As Parliament heads to recess for the summer, the Bank of England delivers a long-awaited rate cut, while the EU sends a message that better bilateral relations come with conditions.
There are also customs updates for traders, which cover both the Goods Vehicle Movement System (GVSM) and Customs Declaration Service (CDS).
The big picture: A number of interest rate decisions were made this week, with the Bank of Japan increasing its base rate to 0.25%, a small but seismic shift after a protracted period of deflation and devaluation against other major world economies.
By contrast, the UK’s central bank delivered a rate reduction yesterday (1 August). After years of increases, the rate fell from its 16-year high of 5.25% to 5%, as inflation stayed at its target 2%.
New chancellor Rachel Reeves welcomed the news, but remained hesitant to suggest the economy was turning a corner ahead of predicted tax rises in the autumn.
Referring to Liz Truss’ 2022 mini budget, she said:
“While today’s cut in interest rates will be welcome news, millions of families are still facing higher mortgage rates after the ‘mini’ budget.
“That is why this government is taking the difficult decisions now to fix the foundations of our economy after years of low growth.”
Good week/bad week: Although a mixed week for EU-UK relations, with the bloc issuing the UK with a set of eight demands to be met ahead of any meaningful talk of improving bilateral relations, German relations are on the up.
Politico reports that Germany is pushing for closer ties across security and trade, while figures show that trade between the UK and the world’s third largest economy has been recovering from its post-Brexit decline.
A bad week for Hong Kong, which has been identified as instrumental in supporting Russia’s invasion of Ukraine by an internal campaign group, the Committee for Freedom in Hong Kong Foundation. The Guardian reports that the organisation described Hong Kong as a trade hub for “the world’s most brutal regimes”, exporting semiconductors which can be used in advanced weaponry to Russia, as well as sending electrical components to Iran and North Korea.
How’s stat? £200m. That’s the amount that UK food exporters have spent on veterinary paperwork since formally leaving the EU in January 2021, the Grocer reports.
Health certificates, required to accompany meat and dairy exports, can cost as much as £200 each, with the UK Animal & Plant Health Agency estimating that over one million have been issued.
A working group of 30 organisations within the UK’s food supply chain wrote to the Department for the Environment, Farming and Rural Affairs (Defra) secretary, Steve Reed, urging him to advocate for changes to the implementation of the Border Target Operating Model (BTOM).
“Perishable and other foods are being delayed entry, resulting in food waste and financial loss”, it wrote, adding that “businesses cannot effectively plan trade routes”.
The week in customs: From 5 August, traders moving goods between Great Britian and Northern Ireland using the Goods Vehicle Movement Service will be able to use their XI Economic Operator Registration and Identification (EORI) number in the Entry in Declarant’s Records’ (EIDR) field to generate a Goods Movement Reference.
From 2 September, the Customs Handling of Import and Export Freight (CHIEF) will no longer be accessible to traders, giving them one month to ensure any open declarations are closed off.
From 4 June, it became mandatory for exporters to migrate to the new system, the Customs Declaration Service, with an extension granted in instances where CDS issues have prevented traders from using it.
Quote of the week: “Our results from 2023 to 2024 show that we are stepping up to this challenge, with our highest level of support for UK businesses since the end of the COVID pandemic.”
Tim Reid, CEO of UKEF, speaking after it was announced that the government agency had supported 650 businesses to export in the past year.
What else we covered this week: As part of our new, member-exclusive Trade Digest series, we looked at trade in the Middle East and Indo-Pacific, covering UAE trade deals and Lammy’s recent trip to the ASEAN foreign minister’s meeting.
Another new series – Border Brief – covered possible plans for UK ports to take legal action against the government if post-Brexit border checks with the EU are reduced.
Our regular feature, Customs Corner, reviewed changes to the submission of health certificates and a workaround for declarations when importing steel to Northern Ireland.
True facts: Today marks what would have been the 100th birthday of US author James Baldwin, whose depiction of US race relations and queer love make him one of the most prominent voices in 20th century American fiction.
His works, including novels Giovanni’s Room and If Beale Street Could Talk, along with acclaimed critical essays that shaped literary journalism in the 20th century, have been translated into 28 languages and sold globally.