EU trade ‘not working’ for UK business, warns lobby group

The next UK government must stop “walking on eggshells” around improving EU trade ties, the head of the UK’s largest business organisation has warned.

Shevaun Haviland, director-general of the British Chambers of Commerce, on Thursday urged the winner of next week’s election to deepen the current EU-UK trade and co-operation deal in order to boost economic growth.

“We must stop walking on eggshells and start saying it how it is. The current plan isn’t working for our members,” she said at the group’s annual international conference in London. 

Haviland’s intervention came as opinion polls put Labour on track to secure a large majority on July 4 on a platform that promises to lift Britain out of a decade of economic stagnation.

The Office for Budget Responsibility, the fiscal watchdog, has said Brexit will cause a 4 per cent long-run hit to UK GDP, alongside a 15 per cent reduction in UK trade.

Analysis published this month by the London School of Economics found that 20,000 small businesses had stopped exporting to the EU as a result of red tape created by the UK exiting the bloc’s single market.

The BCC, which represents more than 50,000 businesses employing 6mn people in the UK, has published a trade manifesto that calls for a series of measures to improve EU-UK trade. They include a youth mobility deal to enable young people to live and work in each other’s countries — a policy Labour has already ruled out.

Haviland said the BCC stands ready to work with the next government on a long-term strategy for trade. “After six weeks of electioneering, businesses will be looking at the next government and who will be true to their word,” she added. 

Labour has been cautious about its plans for reducing the costs of Brexit, which was strongly backed by voters in “red wall” seats in the north of England that it hopes to win back from the Conservatives next week.

The main opposition party has ruled out a return to the EU single market or a customs union with Brussels, while promising in its election manifesto to improve ties by “tearing down unnecessary barriers to trade”.

However, the only concrete measures set out by Labour are a veterinary agreement with Brussels to help food and plant exports, a visa deal for touring musicians, and improved terms for professionals such as engineers and architects. 

Analysis by UK in a Changing Europe, a think-tank, this month said that Labour’s stated plans would have a “minimal” impact on reducing the economic costs of Brexit.

Starmer’s party has sought to play down accusations from the Tories that it will seek to reverse Brexit if elected, with both sides clashing on the subject during a televised election debate on Monday.

Shadow business secretary Jonathan Reynolds said it was “ridiculous” to suggest Brexit had not hit UK trade. “The biggest thing a Labour government will bring is our relationship to the European Union will not be governed by the internal politics of the Conservative party,” he said.  

Reynolds added that he wanted to reduce checks on food and agricultural products but declined to say whether Labour would accept a role for the European Court of Justice as part of any veterinary deal, saying he was “not going to give away our negotiating hand”. 

Business secretary Kemi Badenoch countered that the Conservatives had already tried to secure a veterinary deal and that Labour’s plan to reopen talks “is just going to be taking us back into the EU without saying so”.