The Labour Government Told Closer EU Trade Ties Are a 'Critical Imperative' for UK Companies
The Labour administration has been advised that forging a closer trade deal with the European Union is a "critical imperative" for companies in Britain, as a growing number of exporters report greater difficulty to do business under the existing post-Brexit trade deal.
Mounting Business Dissatisfaction with Current Deal
Calling on Labour to accelerate its reset with Brussels, the leading business group stated that the UK’s current TCA was not supporting them grow their sales 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.
“With a budget that failed to deliver meaningful growth or trade support, getting the EU reset right is now a strategic necessity, 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 dissatisfied companies in a similar survey a year earlier. It added that just four out of the 946 firms surveyed believed government support on navigating new trade rules was comprehensive.
Political Pressure for a Closer Partnership
The intervention by the trade body – which represents more than 50,000 firms – comes amid growing recognition within Labour’s frontbench about the damage of Brexit. Recently, a senior Labour figure became the latest top Labour politician to advocate for closer economic ties with the EU, in remarks seen as hinting that Britain could enter into a customs arrangement.
Such an arrangement would clash with Labour’s manifesto, which promised “no return” to the EU single market, customs union, or freedom of movement. Starmer has also previously insisted he could not foresee any circumstances where the UK rejoined within his lifetime.
Nevertheless, 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
In a report 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 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 no impact in recovering any sales 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 youth mobility scheme.
- Securing full UK participation in the EU’s security and defence fund.
- Enhancing cooperation on tax and border simplification.
An official representative said: “This government is removing red tape and trade barriers to boost employment, companies, and the economy. This is precisely the reason we reset our relationship with the EU and are making significant headway in negotiations.”