UK trading partners: China returns to top 10 as EU trade slumps
China has returned to become a top 10 UK trading partner for the first time since 2022 after a slump in trade activity with the European Union.
China is now the eighth largest trading partner for the UK, after countries like Ireland and Italy have declined significantly in popularity, data from Santander’s latest Trade Barometer revealed.
“As the UK faces ongoing domestic challenges, businesses are looking beyond our borders for growth opportunities,” said Jane Galvin, head of corporate clients at Santander UK.
“There is a real urgency for companies to tap into international markets, despite the more difficult and often unpredictable global landscape.”
A total of 52 per cent of UK businesses reported that they viewed overseas trade as more important as a result of ongoing domestic economic challenges, more than twice as many as five years ago.
Confidence in domestic growth also dipped slightly, from 74 per cent in Autumn 2024 to 70 per cent.
Germany remained the top trading partner of the UK, but saw the number of firms trading with it drop from 59 per cent to 55 per cent as the US surged into second place at 54 per cent in front of France.
The news comes following the launch of a new UK-US trade deal last week, which will see tariffs on steel and aluminium slashed to zero, having been set at 25 per cent earlier this year.
“While Germany and France are still high on the list of markets UK firms do business with, there is a clear downward trend in UK-EU trading activity,” added Galvin.
For future trade, Ireland dropped to just seven per cent, down from 13 per cent in Autumn 2023, while Italy fell to eight per cent from 13 per cent over the same period.
There has also been a renewed focus on India following the signing of the new UK-India trade deal, though 79 per cent of UK firms currently doing business in the country said they still face barriers in bureaucracy, inconsistency in policy, tax regime and industry regulations (34 per cent) and difficulties finding trusted partners (32 per cent).