5.1 Global trade and arrangements

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Global trade was $33 trillion in 2024 with:
- overall growth of 3.4%
- about 3/4 in goods ($25 trillion) and 1/4 in services ($8 trillion)
- services trade growing faster than goods trade
Risks to global trade growth include:
- trade imbalances, government policies and geopolitical tensions
- increased volatility in volumes and inflation, causing values to fluctuate
Dominant players are EU, US and China
UK ranks:
- 5th after US, China, Germany and Netherlands
- 2nd for services exports after US, level with China, but just ahead of Germany and Ireland
- 11th for goods exports
Preferential trade arrangements reduce tariff and non-tariff trade barriers:
- non-tariff barriers have much bigger impact than tariffs
- EU uses a wide range of preferential trade arrangements with third countries
Single Market combined with the EU Customs Union remove many internal barriers
- even so, trade between EU member states is not friction-free
- EU is pursuing major reforms to internal trade to improve EU competitiveness
UK’s political red lines limit post-Brexit EU-UK deal to a basic FTA:
- FTA removes tariffs but does little for non-tariff barriers or services
- Labour’s ‘reset’ refines the FTA to remove a few non-tariff barriers