In recent weeks, the UK has concluded three bilateral trade agreements: a symbolic reset with the EU, a narrow tariff reprieve with the US, and a long-negotiated free trade deal with India. Each varies in scope, timing, and economic consequences.
The EU deal delivers the most immediate economic value, although many elements remain to be negotiated. The US mini deal provides short-term relief for steel and auto exporters but lacks sectoral depth. The India agreement is geopolitically important, but most benefits will be spread over a decade.
The EU-UK reset
The first bilateral reset between the UK and EU since Brexit delivered a modest but symbolically important agreement, restoring structured dialogue through annual summits that may deliver further targeted cooperation. While most outcomes remain subject to negotiation, the reset is forecast to raise UK GDP by 0.2-0.3% by 2040, with agrifood and carbon reforms delivering the bulk of the value.
Here are the four largest impacts:
1. SPS Reforms
The agreement to reform the Sanitary and Phytosanitary (SPS) regime eliminates most export health and plant certificates, reduces physical inspections, and restores smoother flows for agri-food products. This is expected to materially lower trade costs for SMEs in meat, dairy, horticulture, and processed food, especially those exporting to Ireland, France, and the Netherlands.
Supermarkets and logistics firms are also likely to benefit from the eventual removal of costly post-Brexit compliance operations. Research suggests UK agrifood exports to the EU could rise by 22.5%, reversing years of decline; imports are forecast to increase by 5.6%.
The deal simplifies movement of goods between Great Britain and Northern Ireland, though customs declarations remain. Dynamic alignment with EU rules and ECJ oversight were accepted to secure these benefits. In return, the UK extended EU fishing access for 12 years.
2. Energy and Carbon Market Integration
The reset includes a commitment to reintegrate the UK into the EU’s internal energy market and re-link their emissions trading schemes (ETS), which require carbon-intensive firms to buy permits for emissions. This could reduce compliance costs, cut carbon price volatility, and support investment in North Sea renewables.
Re-linking the ETS would also exempt UK exporters from the EU’s Carbon Border Adjustment Mechanism (CBAM), due in 2026, benefiting industries including cement, steel, aluminium, and fertilisers. However, dynamic alignment with EU carbon pricing may raise short-term costs.
3. Defence Pact
The new defence partnership grants UK firms access to the €150bn Security Action for Europe (SAFE) loan facility, enabling joint procurement and R&D in defence technologies and materials. The agreement is symbolically significant and opens the door for UK firms, which export around £10bn annually, to compete for EU-funded contracts. However, full access will require a separate ‘third country’ agreement, and immediate economic levers are limited.
4. Labour Mobility and Professional Access: Limited Progress
Mobility provisions remain vague, with only a commitment to “work towards” a reciprocal youth visa scheme for 18-30-year-olds. No agreement was reached on touring artists, recognition of professional qualifications, or business mobility frameworks. The UK rejected EU proposals to restore home fee status for students. Rejoining Erasmus+, the EU’s academic mobility scheme, remains under discussion.
The UK-US Deal
The UK’s economic deal with the US offers narrow but immediate relief for manufacturers hit by Trump-era tariffs. The partial suspension of US duties on British steel and cars is the key outcome: tariffs on UK cars fall back to 10% (from 25%) and selected steel products gain quota-based duty-free access, preventing further damage to high-value supply chains.
For the UK steel sector, already under strain from energy costs and stalled decarbonisation, the deal offers a temporary reprieve. In April, the government intervened to halt the closure of blast furnaces at British Steel’s Scunthorpe plant, a critical supplier for rail, defence, and infrastructure. The deal reduces pressure but doesn’t solve the firm’s structural challenges: it reported £233m in losses last year and has yet to secure a viable path to green steel, while holding opaque debt to its Chinese parent, Jingye.
Despite £60bn in annual UK goods exports to the US, most still face a 10% baseline tariff. The agreement lacks a broader regulatory or customs framework. It is best viewed as a political patch, not a structural pivot.
The India-UK FTA
The UK’s free trade agreement (FTA) with India offers strategic potential but limited immediate economic benefit. Most tariff reductions will be phased in over a 10-year period, with no measurable GDP uplift expected before 2026.
The deal eliminates duties on up to 90% of UK goods exports to India, addressing tariffs that have historically exceeded 100%. Beneficiaries include whisky distillers, auto manufacturers, aerospace suppliers, and life sciences firms. However, gains will be gradual.
The FTA makes little headway on regulatory access for UK legal, accounting, or financial services firms. One notable provision waives National Insurance Contributions (NICs) for Indian intra-company transferees working in the UK for up to three years. This reduces costs for Indian multinationals in tech and consulting – but creates perceived imbalances, as UK firms must continue paying full employment taxes for equivalent talent.
Implementation risks remain, including customs complexity and regulatory opacity. Strong enforcement, IP protections, and clear rules of origin will be essential for long-term success.
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