United Kingdom - Country Commercial Guide
Market Challenges

Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.

Last published date: 2022-09-11

The UK formally left the European Union single market as of January 1, 2021.  The UK-EU Trade and Cooperation Agreement (TCA) signed in December of 2020 allows for trade in qualifying goods between the UK and the EU without tariffs or quotas. U.S. Exports shipped directly to the UK face essentially the same customs and border requirements as when the UK was an EU member State.  However, U. S. goods entering the UK from the EU may face different requirements as the UK establishes new border controls with the EU market.  Northern Ireland is subject to separate arrangements under the Protocol on Ireland/Northern Ireland that accompanied the agreement between the UK and EU addressing the UK’s withdrawal from the EU.  Challenges with implementation of the Northern Ireland Protocol have led the UK and EU to engage in negotiations to resolve these issues; thus far, however, no agreement has been reached.  According to one recent survey of U.S. companies, U.S. investment confidence in the UK has declined slightly, in large part to lingering uncertainty and challenges to the UK-EU trade relationship and tensions over implementation of the Northern Ireland Protocol.    

The combined impact of COVID and Brexit on the economy resulted in a nearly 10 percent decline in the UK’s GDP in 2020, the largest drop among G7 countries.  The UK’s emergency and fiscal support protected jobs and incomes during the pandemic and, combined with a rapid vaccine rollout, allowed the UK to recover quickly, with a GDP now above its pre-COVID level.  However, the recovery has slowed as the economy continues to struggle with Brexit-related adjustments and supply shortages and rising inflation, compounded by Russia’s invasion of Ukraine. High inflation (annualized rate of 9.1% as of May 2022) is making London, already one of the world’s most expensive cities, even more costly in which to do business.  Property, restaurant, and transportation costs are rising and expensive relative to many other European cities.

As UK and third-country suppliers represent strong competition, and with the UK’s desire to increase domestic content across supply chains in the post-Brexit regulatory environment, U.S. exporters are advised to offer differentiated products at competitive prices.