The Labour Government Told Stronger EU Trade Ties Are a 'Strategic Necessity' for UK Companies

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 a growing number of exporters report finding it tougher to do business under the existing post-Brexit trade deal.

Growing Exporter Frustration with Post-Brexit Arrangements

Urging the government to hasten its EU relationship reset, the leading business group stated that the UK’s current TCA was not supporting them increase exports in the EU. Over 50% of exporters in a survey of almost 1,000 businesses – most of whom were SME companies – said the trade deal enacted in 2021 was not helping them.

“Following a budget that did not to deliver meaningful growth or trade support, getting the EU reset right is now a strategic necessity, not a political choice,” 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 similar survey a year earlier. It added that just a tiny fraction of the businesses surveyed believed government support on trade policy changes was comprehensive.

Calls for Action for a Closer Partnership

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with increasing awareness within Labour’s frontbench about the damage of Brexit. Recently, Wes Streeting became the most recent cabinet minister to call for a deeper trading relationship with the EU, in remarks interpreted as a suggestion that Britain could join a customs union.

Such an arrangement would clash with Labour’s manifesto, which promised “no going back” to the EU internal market, customs bloc, or free movement. The Prime Minister has 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 thought to be part of a group who would prefer the administration to take more ambitious steps.

Business Proposals for the EU Negotiations

In a report setting out a “corporate blueprint for the EU reset”, the BCC said the government must prioritise its efforts to reduce barriers to trade for exporters to support growth in the UK economy. Quoting frustrated survey respondents, it said firms were finding it ever harder to navigate changes in EU and UK laws since Brexit.

“Our overseas sales since leaving the EU have virtually stopped. The TCA has had zero effect 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 reduce inspections on animal and plant products.
• Completing connections between the UK and EU’s carbon markets.
• Establishing a scheme for young people to work and travel.
• Gaining British involvement in the EU’s defence fund.
• Improving collaboration on VAT and customs simplification.

An official representative said: “We are 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.”