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

The next UK government must negotiate a better trading relationship with the EU as businesses face rising costs from Brexit, one of the country’s biggest corporate lobby groups has warned.

The British Chambers of Commerce said stricter immigration rules and the rising costs and complexity of exports were strangling investment and growth in the country.

“We urgently need to achieve a better trading relationship with our closest neighbor,” said BCC CEO Shevaun Haviland.

The constant introduction of new EU rules was making life increasingly difficult for exporters and their suppliers, he told the Financial Times. “We thought after the first year things would get easier for people as they figured out what the problems were, but actually the changes kept coming.”

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

Labor leader Sir Keir Starmer, whose party has a significant lead in opinion polls, will seek closer trade and defense links with the EU if he becomes prime minister.

Starmer wants to “deepen” the UK’s relationship with the bloc but will rule out rejoining the single market or allowing free movement between Britain and the EU, senior Labor officials told the Financial Times last month.

Most companies exporting to the EU told the BCC that selling in the bloc had become more difficult during 2023, and that new border controls on plant and animal products also imposed punitive new costs, particularly on small businesses.

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

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

The BCC’s comments echo the growing concerns of big business, who often have more freedom to voice their criticism.

Sir Mike Rake, former chairman of BT Group, KPMG and easyJet, said Brexit had been “the biggest act of economic and reputational self-harm in our modern history, compounded by an ideologically driven withdrawal treaty that continues to damage our economy with a increase and unnecessary frictional trade and regulatory costs.”

The next parliament “must face reality” and “approach the EU from an economic and political perspective, including reconsidering joining the customs union and single market,” he said last week on the Financial Times’ City Network, a forum of senior executives and political leaders. . “This would be the most important step in restoring trade growth and our reputation, influence and investment capacity as a country,” he said.

Andreas Utermann, former head of Allianz Global Investors, agreed that Brexit was still hurting businesses. While Prime Minister Rishi Sunak’s government had reduced friction with Europe after the administrations of Boris Johnson and Liz Truss, it had “failed to… . . demonstrate some tangible benefit from being outside the EU,” he stated.

Haviland stressed that the BCC was not calling 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.

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