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The Labour administration has been advised that forging a closer trade deal with the European Union is a "critical imperative" for British firms, as a growing number of exporters report finding it tougher to operate under the existing post-Brexit trade deal.

Mounting Business Dissatisfaction with Current Deal

Urging the government to hasten its EU relationship reset, 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 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 significant rise 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 comprehensive.

Political Pressure for a Closer Partnership

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, Wes Streeting became the latest top Labour politician to advocate for closer economic ties with the EU, in remarks interpreted as a suggestion that Britain could enter into a customs arrangement.

Such an arrangement would contradict Labour’s manifesto, which promised “no return” to the EU single market, customs union, or freedom of movement. The Prime Minister has stated in the past he could not foresee any circumstances where the UK rejoined within 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.

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. Quoting frustrated survey respondents, it said firms were finding it increasingly difficult to navigate changes in EU and UK laws since Brexit.

“Our overseas sales since leaving the EU have all but ceased. 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:

• An agreement to reduce inspections on animal and plant products.
• Finalising linkages 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.
• Enhancing cooperation on tax and border simplification.

A government spokesperson said: “We are removing red tape and trade barriers 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.”