Five years after the UK left the European Union’s single market and customs union, the EU remains overwhelmingly Wales’s most important international trading partner. But new research from the Senedd reveals that the physical volume of goods traded with Europe has still not recovered to pre-Brexit levels, while the UK’s much-publicised trade agreements with countries further afield have yet to deliver a convincing alternative.
When Britain voted to leave the European Union in 2016, one of the central arguments made by supporters of Brexit was that the UK would be free to negotiate its own trade agreements with countries around the world.
The promise was that new markets would open, exports would grow and British businesses would benefit from opportunities that had previously been constrained by EU membership.
For Wales, with its manufacturing industries, agricultural producers, steelworks and internationally connected supply chains, the implications were significant.
Five years after the new trading arrangements took effect, it is now possible to begin assessing what has actually happened.
A new report from Senedd Research, Welsh trade under the UK’s trade deals, examines the value and physical volume of goods traded between Wales and five major trading partners or blocs.
Its findings raise serious questions about the extent to which the UK’s post-Brexit trade policy has delivered measurable economic benefits for Wales.
The report finds that the physical volume of goods traded has fallen across all five relationships examined.
Although trade values have increased in four cases, the quantity of goods moving between Wales and its trading partners has declined.
Most significantly, trade with the European Union — still by far Wales’s largest international market — has not returned to its pre-Brexit volume.
Europe remains central to the Welsh economy
Despite the political emphasis on developing new trading relationships across the world, the European Union continues to dominate Wales’s international goods trade.
The latest figures examined by Senedd Research show that goods trade between Wales and the EU is worth approximately £19.7 billion annually.
That represents around 47% of Wales’s total international trade in goods by value.
Within the five trading relationships examined in the report, the EU accounts for 87% of the value and 94% of the physical volume of goods traded.
These figures demonstrate the enormous difference in scale between Wales’s established European markets and the newer agreements negotiated by the UK Government.
Australia, for example, accounts for £216 million in annual goods trade with Wales.
New Zealand accounts for just £47 million.
Combined, the two countries account for approximately £263 million — a fraction of the £19.7 billion traded with the EU.
Even substantial percentage increases in trade with Australia and New Zealand would therefore represent relatively small amounts compared with changes in Wales’s European trading relationship.
This matters because international trade agreements are frequently presented in terms of percentage growth and potential opportunities.
But a 30% increase in a relatively small trading relationship may be worth considerably less to the Welsh economy than a 5% change in trade with Europe.
What has happened to Welsh trade with the EU since Brexit?
The UK–EU Trade and Cooperation Agreement came into effect on 1 January 2021, following the end of the Brexit transition period.
Senedd Research compares the latest available annual figures, for the year ending March 2026, with a pre-Brexit baseline covering the year ending March 2020.
The findings reveal an important distinction between the monetary value of trade and the physical quantity of goods being traded.
| Measure | Change compared with pre-Brexit baseline |
|---|---|
| Total value of goods trade | +10.4% |
| Value of Welsh exports to the EU | +5.4% |
| Value of imports from the EU | +18.2% |
| Total physical volume of goods traded | -8.9% |
| Physical volume of Welsh exports | Approximately -9.0% |
| Physical volume of imports | Approximately -8.8% |
Source: Senedd Research analysis of HMRC Regional Trade Statistics, comparing the years ending March 2020 and March 2026.
On the face of it, a 10.4% increase in the value of trade might appear to represent a positive result.
But the physical quantity of goods traded tells a different story.
Wales is trading approximately 8.9% less with the European Union by weight than it was before the new arrangements came into force.
At points during the five-year period, trade volumes were as much as 31% below the pre-Brexit baseline.
There has been a recovery from those lows, but it remains incomplete.
The report also shows that the increase in trade value has been driven more strongly by imports than exports.
The value of goods imported into Wales from the EU increased by 18.2%, while Welsh exports to the EU increased by just 5.4%.
This does not necessarily mean Welsh businesses are performing worse, but it demonstrates why rising trade values should not automatically be interpreted as evidence of greater trading activity.
Why the difference between value and volume matters
Trade statistics can tell very different stories depending on what is being measured.
Trade value measures the monetary worth of goods imported and exported.
Trade volume, as measured in this report, refers to the physical weight of those goods.
For example, a Welsh manufacturer might export fewer tonnes of a product but receive a higher price for each tonne.
Its export value could therefore increase even though the quantity exported has fallen.
Similarly, rising energy prices or changes in the mix of products being traded can increase monetary values without increasing the physical amount of goods crossing borders.
The reverse can also happen. A business may export more lightweight, high-value products, increasing its earnings while reducing the total weight of its exports.
Neither measure provides a complete picture on its own.
However, the consistent reduction in physical trade volumes identified by Senedd Research is significant because it challenges the assumption that new trade agreements have automatically generated greater trading activity.
To assess the wider economic consequences, it is also necessary to examine employment, investment, profitability, productivity and the types of goods being traded.
Was Brexit responsible for the decline?
The report’s findings should not be interpreted as proof that Brexit caused the entire reduction in trade.
The period examined includes the Covid-19 pandemic, major supply-chain disruption, energy price increases, inflation and changes in global demand.
Some Welsh–EU trade volumes had also declined from earlier peaks before the UK left the EU.
Senedd Research acknowledges the difficulties of separating the effects of Brexit from these wider economic developments.
There have also been changes in customs procedures and statistical collection methods that complicate direct comparisons.
Nevertheless, the figures establish that trade volumes fell sharply around the introduction of the new arrangements and have not fully recovered five years later.
Leaving the EU single market and customs union introduced new customs requirements and regulatory procedures for businesses trading with Europe.
Those changes can create additional administrative costs and complexity, particularly for smaller exporters.
The report does not calculate the financial cost of those barriers or estimate what Welsh trade would have looked like had the UK remained in the EU.
Such an assessment would require a separate economic model.
What the figures do establish is that the promised expansion of global trade has not been accompanied by a recovery in the physical volume of Wales’s most important trading relationship.
Have the new trade agreements made up the difference?
One of the most revealing findings is that the quantity of goods traded between Wales and every one of the five partners examined has fallen since the relevant agreement came into force.
| Trading partner | Change in trade value | Change in physical volume |
|---|---|---|
| European Union | +10.4% | -8.9% |
| Japan | -44.7% | -83.3% |
| New Zealand | +35.2% | -22.8% |
| Australia | +17.1% | -75.9% |
| CPTPP trade bloc | +1.7% | -73.7% |
Source: Senedd Research, November 2026. Each agreement is measured against its own pre-agreement baseline. The periods are not identical, and the CPTPP figures overlap with trade covered by some individual country agreements.
The figures do not mean that every agreement has been unsuccessful for every Welsh business.
Some exporters have benefited from improved market access, while changes in trade values can reflect shifts towards higher-value products.
However, the overall results provide limited evidence that the agreements have generated a substantial increase in physical goods trade for Wales.
Japan: a substantial decline
The UK–Japan Comprehensive Economic Partnership Agreement entered into force in January 2021.
Japan had been identified as a particularly important trading partner for the Welsh economy.
Yet trade between Wales and Japan has fallen by 44.7% in value and 83.3% in physical volume over the period analysed.
Imports from Japan have declined particularly sharply.
The latest total value of goods traded between Wales and Japan is approximately £495 million.
The figures are among the most striking in the report because both value and volume have declined significantly.
They do not establish that the agreement itself caused the fall, but they offer little evidence of a broad expansion in Welsh–Japanese goods trade since it came into force.
Australia and New Zealand: growth from a small base
The agreements with Australia and New Zealand entered into force in May 2023.
Both have produced increases in the monetary value of trade.
Trade with Australia increased by 17.1% in value, while trade with New Zealand increased by 35.2%.
Welsh exports to Australia increased by 35.3% in value, reaching an eleven-year high.
That represents a positive development for businesses selling into the Australian market.
However, physical trade volumes fell sharply.
Trade volume with Australia declined by 75.9%, while trade with New Zealand fell by 22.8%.
The decline in Australian trade volume was driven largely by a dramatic reduction in imports, rather than a collapse in Welsh exports.
Indeed, the report records a substantial increase in the physical volume of Welsh exports to Australia.
These distinctions matter.
The overall trade figures are mixed rather than uniformly negative, but the relatively small size of both markets limits their ability to offset changes in European trade.
The Pacific trade agreement
The UK joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, in December 2024.
The bloc includes Japan, Australia, New Zealand, Canada, Singapore and several other Pacific economies.
The agreement was promoted as an opportunity for British businesses to gain access to expanding international markets.
Senedd Research found that the value of goods traded between Wales and CPTPP members increased by just 1.7% over the period examined.
The physical volume of goods traded fell by 73.7%.
However, Welsh exports to the bloc increased by 14.5% in value and 20% in physical volume.
The overall reduction was driven by a sharp fall in imports.
These figures suggest some positive developments for Welsh exporters, but they also underline the limited evidence of an overall expansion in trade so far.
The agreement had been operating for only a relatively short period when the data was collected, making longer-term conclusions premature.
India and the changing face of Welsh steelmaking
The report also examines Wales’s trading relationship with India, which is becoming increasingly important to the Welsh economy.
The UK–India Comprehensive Economic and Trade Agreement entered into force in July 2026.
The latest available figures cover the period before the agreement took effect, so its impact cannot yet be assessed.
However, the existing trading relationship reveals significant changes linked to the transformation of the Welsh steel industry.
The latest annual value of goods traded between Wales and India is approximately £886 million.
Iron and steel account for 92.3% of the physical volume of goods imported into Wales from India and 47% of their monetary value.
Senedd Research identifies a substantial increase in Indian steel imports following the closure of the blast furnaces at Port Talbot in September 2024.
The years ending June 2025 and June 2026 recorded twelve-year highs in the quantity of goods imported from India into Wales.
The new trade agreement almost triples the tariff-free quota for Indian galvanised steel imports, creating the possibility of further increases.
This is particularly significant for Llanwern, which the report identifies as supplying roughly half of the UK’s domestic demand for galvanised steel.
For Wales, the relationship between international trade agreements and industrial policy is therefore becoming increasingly important.
Lower trade barriers can benefit businesses that rely on imported materials, but they can also increase competition for domestic producers.
The challenge is ensuring that trade policy supports the long-term future of Welsh manufacturing, including steelmaking, rather than simply increasing access to imported products.
Wales’s economic interests are not necessarily the same as those of the UK
International trade agreements are negotiated by the UK Government.
But their consequences can vary considerably across the nations and regions of the UK.
Wales has a significant manufacturing base, important agricultural industries and an economy that is particularly dependent on European goods markets.
In 2024, approximately 60.5% of Welsh goods exports by value went to the EU, compared with 49.8% for the UK as a whole.
This makes Wales more dependent on European export markets than the UK overall.
An agreement that produces a net economic benefit for the UK may not necessarily deliver the same benefits to Wales.
Some industries may gain improved market access, while others face additional competition.
The benefits may also be concentrated in sectors or regions with relatively little presence in Wales.
This makes independent, Wales-specific analysis particularly valuable.
The Senedd Research report examines what has happened to Welsh trade rather than relying solely on UK-wide projections of the potential benefits of new agreements.
It also raises questions about how effectively Welsh economic interests are represented during UK trade negotiations.
What would successful trade policy look like for Wales?
The number of trade agreements signed is not, by itself, a meaningful measure of economic success.
What matters is whether those agreements create opportunities that businesses can turn into additional exports, investment and employment.
For Wales, several questions deserve greater attention.
Are more Welsh businesses exporting than before Brexit?
Have existing exporters increased their sales or entered genuinely new markets?
Are trade agreements generating additional investment in Welsh manufacturing and food production?
Have they improved employment, wages and productivity?
And have any gains from new markets been sufficient to compensate for additional costs associated with trading with Europe?
The Senedd Research report does not answer all these questions.
Its focus is goods trade, and it does not examine services exports, foreign investment or the full economic effects of individual agreements.
But it provides an important starting point.
It demonstrates that increases in trade value should not automatically be presented as evidence that more goods are being traded.
It also shows why the scale of Wales’s existing relationship with the EU remains central to any serious assessment of the UK’s post-Brexit trade strategy.
Five years on, the European question has not gone away
The political debate around Brexit frequently focused on the opportunities Britain would gain from establishing independent trading relationships with the rest of the world.
Those opportunities have not disappeared.
Welsh businesses may continue to benefit from new markets, particularly as agreements mature and exporters adapt.
But five years after the UK’s new trading arrangements began, the available evidence suggests that the economic importance of Europe has not diminished in the way some might have anticipated.
The EU remains Wales’s dominant international goods-trading partner.
The physical volume of trade with Europe remains below its pre-Brexit level.
Trade with Japan has declined significantly in both value and volume.
The agreements with Australia and New Zealand have produced some growth in trade value and Welsh exports, but their overall scale remains comparatively small.
And the Pacific trade agreement has yet to demonstrate a substantial increase in overall goods-trade value.
There is no evidence in the Senedd Research findings that these newer relationships have replaced the importance of Wales’s European market.
The question is therefore not simply whether Brexit has allowed the UK to sign more trade agreements.
It is whether those agreements have delivered sufficient economic benefits to compensate for the disruption and changes associated with leaving the EU’s single market and customs union.
Five years after Brexit, Wales is still trading fewer goods with its largest international partner than it did before the new arrangements came into force. The new agreements have created some opportunities, but they have not filled that gap in physical trade volumes.
For Wales, the challenge now is to move beyond the political arguments about the number of agreements signed and establish what they have actually delivered for businesses, workers and communities.
That assessment must also recognise the continuing importance of the European market.
Whatever the political arguments about Brexit, the economic evidence points to one unavoidable conclusion: Wales’s future prosperity remains closely tied to its trading relationship with Europe.
Sources and methodology
Principal source: Senedd Research, Welsh trade under the UK’s trade deals, November 2026, by Sara Moran, Josh Jenkins and Peter Davies.
Read the Senedd Research report
The report uses HMRC Regional Trade Statistics to compare the value and physical weight of goods traded before and after five UK trade agreements entered into force.
The EU comparison uses the year ending March 2020 as the pre-Brexit baseline and the year ending March 2026 as the latest comparable period.
The other agreements use different baseline periods. Their figures should therefore not be interpreted as a single uniform five-year comparison.
The analysis measures trade in goods rather than services. Changes in trade volume are measured by weight, not by inflation-adjusted monetary value.
The figures establish changes in trading patterns but do not, on their own, establish how much of those changes was caused by Brexit or the individual trade agreements.
