Brexit: UK struggling to supplant EU trade with other countries, report finds

The UK is struggling to supplant EU trade with other countries despite Brexit, a new report has found.

The UK In A Changing Europe (UKICE) tracker reveals that 53.3% of our total trade is still carried out with the EU, which is significantly up on pre-Brexit levels. However, the think tank says this is not driven by more commerce with European countries, but by “relatively weak growth in trade overall, especially with non-EU countries”. 

Despite the Brexiteer promise that leaving the EU would lead to burgeoning free trade agreements around the world, the much anticipated deals struck with Australia and New Zealand currently make up less than 1% of total UK trade.

The then-International Trade Secretary Liam Fox promised 40 free trade deals would be signed the second the UK left the EU in January 2020. However, as the tracker shows, the Australaysian agreements, much criticised by farmers, make up a fraction of the country’s overall trade.

The report finds that forming new partnerships and signing new free trade agreements “will not quickly supplant relationships with closer partners”. It said: “Despite new trade deals and accession to the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP), a trade agreement involving 11 countries, the UK does not look likely to shift away from trading with the EU soon. 

“Bigger trade deals, such as with countries like India and the US, could make more of a difference. But the UK and India have yet to reach an agreement, and there is no prospect of negotiation with the US on the horizon.”

Stephen Hunsaker, author of the UKICE trade tracker, said: “This is less of a story about the UK becoming closer to the EU post-Brexit and more about the UK being unable to become closer to non-EU countries. As yet, the UK has been unable to defy gravity – the well-established fact that trade with your neighbours is easier than trade with the other side of the world.”

The tracker also shows that the UK's trade openness - the amount of imports and exports divided by GDP - is the lowest in the G7. "When we compare the UK to other countries, trade-wise we’re not doing so well right now," Stephen told NationalWorld.

"We’re not seeing growth like other countries are, especially in the G7 or the G20. We’re having a bit of stagnant trade - we’re not seeing either trade with the EU or other countries grow, which is what the UK needs."

And Stephen puts this, in part, down to Brexit. "I think that there’s a pretty strong correlation that the implementation of the Trade and Co-operation Agreement has affected it," he said. "Trade openness has just been struggling in the UK since Brexit."

The UK’s dependence on EU imports could be hit by the post-Brexit food and plant checks coming in over the course of this year. Goods from Britain have faced EU controls since it left the bloc’s single market at the end of 2020, but the UK has repeatedly put off checks in the other direction amidst concerns it could fuel food inflation.

Currently, when UK businesses trade animal and plant products with the EU they get hit by post-Brexit red tape, while European firms are still able to export goods without full checks. Farmers have told NationalWorld that it means they're being undercut by their EU counterparts. 

According to the revised timetable, starting from 31 January 2024, imports of medium-risk animal products, plants, plant products, and high-risk non-animal origin food (and feed) from the EU will require health certification. Further checks will be brought in throughout the year.

Liz Webster, founder of Save British Farming, told NationalWorld: "The English farmer has been the biggest victim of Brexit. Within the UK internal market we've been disadvantaged, and with European farmers able to export here with no horrible red tape they’ve been able to undercut us. This is why we've seen pork and eggs collapse in particular.

"If they apply checks for EU imports, most EU exporters will give up exporting their much loved produce to the UK. Far from taking back control, we’re opening ourselves up to anybody buying low quality meat at the market."

Last year, Business and Trade Secretary Kemi Badenoch said it was “disappointing” the US did not want to pursue a free trade deal with the UK. She told the Commons: “We are very ready to have a free trade agreement with the US, but the US is not undertaking any free trade agreements with any countries. This is, of course, disappointing, but they know that we stand ready and that is why we have had the state (memorandum of understanding) programme.”

While Trade Policy Minister Greg Hands added that advanced talks for a deal with India are ongoing. “A deal with India would be a big step forward … in the UK’s post-Brexit strategy to refocus UK trade on the Indo-Pacific region which represents a third of global GDP,” he said. “My negotiators and I continue to work at pace and we will continue to negotiate until we have secured the right deal for the UK.”

NationalWorld has contacted the Department for Business and Trade for comment.

Ralph Blackburn is NationalWorld’s politics editor based in Westminster, where he gets special access to Parliament, MPs and government briefings. If you liked this article you can follow Ralph on X (Twitter) here and sign up to his free weekly newsletter Politics Uncovered, which brings you the latest analysis and gossip from Westminster every Sunday.