According to a comprehensive study by the London School of Economics, the UK lost £27bn in trade with the EU in the first two years after Brexit. While overall trade fell by 6.4% in exports and 3.1% in imports, the economic impact was less severe than initially forecasted. Researchers found that trade barriers caused significant hardship for small businesses, with over 14,000 firms halting exports to the EU. These small exporters, especially those with fewer than 100 employees, struggled with customs checks, paperwork, and regulations under the new Trade and Cooperation Agreement (TCA).

While larger firms managed to adapt to the changes, sourcing raw materials from outside the EU and maintaining trade levels, smaller businesses were hit hardest by the new barriers. The research found that goods trade declined less than expected, with exports falling by less than half of what the Office for Budget Responsibility (OBR) projected.

Despite the resilience shown by some sectors, the report warned that the UK’s trade future depends on firms diversifying supply networks and adapting to the ongoing challenges posed by Brexit. The UK government is expected to negotiate further phases of the TCA next year, with discussions focusing on agriculture and fishing market access.