The Labour Government Told Stronger EU Trade Ties Are a 'Critical Imperative' for UK Firms

Keir Starmer's government has been told that forging a closer trade deal with the European Union is a "strategic necessity" for British firms, as a growing number of exporters report finding it tougher to do business under the existing post-Brexit trade deal.

Growing Business Dissatisfaction with Current Deal

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. More than half of exporters in a poll of nearly one thousand firms – most of whom were SME companies – said the trade deal enacted in 2021 was not helping them.

“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 matter of political preference,” said Steve Lynch.

Pointing to a continuing economic cost 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 represents more than 50,000 firms – coincides with growing recognition within the government's senior ranks about the damage of Brexit. Recently, Wes Streeting became the latest top Labour politician to call for a deeper trading relationship with the EU, in remarks interpreted as a suggestion that Britain could enter into a customs arrangement.

Such an arrangement would clash with Labour’s manifesto, which promised “no return” to the EU internal market, customs bloc, or free movement. Starmer has also previously insisted he could not foresee a situation where the UK re-entered the EU in his lifetime.

However, several pro-European ministers are believed to be among those 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 minimise trade friction for exporters to support growth in 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.

“Since Brexit our export sales have all but ceased. The TCA has had zero effect in recovering any sales into the EU,” said a manufacturer in Greater Manchester.

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 carbon markets.
• Creating a scheme for young people to work and travel.
• Securing full UK participation 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 boost employment, companies, and the economy. This is precisely the reason we renewed our partnership with the EU and are making strong progress in negotiations.”