Reeves says Brexit caused ‘deep damage’ to the UK – now the UK’s City Minister is flying to Paris, Berlin, and Luxembourg in a bid to rebuild ties
The UK’s City Minister is set to embark on a diplomatic push across key European capitals next week, as the Labour government intensifies efforts to repair financial sector ties strained by Brexit and unlock growth for the domestic economy.
Bloomberg reports that Lucy Rigby, the Economic Secretary to the Treasury and City Minister, will travel to Paris, Berlin, and Luxembourg to meet with counterparts.
The discussions will centre on strengthening market connections and identifying opportunities for closer cooperation that could help firms access capital more efficiently, according to people familiar with the plans who spoke on condition of anonymity.
The visits come just days after Chancellor of the Exchequer Rachel Reeves delivered a pointed critique of Brexit’s legacy in her Mais Lecture at Bayes Business School on 17 March.
Reeves described Brexit as having caused “deep damage” to the UK economy, citing independent studies that estimate it may have reduced GDP by as much as 8%. She highlighted how the departure created profound uncertainty, erected new trade barriers, raised costs for businesses and consumers, and shrank markets for exporters.
“Brexit did deep damage,” Reeves said in the lecture. “Recent independent studies indicate its GDP impacts could be as much as eight percent. It has meant higher costs for businesses, and therefore higher costs in our shops.”
Reeves positioned a “deeper relationship with the EU” as one of three major pillars for boosting growth, alongside regional investment and accelerating AI and innovation, while emphasising that any alignment would be guided by the UK’s national interest.
She argued that no single trade deal could match the importance of ties with the EU, which accounts for nearly half of UK trade and shares intertwined supply chains.
The City of London, long the powerhouse of the UK’s services-dominated economy, has struggled in the post-Brexit era.
Financial and insurance output has grown by just 0.3% since 2015, compared to 15% growth in the broader economy, according to Office for National Statistics data. Firms relocated assets and operations to the EU to maintain access, while non-tariff barriers weighed on the wider economy.
Rigby’s outreach follows Reeves’ call for stripping out frictions, reducing unnecessary burdens, and bolstering capital markets links to help businesses invest and scale faster.
“A closer and more stable economic relationship with Europe must be guided by the national interest,” Rigby said in a statement.
“We want to work with our European partners to strip out frictions, reduce unnecessary burdens and strengthen capital markets links, so firms can invest and scale faster and we can meet shared challenges.”
Six years after the UK’s formal exit from the EU, the Starmer administration sees financial services, a sector that underperformed relative to the rest of the economy post-2016, as a prime area for revival.
