Trade and Investment in the UK general election...and why it's a much bigger deal in the USA.

As the UK general election enters its final throes with the country going to the polls tomorrow (Thursday 4th July) lots of ink has already been spilled on the various parties' manifestos and policy positions with the main focus, predictably, being on contentious areas such as tax, healthcare, immigration etc.

However, much to the chagrin of Economic Development badgers like me, we've seen very little direction in the realm of trade and investment from any camp as the plain reality is that this isn’t a vote winner (or loser) amongst the UK electorate.

Post Brexit, the UK’s trading relationship with Europe really should be a central issue but neither of the main parties have looked to raise this mainly to avoid awkward questions about past deeds and future plans. Much as the Labour Party would be more naturally disposed to pushing an agenda of closer integration and rapprochement with the EU, this has been fundamentally toned down given that it doesn’t play well in the crucial ‘Red Wall’ seats, that the Conservatives successfully targeted and won at the last election in 2019, mainly on the basis of ‘getting Brexit done’, which Labour is seeking to regain now.

For the Middle East, the most obvious Brexit impact was the UK’s ability to enter into direct bilateral trade deals and those discussions with the GCC, whilst on-going for some time now, are unlikely to be interrupted by a change in government as they remain essential for the UK’s prosperity and regional engagement aspirations.? You might, however, see a change in emphasis on certain discussion criteria under a new UK administration.

From a GCC perspective – and indeed globally – the UK has remained a strong magnet for FDI despite recent challenges, with 17.3% of Europe’s inbound FDI landing there in 2023, up from 15.6% in 2022.? Whilst Labour has been engaged on a long term charm offensive to convince the domestic UK business community of its economic competence and safe hands, the international business world remains largely positive on the UK and I would expect this to continue regardless of which party is in power come July 5th.?

With the Bank of England having exclusive control on monetary policy and room for fiscal manoeuvres by any government being severely limited due to existing spending and borrowing commitments, it’s also unlikely that we’ll see the value of Sterling fluctuate to any great degree either as a result of the election itself or a subsequent change in government.

Although it's a shame that Britain’s trading relationships and investment attraction plans have not been debated, perhaps this could also be seen as a welcome sign of relative consensus and commonsense in an otherwise fractious campaign.

If you are looking for a bit more excitement then fear not: the forthcoming US general election campaign won’t disappoint!? Trade relations, tariffs and barriers, onshoring and inward investment will be front and center on both candidates’ campaigns, coming with full-blooded partisan rhetoric and polarised opinions.

In the US this is an electorate mobiliser, vote winner / loser and a hot debating point. Perhaps this is not surprising when you consider that one of the catalysts for the American Revolution and subsequent independence was actually the tax on tea imports (although it's a very tenuous symetry and coincidence that the UK election happens to be taking place on July 4th).