The Labour Government Told Closer EU Trade Ties Are a 'Critical Imperative' for UK Businesses

Keir Starmer's government has been told that forging a closer trade deal with the European Union is a "critical imperative" for companies in Britain, as an increasing proportion of exporters report finding it tougher to do business under the existing post-Brexit trade deal.

Growing Exporter Frustration with Post-Brexit Arrangements

Urging the government to hasten 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 poll of nearly one thousand firms – the majority of which were small and medium-sized companies – said the trade deal negotiated by Boris Johnson’s government was not helping them.

“With a budget that failed to deliver meaningful growth or trade support, getting the EU reset right is now a business-critical need, not a matter of political preference,” said Steve Lynch.

Highlighting an ongoing economic hit from Brexit, the trade body noted this figure represented a significant rise from the proportion of dissatisfied companies in a comparable poll a year earlier. It added that just a tiny fraction of the businesses surveyed believed government support on navigating new trade rules was comprehensive.

Political Pressure for a Deeper Relationship

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with 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 going back” to the EU single market, customs union, or freedom of movement. Starmer has also previously insisted he could not foresee a situation where the UK re-entered the EU in his lifetime.

Nevertheless, several pro-European ministers 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 “business manifesto 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 no impact in recovering any sales into the EU,” said a manufacturer in the North West.

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

• An agreement to cut border checks on agri-food goods.
• Completing connections between the UK and EU’s carbon markets.
• Creating a scheme for young people to work and travel.
• Gaining British involvement in the EU’s defence fund.
• Enhancing cooperation on VAT and customs simplification.

An official representative said: “We are cutting bureaucracy and trade barriers to boost employment, companies, and the economy. That’s exactly why we renewed our partnership with the EU and are making significant headway in negotiations.”