The government has hinted it is open to joining a tariff-free trading scheme as part of its plan to “reset” its relationship with Europe.

Business Secretary Jonathan Reynolds suggested that joining the Pan-Euro-Mediterranean Convention (PEM) could be acceptable as it “is not a customs union”.

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The cabinet minister was speaking to the BBC following a meeting on Thursday with Maros Sefcovic, the EU’s trade commissioner responsible for post-Brexit negotiations.

Mr Sefcovic had earlier told the broadcaster the EU would consider the UK joining the PEM, which allows for tariff-free trade of goods across Europe as well as some North African and Levantine nations.

Mr Reynolds described his comments as “incredibly positive” and “helpful”.

He added: “We can improve the terms of trade with the EU in a way which doesn’t revisit customs unions or single markets or the arguments of Brexit, and we can do that whilst pursuing closer trade links around the world.”

Mr Reynolds also declined to rule out a deal on food and farm products that would involve mirroring EU rules, known as “dynamic alignment”, saying this too didn’t cross any of the government’s “red lines”.

Sir Keir Starmer has ruled out a return to the customs union or single market as part of his ambition for closer ties with Europe following the fractious post-Brexit years.

Labour’s 2024 manifesto instead pledged to “negotiate a veterinary agreement to prevent unnecessary border checks and help tackle the cost of food”. However, details of this have remained vague.

Mr Reynolds’ comments go further than Downing Street yesterday, when a spokesperson said the government did not “currently” have plans to join the PEM and would not “provide a running commentary”.

The British Chamber of Commerce (BCC) told Sky News they would support the move, saying their research “indicates it would have majority support among UK businesses who trade in the European region”.

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Head of trade policy, William Bain, said: “Joining would reduce paperwork and costs for many UK firms as it would align rules and regulations on both sides in relation to the sourcing or components and raw materials used in exports.

“This would cover a wide range of markets for our exporters and give greater flexibility across supply and sourcing chains. “

He added that new PEM rules are due to apply in 2026, which could make the transition easier, and recommended a cost-benefit analysis of the deal beforehand “as the advantages will vary by sector”.

The Lib Dems have also been pushing for closer ties with Europe, amid looming concerns over potential Trump tariffs.

Party leader Sir Ed Davey, who ultimately wants a return to the customs union, said ruling out the PEM proposal would be an “act of economic negligence”.

But on the other end of the political spectrum, the Conservatives accused Labour of “bending the knee” to the bloc.

Dame Priti Patel, the shadow foreign secretary, said: “These latest reports that the government might shackle us to the European Union are deeply concerning, and once again make clear that Keir Starmer and his chums are all too happy to put their ideology ahead of our national interest, no matter the cost.”