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The Labour administration has been advised that forging a closer trade deal with the European Union is a "strategic necessity" for British firms, as a growing number of exporters report finding it tougher to do business under the UK’s post-Brexit agreement.

Growing Exporter Frustration with Current Deal

Calling on Labour to accelerate its reset with Brussels, the British Chambers of Commerce 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 SME companies – said the trade deal enacted in 2021 was not helping them.

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

Pointing to a continuing economic cost from Brexit, the trade body noted this figure represented a 13 percentage point increase from the proportion of unhappy firms in a similar survey a year earlier. It added that just a tiny fraction of the businesses surveyed believed government support on navigating new trade rules was adequate.

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 the government's senior ranks about the economic impact of leaving the EU. Recently, a senior Labour figure became the most recent cabinet minister to advocate for closer economic ties with the EU, in remarks seen as hinting that Britain could enter into a customs arrangement.

This kind of proposal would clash with Labour’s manifesto, which promised “no going back” to the EU internal market, customs bloc, or free movement. Starmer has also previously insisted he could not foresee any circumstances 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 like to see the government go further.

Key Recommendations for the 2026 Reset

In a report setting out a “business manifesto for the EU reset”, the business group said the government must focus its work to reduce barriers to trade 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 winning back any business 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:

• An agreement to reduce inspections on animal and plant products.
• Finalising linkages between the UK and EU’s carbon markets.
• Creating a scheme for young people to work and travel.
• Securing full UK participation in the EU’s security and defence fund.
• Enhancing cooperation on VAT and customs simplification.

An official representative said: “We are removing red tape and obstacles to trade to support jobs, business, and growth. That’s exactly why we renewed our partnership with the EU and are making significant headway in negotiations.”