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.”
The U.S. Federal Reserve left its benchmark interest rate unchanged at 3.5%-3.75% on Wednesday, saying economic activity continues to expand at a solid pace despite uncertainty linked to tensions in the Middle East, while inflation remains above policymakers’ target.
The Federal Open Market Committee (FOMC) decided by a unanimous 12-0 vote to maintain the target range for the federal funds rate between 3.5% and 3.75%, in support of the Fed’s dual mandate.
The decision marked Kevin Warsh’s first FOMC meeting as Fed chair, with investors closely watching how he will handle persistent inflation, Middle East-related uncertainty and questions about the central bank’s forward guidance.
The federal funds rate has remained in the current range since the Fed cut rates by 75 basis points in the second half of 2025.
The latest policy statement was significantly shorter than the previous and removed wording that had been interpreted as signaling a bias toward possible rate cuts. The move suggested policymakers are seeking to keep their options open as they assess whether the latest inflation surge will prove temporary or persistent.
Nearly half of Federal Reserve policymakers have lost faith that merely holding borrowing costs steady will be enough to bring inflation back down to their 2% target in the face of the oil price surge after the Iran war.
Nine of the U.S. central bank’s 19 policymakers now believe they will need to raise the Fed’s policy rate this year, according to projections published on Wednesday as the Fed announced its decision to leave the policy rate in its current 3.50%-3.75% range. None had that view just three months ago, when the Fed last published its projections.
Six of those nine, or nearly a third of the committee, feel more than one quarter-point rate hike will be needed this year, the projections show.
Eight believe that rates ought to stay unchanged, and just one felt a single rate cut would be in order. One policymaker, not named, did not submit a rate-path view.
Those views, captured in the Fed’s so-called dot plot of individual policymaker’s rate-path views, illustrate how quickly the debate within the central bank has flipped from a focus on how long to hold rates steady before cutting them, to a growing worry – and for a some, a conviction – that the Fed will need to raise rates to keep price pressures from higher fuel prices from seeping more broadly into underlying inflation.
They also pose a challenge for new Fed Chairman Kevin Warsh, who was picked for the job by President Donald Trump with the expectation that he cut interest rates, an option that becomes less feasible as broad support for such a move fades.
Global oil prices have dropped sharply since last week when Iran and the U.S. announced a deal to end the conflict and get oil flowing through the Strait of Hormuz again. But it is not clear how quickly shipping and exports could recover after the agreement is signed, particularly given the damage that energy facilities sustained during the three-month war.
Fed policymakers typically have the option of rewriting their dot-plot submissions until shortly before publication, so the views should reflect the latest developments in the Middle East.
Inflation has been running above the Fed’s 2% target for more than five years.
The projections published on Wednesday show central bankers have become more pessimistic about inflation since March, reflecting the sharp rise in inflation since the start of the war. Inflation by the personal consumption expenditures price index is now seen at 3.6% by the end of the year, based on the median policymaker view. In March policymakers expected year-end PCE inflation of 2.7%. Core PCE inflation, which strips out volatile oil and food prices, is now seen hitting 3.3%, compared with 2.7% previously. The unemployment rate is now projected at 4.3% by year-end, matching the actual reading in May and lower than the 4.4% policymakers had expected in March. The forecast suggests increasing confidence that the labor market is not weakening or in need of support from rate cuts, as some policymakers had worried earlier this year. GDP growth is seen at 2.2% this year, worse than the 2.4% forecast as of March. (Reporting by Ann Saphir; Editing by Andrea Ricci)
The World Bank has approved 400 million euros (nearly $464 million) in additional financing to help expand Türkiye’s renewable energy market, focusing on wind power and utility-scale battery energy storage projects.
The financing expands the Accelerating the Market Transition for Distributed Energy Program, building on the success of its first phase, approved in 2024, which helped accelerate the deployment of low-voltage distributed solar energy systems across the country.
The new package consists of two 200 million euros International Bank for Reconstruction and Development (IBRD) loans provided to the Development and Investment Bank of Türkiye (TKYB) and the Industrial Development Bank of Türkiye (TSKB) under a results-based financing framework, in which disbursements are tied to independently verified performance targets.
With the additional funding, the program’s scope will be broadened beyond distributed solar projects to include onshore wind developments and next-generation Battery Energy Storage Systems (BESS).
Türkiye aims to reach 120 gigawatts of combined wind and solar capacity by 2035, alongside a significant expansion of battery storage capacity.
However, access to long-term financing for distributed wind and storage projects remains limited, partly due to local banks’ short-term funding structures, the World Bank said on Monday.
The program aims to address these financing constraints by providing longer-term funding through development banks, strengthening market expertise in emerging grid technologies and mobilizing private sector investment.
“Scaling up battery storage and distributed wind is the next critical step to future-proof Türkiye’s energy grid,” said Humberto Lopez, World Bank country director for Türkiye.
“By using public development banks to bridge the commercial financing gap, this program enables ready-to-build projects to reach financial close, which will support the competitiveness of Turkish industries, enhance national energy security, and create local jobs across the renewable energy value chain,” Lopez added.
According to the World Bank, the expanded program is expected to support 1,579 megawatts of additional renewable energy capacity, 392 megawatt-hours of battery storage and mobilize up to $405 million in private financing.
The Türkiye package forms part of a proposed $2.96 billion increase in the World Bank’s regional renewable energy financing framework, designed to accelerate clean energy investments across Europe and Central Asia.
“Türkiye is acting as a trailblazer for the broader ECARES (Europe and Central Asia Renewable Energy Scale-Up) program,” said Charles Cormier, World Bank regional director for infrastructure for Europe and Central Asia.
“By successfully pioneering commercial rooftop and utility-scale solar, onshore wind and battery storage, Türkiye is establishing the best practices and knowledge that can be replicated to modernize grid infrastructure, integrate renewables and enhance energy security across the entire region,” Cormier added.
A U.S. federal judge on Wednesday ordered the dismissal of a long-running case against Halkbank over alleged Iran sanction violations after the Turkish public lender completed a compliance review.
The bank’s shares on the Borsa Istanbul Stok Exchange (BIST) rose as much as 8.4% after U.S. District Judge Richard Berman signed a “nolle prosequi” order requested by U.S. Attorney Jay Clayton seeking to drop the case.
“The criminal case against our bank ongoing in the United States for years has been definitively and conclusively closed,” Halkbank said in a statement.
Halkbank CEO Recep Süleyman Özdil said the lender expected its opportunities to access foreign funding would improve.
The dismissal promised to relieve one of the main irritants between Türkiye and the U.S., as the NATO allies experience their best ties in decades.
Halkbank was charged in 2019 during President Donald Trump’s first term with allegedly helping Iran evade American economic sanctions. The bank had pleaded not guilty in the case.
President Recep Tayyip Erdoğan repeatedly rejected the charges, insisting that Ankara did not violate the U.S. embargo on Iran. Erdoğan once called the case unlawful and “ugly.”
After Erdoğan and Trump met last year, the Turkish president expressed hope for a resolution of the matter.
Erdoğan said in October that Trump told him during the September meeting at the White House and in a subsequent phone call that the “Halkbank problem is finished for us.”
This March, the U.S. Department of Justice announced a deferred prosecution agreement in which it would dismiss the case following a successful compliance review of Halkbank’s programs.
No money changes hands under the deal, and the bank did not admit criminal wrongdoing.
To fulfill the agreement’s requirements, Halkbank enlisted a Turkish affiliate of accounting firm Ernst & Young to review the bank’s compliance program and check whether any transactions were for the benefit of Iran or Iranian persons or entities.
In a June 10 joint request to judge Berman co-signed by Halkbank counsel, attorney Clayton said the bank’s compliance obligation “has been satisfied,” according to a 12-page letter.
The review identified “no findings of noncompliance,” the letter said.
Energy and Natural Resources Minister Alparslan Bayraktar visited Romania on Wednesday to inspect a nuclear power plant using Canada’s CANDU reactor technology as Türkiye evaluates options for its planned third nuclear power station.
According to a statement from the Energy Ministry, Bayraktar toured Romania’s Cernavoda Nuclear Power Plant, which operates two CANDU reactors developed by Canadian engineering firm AtkinsRealis.
Türkiye is seeking to expand its nuclear power capacity beyond the four-reactor Akkuyu plant, which is being built by Russia’s state-owned nuclear company Rosatom in the southern Mersin province and is expected to begin generating electricity later this year.
Ankara plans to construct two additional large-scale nuclear power plants, one in Sinop on the Black Sea coast and in the Thrace region, with negotiations continuing with South Korea for a second facility and discussions with Canada accelerating in recent months for a third project.
“A critical process is underway for Türkiye,” Bayraktar said during the visit.
“Following Akkuyu, we are evaluating technology choices, potential partnerships and the countries we will work with on future nuclear projects,” he added.
Türkiye aims to reach 7.2 gigawatts (GW) of nuclear generation capacity by 2035 and 20 GW by 2050. It plans to complement the conventional nuclear plants with small modular reactors (SMRs).
Akkuyu’s four reactors will have a combined installed capacity of 4,800 megawatts (MW).
Once all units are operational, it is expected to supply from 10% to 15% of Türkiye’s electricity demand.
In addition to cost and electricity pricing, Ankara is placing increasing emphasis on localization requirements in ongoing negotiations, seeking to ensure that a significant share of equipment and components can be manufactured domestically and integrated into the global nuclear supply chain.
Bayraktar said AtkinsRealis is expected to meet Turkish suppliers and equipment manufacturers later this month or in early July.
“We want a nuclear power plant that is competitive, more affordable, highly secure and has a high degree of localization,” he said.
Türkiye has also been engaged in long-running discussions with China over nuclear cooperation and has intensified contacts with South Korea in recent months.
Bayraktar said the visit to Romania provided an opportunity to examine operational examples of CANDU technology in a nearby country with which Türkiye maintains close relations.
Türkiye views nuclear energy as a key component of its strategy to strengthen energy security and achieve its target of net-zero emissions by 2053.
“Türkiye wants access to nuclear power at competitive prices while ensuring the highest safety standards,” Bayraktar said.
“We will move forward with future projects through a more comprehensive approach that also addresses nuclear waste management and fuel supply security.”
Italy’s government has issued approval to the joint venture between state-controlled defense group Leonardo and Türkiye’s powerhouse Baykar to produce unmanned aerial vehicles (UAVs), a report said Wednesday.
The deal, first announced in March 2025 and structured as a 50-50 partnership, aims to address Europe’s weakness in the drone industry, with the two groups seeing a UAV market worth some $100 billion over the next 10 years.
The government cleared the partnership at a Cabinet meeting on Tuesday, Reuters reported, citing a source.
Under one of the approval’s conditions, sales of the drones and any further international development of the joint venture will be limited to countries politically aligned with Europe and NATO.
All technology used in the drones will be classified, the report said.
Italy exercised its so-called “golden power” rules, aimed at protecting strategic national interests in mergers and acquisitions, which allow the government to impose conditions or even block deals.
The agreement with Leonardo allows Baykar, one of the world’s largest drone exporters, to access the European market and opens the way for expanded industrial activities in Italy.
The government approval of the joint venture was first reported by Italian daily Il Messaggero.
Baykar has meanwhile acquired Italian aviation and defense company Piaggio Aerospace in late 2024.
The Istanbul-based company has become one of the most prolific drone exporters after having gained prominence through their use in multiple conflicts.
It produces light and heavy drones, as well as developing autonomous jet-engine-powered ones, and is betting on autonomous air-to-air combat drones taking over the role of fighter jets.
The oil market is expected to enter a substantial supply surplus in 2027 after rebounding from the closure of the Strait of Hormuz, the International Energy Agency (IEA) said in its monthly report Wednesday.
The U.S. has announced an interim agreement to end the Iran war, which includes Iran reopening the key waterway and the U.S. lifting its naval blockade of Iran, potentially bringing an end to the largest oil supply disruption in history.
The war is estimated to have blocked more than 14 million barrels per day (bpd) of Middle East oil output according to the IEA.
“If the deal holds, exports and production from the Gulf should see a gradual recovery – not least because Iranian oil exports can fully resume once the U.S. blockade is lifted,” the agency, which advises industrialized countries, said.
The oil market will then fall into a significant supply overhang next year, the IEA said in its first look at 2027, as oil supply is set to surge by 8 million bpd while demand rises by just 2 million bpd.
Middle East supply already rising
Flows through the strait were already rising by early June because of a pick-up in ship-to-ship transfers in the Gulf of Oman, the IEA said, helping to boost total Middle East flows to around 12 million bpd in early June from a May low of 9.6 million bpd.
However, political and operational constraints, including prolonged demining and unresolved transit arrangements, leave downside risks to the Middle East recovery outlook, the IEA said.
Overall, the IEA forecasts oil supply to fall by 3.9 million bpd in 2026, as production losses in the Middle East outpace rising output from the Americas.
Russian crude oil and refined fuel exports were stable at around 7.4 million bpd in May despite continued Ukrainian drone attacks on refineries, the IEA said, though the attacks forced Russia to prioritize fuel supply to the domestic market and to maximize crude oil exports.
Demand destruction spreads
Global oil demand will fall by 1.1 million bpd this year according to the IEA, after a 5 million bpd April-June drop.
Demand destruction has spread beyond the areas that were initially most impacted by the Iran war, the IEA said, with deliveries of all major fuels and especially gasoil “showing signs of strain across almost all regions.”
Demand will then recover swiftly and grow next year, as falling oil prices and an improving economic outlook drive the rebound, the IEA said.
In its own monthly report, rival forecaster OPEC lowered its forecast for oil demand growth in 2026 to 970,000 barrels per day.
Large surplus looms in 2027
The IEA forecasts imply that supply will come in around 920,000 bpd below total demand in 2026, according to Reuters’ calculations, narrowing from a 1.78 million bpd deficit in the previous month’s report.
The IEA’s 2027 forecasts imply that supply will outweigh demand by 5.05 million bpd next year, as demand growth is overshadowed by supply ramping up as Middle East barrels return.
The global oil market tipping into a large surplus in 2027 could “provide a welcome respite to the market and an opportunity to replenish depleted inventories, or to build new strategic reserves, as countries review their energy strategies and policies in response to the crisis,” the IEA said.
However, oil inventories could plunge further to historic lows before the market balance is able to shift to a surplus towards the end of this year, the IEA said.
Inventories have fallen at a rate of 3.8 million bpd since the start of the war on Feb. 28, with stock draws in May alone at around 4.6 million bpd, according to preliminary IEA data.
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SON DAKİKA | MSB kaynaklarından NATO zirvesi açıklaması: Gerekli çalışmalar sürdürülmektedir!
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