Sir Keir Starmer should agree to a “comprehensive” pact enabling young people to study and work in the UK and EU as part of next year’s “reset” talks aimed at easing trade barriers, a leading UK business lobby group said.
The call by the British Chambers of Commerce puts it at odds with the Labour government, which has repeatedly ruled out signing such a deal, despite EU negotiators making clear that it would be an essential part of any agreement to improve trade ties.
A “youth mobility” deal is one of 13 recommendations from a BCC report on how to fix the UK-EU Trade and Cooperation Agreement. Agreed by both sides in December 2020 when Britain left the EU, it has led more than 16,000 small businesses to quit trade with the bloc entirely, according to analysis published this month by the London School of Economics.
Other requests include more flexibility for business travellers, a VAT co-operation pact, linking the EU and UK’s carbon trading schemes and joining a pan-European agreement on goods trade, known as the Pan-Euro-Mediterranean or “PEM” convention.
BCC director-general Shevaun Haviland said that while ministers had talked a lot about resetting trade relations with the EU, they now needed to take concrete actions to drive trade and deliver on their promise to boost economic growth.
“Our modelling indicates that if exports had grown 1 per cent in 2024, compared to our forecast of a 2 per cent contraction, then the economy could have grown up to 1.7 per cent instead of 0.8 per cent. That is a big difference,” she said.
“We need to see a smart and flexible approach to these negotiations. Our businesses are clear on what they want to see, less paperwork and bureaucracy, greater flexibility on business travel and a balanced youth mobility scheme between the UK and EU,” she said.
The requests from the BCC, which speaks for 53 chambers of commerce around the country, are considerably more ambitious than the prime minister’s current plans for the “reset”.
Although Labour promised in its election manifesto to “tear down barriers to trade” with Europe, that goal is circumscribed by a pledge not to rejoin the EU single market, customs union or return to free movement of people.
Ministers have therefore limited the trade elements of the reset to three areas set out in the manifesto: a deal to ease visas for musicians, improved recognition of professional qualifications and a so-called veterinary agreement to ease border frictions for EU-UK trade in food and plant products.
The negotiation, which is expected to start in mid 2025, is already shaping up to be difficult. The EU has previously ruled out a deal on musicians, is demanding politically sensitive “dynamic alignment” on EU rules for a veterinary deal and has warned that no deal will be done without early concessions on the right to fish in UK coastal waters.
But Haviland warned that the problems created by Brexit had not eased four years after the TCA came into force and in many respects were “getting worse” as a result of continuing divergence between EU and UK regulations.
The BCC report, titled “A manifesto to reset UK-EU trade”, said member businesses continued to report that Brexit red tape covering customs, VAT and other regulatory burdens was impeding their growth.
“Four years on from the TCA being negotiated, 40 per cent of exporters actively ‘disagree’ that it is helping them grow,” the report said, citing a membership survey conducted in summer 2024.
The survey also warned of the challenges of upcoming EU regulations, such as the levy of carbon border taxes from January 2026, all of which will add bureaucratic burdens to trade.
“Awareness of upcoming changes in trade rules and regulations being made by either the UK or the EU was also alarmingly low, with more than three quarters of firms knowing no details of much of the legislation,” the report said.
The government said it was “resetting the relationship with our European friends to strengthen ties, secure a broad-based security pact and tackle barriers to trade.
“We have been clear that there will be no return to the customs union, single market or freedom of movement.”
Data visualisation by Amy Borrett
