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Keir Starmer has said he is keen for US-UK trade talks to begin soon after President Trump’s inauguration. This should be welcomed, but perhaps taken with a pinch of salt. Starmer has reportedly assigned 100 officials to work on his ‘reset’ of UK-EU relations; will he dedicate similar resources to the UK’s relationship with the US?
The EU and Mexico have concluded negotiations to update an existing free trade agreement. Negotiations began in 2016 and broad agreements on principle were reached in 2018. It has taken 6 years to work out the details. Rules governing how the provenance of traditional European foods should be indicated on labels proved a major stumbling block to the new deal.
A deal at long last
The German Economy Minister has warned that Germany will be the main target of tariffs imposed on goods from the EU by President Trump. Germany has the biggest trade surplus with the US of any European nation, and Trump is said to be particularly irritated by the number of German cars on the roads in the US. This comes as a leaked memo from the German ambassador warns of “a redefinition of the constitutional order” of the US, with power more concentrated than ever in the Oval Office.
The EU Commission has extended its investigation into X (formerly Twitter), demanding information about the algorithm used to decide who sees which posts on the social media site. The Commission’s spokesperson was forced to deny that there was any political motivation behind the move, as mainstream EU politicians continue to complain about what Elon Musk says online.
The Commission takes on Elon.
The Bank of England has announced that it will delay the implementation of Basel III banking regulations by one year because of uncertainty as to whether and how the rules will be adopted by the new Trump administration. The reforms were initially designed in response to the 2008 crash, but have been heavily criticised by US banks since their publication. The delay has been criticised by EU officials, complaining that it creates “level playing field issues”.
Media
Jean-Baptiste Ferroz on the ‘carbon capture con’
Vera Kichanova on what Britain can learn from Hong Kong
Blog
The only reset UK trade needs by Catherine McBride
SPS alignment will not change our agrifood trade statistics because this will not alter the rules of origin in the Trade and Cooperation Agreement. The Government does not need to reset the UK’s relationship with the EU but it does need to reset its attitude towards fossil fuels. Running down our oil-related export industries while importing oil and gas from the US or Qatar is economic suicide.
The Chancellor is looking for new ideas to boost the economy, why not reopen UK coal mines and export the coal to Germany? They need coal to make electricity but are using low-grade brown coal. The UK could supply them with higher-grade coal and we may even be able to buy the electricity back from them via the interconnectors next time the wind drops.
The Starmer government could fall well before 2029 by Robert Lee
Labour’s massive parliamentary majority leads all to assume that they will be in power for the next four years, but can a democratic government really stay in office no matter how incompetent, unpopular and venal it may be? This government is imploding in spectacular fashion, and could it be that the highly flexible constitution that has evolved from our unique history can deliver an earlier change of government?
In the last six months the UK has become an international laughing stock. Our enemies rejoice and our friends despair. I warned in previous articles that the UK’s economic Achilles heel is its excessive dependence on foreign borrowing. Major hedge funds and investment speculators smell blood, as can already be seen in the bond and currency markets. I wish I could envisage a scenario in which the government responds by changing course and slowly but surely restoring confidence. In the absence of that – or a change of government – the outlook for the next four years is grim.
Starmer wishes to use Brexit freedoms by Brian Morris
In this letter to Briefings for Britain, Brian Morris argues that Keir Starmer’s support for an AI-plan to supercharge economic growth in the UK, reveals his belief in the importance of the freedom which Brexit has given for the UK to diverge from restrictive EU regulation.
But at least Sir Kier has provided a powerful response to the Remainers who, for the four years since Brexit became reality, have banged on about not seeing the benefits of leaving the EU. Sovereignty does matter, after all.
Key Points
But a few months ago, Rachel Reeves could say (with a straight face) “I worked at the Bank of England, so I know how to run an economy” and promised that growth would return to Britain as soon as she moved into Downing Street. Now she presides over a stagnant economy and will be forced to choose between abandoning her beloved ‘fiscal rules’ and making cuts to government spending. Where did it all go wrong? Here are three suggestions.
There is a clear problem with mentality. It is not the Chancellor’s job to ‘run’ the UK economy as a CEO might ‘run’ a company. Even if it were possible for an official in Whitehall to control economic activity across the country, it would be undesirable and would be unlikely to see an increase in productive activity. Unfortunately, there is no sign of a shift in Reeves’ socialistic mentality — she met with regulators this week to discuss ideas to encourage economic growth.
Another problem is the government’s obsession with ‘stability’. Though it might be a useful campaigning tool to contrast the ‘turmoil’ of (for example) Liz Truss’ premiership with the ‘stability’ that Labour can offer, it is not a sensible policy goal when things are not going well. At present, stability means stagnation. Economic growth is impossible unless people are willing to take risks by trying new things, be they entrepreneurs starting new businesses, or Chancellors adopting new policies.
The third problem is that for all their talk of ‘change’, the Labour government is not doing things very differently. They have perhaps made some accounting choices which the Conservatives would have avoided (taxing more to pay public sector workers more, for example), but there is no sign of any attempt at major reform in any area of government. Reeves and Starmer have quickly found themselves in a position not unlike Hunt and Sunak last year — they present themselves as competent governors, but leave everyone at a loss for what the overall strategy is. If things stumble on much as they were, voters will surely come to the same view about Labour as they did about the Conservatives.
