UPDATE 2-UK's Reeves says deeper ties with EU is the 'biggest prize'

British finance minister Rachel Reeves said on Wednesday that she would push for closer integration with the EU to reduce the trade barriers put ‌up by Brexit, adding that European countries should cooperate on defence spending too.

Speaking during a week when Prime Minister Keir Starmer has had to fight to stay in power due to fallout from the Jeffrey Epstein scandal, Reeves said Britain's future was inextricably bound with that of ‌Europe on both the economy and security. "The biggest prize is clearly with the EU. The truth is economic gravity is reality. ‌Almost half of our trade is with the European Union," Reeves said at an event at the London School of Economics.

"I'm all up for doing deals with India and the U.S. and Korea. But none of them are going to be as big as what we can get to grow trade relations with ⁠Europe," she ​said. Reeves said deeper integration would ⁠require further alignment with the EU on issues such as rules and standards "but I'm up for that."

Since leaving the EU in 2020, Britain has sought to lower some ⁠barriers to trade but it has trod carefully, wary of angering supporters of the Brexit decision to leave the bloc in a 2016 referendum. However, Reeves ​and Starmer are also trying to show voters and restless Labour lawmakers that they can honour their promises to galvanise Britain's ⁠sluggish economy.

Reeves last year said Britain's trading relationship with Europe was "arguably even more important" than its ties with the United States, due to the country's proximity to ⁠the ​EU. On Wednesday she also said cooperation with European countries on defence spending was vital, saying they could improve value for money by working together in areas such as interoperability and procurement.

"Many European finance ministers and defence ministers are keen to seize the opportunities there. ⁠And I hope that in the coming weeks there's more to say on that," Reeves said. Starmer has previously said his government ⁠will consider applying to join a ⁠second possible multi-billion-euro European Union fund for defence projects.

A British plan to join the original 150 billion euro ($178.25 billion) SAFE fund broke down in November after the government refused to pay a financial ‌contribution to join, representing ‌a setback for the post-Brexit reset of relations. ($1 = 0.8415 euros) (Writing by ​William Schomberg Editing by Gareth Jones)