In a move hailed as a landmark for British business, the United Kingdom and South Korea finalized a sweeping free trade agreement on December 15, 2025, ensuring the continuation of tariff-free trade on nearly all goods and services between the two nations. Announced at Samsung’s flagship store in London by UK Trade Minister Chris Bryant and South Korean counterpart Yeo Han-koo, the deal comes just weeks before the previous EU-era agreement was set to expire, averting the risk of billions in tariffs and securing a vital economic bridge between Europe and Asia.
The new agreement, which locks in permanent tariff-free access across 98% of South Korean tariff lines, is expected to protect £2 billion worth of UK exports from potential duties. It’s a crucial update for a trading partnership that, according to the UK Department for Business and Trade, saw total trade reach £15.8 billion in 2024—a 32% increase over the past decade. More than 1.5 million people in the UK were employed by firms exporting goods to South Korea last year, underlining the deal’s significance for jobs and prosperity at home.
Prime Minister Keir Starmer was quick to praise the outcome, calling it “a huge win for British business.” He added, “This deal making trade even easier between us will help boost the economy—supporting jobs and growth which will be felt all over the country.” Trade Minister Chris Bryant echoed this optimism: “The deal gives cast-iron protections to our key industries to speed up economic growth as part of our Plan for Change.”
South Korea, the world’s 12th largest economy, is the UK’s 25th largest trading partner, accounting for 0.8% of total UK trade in the 12 months leading up to June 2025. However, recent official figures show a dip in bilateral trade, with UK exports to South Korea falling 16.4% and South Korean exports to the UK down 10.8% over the same period. South Korean Trade Minister Yeo Han-koo dismissed concerns that this reflected waning ties, instead highlighting that the deal is about “reducing non-tariff barriers, such as making rules around product origin more business friendly, and creating new digital and investment protections.” He added, “So these two economies can win by cooperating closer through this kind of framework.”
The agreement is the fourth major trade deal struck by the Labour government, following pacts with the EU, US, and India. While previous deals have been criticized for limited economic impact, government officials maintain that this latest agreement will bring tangible benefits, especially by cutting red tape for small businesses and supporting high-growth sectors.
Industry reaction has been overwhelmingly positive. Frank-Steffen Walliser, chairman and chief executive of Bentley Motors, called South Korea “a key market for Bentley and the luxury vehicle market,” adding, “To secure immediate ongoing access to South Korea and a positive long-term trade deal is great news. Smooth international trade is vital to UK automotive business growth.” Jaguar Land Rover’s Chief Finance Officer, Richard Molyneux, also welcomed the deal, noting the benefits it would bring to clients in South Korea, a key export market for the automaker.
For the UK’s beverage sector, the deal promises to quench growing demand in Asia. Nik Jhangiani, interim chief executive of Diageo, which owns Guinness, said, “The deal will support export growth for Guinness, canned in Runcorn, and help satisfy the growing demand from South Korean consumers for the world’s number one stout.” Emily Weaver Roads, interim international director at the Scotch Whisky Association, highlighted that “the reduction of trade barriers in the Republic of Korea will further enhance Scotch Whisky’s access to an important market, especially for single malts.”
Beyond goods, the agreement is a boon for the UK’s world-leading services sector. Trade in services between the two countries has grown by 64% over the past decade, and government modelling suggests UK services exports could rise by £400 million annually as a result of the deal. Chris Hayward, Policy Chairman of the City of London Corporation, described the agreement as “a powerful signal of the UK’s commitment to open markets and a clear demonstration of the UK’s ambition to lead on openness and innovation.” Amanda Tickel, Global Leader for Trade and Tax Policy at Deloitte, added, “By improving market access and creating a more predictable, digitally enabled trading environment, the agreement will help many UK exporters unlock new opportunities in one of Asia’s most dynamic economies.”
The deal also strengthens UK access to South Korea’s expanding financial market, building on £1.1 billion worth of UK financial and insurance exports to South Korea in 2024. The Association of British Insurers’ Director General Hannah Gurga said, “We support South Korea’s pledge to publish clear guidance on cross-border data rules and limit further data localisation restrictions for UK financial services. These measures will help insurers and reinsurers operate with greater certainty and continue serving customers effectively.”
Modernized rules for digital trade and artificial intelligence form a cornerstone of the agreement. Over 70% of services trade between the UK and South Korea is now conducted digitally. Sabina Ciofu, International Policy and Strategy Lead at techUK, remarked, “With more than 70% of UK services to South Korea already delivered digitally, this deal strengthens a partnership that’s become a genuine engine for growth and innovation.”
The agreement also introduces dedicated provisions to streamline customs procedures, making it faster and more predictable for UK exporters to access the Korean market. This is particularly significant for perishable British goods such as Scottish salmon and wine. Tavish Scott, CEO of Salmon Scotland, welcomed the developments, noting that “this deal will increase support in accessing the market and provide the opportunity for our exporters to deliver fish in pristine condition, with confidence, to consumers in South Korea.” Nicola Bates, CEO of WineGB, said, “The inclusion of dedicated provisions to promote smooth customs procedures will help remove barriers and create a more efficient pathway for our wines to reach Korean consumers.”
Supply chain resilience is another key win, with the agreement featuring the UK’s first dedicated Supply Chains Cooperation chapter. This move aims to help British businesses diversify sources of raw materials and components, especially in sectors central to the Industrial Strategy, such as automotive and pharmaceuticals. Rodney Leon, VP at GSK, commented, “Free trade agreements are vital for unlocking economic potential, driving innovation, and strengthening global partnerships that ultimately benefit patients and industries worldwide.”
The deal even unlocks exclusive access for UK firms to bid on government contracts in Sejong City, a smart hub in South Korea with ambitious infrastructure plans. Manveer Sidhu, General Manager at Kestrel Radar Sensors, said, “The upgraded rules of origin, streamlined customs procedures, support for joint innovation and brand new access to Korean government procurement channels will provide opportunities for us to work alongside Korean companies to develop and deploy sensing solutions for modern cities that increase safety for all.”
Looking ahead, the agreement is expected to deepen long-term economic opportunities in the Asia-Pacific, a region forecast to account for 10% of global growth by 2035. Virgin Atlantic’s Chief Commercial Officer Juha Jaervinen announced the airline’s first direct service to Seoul from March 2026, stating, “A modernised UK–South Korea Free Trade Agreement will help unlock even greater potential for businesses and travellers alike—supporting growth, deepening connectivity, and showcasing the best of both countries.”
As the UK seeks to redefine its place in the global economy post-Brexit, this upgraded trade agreement with South Korea stands out as a strategic step toward growth, resilience, and innovation—offering British businesses new avenues to thrive in one of Asia’s most dynamic markets.
