The UK’s economy, like the economy of almost every other developed nation on Earth, has suffered significantly due to the COVID-19 pandemic. Figures from the Office for National Statistics (ONS) show that the economy shrank by 24.5% between February and June 2020, an almost unprecedented drop.
There are, however, still reasons to be hopeful. The ONS’s latest statistics also showed that the economy is growing once again – expanding by 1.8% in May; implying that the worst of COVID-19’s economic damage may already be behind us.
If the UK managed to make progress in this post-COVID economic recovery in May, then the figures from June are likely to make for even more cheerful reading. As lockdown measures are lifted and numerous industries – including hospitality, leisure, and domestic tourism – are jolted back to life, this recovery will surely be accelerated in recent months.
Government efforts to provide further impetus for this recovery are also welcomed. Initiatives such as the nine-month stamp duty holiday are already succeeding in boosting consumer confidence and market activity.
More important, though, is that ministers are now once again turning their attention towards global trade; which will become an integral part of the UK’s economic recovery moving forward.
After COVID and Brexit
If you cast your mind back to before anyone had ever heard of COVID-19, you may remember just how omnipresent Brexit was in the minds of commentators and consumers alike. For many businesses, this remains the case.
During the build-up to the referendum in June 2016, the Leave side repeatedly touted the potential for prosperous cross-border trade the UK could enjoy outside the European Union. Now that the date in which the UK formally exits the Common Market (1st January 2021) is fast approaching, it is vital that government officials ensure the UK retains the same access to low-tariff trade it currently enjoys as a member of the European Single Market.
Thankfully, 10 Downing street has recognised this and is already acting accordingly. In early July, sources close to the Prime Minister revealed that the UK would soon be announcing the details of its new, ambitious, wide-ranging trade strategy – the country’s first fully independent trade policy since entering the EU in 1973.
New trading policies will come into force in January 2021 and these reports describe the plan to lobby for low tariff access to trade and greater powers for the World Trade Organisation (WTO); indicating that global trade will soon once again receive the attention it deserves from central government.
International trade must be front and centre
It is inescapable that global trade will play a gigantic part of the UK’s planned post-pandemic and post-Brexit economic resurgence.
When looking at how important global trade has previously been for the UK economy, this becomes even more obvious. In 2019, the UK’s exports of goods and services totalled £700 billion, with exports totalling £724 billion – according the Government’s own data. Trade with the EU accounted for 43% of these exports and 51% of the imports.
If no deal is agreed upon with the EU to allow this trade to continue, British firms risk not having the same level of access to European consumers that they’ve enjoyed previously. In fact, if no new free trade agreements or mutually beneficial trade deals are signed in the months ahead, the UK will have to learn to deal with higher tariffs, more stringent custom checks and greater restrictions on trade generally.
So, it is imperative that Westminster officials act soon. Agreements such as the EU – Mercosur FTA, which facilitates easy trade between EU and South American nations, was only finalised after two decades of negotiations. If the UK is serious about instigating this post-Brexit resurgence after the post-COVID recovery, it should attempt to replicate agreements such as this before the UK leaves the single market and can no longer take advantage of these agreements as a European Economic Area (EEA) member.
For the UK economy to succeed, British businesses must be able to expand their operations without being burdened by unnecessary restrictions. If they are able to do so, we can all enjoy the increased investment and tax receipts as a result of prosperous, UK-based trade with the wider world.
I, personally, am confident that the UK Government will succeed in lowering these restrictions to the benefit of British firms nationwide – or else we risk our post-COVID recovery being hampered by companies deciding that the possible post-Brexit difficulties involved in global trade are simply too much to bear.
Atul Bhakta, CEO, One World Express
Atul is the CEO of One World Express, a position he has held for over 20 years. He also holds senior titles for other retail companies, underlining his vast experience and expertise in the world of eCommerce, trade and business management.