UK trade with the US, India and EU (Parliamentary evidence)
Overton Advisory submitted this written evidence to the Business and Trade Select Committee. The original evidence is available here
Summary
The US–UK Economic Prosperity Deal (EPD) is best understood as a short-term stabiliser rather than a comprehensive trade agreement. It provides targeted relief for sectors such as automotive and aerospace, helping preserve existing trade and jobs, but its impact on the wider economy will be limited given that services, where most UK-US trade occurs, are largely excluded. The deal is narrow, quota-bound, and reversible, but is a commendable achievement during a period of global trade uncertainty. The EPD should be followed quickly by negotiations to lock in binding tariff reductions, expand regulatory cooperation, and establish credible dispute-settlement mechanisms, where possible. For producers, larger exporters in goods sectors stand to benefit most, while SMEs and services firms will only see meaningful gains if commitments on standards, digital trade, and customs processes are delivered. Parliament should judge the agreement’s success over time against clear benchmarks: growth in covered trade versus comparators, measurable reductions in non-tariff barriers, and the conversion of temporary measures into durable, enforceable commitments.
The UK–EU Summit’s Common Understanding represents a constructive reset in relations rather than a comprehensive trade agreement. It reaffirms the Withdrawal Agreement and TCA while signalling cooperation in fisheries, energy, sanitary and phytosanitary (SPS) rules, carbon markets, youth mobility, and defence. These commitments could reduce costs for agri-food exporters, shield UK industry from the EU’s carbon border adjustment mechanism tax, and enhance energy security. However, most of these ambitions remain political intentions rather than binding provisions and will require sustained negotiation and binding commitments. The Government has partially achieved its objectives by restoring trust between both sides and setting a pragmatic direction of travel, though delivery is still to come. In the short term, benefits will be concentrated in agriculture, energy-intensive industries, and larger firms with established EU supply chains, with SMEs and consumers likely to gain the most if commitments on standards, mobility, and digital trade are implemented. UK standards in food, labour, and the environment are preserved, but Parliament should scrutinise technical negotiations to ensure safeguards hold. Success should ultimately be judged on whether these commitments are translated into enforceable agreements that reduce post-Brexit frictions, expand economic opportunities, and create a more stable and predictable UK–EU relationship.
Policy focus: US-UK Economic Prosperity Deal
1. Do the agreements represent a good deal for the UK?
The UK-US Economic Prosperity Deal (EPD) represents a positive short-term victory for the UK Government during a time of global trade volatility, but should best be thought of as a useful short-term stabiliser rather than a destination or a long-term outcome.
The EPD is a non-binding, interim framework designed to mitigate tariff exposure and maintain a channel for resolving sector-specific barriers while broader trade negotiations continue. Early, targeted measures, such as reducing tariffs on UK car exports to 10% within quota and removing certain aerospace tariffs, provide short-term relief and some stability for investors amid global trade volatility. However, the package is narrow, reliant on executive actions and quotas, and reversible. It does not yet establish detailed, enforceable timelines for regulatory cooperation or a robust dispute-resolution mechanism. The EPD should therefore be followed quickly by negotiations to lock in binding tariff outcomes, expand and clarify TRQs, establish a timetable for mutual recognition/regulatory cooperation, and create a credible dispute-resolution mechanism so the UK is not managing change or volatility one sector at a time.
2. To what extent has the Government achieved its stated negotiating objectives?
The UK Government has partially achieved its stated negotiating objectives in the short-term, but only for specific sectors. Achieving them in full requires converting intentions into binding instruments, expanding scope beyond narrow quotas, establishing clear timetables for MRAs/digital trade, and insulating commitments from future Section 232 actions from the US side. Parliament should track TRQ utilisation, sectoral export growth vs. non-covered sectors, concluded MRAs/digital provisions, and the share of commitments converted into durable, enforceable measures.
Aim 1: grow the quality and volume of mutually beneficial trade and jobs.
The EPD creates targeted openings (e.g., a U.S. quota allowing up to 100,000 UK vehicles imported into the US at a 10% tariff; UK duty-free TRQs for U.S. beef and ethanol). These should support trade flows in the covered lines but they are narrow, quota-bound, and reversible. They also cap current flows rather than bolster future growth. On their own, they are unlikely to move aggregate trade materially unless expanded and locked in, but will support trade and jobs reliant on the US market in the short-term.
Aim 2: remove barriers to make it easier to operate, invest, and trade.
The deal signals future work on non-tariff barriers, i.e. mutual recognition/conformity assessments, digital trade provisions, paperless customs, and SPS engagement, and reaffirms procurement alignment. While these are to be welcomed, most of this remains intent rather than enforceable change today. To bolster business confidence, timelines and instruments negotiations should be prioritised and agreed where possible. Without legally binding commitments, much of the barrier removals in the EPD remain prospective and therefore less likely to attract investment and support jobs and economic growth.
Aim 3: ensure an enduring, fair, reciprocal, future-facing partnership.
By design, the EPD’s General Terms are not legally binding and include termination on notice. Several benefits are conditioned on U.S. national-security (Section 232) processes and some are still open (e.g., pharmaceuticals), both of which create policy risk and limit how enduring potential benefits could be until outcomes are legislated or treaty-based. As a result, this is best viewed as a positive first step rather than a final outcome during a time of trade volatility and uncertainty.
3. How should Parliament judge the success of these agreements over the coming years?
Parliament should judge the success of the US-UK Economic Prosperity Deal (EPD) by focusing on implementation, uptake, and impact over time. A clear timetable is essential. The first six months should demonstrate operational readiness and initial uptake, months six to twenty-four should show early trade and investment effects, and the period beyond thirty-six months should demonstrate legal durability and structural outcomes. To ensure credible attribution, performance should be compared between covered and non-covered sectors, as well as between UK-US flows and UK-rest-of-world trade. Monitoring should be formalised through an annual EPD scorecard, supported by a quarterly data annex drawing on HMRC, ONS, DBT, US Census/BEA, procurement portals, and tariff-rate quota data. Pre-set Red-Amber-Green (RAG) thresholds, such as TRQ utilisation, the number of MRAs concluded, and the share of measures converted into binding commitments, should trigger ministerial explanation to Parliament. Ultimately, success will be demonstrated if covered trade grows faster than credible comparators, non-tariff barriers fall measurably, and short-term measures are translated into durable, enforceable commitments with a functioning dispute-settlement mechanism within three years.
4. How are the terms of these agreements likely to affect you, your business or organisation, or those that you represent?
The deal is a welcome development in an environment where doing business in the UK has become increasingly challenging as corporate tax and regulatory burdens rise and trading frictions with other markets such as the European Union, remain and potentially widen. For many of the organisations that we do business with and represent, the signal of intention and direction of travel will have a greater positive impact than the details of the EPD itself. As the current US administration makes access to the world’s largest economy more difficult for both allies and adversaries, many organisations are looking to the UK, where the Government has secured favourable terms at a time when few others have managed to do so.
5. What is likely to be the impact of the agreements on:
a) the UK’s economy as a whole?
The EPD is unlikely to materially benefit the UK’s aggregate economy. The sectors that benefit the most, i.e. automotive and aerospace, make up less than 2.5% of total GDP and the carveouts negotiated by the UK government are likely to support current trade volumes rather than grow them in the future. Most of the UK’s trade with the US takes place in services, which are largely absent from the EPD in codified form. If the EPD’s stated intentions on regulatory cooperation and mutual recognition are implemented, the overall impact could be greater, though this would need to be weighed against the UK’s broader market access priorities, particularly with the European Union.
b) UK producers, including SMEs and key sectors?
Overall, the EPD supports continuity for established exporters in certain goods sectors, such as automotive and aerospace, but falls short of unlocking broad-based opportunities for SMEs and service-sector producers.
For UK producers in the automotive and aerospace sectors, reduced tariffs and quota access should help sustain export orders and protect existing employment and investment. While larger firms stand to benefit the most because many are already active in the US market, SMEs would benefit from a reduction in day-to-day non-tariff barriers that disproportionately inhibit smaller firms, such as certification, regulatory divergence, and customs complexity. The Government should aim to re-negotiate a higher volume of TRQs in order to incentivise further growth and investment in the aforementioned sectors.
If the EPD’s intentions on the mutual recognition of standards, digital trade, and streamlined customs processes are implemented, SMEs could benefit more directly - particularly those in advanced manufacturing, pharmaceuticals, and services that depend on smoother regulatory cooperation and make up the bulk of UK trade with the US.
c) UK workers and consumers?
We expect the average worker to be largely unaffected by the EPD. However, for workers in the most exposed sectors, such as steel manufacturing, without a negotiated and upheld agreement we expect continued difficulties.
6. Do you believe the three agreements adequately safeguard UK standards in labour rights, environmental protection, consumer protection and food standards?
Yes, the EPD upholds UK food standards by requiring US agricultural imports to comply with UK SPS standards.
7. How well has the Government communicated its progress in negotiations – and how much has it listened to stakeholders during those negotiations?
We understand and support the need for the Government to maintain an element of privilege and discretion as it negotiates commercially and politically sensitive agreements with partners such as the United States. However, we do believe that greater involvement of business stakeholders, especially smaller, scaling businesses that have begun to trade internationally, particularly those that simultaneously trade in both EU and US markets, would bring a valuable and unique viewpoint that should be heard by the Government as it seeks to promote growth and investment.
Policy focus: UK-EU Summit
1. Do the agreements represent a good deal for the UK?
The UK–EU Summit’s Common Understanding reached at the May 2025 summit should be seen as a constructive reset in relations rather than a comprehensive trade agreement. It reaffirms the Withdrawal Agreement and the Trade and Cooperation Agreement while opening pathways for closer cooperation in fisheries, energy, SPS rules, carbon markets, labour mobility, and defence. Some of these commitments carry clear potential benefits. Structured defence dialogue and possible participation in the EU’s SAFE program, for example, reflect shared security interests and will benefit UK defence firms seeking to grow domestically and internationally, while also fostering foreign direct investment into the UK.
However, the Common Understanding remains a political framework, not a binding treaty. The measures outlined are exploratory, reversible, and will take sustained technical negotiation, likely twelve months or more, to translate into enforceable agreements. The UK government has taken a pragmatic step that restores cooperation and mitigates post-Brexit frictions. Whether it represents a beneficial deal for the UK will depend on how quickly and credibly these commitments are delivered, and on whether they translate into tangible economic, institutional, and strategic gains. In practice, many businesses will support this as a beneficial direction of travel, but will wait to see tangible results before making large investments in capital or workforce.
2. To what extent has the Government achieved its stated negotiating objectives?
The Government has partially achieved its stated negotiating objectives in the UK–EU Common Understanding, but the outcomes are still preliminary. It has made significant strides in resetting relations with the European Union, securing political agreement to cooperate on priority areas such as defence, fisheries, energy, SPS rules, carbon markets, and labour mobility. This represents progress towards the stated aim of building a more stable, pragmatic relationship. However, most of these commitments remain non-binding frameworks rather than fully negotiated agreements, meaning the objectives have been met only in intent, not yet in delivery. Achieving them in full will depend on whether exploratory commitments, such as mutual recognition in SPS, linkage of emissions trading systems, electricity market integration, and new defence investment and cooperation mechanisms, are translated into binding, enforceable arrangements. Until then, the Common Understanding should be seen as an important political step forward, but not yet a comprehensive fulfilment of the Government’s negotiating objectives.
3. How should Parliament judge the success of these agreements over the coming years?
Parliament should judge the success of the UK–EU Common Understanding by focusing on whether political commitments are translated into binding, enforceable arrangements and whether they deliver measurable economic and strategic benefits.
In the near term (0–12 months), scrutiny should focus on progress in technical negotiations, publication of workplans, and evidence that joint committees are meeting regularly with stakeholder input, particularly smaller firms that trade intensively between the two markets. Over the medium term (12–24 months), Parliament should assess concrete outputs such as the conclusion of SPS agreements. Beyond two years, success should be judged on structural outcomes: reduced administrative and compliance costs for exporters, measurable increases in UK-EU trade in agri-food and energy, a demonstrable reduction in carbon adjustment exposure for UK firms, and evidence of joint UK-EU projects in defence and research.
Parliament should also track the durability and reciprocity of commitments. This means examining whether agreements are codified in legally binding instruments, whether benefits are evenly shared between parties and amongst sectors, and whether dispute-resolution mechanisms are in place and functioning. Regular reporting, such as an annual “UK–EU Economic Cooperation Scorecard” with Red-Amber-Green thresholds on SPS, ETS, mobility, and energy integration, would allow ministers to be held accountable for delivery. Ultimately, the agreements should be judged successful if they reduce post-Brexit frictions, expand economic opportunities beyond what is possible under the existing Trade and Cooperation Agreement, and create a more stable, predictable basis for UK–EU cooperation over the long term.
4. How are the terms of these agreements likely to affect you, your business or organisation, or those that you represent?
The agreement is a welcome development in an environment where doing business in the UK has become increasingly challenging, as corporate tax and regulatory burdens rise and trading frictions with other markets, such as the United States, widen. For many of the organisations that we do business with and represent, the signal of intention and direction of travel will have a greater positive impact than the details of the agreement itself. As the current US administration makes trading with the world’s largest economy more difficult for allies and adversaries alike, the UK government has taken prudent steps to reflect the commercial reality that many businesses face as they pivot and shift resources away from the US and towards EU markets.
5. What is likely to be the impact of the agreements on:
a) the UK’s economy as a whole?
The Common Understanding is unlikely to transform the UK’s aggregate economic performance in the short term, as most of the outcomes remain political commitments rather than binding provisions. If successfully implemented, however, SPS alignment could lower costs for agri-food exporters, ETS linkage could shield UK industry from the EU’s carbon border tax, and electricity market integration could reduce wholesale energy costs. These measures would support competitiveness and investment at the margin but are incremental compared with the overall scale of UK–EU trade left untouched by this agreement.
b) UK producers, including SMEs and key sectors?
For producers, the clearest benefits lie in sectors most affected by post-Brexit frictions. Food and agriculture businesses, which see the EU take 57% of their total exports, would face reduced administrative and compliance burdens under SPS arrangements, while energy-intensive industries stand to gain from carbon-market linkage, greater energy security, and lower prices. Larger firms with established EU supply-chains will benefit most immediately, but SMEs could gain over time if mutual recognition and digital trade facilitation are delivered. In practice, the deal preserves continuity for incumbents while offering a framework that could expand opportunities for smaller exporters if commitments are codified.
c) UK workers and consumers?
For workers, sector-specific gains are likely in agriculture, energy, and related supply chains if lower barriers translate into higher trade volumes and investment. Youth mobility and Erasmus-style programmes could also expand opportunities for students and early-career workers. For consumers, the main impacts would come through potentially lower food prices if SPS alignment eases costs, greater energy resilience, and modest improvements in consumer choice. That said, the benefits depend on implementation; without binding agreements, the effects will be limited to signalling rather than substantive change in living standards.
6. Do you believe the three agreements adequately safeguard UK standards in labour rights, environmental protection, consumer protection and food standards?
The UK–EU Common Understanding appears to adequately safeguard UK standards in the areas of labour rights, environmental protection, consumer protection, and food standards, though this assurance is conditional on delivery. The document reaffirms that any cooperation on SPS rules, carbon markets, and energy integration will respect existing domestic standards and legal frameworks. In practice, this means that UK food safety and environmental protections are preserved, as imports from the EU already meet UK requirements, and reciprocal recognition would not require the UK to dilute its regime. Similarly, linking emissions trading systems would support environmental objectives without lowering standards, while cooperation on mobility and research does not touch consumer or labour protections directly.
The main risk lies less in standards being weakened and more in uncertainty until commitments are codified. For example, the detail of SPS alignment or ETS linkage will determine how safeguards are implemented in practice. On balance, the framework upholds the UK’s baseline protections, but Parliament should scrutinise the technical negotiations to ensure that no concessions undermine statutory standards, particularly in food safety and environmental regulation.
7. How well has the Government communicated its progress in negotiations – and how much has it listened to stakeholders during those negotiations?
The Government has communicated the outcomes of the UK–EU Common Understanding in broad and accessible terms, emphasising the reset in political relations and highlighting priority areas for future cooperation. However, the detail provided to date has been limited, reflecting the fact that most elements remain exploratory rather than fully negotiated. Communication has therefore been clear at the political level but thin on the technical specifics that matter most to businesses and consumers.
On stakeholder engagement, the Government should involve SMEs and smaller exporters, who often face the highest administrative burdens, in future discussions. Greater transparency in setting negotiation priorities and more structured engagement with a wider range of stakeholders would strengthen confidence that the eventual agreements reflect the needs of the whole economy, not just those of the most established sectors or largest firms.