Digitalising trade to unlock the UK’s economic growth potential

Hemita Bhatti and Ana Sofia German,Institute of Export and International Trade

“The digitalisation of trade is transforming the landscape of global commerce. It significantly enhances the scale, speed and accessibility of trade, and expands the range of goods and services that can be exchanged cross-border”




The digitalisation of trade is transforming the landscape of global commerce. It significantly enhances the scale, speed and accessibility of trade, and expands the range of goods and services that can be exchanged cross-border. This evolution presents opportunities to unlock previously untapped potential and facilitates entry for smaller businesses into global trade. It contributes to economic growth by streamlining processes to improve the overall efficiency of the trading system. The ICC estimates the adoption of digital tools could boost trade across the G7 nations by $9 billion by 2026.

The UK has experienced slow rates of economic growth in recent years, with the latest 2024 IMF statistics indicating a GDP growth of 0.6%, making it one of the weakest performers in the G7. The digitalisation of trade presents a valuable opportunity to change this. As a world leader in services and innovation, the adoption of digital tools can enhance the UK’s position and unlock the potential for further growth through digital cooperation. It is important that alongside the adoption of national digital initiatives, there is cooperation at the international level by all trading partners to ensure interoperability of digital trading systems.

Digital trade as an economic growth tool

In the fast-evolving landscape of global commerce, digital trade serves as a catalyst for economic expansion. Increase in digital access has enabled the emergence of e-commerce, boosted digitally delivered services, and digitally ordered goods and services, as well as improved supply chain resilience.

Trade through e-commerce platforms has grown exponentially in the last decade. In 2020 alone, digital trade accounted for approximately 25% of global trade according to the OECD. This has been fuelled by the reduction of costs for data sharing, internet connectivity and international transactions, allowing more businesses to connect to customers abroad through innovative business models and types of delivery.

As of 2024, a significant amount of global trade transactions is still paper-based, making processes unnecessarily time-consuming, expensive and unsustainable. Singapore stands as a prime example of how digitalisation can empower nations in global trade. Its border clearance processes rank as the best in the world, led by top marks for efficiency, predictability and transparency. Singapore’s success in leveraging new technologies to enhance its trade infrastructure has enabled it to streamline processes, reduce costs and improve efficiency in cross-border transactions.

This has resulted in Singapore’s digital economy accounting 17.3% of its GDP in 2022, 13% higher than 2017.  Despite its small size, Singapore has emerged as a leader in global trade, partially due to its early adoption and integration of digital technologies in its trade processes.

Digitalisation of trade can help create supply chain resilience

Recently, we have all witnessed shocks to global supply chains, often as a result of heightened geopolitical tensions and the effects of climate change. This has significantly impacted the supply and movement of goods and emphasises the need for efficient, transparent and resilient supply chains.

Digitalising supply chains allows businesses to have a better understanding and control of their suppliers and processes, enabling them to become more resilient to external shocks. This can lower trade costs in various aspects of export journeys, such as logistics, transportation and trade-in services, at a time when the cost of doing business is high. Increasing the visibility of supply chains can also help anticipate and prevent security risks and help businesses diversify their supply chains to increase resiliency against geopolitical and climate-related challenges.

There are significant initiatives currently taking place in the digital trade space. One example is the Transport Logistics Information Pipeline (TLIP), an infrastructure solution championed by organisations such as the Institute of Export & International Trade and based on IOTA’s distributed-ledger technology, which captures documentation and events for each consignment journey. The TLIP infrastructure is being deployed across Africa, the UK and EU and is an important demonstration of what paperless trade can do for these regions.

Challenges of transitioning to paperless trade

Even as the benefits of digital trade are increasingly recognised, significant challenges prevent its growth, including lack of interoperability between markets and restrictive trade measures.

Progress towards multilateral digital trade governance is being threatened as several countries adopt stricter measures to safeguard their technology industries. For example, some states are seeking to terminate the WTO E-commerce Moratorium, which grants businesses continued tariff-free access to digital trade. The potential for customs duties to be introduced on this trade, along with data localisation requirements and regulations affecting online payment services, reflects protectionist national interests that conflict with multilateral cooperation towards making ease digital trade easier and more accessible.

The different approaches of states to trade digitalisation result in non-interoperable systems that prevent the proper utilisation of established digital infrastructures. Despite national efforts to increase digital trade through initiatives such as the planned implementation of the UK Single Trade Window and the Electronic Trade Documents Act, the benefits of these initiatives can be nullified without compatible systems with key trade partners.

In addition to national trade digitalisation, the UK should also endeavour to promote the necessary international cooperation in global digital trade. By establishing itself as a global leader in digital trade governance and by promoting interoperability with trade partners, the UK can unlock its economic growth potential from international trade.