This week’s trade news includes questions in Parliament for UK foreign secretary David Lammy on his recent visit to India and new legislation entering force in the EU on AI, aimed at limiting the potential of the technology to pose “unacceptable risks” as its development continues.
Elsewhere, there could be a turning point for monetary policy in England as economists predict an interest rate cut.
Parliamentary activity
Lammy takes questions in Parliament on UK-India and UK-Europe relations on Tuesday (30 July) before Parliament enters recess on Wednesday until 2 September.
It comes following Lammy’s visit to India and the signing of a new UK-India Technology Security Initiative, intended to ensure improved cooperation between the two nations on “trade, technology, education, culture and climate”. Lammy said last week that the agreement would “unlock mutual growth, boost innovation, jobs and investment”.
The questions on UK-Europe relations will explore how the government intends to strengthen trade ties with the EU. Trade experts – including Marley Morris of the Institute for Public Policy Research (IPPR) at last week’s Chartered Institute of Export & International Trade webinar – have called for deeper cooperation with the bloc to boost UK growth.
An adjournment from Sir John Hayes MP focusing on food security is likely to see attention on the Border Target Operating Model (BTOM) and its implications for UK access to sanitary and phytosanitary (SPS) goods, including food.
Artificial impediments?
The EU’s first legislation on artificial intelligence (AI) enters into force on Thursday (1 August) “to ensure better conditions for the development and use of this innovative technology”, according to the Act.
The regulatory framework establishes four ‘risk levels’ for AI, ranging from “unacceptable risk” down to those classed as “supporting innovation”. It also requires content created using generative AI not considered ‘high risk’, including OpenAI’s ChatGPT, to be labelled as such. Unacceptable risk technologies are to be banned within six months of the act’s introduction.
The European Commission is keen to emphasise that it will continue to encourage innovation in the industry rather than impeding the technology’s development, as some critics have suggested it will, noting that the Act requires national authorities in the EU to “provide companies with a testing environment” for use by SMEs in the sector.
Interest rate spate
A series of three major monetary policy decisions will be announced this week, as the Bank of Japan and US Federal Reserve set interest rates on Wednesday, before the Bank of England follows with its own decision on Thursday.
Last week, higher-than-anticipated US GDP growth changed the context for the Federal Reserve’s decision, raising the possibility that the current rate of 5.25-5.5% will remain in place.
The Bank of England may be more willing to cut the current, 16-year-high interest rate of 5.25%. The FT reports that 80% of Reuters-polled economists expect a first cut since rates were hiked to help tackle inflation, based on comments from the bank’s monetary policy committee that its members “will consider all the information available and how this affects the assessment that the risks from inflation persistence are receding”.
Other stats
Preliminary Q2 GDP stats are due tomorrow for the EU as a whole, as well as for France, Germany, Hungary and others.
Inflation data from Germany, the EU’s largest economy, could also offer hints about the bloc’s economic trends before eurozone preliminary July HICP inflation rate data on Wednesday. France will also publish inflation data that day.
Manufacturing Purchasing Manager Indexes (PMIs) for July will be published for the eurozone as well as the UK, US, China and Japan on Thursday, before France’s June industrial production figures and South Korea’s inflation data are released on Friday.
Other dates for the diary
Monday: New Financial Conduct Authority (FCA) rules on UK listings enter force
Tuesday: New Iranian president Masoud Pezeshkian inaugurated
Wednesday: Brazil interest rate decision
Thursday: US tariff increases on Chinese electric vehicles and other goods enters force
Friday: US employment figures released
Saturday: National Eisteddfod begins in Wales
Sunday: Former US president Barack Obama turns 63
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