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The Labour administration has been advised that forging a closer trade deal with the European Union is a "critical imperative" for companies in Britain, as a growing number of exporters report greater difficulty to operate under the existing post-Brexit trade deal.

Growing Exporter Frustration with Current Deal

Urging the government to hasten its reset with Brussels, the British Chambers of Commerce 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 survey of almost 1,000 businesses – most of whom were small and medium-sized companies – said the trade deal enacted in 2021 was failing to assist.

“Following a budget that did not to deliver substantial economic expansion or trade support, getting the EU reset right is now a business-critical need, not a political choice,” said Steve Lynch.

Highlighting an ongoing economic hit from Brexit, the business group noted this figure represented a significant rise 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 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, Wes Streeting 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.

Such an arrangement would clash with Labour’s manifesto, which promised “no going back” to the EU single market, customs union, or freedom of movement. Starmer has also stated in the past he could not foresee a situation where the UK rejoined within his lifetime.

Nevertheless, 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 EU Negotiations

According to a document setting out a “corporate blueprint for the EU reset”, the BCC 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 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 winning back any business into the EU,” said one small manufacturing firm in the North West.

The BCC outlined five key proposals for talks with Brussels in 2026, including:

• An agreement to reduce inspections on animal and plant products.
• Finalising linkages 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 security and defence fund.
• Improving collaboration on tax and border simplification.

A government spokesperson said: “This government is cutting bureaucracy and trade barriers 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.”