It appears that we will see two 'trade deals' announced this week. The one with India is good news, no doubt about it. But the impact is likely to be barely noticeable, with GDP to increase by 0.1% per year in the long run, defined as 2040. This, according to the government amounts to about £4.8 billion a year in 15 years. I assume this means we will have a GDP of about £4.8 trillion at that time. It is a flea bite in national wealth terms but every little helps I suppose. India, remember is a nation of 1.4 billion, mostly poor people although it does have a rising middle class of about 60 million. It is notoriously protectionist so I expect we have had to make some serious concessions. The second is with the USA or more properly with President Trump.
Labour has been trumpeting its success in Delhi, while the right-wing media in the form of The Telegraph and the Daily Mail, attacks the provision about Indian posted workers avoiding NI contributions for three years. This is known as a Double Contributions Convention (DCC), a standard part of about 50 UK trade deals, so there’s very little in their feigned indignation.
The irony is that during the Brexit referendum, the opportunity to sign trade deals outside the EU was touted as a big win. When we do negotiate a trade deal, the Brexit-supporting rags can only criticise Starmer for not getting a better deal. As a middling European trading nation, this is what happens when you negotiate trade deals with growing superpowers. An official summary of the deal is HERE. There will still be a 75% tariff on Scotch whisky (down from 150%).
However, to find details about the 2040 date, you have to click through to a technical note which explains that "To contextualise the modelling results in £ terms, we rely on 2040 trade and GDP projections."
The 0.1% figure for additional GDP is also confirmed. Trade Secretary Jonathan Reynolds was out on the airwaves, selling the deal as a triumph:
As @implausibleblog.bsky.social points out, if £4.8 billion by 2040 is so good, what about the 4% of GDP lost by Brexit by 2030? This is the OBR's estimate, and I am sure that the reduction in GDP predicted from falling trade with our closest neighbours won't stop at 4%. By 2040 we could be looking at 6-8% quite easily, maybe more. These are 'reductions' in the sense of GDP being less than it otherwise would be, without Brexit.
Starmer may well be trying to cut trade barriers with the EU but he is facing the same issue as with India, we are the smaller demandeur and we will always be at a disadvantage. There is no way Britain will ever get the better end of the deal. It's how international trade works.
To see this in action, the next Trade deal is with the USA - apparently. We know a little from this 'truth' from Donald Trump:
The BBC reports that the 'big and highly respected' country is in fact the UK. It isn’t a trade deal in the traditional sense, it is just a framework for a very limited, sector-specific agreement that will be thrashed out over the next few weeks and months. And you can be sure, that we will come out worse off.
Trump isn’t going to agree anything that benefits Britain more than America.
We, I understand, will get tariffs on cars and some other stuff reduced from 25% to 10% (we avoid the reciprocal tariffs while our exports will still have the 'universal' tariff applied) and in return, the government will agree to drop the Digital Services Tax on US techno businesses, worth £800m a year to the Treasury.
In essence, the US has forced the UK to alter its tax regime to benefit some of the richest, most profitable, monopolistic firms in the world, who would have passed the 2% DST on their revenues to UK consumers in any case.
As Britain bows before Trump and concedes, the EU is preparing to target nearly 100 billion euros worth of US goods in response to Trump's 20% tariff. They will come into effect if the current negotiations fail to yield an agreement. You can bet they won't be such an easy target.
It all makes Starmer's position on Brexit even less fathomable.
Peter Kellner, a former president of YouGov has been analysing the local election results and has a piece in Prospect Magazine. He says Labour is learning the wrong lessons about Reform UK. They are not losing more votes to Reform on the right, than they are to the left:
"YouGov consistently finds that Labour is losing fewer votes to the right (Conservative and Reform than to the left (Liberal Democrats, Greens and SNP). The more Labour bends towards Reform’s narrow nationalism, the more it will alienate progressive voters."
But more than that, he says this:
"To be fair to Labour’s pro-Brexit lobby, 80 per cent of Reform voters still think Brexit was right. That, though, is not the end of the story. When YouGov explored what should happen now, almost half of Reform voters either support rejoining the single market (22 per cent) or don’t take sides (23 per cent). Brexit still matters to many Reform supporters, but not as much as it did; and its new converts are fired by more conventional issues such as the winter fuel alliance, our sluggish economy and the cost of living."
And this:
"Reform voters also have more complex attitudes to immigration than might be supposed. Yes, they want the numbers down. But when Ipsos tested views about 13 specific immigrant groups, a more nuanced picture emerges. Reform voters would like fewer bankers, students and lorry drivers coming to Britain. They are divided on restaurant workers. But most oppose any reduction in the numbers coming to work in care homes or as doctors, nurses, engineers, seasonal fruit pickers, academics, teachers, computer specialists, or in construction. Their big beef is with asylum seekers. Reform voters think they comprise 51 per cent of all immigrants arriving here. The true share is 11 per cent."
Reform voters support Farage because they think he can 'get things done' and has some sort of magic touch. It would be far better, and probably more successful, to show that he is a charlatan, to expose his simplistic solutions like Brexit as utter failures.
What has Starmer got to lose?
