United Kingdom - Market OverviewUK Market Overview
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On June 23, 2016, the UK voted to leave the European Union (EU), ushering in a period of economic and political uncertainty that perists as the UK seeks to define a new, post-Brexit, relationship with the EU and its other key trading partners. As part of the Brexit process, the UK Government triggered the two-year exit process by invoking Article 50 of the Lisbon Treaty in March 2017. The UK and the EU are currently negotiating the terms of the UK's withdrawal and will discuss a framework for their future relationship ahead of the UK's scheduled departure from the bloc on March 29, 2019.
Formal Brexit negotiations started in June 2017. In March 2018, both sides agreed to a 21-month transition deal (from March 29, 2019 to December 31, 2020) during which the UK would effectively remain in the EU Customs Union and Single Market. While the UK would be required to continue to follow EU rules without being able to participate in EU decision-making processes, the UK would technically be free to negotiate and sign new trade deals during this time. The most immediate focus of UK-EU discussions is on agreeing to a final “divorce deal” – the status/rights of citizens (3.2 million EU citizens in the UK;1 million Britons in the EU); the divorce bill (what the UK will pay to cover long-term commitments made to EU programs while the UK was still an EU member); and the status of the border between Northern Ireland and the Republic of Ireland – before the March 2019 Brexit deadline. Subsequent negotiations will then center on the future trading arrangement between the UK and EU.
Despite the challenges and uncertainty posed by the continuing Brexit process, the UK remains a critical market for American exports of goods and services and a key destination of U.S. foreign direct investment.
The United Kingdom (estimated 2017 GDP of $2.6 trillion) is a major international trading power, with the fifth-largest economy in the world according to the World Bank Group, the second-largest economy in the European Union.
While the United Kingdom is geographically relatively small (about the size of Oregon), it has a population of more than 65 million people.
Highly developed, sophisticated, and diversified, the UK market is the largest in Europe and the fifth-largest in the world for U.S. goods exports. The United Kingdom is the largest market in the world for U.S. service exports.
With few trade barriers, the United Kingdom serves as the entry market into the European Union for more than 43,000 U.S. exporters. U.S. exports to the UK of goods and services combined were estimated to be worth about $122 billion in 2017.
Major categories of U.S. exports include Aerospace Products, Agricultural Products, Cyber Security, Medical Equipment, New Build Civil Nuclear, certain consumer goods (such as Pet Products), Smart Grids, Sustainable Construction, and Travel & Tourism.
The UK ranks third in overall number of people arriving to the United States (behind Canada and Mexico, respectively), and thus the UK is the number one overseas market for travel to the United States, with four to five million UK travelers visiting the United States each year. British travelers are estimated to contribute over $12 billion to the American economy annually.
The U.S.-UK investment relationship is the largest in the world, with cumulative bilateral stock in direct investment valued at more than $1.2 trillion in 2016. More than two million jobs, approximately one million in each country, have been created over the years as a result of this investment.
More than 7,500 U.S. firms have a presence in the United Kingdom, which is also the top location in Europe for U.S. regional headquarters covering Europe, the Middle East, and Africa. A major international financial, media, and transportation hub, London is also headquarters to the European Bank for Reconstruction and Development (EBRD).
The UK economy grew by 1.7% in 2017, a modest deceleration from previous years, reflecting uncertainty caused by the Brexit vote and what it will mean for the UK economy. Some observers expect the economy to weaken slightly in 2018 as consumer confidence could be suppressed by factors such as rising inflation and potential currency fluctuations.
United Kingdom Trade Development and Promotion