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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 Business Dissatisfaction with Post-Brexit Arrangements

Calling on Labour to accelerate its EU relationship reset, the leading business group stated that the UK’s existing trade and cooperation agreement was failing to help them grow their sales 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 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 trade policy changes was adequate.

Calls for Action for a Closer Partnership

This statement from the business group – which speaks for tens of thousands of companies – coincides with growing recognition within Labour’s frontbench about the damage of Brexit. Recently, Wes Streeting became the latest top Labour politician to call for a deeper trading relationship with the EU, in remarks seen as hinting that Britain could join a customs union.

This kind of proposal would clash with Labour’s manifesto, which promised “no return” to the EU internal market, customs bloc, or free movement. Starmer has also previously insisted he could not foresee a situation where the UK re-entered the EU in his lifetime.

Nevertheless, several pro-European ministers are believed to be among those who would like to see the government go further.

Key Recommendations for the 2026 Reset

According to a document setting out a “corporate blueprint 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. Quoting frustrated survey respondents, it said firms were finding it ever harder to adapt to new rules in EU and UK laws since Brexit.

“Since Brexit our export sales have virtually stopped. 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 several main recommendations for negotiations with the EU in 2026, including:

• A deal to reduce inspections on agri-food goods.
• Completing connections between the UK and EU’s emissions trading schemes.
• Establishing a scheme for young people to work and travel.
• Gaining British involvement in the EU’s defence fund.
• Improving collaboration on tax and border simplification.

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