London Daily

Focus on the big picture.
Monday, Mar 09, 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
Trump Declines UK Offer to Deploy Aircraft Carriers to Middle East Amid Iran Conflict
Prince Harry and Meghan Markle to Return to Australia After Seven Years for Philanthropic and Business Engagements
UK Government Signals Independence From Washington as Cooper Says Britain Does Not Agree With Trump on Every Issue
UK Experts Warn AI Chatbots Are Fueling Surge in Claims of Organised ‘Satanic’ Ritual Abuse
UK Political Parties Divided Over Strategy as Iran Conflict Reshapes Foreign Policy Debate
Britain Discloses Secret Military Repair Hubs Operating Inside Ukraine
Trump Says US No Longer Needs UK Carrier Support After Delayed Offer Amid Iran Conflict
Why Britain Has Become Involved in the US-Israel Military Campaign Against Iran
UK Gas Storage Falls to Under Two Days as Iran Conflict Jolts Global Energy Markets
UK Warned to Brace for Economic Shock as Iran War Drives Global Energy Price Surge
Starmer and Trump Hold First Call After Public Dispute Over Iran Conflict
UK Dentists Returned £1.3 Billion to Government as Shift Toward Private Care Accelerates
Expert Warns UK Must Build Emergency Food Stockpiles to Prepare for Climate Shocks or War
UK Plans Charter Flight to Evacuate British Nationals from Gulf as Regional Conflict Disrupts Air Travel
Families of Zimbabwe’s Liberation Fighters Call on Britain to Help Locate Skulls Taken During Colonial War
Iran’s Ambassador Warns Britain to ‘Be Very Careful’ Over Deeper Role in Expanding Middle East War
UK Military Leadership Defends Britain’s Defensive Role in Expanding Middle East Conflict
Four U.S. Strategic Bombers Arrive in Britain as Iran War Intensifies
Soham Murderer Ian Huntley Dies After Violent Attack in High-Security Prison
UK Lawmakers and Experts Condemn Scale of Overseas Human Remains Held in British Museums
Royal Navy Aircraft Carrier HMS Prince of Wales Placed on Standby for Potential Deployment
United Kingdom Confirms U.S. Military Using British Bases for Operations Targeting Iranian Missile Sites
Starmer Defends UK Role in Iran Conflict After Renewed Criticism from President Trump
Blue Owl Reveals £36 Million Exposure After Collapse of UK Lender Serving Wealthy Clients
UK Asylum Reform Plan Triggers Fierce Debate Over Border Control and Humanitarian Impact
US Stealth Bombers Head to UK Base as Trump Issues Stark Warning to Iran
UK Deputy Prime Minister Says Legal Case Could Exist for British Strikes on Iranian Missile Sites
Investigators Link Mysterious Parcel Fires Across Europe to Russian Intelligence Operation
Debate Intensifies Over Britain’s Legal Justification for US Military Operations Launched From UK Bases
Britain Faces Heightened Energy Price Risks as Iran-Linked Tensions Threaten Global Oil and Gas Supplies
British Counter-Terror Police Arrest Four Suspected of Spying on Jewish Community for Iran
Axel Springer Agrees $770 Million Deal to Acquire Britain’s Daily Telegraph
Iceland Supermarket Drops Trademark Challenge Against Icelandic Government in Long-Running Naming Dispute
UK Defence Secretary Visits Cyprus Following Scrutiny of Britain’s Response to Drone Attacks
Questions Grow Over Britain’s Military Readiness as Response to Iran Conflict Draws Scrutiny
UK Offers Failed Asylum Seeker Families Up to Forty Thousand Pounds to Leave Voluntarily
Saharan Dust Could Bring ‘Blood Rain’ to Parts of the UK as Weather Systems Shift
UK Deploys Additional Typhoon Fighter Jets to Qatar and Helicopters to Cyprus Amid Rising Middle East Tensions
Experts Urge Britain to Accelerate Renewable Energy Push as Global Conflicts Drive Up Costs
British Public Shows Strong Reluctance to Join Wider War in Iran
First UK Evacuation Flight Departs Middle East After Lengthy Delay
United Kingdom Imposes New Visa Requirements on Travelers from St. Lucia and Nicaragua
Iran Conflict Strains U.S.–U.K. Alliance as Trump and Starmer Clash Over Military Strategy
UK Interest Rates Could Rise Above Four Percent Again if Energy Shock Continues, Think Tank Warns
Starmer Defends Britain’s Iran Strategy as Badenoch Urges Stronger Military Support
Labour MP Says She Saw No Sign Husband Broke Law After Arrest in China Espionage Investigation
UK Jobless Rate Overtakes Italy’s for First Time in Years as Labour Market Weakens
United Kingdom Suspends Student Visas for Four Countries in Unprecedented Immigration Move
Campaigners Warn UK Student Visa Ban Could Push Migrants Toward Dangerous Channel Crossings
First U.K. Charter Flight for Stranded Nationals Set to Depart Oman Amid Middle East Crisis
×