Chancellor Rachel Reeves has been cautioned that any effort to foster closer ties with the European Union may come with a significant financial commitment from the UK. This would involve contributing billions of pounds to Brussels’ aid budget, as a senior EU diplomat expressed.

Sources have indicated that Britain should brace itself to become substantial contributors to the EU’s ‘cohesion fund,’ a financial pot designed to alleviate poverty across the union. This would be a prerequisite if the UK seeks to re-align with more of Brussels’ regulations.

Moreover, such a move would entail the UK accepting the oversight of EU judges over a broader expanse of its economy. This is a significant consideration for the UK as it navigates its post-Brexit relationship with the EU.

Labour, under Sir Keir Starmer’s leadership, has already pledged to adhere to EU standards concerning food and plant safety, electricity, and carbon pricing as part of a post-Brexit ‘reset’ deal. Yet, in a recent address, Ms. Reeves suggested the potential for further integration, hinting at the possibility of extending Brussels’ influence into areas like chemicals, automotive, and industrial goods.

Ms. Reeves contends that these steps are essential to repairing the ‘deep damage’ inflicted by Brexit. She referenced controversial research claiming that Brexit has negatively impacted the UK economy by up to 8 percent of GDP, underscoring the gravity of the decision facing the UK government.

She insisted it was necessary to undo the ‘deep damage’ caused by Brexit, citing disputed research that the ‘hit’ is equivalent to as much as 8 per cent of GDP.

Critics have said returning to alignment with EU regulations amounts to giving up the control that voters demanded in the historic 2016 Brexit referendum.

Ahead of a Brussels summit yesterday, one senior EU diplomat told the Mail that not a single EU country would try to block Labour from signing Britain up to more Brussels rules, but warned it would come with ‘obligations’.

Senior EU diplomats said paying into the bloc’s aid budget would be the price of even closer ties with European Union 

Sir Keir Starmer struck a ‘reset’ deal with EU Commission president Ursula von der Leyen last May, under which Britain will shackle itself to Brussels rules on food standards 

Mark Francois, chair of the European Research Group of Tory MPs, said Labour’s policy on EU relations was ‘madness’ 

This includes paying into the bloc’s so-called ‘cohesion fund’, which is designed to ‘level up’ poorer EU regions by giving them aid money for infrastructure projects.

The senior diplomat said: ‘If the UK is willing to align more, then very much it’s possible. And I think that every single member state will say the same.

‘And part of the alignment is of course accepting the rules of the European Court of Justice, because you have to have an independent arbiter.

‘And it means that if you take part in the internal market, that you also pay for the cohesion fund part of it.

‘Whoever takes part in the internal market also pays for market access.

‘We take part in the internal market in my country and we’re big payers in the cohesion fund part of it. That’s part of the deal.’

A second senior EU diplomat added: ‘If the UK wishes to get closer to Europe, which we want, it goes of course with rights and obligations.

‘If you’re part of it then you’re completely part of it. And I think that is the discussion we should have. And the closer you can get, the better for us.

‘The closer the better – but on the basis of rules, privileges and obligations [including paying into EU budgets].’

They referred to Norway, which pays into the EU’s cohesion fund in exchange for closer ties but is not a member of the bloc.

It pays more than £2billion over the course of the bloc’s seven-year budget cycle.

In her speech, Ms Reeves insisted ministers would not take Britain fully back into the bloc’s Single Market or customs union.

But critics have accused the government of trying to re-join ‘by stealth’ because it has agreed to ‘dynamically align’ with the bloc on food standards, electricity and carbon pricing.

This means effectively being a ‘rule-taker’ – even over future new regulations – while having no say over them.

Mark Francois, chair of the European Research Group of Tory MPs, said: ‘As Labour grow increasingly nervous about the forthcoming May elections, they seem to think they can avoid an electoral hiding by somehow cosying up to Brussels and seeking the jurisdiction of the European Court – well, that way madness lies.’

Reform UK MP Andrew Rosindell added: ‘Reports that Britain could be expected to hand over billions to Brussels and once again become a rule-taker should alarm everyone who values our sovereignty.

‘The British people voted to leave the European Union – the Government has no mandate to edge back in through the back door.

‘Any arrangement that sees the United Kingdom paying into EU funds and aligning wholesale with Brussels regulations would be a betrayal of that democratic decision and will only further weaken our sovereign Parliament.

‘This government seems hellbent on dragging us back into the European Union by stealth.’

A Reform spokesman added: ‘After the next election, we will reverse Reeves’ move to drag us back into the single market.’

Ministers hope the deal on alignment of food standards, struck last May, will be in place by mid-2027, with separate talks also taking place on a youth mobility scheme. 

These have stalled amid demands from Brussels that EU students are allowed to pay the same tuition fees as their British counterparts while attending UK universities, which are much cheaper.