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Rachel Reeves has urged the EU to give greater access for the City of London, telling finance ministers from the bloc it would help grow their stagnating economies.
“The UK has deep global capital markets that can fund the growth that economies across the continent need,” the UK chancellor told Euro area finance ministers on a visit to Brussels.
“Openness to each other’s markets is a source of strength, not weakness,” she added, promising that the UK was not trying to become a haven of light regulation, or what some have nicknamed “Singapore on Thames”.
Britain’s self-imposed exclusion from the single market after Brexit has limited access for banks and investment firms, while the City no longer follows EU rules.
Investment from City firms “can help finance start-ups, scale up businesses as well as the infrastructure investment that we need in energy and elsewhere”, Reeves added during a question session after her formal speech.
Her trip is the first from a UK chancellor since Britain left the bloc, and comes ahead of formal “reset” talks next year. During her visit, the two sides agreed to hold the next regular UK-EU financial services forum on February 12.
The chancellor said she hoped Sir Keir Starmer’s Labour administration could build trust after the “chaos and the division” created by previous Conservative governments.
However, the EU has set conditions — including a ban on “cherry picking” member benefits — that may hamper the UK’s ability to carve out a fresh relationship.
Reeves told a press conference after her speech that the government had told regulators to “regulate not just for risks but also for growth”.
At the same question session Paschal Donohoe, the eurogroup president, distanced himself from this approach to regulation.
He said: “We are very clear that the stability of our financial sector is the bedrock of macroeconomic stability, which in turn creates the environment within which economies can grow in a sustainable way.”
Donohue added that a “reset” of UK relations was welcome since “we’re facing the same challenges”.
Great Britain — which excludes Northern Ireland — left the single market and customs union, leading to a steep increase in bureaucracy and border checks for businesses. Many have stopped selling to the EU or been cut out of supply chains.
Starmer has ruled out rejoining the single market and customs union, which would eliminate barriers, but would open the UK up to higher levels of immigration.
The UK wants a deal on animal and food standards with the EU that would reduce checks. But the EU has indicated this would require London to mirror the bloc’s farming rules — a controversial topic among Brexit supporters because it would make it difficult to strike trade deals with the US or other partners with different standards.
The EU has its own agenda for the reset. It has said it is willing to discuss a veterinary deal, though a leaked document seen by the Financial Times proposes the UK should pay a financial contribution towards the cost of checks.
Brussels is also finalising the offer of a “youth experience scheme”, which would give 18 to 30-year-olds the right to live and work in the EU and UK for three years.
The UK has so far rejected the measure as a return to free movement of people. Officials say the priority is to get British people working rather than import labour.
The EU has also insisted that the UK implement fully an agreement on goods trade with Northern Ireland, which remains in the single market, before deepening ties. Reeves promised to do so in her speech.
It is also demanding continued access to UK fishing waters after the current agreement expires in mid-2026 as a condition for serious talks on other issues.
During her speech on Monday, Reeves made a staunch defence of “all the investment, innovation and lower prices that free trade brings”. She urged her audience of Eurogroup ministers to oppose the erection of “new barriers”.
Reeves, who will travel to Beijing next month for talks on financial co-operation, also said all European countries would have to “find the right way to build a stable, long-term relationship with China”.
She also urged the EU to step back from any trade war with US president-elect Donald Trump, warning that it would be “a profound mistake to abandon free trade”.