The Labour Government Told Stronger EU Trade Ties Are a 'Critical Imperative' for UK Businesses

The Labour administration has been advised that forging a closer trade deal with the European Union is a "strategic necessity" for British firms, as an increasing proportion of exporters report greater difficulty to do business under the existing post-Brexit trade deal.

Growing Business Dissatisfaction with Current Deal

Urging the government to hasten its reset with Brussels, the leading business group stated that the UK’s current TCA was failing to help them grow their sales in the EU. More than half of exporters in a survey of almost 1,000 businesses – most of whom were small and medium-sized companies – said the trade deal negotiated by Boris Johnson’s government was not helping them.

“With a budget that failed to deliver substantial economic expansion or trade support, getting the EU reset right is now a strategic necessity, not a matter of political preference,” 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 four out of the 946 firms surveyed believed government support on trade policy changes was adequate.

Political Pressure for a Closer Partnership

This statement from the business group – which speaks for tens of thousands of companies – comes amid 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 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 clash with Labour’s manifesto, which promised “no return” to the EU internal market, customs bloc, or free movement. The Prime Minister has previously insisted 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 EU Negotiations

According to a document setting out a “corporate blueprint for the EU reset”, the business group 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 increasingly difficult to adapt to new rules in EU and UK laws since Brexit.

“Since Brexit our export sales have virtually stopped. The TCA has had no impact in recovering any sales into the EU,” said a manufacturer in the North West.

The BCC outlined five key proposals for talks with Brussels in 2026, including:

• A deal to cut border checks on animal and plant products.
• Completing connections between the UK and EU’s emissions trading schemes.
• Establishing a scheme for young people to work and travel.
• Securing full UK participation in the EU’s defence fund.
• Improving collaboration on tax and border simplification.

An official representative said: “We are removing red tape and trade barriers to support jobs, business, and growth. This is precisely the reason we renewed our partnership with the EU and are making significant headway in negotiations.”