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Welcome to the BABN’s December Policy and Trade Update.
November was a busy month for the UK; the Treasury released its Autumn Statement outlining a new direction for economic policy, Trade Secretary Kemi Badenoch visited Washington, D.C., and Prime Minister Sunak met with President Biden on the sidelines of the G20 Summit in Bali. In December, the US and UK launched a new partnership focused on energy security, and some of the key players in the US Senate expressed their support for reinvigorating trade talks with the UK.
Read on for a recap of the policy and trade headlines of November and early December 2022!
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UK Government's 2022 Autumn Statement
17 November 2022
In November, the UK government released its Autumn Statement, outlining a new direction for economic policy now that the UK has entered a recession. Reversing the majority of tax measures set out in the Growth Plan and acknowledging that high inflation and interest rates and slow economic growth have affected public finances, the statement outlines a path towards reducing debt as a share of GDP over time. Among other things, the Autumn Statement:
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Raises the Corporation Tax to 25% for companies with over £250,000 of profit;
- Raises the Energy Profits Levy to 35% from 1 January 2023;
- Introduces a temporary 45% Electricity Generator Levy from 1 January 2023;
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Makes £8 billion available for the NHS and for adult social care for 2024-25;
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Raises the Energy Price Guarantee from £2500 to £3000;
- Provides for cost-of-living payments to households on means-tested benefits, pensioners, and persons with disabilities, limits the maximum allowable rent increases, and raises the National Living Wage;
- Commits that the UK's defense spending will not below 2% of GDP; and
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Outlines increased public spending on research and development(to £20 billion per year, a 30% increase from 2021.
The OBR expects inflation to peak at 11.1% in Q4, a significant increase from the March forecast. Nominal earnings are expected to rise, but fail to keep pace with rising prices, and high energy costs will cause real household disposable income to fall by over 4%. Business investment trade volumes are projected to fall, while unemployment and workforce inactivity are expected to rise.
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UK Trade Secretary Kemi Badenoch Visits Washington, D.C.
November 14, 2022
UK Trade Secretary Kemi Badenoch made her first visit to Washington, D.C. in early November for talks with government officials, Congressional offices, key business leaders. She emphasized the link between economic security and national security, the importance of future-proofing economies to build resilience to shocks, and the dangers posed by protectionism. In a meeting with US Deputy Secretary of the Treasury Wally Adeyemo, Secretary Badenoch discussed the Inflation Reduction Act, investment security, and resilient clean energy supply chains. She attended the Global Women's Summit, where she spoke about her journey as a young woman in leadership and answered tough questions about the UK's economic direction post-Brexit from Washington Post columnist David Ignatius. In meetings with members of the House Ways and Means Committee, she made the case for increased free trade between the US and UK and spoke to the CATO Institute on how free trade helps secure and future-proof economies.
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G20:
US President Joe Biden Meets UK Prime Minister Rishi Sunak
November 16, 2022
On the sidelines of the G20 in Bali, President Biden and Prime Minister Sunak met to discuss the war in Ukraine, relations with China, global efforts to combat the climate crisis, and building sustainable supply chains. The leaders reiterated that the gains of the Good Friday Agreement would be respected in post-Brexit negotiations. Prime Minister Sunak expressed optimism about the US-UK relationship and noted that, while the leaders did not discuss a trade deal, they were on the same page about their countries' economic relationship.
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UK-US Energy Security and Affordability Partnership
December 7, 2022
the UK and US have announced a new partnership to bolster energy security and manage energy prices. The partnership will focus on reducing dependence on Russian energy, stabilizing energy markets, and collaborating on energy efficiency and nuclear and renewable energy. It will be led by a high-level bilateral Joint Action Group led by senior UK Government and White House officials. Additionally, the US will seek to double the amount of liquefied natural gas it exports to the UK in 2023, helping the country replenish its gas storage.
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Op-Ed From Senators Portman and Coons: A Bipartisan Trade Proposal to Support our Economy
December 2, 2022
Senator Rob Portman (R-OH) and Senator Chris Coons (D-DE) have authored an op-ed published in The Hill to underline the importance of passing a bipartisan trade proposal. The Senators note that American inaction on trade has allowed China to vastly expand its trading relationships, making the country the top trading partner of nearly every country in the world, and urge Congress to reach agreement on a way forward for trade. They advocate passage of the Trade Adjustment Assistance (TAA), which expired over the summer, and Trade Promotion Authority (TPA), which has not been passed since 2015. The TAA provides for retraining of workers whose jobs have been lost due to foreign trade, helping to secure citizen's livelihoods while allowing the US to reap the benefits of free trade; the TPA streamlines the negotiation process between the President and Congress with regards to trade agreements. In early 2022, the Senators introduced the Trading System Preservation Act, which would provide TPA for enacting sector-specific trade agreements and negotiating comprehensive free trade agreements - including with the UK. The Act, which has been referred to the Senate Committee on Finance, and the op-ed indicate strong interest in UK-US trade from two of the Senate's most esteemed voices. Read the full op-ed here.
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UK Trade Minister Greg Hands Kicks Off US Tour
December 7, 2022
UK Minister for Trade Policy Greg Hands has begun a tour of the US that will bring him to South Carolina, California, and Utah for discussions on fostering closer trade relations. While in Columbia, South Carolina, Minister Hands will sign a trade Memorandum of Understanding - the UK's third such agreement with a US state, following the MOUs signed with Indiana and North Carolina earlier this year. South Carolina purchased £1.4 billion worth of goods from the UK in 2021, and the MOU will expand trade further by addressing trade barriers, sharing best practices, and unlocking opportunities for UK businesses seeking to invest abroad.
BAB was pleased to have the opportunity to meet with Minister Hands, along with a group of member companies, ahead of his visit to the US to discuss opportunities for state-level trade engagement.
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BAB Hosts 49th Evidence Session for UK Net Zero Review with Chris Skidmore MP
November 30, 2022
Last Wednesday, BAB hosted Chris Skidmore MP for discussions with industry on the UK's Net Zero Review, offering the 49th evidence session for the review. Participants discussed the review's progress and findings, the UK's sustainability policy, and how companies are keeping sustainability at the center of their business practices. The Net Zero Review's recommendations will be submitted to the UK Department for Business, Energy & Industrial Strategy Secretary of State by the end of the month.
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UK Announces Financial Services Regulatory Reform
December 9, 2022
Today, the Chancellor of the Exchequer, Jeremy Hunt, announced reforms to the UK's financial service sector regulations aimed at fostering investment and growth in towns and cities across the UK. According to the government, hundreds of pages of EU-retained laws will be repealed and replaced with a more flexible and less costly framework. In particular, the UK government vows to make progress on repealing and replacing Solvency II, which codified and harmonized insurance regulation across the EU. Read a statement from our CEO Duncan Edwards welcoming the reforms.
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BAB Meeting with Gabriel Esparza, US Small Business Administration Associate Administrator for International Trade
December 1, 2022
Last Thursday, BritishAmerican Business met with Gabriel Esparza, US Small Business Administration Associate Administrator for International Trade to discuss the challenges faced by SMEs in current economic conditions, barriers to transatlantic trade, and the business opportunities offered to SMEs in the UK and US.
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US-UK SME Dialogue Recap
November 29, 2022
The 6th UK-US SME Dialogue was hosted in Edinburg, Scotland in late November and hosted 50 UK and US small- and medium-sized enterprises for discussions on strengthening economic cooperation and identifying new export opportunities. To these ends, US and UK officials agreed to implement concrete measures over the next six months to support SMEs doing business across the Atlantic by:
- Improving access to and quality of information for SMEs that seek to do business in the US and UK, including through resources for women-, minority-, and indigenous-owned businesses; and
- Convening US and UK government officials for high-level discussions on digital trade and trade facilitation, which will take into account input from SMEs.
The next SME Dialogue will take place in the United States in May 2023. Additionally, the UK will host a North America Roadshow from late February to early March 2023 to inform SMEs about export opportunities and promote growth through trade with the US and Canada.
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Thank you for reading our Policy and Trade Update. If you have any feedback or comments, please contact us.
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