The UK economy, like the economies of most developed countries around the world, has been significantly damaged by the coronavirus pandemic. According to the Office for National Statistics (ONS), the economy is “in the doldrums”, having contracted by 24.5% since February 2020.
There are reasons to be optimistic, though. For one, the ONS’ latest data shows that the economy returned to growth in May, albeit by just 1.8%. While this slight rebound after months of sharp decline might not seem like much cause for celebration, it does suggest the worst of the crisis might have passed and that brighter futures now lie ahead.
If the economy had already started to grow again by May, then June – when many more industries re-opened – ought to post far more impressive figures. Indeed, lockdown measures have been eased; various sectors are sparking back into life, including housebuilding, hospitality, leisure and domestic tourism; and further economic stimuli have been unveiled by the Chancellor in a bid to protect jobs and get consumers spending again.
Importantly, as well as rightly focusing on tackling unemployment and boosting consumer confidence, the Government is also starting to turn its attention back to global trade. This is a positive development.
Amid the chaos and hardship caused by COVID-19, it is easy to forget that the UK economy was already contending with a hugely challenging situation: Brexit.
While the UK’s separation from the EU might have formally taken place on 31st January 2020, the country is still wedded to the various rules and regulations laid down by the bloc; which will remain the case until the end of 2020. As such, it is vital that officials in Westminster do not lose sight of the fact that thorough preparations must be made for when the UK is cut adrift from the Single Market.
As an ardent campaigner for Brexit, Boris Johnson has long heralded the benefits on offer once the UK gains the freedom to forge its own path away from Brussels. Well, now that path needs forging, and fast – an international trade network must be put in place in the months ahead, including free trade deals with major economies on every corner of the planet. Further, the UK faces a race to maintain its existing trade deals, many of which were signed because of Britain’s membership with the EU.
Yet it does seem that global trade has once again become a prominent priority on the Government’s agenda; in early July, a source from 10 Downing Street said that the UK would soon be pushing ahead with an ambitious, far-reaching trade strategy, including the country’s first independent trade policy since 1973 – due to come into force in January – which would involve lobbying for low tariffs and greater powers for the World Trade Organisation (WTO).
Global trade key to economic recovery
The Government’s post-pandemic and post-Brexit trade strategy is going to have a hugely significant influence on the economy’s ability to bounce back.
To put the matter into context: in 2019, the UK’s exports of goods and services totalled £700 billion and imports totalled £724 billion, according to government data. The EU accounted for 43% of those exports and 51% of imports.
Evidently, without creating a beneficial new trade deal with both the EU and many other world powers, the UK risks cutting itself adrift. The plain facts are that if new free trade agreements (FTAs) or attractive trade deals cannot be signed in the months ahead, the UK will be faced with higher tariffs and greater restrictions on both its imports and exports; this, in turn, will affect supply chains across almost every industry, which will translate into higher costs for both consumers and businesses.
The UK economy can only recover if British businesses succeed – they must expand in size to boost employment numbers and revenues, boosting the state’s tax receipts and facilitating more inward investment. Lowering restrictions to cross-border trade is a crucial way of enabling business growth, so One World Express watches on with keen interest as the Government lays out and executes its plans for global trade in the coming months.