More than half of British businesses say they are struggling to grow sales in Europe as trade frictions worsen, highlighting mounting concerns over the effectiveness of the UK’s post-Brexit trading arrangements. Research by the British Chambers of Commerce shows that exporters are increasingly frustrated with barriers to the UK’s largest overseas market, despite government efforts to reset relations with Brussels.
According to a BCC survey of 989 companies, 54 per cent of exporters said the UK–EU Trade and Co-operation Agreement has not helped them increase sales in Europe, a sharp rise of 13 percentage points compared with last year. Only 16 per cent said the deal had supported growth, while almost none felt government assistance in navigating trade changes had been comprehensive. The findings were reported by the Times UK, underscoring growing unease within the business community.
Prime Minister Sir Keir Starmer has pledged to rebuild ties with the European Union, describing a “reset” as central to his economic strategy. However, the BCC warned that problems linked to red tape, customs procedures and business mobility appear to be intensifying rather than easing. The pace of progress has also become a political flashpoint, with senior Labour figures under pressure to consider bolder steps.
The debate has been sharpened by calls from within Labour to revisit membership of the customs union. Health Secretary Wes Streeting said over the weekend that re-joining could offer Labour a clear political dividing line ahead of the next election, although Starmer has insisted that such a move remains a “clear red line” for his government.
The Trade and Co-operation Agreement, signed in December 2020, was designed to preserve tariff-free trade once Brexit took effect. In practice, many firms say access to EU markets has been constrained by complex rules of origin, customs paperwork and restrictions on staff movement. Small and medium-sized enterprises, which made up 96 per cent of respondents in the BCC survey, reported being hit hardest.
The BCC has urged the government to take practical steps to reduce friction through 2026, including closer cooperation on VAT, simplified customs processes and a deeper sanitary and phytosanitary agreement to cut red tape on food, animal and plant products. It has also warned about delays to scrapping the de minimis exemption, which allows low-value imports to avoid duties and has benefited overseas online retailers. Chancellor Rachel Reeves is expected to close the loophole, but not until 2029.
“With a budget that failed to deliver meaningful growth or trade support, getting the EU reset right is now a strategic necessity, not a political choice,” said Steve Lynch, director of international trade at the BCC. He added that while symbolic steps such as re-joining the Erasmus+ programme were welcome, businesses wanted faster delivery, greater certainty and a clearer long-term vision.
Despite trade frustrations, there are tentative signs of improving sentiment in the wider economy. Lloyds Bank’s business confidence index rose by 11 points to 42 per cent in December, its highest level in four months, while the GfK consumer confidence index also edged higher. Analysts say the easing of uncertainty around the autumn budget has helped stabilise expectations, even though Reeves raised £26 billion in taxes, largely targeting individuals rather than firms.
Paul Kempster, managing director at Lloyds Business and Commercial, said ending the year on a stronger footing would give companies confidence as they look ahead to potential growth opportunities in 2026.
The government defended its approach, saying it was making “strong progress” in negotiations with the EU. A spokesperson said the UK and EU had committed to concluding talks on a food and drink agreement and linking emissions trading systems by the next summit, measures the government estimates could add nearly £9 billion a year to the economy by 2040 while easing the burden on businesses.