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The Labour administration has been advised that securing a deeper trading relationship with the European Union is a "strategic necessity" for British firms, as an increasing proportion of exporters report finding it tougher to operate under the existing post-Brexit trade deal.

Growing Business Dissatisfaction with Current Deal

Calling on Labour to accelerate its EU relationship reset, the leading business group stated that the UK’s current TCA was not supporting them grow their sales in the EU. More than half of exporters in a poll of nearly one thousand firms – most of whom were SME companies – said the trade deal enacted in 2021 was not helping them.

“With a budget that failed to deliver substantial economic expansion or trade support, securing a successful EU reset is now a strategic necessity, not a matter of political preference,” said the BCC’s director of international trade.

Pointing to a continuing economic cost from Brexit, the business group noted this figure represented a significant rise from the proportion of dissatisfied companies in a similar survey a year earlier. It added that just four out of the 946 firms surveyed believed government support on trade policy changes was adequate.

Calls for Action for a Deeper Relationship

This statement from the business group – which represents more than 50,000 firms – comes amid increasing awareness within the government's senior ranks about the damage of Brexit. Recently, a senior Labour figure became the most recent cabinet minister to advocate for closer economic ties with the EU, in remarks seen as hinting that Britain could enter into a customs arrangement.

This kind of proposal would contradict Labour’s manifesto, which promised “no return” to the EU internal market, customs bloc, or free movement. Starmer has also previously insisted he could not foresee a situation where the UK rejoined within his lifetime.

Nevertheless, several pro-European ministers are believed to be among those who would like to see the government go further.

Business Proposals for the EU Negotiations

According to a document setting out a “business manifesto for the EU reset”, the BCC said the government must prioritise its efforts to minimise trade friction for exporters to help boost the UK economy. Quoting frustrated survey respondents, it said firms were finding it increasingly difficult to navigate changes in EU and UK laws since Brexit.

“Since Brexit our export sales have virtually stopped. The TCA has had zero effect in recovering any sales into the EU,” said one small manufacturing firm in the North West.

The BCC outlined several main recommendations for negotiations with the EU in 2026, including:

• A deal to reduce inspections on animal and plant products.
• Finalising linkages between the UK and EU’s emissions trading schemes.
• Establishing a youth mobility scheme.
• Securing full UK participation in the EU’s security and defence fund.
• Improving collaboration on VAT and customs simplification.

A government spokesperson said: “We are removing red tape and obstacles to trade to support jobs, business, and growth. This is precisely the reason we reset our relationship with the EU and are making significant headway in negotiations.”