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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 companies in Britain, as an increasing proportion of exporters report greater difficulty to do business under the existing post-Brexit trade deal.

Growing Exporter Frustration with Post-Brexit Arrangements

Calling on Labour to accelerate its EU relationship reset, the British Chambers of Commerce stated that the UK’s current TCA was not supporting them increase exports in the EU. Over 50% of exporters in a poll of nearly one thousand firms – the majority of which 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, getting the EU reset right is now a strategic necessity, 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 13 percentage point increase from the proportion of unhappy firms in a comparable poll a year earlier. It added that just four out of the 946 firms surveyed believed government support on trade policy changes was comprehensive.

Political Pressure for a Closer Partnership

This statement from the business group – which speaks for tens of thousands of companies – comes amid growing recognition within Labour’s frontbench about the economic impact of leaving the EU. Recently, Wes Streeting became the latest top Labour politician to call for a deeper trading relationship with the EU, in remarks seen as hinting that Britain could enter into a customs arrangement.

This kind of proposal would clash with Labour’s manifesto, which promised “no return” to the EU internal market, customs bloc, or free movement. Starmer has also stated in the past he could not foresee any circumstances where the UK re-entered the EU in his lifetime.

Nevertheless, several ministers favouring closer EU links are thought to be part of a group who would like to see the government go further.

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 focus its work to reduce barriers to trade for exporters to help boost the UK economy. Citing comments from annoyed businesses, it said firms were finding it ever harder to adapt to new rules in EU and UK laws since Brexit.

“Our overseas sales since leaving the EU have virtually stopped. The TCA has had no impact in winning back any business into the EU,” said one small manufacturing firm in the North West.

The BCC outlined five key proposals for negotiations with the EU in 2026, including:

• A deal to reduce inspections on animal and plant products.
• Completing connections between the UK and EU’s carbon markets.
• Establishing a youth mobility scheme.
• Securing full UK participation in the EU’s security and defence fund.
• Improving collaboration on tax and border simplification.

A government spokesperson said: “We are removing red tape and obstacles to trade to boost employment, companies, and the economy. That’s exactly why we reset our relationship with the EU and are making strong progress in negotiations.”