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The Labour administration has been advised that securing a deeper trading relationship with the European Union is a "critical imperative" for companies in Britain, as an increasing proportion of exporters report finding it tougher to operate under the existing post-Brexit trade deal.

Growing Business Dissatisfaction 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 increase exports in the EU. More than half of exporters in a poll of nearly one thousand firms – the majority of which were SME companies – said the trade deal negotiated by Boris Johnson’s government was not helping them.

“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 Steve Lynch.

Highlighting an ongoing economic hit from Brexit, the business group noted this figure represented a 13 percentage point increase 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 trade policy changes was adequate.

Political Pressure for a Closer Partnership

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with growing recognition within Labour’s frontbench about the damage of Brexit. Recently, Wes Streeting became the latest top Labour politician to advocate for closer economic ties with the EU, in remarks interpreted as a suggestion 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 internal market, customs bloc, or free movement. Starmer has also stated in the past he could not foresee a situation where the UK rejoined within 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.

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 help boost the UK economy. Quoting frustrated survey respondents, it said firms were finding it ever harder 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 Greater Manchester.

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

• An agreement to reduce inspections on animal and plant products.
• Finalising linkages between the UK and EU’s carbon markets.
• Establishing 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: “We are 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.”