Brexit and Norway
Norway ‘s economic relationship with the EU is being looked at in some quarters as the model to follow if the UK were to reset its economic relationship with the EU.
It may be interesting, therefore, to analyse Norway’s own trading and investment relationship with the UK.
According to a UK-Norway trade and investment factsheet published by the UK Department for Business and Trade ( “DBT”) on 7th April 2025, total trade in goods and services ( exports plus imports) between the two countries was £36.5 billion in the four quarters to the end of Q3 ( Quarter 3) 2024, a decrease of 14.2% or £6.1 billion in current prices from the four quarters to the end of Q3 2023.Of this £36.5 billion :
- Total UK exports to Norway amounted to £8.9 billion in the four quarters to the end of Q3 2024 ( a decrease of 7.3% or £702 million in current prices, compared to the four quarters to the end of Q3 2023); and
- Total UK imports from Norway amounted to £27.6 billion in the four quarters to the end of Q3 2024 ( a decrease of 16.3% or £5.4 billion in current prices, compared to the four quarters to the end of Q3 2023).
The factsheet also showed that Norway was the UK’s 12th largest trading partner in the four quarters to the end of Q3 2024 , accounting for 2.1% of total UK trade.
On the investment side, the factsheet showed that, in 2023, the outward stock of foreign direct investment (“FDI”) from the UK in Norway was £6.1 billion accounting for 0.3% of the total UK outward FDI stock, and that, in the same period, the inward stock of FDI in the UK from Norway was £7.0billion , accounting for 0.3% of the total UK inward FDI stock.
The trade figures listed above showed a disappointing downturn on a year by year basis over the previous year but the fact that Norway is the UK’s 12th largest trading partner is significant.
Let us see how any reset of the UK’s economic relationship with the EU impacts on the UK’s economic relationship with Norway.
Interesting times!
Brexit and a Trade Pact with India
On 6th May 2025, the UK Government issued a press release confirming that the UK and India had that day “agreed a landmark deal which delivers on this government’s core mission of growing the economy, raising living standards, and putting money in people’s pockets”.
Key takeaways from the press release include that “Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade” and that “ Whisky and gin tariffs will be halved from 150% to 75% before reducing to 40% by year ten of the deal , while automotive tariffs will go from over 100% to 10% under a quota”.
According to the press release, “ the deal is expected to increase bilateral trade by £25.5 billion, UK GDP by £4.8 billion and wages by £2.2 billion each year in the long run”.
It appears, however, that the deal did not, however, include the freeing up of legal services as one of its provisions so that under the deal UK lawyers are no freer to practise UK law in India than they were before. Reportedly as well, the UK pharmaceutical industry is also a little unhappy because, according to an article in The Times on 8th May 2025, the deal does not appear to address the industry’s long- standing concerns about intellectual property protections for UK life science “innovators” within the Indian market. – this is said to be particularly the case for data protection, given that India is a major market for generic medicines.
One somewhat controversial aspect of the deal ( as reported in The Times) is that the UK has agreed to exempt Indian workers transferred to their employers in the UK from UK national insurance contributions for three years – some opposition parties in the UK argue that this would give Indian workers an unfair advantage over UK workers.
The deal ( which remains to be ratified) is expected to come into force in the course of 2026.
An important trade deal in challenging post-Brexit times!
Brexit and the USA
On 8th May 2025 ( VE day, marking the end of the Second World War in Europe), the UK and US governments announced the signing of a trade deal between their two countries, the highlights of which reportedly include:-
- Reduction from 27.5% to 10% in US tariffs on the first 100,000 cars a year exported to the US from the UK;
- Removal of 25% US tariffs on steel and aluminium exports from the UK to the US;
- Removal of up to 50% UK tariffs on US exports of ethanol to the UK:
- Reciprocal tariff – free access on beef exports and imports up to 13,000 metric tonnes per year ( in each direction) between the UK and the US; and
- 10% US tariffs to remain on most other UK exports of goods to the US.
It has been estimated that the effect of the new deal is that overall , since the introduction of the new Trump tariffs following his”liberation day “ announcement on 2nd April 2025, UK tariffs on US goods with have dropped from 5.1% to 1.8% and US tariffs on UK goods will have increased from 3.4% to 10%.
It seems clear that the UK – US trade deal is more a “work in progress” than a final production, as both parties appear to acknowledge, and in particular threatened 100% US levies on imports of UK films have not been dealt with, threatened US tariffs on UK pharmaceutical products have not been addressed, the UK’s 2% digital services tax remains in place and a deal remains to be done on Artificial Intelligence and other technologies and scientific collaboration more generally.
On agricultural and food products in particular, the UK has had to tread a fine line in its trade negotiations with the US – for fear of not upsetting any forthcoming trade deal between the UK and the EU. At this stage, hormone-treated beef and chlorinated chicken products will not be allowed into the UK from the US.
Given how long it has taken for any US- UK trade deal to be done following Brexit in 2020, the new deal ( concluded in quick time since Trump’s “liberation day” tariff onslaught) must, nevertheless, be regarded as a triumph of sorts ( particularly for the UK car and steel industries).
What next for the UK ( and the EU) in the Trump era?
The UK-EU Brexit “Reset” Deal – The Common Understanding
On 19th May 2025, the UK Government and the EU Commission respectively published the Common Understanding reached between the UK and the EU that day.
Whilst the Common Understanding does not seem intended of itself to be a legally binding agreement or treaty but rather badges itself as setting out conclusions of “exploratory talks” aimed at strengthening bilateral cooperation between the EU and the UK, it does say that the parties “ will proceed swiftly on the undertakings set out in this document, in accordance with our respective procedures and legal frameworks”, at the same time respecting each other’s “decision – making autonomy”.
Nuggets in the Common Understanding include ( not necessarily highlighted elsewhere) a statement by the parties to “work towards the association of the United Kingdom to the European Union Erasmus+ programme” and recognition of “the value of travel and cultural and artistic exchanges, including the activities of touring artists “.
A statement in the Common Understanding that the parties “will set up dedicated dialogues on the implementation of the Trade and Cooperation Agreement, as regards entry and temporary stay of natural persons for business purposes, including the sponsorship scheme, and the recognition of professional qualifications” sounds hopeful, but may not go far enough to satisfy all interested parties.
References to “dynamic alignment” of the UK with relevant EU rules in the context of a UK-EU Sanitary and Phytosanitary Agreement (SPS Agreement) and separately also in the contexts of linking the UK and EU Emission Trading Systems (ETS) and of UK participation in the EU’s internal electricity market , albeit in each case whilst “giving due regard to the United Kingdom’s constitutional and parliamentary procedures” ( whilst at the same time respecting the role of the Court of Justice of the EU as the ultimate authority for all questions of EU law) , will send shivers up the backs of some but for others will show necessary pragmatism.
Cooperation on competition matters ( including the successful negotiations for a competition cooperation agreement, which has already occurred) and reinforced law enforcement and judicial cooperation in criminal matters ( as well as separately judicial cooperation in civil and commercial matters) sound like positive steps but let us see how it all works in practice.
All in all, the Brexit “ Reset” would seem to be a start on a much longer journey – but all consequential journeys begin with the first step!
Disclaimer: This article contains general commentary only and should not be relied upon as legal advice.
