Summary: Rachel Reeves has described closer integration with the European Union as the “biggest prize” for Britain’s economy, in comments that mark a significant shift in tone from her position just weeks ago. The Chancellor’s remarks are expected to energise Labour’s soft-Left faction and reopen the customs union debate, despite repeated assurances from Keir Starmer that it remains a red line.

Reeves Signals Warmer Turn Towards Brussels

According to The Telegraph, the Chancellor will tell the London School of Economics that while the UK trades with the US and China, Europe remains the economic block “on our doorstep”. She will say the “biggest prize” is closer integration with Europe.

The language is striking. Only last month at Davos, Reeves warned Britain could not “go back in time” and highlighted the risks to trade deals if the UK re-entered a customs union.

Now the tone has softened. And Westminster has noticed.

Customs Union Back on the Table

Sir Keir Starmer has repeatedly insisted that rejoining the EU customs union is a red line. Labour’s manifesto ruled it out. Yet senior ministers have begun floating the idea openly.

David Lammy has argued Brexit damaged the economy. Peter Kyle has called it “crazy” not to consider a customs union. Wes Streeting has praised the economic benefits it once brought.

Reeves’ comments will be read by many as another step toward policy drift in that direction.

Soft Left Senses Opportunity

The timing matters. Starmer has emerged weakened from recent controversies, including the Mandelson fallout. Although the Cabinet publicly backed him, internal factions now appear emboldened.

The soft-Left sees leverage. Britain is due to hold reset talks with the EU this summer. Pressure is building inside Labour to go further than incremental sector deals.

Reeves insists any regulatory alignment would only happen if it serves Britain’s national interest. Critics argue the direction of travel is already clear.

The Elephant in the Room

Rejoining a customs union would remove many trade barriers with the EU. It would also bind Britain’s trade policy to Brussels and limit independent deals with countries like the US and India.

Last year’s Brexit reset already forced concessions on fishing rights after pressure from Emmanuel Macron. For many voters, that episode looked less like reset and more like retreat.

The question now is simple. Is Labour managing Brexit, or quietly unwinding it.