Economy
10 years after Brexit, UK exporters still adapting to non-EU life
After Brexit suddenly halted British cheesemaker Michael Harte’s plans to export his products across Europe, it took four years before his young company, Bridge Cheese, managed to find international buyers again, for its cheddar and mozzarella cheeses – this time in distant Hong Kong.
Harte had banked on a “soft Brexit” that kept frictionless trade after Britain’s shock decision on June 23, 2016, to leave the European Union, he said. Instead, the world’s fifth-biggest economy left the common market completely, putting up barriers to the giant on its doorstep.
From its base in Telford, central U.K. – a town best known as the birthplace of the 18th-century Industrial Revolution that helped spread the idea of open economies around the globe – Bridge Cheese’s pivot to Asia is now bearing fruit.
This year, it expects to sell more than double the volume of processed cheese to Hong Kong than the annual 100,000 tons it used to send to Europe. Harte hopes to start exports to Malaysia this year and is seeking approvals in Vietnam, Thailand and mainland China and other markets.
But between shortly after the Brexit barriers went up and late 2025, Bridge Cheese had booked no overseas sales at all, relying instead on slowing domestic growth to keep the business going.
Harte has no doubt his company’s growth would have been much stronger if the U.K. could still trade freely with its neighbors.
Before Brexit, “you could make a pallet of cheese here on a Monday and have it with the customer in France or Ireland by Wednesday,” Harte said, recalling plans he had to expand rapidly into Spain and Italy.
He abandoned sales to the continent six months after a post-Brexit trade deal was implemented in 2021 because of the new costs of doing business – including mandatory veterinary checks costing 500 pounds ($670) per inspection – as well as reams of customs paperwork and border delays, which increased lead times.
“We just weren’t competitive,” said Harte.
Now, it costs his firm the same for veterinary certification of a 40-foot container carrying 16,800 kilograms of cheese to Asia as it would do for just two pallets totaling 1,200 kilograms sent to the EU, Harte said. And the paperwork is less onerous.
Like Bridge Cheese, which has an annual turnover of around 35 million pounds, thousands of British companies have been forced to find ways to compensate for the loss of free access to their main foreign market, with food producers among the hardest hit.
Although the EU remains the U.K.’s biggest trading partner, a range of manufacturers have felt the impact, adding to the list of problems facing the economy, which has been stuck in a slow-growth rut since the 2007-08 global financial crisis.
“Make an economy less open, and it will restrict growth, though over a longer time trade will adjust and rebuild,” Bank of England (BoE) Governor Andrew Bailey said last October.
So far, that rebuild has proven tentative.
U.K. food exports to EU plummet
Volumes of U.K. food exports to the bloc were down by more than 23% between 2021 and 2025 compared with the five years before Brexit, according to the Food and Drink Federation.
By 2024, around 20,000 small firms, among them food producers, had stopped exporting goods to the EU, reducing the total to around 100,000, according to a report by the London School of Economics’ Centre for Economic Performance.
Britain’s post-Brexit trade deals with countries such as Australia and India will replace just a fraction of these lost exports. As well as the hit to trade, Brexit has created years of uncertainty for businesses, reducing investment.
Britain’s overall economy will be 4% smaller 15 years after Brexit than if the country had stayed in the EU, with around half the damage done already, the government’s budget forecasters have estimated.
Based on Britain’s 3 trillion pounds of gross domestic product in 2025, that would be equivalent to 120 billion pounds lopped off the economy.
The National Bureau of Economic Research, a U.S. think tank, predicts even heavier damage, saying Brexit will reduce the size of the economy by between 6% and 8%, with investment, which is crucial for future economic growth, down by 18% compared with a no-Brexit scenario.
Economists who supported Brexit – who were in the minority at the time of the referendum – challenge the estimates.
They argue that the remarkable performance of the U.S. economy in the NBER’s analysis – which compares Britain with a basket of other countries including the U.S. – exaggerates the Brexit effect. The real culprits for the economic malaise, they say, are higher taxes, more regulation and sky-high power bills.
They point out that Britain’s overall economic performance in recent years has been roughly in line with that of France and better than Germany’s, arguing that London should pursue further bilateral trade deals, especially those which help the country’s big services sector.
The red tape, delays and administrative costs of Brexit have also impacted the cost of the food Britain imports, a contributor to inflation, which has been the highest in the G-7 for much of the past four years, fueled in part by the drop in the value of sterling after the referendum.
Northern Ireland exporters fare better
When policymakers wonder about how the U.K. economy might have fared without Brexit, some look across the Irish Sea.
Northern Ireland, a constituent part of the United Kingdom which shares a land mass with the Republic of Ireland, has been allowed to keep free access to its southern neighbor and the rest of the EU’s single market, thanks to arrangements designed to protect the peace deal that ended decades of armed conflict.
That access is vital for businesses and entrepreneurs such as Mike Thomson, another cheese-maker near Belfast.
He said it represented “the best Brexit outcome we could have hoped for,” even if red tape for ingredients shipped over from the U.K. has added costs for his craft dairy, Mike’s Fancy Cheese.
His biggest single client is located across the border, in Dublin.
Northern Ireland’s Brexit carve-out helped it to outgrow the rest of the U.K. In 2023 – the most recent year for which such data is available – the Northern Irish economy was 16.5% larger than in 2015, making it the best-performing part of the U.K.
England’s economy grew by 11.6%, according to data from the Office for National Statistics (ONS).
In 2024, more than a quarter of Northern Ireland’s goods and service exports went to the Republic of Ireland, up from 14% in 2015.
U.K.-EU reset
British Prime Minister Keir Starmer is trying to ease the friction and an EU-U.K. summit has been set for July 22 to seal a deal to slash veterinary checks from mid-2027, although EU sources have said progress has been slow.
Harte said Bridge Cheese would be keen to export to the EU again if conditions were right and Britain aligned with its rules on human, animal and plant life trade, giving EU buyers more confidence: “If it improves our competitiveness, brilliant.”
But for many companies bruised by Brexit and other economic shocks in recent years, a sense of uncertainty and caution is unlikely to be lifted much by a U.K.-EU reset on food safety standards.
Business investment in Britain has been weak since the turn of the millennium, and as a share of gross domestic product (GDP), it has been the lowest among the G-7 economies since shortly before the Brexit vote.
Economists point to a range of likely causes, including tax changes and poor management, but Brexit – and the political volatility it has spawned with six different prime ministers in Downing Street since 2016 – hangs heavily over many employers.
Starmer himself is likely to face a challenge from within the governing Labor Party in the coming months.
Thomson, the cheese-maker in Northern Ireland, said the uncertainty meant he would not be investing to expand sales to the EU, even with his largely hassle-free access.
Reform UK, the party of Brexit campaigner Nigel Farage, is riding high in opinion polls. At the same time, one of the possible contenders to replace Starmer from within the Labor Party, former health minister Wes Streeting, has called for Britain to rejoin the EU one day.
“Brexit is not a thing that has happened and is done,” Thomson said. “It’s not something you can plan around because you just don’t know how it’s going to be resolved.”
Some of the world’s most prominent central bankers will attend the Istanbul Economic Forum this week to discuss inflation, monetary policy and the global economic outlook, the forum’s website said.
U.S. Federal Reserve (Fed) Governor Christopher Waller, Bank of England (BoE) Governor Andrew Bailey, Bank for International Settlements (BIS) General Manager Pablo Hernandez de Cos and Banque de France Governor Emmanuel Moulin are among those due to attend the two-day forum on Thursday and Friday.
Other expected attendees include the central bank governors of Greece, the Netherlands, Hungary, Saudi Arabia, Malaysia, Azerbaijan and Kazakhstan, according to the website compiled by the Central Bank of the Republic of Türkiye (CBRT).
In total, 16 central bank governors and eight deputy governors, as well as the finance ministers of Türkiye and Egypt and officials of international financial institutions, are scheduled to join the meeting.
The forum said participants will discuss topics including navigating a fragmenting global economy, monetary policy under uncertainty, debt dynamics, and the implications of artificial intelligence and digital innovation for macroeconomic policy.
The Federal Reserve website included Waller’s planned speech at the conference on its schedule for Thursday.
Türkiye plans to transform the Development Road project into a multi-billion-dollar link carrying oil, natural gas and electricity from Iraq and the Gulf to Europe, according to Energy and Natural Resources Minister Alparslan Bayraktar.
Bayraktar, who met with Iraqi Oil Minister Basim Mohammed Khudair in Ankara on Friday, said Türkiye aims to turn the Development Road into a strategic “energy corridor.”
Unveiled in May 2023, the project is a $20 billion regional infrastructure initiative designed to facilitate the transport of goods from the Gulf to Europe via the Grand Faw Port in Basra in southern Iraq. The port would be linked to Türkiye and subsequently to Europe through an extensive network of railways and highways.
In April 2024, Türkiye, Iraq, the UAE and Qatar signed a memorandum of understanding (MoU) for joint cooperation on the project.
Bayraktar said oil and natural gas transported along the route could alone generate an annual economic value of around $80 billion if the project’s energy infrastructure is developed alongside its transportation network.
“We are determined to build the Development Road as a strategic ‘energy corridor,'” he told Anadolu Agency (AA), noting that developing the energy infrastructure alongside the route will greatly boost its economic value.
Bayraktar said Iraq’s oil resources offered significant potential for the project’s energy dimension and that the route could eventually carry up to 2.5 million barrels of oil per day (bpd).
Iraq currently produces around 4 million bpd, while Kuwait has a production capacity of around 2 million bpd.
Qatari gas could be transported through Iraq
Bayraktar said the Development Road also had significant potential for natural gas transportation, particularly by providing an alternative route for Qatar’s gas exports to Europe.
Qatar, one of the world’s largest gas exporters, currently ships most of its gas as liquefied natural gas (LNG).
Bayraktar said Qatar’s LNG exports rely heavily on the Strait of Hormuz and that transforming the Development Road could provide an alternative route for some of the country’s gas.
He said the initiative could therefore evolve from a project aimed at strengthening trade and transportation links between Iraq and Türkiye into a multidimensional corridor encompassing oil, natural gas and electricity infrastructure.
Ceyhan could become global energy hub
Bayraktar said alternative routes to the Strait of Hormuz had become increasingly important at a time when energy security and supply diversification were gaining greater significance.
Extending the Kirkuk-Ceyhan pipeline, the current infrastructure connecting Iraqi oil to Türkiye’s Mediterranean export terminal at Ceyhan, to Basra and increasing its capacity could provide a strong alternative to the Gulf region and the Strait of Hormuz for oil transportation, Bayraktar stated.
Türkiye also aims for its state-owned Turkish Petroleum Corporation (TPAO) to play a more active role not only in the Kirkuk fields but also in other oil fields in Iraq, Bayraktar said.
“We will continue to strongly pursue concrete projects in close cooperation with the new Iraqi government,” he said.
“We aim to reach the target of supplying 1 million barrels of crude oil, increase trade and turn Ceyhan into a global energy hub,” Bayraktar said.
President Recep Tayyip Erdoğan said Monday that Türkiye had never allowed itself to fall behind in the space race, stressing that space should not be the preserve of a handful of powerful nations.
“The space race cannot be a competition between just a few countries,” Erdoğan told the International Astronautical Congress in the southern city of Antalya.
It is the first time Türkiye is hosting the event that brings together scientists and delegates from 111 countries.
Erdoğan set out what he called Türkiye’s principle on space: that it should not be treated as a prize for whoever gets there first.
“Militarizing space and turning it into a vehicle for an arms race would be utterly wrong,” he noted.
Erdoğan said Türkiye is now one of the few countries able to design, develop, build, test and operate its own satellites in orbit.
He pointed to the IMECE satellite, which he said gave Türkiye an important high-resolution Earth observation capability, and to the Göktürk satellites, which he said had expanded its ability to observe and survey from space.
Türkiye has also launched the Türksat 5A and 5B communications satellites. In 2024, it launched and put into service Türksat 6A, its first domestically designed and built communications satellite.
Erdoğan said that satellite had confirmed the country’s engineering capability, industrial base, human resources and confidence in space technology.
Space, he said, is not only about satellites.
In 2024, Türkiye sent Alper Gezeravcı to the International Space Station on the country’s first crewed space mission.
A suborbital research flight by Tuva Cihangir Atasever followed, giving Türkiye experience in microgravity research.
Erdoğan called these steps meaningful but not sufficient, and said Türkiye was pursuing bigger goals.
Moon program
Erdoğan said one of the most ambitious goals of the National Space Program, announced in 2021, is a mission to the Moon.
He said Türkiye had set that goal five years ago and had since turned it into a concrete program.
“We have completed the production, assembly, and integration of the lunar rover we developed as part of our Moon Research Program,” Erdoğan said. He said the spacecraft was now undergoing system-level environmental tests.
The vehicle weighs about 3.5 metric tons and has a domestic content rate of more than 80%, which he called a source of great pride.
He added that experience gained on projects such as IMECE and Türksat 6A was being carried over to the lunar mission, so that Türkiye did not have to start from scratch each time.
Spaceport in Somalia
Erdoğan said that having satellites was not enough to be a space power and that access to space was also essential.
He said Türkiye had given priority to launch access and a spaceport in its space program and had begun construction of a spaceport in Somalia. He said the project would strengthen Türkiye’s access to space and help develop the space ecosystem of the African continent.
The euro plunged to its lowest level against the dollar in 17 months on Monday amid growing concerns about France’s high debt and deficits and political future, which have sent its government bond yields higher.
An underwhelming 2027 budget plan unveiled last week fanned concerns that government spending will remain high ahead of next year’s presidential elections, in which the far-right Marine Le Pen, seen as a fiscal populist, stands a chance of winning.
That has rattled bond investors at a time when interest rates – and hence borrowing costs – are rising in developed economies worldwide to combat inflation.
French debt is projected to rise to nearly 122% of the country’s gross domestic product (GDP) next year, despite billions of euros in planned spending cuts.
That has sent its 10-year government bond yield to 4.8%, the highest since the 2011 eurozone bond crisis.
“The fact that French bonds and the euro sold off last week, and the downward momentum could persist this week, is a sign that Europe is out of favor with investors and bond market vigilantes are watching developments in the eurozone closely,” said Kathleen Brooks, research director at XTB.
A call for snap elections in Spain by Prime Minister Pedro Sanchez also surprised investors, after lawmakers rejected a hotly debated housing relief bill from his Socialist-led minority government.
“France had already been under pressure due to questions over fiscal credibility and political stability,” said Patrick Munnelly, market strategist at Tickmill Group.
“Spain now adds another layer of uncertainty,” he added. “Europe’s political risk is weighing on the euro.”
Stocks, meanwhile, were broadly higher, with the Nasdaq opening higher after hitting another all-time high on Friday in the wake of weak U.S. jobs data, and the broader Dow also still near record territory.
That tempered expectations of an imminent rate hike by the Federal Reserve (Fed), and fueled optimism on Asian and European equity markets that the AI-fuelled rally still has room to run.
Paris was dragged lower, however, by Schneider Electric after the industry group unveiled a $22.6 billion all-cash deal to buy the U.S. engineering software specialist PTC, which pulled its share price down nearly 10%.
Lower oil prices provided additional support, after G-7 countries, in coordination with the International Energy Agency (IEA), agreed on Friday to immediately release 100 million barrels of diesel and crude oil to ease supply concerns caused by the U.S.-Iran war.
Exports of Middle East oil, excluding Iran, surpassed their pre-war levels last week despite attacks on ships in the Strait of Hormuz, according to data from the maritime tracking firm Kpler.
But Saudi Aramco chief executive Amin Nasser on Monday described oil stockpiles as “scarily thin” as the European winter looms.
France and Germany are seeking a new rapid-response trade tool that the European Union would use to position itself better against countries that harm the bloc economically in a new world where trade is increasingly used as a weapon.
German officials said the EU needed a tool as powerful as the Section 301 tariffs imposed by the U.S. or China’s restrictions on exports of critical minerals.
The new measure would not target any specific country, but highlights dumping, widespread subsidies and restriction of currency convertibility – market distortions that many EU leaders say China is engaged in.
A French-German document published on Monday, 10 days before EU leaders discuss Chinese trade imbalances at a summit in Brussels, said “systemic and persistent market distortions” jeopardize the European economy and particularly its industrial base, with widespread job losses.
The bloc, said the document, needs to deploy its trade defense tools more swiftly and efficiently, with more investigations and a broader approach to cover whole sectors.
France and Germany also said the European Commission should propose two new instruments as soon as possible to focus EU efforts on diversification and securing economic security.
The first, which the Commission has already mentioned, would seek to limit companies’ reliance on single sources for certain critical supplies.
The second would limit access to the EU single market for countries that undermine fair market conditions through political or economic means, without specifying what the trigger for EU reaction would be or what action the EU should take.
The paper said that any proposal by the Commission to activate counter-measures against another country should be adopted unless a qualified majority of EU members opposed – a lower hurdle than for some trade measures.
The paper also said the Commission should be able to activate such new measures swiftly, which German government officials said could mean a matter of days.
Legislation to enact a new instrument would still need approval by EU governments and the European Parliament.
A French presidential adviser said it was urgent for the EU to take action, that the imbalances with some trade partners had become unsustainable, and that France and Germany were keen for the bloc to deploy existing anti-dumping measures as soon as possible.
“France and Germany are very keen to put an end to the naivete on trade,” the adviser told reporters.
Brazilian assets were trading higher on Monday after right-wing Senator Flavio Bolsonaro, the son of ex-leader Jair Bolsonaro, came in first in the first round of Sunday’s presidential election.
The Bovespa benchmark stock index gained more than 8% and the country’s currency strengthened against the U.S. dollar following the vote.
The eldest son of former President Jair Bolsonaro won 47% of the votes and will face leftist incumbent President Luiz Inacio Lula da Silva, who secured about 45% of the vote, in a runoff on Oct. 25. Polls had forecast Lula would lead the first round of voting by around three percentage points.
Investors cheered on Monday morning as Bolsonaro’s strong showing was matched by gains for his allies in Congress. Analysts say a friendlier legislature would make it easier for him, if elected, to push through a pro-market agenda of tighter public spending, privatizations and tax cuts.
“Brazil wants change,” Bolsonaro said on Sunday evening, heralding the “end of the era of (Lula’s) Workers’ Party.”
Shares in retailer Magazine Luiza, stock exchange operator B3, lender BTG Pactual, homebuilder Cyrela and conglomerate Cosan jumped more than 20% each, putting them among the top gainers.
J.P. Morgan upgraded Brazil’s equities to “overweight” on Monday, saying a more favorable political backdrop after recent election developments had improved the outlook for the region’s largest market and could drive a period of outperformance.
Brazil’s real currency strengthened more than 4% against the U.S. dollar in early trading, moving below 5.00 per greenback, from around 5.22 previously, in line with analyst forecasts and with the currency’s performance four years ago when then-President Jair Bolsonaro did better than expected in the first-round vote against Lula.
The elder Bolsonaro went on to lose to Lula in the second round of that election and was subsequently convicted of trying to carry out a coup to overturn the result. The former president was sentenced to about 27 years in prison and is currently under house arrest.
Brazil’s international debt also rallied on Monday, while broader fixed-income markets were jittery. The 2056 bond was up 1.4 cents on the dollar to bid at 93.5 cents, Tradeweb data showed.
‘The market wants change’
Bolsonaro has pitched himself as a “more centered” version of his father to investors concerned about Brazil’s burgeoning fiscal pressures.
“It remains to be seen whether the senator would ultimately prove more fiscally responsible than Lula would be in a fourth non-consecutive presidential term. However, markets are likely to give him the benefit of the doubt,” said Thierry Larose, portfolio manager at Vontobel.
If he is elected, Bolsonaro would enjoy some room to maneuver with Congress after his Liberal Party emerged as the biggest winner in congressional races on Sunday.
Bolsonaro’s party increased its representation in the Senate from 15 to 28 seats, the strongest result for a party since Brazil’s return to democracy in 1985. It also is projected to secure 121 seats in the lower house, up from its current 98 seats.
“The likelihood of advancing reforms is much greater,” said Pedro Paulo Silveira, an analyst at Terra Investimentos. He noted that during the previous Bolsonaro government, reforms often depended on costly political bargaining or stalled altogether.
Analysts also expect the real to continue strengthening into 2027. Societe Generale forecast that it would move to 5.10 by the end of 2026, with scope to move below 5.00 in the first half of 2027. Morgan Stanley forecast the real could strengthen past 4.90 and toward 4.50 in the first quarter of next year.
“The market wants change, it wants reform; it doesn’t want a high public deficit; with the current government, all of this will continue,” said Pedro Galdi, investment analyst at the AGF Investments platform.
Bolsonaro’s strong showing is likely to boost market confidence in the near term, said Bryan Harris, a managing partner at Sabio.
“The market will be looking for clear signals from Bolsonaro that he is serious about tackling the country’s problems,” Harris said.
Heading into Sunday’s vote, most private polls, which largely underestimated the younger Bolsonaro’s strength, had shown the 45-year-old senator and Lula, who will turn 81 later this month, about even in a runoff vote.
Addressing a crowd at a hotel in Sao Paulo, Lula said he had been convinced he would win the election in the first round.
“Starting tomorrow, we begin a new campaign,” the leftist leader said, promising to show voters what he had accomplished as president.
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