Brexit ushered in a new era of ‘global Britain’ or an extended period of national decline, depending on your viewpoint. Five years on, we sift the evidence.

In January 2020, the United Kingdom officially left the European Union, a move that supporters hailed as a historic step towards economic freedom while opponents feared it would trigger long-term decline. Five years on, the reality is more complex. The economic impact of Brexit has been compounded by global challenges, including the COVID-19 pandemic and Russia’s invasion of Ukraine. However, Brexit itself has left a deep mark on the UK economy, with some analyses estimating a £140 billion loss directly linked to the country’s departure from the EU.

The Trade and Cooperation Agreement (TCA), which took effect on January 1, 2021, introduced new regulatory barriers, customs checks, and rules of origin requirements. As a result, UK trade with the EU declined sharply, with goods exports dropping by £27 billion in 2022 alone. Even now, the UK’s total trade in goods remains 12 percent below pre-Brexit levels, with goods exports at just 82 percent of their 2020 volume. In contrast, EU trade has rebounded, matching pre-Brexit levels. Economist Dana Bodnar of Atradius describes the situation as grim, noting that UK exports have struggled even more than imports, leaving the country’s overall trade performance weaker than anticipated.

Beyond Europe, the UK has pursued new trade agreements, though results have been underwhelming. While the country has secured 70 trade deals, most simply replicate previous EU agreements. New deals with Australia and New Zealand have been widely publicized but are limited in scope, and negotiations with the United States have stalled. The UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may offer future benefits, though in the short term, its impact remains modest. Given that the UK already had agreements with nine of the eleven CPTPP members, any significant gains will depend on the bloc’s expansion.

Brexit’s impact has been uneven across different industries. Agriculture has been particularly hard-hit, with Brexit-related labor shortages exacerbated by the war in Ukraine. UK farmers, once reliant on seasonal migrant workers, have struggled to find replacements, leading to crop losses reported by 40 percent of farmers surveyed by the National Farmers’ Union. In response to concerns about rising costs, the UK government has delayed post-Brexit checks on EU agricultural imports for a third time, pushing them back to July 2025.

The automotive industry faces a major Brexit-related challenge in the form of a planned 10 percent tariff on electric vehicles traded between the UK and the EU, set to apply if they fail to meet strict rules of origin requirements. Originally scheduled for 2024, these rules have been deferred for three years to avoid disruptions at a time when the European auto industry is already grappling with rising competition from Chinese manufacturers.

For the chemicals sector, Brexit has introduced both tariffs and regulatory complications. With two-thirds of UK chemical production destined for export—mostly to the EU—new trade barriers mean that 70 percent of these exports now face tariffs, while raw material imports from the EU are also subject to new costs. The lack of a cost-effective UK regulatory framework to replace the EU’s chemicals registration system has created further uncertainty, affecting investment in the petrochemicals sector.

Despite these challenges, some industries remain resilient. Aerospace, paper and packaging, and renewable energy are expected to perform well in 2025, and the UK media industry is poised for significant growth. However, sectors with greater exposure to Brexit-related challenges—such as steel, logistics, and construction—face a more uncertain future.

While Brexit was driven by political as well as economic motivations, its economic benefits have yet to materialize. Trade remains sluggish with both the EU and the rest of the world, while key industries are struggling with increased costs, bureaucracy, and labor shortages. Supporters of Brexit argue that these are temporary adjustments and that opportunities such as CPTPP and a potential US trade deal could deliver future gains. Recent IMF data also suggests that the UK is on track to be the fastest-growing major European economy in 2025.

Even so, the UK’s growth remains below its historical average, and trade prospects remain highly uncertain. Five years after leaving the EU, Brexit has yet to deliver the economic advantages its proponents promised, and for many sectors, its challenges remain an ongoing reality.

Author: Silvia Ungaro, Senior Advisor, Atradius N.V.

The private equity industry experienced a rare decline in 2024, marking the first contraction in decades. Assets under management (AUM) fell by 2% as investors scaled back commitments amid economic uncertainty and tighter financial conditions.

The pullback reflects a broader trend of cautious investment behavior, driven by rising interest rates, concerns over global economic stability, and reduced liquidity in capital markets. For years, private equity has seen continuous expansion, fueled by strong fundraising and high levels of deal activity. However, the slowdown suggests a shift in investor sentiment, with some limited partners choosing to rebalance their portfolios away from alternative assets.

Industry analysts point to multiple factors influencing the contraction. Higher borrowing costs have made leveraged buyouts less attractive, while valuation adjustments across portfolios have also weighed on overall AUM. Additionally, institutional investors, such as pension funds and endowments, have faced liquidity constraints, leading to reduced capital allocations for private equity funds.

Despite the decline, private equity firms continue to seek investment opportunities, with some focusing on distressed assets or alternative deal structures. Market participants anticipate a potential rebound if macroeconomic conditions stabilize and fundraising efforts regain momentum. However, in the short term, the industry may face continued headwinds as investors adopt a more cautious approach to capital deployment.

The contraction signals a potential inflection point for private equity, challenging firms to adapt to a changing financial landscape while maintaining long-term value creation strategies.

Source: comp.