Keir Starmer Told Stronger EU Trade Ties Are a 'Strategic Necessity' for UK Firms

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 an increasing proportion of exporters report greater difficulty to operate under the UK’s post-Brexit agreement.

Mounting Business Dissatisfaction with Post-Brexit Arrangements

Urging the government to hasten its EU relationship reset, the British Chambers of Commerce 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 survey of almost 1,000 businesses – the majority of which were small and medium-sized companies – said the trade deal enacted in 2021 was not helping them.

“With a budget that failed to deliver meaningful growth or trade support, getting the EU reset right is now a strategic necessity, not a matter of political preference,” 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 dissatisfied companies in a comparable poll a year earlier. It added that just a tiny fraction of the businesses surveyed believed government support on trade policy changes was comprehensive.

Political Pressure for a Closer Partnership

The intervention by the trade body – which speaks for tens of thousands of companies – coincides with growing recognition within Labour’s frontbench 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 join a customs union.

This kind of proposal would contradict Labour’s manifesto, which promised “no going back” to the EU internal market, customs bloc, or free movement. Starmer has also stated in the past he could not foresee any circumstances where the UK rejoined within his lifetime.

Nevertheless, several pro-European ministers are believed to be among those who would prefer the administration to take more ambitious steps.

Key Recommendations for the 2026 Reset

According to a document setting out a “corporate blueprint for the EU reset”, the business group 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 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 winning back any business into the EU,” said a manufacturer in the North West.

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

• A deal to reduce inspections on agri-food goods.
• Finalising linkages between the UK and EU’s carbon markets.
• Creating a youth mobility scheme.
• Gaining British involvement in the EU’s defence fund.
• Enhancing cooperation on VAT and customs simplification.

A government spokesperson said: “We are removing red tape and trade barriers to support jobs, business, and growth. This is precisely the reason we reset our relationship with the EU and are making significant headway in negotiations.”