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British Prime Minister Keir Starmer makes an address following an emergency cabinet meeting on Gaza at 10 Downing Street in London on July 29, 2025. Toby Melville/AFP/Getty Images
The UK and South Korea on Dec. 15 finalized an upgraded free trade agreement aimed at locking in tariff-free access for most goods and expanding digital and services trade.
The agreement was announced in London by UK Trade Minister Chris Bryant and South Korean Trade Minister Yeo Han-koo, after six formal rounds of negotiations and five ministerial-level trade meetings.
It updates a continuity deal first signed in 2021 to prevent trade disruption after Britain left the European Union.
The South Korea deal is the fourth trade agreement concluded this year by Britain’s Labour government, which took office in July last year, following deals with the United States, India, and the European Union.
“This is a huge win for British business and working people,” British Prime Minister Keir Starmer said in a statement on Dec. 15. “From food to TV, music and more, Korean culture is already influential here in the UK. 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.”
The deal secures permanent tariff-free access across 98 percent of tariff lines, delivering certainty and predictability for UK exporters, according to the UK’s Department for Business and Trade.
British officials said the agreement is expected to raise UK services exports to South Korea by about 400 million pounds ($537 million).
The services sector accounted for 44.1 percent of all UK exports to South Korea in the year to the end of the second quarter of 2025, according to department figures.
The agreement creates “opportunities for British businesses of all sizes which stand to benefit from South Korea’s growing import market, forecast to grow by 26% by 2035,” the UK government said.
The deal also recognizes electronic contracts and other digital trade tools. The UK said these provisions will cut costs and reduce red tape for companies selling into South Korea.
Yeo said on Dec. 15 the upgraded agreement would “strengthen the free-market system in a trade environment with heightened uncertainty.”
He said it would also deepen economic cooperation with the UK, which he described as a key European partner.
Trade Data and Economic Backdrop
The trade deal comes as Britain’s economy shows signs of slowing. Official data released on Dec. 12 showed gross domestic product fell by 0.1 percent in October, the second straight monthly decline.
The UK unemployment rate climbed to 5.1 percent in the three months to October, up from 4.3 percent a year earlier, with younger workers hit hardest, according to official data from the Office for National Statistics on Dec. 16.
The figures increase pressure on the UK government to boost growth, which comes amid pressure from the opposition Conservative Party and political challenges from the Reform UK party, currently ahead of Labour in polls.
Bryant said on Dec. 15 that the deal will help “speed up economic growth,” one of the Labour government’s key priorities.
South Korea ranked as the UK’s 25th-largest trading partner, accounting for 0.8 percent of total trade.
UK exports to South Korea totaled 8.1 billion pounds ($10.8 billion) in the four quarters to the end of the second quarter of 2025. That was down 16.4 percent from the previous equivalent period, according to government data.
Imports from South Korea fell by 10.8 percent to 7 billion pounds ($9.3 billion).
Industry Reaction
UK officials said about 2 billion pounds ($2.6 billion) worth of exports were close to facing higher tariffs.
Those increases will now be avoided under the agreement. Products such as Guinness canned in Runcorn, Bentley cars made in Crewe, and Scottish salmon are expected to stay competitive in South Korea’s import market.
Bentley Motors Chairman and Chief Executive Frank-Steffen Walliser said on Dec. 15 that South Korea is “a key market for Bentley and the luxury vehicle market.” He added that “smooth international trade is vital to UK automotive business growth.”
Diageo Interim Chief Executive Nik Jhangiani said on Dec. 15 that the deal would support export growth for Guinness and help meet rising demand from South Korean consumers.
Britain’s auto industry also welcomed the agreement.
The Society of Motor Manufacturers and Traders (SMMT) said it had long called for an upgraded deal. SMMT Chief Executive Mike Hawes said on Dec. 15 that “maintaining permanent tariff-free access, introducing workable rules of origin and cooperating across the supply chain are all positive steps.”
Evgenia Filimianova is a UK-based journalist covering a wide range of international stories, with a particular interest in foreign policy, economy, and UK politics.
