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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 companies in Britain, as an increasing proportion of exporters report greater difficulty to operate under the existing post-Brexit trade deal.

Growing Exporter Frustration with Current Deal

Urging the government to hasten its reset with Brussels, the leading business group stated that the UK’s existing trade and cooperation agreement was not supporting them grow their sales in the EU. More than half of exporters in a poll of nearly one thousand firms – most of whom were SME 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, securing a successful EU reset is now a business-critical need, not a political choice,” said the BCC’s director of international trade.

Pointing to a continuing economic cost from Brexit, the business group noted this figure represented a significant rise 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

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with increasing awareness within Labour’s frontbench about the economic impact of leaving the EU. Recently, a senior Labour figure became the most recent cabinet minister 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 single market, customs union, or freedom of movement. Starmer has also stated in the past he could not foresee a situation where the UK rejoined within his lifetime.

However, several pro-European ministers are thought to be part of a group who would prefer the administration to take more ambitious steps.

Business Proposals 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 reduce barriers to trade for exporters to help boost 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.

“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 Greater Manchester.

The BCC outlined several main recommendations for negotiations with the EU in 2026, including:

• An agreement to cut border checks on agri-food goods.
• Completing connections between the UK and EU’s emissions trading schemes.
• Creating 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.

A government spokesperson said: “We are cutting bureaucracy 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 significant headway in negotiations.”