Mais Lecture 2026: Britain to align closer with Europe says Chancellor

Rachel Reeves has outlined a closer relationship with Europe in her speech at the Mais Lecture 2026. She said that this was one of the big choices the government would make as it seeks to continue improving growth and stability, while battling the cost of living crisis in an increasingly unstable global environment.

Delivering the annual lecture at Bayes Business School City St George’s University of London, Reeves returned to the podium this year as Chancellor, having first given the lecture when a member of the shadow cabinet in 2024.

The Chancellor signalled further economic and security ties to Britain’s closest neighbours, giving shared values and objectives as key motivations behind the government’s evolving rationale.

The Chancellor placed her argument of closer alignment within the context of the UK’s security interests being closely linked to Europe, as Russian aggression in Ukraine continues. Further support for Ukraine continues to be considered, with Reeves announcing that the government are looking into the option of participating  in a €90 billion loan initiative for the nation.

Within this context, it was announced that the UK is collaborating with European and NATO partners, including a new mechanism involving countries such as the Netherlands and Finland to strengthen collective security and resilience.

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Reeves said that Britain’s “economic, political and military strength will rest on strategic alliances” and that the UK’s “fate is inescapably bound with that of Europe”.

She indicated that the government have already began to make significant progress in reshaping the relationship between the UK and the EU, acknowledging the “deep damage” caused by the effects of Brexit, as she pointed to recent studies that report leaving the EU resulted in higher trading costs and estimates of an 8% hit to British GDP.

The Chancellor welcomed trade deals with India and the US, two of the government’s success stories of their first eighteen months in power, but accepted neither trade deal could be considered a substitute for UK relations with Europe, which accounts for around half of the nation’s trade.

However, scars from the Brexit fall-out are not entirely healed domestically. Reeves set out a framework of ‘National Interest Principles’ that would have to be met to ensure any chance of long durability of a reset in alignment, that could see closer cooperation in areas of the single market. Reeves stated this was “not to turn back the clock, but look forward to a new and stable future relationship.”

The three conditions that would have to be met are as follows:

1. The decision to align means higher growth investments more jobs and consumer benefits for long term.
2. The future direction of policy should be sufficiently stable and compatible in terms of value and objectives.
3. UK economic and national security and resilience should be preserved or enhanced as a result of alignment.

If satisfied that these conditions are met, then the Chancellor said that alignment should be designed to be durable over the long term. She pointed out that whilec some sectors would need regulatory individualism, this may be the exception as opposed to the norm.

Regional growth and fiscal devolution: Mayors to receive share of Inheritance Tax

Alongside prioritising closer partnerships with Europe, the Chancellor used the Mais lecture to signal the government efforts to push forward regional growth and fiscal devolution.

Beginning from a position that the UK is “the most politically centralised of advanced democracies, and one of the most geographically unequal”, the Chancellor explained some of the measures she would be taking to “rebalance the economy” with the most significant policy change being that England’s mayors will begin to see a share of Inheritance Tax.

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Reeves said that successes in areas around the country still see the Exchequer as the overall beneficiary in the current system. As she pushes forward to deliver investment-based growth across the UK, it is evident that the Chancellor feels the best method to achieve this is to push spending directly into the heart of Britain’s fast growing City regions.

Reeves rejected the idea that economic development is a “zero sum game”, proposing that through investing in necessary infrastructure, the debate between cities and towns can see the two developed in harmony, as better connectivity allows towns to be absorbed into city regions that sees everyone benefit.

Reeves announced that Treasury officials have already started on working directly with Mayoral teams to develop a plan of fiscal devolution and plans are expected to be announced in this year’s budget. The Chancellor outlined that the purpose of the reforms would be to share the funding with the places that generate income, thus remaining fiscally neutral.

“These reforms will represent a permanent transfer of power and resources” she said, also referring to the changes as a “generational opportunity” and “genuine break from the past”.

In addition to these reforms, the Chancellor announced her decisions to  invest further in infrastructure development for the Oxford-Cambridge growth corridor, as well as the North, pointing to Liverpool, Manchester, Leeds and Sheffield as areas to push for further growth.

Comparing the UK’s cities outside the capital with the geographic economies of European nations, Reeves suggested that there are “Huge gains to be made backing Manchester, Liverpool and Leeds to match and overtake Stuttgart, Turin and Lyon” as well as calling it a “a fiction that a strong economy…could be built on just a few places”.

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Finally, the Chancellor also announced £2.3 billion in long-term investment funding for metro mayors, as well as an ability to retain future business rates revenue.

Artificial Intelligence

The Chancellor’s speech at the Mais lecture also saw her outline a third “big choice” in pushing the UK to be a hub of support for emerging technologies and artificial intelligence (AI). She discussed government plans for significant procurement investments, including up to £1 billion in quantum computing, starting a gun on a global race to be a world leader in this field.

The Chancellor explained that she views AI as an opportunity to drive investment in the UK, with the government working across departments to ensure that Britain offers the most desirable place to come and develop emerging technology with efforts to introduce the most beneficial regulation and support for entrepreneurs in the field.

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