How will the EU trade deal benefit UK business?

Passport queues and fishing waters may have taken up most of the headlines in the wake of the wide-ranging UK-EU deal just signed, but the new communiqué offers much in the way of practical promise for UK businesses too.

The food and drink sector, in particular, has reason to welcome the element of the deal relating to export checks. Proposed new SPS (sanitary and physosanitary standards) arrangements would bring about a significant reduction in the extra certifications and inspections that agrifood exporters have faced for the past four years.

Most routine border checks on animal and plant shipments to and from the EU will end, subject to confirmation of the deal. This would have a huge effect for exporters – saving thousands of pounds in certificate costs on a mixed load of animal products, for instance.¹

“Extra bureaucratic burdens have been a deterrent to the international ambitions of smaller businesses, in particular,” says Stephanie Betant, Head of Global Trade Solutions at HSBC UK. “This part of the agreement is not time-limited, so once this is confirmed, businesses will have certainty that they can avoid lengthy form-filling and anxiety about their products being trapped in border queues.”

The UK government believes that the economy will benefit by nearly £9 billion by 2040 ² through the SPS deal, alongside closer cooperation on carbon emissions.

The latter element would link the emissions trading systems (ETS) run by the UK and EU. An ETS places a cap on emissions, and auctions allowances to companies that emit. ETS linkage agreement allows companies to surrender an allowance purchased in one jurisdiction in the other.

Once confirmed, the UK-EU linkage means savings for UK businesses, albeit in the form of exemption from a levy they do not yet pay – the ‘carbon border adjustment mechanism’, a top-up to the EU ETS price imposed on imports. Research suggests this was set to cost UK exporters up to £800m a year. ³

It’s not clear if this will be completed before the EU’s ETS regime becomes operational in January 2026 (the UK’s equivalent kicks in a year later). While there may be a gap, UK businesses are set to benefit in the long run.

“With clear incentives to cooperate on carbon reduction efforts, ETS linkage is a common-sense move for which UK industry has long been calling,” says Cora McLaren, Managing Director of International Subsidiary Banking at HSBC UK. “Again, this has the potential to remove trade barriers, bolster certainty and encourage investment in clean technologies.”

The deeper economic cooperation promised in the communiqué signed by London and Brussels also promises wider benefits for other sectors, once details are firmed up.

For example, the new security and defence partnership paves the way for UK defence businesses to be eligible for cheap loans through a £150bn fund established to boost European security.

Hospitality businesses have welcomed a potential ‘youth experience’ scheme that would see young people from the EU allowed to come to the UK to work for a limited time. This could support recruitment in a sector still struggling with high vacancy levels.

“It’s been a challenging decade for UK businesses that deal with EU countries,” Stephanie Betant adds. “This is a reset, not a rewind – but it opens the way to more efficient, less costly business relationships with our biggest trading partners. Combined with the recent India and US agreements, it provides a positive shot of confidence to UK businesses with an international outlook.”

The recent US court judgment on tariffs adds a new twist and underlines the shifting nature of the trade picture, but if ultimately upheld would in theory be a further positive for business.

“At HSBC UK we stand ready to help every business make the most of these emerging opportunities,” concludes Stephanie. “With an extensive presence in all these markets, we are ideally placed to provide useful connections, market knowledge and the specialist finance support businesses need.”