Next UK government must forge better trade relations with EU, say lobby group

British Chambers of Commerce warns companies face ever higher costs stemming from Brexit

The next British government must negotiate an improved trading relationship with the European Union (EU) as businesses face ever-higher costs from Brexit, one of the country’s biggest corporate lobby groups has warned.

The British Chambers of Commerce (BCC) said that tighter migration rules and rising costs and complexity of exports were throttling investment and growth at home.

“We urgently need to get a better trading relationship with our closest neighbour,” said BCC director general Shevaun Haviland.

A constant addition of new EU rules was making life ever-harder for exporters and their suppliers, she said. “We thought that after year one things would just get easier for people as they worked out what the problems were, but actually the changes just kept coming.”

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The concerns are part of a rising chorus of criticism about the impact of Brexit on businesses ahead of the UK’s general election on July 4th. Both Labour and the ruling Conservatives have avoided focusing on Brexit, which is still seen as divisive among voters.

Labour leader Keir Starmer, whose party has a significant lead in opinion polls, is set to pursue closer trade and defence ties with the EU if he becomes prime minister.

Mr Starmer wants to “deepen” the UK’s relationship with the union, but will rule out rejoining the single market or allowing freedom of movement between Britain and EU, senior Labour figures said last month.

A majority of companies exporting to the EU told the BCC that selling into the union had become harder during 2023, with new border checks on plant and animal products also imposing punitive new costs, particularly on small firms.

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Ms Haviland said that easing migration rules was one of the changes that would most help businesses: “Working with the EU to ensure that the movement of people for work is easier will absolutely benefit our businesses.”

The UK voted to leave the EU in 2016 and officially exited in 2021, when the less comprehensive EU UK Trade and Cooperation Agreement came into force.

The BCC’s comments echo rising concerns from business grandees, who are often freer to be more vocal in their criticisms.

Mike Rake, former chair of BT Group, KPMG and EasyJet, said Brexit had been “the single biggest act of economic and reputational self-harm in our modern history, compounded by an ideologically driven exit treaty which continues to damage our economy with increasing and unnecessary frictional trade and regulatory costs”.

The next parliament “must face reality” and “move closer to the EU from an economic and political perspective, including reconsideration of joining the customs union and single market”, he said last week. “This would be the single most important step to restoring growth in trade and our reputation, influence and investability as a country,” he said.

Andreas Utermann, former chief of Allianz Global Investors, agreed that Brexit was still damaging businesses. While prime minister Rishi Sunak’s government had reduced friction with Europe after the Boris Johnson and Liz Truss administrations, it had “failed to ... demonstrate any tangible benefit to being outside the EU”, he said.

Ms Haviland stressed the BCC was not asking for the UK to rejoin the EU, which accounts for more than 40 per cent of British exports. “We’re not suggesting going back there, that’s done, we’re moving forward,” she said. – Copyright The Financial Times Limited 2024