The UK’s Post-Brexit Trade
Louis Fritsch
Ambitious Expectations
When the UK finally left the EU’s economic orbit in January 2021, it marked the beginning of a new chapter that many supporters of Brexit had waited decades to see. For them, Brexit was supposed to be a moment of renewal, a chance for the UK to rediscover the global commercial reach they believed had been restrained by EU membership. The political case for Brexit rested heavily on the belief that Europe’s rules placed the UK in a straitjacket. Critics argued that as long as the country remained inside the EU’s vast Single Market, it could not fully shape its own trade policy.
That vision was reinforced by high-profile statements throughout 2020, including then Prime Minister Boris Johnson’s declaration that Brexit would allow the UK to “take full advantage of the opportunities of an independent trading nation.”
One of the least acknowledged dynamics of the referendum campaign was how profoundly the UK’s economy had become intertwined with the EU over forty years. Much of this integration was invisible in everyday political debate.
Politicians spoke about simply “shifting” trade elsewhere. This gap between political slogans and day-to-day economic practice only became apparent after 2021 when firms suddenly encountered frictions that had been shielded by decades of seamless EU market participation. This framework allowed firms to move goods, services and workers across borders without checks, delays or regulatory duplication.
Disappointing Outcomes
The UK avoided tariffs through the Trade and Cooperation Agreement (TCA) but the deal introduced a full suite of new border checks and red tape that did not exist before. Numerous firms describe the process as “exhausting” with some choosing to stop serving EU customers altogether because the paperwork is simply too time-consuming. According to the British Chambers of Commerce, 49% of UK exporters report difficulties adapting to new EU rules.
For example, one of the largest structural shifts has been the UK’s exclusion from the EU’s system of diagonal cumulation. This previously allowed British manufacturers to count EU and third-country components as “local” when exporting under the EU’s network of trade agreements. Since Brexit, many UK-made goods no longer qualify for preferential tariff treatment abroad because their inputs are no longer recognised as originating within the same trade bloc. This has weakened the competitiveness of British products in sectors like automotive, machinery and chemicals. Several manufacturers say they have faced higher tariffs in key export markets because the UK now sits outside the integrated origin system.
According to the House of Commons Library, overall UK goods exports to the EU in 2024 were 18% below their 2019 level. Growth in newer markets has picked up in places but it has not meaningfully changed the picture. The scale of the EU market means that even substantial gains elsewhere register only modestly in comparison. Therefore, it comes at no surprise that, according to a 2022 survey by the British Chambers of Commerce: more than 77 per cent of UK firms claim the post-Brexit deal has not helped them increase sales or grow their business.
Recently signed agreements with Australia and New Zealand have been heavily promoted as proof of the UK’s new global reach. Despite the political fanfare, the government’s own figures show that both FTAs deliver only very minor economic benefits in the long run. Some trade analysts also point out that these deals overwhelmingly benefit foreign exporters who now enjoy easier access to UK markets, while offering British firms limited new commercial space abroad. Securing favourable terms requires leverage and with its domestic market far smaller than the EU’s, the UK often negotiates from a weaker position. This limits what it can realistically secure. Australian beef and lamb exporters gained significantly expanded tariff-free quotas into the UK market. In contrast, British farmers received almost no new access to Australia where strict biosecurity rules limit commercial opportunities.
Official data shows that exports to EU states (goods and services) with new restrictions have grown far more slowly than those where barriers have not changed. Larger firms can sometimes shoulder the added burden but smaller ones often struggle. Many report that the new complexity discourages them from attempting EU expansion at all. This means the UK risks becoming a market where only major actors have the resources to maintain European operations.
Chambers of commerce warn that smaller exporters risk being squeezed out of international markets altogether. This will widen the competitive gap between large corporations and the more fragile SME sector. A clear illustration is the UK craft furniture and home-wares sector: small workshops exporting custom pieces to EU clients have reported that new customs declarations, product safety attestations and return-logistics rules now require hiring specialist brokers. For shipments worth only a few hundred pounds, these administrative and compliance fees often exceed the value of the item itself. By contrast, large retail chains can absorb these costs through scale and existing legal departments.
Brexit has unintentionally fuelled a surge in customs-intermediary firms. Thousands of SMEs now outsource rules-of-origin checks and declarations to private brokers . This service that barely existed before 2021.
Yet it is worth acknowledging the benefits that supporters hoped Brexit would unlock: greater freedom to set UK-specific regulations, the ability to negotiate independent trade agreements and opportunities to streamline rules in areas like finance, agriculture and digital services. These potential gains were presented as a chance for Britain to operate with more agility on the global stage. However, even with these upsides in mind, the early evidence suggests that the practical costs of new trade frictions have so far outweighed the promised advantages. Indeed, the Office for Budget Responsibility reports that by the third quarter of 2023, UK trade intensity remained 1.7 per cent below its pre-pandemic 2019 level whereas in the rest of the G7 it had risen to 1.7 per cent above pre-pandemic levels.
To conclude, the post-Brexit era is still young and businesses can adapt but the first few years outside the EU show that while new commercial possibilities are emerging, they remain overshadowed by the practical frictions introduced in 2021.
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