Who Would Lose More: A 2024 Simulation of a UK-Initiated Bilateral Boycott with Israel
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A bilateral trade war in which the United Kingdom boycotts Israel and Israel answers in kind would injure both economies, but not symmetrically. On the static arithmetic of 2024 flows, Israel absorbs the larger hit relative to the size of its economy. In absolute export revenue, and still more once American state anti-boycott law is counted, the United Kingdom is the party that walks into the more expensive trap.
The boycott is assumed to be initiated by London; Israeli measures are reciprocal, not opening moves. A freeze on counter-terror intelligence, and a rupture in the defence-industrial link, widen that trap on the British side.
The 2024 Baseline
In 2024, total UK–Israel trade in goods and services was £6.0 billion. UK exports to Israel were £3.4 billion and UK imports from Israel £2.6 billion. Israel ranked around 43rd among UK trading partners and accounted for roughly 0.3 per cent of UK trade. The United Kingdom therefore ran a bilateral surplus of about £0.8 billion.
Converted at an average 2024 sterling rate of about $1.28, the flow is approximately $7.7 billion: some $4.3 billion of UK sales to Israel and $3.3 billion of Israeli sales to the UK. UK goods sold into Israel are led by medicinal and pharmaceutical products, mechanical power-generating equipment, road vehicles and scientific instruments; UK services are led by financial services and business and professional services. Israeli sales into the UK are concentrated in diamonds, chemicals, machinery and electronics.
A continuity agreement signed in 2019 carries over the old EU–Israel preferences, including duty-free industrial goods and mutual recognition of pharmaceutical good-manufacturing-practice (GMP) inspections. A boycott would not merely raise a tariff; it would set that administrative convenience aside.
The macroeconomic frames are not comparable:
- United Kingdom: Nominal GDP in 2024 was £2,905 billion (on the ONS Blue Book 2026 estimate). UK exports of goods and services were £898 billion and imports £920 billion.
- Israel: GDP in 2024 was $542.3 billion. Israeli goods exports were $60.3 billion, down 4.9 per cent on 2023. The Central Bureau of Statistics (CBS) lists the United Kingdom among the destinations with the largest falls in Israeli goods exports that year. Goods imports were on the order of $90–92 billion.
Foreign direct investment does not thicken the link. At end-2024, the ONS-recorded stock of Israeli direct investment in the UK was £1.3 billion, 0.1 per cent of the UK inward stock. The recorded UK outward stock in Israel was negative (£–8.1 billion), a figure that reflects valuation, intra-group financing and disinvestment rather than a conventional asset position. A boycott would freeze a thin investment relationship, not a strategic one.
Static Arithmetic of a Total Cutoff
Assume, for the first cut, that every recorded 2024 flow ceases and that nothing is replaced. That is an upper bound on the bilateral channel, not a forecast.
For the United Kingdom, the lost export market is £3.4 billion, or 0.38 per cent of total exports and 0.12 per cent of GDP. The whole bilateral flow is 0.21 per cent of UK GDP. Even a crude multiplier of 1.5 on lost exports—generous for goods that are not uniquely British—leaves a GDP effect well under 0.2 per cent.
For Israel, the lost export receipts are about $3.3 billion, or 0.61 per cent of GDP. Against goods exports alone, partner-reported UK demand of roughly $1.5–1.6 billion is about 2.5 per cent of the $60.3 billion total.
The ratio of export-loss-to-GDP is therefore about five to one against Israel (0.61 per cent against 0.12 per cent). Absolute lost export revenue, however, is larger on the British side, because Britain is the surplus partner.
Two further static observations follow:
- Balance-of-payments: The effect is a surplus given up by Britain and a deficit closed, in this one corridor, by Israel. Britain stops earning a net £0.8 billion; Israel stops paying it.
- Import shock: This is the milder half for both. Britain can replace £2.6 billion of Israeli goods and services from the EU, the United States, and India without a measurable consumer-price effect. Israel can replace £3.4 billion of British goods from Germany, Ireland, Italy, the United States, and East Asia; its own import bill in 2024 was already near $92 billion in goods alone.
Composition, and What Can Be Replaced
The static ratio overstates Israel’s disadvantage once substitution is allowed, and understates Britain’s once politics and defence are allowed.
Israeli exports to Britain are not, in the main, captive. Polished diamonds can be routed through Antwerp, Ramat Gan’s other partners, or India. Electronics, chemicals and medical devices already have larger buyers in the United States, Germany, Ireland, the Netherlands and, increasingly, Asian and Abraham Accords markets. The United States alone took $17.1 billion of Israeli goods in 2024, an order of magnitude above the British book. A British cutoff is a margin loss and a logistics cost, not a demand shock to the export model.
British exports to Israel are likewise replaceable from the Israeli side. Pharmaceuticals, vehicles and instruments have ready EU substitutes—Germany, Ireland and Italy already outrank Britain as goods suppliers to Israel. What Britain would lose is a small, profitable niche: a few hundred million pounds of medicines, a specialist instrument trade, City financial services, and the administrative convenience of the continuity agreement’s GMP mutual recognition. None of these is large enough to move the UK trade balance, which in 2024 was a £22 billion deficit on £898 billion of exports.
Civilian substitution, however, does not describe the defence-industrial link. That channel is smaller in the customs statistics than in the force structure.
The Defence Industry
Defence trade is the point at which a boycott stops being a customs measure and becomes an industrial and operational one. The 2024 figures are public, and they are lopsided.
Britain’s defence export orders in 2024 were £13.2 billion, up from £11.9 billion in 2023. Single individual export licences for military goods to Israel in that year were worth £142 million, the highest such figure since 2017. Two November licences, together £126 million, for military radars accounted for most of it; public reporting ties them to a Watchkeeper-related programme involving Elbit production for a third-country sale, not to a standing British revenue stream from the Israeli Ministry of Defence.
Set against the £13.2 billion order book, the direct licensed flow to Israel is about 1.1 per cent. In September 2024, London already suspended 29 licences for equipment assessed as usable in Gaza, while leaving the F-35 component chain in place. A full boycott would finish a cut that a partial suspension had already begun.
That indirect channel is the larger British interest. BAE Systems states a 13–15 per cent workshare on each F-35, excluding propulsion; the United Kingdom is the largest international component supplier on the programme. Israel’s F-35I fleet is supplied through the United States, not by a direct British export line. A campaign estimate puts UK content at roughly $12 million an aircraft and on the order of $540 million across the aircraft delivered by the middle of the decade, plus spares.
These matter because a boycott that reached F-35 components would not punish an Israeli purchase of British goods; it would put a British workshare, paid for inside a US-led programme, at odds with Washington. Israel can keep taking aircraft, while Britain would be left arguing with the prime contractor and the United States.
The Israeli industry does not depend on the British customer. Defence exports reached a record $14.8 billion in 2024, up 13 per cent. Europe took 54 per cent, Asia-Pacific 23 per cent, the Abraham Accords countries 12 per cent, and the United States 9 per cent. The United Kingdom is not in that ranking as a major destination. A British refusal to buy removes a marginal European customer from an industry that has just posted a record on other orders.
The loss to Britain is the reverse. Israeli-owned capacity already sits inside the UK force structure. Elbit Systems UK Limited reported a turnover of £62.5 million in the year to 31 December 2024, employing nearly 700 people across 15 sites, and investing more than £30 million in the UK since 2019 to supply all three services. A reciprocal boycott strands that footprint or forces a sale under distress.
The jobs are British, but the technology being integrated is Israeli, and the substitutes are slower than a licence revocation. Watchkeeper, radar licences, and the broader unmanned and electronic-warfare relationship are the concrete form of that lag.
| Defence-Industrial Channel | 2024 Anchor | Illustrative Loss in a Full Freeze | Harder Hit |
|---|---|---|---|
| UK military SIELs to Israel | £142 million (inc. £126m radar licences) | The whole £142 million (~1.1% of UK defence export orders) | Small for both; politically noisy |
| UK defence export orders (all) | £13.2 billion | Israel is not a top market; direct exposure ~1% | UK, but not material to the order book |
| Israeli defence exports | $14.8 billion (Europe 54%, US 9%) | UK share not separately published; not a leading destination | Israel, marginal |
| F-35 UK workshare | 13–15% of each aircraft (excl. propulsion) | Cumulative UK content in Israel’s fleet ~$0.5 billion plus spares | UK, due to secondary dispute with Washington |
| Elbit Systems UK | £62.5m turnover; up to 700 jobs across 15 sites | Stranded investment; gaps in already fielded UK programmes | UK jobs and defense availability |
| Israeli systems Britain buys | Not a single published 2024 line | Replacement lag in unmanned systems, radar, electronic warfare | UK, on operational timeline |
The American Constraint
The decisive asymmetry is not in the bilateral ledger: a British boycott collides with American state law, whereas an Israeli counter-boycott does not.
By April 2024, on the survey used by Newsweek from the Jewish Virtual Library’s legislative list, a large majority of US states had either a statute or an executive order restricting the boycott of Israel. The statute states in that survey included Texas, Ohio, Illinois, Indiana, Florida, Arizona, Georgia, Iowa, Pennsylvania, Michigan, Arkansas, Minnesota, Nevada, South Carolina, Tennessee, Alabama, Rhode Island, New Jersey, Oklahoma, Kansas, North Carolina, Utah, Missouri, Idaho, West Virginia, Colorado, Mississippi and New Hampshire. Executive orders covered, among others, New York, Maryland, Wisconsin, Louisiana, Kentucky and South Dakota; Alaska added an administrative order the same year. The working count is on the order of 35 to 38 jurisdictions.
These rules bind companies, not foreign sovereigns. A UK government policy that requires British firms to refuse Israeli commerce, or a British multinational that implements the boycott in order to comply with London, can fail the certification and lose eligibility for state contracts and for the portfolios of state retirement systems.
The market behind those rules is not comparable to the bilateral flow. The US Census Bureau’s Annual Survey of Public Pensions put state and local pension assets at $5.99 trillion in 2024, up from $5.48 trillion in 2023, with $405 billion paid out in benefits that year. State, local and education procurement is commonly estimated at $1.5–2 trillion a year, several times the federal procurement market.
Anti-boycott statutes do not close that entire market to Britain. They close it, contract by contract and mandate by mandate, to firms that certify — or are found — as boycotters of Israel. A single large British pharmaceutical, defence, engineering or financial firm with material US public-sector exposure can face a secondary loss exceeding its entire Israeli book.
Israel, retaliating against a boycott it did not start, does not trigger those statutes; the statutes are aimed at boycotters of Israel. Washington’s federal relationship — military financing, co-production, technology access — is unaffected by a London–Jerusalem quarrel and remains Israel’s principal external economic and security anchor.
Britain, having started the boycott, would be asking its own firms to choose between a market worth 0.4 per cent of UK exports and continued access to public business across most of the American union. The F-35 workshare makes the same point inside one programme: a British refusal to supply components is an argument with the United States, not a sanction Israel is obliged to feel.
The market behind those rules is massive:
- The US Census Bureau’s Annual Survey of Public Pensions put state and local pension assets at $5.99 trillion in 2024.
- State, local and education procurement is commonly estimated at $1.5–2 trillion a year, several times the federal procurement market.
Anti-boycott statutes close this market contract by contract to firms found to be boycotting Israel. A single large British pharmaceutical, defence, engineering or financial firm with material US public-sector exposure can face a secondary loss exceeding its entire Israeli book.
Israel, retaliating against a boycott it did not start, does not trigger those statutes. Britain, having started the boycott, would be asking its own firms to choose between a market worth 0.4 per cent of UK exports and continued access to public business across most of the United States.
Security — Sharing of Counter-Terror Intelligence
Trade is the visible ledger; the invisible one is liaison: warning on terrorist travel, financing, facilitation, and hostile-state sponsorship. Within established limits, London has long treated Israeli services as a regional partner on threats that reach Britain. A boycott initiated by Britain, if drawn widely enough to include that channel, would be a British choice to close a feed it does not own and cannot cheaply replace.
For the year ending 31 March 2025, the Single Intelligence Account (funding MI5, SIS, and GCHQ) spent £5.20 billion. That is the replacement budget, not the loss. What can be priced is the consequence of a missed warning, using the Home Office’s own costings under CONTEST:
- The direct economic and social cost of the five terrorist attacks in Britain in 2017 was £171.8 million (with Manchester Arena accounting for £116.0 million).
- The wider associated loss of economic output was estimated at about £3 billion.
- CONTEST 2023 records 39 late-stage plots disrupted since 2017, with Islamist terrorism accounting for about three-quarters of MI5’s caseload.
If a freeze on Israeli liaison raised the annual probability of one additional late-stage plot succeeding by 10 percentage points, the expected direct cost would be about £12 million a year, and the wider output cost about £300 million a year. At 25 percentage points, those figures rise to £29 million and £750 million a year, respectively. Spread over a decade, the upper illustrative path runs to several billion pounds—larger than the entire UK export book to Israel.
| Security Channel | Public 2024/25 Anchor | Illustrative Loss if Liaison Freezes | Who Pays |
|---|---|---|---|
| UK Intelligence Account | £5.20 billion outturn | Not a loss in itself; the budget that must grow to replace a lost feed | UK, as replacement cost |
| Direct cost (Manchester-scale) | £116 million (2017 prices) | Expected £12–29m / year if risk rises by 10–25 percentage points | UK public and victims |
| Wider output loss (2017 series) | ~£3 billion | Expected £0.3–0.75bn / year on the same 10–25 point risk increment | UK economy |
| Plots already stopped | 39 late-stage plots since 2017 | One extra success in a decade wipes out years of bilateral export gains | UK |
| Five Eyes / US Conduit | Intact (Israel is outside) | Direct UK-Israel pipe closes; UK relies on US-filtered relays | UK, on timeliness and control |
Two asymmetries decide who pays. First, the product runs mainly toward Britain. Israeli services collect on networks, facilitators and state sponsors in a region that generates the larger part of MI5’s Islamist caseload; Britain’s return flow is European travel, finance and diaspora reporting, plus whatever Five Eyes material London is permitted to pass. A reciprocal freeze therefore removes, for Britain, a regional sensor it cannot replicate inside a £5.2 billion account without years of new coverage, and removes, for Israel, a European node that the United States and other partners can partly cover.
Second, the United States does not leave the room. Washington remains Israel’s principal intelligence partner and Britain’s. A London–Jerusalem rupture does not close the American channel, nor the UK–US channel. It closes only the bilateral pipe. Britain then depends on the United States to pass on, at American discretion, material that previously arrived directly. That is a loss of timeliness and of control, and it is a loss only the initiator suffers as a political fact.
Who Is Hurt More?
Three core results follow from this 2024 simulation:
- Relative to GDP, Israel loses more from the direct cutoff: Lost export receipts of 0.61 per cent of GDP against 0.12 per cent is a real, measurable difference, though neither figure triggers a recession.
- In absolute commercial, legal, and security terms, Britain loses more: It surrenders the larger export book, the trade surplus, a key defence-industrial link, and carries the compliance conflict with US state law alongside the F-35 argument with Washington. This secondary channel is capable of costing far more than the bilateral trade itself.
- Retaliation favours the party that can calibrate: Israel can answer with targeted measures (vehicles, spirits, selected services) while keeping its crucial US, Indian, and Abraham Accords channels fully intact. Britain cannot easily unwind the signal sent to Washington by being the initiator, nor can it quickly rebuild regional intelligence coverage.
| Measure (2024 Simulation) | United Kingdom | Israel | Harder Hit |
|---|---|---|---|
| Bilateral exports at risk | £3.4 billion (~$4.3bn) | £2.6 billion (~$3.3bn) | UK (in absolute terms) |
| Export loss as share of GDP | 0.12% of £2,905bn | 0.61% of $542.3bn | Israel (by ~5 to 1) |
| Total flow as share of GDP | 0.21% | ~1.4% | Israel |
| Bilateral balance given up | Surplus of ~£0.8 billion | Deficit of ~£0.8 billion closed | UK (as the earning side) |
| Substitutability of sales | High for civilian goods; low for specific defence items | High for diamonds/electronics; US alternative market is massive ($17.1bn) | Even / Israel favored |
| Defence-industrial footprint | Elbit UK footprint; F-35 component chain risks | Record exports elsewhere ($14.8bn); Europe already 54% | UK |
| Counter-terror liaison | Expected risk cost up to £750m/year; replacement friction | Smaller European node loss, mitigated by US | UK |
| US state law collision | Yes (Risk to US public procurement/pensions access) | No (Statutes target initiators of boycotts) | UK |
| Who initiates | London | Reciprocal only | UK bears the legal overhang |
Conclusion
A bilateral boycott on 2024 volumes would be felt sharply by specific firms, in the diamond and pharmaceutical pipelines, and in the warning time on plots aimed at British cities. It would not structurally break either economy.
Read down the last column and the asymmetry is numerical, not rhetorical. The bilateral export loss is £3.4 billion. A pension exclusion of one twentieth of one per cent of the 2024 public-pension stock already matches that sum. A procurement-access loss of one tenth of one per cent of the state-and-local market matches it again, and recurs annually. A modest rise in residual terrorist risk, priced on the Home Office’s own wider unit, can match it over a single parliament.
The defence-industrial loss is smaller on the invoice — £142 million of licences, a £62.5 million UK subsidiary — and larger on the programme, because the F-35 workshare is an argument with Washington. These are scenarios, not predictions: many UK firms would try to wall off the Israeli business so as to keep the US certificate, and many officials would try to keep liaison and component flows alive inside a political boycott. Both attempts are themselves costs, and both fail where the UK measure is mandatory rather than voluntary. The US statutes do not need to fire at full force, and the intelligence freeze does not need to blind every investigation. They only need to fire at the margin to dominate the bilateral arithmetic.
A bilateral boycott on 2024 volumes would be felt in particular firms, in the diamond and pharmaceutical pipelines, in a handful of defence programmes, and in the warning time on plots aimed at British cities. It would not restructure either economy.
Measured properly — relative macro pain, absolute revenue, substitutability, the defence-industrial link, the American legal overhang, and the priced risk of a thinner counter-terror feed — the United Kingdom, as the initiator, would be the party that damages itself more.
Sources for the ledger
DBT/ONS factsheet and 2024 partner table (trade £6.0 billion, exports £3.4 billion, imports £2.6 billion); House of Commons Library (UK exports £898 billion, imports £920 billion); ONS Blue Book 2026 (UK GDP £2,905 billion); World Bank (Israeli GDP $542.3 billion); CBS (goods exports $60.3 billion); UK Defence Export Statistics 2024 (defence orders £13.2 billion); CAAT licence compilation (£142 million in military SIELs, of which £126 million in two November radar licences; partial suspension of 29 licences in September 2024); Israel Ministry of Defence figures as reported by Reuters, 4 June 2025 (defence exports $14.8 billion, Europe 54 per cent, missiles and air defence 48 per cent); BAE Systems on a 13–15 per cent F-35 workshare excluding propulsion; Elbit Systems UK Limited filing (turnover £62.5 million, 284 employees, year to 31 December 2024) and the group’s 2024 account of nearly 700 people across 15 sites; US Census Annual Survey of Public Pensions 2024 ($5.99 trillion); Newsweek/Jewish Virtual Library survey of April 2024 on anti-boycott states; Cabinet Office, Security and Intelligence Agencies Financial Statement 2024–25 (Single Intelligence Account outturn £5.20 billion); Home Office, CONTEST 2023, Annex D (direct cost of the five 2017 attacks £171.8 million, Manchester Arena £116.0 million; RAND wider output loss of about €3.5 billion) and the CONTEST press account of 39 late-stage disruptions since 2017, nine declared attacks since 2018, and Islamist terrorism as about three quarters of the MI5 caseload. The procurement range of $1.5–2 trillion is a commonly cited market order of magnitude, not a single Census line item. The F-35 content estimate of about $0.5 billion is a campaign extrapolation from the workshare, not an official export line. The percentage scenarios in the US table, and the 10- and 25-point risk increments in the security table, are expressly illustrative.
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