This week in trade has brought the first Budget of the new Labour government, with chancellor Rachel Reeves unveiling her fiscal plans for the next year on Wednesday (30 October).
There’s increased speculation about the outcome of next week’s (5 November) US election, and we have fresh instalments in our series of features exploring how the outcome could shape global trade.
Finally, reviewing the week’s economic data, there’s been positive news for the Chinese economy with less positive news for Kazakhstan’s agri-exporters.
The big picture: Even though it wasn’t the most trade-focused Budget in recent memory, chancellor Reeves’ Autumn Budget still had a few important updates for importers and exporters.
Slipping out almost unnoticed was an announcement on supply chain finance. UK Export Finance can now offer support for overseas projects that help guarantee the UK’s supply of critical minerals. Credit guarantees are on offer for companies that produce minerals like graphite, cobalt and lithium, which the government hopes will make it easier for UK manufacturers to secure contracts abroad.
There’s also the ongoing fallout over falling UK bonds. Gilts have fallen over the last few days, bringing back memories of Liz Truss’ Budget that sent markets into a tailspin. However, Reeves and some market analysts have downplayed the risk, with Stefan Koopman of RaboBank telling Bloomberg that it is “small beer” compared to 2022.
Good week/Bad week: It’s been a good week for the Chinese economy. After weeks of poor economic news, manufacturing data from the National Bureau of Statistics showed an unexpected rise in activity. This follows a stimulus package announced by Beijing that aims to boost the world’s second-largest economy, which has been struggling as of late.
It’s been a bad week for Kazakh farmers. Following a recent announcement that Russia would not buy agricultural goods from Kazakhstan after the latter refused to join the BRICS group, EurasiaNet reports that Kazakh exports of wheat have dropped almost 40%. The country’s vice president of trade alleged that Russia has ‘dumped’ its wheat products into the traditional buying markets of Afghanistan, Italy and various Central Asian states, driving down Kazakhstan’s exports.
How’s stat? 2%. That’s the UK’s predicted GDP growth for 2025, according to the Office for Budget Responsibility, with the number expected to fall to 1.5% in 2027 and 2028.
The week in customs: The government confirmed the next stage of the freeports and investment zone programmes in the Budget. An East Midlands Investment Zone was announced, as well as five new customs sites to appear in existing freeports “shortly”.
The Joint Customs Consultative Committee released a Q&A sheet on preparing for the safety and security (S&S) declarations. The new S&S requirements on goods being imported from the UK to Great Britain are now due to enter into force 31 January 2025, having been delayed.
Quote of the week: “Many of the policies announced in the Budget are closely intertwined with the creation of the government’s modern Industrial Strategy and we are pleased to be actively working with our members and our community of trade experts to ensure that the government is receiving high-quality, tailored and practical inputs to this Strategy.”
Chartered Institute of Export & International Trade director general Marco Forgione reacting to the Budget.
What else we covered this week: Aside from the Budget, we looked ahead to next week’s presidential election, examining how the policies of either former President Donald Trump or incumbent vice president Kamala Harris could impact both the environment and the World Trade Organization in two member-exclusive features.
There was also an update on the Carbon Border Adjustment Mechanism (CBAM), as the government published its response to the consultation on the proposed mechanism. While British firms “welcomed” the introduction of a CBAM, according to the government, the UK’s version is set to diverge from the EU’s model both in timing and in the products covered, raising the risk of ‘carbon leakage’.
True facts: As we enter the ‘trick or treat’ season, it’s a good time to look at the world’s sugar sales.
Perhaps unsurprisingly, given the avalanche of sweet treats doled out over Halloween, the top importer of sugar and confectioneries in 2022 was the US with US$6.03bn, with the UK placing fourth at $1.55bn. Brazil remains the single largest exporter, sending $11.7bn worth of sugar abroad.