London Daily

Focus on the big picture.
Monday, Aug 24, 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
Prime Minister Andy Burnham to Give Ukraine Classified Storm Shadow Blueprints for Domestic Missile Production
UK Graduate Job Vacancies Plunge 45% to Lowest Levels on Record
Government Audit Reveals Pressure on UK Hospitality From Business Rates and Rising Costs
Kindertransport Survivor Prepares to Revisit European Sites Linked to Her Family’s Wartime Separation
Northern England Transport Operators Strengthen Contingency Plans as Travel Demand Rises
New Implant Trials Offer Treatment Prospects for Patients With Refractory Angina
South Wales Reviews Wildfire Response After Exceptionally Dry Summer
UK Treasury Prepares Autumn Fiscal Statement Amid Spending and Defense Pressures
Norfolk Records First Wild Beaver Births in More Than Five Hundred Years
Historic Portrait of Benjamin Disraeli Reported Missing From Parliament’s Art Collection
Five People, Including Police Officers, Killed in A66 Crash as Families Pay Tribute
Most English Secondary Schools Found to Fall Short of National Healthy Food Standards
UK Think Tank Says Productivity Growth May Be Stronger Than Official Data Shows
Reform Party Proposes Lower Social Housing Priority for Foreign-Born UK Citizens
UK Government Plans Business Rate Overhaul to Ease Pressure on Pubs and Hotels
New Daily Diabetes and Weight-Loss Pill Launches Across NHS Pharmacies in England
UK Graduate Job Vacancies Fall to Lowest Level in a Decade
UK Prime Minister Andy Burnham Visits Kyiv to Reaffirm Long-Term Military Support for Ukraine
Iranian Hackers Shut Down British Power Plant for Four Days in Landmark Cyber Attack
Novak Djokovic Reveals Relentless Self-Doubt and Rejects Retirement in New Documentary
Trump Imposes 50% Tariffs on Canadian Goods After Bilateral Trade Talks Collapse
First Bus Bars Unaccompanied Under-Sixteens From Evening Services in Stoke-on-Trent
Lithium-Ion Battery Fires Cost UK Waste Sector About One Billion Pounds a Year
Reform UK Proposes Lower Social Housing Priority for Foreign-Born Naturalised Citizens
UK Government Deploys AI Drones in Crackdown on Illegal Waste Dumping
EU Biometric Border Checks Cause Disruption for British Travellers and Freight Operators
UK Expands Voluntary Drug Treatment Programme for Sex Offenders to Twenty Prisons
CrossCountry Cancels Most Services After Major Power Failure at Control Centre
Met Office Warns El Niño Could Bring Severe Autumn Storms and Higher Food Prices
Resolution Foundation Says UK Productivity Growth May Be Stronger Than Official Data Suggest
Andy Burnham Proposes Giving Regional Mayors Greater Planning Powers
UK Government Overhauls Planning Rules to Accelerate Housing Near Transport Links
Russia Withdraws Ambassador to Britain and Warns of Retaliation Over UK Drone Supplies to Ukraine
Iran-Linked Hackers Blamed for Cyberattack That Shut Down UK Power Plant
Andy Burnham Pledges UK Support for Long-Range Missile Production in Ukraine
Australia Combines Indigenous Fire Knowledge With Satellite Tech to Combat Catastrophic Wildfires
Father and Son Jailed in Scotland Over £900,000 Airport Cannabis Smuggling Operation
UK Fraud Reports Surge Sevenfold as Criminals Exploit QR Codes in Parking Meters and Phishing Emails
Brighton Thrash Aston Villa in Four-Goal Opening Half as Manchester City Trail Bournemouth
Erin Patterson Appeals Triple Murder Convictions After Hotel Mixed Sequestered Jury With Prosecution
Bank of England Maintains Close Watch on Banks Amid Global Economic Uncertainty
Warm Weather and Tourism Support UK High Street Spending During Summer
Westminster Faces Continuing Political and Administrative Fallout From Epstein Files Release
UK Invests in Domestic Defence Drone Manufacturing to Strengthen Military Supply Chains
Around Five Million UK Households Face Higher Mortgage Payments by 2028
Bluetongue Virus Cases Rise Across England, Wales and Scotland
UK Government Holds First National Day for Victims and Survivors of Terrorism
Historic Summer Droughts Threaten UK Harvests and Put Further Pressure on Food Prices
UK Economy Holds Up in Second Quarter Despite Global Energy and Geopolitical Pressures
UK Opens National Artificial Intelligence Safety Testing Facility
×