London, December 2025 – The landmark UK-EU Trade and Cooperation Agreement (TCA) is failing to deliver its promised boost to British exports, with new data revealing a startling increase in business friction and bureaucratic barriers. According to a comprehensive survey by the British Chambers of Commerce (BCC), more than half of UK exporters now report that the deal has not helped them increase sales in Europe, marking a significant deterioration from the previous year. This reality presents a critical challenge for Prime Minister Keir Starmer’s promised ‘reset’ with Brussels and underscores the persistent economic headwinds facing British businesses.
UK-EU Trade Deal Fails to Deliver for Exporters
The British Chambers of Commerce surveyed 989 firms, with a overwhelming 96% being small and medium-sized enterprises (SMEs), the backbone of the UK economy. The findings are stark: 54% of exporters believe the TCA has failed to help them increase sales in the EU, the UK’s largest overseas market. This figure represents a concerning 13-percentage-point increase compared to 2024. Conversely, a mere 16% of businesses reported that the deal had actually helped them grow sales. The survey paints a clear picture of a trade framework that, nearly five years after its implementation, is becoming more restrictive rather than easing over time. This trend directly contradicts initial government assurances that teething problems would gradually diminish.
The Mounting Cost of Persistent Friction
Businesses cite a familiar yet intensifying list of obstacles. Firstly, ongoing customs bureaucracy creates delays and increases administrative costs. Secondly, VAT complexity across different EU member states confuses and burdens smaller firms. Thirdly, restrictions on staff mobility hinder companies from sending skilled workers to service EU clients or manage operations. A particularly acute pain point is the regime of Sanitary and Phytosanitary (SPS) checks, which affects food, drink, and agricultural exporters. These checks lead to significant paperwork, delays at borders, and, in some cases, spoilage of perishable goods. The BCC warns that these frictions are not static; they are actively worsening, squeezing profit margins and forcing some businesses to reconsider the European market entirely.
Business Demands for a Tangible EU Reset
The survey results land at a pivotal political moment. Prime Minister Starmer has championed a ‘reset’ of the UK’s trading relationship with the European Union. However, business groups are issuing a clear warning: progress is too slow, and unresolved red tape continues to weigh heavily. Steve Lynch, Director of International Trade at the BCC, stated, “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.” The BCC has outlined a practical roadmap for 2026, urging ministers to prioritize:
- Closer VAT co-operation with the EU to simplify compliance.
- Radically simplified customs procedures to reduce delays.
- A deeper SPS agreement to minimize border checks for agri-food goods.
Furthermore, businesses express frustration over government support. Almost none of the surveyed firms felt guidance on navigating post-Brexit trade rules had been comprehensive, highlighting a gap between policy and practical, on-the-ground assistance for companies.
The De Minimis Loophole and Unfair Competition
A separate but related issue compounding business concerns is the UK’s de minimis import exemption. This rule allows overseas sellers to ship low-value goods into the UK without paying import duties or VAT, a benefit not reciprocated for UK sellers sending goods to the EU. Chancellor Rachel Reeves has signaled the loophole will be closed, but not until 2029. Business groups argue this timeline leaves UK retailers, particularly SMEs in e-commerce, exposed to years of unfair competition from overseas platforms. The delay is seen as a failure to level the playing field for domestic businesses already struggling with export friction.
Political Crossroads and Economic Context
The BCC’s findings fuel a broader political debate about the UK’s future relationship with Europe. While the Labour government has ruled out rejoining the customs union or single market, senior figures within the party acknowledge that closer alignment could become a significant electoral issue in the future. The economic backdrop is mixed. Broader business confidence, as measured by indices like Lloyds Bank’s, showed tentative signs of stabilising in late 2025. However, exporters make a crucial distinction: domestic optimism cannot compensate for tangible trade barriers in Europe. Growth in the UK’s most important export market remains largely out of reach without substantive reform.
A UK government spokesperson pointed to ongoing negotiations, highlighting commitments to conclude a food and drink agreement and to link UK-EU emissions trading systems. Officials claim these measures could add nearly £9 billion annually to the economy by 2040. Nevertheless, for many exporters on the front line, these long-term promises offer little solace against the daily reality of customs forms, border delays, and lost sales. The core message from business is one of urgency: clarity, certainty, and delivery at pace are needed in 2026.
Conclusion
The evidence is compelling: the UK-EU trade deal is failing to boost exports as intended, and business friction is worsening. The rise from 41% to 54% of exporters seeing no benefit from the TCA is a damning indicator of systemic problems. For the UK government, the challenge is no longer about political repositioning but about delivering practical, technical solutions that reduce the cost and complexity of selling to Europe. The success of the promised ‘reset’ will be measured not by diplomatic communiqués but by whether British businesses, especially SMEs, finally experience a reduction in the barriers that have constrained their growth since Brexit. Without swift and effective action to ease these frictions, Europe will remain a growth opportunity that is persistently out of reach for UK exporters.
FAQs
Q1: What percentage of UK exporters say the EU trade deal has not helped them?
A1: According to the 2025 British Chambers of Commerce survey, 54% of UK exporters report that the Trade and Cooperation Agreement (TCA) has failed to help them increase sales in the European Union.
Q2: What are the main trade frictions cited by British businesses?
A2: The key obstacles include ongoing customs bureaucracy, complex VAT rules across EU states, restrictions on the mobility of staff, and stringent Sanitary and Phytosanitary (SPS) checks for food and agricultural products, which cause delays and paperwork.
Q3: What is the ‘de minimis’ loophole and why are businesses concerned?
A3: The de minimis rule allows overseas sellers to ship low-value goods into the UK without paying import duties or VAT. UK businesses argue this creates unfair competition, as they face these costs when exporting to the EU. The government plans to close it in 2029, but businesses want faster action.
Q4: What does the BCC recommend to improve the UK-EU trade relationship?
A4: The BCC’s 2026 roadmap urges closer VAT cooperation, simplified customs procedures, and a deeper SPS agreement to reduce border checks. They emphasize the need for practical, technical fixes rather than broad political realignment.
Q5: How is the UK government responding to these concerns?
A5: The government cites progress in negotiations, including work on a food and drink agreement and linking emissions trading systems. However, exporters seek more immediate, tangible reductions in day-to-day trade barriers and faster implementation of promised reforms.
