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Keir Starmer's government has been told that forging a closer trade deal with the European Union is a "strategic necessity" for British firms, as an increasing proportion of exporters report finding it tougher to operate under the existing post-Brexit trade deal.

Mounting Business Dissatisfaction with Current Deal

Calling on Labour to accelerate its EU relationship reset, the leading business group 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 – the majority of which were small and medium-sized companies – said the trade deal enacted in 2021 was failing to assist.

“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 political choice,” said Steve Lynch.

Highlighting an ongoing economic hit 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 comprehensive.

Calls for Action for a Deeper Relationship

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with growing recognition 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 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.

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

Business Proposals for the EU Negotiations

According to a document setting out a “business manifesto for the EU reset”, the BCC said the government must focus its work to minimise trade friction 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.

“Since Brexit our export sales have virtually stopped. The TCA has had zero effect in winning back any business into the EU,” said a manufacturer in the North West.

The BCC outlined several main recommendations for talks with Brussels in 2026, including:

• A deal 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.
• Enhancing cooperation on tax and border simplification.

An official representative said: “This government is removing red tape and trade barriers to support jobs, business, and growth. That’s exactly why we reset our relationship with the EU and are making strong progress in negotiations.”