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

Keir Starmer's government has been told that securing a deeper trading relationship with the European Union is a "strategic necessity" for companies in Britain, as a growing number of exporters report greater difficulty to do business under the existing post-Brexit trade deal.

Mounting Exporter Frustration with Current Deal

Calling on Labour to accelerate its EU relationship reset, the British Chambers of Commerce stated that the UK’s current TCA was not supporting them grow their sales in the EU. Over 50% 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 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 business group noted this figure represented a significant rise from the proportion of dissatisfied companies in a similar survey 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 Closer Partnership

This statement from the business group – which represents more than 50,000 firms – comes amid increasing awareness 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 advocate for closer economic ties with the EU, in remarks seen as hinting that Britain could join a customs union.

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. The Prime Minister has stated in the past he could not foresee a situation where the UK re-entered the EU in his lifetime.

However, several ministers favouring closer EU links are thought to be part of a group 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 focus its work to reduce barriers to trade 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.

“Our overseas sales since leaving the EU have virtually stopped. The TCA has had no impact in winning back any business into the EU,” said one small manufacturing firm in Greater Manchester.

The BCC outlined several main recommendations for talks with Brussels 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 tax and border simplification.

A government spokesperson said: “We are removing red tape and obstacles to trade to support jobs, business, and growth. That’s exactly why we reset our relationship with the EU and are making significant headway in negotiations.”