A decade after the Brexit vote, Europe remains the dominant destination for UK businesses expanding abroad. New research from Howden and Beauhurst finds the compliance burden on smaller firms is growing, even as expansion continues.
UK businesses now operate 84,800 entities across Europe, with 62% of small-to-medium exporters active in the EU. More than four in five of those European operations are run by SMEs. Howden warned that smaller firms are the most exposed to mounting European compliance costs, particularly around statutory insurance mandates and local employment law.
The insurance dimension is significant. EU member states carry distinct statutory insurance requirements, from employer liability schemes to mandatory health coverage. Non-compliance can generate financial penalties that smaller operators may not have budgeted for.
Those compliance costs sit within a wider picture the insurance sector is only now beginning to quantify. A Centre for European Reform report published on 18 June 2026 found that Brexit reduced UK finance and insurance exports to the EU by 24%.
The cumulative cost from the post-Brexit dual-entity model is estimated at between £20 billion and £40 billion in lost sector output over the decade.
Singapore leads growth in outbound UK business activity since 2016, with operations rising 127% to 356 entities. The United States grew 74.1% to 2,480, Turkey 44.1% to 2,030, the UAE 35% to 1,950, and France 29.6% to 19,700.
Asia now hosts 17,300 UK multinational operations, of which 15% are under five years old. The Pacific stands out as the only region where online retail and clothing lead UK expansion ahead of digital and technology sectors.
Northern Ireland's outbound incorporations fell just 2.3% from their 2023 peak, well below the 5% to 8% decline seen in most UK regions. Howden attributed this to Northern Ireland's dual access to UK and EU markets under post-Brexit arrangements.
The exposure is set to widen as UK SMEs accelerate their expansion plans. Aviva research found that 73% of UK SMEs anticipate growth over the next year, with 35% planning to open new locations. Yet only 32% of expanding SMEs turn to brokers for risk management and just 25% seek help with business continuity planning.
Matthew Gregson, executive director at Howden Employee Benefits, said the operational environment is more complex than it was in 2016.
"For UK exporters navigating the EU, failing to understand complex statutory insurance governance mandates or localised regulations is a costly trap that smaller firms simply cannot afford," he said.
The compliance risk extends beyond financial penalties. The Crime and Policing Act 2026 received Royal Assent on 29 April 2026 and takes effect from 29 June 2026. The Act makes UK businesses criminally liable for any offence committed by their senior managers when acting within actual or apparent authority.
For internationally expanding firms, that liability covers senior managers who oversee overseas operations, statutory insurance compliance failures in foreign jurisdictions among them.
Brokers face direct exposure if they lack current knowledge of the local statutory frameworks in which their clients operate. Legal experts have previously warned that compliance failures in international markets can carry consequences that go beyond regulatory fines.
Gregson said fast-growing operators need to adapt quickly to employment norms across multiple jurisdictions. He said a single coordination point for global employee benefits functions as a cost-control mechanism, not just an HR or compliance tool.
