United Kingdom and Ireland

The Basque Country has found in the United Kingdom and Ireland strategic markets for exporting products and services, particularly in sectors such as the automotive industry, energy and technology.

Despite the challenges stemming from Brexit, Basque companies have continued to trade with the United Kingdom, and have adapted to the new economic and legal frameworks. Ireland, in turn, has become a key partner in the field in information and communication technologies, with a growing number of alliances and partnerships between Basque and Irish companies in this sector.

A longstanding trade relationship

The United Kingdom continues to be a global powerhouse in terms of trade, economy and political influence, even though there have been challenges in recent years after its exiting of the European Union. Economically speaking, the United Kingdom is the world’s sixth largest economy by GDP and London continues to be an important global financial centre. However, the impact of Brexit has redefined some of its trade relations, particularly with the European Union, even though progress has been made in new agreements with countries such as the USA, Japan and Australia. In terms of global trade, the United Kingdom stands out as one of the most open and active economies, particularly in sectors such as financial services, technology and advanced manufacturing. Furthermore, the United Kingdom maintains an active position as a permanent member of the UN Security Council, NATO and the G7, even though how much power it exerts in international diplomacy has been subject to scrutiny since Brexit.

The diversification of the UK economy has keen fundamental for its ability to adapt in the current global context of uncertainty and to address the post-Brexit scenario. The British economy that has traditionally depended on sectors such as manufacturing, energy and the financial services, where London continues to be a world leader, has incorporated emerging technology sectors, such as artificial intelligence, biotechnology and renewable energy, thus consolidating its position as a global innovation centre. The creative sector, which includes the audiovisual industry and design, has also grown considerably.

Growth of 0.4% is expected for 2024, although lower inflation, the stronger growth in real wages and the stability of the interest rates will help to improve the economic situation in the long term. The global economic slowdown, along with the Brexit consequences for trade with the EU, have curbed British economic growth. The growth forecast for 2026 to 2028 stands at an annual average of 1.5%. The economy is highly dependent on revenue from services (business, retail trade and financial services) that account for 80% of its GDP

The United Kingdom’s external sector plays a fundamental role in its economy, and it is one of the most open in the world. The United Kingdom is the first largest global exporter and importer of goods and services, with financial services, technology and professional services heading its exports. London continues to be a hub for international finances, attracting foreign capital and is home to international banks, insurance companies and investment funds.

However, the British trade balance continues to show a persistent deficit between 2024 and 2028, when it is forecast to be at around 3% of its GDP. The exit from the EU has affected trade and the new trade partnerships signed after Brexit will still take time to have a positive effect.

The UK market is one of the largest and most diversified in the world, with an economy that ranges from financial services, technology and advanced manufacturing to the health sector and creative industries. London is a key global financial centre, attracting foreign investments and is the heart of the banking and insurance industries, and professional services. Furthermore, it offers different market opportunities in areas such as artificial intelligence and cybersecurity, and renewable energy, particularly wind and solar power. The United Kingdom’s domestic consumption is also robust, driven by a diverse population and with high purchasing power.

The United Kingdom has shown its commitment to remain as one of the countries with the greatest economic openness by giving impetus to new trade agreements, minimally restricting foreign property ownership, and prioritising a diversified trade portfolio; however, the post-Brexit challenges and the greater scrutiny of investments in strategic sectors have hindered foreign investment. The new Labour government is expected to keep the current fiscal policies, but may increase the capital gains tax and introduce higher taxes on energy producers, while following a strict monetary policy. The legal system is favourable to foreign investment, with strong protection of patents and efficient insolvency legislation.

In the short term, the new Labour government is not expected to make large changes to income tax, national insurance, VAT and corporation tax, and only the energy producers will have to face higher taxes. The United Kingdom has a strong banking sector including electronic banking; it is home to the London Stock Exchange, the largest in Europe and one of the most important outside the United States, which offers a particularly attractive financial market. However, the growing tax burden on companies and the strict monetary policy make the market less attractive for investors. Overall, the United Kingdom is in 15th place of 27 developed markets and the 87th of 202 in terms of public intervention.

The United Kingdom is a leading trade market, fundamental for the global supply chains, particularly in the services sector. The market’s pull for investors is driven by high trade volume, liberal trade policies, sustained momentum to bring about post-Brexit trade agreements, and the highly competitive exports in advanced sectors. However, revenue and volumes of exports are exposed to the results of its regional counterparts and to global demand, while trade as a percentage of the GDP continues to be lower than that of the European trade powerhouses, such as Germany and the Netherlands. Overall, the United Kingdom is ranked 17th out of 27 developed markets and 55th out of 202 global markets in trade openness.

The United Kingdom has a relatively liberal trade system. There are no currency restrictions and import licences are only required for a limited number of goods. The United Kingdom has kept many EU regulations post-Brexit, but is progressively diverging, which could make trade more complicated. Tariffs are kept on around 5,000 lines, with significant rates on certain products such as agricultural goods and vehicles. Non-tariff barriers include the specific complex border controls for Norther Ireland as the result of the Windsor Framework, and strict plant-protection and health measures that can exceed EU limits. The technical barriers persist due to the legislative mismatch with the EU, particularly in agricultural biotechnology and pesticide regulation. Furthermore, there are restrictions in public procurement, particularly in the aerospace sector, and intellectual property problems, above all in relations to music copyrights. Digital services face potential levies and the Airbus subsidies have led to specific trade negotiations with the EU.

The United Kingdom is a country with few legal risks and has a very low corruption rate. The British judicial system has a highly respected track record in the solving of conflicts and disputes, with a justice system that is globally recognised as being impartial and fair. Furthermore, the property laws are robust and the legal system protects investors.

Contact office

BASQUE TRADE & INVESTMENT UK & IRELAND

6 Lloyd’s Avenue, Suite 6CL
London EC3N 3AX

+44 (0)20 3006 2434

asantamarias@basquetrade.eus

* Office hours:

Monday to Thursday: 7.30 a.m. to 4.00 p.m.
Fridays: 8.00 a.m. to 1.00 p.m.

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