The Labour Government Told Stronger EU Trade Ties Are a 'Strategic Necessity' for UK Companies

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 greater difficulty to operate under the UK’s post-Brexit agreement.

Mounting Exporter Frustration with Post-Brexit Arrangements

Calling on Labour to accelerate its EU relationship reset, the leading business group stated that the UK’s current TCA was not supporting them increase exports in the EU. More than half of exporters in a survey of almost 1,000 businesses – most of whom were SME 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, securing a successful EU reset is now a business-critical need, not a political choice,” said Steve Lynch.

Pointing to a continuing economic cost from Brexit, the business group noted this figure represented a 13 percentage point increase from the proportion of unhappy firms in a similar survey a year earlier. It added that just four out of the 946 firms surveyed believed government support on trade policy changes was adequate.

Calls for Action for a Closer Partnership

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with increasing awareness within the government's senior ranks about the economic impact of leaving the EU. Recently, a senior Labour figure became the latest top Labour politician to call for a deeper trading relationship with the EU, in remarks interpreted as a suggestion 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.

However, several ministers favouring closer EU links are believed to be among those who would like to see the government go further.

Key Recommendations for the 2026 Reset

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. 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.
• Completing connections between the UK and EU’s carbon markets.
• Establishing a youth mobility scheme.
• Gaining British involvement in the EU’s security and defence fund.
• Improving collaboration on tax and border simplification.

A government spokesperson said: “We are removing red tape 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.”