Crédito y Caución | The UK’s foreign trade remains scarce, and the main sectors of its economy are suffering from rising costs, more complex bureaucracy, and labour shortages. Five years ago, Brexit marked the beginning of a new era for Great Britain. The Trade and Cooperation Agreement introduced new regulatory barriers and customs controls with the European Union, but also the theoretical possibility of a British economy free to trade more easily with the rest of the world. Five years later, the UK’s foreign trade remains scarce, and the main sectors of its economy are experiencing rising costs, more complex bureaucracy, and labor shortages due to Brexit. Currently, UK goods trade stands at 88% and its exports at 82% of their pre-Brexit levels. “The trading outlook remains bleak for the UK five years after leaving the European Union. Total trade has not recovered to pre-Brexit levels, and the performance of British exports is even more disappointing than that of imports,” explains Atradius economist Dana Bodnar.
The economic environment in the UK is complex, but far from catastrophic. The growth prospects for 2025 are better than those of other major European economies, although they remain below the pre-2020 average annual rate of 2%. Perhaps the most significant development is the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which has just come into effect. Its short-term effects are limited, as the UK already had bilateral trade agreements in place with nine of the eleven members of the trade bloc, but it could yield greater benefits in the future as it expands, especially with China’s formal application for membership. The UK has also concluded trade agreements with Australia and New Zealand, but negotiations with the United States, its largest trading partner outside the European Union, are stalled. “The UK now has 70 trade agreements in force. But the vast majority of them are essentially rollover agreements, honoring the trade terms of existing EU agreements with third countries,” adds Bodnar.
Sectors such as aerospace, renewable energy, media, and paper are poised to register significant growth. Metallurgy, logistics, and construction face greater uncertainties. Agriculture is one of the sectors most affected by labour shortages. In the automotive industry, the implementation of tariffs has been postponed. “The addition of a 10% tariff on electric vehicles manufactured in the European Union and the UK threatened to jeopardize the electrification of the European automotive sector at a crucial moment, just as it faced a series of challenges, including increasing competition from Chinese car manufacturers,” explains Nicola Harris, senior risk analyst in the UK for the transport sector. Brexit is also a challenge for the chemical sector, which exports two-thirds of its production, mainly to Europe. “This is increasingly affecting investment in the petrochemical sector as companies navigate the uncertainties and costs associated with the regime. In the longer term, we also expect skilled labor shortages,” says Sarah Evans, senior risk analyst in the UK for the chemical sector. Supporters of Brexit argue that these initial obstacles will be resolved over time and find incentives in opening up to trade agreements, but trading prospects remain uncertain on the fifth anniversary of Brexit. Its economic benefits have yet to materialize.
