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The Labour administration has been advised that forging a closer trade deal with the European Union is a "strategic necessity" for British firms, as a growing number of exporters report greater difficulty to do business under the UK’s post-Brexit agreement.

Mounting Exporter Frustration with Post-Brexit Arrangements

Calling on Labour to accelerate its EU relationship reset, the leading business group stated that the UK’s existing trade and cooperation agreement was failing to help them increase exports in the EU. Over 50% of exporters in a survey of almost 1,000 businesses – most of whom were SME companies – said the trade deal enacted in 2021 was not helping them.

“With a budget that failed to deliver meaningful growth or trade support, securing a successful EU reset is now a business-critical need, not a matter of political preference,” said the BCC’s director of international trade.

Highlighting an ongoing economic hit from Brexit, the business group noted this figure represented a significant rise from the proportion of unhappy firms 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 comprehensive.

Calls for Action for a Deeper Relationship

This statement from the business group – which speaks for tens of thousands of companies – coincides with growing recognition within the government's senior ranks about the damage of Brexit. Recently, Wes Streeting became the most recent cabinet minister to advocate for closer economic ties with the EU, in remarks seen as hinting that Britain could join a customs union.

This kind of proposal would clash with Labour’s manifesto, which promised “no return” to the EU single market, customs union, or freedom of movement. Starmer has also stated in the past 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 prefer the administration to take more ambitious steps.

Business Proposals for the EU Negotiations

According to a document setting out a “corporate blueprint for the EU reset”, the business group said the government must prioritise its efforts to minimise trade friction for exporters to help boost the UK economy. Citing comments from annoyed businesses, it said firms were finding it increasingly difficult to navigate changes in EU and UK laws since Brexit.

“Our overseas sales since leaving the EU have all but ceased. The TCA has had zero effect in winning back any business into the EU,” said one small manufacturing firm in Greater Manchester.

The BCC outlined several main recommendations for talks with Brussels in 2026, including:

• An agreement to reduce inspections on animal and plant products.
• Completing connections between the UK and EU’s emissions trading schemes.
• Creating a scheme for young people to work and travel.
• Securing full UK participation in the EU’s defence fund.
• Improving collaboration on VAT and customs simplification.

An official representative said: “We are removing red tape and obstacles to trade to support jobs, business, and growth. That’s exactly why we renewed our partnership with the EU and are making strong progress in negotiations.”