Rachel Reeves tonight sparked fresh claims of Brexit 'betrayal' as she hailed deeper integration with the EU as the 'biggest prize' for Britain.
Speaking at a London School of Economics event, the Chancellor set out Labour's case for closer economic and security ties with the UK's nearest neighbours.
'The biggest prize is clearly with the EU,' she said. 'The truth is economic gravity is reality. Almost half of our trade is with the European Union.
'We trade almost as much with the EU as the whole of the rest of the world combined.
'There are three big trading blocs in the world - there's the US, there's China, and there is Europe.
'We want to make Europe as strong as possible, and that means not putting up the drawbridge.'
In response to her remarks, the Tories accused both Ms Reeves and Sir Keir Starmer of trying to 'point the finger at Brexit' rather than their own failures on the economy.
It also comes as the Prime Minister faces huge pressure from Labour MPs to reset his premiership, as he fights to stay in power amid the Peter Mandelson scandal.
There are suggestions that Sir Keir has bowed to demands for a lurch to the Left as the price of senior ministers propping him up in No10.
The fallout from the Mandelson scandal has seen Sir Keir ditch Morgan McSweeney as his No10 chief of staff.
Mr McSweeney was the architect of Labour's general election victory and was credited with keeping Labour focused on winning back so-called 'hero voters'.
This was a term given to Leave-backing constituents who supported Boris Johnson in 2019, but were willing to swing back behind Labour.
His departure from Downing Street will heighten fears that Sir Keir's promised 'reset' of relations with the EU will see the PM unravel Britain's Brexit freedoms.
Ms Reeves on Wednesday said the Government would seek to reduce trade barriers with the EU, as she confirmed the UK will align with EU regulatory standards where she deems it in the national interest.
She added: 'I strongly believe that Britain's future is inextricably bound with that of Europe's - for economic reasons, but also reasons of security, resilience and defence.'
'On defence, we don't want to create more barriers. We want to be bringing those barriers down. We want to greater integrate supply chains, not damage them by taking a sort of inward-looking approach.'
'But I don't think any Chancellor actually believes we are getting the value for money that we should. Things like interoperability, joint procurement, not every country in Europe having different specifications when they're buying equipment - the potential there is huge.'
The London School of Economics event was held by Brussels-based think tank Bruegel to mark its 20th anniversary.
Sir Mel Stride, the Conservative shadow chancellor, said: 'It's no secret that Reeves and Starmer have wanted to row back on Brexit since day one.
'Labour are desperate to blame anyone but themselves for their economic failures.
'Under increasing pressure from their own soft-Left colleagues following the Mandelson scandal, Starmer and Reeves would rather point the finger at Brexit than accept their poor choices have been a disaster for our economy.'
Suella Braverman, the former home secretary who defected from the Tories to Reform UK last month, said: 'The great Brexit betrayal is under way.
'Fresh from kowtowing to Communist China, the Government are exploiting their own chaos in No 10 to quietly pull us back into the European Union.
'We will once again become a rule taker, not a rule maker.
'Labour have been hell-bent or eroding Brexit and never accepted the result of the referendum.
'They have been searching for any reason to unravel the greatest democratic vote in Britain's history.
'With Downing Street in disarray, they will see this moment of weakness as their golden opportunity.
'The Prime Minister must stand firm and honour the promise he made to voters in the last general election that joining the single market or the customs union is off the table.'