Leaving the European Union had inflicted “deep damage” on the country, with independent studies suggesting a potential hit to GDP of as much as 8%, says Chancellor Rachel Reeves.
Delivering the prestigious Mais Lecture at Bayes Business School in London on Tuesday (17 March), Reeves used the platform to outline her vision for “securonomics”, a strategy blending economic security with growth in an era of global instability, while directly confronting Brexit’s legacy as a barrier to prosperity.
“Brexit did deep damage,” Reeves stated plainly in her speech. “Recent independent studies indicate its GDP impacts could be as much as eight percent. It has meant higher costs for businesses, and therefore for higher costs in our shops. It’s meant shrinking markets for UK exporters, and our strategic industries exposed, as protectionist barriers rise.”
The chancellor’s remarks represent one of the most explicit acknowledgments from a senior Labour government figure of Brexit’s long-term economic toll.
She linked the departure to broader issues plaguing the UK economy, including suppressed investment, stop-go cycles, and the country’s position at the bottom of G7 productivity and investment rankings.
Reeves argued that Brexit had compounded other historical drags on growth, such as the 2008 financial crisis aftermath and austerity policies in the 2010s.
In a world where globalisation is “dead” and shocks, from pandemics to wars in Europe and the Middle East, ripple through supply chains, she warned that Brexit had left Britain vulnerable by raising trade barriers and creating uncertainty.
The speech framed closer EU relations as one of three “big choices” for unlocking growth, alongside powering regional development and seizing leadership in artificial intelligence.
A new future
While ruling out “turning back the clock” or rejoining the single market wholesale, Reeves advocated for a “new and stable future relationship” with deeper integration where it serves the national interest.
This could include aligning with EU regulations in areas that deliver higher growth, investment, jobs, lower consumer prices, and greater resilience – particularly in energy, agrifood, electricity trading, and strategic supply chains.
“Our fate as a country is inescapably bound with that of Europe,” she said. “No partnership is more important than that between the UK and our European neighbours.”
Potential benefits she highlighted include reduced business costs, expanded export opportunities, easier travel and study abroad, better access to capital and talent, lower inflation through consumer choice, more resilient energy systems, and stronger defense cooperation amid shared security threats like support for Ukraine.
Reeves emphasized that any alignment would preserve UK regulatory autonomy in critical sectors while prioritizing stability, shared values, and mutual gains.
Nearly half of the UK’s trade flows through Europe, making enhanced ties a “strategic imperative” for economic resilience in a fragmented global landscape.
An active and strategic state
The address formed part of a wider pitch for an “active and strategic state” partnering with business to drive productivity-led growth.
Reeves detailed government actions already underway, including fiscal repairs to address a £22 billion shortfall, a £120 billion public investment boost in housing, energy, transport, and industrial strategy, and reforms to planning, employment rights, and energy markets – such as lifting the ban on new onshore wind and advancing nuclear power.
She also spotlighted regional devolution, including City Investment Funds and fiscal powers for mayors, and a major push on AI through compute capacity, skills training for millions, and “AI Growth Zones.”
The Mais Lecture, an annual fixture on economic policy, has historically signaled major shifts.
Reeves’ direct language on Brexit and her call for pragmatic EU rapprochement suggest the government is prepared to prioritize practical improvements in relations with Brussels as part of its mission to deliver “responsibility, fairness, and prosperity.”
Leave a Reply