Keir Starmer has emphasized that strengthening trade relations with the European Union is a "strategic necessity" for British businesses as more exporters face increasing challenges under the current post-Brexit trade agreement. The British Chambers of Commerce (BCC) has urged the Labour government to expedite its efforts in redefining ties with Brussels, pointing out that the existing Trade and Cooperation Agreement (TCA) is falling short of aiding companies in expanding their sales within the EU market.
In a recent survey conducted among nearly 1,000 businesses, predominantly small and medium-sized enterprises, it was revealed that over half (54%) of the exporters believe that the trade deal struck by Boris Johnson's administration and implemented in 2021 is not beneficial for their operations. This finding underscores the ongoing economic repercussions of Brexit, with the BCC noting a significant increase of 13 percentage points from the previous year's survey, indicating a growing dissatisfaction among firms regarding the current trade landscape.
Adding to the pressure on Labour to implement measures for economic support following a tough year for businesses, the survey revealed that merely four out of the 946 firms felt that government assistance in navigating changes to trade policies was adequate. Steve Lynch, the director of international trade at the BCC, articulated the urgency of the situation, stating: "With a budget that has not produced substantial growth or trade support, recalibrating our relationship with the EU has become a strategic necessity rather than simply a political choice. Trade is the most efficient pathway to growth, yet reports indicate that companies are finding it increasingly challenging to enter our largest market."
This statement from the BCC, which represents over 50,000 firms employing six million people across the UK, comes at a time when there is a rising acknowledgment within Labour's leadership about the negative impacts of Brexit. Recently, Wes Streeting became the latest prominent Labour figure to advocate for a more profound trading relationship with the EU, suggesting that Britain might consider joining a customs union with the bloc. However, this proposition could clash with Labour's manifesto commitment, which stated a clear intention of "no return" to the EU single market, customs union, or free movement of people. Starmer has also insisted in the past that he does not foresee any scenario in which the UK would rejoin the EU during his lifetime.
Despite this, several pro-European ministers within Labour, including Streeting, David Lammy, Peter Kyle, Liz Kendall, and Bridget Phillipson, are believed to support pushing the government toward a more integrated approach. This comes as the government prioritizes efforts to "reset" its relationship with the EU, particularly after a significant summit with Brussels earlier this year. Notably, Labour recently announced its agreement for the UK to rejoin the Erasmus+ EU student exchange program in 2027, highlighting a shift in focus towards rebuilding educational ties with Europe.
The BCC has outlined a "business manifesto for the EU reset," advocating for the government to prioritize reducing trade friction for exporters to stimulate the UK economy. Many survey respondents expressed frustration regarding their struggles to adapt to the evolving legal frameworks between the UK and EU since the initial post-Brexit trade deal was put into effect in 2020.
One small manufacturing company based in Greater Manchester lamented, "Since Brexit, our export sales have virtually ceased. The TCA has failed to assist us in regaining any sales in the EU." Another small retailer from Hampshire linked declining business to tax hikes and the loss of EU membership, stating, "Work has dried up for the UK due to high taxes and no longer being part of the EU. Consequently, numerous companies have shut down, leading to thousands of job losses, many of which have persisted for over two years."
To address these concerns, the BCC has proposed five key initiatives for discussions with Brussels in 2026. These proposals include creating agreements to minimize border checks on agricultural products, finalizing connections between the UK and EU emissions trading schemes, establishing a youth mobility scheme, ensuring full UK participation in SAFE—the EU's defense fund—and enhancing cooperation on VAT and customs procedures.
In response, a government spokesperson affirmed, "This administration is dedicated to eliminating bureaucratic obstacles and trade barriers to support jobs, businesses, and economic growth. This is precisely why we are working to reset our relationship with the EU and are making significant progress in our negotiations."
But here's where it gets controversial: Is a deeper relationship with the EU truly what Britain's economy needs, or should the country focus on forging new global partnerships? What do you think about the potential direction of Labour's trade policies? Feel free to share your thoughts!
