From renewed threats of tariffs to negotiations with the EU, firms are starting 2026 in an environment shaped by geopolitics as much as economics.
Global uncertainty
The opening weeks of the year saw President Trump threaten tariffs on the UK in response to its support for Greenland's autonomy - a stark reminder of how quickly trade can become entangled with wider geopolitical disputes.
Our CEO, Rain Newton-Smith, was at this year's World Economic Forum in Davos as part of the Team UK delegation where she hammered hope one key message: businesses thrive on predictability, and the prospect of tariffs raises costs, delays investment and undermines confidence. Though it’s unclear whether these threats will translate into concrete measures at any point, the signals alone can be damaging.
Alongside the Chancellor, the Business Secretary and the Investment Minister, discussions highlighted how important it is for the UK to remain a beacon of stability and a champion of the rules-based order to achieve growth. With fragile global supply chains and the risk of retaliatory or escalating trade measures growing, organisations like the CBI will need to work hand in glove with government to ensure businesses are supported to manage short-term shocks. This is exactly why we were so pleased to support the Prime Minister’s visit to China – this represents an important step on the journey to renewing our international relationships and will help UK firms seize the significant opportunities offered by one of the world’s largest economies.
EU-UK reset
Against this global backdrop, the EU-UK reset remains one of the most significant opportunities for improving the trading environment facing UK business. There is genuine momentum in the dialogue, but business concern is growing about pace, scope and delivery.
At a roundtable with the Secretary of State for Environment, Food and Rural Affairs, CBI members voiced their broad support for an EU-UK SPS Agreement as the most effective way to reduce friction at the border. However, concerns were raised around implementation, from transition arrangements to clarity on scope, timelines and compliance requirements.
Our Europe and International Director, Sean McGuire, reinforced similar themes in a recent evidence session to the Business and Trade Select Committee. Business is supportive of efforts to reset the relationship, but clarity, credibility and delivery will determine whether - and how quickly - that support translates into real economic gains.
The ‘Made in Europe’ agenda is also rising up the priority list for 2026, with emerging proposals to prioritise EU-manufactured products prompting growing concern among UK firms about disruption to long-established supply chains. In an economy where production networks span borders, local content requirements risk creating new friction that could affect investment decisions, operational certainty and competitiveness on both sides of the Channel. The CBI is ensuring UK business concerns are clearly represented through BusinessEurope as this debate gathers pace, and we will continue to work with members and policymakers to shape outcomes that reinforce the EU-UK economic partnership.
If you have views or concerns to share about any of the issues covered in this month’s update, please contact Sean McGuire or Erin Henwood.