Insight
A perfect storm: Britain’s trade malaise, weak growth and a new geopolitical moment by Anton Spisak, 21 May 2025 The UK is facing its most severe trade challenge in decades – and at the worst possible time. If the Labour government is committed to fostering sustained growth, it must place trade at the heart of its economic plans. Since taking office in July 2024, Britain’s Labour government has made economic recovery its central priority. Strikingly absent from its growth plans is a focus on trade. However, the UK is currently experiencing the most severe trade stagnation in a generation – and one that has undermined postpandemic recovery and continues to weigh heavily on the country’s growth prospects. For the Labour government to revive stalled growth, trade must be placed at the heart of its economic strategy. Britain’s trade malaise Over the past 50 years, the UK has steadily become more open to trade. The combined value of imports and exports as a share of GDP has more than doubled, from 30 per cent in 1975 to 67 per cent in 2024 (Chart 1, left panel). This transformation helped fuel several decades of rising living standards, as global trade liberalisation brought cheaper products to consumers and expanded opportunities for British businesses on the global stage. Three distinct phases can be identified in the story of Britain’s trade openness (right panel). First came the great liberalisation that began in the 1980s and continued until the 2008 financial crisis, when trade volumes grew at nearly 5 per cent annually. The post-2008 era was marked by a slowdown in trade, with growth at above 2 per cent per annum. Since 2020, as Britain experienced the dual shock of the pandemic and Brexit, UK trade has not merely decelerated – it has flatlined in real terms, marking a sharp break from past decades. The UK’s trade performance largely mirrored global trends until 2020, after which trade volumes have suffered a particularly severe setback and, in contrast to many other countries, have not yet fully recovered. CER INSIGHT: A PERFECT STORM: BRITAIN’S TRADE MALAISE, WEAK GROWTH AND A NEW GEOPOLITICAL MOMENT 21 May 2025
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