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The UK in a Changing Europe trade tracker focuses on three key areas: UK trade and its performance relative to historical data; UK trade in a global context and how it compares to the G7; and finally, newsworthy developments which have occurred within trade.
Typically, it is a quarterly snapshot. However, with data for the last quarter of 2023 now out this edition of the tracker will look at 2023 as a whole and how trade performed over the course of the year.
The tracker examines how UK trade measures compare to 2019 as well as the proportion of total UK trade with the EU. It also looks at a breakdown of UK total trade by country and region. In addition, the tracker looks at the UK’s trade balance and trade openness compared to the G7.
According to analysis of Resolution Foundation research in the Financial Times, UK goods
trade had its worst performance in 2023 since data began to be tracked. The UK saw the fifth
consecutive year-on-year decline in goods exports since records began in 1997. That amounts to a
total decline of 8.2% since 2019.
Goods trade started to decline in 2018, falling into the negative in 2019. While Brexit and the
implementation of the Trade and Cooperation Agreement in 2021 are unlikely to be the sole cause
of those declines, they do appear to have played an adverse role.
However, trade in UK services has performed better, buoying up UK trade overall. While the end of
the pandemic and the Brexit transition period seemed to impact services negatively, services have
grown since at a strong pace with year-over-year growth in 2023, the strongest year to date, at
9.5%.
UK trade with the EU, as a per cent of total trade in volume terms in Q3 2023, was at its highest
levels since Q2 2008. In Q4 2023, it increased further from 53.4% to 53.6%. This does appear to
imply that trade with the EU is increasing. Trade with non-EU countries is actually going down,
leading to the more stable trade with the EU making up a higher share of UK trade overall.
This led to the annual total for 2023 being the highest since 2008, with 53.1% of total UK trade
being made up by trade with the EU. As discussed in the previous trade tracker, this has surprised
many trade economists. Following Brexit, it was largely anticipated that trade with the EU would
suffer. While trade did initially dip in 2021 it recovered quite quickly and has returned to prepandemic
and pre-TCA levels. What has puzzled economists is why trade with non-EU countries
is going down. It will likely take more granular trade data, such as at firm-level, in future to come
to an answer.