UK goods exports to the EU stood 18 percent below their 2019 level in real terms by 2024, while services exports had recovered past pre-Brexit benchmarks, according to Federal Reserve analysis published in January 2026. The divergence between goods and services draws a precise line around where departure from the EU single market and customs union has exacted its clearest cost.

The goods figure is the sharper edge of the data. Leaving the single market eliminated frictionless access to a rulebook that governs tariff-free movement and mutual product recognition across 27 member states. The customs union exit layered additional administrative costs — rules of origin requirements, customs declarations, sanitary and phytosanitary checks — onto exporters who had operated without them for decades. These are not abstract compliance burdens. For manufacturers running just-in-time supply chains or small agri-food exporters operating on thin margins, each added process is a cost that competitors inside the EU do not bear.

The Federal Reserve's finding that services exports exceeded pre-Brexit levels by 2024 is real, but context matters. UK services trade with the EU was never governed by the single market in the same way as goods. The EU's services market remains substantially fragmented, and UK professional and financial services firms lost passporting rights — the mechanism that had allowed them to sell across the bloc from a single domestic licence. Recovery above pre-Brexit baselines reflects global demand for UK services more broadly, not a resolution of the specific market-access constraints Brexit introduced.

Earlier granular estimates pointed toward the same structural damage in goods. The Centre for European Reform calculated that leaving the single market and customs union had reduced UK trade in goods by 13.5 percent as of May 2021 — an early read taken while businesses were still absorbing new border procedures introduced at the start of that year. The Fed's 2024 figure of 18 percent in real terms, drawn from a longer time horizon, suggests the drag has persisted and deepened rather than faded as adjustment kicked in.

Sam Lowe of the Centre for European Reform has noted that instruments like freeports could deliver localised economic benefits post-Brexit, but assessed them as insufficient to offset the systemic costs of customs union exit. That framing holds in the aggregate data: targeted industrial-policy tools operate at the margin; the customs union cost is structural and economy-wide.

The goods-services split also has a distributional dimension that aggregate trade figures obscure. Goods trade is disproportionately important to regional manufacturing bases — the Midlands, the North of England, parts of Wales — while services concentration skews heavily toward London and the South East. A recovery that shows up in services aggregates while goods remain durably suppressed is, in practice, a recovery that maps unevenly onto the UK's economic geography.

The Fed paper's framing of these findings as "lessons from Brexit on the effects of trade disintegration" situates the UK case within the broader literature on trade policy reversal. Economists have long modelled the costs of disintegration as asymmetric with integration gains — harder to reverse, slower to appear in full, and prone to understating because some trade simply never forms rather than being lost from a prior baseline. The 18 percent goods figure, held five years after the transition period ended, is consistent with that literature.

What the data cannot yet resolve is whether any future UK-EU reset — including the defence and security pact agreed in May 2025 and the tentative steps toward a UK-EU veterinary and SPS agreement — will materially alter the goods trajectory. Those negotiations have moved cautiously; none of the frameworks under discussion would restore single market membership or customs union participation. The structural barriers in goods trade remain, and the cost clock that started running in January 2021 has not stopped.