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

Mounting Business Dissatisfaction with Post-Brexit Arrangements

Urging the government to hasten its reset with Brussels, the leading business group stated that the UK’s existing trade and cooperation agreement was not supporting them increase exports in the EU. Over 50% of exporters in a survey of almost 1,000 businesses – the majority of which were SME companies – said the trade deal enacted in 2021 was failing to assist.

“With a budget that failed to deliver meaningful growth or trade support, getting the EU reset right is now a strategic necessity, not a political choice,” said Steve Lynch.

Pointing to a continuing economic cost from Brexit, the trade body 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 navigating new trade rules was adequate.

Calls for Action for a Deeper Relationship

This statement from the business group – which represents more than 50,000 firms – coincides with growing recognition within the government's senior ranks about the damage of Brexit. Recently, a senior Labour figure became the most recent cabinet minister 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 contradict 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 rejoined within his lifetime.

However, several ministers favouring closer EU links are believed to be among those who would like to see the government go further.

Key Recommendations for the EU Negotiations

In a report setting out a “corporate blueprint for the EU reset”, the business group said the government must focus its work 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 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 zero effect in recovering any sales into the EU,” said one small manufacturing firm in Greater Manchester.

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

• A deal to cut border checks on animal and plant products.
• Finalising linkages between the UK and EU’s carbon markets.
• Establishing a youth mobility scheme.
• Gaining British involvement in the EU’s security and defence fund.
• Improving collaboration on VAT and customs simplification.

A government spokesperson said: “This government is removing red tape and obstacles to trade to support jobs, business, and growth. This is precisely the reason we renewed our partnership with the EU and are making strong progress in negotiations.”