London Daily

Focus on the big picture.
Monday, Oct 05, 2026

Brexit Cost Small UK Businesses £27 Billion, Yet Total Trade Impact Defies Dire Forecasts

LSE Review Reveals Stark Contrast Between Small and Large Firms' Adaptation to Post-Brexit Trade Barriers
In a comprehensive study conducted by the London School of Economics (LSE), the aftermath of Brexit on the United Kingdom's trade with the European Union reveals a complex and multifaceted picture.

Over the first two years following Brexit, the UK endured a loss of £27 billion in trade with the EU, a financial hit that predominantly affected smaller businesses.

Despite the bleak figure, the study offers a glimmer of hope by challenging previous forecasts which predicted much graver outcomes.

By analyzing customs data from over 100,000 UK firms, researchers at LSE's Centre for Economic Performance found that overall trade impacts have been less catastrophic than anticipated.

British goods exports saw a decline of 6.4%, and imports fell by 3.1% by the end of 2022.

The Office for Budget Responsibility (OBR), the UK government’s independent economic forecaster, had warned of a potential long-term trade slump of 15%, correlating to a 4% downturn in national income.

However, Thomas Sampson, one of the lead authors of the report, cautions against equating short-term findings with ultimate outcomes.

'The TCA reduced goods trade by less than half as much as the OBR projected,' he noted, while emphasizing the potential for further trade deterioration.

The research highlights a significant disparity between large enterprises, which have mostly sustained their trading volumes with the EU, and smaller firms.

Notably, over 14,000 small businesses have ceased trading with EU counterparts, plagued by new customs checks, paperwork, and regulatory hurdles.

While larger companies have adeptly maneuvered around the newly imposed barriers by diversifying their supply chains beyond the EU, it's the small and medium enterprises that have borne the brunt of the fallout.

In contrast, imports have proved more resilient, buoyed by big businesses sourcing materials from alternative international markets.

Kalina Manova, co-author and professor at University College London, stressed the challenge for firms of all sizes to maintain robust supply networks amidst evolving non-tariff barriers.

The LSE study, although focused solely on goods, leaves the realm of services largely unexplored—an area still shrouded in uncertainty yet fundamental to the UK's economic fabric.

As policymakers prepare for forthcoming negotiations on the next phase of the Trade and Cooperation Agreement, the findings intensify scrutiny on government efforts.

While some see an opportunity to leverage negotiations to lower trade barriers, others fear that additional concessions could further compromise crucial sectors like agriculture.

Rachel Reeves, a prominent economic voice, is likely to perceive these initial findings as testament to the UK economy’s nascent resilience and an impetus for the Chancellor to galvanize support for facilitating smoother trade processes.

While the UK's trade landscape remains under scrutiny, the ongoing analysis by bodies such as the OBR may well adjust to reflect these evolving realities, possibly recalibrating growth forecasts to a more optimistic outlook.

Whether current resilience can translate into long-term stability is yet to be determined, bearing significant implications for the UK’s economic strategy in a post-Brexit world.
Newsletter

Related Articles

0:00
0:00
Close
BT Accused of Pressuring Vulnerable Customers During Digital Landline Shift
British Carmakers Warn of Growing Pressure From EU-China Tariff Dispute
Green Party of England and Wales Adopts Motion Defining Zionism as Racism
Medical Charity Threatens NHS Legal Action Over Two-Year Autism and ADHD Assessment Waits
British Transport Police Report Record Rise in Violence on Railways
Glasgow Council Workers Face Pay Cuts Under Fire-and-Rehire Plan
British Medical Groups Press Prime Minister Andy Burnham to Cancel £330 Million Palantir NHS Contract
UK Faces Record Bluetongue Outbreak Across Livestock Farms
UK Schools Report Thousands of Child-on-Child Sexual Offences
High Court Overturns Ban Blocking Gaza Families From Reuniting With Relatives in UK
G7 Authorizes Emergency Fuel Release as UK Diesel Prices Hit £2 a Litre
France and Italy Draw 1-1 in Nations League Match
Pope Leo XIV and Prince Albert II of Monaco Meet in Metz
SNCF Expands Low-Cost Ouigo High-Speed Service Between Lyon and Bordeaux
Paris Expands Dedicated Cargo Bike Routes for Urban Deliveries
French Film Industry Pushes for Tighter Streaming Investment Rules
Marseille Court Hands Down Prison Terms in Public Procurement Corruption Case
LVMH and Kering Rely on US Demand as Chinese Luxury Spending Slows
Toulouse Aerospace Sector Launches €80 Million Modernization Fund
Javier Milei Courts French Investment in LNG and Lithium
Mistral AI Launches Sovereign Model for European Public Services
French Competition Authority Fines Retailers €40 Million Over Misleading Promotions
France Records Exceptional Electricity Exports as Nuclear Output Recovers
Dassault Aviation Expands Rafale Assembly Capacity at Mérignac
Sanofi Invests €1 Billion in New Biologics Production Hub Near Lyon
France Protests Germany’s Extension of Border Controls Into 2027
French Public-Sector and Transport Unions Threaten National Strike
France Deploys Riot Police After Violence in Lyon Suburbs
French Anti-Terrorism Prosecutors Investigate Radicalized Flydubai Co-Pilot
France’s Defense Budget Surpasses NATO’s 2% of GDP Target
French Government Faces No-Confidence Threat Over Budget
France and G7 Release 100 Million Barrels From Strategic Oil Reserves
France Convenes Emergency Defense Council Over Threats to Commercial Shipping
France and Germany Coordinate Military Response After Russian Strikes on Kyiv Infrastructure
UK Police Release Six Iranian Nationals on Bail After RAF Fairford Security Alert
UK Business Confidence Falls as Energy Costs and Tax Uncertainty Rise
Cornwall Insight Warns UK Energy Bills Could Rise 16% in January
UK Introduces Zero VAT on Household Electricity Bills
UK 30-Year Gilt Yield Hits 6% as Bond Market Pressures Intensify
UK Introduces Stricter Subcontractor Checks and Expanded Trade Union Access
Green Party Proposes Three-Year Emergency Freeze on Private Rent Increases
UK Treasury Committee Seeks Tax Clarification Over Manchester City Investigation
Royal Marines Deploy to Faroe Islands for Northern European Security Exercise
UK Business Confidence Weakens as High Costs Delay Investment
UK GDP Growth Revised Up to 0.5% in Second Quarter
Bank of England Warns of Financial Stability Risks From Autonomous AI
UK Expands Early Prisoner Release Scheme to Ease Overcrowding
UK Records Worst Bluetongue Outbreak on Record Across Livestock Farms
UK Government Faces Shrinking Fiscal Headroom Ahead of October 28 Budget
UK 30-Year Gilt Yield Reaches 6% as Energy Shock Drives Borrowing Costs Higher
×