She said regulatory independence should be \u201cthe exception, not the norm.\u201d Treasury sources confirmed the Government is \u201clooking at more alignment\u201d with the bloc across \u201cseveral sectors\u201d.<\/p>\n
Reeves insisted she was not trying to \u201cturn back the clock\u201d on Brexit but to build a \u201cnew and stable future relationship\u201d with Brussels, and acknowledged she would have to \u201cmake and win the political argument\u201d.<\/p>\n
Cabinet ministers have stopped ruling out a customs union<\/p>\n
Business Secretary Peter Kyle told The i Paper in Brussels last month that \u201cthe debate about [the customs union] needs to be engaged with\u201d.<\/a><\/p>\n But he warned that going back into the trading bloc would take years and would not prove \u201cthe quick fix that some people think it is\u201d, noting that Turkey\u2019s own accession to the arrangement took decades.<\/p>\n In December, Health Secretary Wes Streeting also told the Observer that the customs union could have \u201cenormous economic benefits\u201d for the UK.<\/p>\n \u201cThe best way for us to get more growth into our economy is a deeper trading relationship with the EU,\u201d he added.<\/p>\n Streeting ruled out a \u201creturn to freedom of movement\u201d, but his comments appeared to leave the door open to the idea of a customs union-type agreement.<\/p>\n Starmer\u2019s chief economic adviser Minouche Shafik has also reportedly advocated internally for closer EU ties<\/a>. In the run-up\u00a0to the Budget, she is understood to have made the case for rejoining the EU\u2019s customs union to deliver a boost to British exporters.<\/p>\n Labour mayors are calling for a full customs union return<\/p>\n Tracy Brabin, the Mayor of West Yorkshire, returned from a trade delegation to Germany and Switzerland this year calling for Britain to go further on Europe<\/a>.<\/p>\n \u201cIf we are serious about growth, we must be braver about our relationship with Europe,\u201d she told The i Paper. \u201cThat means a customs union relationship with the EU.\u201d<\/p>\n Andy Burnham, the Mayor of Greater Manchester, made the same argument at the Labour Party Conference last year.<\/p>\n \u201cI do think you call out what has put the country in this position,\u201d he said, arguing the UK should rejoin the trading bloc. \u201cThe growth is not there as it once was.\u201d<\/p>\n Khan went further still this week, saying the damage of Brexit was visible \u201con a daily basis\u201d and that rejoining the EU was a matter of when, not if. <\/p>\n \u201cI think it\u2019s inevitable \u2014 the direction of travel at some stage we\u2019re going to rejoin the European Union,\u201d he said.<\/p>\n Labour leadership candidates are staking out softer Brexit positions<\/p>\n With big losses expected at May\u2019s local elections, Labour insiders told The i Paper<\/a> that potential leadership candidates are already sounding out Brexit experts and positioning themselves on Europe ahead of a possible contest.<\/p>\n A Labour insider said contenders from \u201cacross the board\u201d of the party\u2019s factions are considering moving closer to the EU, amid fears that the Government\u2019s reset is too incremental to deliver growth or win back votes.<\/p>\n \u201cThere is a fairly clear consensus across the party that Brexit hasn\u2019t worked, that voters can see it hasn\u2019t worked, and that the Government\u2019s \u2018reset\u2019 isn\u2019t going to give us nearly enough growth or credit with voters,\u201d the insider said.<\/p>\n But not everyone in Labour agrees<\/p>\n Deep divisions remain within the party. Even among pro-European Labour MPs, a customs union does not command unanimous support.<\/p>\n One told The i Paper the \u201creal prize\u201d was a relationship modelled on Switzerland \u2014 a patchwork of sector-by-sector deals \u2014 rather than a formal customs union<\/a>. \u201cWes will regret going for customs union as it\u2019s a lot of pain for little gain,\u201d they said.<\/p>\n A \u201cRed Wall\u201d Labour MP accused Streeting of raising the issue to burnish his leadership credentials. \u201cHe knows what he\u2019s doing \u2014 playing to the membership,\u201d they said.<\/p>\n Reform UK has also pledged to unpick any closer alignment with the EU if it wins power, and the party is consistently polling ahead of Labour.<\/p>\n What the Government has already done \u2014 and where it is stuck<\/p>\n In 2024, the UK rejoined Horizon Europe, the EU\u2019s flagship research and innovation programme<\/a>, which it had left as part of the Brexit settlement.<\/p>\n In December, it also agreed to associate with Erasmus+ from 2027<\/a> \u2014 the student exchange scheme that allows young people to study abroad for up to a year, and which the Conservative government had declined to rejoin on cost grounds.<\/p>\n But further progress has proved harder. The first is money \u2014 the EU wants the UK to contribute financially to reducing economic disparities between EU regions as the price of entry to its internal energy market<\/a>.<\/p>\n The second is tuition fees. EU negotiators want European students in the UK to pay domestic rates \u2014 a move that could cost UK universities up to \u00a3580m<\/a>, according to modelling shared with The i Paper.<\/p>\n![\"FILE](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/03\/SEI_276007621.jpg\")
Keir Starmer meets with European Commission President Ursula von der Leyen (Photo: Omar Havana\/AP)<\/p>\n