Chancellor Rachel Reeves has said she is “overwhelmed” by the response to the UK’s first attendance at an EU finance ministers’ meeting since Brexit.
No negotiations nor demands were made at this point, Ms Reeves said, but they will start in the new year.
UK government red lines on Brexit were reiterated – that there would be no free movement of labour and no return to the single market or customs union – but Ms Reeves said it was in “our collective national interest” to build closer trade relationships with neighbours and to cooperate on security and defence.
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She acknowledged the harm post-Brexit trading has had on the UK, saying the deal was “not the best one for our country and indeed has reduced trade flows, not just from the UK to the European Union, but also from businesses based in the European Union and into the UK”.
There is a “shared objective and a shared challenge” to improve trade and investment flows, she added.
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After “fractious and antagonistic years” now is the time to “rebuild trust” with “allies”, Ms Reeves said.
EU finance ministers want to have “a more businesslike relationship” with the UK, she said, to reset and rebuild.
All assembled ministers agreed growth “is not a zero-sum game” and that all countries in the EU and indeed the UK “need to do more” to boost growth, productivity and competitiveness.
Not since the UK left the EU has a chancellor attended a Eurogroup finance ministers’ meeting.
Meeting all about tone and symbolism while officials worry
Rachel Reeves described today’s meeting as a “milestone” in the effort to reset relations with the EU.
There were no policy announcements, it was the symbolism that mattered.
Ms Reeves is clearly signposting a direction of travel to closer relations with Europe.
She said the government had begun its “reset” with the EU but, when pressed, said that negotiations would begin in January.
Today was about setting the tone.
Ms Reeves repeated the government’s red lines.
The government is likely to press for greater regulatory alignment in key sectors, although the route there is unlikely to be seamless with the EU very reluctant to allow “cherry-picking”.
Here in Britain, officials are worried that any relaxation from Europe will require the UK to offer greater access to UK fishing waters.
There are also concerns among some industries that greater alignment without access to the single market would lead to more onerous rules without fully frictionless trade.
EU reaction
Ms Reeves’s attendance received a “very warm response”, according to Eurogroup president Paschal Donohoe.
Being in the room with 27 EU finance ministers was “very symbolic and important”, he said.
The gathering “set the tone” and laid out areas the UK and EU can continue to cooperate on.
It follows rare public comments on Brexit by Bank of England governor Andrew Bailey at the recent Mansion House and Treasury Committee meetings.
He said the government must be alert to and welcome opportunities to rebuild relations with the EU as Brexit has reduced the level of goods coming into the UK.
“We should be in active dialogue with the EU,” he told MPs at the Treasury Committee.
“I find it hard to understand people who seem to say that we should implement Brexit in the most hostile fashion possible.”
He added: “I take no position on Brexit. I never have. I’ve always said it’s my job to get on and do it and I’ll do it in the best way possible and I think talking, having a relationship with the European Union is the better way to do it.”
Sir Keir Starmer has said his government stands ready to use industrial policy to “shelter British business from the storm” after Donald Trump’s new 10% tariff kicked in.
The UK was among a number of countries hit with the lowest import duty rate following the president’s announcement on 2 April – which he called ‘Liberation Day’, while other nations, such as Vietnam, Cambodia and China face much higher US levies.
But a global trade war will hurt the UK’s open economy.
The prime minister said “these new times demand a new mentality”, after the 10% tax on British imports into America came into force on Saturday. A 25% US levy on all foreign car imports was introduced on Thursday.
It comes as Jaguar Land Rover announced it would “pause” shipments to the US for a month, as firms grapple with the new taxes.
On Saturday, the car manufacturer said it was working to “address the new trading terms” and was looking to “develop our mid to longer-term plans”.
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Referring to the tariffs, Sir Keir said “the immediate priority is to keep calm and fight for the best deal”.
Writing in The Sunday Telegraph, he said that in the coming days “we will turbocharge plans that will improve our domestic competitiveness”, adding: “We stand ready to use industrial policy to help shelter British business from the storm.”
It is believed a number of announcements could be made soon as ministers look to encourage growth.
NI contribution rate for employers goes up
From Sunday, the rate of employer NICs (national insurance contributions) increased from 13.8% to 15%.
At the same time, firms will also pay more because the government lowered the salary threshold at which companies start paying NICs from £9,100 to £5,000.
Also, the FTSE 100 of leading UK companies had its worst day of trading since the start of the pandemic on Friday, with banks among some of the firms to suffer the sharpest losses.
Sir Keir said: “This week, the government will do everything necessary to protect Britain’s national interest. Because when global economic sands are shifting, our laser focus on delivering for Britain will not. And these new times demand a new mentality.”
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Some of the highest rates have been applied to “worst offender” countries including some in Southeast Asia. Imports from Cambodia will be subject to a 49% tariff, while those from Vietnam will face a 46% rate. Chinese goods will be hit with a 34% tariff.
Imports from France will have a 20% tariff, the rate which has been set for European Union nations. These will come into effect on 9 April.
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Sir Keir has been speaking to foreign leaders on the phone over the weekend, including French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Australian Prime Minister Anthony Albanese, to discuss the tariff changes.
A Downing Street spokesperson said of the conversation between Sir Keir and Mr Macron: “They agreed that a trade war was in nobody’s interests but nothing should be off the table and that it was important to keep business updated on developments.
“The prime minister and president also shared their concerns about the global economic and security impact, particularly in Southeast Asia.”
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Trump’s warning
Mr Trump has warned Americans the tariffs “won’t be easy”, but urged them to “hang tough”.
In a post on his Truth Social platform, he said: “We are bringing back jobs and businesses like never before.
“Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast!
“THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”
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