UK-EU summit will be step on path to better relations, says Rachel Reeves

Chancellor tells Guardian that UK will retain red lines such as no free movement but ‘there will be future areas where we can do more’

The UK-EU summit on Monday is a “step towards” a deeper and ongoing partnership with Europe, the chancellor, Rachel Reeves, has said, saying any deal struck next week will not be a “one off.”

In an interview with the Guardian, Reeves suggested the government was looking for closer ties with Europe beyond what was on the table this coming Monday, adding: “There will be future areas in which we can do more.”

She said the government would show there had been a decisive break with the ideological Brexit battles of the past, saying “there is a lot of room for improvement” for ways to trade with the bloc.

Asked if the UK had raised its future sights beyond fixes such as a veterinary deal that were set out in the Labour manifesto, Reeves said there would always be the red lines of no single market, customs union or a return to free movement, but suggested there was still more that could be done.

“We think that because of the trust we built, we can get a better deal. The European Union have understood from the beginning those red lines,” she said.

“I am ambitious for our future. This isn’t a one-off. There will be things that we achieve, some concrete outcomes on Monday, but there will also be a step towards where we want to go next between our countries.

“And I see that as a journey, not that what happens on Monday is the end; there will be future areas where we can do more.”

Her remarks go further than Keir Starmer’s in the Guardian last week, when he said he would not “start speculating” beyond a deal that was yet to be agreed, but added: “We can be ambitious. I do think that we can have a successful reset.”

On Friday, Starmer told European political leaders meeting in Albania that the UK would not “respond by turning inwards” at such a great time of uncertainty but “by taking its place on the world stage, strengthening our alliances, supporting freedom and peace in Europe”.

More than 60 Labour MPs have already urged the government to go further than its plans at Monday’s summit – including on a youth mobility deal where a time-limited version is now under discussion.

They also suggested further Brexit trade barriers could be removed through a Canada-style deal involving a mutual recognition agreement (MRA) on conformity assessment, allowing standards of goods to be tested in the UK before export. That change has been strongly backed by UK business groups.

But the strong performance in the May local elections of Nigel Farage’s Reform UK – currently leading the polls – means any close alignment is fraught with political risk.

Tense negotiations, on even the most basic issues, are expected to continue until the final hours before the highly anticipated summit at Lancaster House between Starmer and senior EU figures, including the European Commission president, Ursula von der Leyen. Key conflicts inlcude a rejection by EU member states of UK positions on fishing and fees for EU students.

It remains likely that Monday’s summit will secure a defence and security agreement, but that is not expected to allow Britain access to a new €150bn (£125bn) European defence fund.

Instead, government officials say they expect Monday’s deal to pave the way for future talks on British companies being able to bid for money from the loan facility known as Security Action for Europe.

“Monday is not about access to the defence fund,” the defence secretary, John Healey, said during a meeting of European defence ministers in Rome. “This is a big step, but it’s a first step, and the negotiations won’t end on Monday.”

Easing of trade restrictions are expected to be stated ambitions rather than sealed. Members states have criticised UK plans not to exempt EU students from foreign tuition fee rates, a red line for the government.

The economic potential of closer ties with Europe is far greater than the two deals clinched so far; 41% of UK goods exports still go to the EU, more than to the US, India and Indo-Pacific combined.

But Reeves said those deals struck with India and the US had already delivered growth and saved jobs.

“People said you had to choose, and Keir was really clear that we weren’t going to choose,” she said.

“I was at Rolls-Royce on Thursday – their engines going to the US will be zero tariffs. The prime minister was at Jaguar Land Rover last week, where it could have been to announce a package to support redundancies. Instead, it was marking a trade deal which means they can start exporting again.”

Reeves, now the second longest-serving finance minister in the G7, said the deals were coming as a result of a ferocious effort and the UK’s relative stability in a tumultuous world.

“We worked really hard. And also, crucially, put the country first, not the party first,” she said.

“And that’s probably more so with Europe than anywhere else, because our economy is being held back by the last government that put the Tory party first, never the country first, because of their ideological issues about Europe.

“They were unwilling to do what was necessary to support British businesses, British jobs and families in the UK.”

Reeves dismissed suggestions that negotiations were in trouble because of fraught briefings from both sides over the difficulty of reaching consensus in the final hours on fishing, security and student fees.

“Last Tuesday, we weren’t certain we were going to be able to announce the India deal that day, and same on Thursday with the US deal. There are tough negotiators on both sides. But we’ve worked really hard to re-establish that trust.”

All three deals – the US, India and the EU deal to come – have been the subject of significant criticism from both the Conservatives and Reform. Reeves said she acknowledged the government had a job to do to explain how international trade would benefit British jobs.

But she said the Conservative attacks had been “extraordinary” – especially Kemi Badenoch’s vow to rip up any forthcoming EU deal.

“If you want to pull up the drawbridge and withdraw from the rest of the world, you’re not going to make people better off, and you’re going to be selling Britain short,” she said.

“Look at the deal that we secured with the US, and massive opportunities for steel, car exports and aerospace as well. That’s what I want to secure with Europe as well.”

Reeves and Starmer are set to face a challenging fortnight after the EU summit as a significant rebellion grows in the party over welfare cuts, including a private letter warning against the government’s reforms signed by more than 100 MPs.

The chancellor struck a conciliatory tone towards MPs, while defending the plans to cut disability benefits for some claimants.

“We’ve got more work to do to show that what we’re doing is the right and fair thing to do,” she said.

“Obviously, I listen to my colleagues and hear their concerns, and they speak to voters every week in their own constituencies. But there’s not a single Labour MP that I’ve met that thinks that the system we inherited is working.

“I want to lift people out of poverty, particularly I want to lift children out of poverty, and of course, we’ll set out more plans to do that.