The Labour Government Informed Closer EU Trade Ties Are a 'Critical Imperative' for UK Firms

Keir Starmer's government has been told that securing a deeper trading relationship with the European Union is a "critical imperative" for British firms, as a growing number of exporters report finding it tougher to do business under the UK’s post-Brexit agreement.

Growing Business Dissatisfaction with Post-Brexit Arrangements

Calling on Labour to accelerate its EU relationship reset, the leading business group stated that the UK’s current TCA was failing to help them grow their sales in the EU. More than half 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.

“Following a budget that did not to deliver meaningful growth or trade support, securing a successful EU reset is now a strategic necessity, not a political choice,” said the BCC’s director of international trade.

Highlighting an ongoing economic hit from Brexit, the trade body noted this figure represented a 13 percentage point increase 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 navigating new trade rules was comprehensive.

Calls for Action for a Deeper Relationship

The intervention by the trade body – which represents more than 50,000 firms – comes amid growing recognition within the government's senior ranks about the economic impact of leaving the EU. 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 join a customs union.

Such an arrangement 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 re-entered the EU in his lifetime.

However, several pro-European ministers are thought to be part of a group who would like to see the government go further.

Business Proposals for the 2026 Reset

In a report 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 support growth in the UK economy. Citing comments from annoyed businesses, it said firms were finding it ever harder 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 winning back any business into the EU,” said a manufacturer in the North West.

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

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

An official representative said: “We are cutting bureaucracy 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 significant headway in negotiations.”