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

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 finding it tougher to operate under the UK’s post-Brexit agreement.

Mounting Business Dissatisfaction with Post-Brexit Arrangements

Calling on Labour to accelerate its reset with Brussels, the British Chambers of Commerce stated that the UK’s existing trade and cooperation agreement was not supporting them increase exports in the EU. More than half of exporters in a survey of almost 1,000 businesses – the majority of which were SME companies – said the trade deal enacted in 2021 was failing to assist.

“With a budget that failed to deliver meaningful growth or trade support, securing a successful EU reset 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 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 comprehensive.

Political Pressure for a Deeper Relationship

This statement from the business group – which speaks for tens of thousands of companies – comes amid growing recognition within Labour’s frontbench about the damage of Brexit. Recently, a senior Labour figure became the most recent cabinet minister to advocate for closer economic ties with the EU, in remarks interpreted as a suggestion that Britain could enter into a customs arrangement.

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

However, several ministers favouring closer EU links are thought to be part of a group who would prefer the administration to take more ambitious steps.

Key Recommendations for the EU Negotiations

In a report setting out a “corporate blueprint for the EU reset”, the BCC said the government must focus its work to reduce barriers to trade for exporters to help boost 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.

“Since Brexit our export sales have all but ceased. 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 talks with Brussels in 2026, including:

• An agreement to cut border checks on agri-food goods.
• Finalising linkages between the UK and EU’s emissions trading schemes.
• Creating a youth mobility scheme.
• Securing full UK participation in the EU’s defence fund.
• Enhancing cooperation on VAT and customs simplification.

A government spokesperson said: “This government is removing red tape and trade barriers to boost employment, companies, and the economy. That’s exactly why we renewed our partnership with the EU and are making significant headway in negotiations.”