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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 companies in Britain, as an increasing proportion of exporters report finding it tougher to do business under the UK’s post-Brexit agreement.

Mounting Exporter Frustration 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 grow their sales in the EU. Over 50% of exporters in a survey of almost 1,000 businesses – most of whom were small and medium-sized companies – said the trade deal enacted in 2021 was not helping them.

“Following a budget that did not to deliver substantial economic expansion or trade support, securing a successful EU reset is now a strategic necessity, not a matter of political preference,” said the BCC’s director of international trade.

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 four out of the 946 firms surveyed believed government support on trade policy changes was comprehensive.

Calls for Action for a Deeper Relationship

This statement from the business group – which speaks for tens of thousands of companies – comes amid increasing awareness within Labour’s frontbench about the economic impact of leaving the EU. Recently, Wes Streeting became the most recent cabinet minister to advocate for closer economic ties with the EU, in remarks seen as hinting that Britain could join a customs union.

This kind of proposal 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 a situation where the UK re-entered the EU in his lifetime.

However, several ministers favouring closer EU links are believed to be among those who would prefer the administration to take more ambitious steps.

Business Proposals for the 2026 Reset

According to a document setting out a “business manifesto for the EU reset”, the BCC said the government must prioritise its efforts to minimise trade friction for exporters to support growth in the UK economy. Citing comments from annoyed businesses, it said firms were finding it ever harder to adapt to new rules in EU and UK laws since Brexit.

“Our overseas sales since leaving the EU have all but ceased. The TCA has had zero effect 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:

• 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: “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.”