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The Labour administration has been advised that securing a deeper trading relationship with the European Union is a "strategic necessity" for British firms, as a growing number of exporters report greater difficulty 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 British Chambers of Commerce stated that the UK’s existing trade and cooperation agreement was failing to help them grow their sales in the EU. More than half of exporters in a poll of nearly one thousand firms – most of whom were small and medium-sized companies – said the trade deal enacted in 2021 was failing to assist.

“With a budget that failed to deliver substantial economic expansion 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.

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 a tiny fraction of the businesses surveyed believed government support on trade policy changes was adequate.

Political Pressure for a Deeper Relationship

The intervention by the trade body – which speaks for tens of thousands of companies – comes amid increasing awareness within Labour’s frontbench 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 enter into a customs arrangement.

Such an arrangement would contradict Labour’s manifesto, which promised “no going back” to the EU single market, customs union, or freedom of movement. The Prime Minister has 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.

Business Proposals for the EU Negotiations

In a report setting out a “corporate blueprint for the EU reset”, the BCC said the government must prioritise its efforts to reduce barriers to trade for exporters to support growth in the UK economy. Quoting frustrated survey respondents, it said firms were finding it ever harder to adapt to new rules in EU and UK laws since Brexit.

“Since Brexit our export sales have virtually stopped. The TCA has had zero effect in recovering any sales into the EU,” said one small manufacturing firm 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.
• Finalising linkages 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 defence fund.
• Improving collaboration on tax and border simplification.

A government spokesperson said: “This government is cutting bureaucracy and obstacles to trade to boost employment, companies, and the economy. That’s exactly why we renewed our partnership with the EU and are making strong progress in negotiations.”