The United Kingdom’s departure from the European Union has introduced both challenges and opportunities for Portugal’s business and trade relationships. In the immediate aftermath of the Brexit referendum in 2016, Portugal experienced some negative impacts as the falling British pound made the country a less affordable destination for UK travelers. Certain Portuguese exports to Britain faced new tariff and regulatory barriers upon the UK leaving the single market.
However, Portugal has worked diligently to safeguard economic ties with its longtime ally. In 2020, both nations signed a continuity agreement that rolled over the terms of the EU-UK trade deal to ensure smooth commerce could continue. This helped minimize disruption for Portuguese companies exporting to the UK market. Both governments have also pursued increased bilateral engagement through new forums promoting trade and investment between the two countries.
As a result of these mitigation efforts, UK-Portugal trade has grown since Brexit took effect. British importers have increased orders of key Portuguese products like food, textiles, machinery, and aircraft. Looking ahead, Portugal sees potential to attract additional relocation of British businesses seeking to maintain access to the EU single market. The country promotes its stable Eurozone membership, low corporate tax rates, and highly skilled, English-speaking workforce as competitive advantages.
Sectors such as aerospace, shipbuilding, renewable energy, and engineering have actively pursued partnerships with UK counterparts. Portugal’s membership in NATO and similar common law traditions with Britain also facilitate security and legal cooperation outside the EU framework. While Brexit added new complexities to the relationship, both countries are committed to developing an even stronger bilateral trading partnership through open dialogue and collaboration on issues of mutual interest.
If Portugal continues promoting trade, investment, tourism, and cultural exchanges with the UK, the negative economic impacts of Brexit may be largely mitigated. Over the long run, the relationship could deepen into an important extra-EU partnership as both nations adjust to Britain’s new position outside the European Union. Strategic cooperation will be key to maximizing opportunities and offsetting challenges that emerge from this significant geopolitical change across the Atlantic.
