Has Brexit improved Britain’s trading position — or made every deal harder?

MATCH OF THE DAY: TERMS OF TRADE - RESULT: UK O, EU 3

Referee: United Nations Trade and Development (UNCTAD)

Brexit was sold as a way for Britain to trade more freely and come out stronger. On this metric, the scoreboard says otherwise. 

Terms of trade are simply the rate at which Britain swaps what it sells for what it buys. If that rate gets worse, the country has to export more to pay for the same imports. For ordinary people, that is not an economist’s parlour game.

It means pricier imported energy, tighter margins for firms, weaker room for pay growth, and a country that has to work harder just to buy the same stuff.

In the top 5, Britain sits below the EU in every post-Brexit year from 2016 to 2023. That matters now because Keir Starmer inherits not just a trade problem, but a value-for-money problem at the border. Britain’s problem on terms of trade is not that trade stopped. It is that Brexit never turned freedom into better prices.

Click on replay, rank and score to see what happened.

1 PROBLEM

Start with the scoreboard. Britain does not beat the EU once. By 2023, it is also bottom of this five-side mini-league, behind France (96.5), the EU (96.24), Italy (100.7) and Germany (101.6).

The chart shows the gap opening after 2015. That is not just a spreadsheet mix up. It means Britain was paying relatively more for what it bought than it was gaining from what it sold.

The ONS says that hurts the purchasing power of UK GDP. Britain did not lose this match in one freak season. It spent the whole post-Brexit stretch below Europe.

Why?

3 REASONS

1) PLAN — Britain had a promise, not a route to better trade terms

The Brexit pitch was clear enough: more freedom, more agility, better deals. The trouble is that neither of the UK’s own trade blueprints is really a terms-of-trade plan.

The current UK Trade Strategy is mainly about growth, diplomacy and market access. The older export strategy is a “Race to a Trillion” support plan to help firms sell more abroad. Those are plans for more trade. They are not a clear funded route to stronger export pricing power relative to import costs.

The EU kept a broader economic architecture instead: bloc scale, cohesion policy to narrow gaps and strengthen regions, and then a shared energy-security response through REPowerEU. Britain had a theory of sovereignty. Europe kept a theory of trade power. 

Plan score: UK 3/10, EU 7/10 — Britain had the slogan; Europe kept the system.

2) POLICY — Britain backed exports, but Europe built more protection against the shock

Britain’s policy mix after Brexit was heavy on export support, finance and diplomacy, but thin on direct protection against a terms-of-trade squeeze. The OBR says UK goods imports from the EU fell sharply after the transition period and overall trade intensity has weakened. Then the energy shock landed. The ONS says the UK suffered its biggest negative terms-of-trade effect since the mid-1970s because, as a net importer of energy and other goods, its import prices rose faster than its export prices.

The EU’s answer was more direct: REPowerEU pushed renewables, grids and energy diversification, while the reformed electricity market design was meant to make bills less hostage to short-term spikes. Britain had export help. Europe had more shock absorbers. 

Policy score: UK 4/10, EU 7/10 — Britain tried to sell more; Europe worked harder not to be mugged by the import bill.

3) PERFORMANCE — Europe can point to working models, Britain cannot yet

This is where the argument stops being theoretical. Britain had no silver bullet. Europe can point to actual working , innovative policies. At the wider EU level, the JRC says Cohesion Policy has its strongest payoff in regions with a strong export base, and that each euro invested under the 2014-2027 programmes is expected to generate an additional 1.3 by 2030, with spillovers across the bloc.

That is not just policy on paper. It is a working system that helps regions strengthen production, exports and resilience. Britain does not lack companies. It lacks a joined-up model already delivering those gains. 

Performance score: UK 3/10, EU 8/10 — Europe can point to teams already scoring; Britain is still explaining the tactics.

FINAL WHISTLE

So the overall score is: EU 3, UK 0.

Europe wins on plan, policy and performance. Britain’s problem on terms of trade is not that Britain imports things. It is that Britain left one system without building a stronger machine for export pricing power and import resilience. The UK never beats the EU once. Why? The OBR shows the wider Brexit drag on trade intensity. The ONS shows how an energy shock then punished a net importer. And Europe’s own REPowerEU response shows what a bigger shield looks like.

Starmer did not create that inheritance. But he now owns the test. If he wants to prove Britain trades better after Brexit, he has to show the country can earn better prices for what it sells or face lower relative costs for what it buys — not just announce more deals. Until that line turns, the recovery story is still playing away from home.