A raft of statistics released today shed light on the UK’s economic performance in 2025. While its goods trade deficit rose steeply to record levels, the inverse was true for services, which saw its surplus peak.
Elsewhere, moderate annual GDP growth was undercut by a slow end to the year, with chancellor Rachel Reeves citing improved EU trade ties as a key part of the solution.
UK goods deficit rises
Data from the Office for National Statistics (ONS) shows a growing divergence in the UK’s trade balances for goods and services.
Last year the trade deficit for goods reached its widest margin on record, with the UK importing £248.3bn more than it exported. That figure leapt £30.5bn on the previous year.
Make UK economist Fhaheen Khan told the FT that the data reflected a long-term decline in the UK’s manufacturing output, but added that comparatively lower energy and production costs in other countries over the past year also favoured exports.
By contrast, the UK’s services exports surplus grew £16.4bn between 2024 and 2025, taking it to a record high of £191.8bn.
2025 GDP figures
This data was released alongside estimates for UK GDP growth in 2025, which came in at 1.3%.
UK chancellor Rachel Reeves took the news as vindication of the government’s plan for growth, saying that “thanks to the choices we have made, we’ve seen six interest rate cuts since the election, inflation falling faster than predicted and ours is the fastest growing G7 economy in Europe”.
However, experts have noted the decline in momentum over the course of the year, with growth slowing to just 0.1% in the final quarter. Lindsay James, an investment strategist at wealth management firm Quilter, told the Guardian “the Christmas period was weak by historical standards”.
Despite strong export performance, he also noted that overall services growth was revised down from 0.2% to nothing between August and November. Speaking to the BBC, ONS director of economic statistics also said it was “notable” that services didn’t grow at all in Q4, as it’s “so often a driver of growth” for the UK economy.
Reeves on EU trade
One avenue Reevs believes the UK should explore, to boost GDP, is the EU-UK relationship, which she described as the “biggest prize” for growth.
She added that “Britain's future is inextricably bound with that of Europe's – for economic reasons, but also reasons of security, resilience and defence”.
Speaking at a London School of Economics event yesterday (11 February), she followed a succession of senior cabinet ministers who have weighed in on the UK’s trading relationship with the EU in recent months.
Reflecting on the UK’s trade ties with Europe, she told the audience that “economic gravity is reality, and almost half of our trade is the EU”.
“I’m all up for doing deals with India and the US and South Korea, but none of them are going to be as big as what we can get with better trade relations with Europe.”
Opposition response
The ability of the UK to set its own trade agenda, striking trade deals independent of EU, was touted as a major benefit of Brexit by previous Conservative administrations.
Responding to Reeves’ comments, shadow chancellor Sir Mel Stride said it’s “no secret that Reeves and Starmer have wanted to row back on Brexit since day one”, adding that Labour is trying to “blame anyone but themselves for their economic failures”.
The Labour government has undertaken a ‘reset’ of relations with Europe since entering office in 2024, and is currently negotiating the terms of a sanitary and phytosanitary agreement announced last year.
Legislative challenge to Trump’s Canadian tariffs
Lawmakers in the US House of Representatives – Congress’ lower chamber – have voted to reverse Trump’s tariffs on Canadian goods. Six Republicans were among those supporting the measure, which only passed by eight votes: 219-211 in favour.
As Global Trade Today reported yesterday, the House rejected Republican member and speaker Mike Johnson’s attempt to block all further debate on the topic, with three Republican’s among those dissenting.
While the vote is largely symbolic, requiring approval by the Senate – Congress’ upper chamber – and then Trump himself, it reflects growing discontent with the president’s tariff regime and economic agenda within his own party, ahead of what is widely anticipated to be a difficult set of midterm elections later this year.
Trump took to his platform Truth Social to try to keep his party in line, writing that Republican senators voting against tariffs “will seriously suffer the consequences come Election time”.
The US’ judicial branch, the Supreme Court, is also expected to rule on the legality of tariffs in the coming month.
Elsewhere in the headlines
· EU member states debate a new protectionist push, amid their own low growth figures, including discussion on a “Buy European” drive
· In the latest news on sanctions evasion, Reuters reports that European and Asian cars are being transshipped to Russia through China
Yesterday in trade
· EU parliamentarians agreed to terms on the bloc’s trade pact with the US, taking the deal a step closer to enforcement
· The UK’s competition watchdog took a softer approach to regulating US tech firms than the EU
· Expert insight on EU customs reforms, including the removal of the de minimis threshold, was shared following a Chartered Institute webinar
