UK Businesses Turn to Technology as Their Trade Complexity with Europe Intensifies, Avalara Finds

New research from Avalara, Inc., the agentic tax and compliance leader, has found that UK businesses surveyed remain committed to international growth, despite rising uncertainty and mounting friction with Europe making cross-border expansion more difficult.

The 2026 Cross-Border Complexity Report reveals that British companies are scaling back expansion plans because their confidence in stable trade rules has weakened. More than eight in ten leaders ((82%[1]) say cross-border operations are more complex than a year ago, seven in ten (71%[2]) say trade is more complex than it was three years ago, and more than two-thirds (68%) now view Europe as their most challenging trading partner. Just 37% are actively expanding internationally.

With this trust in policy stability declining, UK firms are increasingly relying on technology to restore certainty. More than eight in ten (83%[3]) now use AI in cross-border operations, with automation and intelligent compliance systems becoming central to managing risk, navigating regulatory change and sustaining growth. Today’s report pinpoints a major shift in how UK firms approach international expansion, focusing on technology for stability and predictability. 

“While Europe continues to be an important market for UK businesses, it has also become one of the most complex,” said Craig Reed, GM, Cross-Border at Avalara. “As rules grow more fragmented and fast-changing, technology becomes the only true source of stability. Businesses that invest in intelligent compliance systems will be best positioned to compete on the global stage.”

Other findings from the Cross Border Complexity Report include:

Europe is now UK businesses’ greatest test: Despite Europe’s proximity and commercial importance to the UK, British firms face multiple friction points. More than half (53%) pointed to tariffs and duties as their top burden for cross-border operations, while 38% of businesses struggle with border processes and regulatory change. As such, many UK firms will be reassessing their supply chains, compliance infrastructure and growth priorities in response to this complexity.

Compliance is reshaping expansion decisions: Compliance is now a decisive factor in where and how UK businesses grow. Regulatory change after market entry is viewed as a major risk by nearly half of respondents (49%). The financial and operational burden of managing trade rules is also forcing companies to be more selective, delaying (40%) or downsizing market entry plans (17%) to avoid costly missteps.