Britain has shed £74 billion of goods exports since Brexit and tilted ever more firmly towards a services-led economy, according to new research that throws cold water on hopes of reindustrialising the country, an ambition recently set out by Andy Burnham.
The Resolution Foundation, a think tank, found that some of the nation’s most prized industrial sectors, among them cars and pharmaceuticals, have been the biggest casualties since the UK formally left the single market and customs union in 2020. The economy’s overall share of goods exports fell by a fifth between 2019 and 2024, leaving exporters roughly £74 billion worse off, the steepest decline anywhere in the G7 group of large economies.
Crucially, the researchers pin the blame on Brexit itself rather than on higher energy prices or a flood of cheap Chinese goods, both of which are frequently cited as the culprits behind Britain’s trade weakness. The findings are set out in full in the foundation’s report on the UK’s post-Brexit trade performance, which calls for an industrial strategy rethink.
The pain is concentrated in precisely the goods the rest of the world is buying more of. “The UK has lost ground in exactly the goods the world is buying more of, including medicines, electronic microcircuits and data processors,” said Sophie Hale, research director at the Resolution Foundation. “Some once-staple strengths have disappeared outright in the past five years. Revealed comparative advantage has gone in road vehicles, chemicals, dairy, live animals for food and non-ferrous metals.”
Since the referendum, Britain has slipped from the world’s 11th-largest goods exporter to 14th. The losses sit squarely within the eight priority, high-growth sectors the government has identified as central to future prosperity, including advanced manufacturing, clean energy, defence and life sciences.
Business sentiment underlines the strain. In a survey by the British Chambers of Commerce, an industry lobby group, 54 per cent of UK exporters said the trade and co-operation agreement struck after Brexit had made it harder to sell into the bloc, and that “urgent change” was needed. Only 16 per cent felt the deal had helped them grow their exports. The lobby group’s own assessment that EU trade is getting harder chimes with the Resolution Foundation’s data, and echoes earlier warnings that the UK-EU trade deal has failed to boost exports as cross-border friction has worsened.
The squeeze has not fallen evenly. Smaller firms have borne the brunt, a pattern Business Matters has tracked as UK exporters face a £27bn Brexit hit, with the smallest businesses seeing relative goods exports to the EU fall far faster than their larger rivals.
Brexit has also hastened Britain’s pivot to services, which now account for 59 per cent of total exports, up by 11 percentage points since 2019. Services trade with the European Union has dipped, but nowhere near as sharply as goods, according to figures from the Centre for European Reform.
For Hale, that shift is no cause for alarm. “The shift towards services should not be viewed as a problem,” she said. “Countries specialising in services can be rich. So doubling down on these strengths should be viewed as a feature, not a bug.” Her prescription is a clear-eyed triage: defend the sectors where Britain remains world-leading, such as aero engines, contest a handful where the advantage is slipping but not yet lost, such as medicines, and be honest where the realistic prize is carving out niches rather than recovering share, as in electronic microcircuits.
The research lands awkwardly for Burnham, who is challenging Sir Keir Starmer’s leadership after winning the Makerfield by-election in Greater Manchester. The mayor has pledged to reindustrialise the north of England and bring utilities under greater state control, yet the data lays bare how hard that will be when the UK’s most lucrative and competitive sectors are now in services rather than on the factory floor. It is a tension familiar to readers who have followed how pro-Brexit regions became more dependent on EU exports than many had assumed.
Labour says it wants a warmer relationship with Brussels through a veterinary agreement covering animals, plants and food, and an extension of Erasmus schemes for students. The Centre for European Reform cautions that the economic dividend from such measures would be modest, and that the single biggest lift to UK trade would come from rejoining the single market, a step neither the current government nor Burnham backs.
The BCC found that 55 per cent of exporters would support aligning with EU product rules and standards, a move that would unlock single-market access but surrender Westminster’s control over large areas of regulation. William Bain, head of trade at the BCC, warned that rejoining the EU “would compromise the trade deals we have made since leaving and cut our advantages in areas such as AI where [the UK’s] regulatory approach differs”.
Gerard Lyons, a research fellow at the Centre for Policy Studies, a centre-right think tank, argued that rejoining the customs union, the single market or the EU would reduce the UK to a “rule-taker”. He added: “The fundamental causes of our poor economic performance predate Brexit and are in our power to fix.”
