Since 2016, Brexit has brought many changes to the United Kingdom. The procedures initiated by this political and institutional schism are now coming to an end. Since April 2025, it is now necessary to obtain a visa and travel authorisation to cross the Channel from a European Union country, which marks a clear separation in the free movement of people between the British Islands and the European area.
As a predictable consequence of Britain's exit from the EU, the United Kingdom is now negotiating alone within the World Trade Organization, facing the combined 27 votes of the EU, as well as those of the American and Chinese giants. Sixth largest economy in the world in 2024, the United Kingdom has also seen a change in political power. The appointment of Labour Prime Minister Keir Starmer in July 2024, marks a major turning point after nearly a decade of Conservative majority rule. In ten years, the world’s geopolitical and economic situation has also undergone right-angle turns, even 180-degree reversals. The unconditional ally of the 20th century, the United States, no longer supports global economic liberalism and remains ambiguous about its military cooperation within NATO, calling into question its 'special relationship' with London.
In this unprecedented international context, combined with the profound internal changes taking place in the United Kingdom, what commercial prospects are available to the new Labour government? Has Brexit fundamentally changed British trade? Has the UK retreated into reinforced trade with Commonwealth countries? Did the pre-Brexit rise of the Chinese partnership suffer from the hostile policies of successive British Conservative governments, and particularly those of the last one? Do the United States and the European Union still hold a prominent place in British trade?
In other words, has the UK succeeded in achieving its goals of becoming a "Global Britain" rather than a European one, as Prime Minister Theresa May claimed in 2017? Possible answers.
British companies trade a lot of goods and services with the rest of the world, and in a fairly balanced way. Since the UK has a deficit in goods trade but a large surplus in services, this translates into a small overall trade deficit. There was a slight contraction of trade in goods in 2020, a year marked by Covid-19 but also by the end of the transition period ahead of leaving the EU. EU-UK trade absorbed the shock before picking up again the following year.
Although the UK has left the EU, Europe remains by far its largest trading partner, both in terms of imports and exports of goods and services. For goods, the EU accounted for 47% of UK exports and 53% of its imports in 2023. In services, the EU accounted for 45% of imports and 36% of exports[1].
By comparison, the UK's traditional trade and military ally, the United States, accounted for (in the same year) "only" 16% of its exports and 9.5% of its imports of goods, and 19% of its imports and 26% of its exports of services. China is the UK's second largest trading partner for goods imports and third largest for exports. It trades very little in services with the United Kingdom.
On the European side, the United Kingdom remains the third largest supplier of goods for the EU, but the decline in British exports to the EU has been notable since 2021. That year, one year after Brexit came into effect, the United Kingdom joined the "second division" of European trading partners, alongside Norway and Switzerland. The painfully negotiated Trade and Cooperation Agreement (TCA), which now governs trade relations between the European Union and the United Kingdom, did not introduce customs duties, but in the absence of formal mutual recognition of the regulations applied on both sides, it imposes border formalities that lengthen delays and increase costs. The case of health and safety controls of food and agricultural products is particularly edifying. EU member states introduced controls on imports from the UK immediately after the transatlantic trade agreement came into force, although with grace periods and deferrals for certain measures. The UK has been obliged to proceed in even more numerous stages, as the transition is so complex.
Furthermore, according to some studies, intra-European trade was much more dynamic than global trade after 2020. By cutting itself off from these dynamics, British trade has also lost opportunities for expansion. Other analyses[2] also suggest that in the long term, based on current data, British trade with all its partners would decrease by around 15%.
One of the arguments of the Brexiteers was to restore the UK's freedom to negotiate free trade agreements (FTA). By freeing itself from the unavoidable compromises that this type of agreement implies within the European Union, in order to take into account the interests of all Member States, the United Kingdom hoped to better defend its own sectors. Today “over 70 trade agreements are in place but the overwhelming majority of these are rollover deals which has allowed the UK to continue trading with key countries with minimal disruption,” the UK Trade 2024 report highlights.[3]. The only exceptions are the agreements with Australia, New Zealand and, to a lesser extent, the agreement with Japan. “Negotiations are ongoing with India but have proven difficult, with issues such as post-study work visas difficult to resolve. An FTA with China is not currently possible given geopolitical tensions. The UK’s initial post-Brexit aim of concluding an FTA with the US has also not been achieved and does not look likely to be in the short term,” the report states.
It is likely that the UK’s trade with the US will weaken in the coming years. First of all, the US administration has just imposed "universal" tariff measures of 10% which also concern goods from the United Kingdom, despite the surplus trade relationship that Washington has with London since 2015. Even though US tariffs are lower than those imposed on other countries (20% for the EU, for example), these measures risk jeopardising British exports to the United States. Beyond Donald Trump's unconventional and particularly surprising trade position towards the United Kingdom, the United States is also fuelling uncertainty about its position concerning Russia's war against Ukraine. This is pushing the UK to move closer militarily – but also probably commercially – to more aligned partners, especially EU countries. London is a strong supporter of Volodymyr Zelensky, as well as a true pillar of NATO. The country also supported sanctions against Russia, with its bilateral trade collapsing as early as 2022.
Bilateral trade with China is declining, both for imports of Chinese products and exports of British goods. This is not confined to the UK: for several years, China has been seeking to limit its imports, particularly from Western countries. In the name of the so-called policy of "dual circulation", Beijing seeks to grow its exports to increase its partners' dependence on Chinese products, while reducing its own trade dependence.
For the UK specifically, successive Conservative governments in Westminster have distanced themselves from China, resulting in a significant decrease in trade. Between 2023 and 2024, Chinese imports fell by 10%, while British exports to China fell by 27%. In comparison, at the same time, Chinese exports to the European Union declined by only 0.5%, and Chinese exports to the United States increased by 1%.
Services, particularly financial and business services, are the driving forces behind British exports. While the role of the London stock exchange is well known, business services, which are less visible, represent almost double the value of financial services. Far behind these pillars of the British economy are the categories of British exported goods, foremost among which are machinery and transport equipment.
The latter, which notably include British-branded vehicles, are ahead of exports of chemicals, manufactured goods, industrial equipment and hydrocarbons. Among these goods, only oil is not a manufactured product. However, these elements confirm the previous analyses: the UK exports more intermediate goods than other comparable OECD economies.
The United Kingdom exports some of its oil but also imports it: it is the third largest product imported across the Channel. Like other island economies, the UK remains heavily dependent on the rest of the world for its food security - food and live animals are the UK's fifth largest import.
Despite Brexit, the European Union remains the United Kingdom's largest trading partner for both goods and services, and for both imports and exports. Theresa May's goal of a "Global" British economy has not been achieved to date. The realisation of the free trade agreement negotiated with the United States seems to be no nearer (even if it has not been abandoned, the resumption of negotiations has been postponed until at least 2025) and the preferential agreement with India is still under negotiation. The UK's major partners, particularly the United States, have been perceived as increasingly unreliable since the return of the Trump administration. China is no longer a partner of choice for London either. Even though the United Kingdom wanted to break away from its European neighbour, the two remain linked, at least commercially. This trend is expected to strengthen in a context where security issues, and in particular the war in Ukraine, are pushing them to deepen their cooperation.
[1] Data for the 4th quarter 2024 are not yet available.
[2] UK trade 2024, UK in a Changing Europe (2024)
[3] UK trade 2024, UK in a Changing Europe (2024)