Reeves secures £6.4 billion trade and investment package with Saudi Arabia

Brexit is partly responsible for high inflation in the UK, according to Rachel Reeves, as she advocated for rebuilding ties with the EU.

The Chancellor mentioned that the cost of trading with Brussels is one of the reasons for rising prices in Britain.

During an appearance at Riyadh’s Future Investment Initiative summit while visiting Saudi Arabia, Ms. Reeves linked the UK’s vote to sever ties with the EU to "a rejection of open borders".

However, she noted that there is "public support" for the Labour Government’s efforts to reset relations with the bloc, including an agreement secured earlier this year aimed at reducing red tape for travelers and businesses.

"I think Brexit was a rejection of open borders, but if you look at the UK today, when we struck that deal back in May with the European Union to remove some of those barriers and even introduce an ambitious youth mobility scheme, the public supported it," Ms. Reeves said.

"And actually the concern we had as the Government, that reopening that issue of our relationship with the European Union might be quite risky— actually, the response has been very positive.

"Businesses, especially small businesses, facing increased red tape since we left the European Union, and workers now blocked from the jobs market in Europe, stand to benefit greatly from rebuilding some of those relations."

Ms. Reeves is preparing to deliver a challenging Budget next month, where she is widely anticipated to raise taxes again to cover a gap in public finances.

Economists at the Institute for Fiscal Studies (IFS) have stated that she would need to raise £22 billion to restore the £10 billion of headroom she had previously allowed for.

The pressure has eased slightly due to better-than-expected inflation, with the Consumer Prices Index (CPI) remaining steady last month at 3.8%, but the Chancellor remarked on Tuesday that it was still too high.

"Inflation is too high in countries worldwide, including in the UK, and one reason for this is the excessive cost associated with trade with our nearest neighbors and trading partners," she told the audience.

Ms. Reeves is leading a UK delegation in Saudi Arabia as the Government aims to deepen ties with the region in pursuit of economic growth.

On Tuesday, she welcomed a package of two-way trade and investment deals with the country, which the Treasury claims is worth £6.4 billion.

The agreements involve up to £5 billion in financing support from UK Export Finance for projects in Saudi Arabia, which the Government hopes will unlock contracts for British suppliers, and a new Barclays headquarters in Riyadh.

"The £6.3 billion package of new trade, procurement, and investment commitments unveiled today will boost business opportunities and create thousands of jobs at home—key elements for kickstarting economic growth and building an economy that works for, and rewards, working people," Ms. Reeves said.

Downing Street has defended the visit amid questions about Saudi Arabia’s human rights record, insisting that "economic partnership can coexist with frank dialogue on areas of disagreement".

"The Chancellor will be candid with Gulf counterparts over areas of divergence and cultural differences," the Prime Minister’s official spokesman said on Monday.