More than half of British businesses are struggling to expand their sales in Europe, with trade frictions worsening despite the UK-EU trade deal, according to new research from the British Chambers of Commerce.
A survey by the BCC found that 54 per cent of exporters believe the Trade and Co-operation Agreement (TCA) has failed to help them increase sales in the UK’s largest overseas market, a rise of 13 percentage points compared with last year. The findings underline growing concern that Brexit-related barriers are becoming more restrictive rather than easing over time.
The results come as Prime Minister Keir Starmer pursues a much-trailed “reset” of the UK’s trading relationship with Brussels. However, business groups are warning that progress has been too slow and that unresolved red tape continues to weigh heavily on exporters.
Only 16 per cent of businesses surveyed said the EU deal had helped them grow sales, while almost none felt government support in navigating post-Brexit trade rules had been comprehensive. The BCC polled 989 firms, of which 96 per cent were small and medium-sized enterprises.
Businesses cited ongoing customs bureaucracy, VAT complexity and restrictions on staff mobility as key obstacles to selling into the EU. Problems around sanitary and phytosanitary (SPS) checks, affecting food, drink and agricultural exporters, were also flagged as a major source of friction.
The BCC has urged ministers to prioritise practical reforms in 2026, including closer co-operation with the EU on VAT, simplified customs procedures and a deeper SPS agreement to reduce paperwork and delays at borders.
It also warned about delays in scrapping the de minimis import exemption, which allows overseas sellers to ship low-value goods into the UK without paying duties. Chancellor Rachel Reeves has signalled the loophole will be closed, but not until 2029, a timeline business groups say leaves UK retailers exposed to unfair competition from overseas ecommerce platforms.
Steve Lynch, director of international trade at the BCC, said: “Problems with trade friction appear to be worsening, not improving. 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.
“Businesses want clarity, certainty and delivery at pace in 2026, alongside a clear vision for how trade with Europe will actually improve.”
The findings land amid a broader political debate over whether Labour should go further in repairing ties with the EU. While Starmer has ruled out re-joining the customs union, senior figures within the party have suggested closer alignment could become an electoral issue in future.
There are tentative signs that wider business confidence is stabilising. Lloyds Bank’s business confidence index rose to a four-month high in December, while consumer confidence also edged higher after months of pre-budget uncertainty.
However, exporters say that without tangible reductions in trade barriers, optimism at home will do little to unlock growth in Europe.
A government spokesperson said ministers were making “strong progress” in negotiations with the EU, including commitments to conclude a food and drink agreement and to link UK-EU emissions trading systems, measures it said could add nearly £9 billion a year to the economy by 2040.
For now, many exporters remain unconvinced, warning that unless trade frictions ease quickly, Europe will remain a growth opportunity largely out of reach for UK businesses.
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UK-EU trade deal fails to boost exports as business friction worsens
