The United Kingdom could be missing out on as much as £6.5 billion in exports to the European Union every year because British and EU product-testing rules have diverged following Brexit, according to an analysis by the Institute for Public Policy Research (IPPR).
The thinktank estimated that the absence of an agreement allowing UK and EU authorities to recognise each other’s product assessments has reduced British exports by between £3.7 billion and £6.5 billion annually since the post-Brexit trading arrangements came into force in 2021. The estimated loss is equivalent to around 0.18% of the UK’s annual national income.
The issue centres on the additional requirements faced by British manufacturers seeking to sell goods in the EU. Companies can be required to undergo separate testing and certification procedures for the two markets, increasing administrative costs and creating uncertainty for exporters. According to the IPPR, some businesses have responded by abandoning exports to the EU altogether, while others have established subsidiaries within the bloc to make access to the European market easier.
The report said a mutual recognition agreement could significantly reduce those barriers by allowing authorities in Britain and the EU to recognise each other’s conformity assessments. The IPPR suggested that such an arrangement could involve “dynamic alignment”, under which UK product regulations would remain broadly aligned with relevant EU standards.
The impact of the regulatory differences has been particularly significant in several major sectors. The IPPR estimated that exports of motor vehicles and parts could have been between £2.48 billion and £3.42 billion higher each year if the additional barriers had not existed. Electronic goods were estimated to have lost between £1.17 billion and £1.67 billion in annual exports, while pharmaceutical exports could have been between £740 million and £820 million higher each year.
The analysis comes amid renewed discussions about the future of economic relations between Britain and the EU. The European Union remains the UK’s largest trading partner, with British exports to the bloc valued at £385 billion in 2025, accounting for about 41% of total UK exports. Imports from the EU were worth £474 billion, representing around 49% of the UK’s total imports.
The IPPR said its research attempted to isolate the effect of the absence of mutual recognition arrangements from other factors that have affected international trade since Brexit. Researchers considered the possible effects of the Covid-19 pandemic, changes in global supply chains, sanctions imposed following Russia’s invasion of Ukraine, energy-market disruptions and changes in re-export patterns.
Joseph Sassoon, an economist at the IPPR and co-author of the report, said the estimated impact remained significant after researchers accounted for those factors. The report described the findings as evidence of substantial trade that could potentially be recovered by reducing regulatory friction between Britain and the EU.
The findings have also emerged as British politicians debate how closely the country should align economically with the EU. Liberal Democrat leader Ed Davey said earlier this week that, if his party formed the government, it would seek talks aimed at rejoining the EU single market and customs union. The government has separately discussed the possibility of creating a single market for goods between Britain and the EU, although EU officials have rejected the proposal in its current form.
European officials have said they want closer cooperation with Britain but have stressed that any agreement would need to respect the principles underpinning the EU single market.
The latest IPPR estimates add to wider debate over the economic consequences of Brexit. Previous analysis has pointed to increased border procedures and regulatory differences as factors affecting British goods exporters, while services have performed comparatively better. The Office for Budget Responsibility has estimated that the UK economy will ultimately be around 4% smaller than it would otherwise have been over a 15-year period because of Brexit-related effects, although broader economic developments also make it difficult to isolate individual causes.
The new findings therefore place renewed attention on the practical costs faced by manufacturers exporting to the EU, particularly those operating in industries where product certification and testing are essential parts of the trade process. For businesses that depend heavily on European customers, the lack of regulatory recognition can mean additional paperwork, duplicated testing and higher costs, potentially affecting decisions about whether to continue exporting from Britain or establish operations within the EU.
The IPPR has called for the UK government to reopen discussions with Brussels over a mutual recognition arrangement, arguing that reducing regulatory barriers could help restore some of the trade lost since the post-Brexit system came into effect.
