Brexit Fast Facts

IBISWorld presents a collection of fast facts on how Brexit has affected each sector of the UK economy.

Agriculture, Forestry & Fishing

Following Brexit, the key issues facing the Agriculture, Forestry and Fishing sector include significant changes to farming subsidies, disputes regarding fishing quotas and reduced access to EU labour markets.

Having previously received a large proportion of their income through the EU’s Common Agricultural Policy, sweeping policy changes have the potential to threaten the viability of UK farmers.

• Half of farmers surveyed by Riverford Organic Farmers said they may go out of business because of post-Brexit trade deals, rising costs and payment scheme uncertainty. Momentum among farmers for a Universal Basic Income for all farmers in Britain is also gathering.
• In January 2024, the government announced a 10% average increase in the value of payments of Sustainable Farming Incentive and Countryside Stewardship subsidies for English farmers in a bid to boost enrolment rates.
• The Sustainable Farming Incentive (SFI) is part of a package of payments that’s replacing the EU’s Common Agricultural Policy, which paid land managers for the amount of land in their care. The government has received over 20,000 applications to the SFI as of April 2024. 
• The leader of the National Farmers’ Union (NFU) has stated that the post-Brexit farming subsidy scheme in England hasn’t improved upon the old EU system and that it still disproportionately benefits large landowners. The new “public money for public goods” approach dissuades farmers from producing food, at a time when food security concerns are rife.
• As of January 2024, British farmers are no longer bound to EU regulation relating to lowering agricultural runoff into rivers. In addition, rules in place to prevent soil erosion will become more lax. The Salmon and Trout Conservation charity states that agriculture was the greatest threat to the health of river ecology in England.
• The UK and the EU have agreed a deal on sharing fish stocks amid an ongoing dispute with France over access to British waters. In 2023, the UK fleet will be allowed to catch approximately 140,000 tonnes of fish, no change on the number agreed in 2022 and a decline from the 160,000 tonnes of fish agreed in 2021. Under the EU-UK Trade and Cooperation Agreement (TCA), 25% of EU boats’ fishing rights in UK waters will be transferred to the UK fishing fleet between 2021 and 2026.
• Farming bodies have cautiously welcomed the government’s move to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, through which there will be improved access to 11 countries in the trade bloc. Minette Batters, the president of the NFU, said joining the trade bloc could present an opportunity to get more British food on plates overseas.
• According to a report from Parliament’s Public Accounts Committee, the UK government hasn’t established any way to measure whether £2.4 billion of annual farm payments through the Environmental Land Management (ELM) scheme will provide value for money. The report also raised concerns that incentives to convert farmland to other uses will increase the UK’s reliance on food imports.
• To address labour shortage in the agriculture sector, the UK government has announced an extension of the Seasonal Worker visa route to the end of 2024, allowing foreign workers to come to the UK for up to six months to pick both edible and ornamental crops.
• Defra has committed £12.5 million of investment into vertical farming as part of plans to drive homegrown fruit and vegetable production and push up the growth of high-tech horticulture.

Mining

Following Brexit, the key issues facing the Mining sector are related to the supply chain, investment and regulation.

There are both opportunities and challenges for the sector that have arisen from the UK’s exit from the EU.

• The EU-UK trade deal has been beneficial for the mining sector, as it’s kept trade volumes high and allows mining companies to build supply agreements with overseas companies and for the UK to form trade partnerships with other countries.
• Non-tariff barriers, such as customs checks, new paperwork and rules of origin, have increased supply chain costs for mining operators, with the cost of exporting and importing specialist equipment, vehicle parts and mined products increasing. Nevertheless, the UK’s exit from the EU opens up the possibility of new trade deals that could boost the trade of raw materials and strengthen the supply chain in the future.
• The mining sector stands to benefit from increased domestic investment as the UK government focuses more on boosting domestic productivity and reducing reliance on foreign goods, including minerals. Additionally, there have been reports that the mining sector could be key to boosting renewable energy in the short term. For example, British Lithium has extracted battery-grade lithium carbonated from granite mined at a pilot plant in Cornwall. This could help to build a reliable domestic supply chain for electric vehicle batteries rather than having to depend entirely on imports. The government could allow and invest in further explorations and new mines, aiding the sector. The North Sea Transition Authority has awarded 31 new oil and gas licences in the North Sea, further strengthening energy security as the UK becomes less reliant on imported gas.
• The UK’s only rare earths metal producer, Less Common Metals (LCM), has announced plans to expand and focus on the US and EU markets. The company claims Brexit has negatively affected the industry it operates in by creating export challenges, forcing LCM to seek a way to set up operations in Europe.
• The UK government has agreed to allow more oil and gas wells to be drilled in the North Sea, with the North Sea oil and gas industry aiming to cut its carbon emissions and transition away from fossil fuels. The joint venture investment would be up to £16 billion, supporting 40,000 jobs. Offshore Energies UK has reported that the UK North Sea contains oil and gas reserves equivalent to 15 billion barrels of oil, which would be enough to fuel the UK for 30 years, though it claims that more investment in exploration is needed. The government has approved drilling at the Rosebank oil field, which is one of the biggest undeveloped discoveries in UK waters, containing up to 300 million barrels of oil, according to the BBC. It’s owned by Norwegian energy company Equinor and British company Ithaca Energy. Oil production at the site is expected to start from 2026 and could account for 8% of the UK’s total oil production between then and 2030. The approval has been welcomed by some and is seen as a step towards safeguarding UK energy security, though it’s also received criticism from green campaigners.
• In the post-Brexit era, the government has the freedom to amend environmental legislation, which could have both positive and negative effects on the sector going forward. Despite net-zero targets, in December 2022, the government gave the go-ahead for the UK’s first coal mine in 30 years, to be located in Cumbria, drawing backlash and legal challenges from climate activists. It was announced in July 2024 that the coal mine approval was unlawful as carbon emissions from the mine should have been taken into account in the planning decision, as reported by The Guardian. The UK has also backed a moratorium on deep-sea mining, announcing this stance publicly for the first time and bringing the UK in line with over 20 countries that have called for a pause on deep-sea mining, including Germany and France.

Manufacturing

Following Brexit, the key issues faced by the Manufacturing sector are costs associated with meeting new legislation, disruption to EU-UK trade and reduced access to labour.

Exporters have recovered from a sharp initial drop in trade volumes immediately following the end of the transition period; however, the direct and indirect effects of increased administrative barriers to trade and reduced access to labour present a continued challenge for manufacturers. 

• According to Make UK’s survey of British manufacturers, nine out of 10 exporting manufacturers are facing challenges trading with the EU three years after the post-Brexit trade deal.
• Carmakers have received a big boost after a three-year delay to the electric vehicle tariffs that were set to be introduced in January 2024. A 10% levy on cars with batteries made outside of the EU or UK was proposed, raising the average cost of UK-built battery electric vehicles by £3,600 in Europe, according to the Society of Motor Manufacturers and Traders.
• In the Office for National Statistics’ (ONS) Business Insights and Impact on the UK Economy survey, 48.2% of manufacturing companies surveyed stated that they had incurred extra costs between 20 September and 2 October 2022 as a result of the end of the EU-UK transition period. This is significantly above the economy-wide figure, with the majority of cost increases attributed additional transportation costs and extra costs in the prices of goods and services imported.
• According to Make UK, 42% of manufacturers increased the proportion of their suppliers based in Great Britain over the two years through 2021-22. Make UK announced that almost half of UK manufacturers in a survey of more than 100 leading industrial companies said their EU suppliers had grown more cautious about doing business in Britain. Further, 40% of UK manufacturers said that political chaos had damaged the image of the UK as a place for foreign direct investment.
• The UK government extended the deadline for companies in Great Britain to display the UKCA mark on new and existing products from 1 January 2023 to 31 December 2024. The new legislation covers all products that previously carried the EU’s CE marking. The government has also implemented easements to the certification, in response to widespread concern regarding cost pressures caused by the transition to the new regime. These changes include recognising EU tests on existing products and dropping the requirement for imported parts to carry a UKCA mark before being fitted.
• A report published by the Public Accounts Committee found that the Competition and Markets Authority, Food Standards Agency and the Health and Safety Executive have been particularly affected by Brexit. Challenges have stemmed mainly from recruitment difficulties, a shortage of expertise and exclusion from EU information-sharing networks.
• The share of manufacturers in Northern Ireland struggling with the Northern Ireland Protocol, which governs trade in the region, declined from 41.3% in July 2021 to 23.9% in January 2022, according to a survey conducted by Manufacturing NI. This is expected to have facilitated increased trade volumes between Ireland and Northern Ireland, with the Central Statistics Office noting a 23% hike in the value of exports to Ireland from Northern Ireland and a 42% rise in the value of imports from Ireland to Northern Ireland.

Utilities

Following Brexit, the UK has left the EU internal energy market.

While the EU-UK TCA provides a broadly similar framework for the EU and UK energy markets, the energy sector has faced a reduction in the efficiency of trade through interconnectors, placing upward pressure on electricity prices.

• Britain’s Treasury could lose £3 billion a year from the sale of carbon permits after prices on its post-Brexit Emissions Trading Scheme fell faster than in the EU in 2023, according to Reuters.
• The TCA ensures continued tariff-free trade of electricity through interconnectors and generally follows the same principles set out in existing EU legislation, such as providing exemptions from requirements for third-party access and unbundling. However, Great Britain has lost access to implicit day-ahead and intraday market coupling arrangements on GB electricity interconnectors.
• The decoupling of UK and EU energy markets has had a significant indirect effect on Ireland’s energy market. Ireland’s Single Electricity Market (SEM) trades energy with Europe via two interconnectors running through Great Britain; these supply between 15% and 30% of typical demand on the SEM. Less-efficient interconnector flows between the EU and the UK spurred increased price volatility in early 2021, though this is expected to have eased since as electricity companies have become more accustomed to the new trade arrangements.
• The UK introduced a 25% Energy Profits Levy in May 2022, applying to profits made from extracting UK oil and gas. In the 2022 Autumn Statement, Chancellor Jeremy Hunt announced this would increase to 35% from 1 January 2023 and stay in place through March 2028. The tax is forecast to raise £40 billion over six years.
• At a meeting between 44 European leaders in October 2022, Czech Prime Minister Petr Fiala confirmed plans to renew the UK’s participation in the North Seas Energy Cooperation, which the UK previously left following the end of the Brexit transition period. This would help to strengthen European energy cooperation, with the scheme supporting the construction of wind farms and interconnectors.
• After withdrawing from the European Atomic Energy Community (Euratom), Britain signed a 21-page Nuclear Cooperation Agreement (NCA) with Euratom on 1 January 2021. The NCA closely tracks the Euratom treaty, ensuring continued supply of nuclear materials and equipment to the UK. The UK has also put new bilateral NCAs with Canada, the US and Australia in place.
• Despite having the freedom to set its own VAT rates following the end of the transition period, the UK government has ruled out removing VAT from domestic gas and electricity bills amid soaring energy costs.
• Britain and the EU are coordinating on implementing a new carbon border tax that would place a levy on imported carbon-intensive goods arriving in Europe. Discussions between the UK and the EU on climate-related issues are the latest signal of improving relations post-Brexit, with the tax seeking to level the playing field for the domestic companies regulated by the EU’s Emissions Trading System.
• The UK government has officially joined the EU’s flagship Horizon Europe programme, with British scientists and universities seeing the €95.5 billion scientific collaboration programme as vital to the country’s competitiveness, including in the utilities and energy sectors.

Construction

Following Brexit, the key concerns for the Construction sector relate to access to labour, the supply of raw materials and access to funding.

Contractors have consistently noted frictions arising from the end of the transition period as a weight on growth within the sector.  

• According to the ONS, the number of EU-born construction workers declined by 42% between 2017 and 2020, compared with a 4% drop in UK-born workers over the same period. The tightening of immigration rules from 1 January 2021 has limited access to EU labour markets, exacerbating these shortages.
• More than 240,000 workers left the construction sector between the first quarters of 2019 and 2022, indicating Brexit’s hard hit on construction’s labour supply. The sector needs to find and train the 266,000 extra workers the Construction Industry Training Board claims it will need by 2026.
• The UK government is planning to welcome in more foreign builders to tackle a chronic post-Brexit labour shortage in Britain’s construction sector using a shortage occupation list in a bid to boost residential construction volumes. The Migration Advisory Committee recommended bricklayers, plasterers, roofers and other construction workers be added to the shortage list.
• In the ONS Business Insights and Impact on the UK Economy survey, 30.8% of companies surveyed in the construction sector stated that they faced increased costs between 20 September and 2 October 2022 compared with the same period in the previous year, as a result of the end of the Brexit transition period. Costs associated with changing supply chains and transportation were the main causes of this.
• Following the loss of funding from the EU Infrastructure Bank, the UK launched a new UK Infrastructure Bank (UKIB) on 17 June 2021. The UKIB will provide £22 billion of funding for infrastructure projects through an initial capital fund of £12 billion and up to £10 billion of government guarantees.
• Approximately 60% of imported materials used in the UK construction sector are imported from the EU. Therefore, additional red tape implemented at UK ports has lengthened lead times in the sector. For example, in May 2021, the Timber Trade Federation stated that Brexit-related complications have squeezed UK timber stocks.
• In order to ease materials shortages faced by the construction sector, the UK government extended the deadline to replace the EU’s CE markings, which are used to certify construction products, with the new UKCA marking from January 2022 to December 2024. The deadline was formerly 1 January 2023, but the Construction Products Association noted a lack of testing capacity to meet this new, with the Construction Leadership Council estimating that the inability to certify radiators in the UK could delay the construction of over 150,000 homes in a single year. In response to these concerns, the government eased the bureaucratic demands associated with the introduction of the safety and quality assurance mark, with changes including the recognition of EU tests on existing products for the basis of awarding a UKCA mark.
• The EU construction regulatory frameworks that industry bodies had raised concerns around losing, such as the Construction (Design and Management) Regulations, Management of Health and Safety at Work Regulations, Work at Height Regulations and the Personal Protective Equipment (PPE) at Work Regulations, aren’t on the list of regulations set to be scrapped by the UK government, maintaining safety in the construction sector.
• New research indicates that the cost of construction materials has risen faster in the UK than in the EU since the Brexit referendum in June 2016. Between 2015 and 2022, the cost of materials in the UK increased by about 60%, according to Construction News.

Wholesale Trade

Following Brexit, the key issues facing the Wholesale Trade sector are labour shortages and non-tariff barriers.

Similar to other sectors in the economy, wholesale companies have reported severe labour shortages that have disrupted operations and supply chains.

Additionally, red tape when trading with the EU has created some trade friction and increased costs for wholesalers, hurting exports and imports.

• One of the biggest challenges faced by wholesalers has been a lack of labour, with companies reporting staff shortages in operational roles within depots. Moreover, truck driver shortages, arising from border friction following Brexit and because many former drivers have returned to their home countries, have significantly affected wholesalers and logistics companies.
• Citing Home Office data, The Grocer reports that UK wholesalers are hiring more high-skilled workers from outside of the EU, many of which from South Asian countries such as India.
• Companies have criticised the new paperwork and border checks required when trading with the EU, as they’re adding extra costs. They’ve even led to some distributors closing for good, like UK cycle distributor FLi Distribution. As a result, wholesalers have been forced to act. For example, Regal Wholesale (a leading UK-based distributor of health and beauty, and grocery discount products) has announced plans to set up a business in Europe to target post-Brexit trade, according to The Grocer. Around a quarter of its business was conducted within the EU prior to the Brexit vote.
• ONS data shows that the UK trade volumes suffered heavily in 2023, highlighting the continued effect of Brexit; they were 7.4% smaller in 2023 than in 2018, with imports down 3.8% and exports down 12.4%.
• In a survey by Make UK, 90% of UK exporting manufacturers said they’re still facing EU trade friction three years after the EU-UK trade deal commenced. This is bad news for wholesalers, as manufacturers often pass down cost increases to middlemen.
• Brexit has given the UK the opportunity to seek trade deals with other countries and regions. In April 2023, the UK signed a deal to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which includes 11 Asia and Pacific nations. This would loosen trade restrictions between members and reduce tariffs on goods.
• Post-Brexit border controls on animal and plant products that were originally planned to start in 2021 were delayed five times amid worries they would push up prices. These controls finally came into force at the end of January 2024, though new physical checks were pushed back from January 2024 to 30 April 2024. These new border checks have added further friction, creating issues and severe delays for flower and plant wholesalers. Most flowers and plants are imported from the Netherlands. Meanwhile, the announcement that consignments of EU plant and animal products face charges of up to £145 from the end of April has faced heavy criticism from trade groups, as it will likely drive food prices and deter EU producers from exporting to the UK.

Retail Trade

Following Brexit, the key issues facing the Retail sector are disruption to trade and additional customs controls and border checks on goods imported for resale.

However, the effect of the end of the transition period is difficult to untangle from that of COVID-19.  

• The first phase of the UK’s post-Brexit Border Target Operating Model was implemented on 31 January 2024, stating that imports of plant and animal products will now require export health certificates. However, the government has said to take a “light touch” approach and won’t turn away deliveries with incorrect paperwork to avoid empty shelves and soaring prices.
• Since October 2023, all meat and some dairy products between Great Britain and Northern Ireland have been required to carry labels. The government is putting forward legislation to stop post-Brexit checks, which hit retailers hard, particularly food stores. Supermarket M&S flagged that the complexity hit its profitability as chairman Archie Norman ruled out further European expansion due to the added expense of exporting fresh food.
• The British Retail Consortium has warned the additional labelling requirements and import checks from April 2024, thanks to Brexit and business rate increases, may undo recent progress to bring inflation back down.
• The UK continues to lose tax-free shoppers as tourists turn to Paris and Milan instead. The UK ended the tax incentive in 2021 and has resisted strong lobbying from retailers and other companies linked to the tourism sector to reinstate it. The 34,000 tourists who have shifted their tax-free shopping from Britain have also ramped up their spending from an average of €2,900 (£2437) per person in 2019 to €3,800 (£3193) in 2023, according to Global Blue, a Switzerland-based tax rebate provider that tracks passport numbers.

Transportation & Warehousing

Following Brexit, key issues facing the Transportation and Storage sector include changing aviation rules, disruption to international trade and reduced access to EU labour markets.

The EU-UK TCA ensures minimal disruption for UK airlines, though new immigration rules have exacerbated labour shortages in the logistics sector. 

• 81% of hauliers that responded to the government’s consultation on the new border charges stated that these charges will have a fairly or extremely negative impact on their businesses, according to Logistics UK.
• Following the EU’s decision to lift its antitrust exemption for shipping alliances, shipping companies are looking for clarification on the UK’s position, as the current deal expires in April 2024.
• UK airlines no longer enjoy traffic rights inside the EU and EU airlines no longer enjoy domestic UK traffic rights. This means that UK airlines are no longer allowed to provide intra-EU flights, while EU companies aren’t able to provide domestic UK flights. The impact of this is fairly minimal, as airlines that previously took advantage of these rights have established subsidiaries to preserve them.
• Chartered and freight airlines have been affected by new red tape relating to non-scheduled flights following the end of the transition period. Carriers running non-scheduled flights now have to apply for a permit from individual EU member states when they want to fly there. This process can often take days, causing several smaller airlines to lose a significant amount of business.
• Additional administrative burdens associated with the trade of goods between the UK and the EU has contributed to significant disruption at ports since the end of the transition period. The introduction of complex new customs declarations and rules-of-origin forms on 1 January 2022 has contributed to significant delays for lorry drivers carrying goods imported from the EU.
• Changes to freedom of movement rules following the end of the transition period have exacerbated labour shortages for transport companies. According to the ONS, the number of EU lorry drivers working in the UK declined from 43,000 in 2019 to just 30,000 over the year through September 2022.
• In the ONS Business Insights and Impact on the UK Economy survey, 26% of companies surveyed in the Transportation and Storage sector stated that they faced higher costs between 20 September and 2 October 2022 than in the same period in the previous year as a result of the end of the Brexit transition period. Extra costs in the prices of goods and services imported and additional transportation costs were the main causes of these increases.
• In October 2022, trials took place for the EU’s incoming Entry/Exit System. The new system – due to be introduced in late 2024 after being repeatedly delayed – will collect biometric data in the form of fingerprints and captured facial images from non-EU travellers each time they cross an EU external border. There are fears among industry leaders that the new system could cause significant disruption at UK borders.
• According to the ONS, the value goods exports to the EU was 1111.8% lower in 2021 than during 2018. In contrast the value of goods exports to non-EU countries declined by just 5.6% compared with 2018. Imports from EU countries declined by 16.8% between 2018 and 2021, compared with a 12.5% increase in imports from non-EU countries.
• The UK and the EU reached a new deal on commerce with Northern Ireland with goods traveling from Great Britain to Northern Ireland requiring less onerous checks and paperwork than those destined for the EU, reducing challenges to cross-border commerce between the UK and its largest trade partner. This deal paves the way for a bright post-Brexit future between the two countries, as well as improving the efficiency of UK logistics networks.
• The aviation sector has displayed a growing trend of UK airlines leasing European-owned aircraft, enabling airlines to bypass the requirement for flight crew to hold a British visa and avoid Brexit-related staff shortages.
• Ryanair boss Michael O'Leary has described the British labour market as “broken”, saying that leaving the EU had forced Ryanair to hire European and non-European workers on what he called “ludicrously” expensive visas, costing £3,000 each.
• According to UK Haulier, companies moving goods between Great Britain and Northern Ireland continue to seek clarity on the practical workings of the Windsor Framework. New processes designed to manage post-Brexit trade between Northern Ireland and the rest of the UK are set to be implemented on 30 September.

Accommodation & Food Services

Following Brexit, the key issues facing the Accommodation and Food Services sector are labour shortages and higher input prices.

The sector has been one of, if not the most, affected by the staff shortages since the start of 2021, when the points-based immigration system came into force.

Moreover, due to many of the sector’s inputs being purchased from abroad, trade friction and red tape since the end of the transition period have increased costs and weighed on performance.

• The biggest issue facing accommodation and food services businesses is a severe labour shortage since 1 January 2021, largely due to Brexit but also exacerbated by the COVID-19 pandemic. Thousands of workers returned to their home countries or took other jobs over 2021. Pubs, bars, cafes, restaurants and hotels have all been severely affected by the lack of labour, while job vacancies have surged.
• The increase in the minimum salary requirement for a skilled worker visa from £26,200 to £38,700 in April 2024, in a bid to cut migration, could deal a blow to the UK hospitality sector, which relies heavily on low-paid labour from abroad, particularly Europe. It could significantly raise labour costs, piling further pressure on hospitality businesses.
• Major food delivery platforms, including Deliveroo, Just Eat and Uber Eats, have agreed to check on riders’ immigration status following pressure from ministers over illegal working and exploitation in the sector amid a broader drive to cut net immigration, reports the Financial Times.
• Currently, Brits don’t have to apply in advance to visit the EU. However, once the new European Travel Information and Authorisation System (ETIAS) launches (likely in 2025) they’ll have to register online and pay in advance for a permit to visit the EU. This permit is considered a visa waiver rather than a visa. It will cost €7 (£6) for those over the age of 18 but will be free under 18s and those aged 70+. Successful applications will be valid for three years.
• The tourist sector has called on the government to reinstate the tax-free shopping scheme for overseas visitors and extend it to EU visitors to boost visitor numbers. Recently, Jeremy Hunt authorised the UK’s fiscal watchdog, the Office for Budget Responsibility, to review the “tourist tax,” which has potentially deterred high-spending international visitors from visiting the UK. VAT-free shopping for international visitors was scrapped in 2020, making the UK less competitive against other European shopping destinations.
• New paperwork, border checks and controls that are now required when trading with the EU have increased purchase costs for accommodation and food services companies, with input prices rising. Higher transportation costs and extended lead times have also weighed on the sector’s performance. As a result, some hospitality companies have looked into changing suppliers, attempting to avoid importing products from the EU.

Information

Following Brexit, the key issues facing the Information sector mainly relate to labour, funding and regulation.

Loss of funding and regulatory changes, straying away from EU frameworks, may hinder the sector’s growth.

However, this also offers the opportunity for the government to step in to fund and introduce legislation that supports technology and other business start-ups and innovation in the UK.

• Businesses in the sector have faced some difficulties recruiting talent from overseas due to the points-based immigration system. This may impede growth in the sector, as it relies on highly skilled staff. According to the Recruitment and Employment Confederation, approximately one-fifth of technology positions in London were filled by EU citizens in 2019. In June 2022, BT’s Openreach division claimed that Brexit is slowing the superfast broadband roll-out, criticising the process of hiring skilled workers from the EU bloc.
• The UK is no longer part of the Creative Europe programme, reducing funding for businesses in this sector. UK businesses are also excluded from the new European Innovation Council Fund, which is designed to support start-ups. The UK has also lost the benefit of participating in the Digital Single Market (DSM).
• As the UK is no longer part of the DSM, the UK’s leading mobile network operators (MNOs) have reintroduced roaming charges for some customers in 2022. The government has legislated to protect consumers from unexpected charges, ensuring obligations on MNOs to apply a financial limit on mobile data usage while abroad are retained in UK law. Furthermore, Ofcom has stated that telecoms companies must inform UK customers travelling abroad of roaming charges to protect customers from unfairly inflated bills.
• The UK has remained a part of the European Space Agency (ESA) following Brexit, as the ESA isn’t an EU organisation. On 7 September 2023, the UK agreed a deal to participate in the Copernicus Earth observation programme through to 2027. From the start of 2024, UK scientists will have access to valuable Earth observation data, while the UK sector will be able to bid for contracts worth hundreds of millions.
• Since the UK is no longer part of the EU Galileo or European Geostationary Navigation Overlay Service programmes, the government has invested in OneWeb, an intended alternative sovereign global satellite system, and has trialled Starlink satellite technology for internet access in remote areas.
• The UK now has the freedom to introduce new legislation and diverge from EU frameworks in relation to technology and telecommunications. As such, the government introduced the Online Safety Act in October 2023. Ofcom has outlined over 40 measures that tech companies must implement to protect underage users from harmful content online and meet incoming legal requirements. These include age verification and better moderation and form part of the UK’s Online Safety Act.
• In June 2022, the UK government unveiled a new UK Digital Strategy with the aim to make the UK a global tech superpower by addressing tech sector skills, investment and infrastructure. Similarly, the government has announced it will avoid regulation on AI in the short term due to concerns that rules could hinder investment and growth. In the 2023 Autumn Statement, it was also announced the government will raise spending on computer power by £500 million to develop AI capabilities, lifting the total planned investment to £1.5 billion.

Finance & Insurance

Following Brexit, the key issues facing the Finance and Insurance sector are loss of passporting rights, equivalence, regulatory uncertainty and labour.

The regulation of the UK Financial Services and Insurance market is governed by a number of key regulations, many of which were not covered in EU-UK TCA.

• In June 2024, the Prudential Regulation Authority finalised Solvency II rules – specifically the price adjustment mechanism – boosting investment for UK insurers. This initiative aims to enable UK life insurers to allocate more of assets into the productive economy, supporting the government’s objectives for increased investment in productive and green finance.
• In the immediate aftermath of Brexit, 44% of the largest financial services firms in the UK planned to move part of their operations (and/or staff) to the EU. There was something of a deluge in terms of the number of companies leaving the EU between 2017 and 2021, however, which has stabilised since. This indicates that, while a big portion of the UK’s elite financial services companies did leave the UK in the wake of Brexit, most left soon after the referendum took place. In December 2023, Dutch company Bunq, the second-largest neobank in the EU, announced plans to return to the UK having left the country after Brexit.
• In December 2023, the UK signed a financial services deal with Switzerland based on the mutual recognition of each other’s regulatory regime, making it easier for financial firms and high net-worth individuals to conduct business with each other.
• The insurance sector has urged ministers to adopt a light-touch approach to captive insurers to encourage businesses to bring these subsidiaries onshore and boost the competitiveness of the sector post Brexit. Captive insurers are in-house insurance units set up by large companies to cover their own risks.
• In December 2023, the Financial Conduct Authority ruled out any extension of the temporary post-Brexit licensing regime beyond the end of 2023. The temporary regime offered companies that had been using their European licences to passport into the UK for up to three years from Brexit to make additional arrangements.

Real Estate and Rental and Leasing

Following Brexit, the key issues facing the Real Estate and Rental and Leasing sector are immigration rules, investment and relocation.

• ONS data shows that net migration of EU nationals to the UK has slowed – it even turned negative in 2020. This hinders demand for real estate, rental and leasing services. However, ONS figures from May 2023 show a large net migration to the UK, driven by immigrants from non-EU countries, with over 600,000 more people arriving long term than leaving in 2022, an increase of nearly 120,000 compared to 2021. This is beneficial for the real estate sector, as these people will seek housing.
• The UK High Court ruled that a government registration regime requiring Europeans with pre-settled status to make a second application to the EU Settlement Scheme was unlawful. The regulation would have affected over 2.5 million EU citizens living in the UK, which could have lost their right to residence if they failed to apply for settled or pre-settled status within five years. The Home Office has decided against appealing the decision, which has been welcomed by the Independent Monitoring Authority.
• The uncertainty surrounding Brexit encouraged some companies to relocate offices and move away from the UK, or at least reduce their investment and expansion plans, with non-residential property sales activity declining since the Brexit vote. According to HMRC data, UK non-residential property transaction volumes (seasonally adjusted) declined by 7.9% between 2016-17 and 2019-20.
• Residential property transaction volumes have remained strong, with HMRC data showing that there were 7.24 million transactions between July 2016 and May 2022, a rise of 14.4% on the previous six years. Nevertheless, according to estate agency Knight Frank, UK house prices grew by 32% between July 2016 and May 2022, while central London recorded a 12.7% rise in prices, far behind the rest of the country.
• Estate agent Benham and Reeves states that nearly 250,000 homes are owned by overseas buyers, with the total market value of foreign homes standing at £90.7 billion across England and Wales, as reported by City AM. This suggests that Brexit hasn’t led to an exodus of foreign homeowners.
• As Brexit-related uncertainty has waned, more large commercial property deals have taken place, showing some foreign investor confidence in the UK, particularly in London’s real estate market.
• The EU faces a potential €450 million office space bill after the European Medicines Agency, the EU’s drugs regulator, quit London as a result of Brexit. The office space was sublet to WeWork in 2019 but the business has gone bankrupt, suspending rent payments, according to The Financial Times.
• As cross-border movement has become more complicated, Britons wanting to move to the EU are finding it more difficult, with visas in place and each country having its own residency requirements. This may have put off some Britons from looking for homes abroad and instead led them to buy a house in the UK.

Professional, Scientific & Technical Services

Following Brexit, the key issues facing the Professional, Scientific and Technical Services sector are labour, exports and regulation. The EU-UK TCA contained little provisions on professional services.

• The lack of mutual recognition of professional qualifications hindered the sector and some industries within the sector have lost out, particularly professional services businesses. For example, UK lawyers lost the ability to automatically work in the EU, making UK law firms less competitive; as a result, some may relocate offices to or open new offices in the EU. Architects have also warned that winning work in the EU has become harder. Nevertheless, those who already have qualifications accepted in the EU will continue to have that recognition.
• Following KPMG’s lead, Deloitte has pulled job offers to some foreign graduates in the UK following the government’s decision to raise the Skilled Worker visa minimum salary from £26,200 to £38,700 in April 2024.
• According to an external member of the Bank of England’s Monetary Policy Committee, Britain has lost out on £29 billion of business investment due to Brexit, hurting businesses in the professional, scientific and technical sector.
• Data from the Department for Business and Trade shows that the number of foreign direct investment projects in 2023-24 was 31% below the peak in 2016-17 and 6% less than in the previous year. The 1,555 FDI projects is the second-lowest figure recorded since 2011-12.
• As the UK has left the EU, it has the opportunity to seek better deals and set its own regulatory frameworks, though it also wants to avoid significant divergence from EU rules. One of the most anticipated regulatory changes in the UK relates to the overhaul of the audit sector due to its high-profile failings. The Financial Reporting Council, the UK’s accounting regulator, has decided to drop many of its anticipated UK boardroom reforms, citing the need to protect the competitiveness of London and encourage economic growth. Some of the abandoned plans include greater requirements for diversity reporting and a new audit committee overseeing ESG issues. This move marks the latest U-turn in reforms aimed at the accounting sector, drawing criticism.
• In December 2023, UK and Switzerland audit authorities jointly approved mutual recognition of audit qualifications, allowing auditors to work more easily in each country, boosting both countries’ audit markets.
• ONS figures show that UK services export volumes have soared 63% in real terms between 2010 and the end of 2023, growing nine times faster than export of goods, showing the UK’s shift away from manufacturing amid Brexit.
• Following positive talks towards the end of 2023, the UK announced a deal to rejoin the EU’s €95.5 billion Horizon Europe research programme as an associate country from January 2024. The deal includes an €800 million discount for the UK, as it was locked out of the programme for nearly three years. The UK will provide about €2.6 billion yearly. The UK government has launched an advertising campaign encouraging eligible businesses to use the programme, with the government paying over £2 billion annually for the scheme. However, the EU is encouraging the UK to ease visa procedures and costs for European scientists going to the UK, warning it risks missing out on Horizon Europe’s full benefits.
• In November 2022, the UK and Switzerland agreed on a research and innovation collaboration deal. The UK has also been building closer relationships with Sweden, Switzerland and New Zealand, with the UK science minister announcing in December 2022 a £119 million international science partnerships fund in Tokyo.

Education

Following Brexit, the key issues facing the Education sector are the end of freedom of movement for international students and funding, particularly for tertiary level educational providers.

However, the effect of the end of the transition period is difficult to untangle from that of COVID-19.

• The latest UCAS data on the 30 June deadline cycle for undergraduate applications for the 2024-25 academic year study shows a 1.9% dip in international student applications on the previous year. The number of applicants from the EU continued a post-Brexit decline, dropping by 4.1% to 21,470. While the income of higher education providers has been steadily increasing, the data suggests the rise is fuelled by non-EU fees, which have more than doubled since 2016-17.
• To be eligible for home student status in any academic year, some students had to be settled at the start of their course, but this is no longer the case for academic years starting on or after 1 August 2024. With some exceptions, students must be “ordinarily resident” in the UK on the first day of the first academic year of their course and for the three years before that date. The three-year residency rule applies to UK nationals who have been living abroad (see below for an exception for UK nationals living in Europe).
• In December 2023, the UK relaxed post-Brexit entry requirements for school trips originating from France. French and EU nationals at schools in France who cross the Channel for a language-learning holiday will now need to carry only a simple identity card, as was the case before the UK formally departed the EU in 2021. Non-EU nationals attending French schools will still need a passport to enter the UK on a language-learning holiday, although London has scrapped the need for them to have a visa costing £115.
• Brexit meant new EU students would face higher fees from 2021 and wouldn’t be eligible for fee loans. Applications from EU students fell by 40% in 2021. The number of EU students starting full-time undergraduate courses fell by 67% between 2020 and 2023, to its lowest level since 1994. Meanwhile, the number of non-EU overseas applicants increased to record levels in each year from 2019 to 2022, despite concerns over COVID-19. However, acceptances fell by 1.5% in 2023 to their lowest level since before the pandemic. There was no increase in non-EU students to offset the fall in home and EU students.
• More than 40,000 young people are taking part in the Turing Scheme that was introduced after the UK left the EU. The Turing scheme replaced the bloc’s Erasmus+ system. It’s a real game-changer for students from disadvantaged backgrounds, empowering them with transformative opportunities abroad, offering a chance to experience other cultures and learn vital skills for life and work.

Healthcare & Social Assistance

Following Brexit, the key issues facing Healthcare and Social Assistance sector are labour, supply of pharmaceuticals and medical devices and divergent legislation.

The effect of the end of the transition period is difficult to untangle from that of COVID-19.

• A report from the Nuffield Trust shows regular shortages of life-saving medicines are the new normal in the UK – and Brexit has made the issue harder to tackle. Health column Pulse has reported shortages of medicines for diabetes, ADHD, epilepsy, menopause and scabies, as well as antibiotics. There are also now double the number of notifications by drugs companies warning of impending shortages than there were three years ago, rising to 1,634 last year.
• Minimal progress has been made on the post-Brexit falsified medicine scheme, with former Health Minister Andrew Stephenson stating the Department of Health and Social care was still considering the right approach for the future at the end of January 2024.
• The EU is seeking to safeguard its supplies by switching to a system in which its 27 members work together to secure reliable supplies of 200 commonly used medications, such as antibiotics, painkillers and vaccines. The centralised supply strategy across the bloc could threaten to leave Brexit Britain behind with shortages. At the same time, the UK is currently facing major shortages of medicines, including for type 2 diabetes, motor neurone disease and cancer.
• An investigation from The Bureau for Investigation Journalism and Citizen’s Advice revelated collected testimonies from over 175 people working for 80 care providers under Britain's health and care worker visa and found more than 150 migrant health and care workers facing abuse or exploitation but remained silent to protect visa-sponsored jobs. The actual number is likely higher.
• Former health secretary Steve Barclay announced a new fast-track process for clinical trials, halving the time it takes for some medicinal research to get under way. In December 2023, the Medicines and Healthcare products Regulatory Agency cleared a backlog of more than 2,000 applications. The changes were prompted by regulators have more freedom to design their own processes, including identifying trials that can be authorised more quickly.
• According to the latest NHS staff from overseas statistics, the proportion of NHS staff reporting an Asian nationality climbed from 4% in 2016 to 8.6% in June 2023. Reported African nationality rose from 1.8% to 3.8% since 2016. Reported EU nationality increased from 2.9% in 2009 to a high of 5.6% in 2017. Since then, it’s gradually fallen and was 5.2% in June 2023.

Arts, Entertainment & Recreation

Following Brexit, the key issues facing the Arts, Entertainment and Recreation sector are access to funding, particularly for creative industries, and free movement of labour for professional sports clubs. 

• Additional border requirements effective from January 2024 interfere with the transportation of racehorses to England ahead of Cheltenham. The additional UK customs rules mean shipping services must complete extra electronic documentation before the cargo arrives at ports. Without it, some of the world’s most sought-after horses – many of them from Ireland – would face issues crossing the sea.
• After Brexit, performing artists can no longer tour and work freely across the EU and the UK. As a result of leaving the EU Customs Union and the single market for services, UK touring artists are facing additional administrative requirements and costs. UK industry representatives are calling for further action, including an EU-wide visa waiver for creative industries or a “cultural exemption” from the TCA. The European Commission’s and UK government’s position is that there’s no prospect of changing the TCA in the near future.
• The UK art market continues to be hit by Brexit. Since Brexit officially came into place in 2020, art and antiques (along with most other cultural goods) entering the UK from the EU are subject to a 5% import VAT and significant red tape. This has hugely impacted cross-border trade; imports to the UK in 2022 were £2.5 billion, less than half their level in 2015, the year before the Brexit vote.