The Business Secretary has left the door open to joining a tariff-free trading scheme with Europe following a meeting with the EU trade commissioner in Davos.

Jonathan Reynolds’s meeting with Maros Sefcovic on Thursday came after the trade commissioner suggested Britain could join the Pan-Euro-Mediterranean Convention (PEM), which allows for tariff-free trade of goods across Europe, as well as some North African and Levantine nations.

Speaking to the BBC, Mr Reynolds described Mr Sefcovic’s comments as “incredibly positive” and “helpful”, and suggested joining the PEM could be acceptable as it “is not a customs union”.

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 it too did not cross any of the Government’s “red lines” on rejoining the customs union or single market.

Labour’s 2024 manifesto committed it to seeking a deal on such products with the EU, while some business groups have backed joining the PEM as it would help maintain complex supply chains.

Ministers said on Thursday the Government did not “currently” have plans to join the PEM and would not “provide a running commentary”.

The Business Secretary’s comments come amid the Government’s ongoing attempt to “reset” relations with the EU.

But 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.”

Liberal Democrat leader Sir Ed Davey said ruling out the PEM proposal would be an “act of economic negligence”.