Atul Bhakta, CEO of One World Express
The importance of global trade to the UK’s Covid recovery
By Atul Bhakta, CEO, One World Express
The UK’s economy, like the economies of most advanced nations, has been dealt a heavy blow by Covid-19. The Office of National Statistics (ONS) places the damage at a 24.5% contraction of GDP since February 2020, a figure unimaginable by economists before the sheer scale of the virus was understood.
Despite the hardships of the past six months, however, there are reasons for optimism in the long-term. The worst of coronavirus’s economic damage has seemingly already been inflicted, with the ONS recording growth returning at 1.8% in May. While this may not seem like much, as more of the economy re-opens and the government’s enacts new stimuli policies, this level of growth will likely begin to increase exponentially over the coming months.
Alongside these new stimulus policies there has also been a returning – and sorely needed –attention within the UK Government on global trade. This is important; it is likely to play a significant role in shaping the country’s economic recovery.
Opening up to the world
Before the coronavirus pandemic took hold, the UK was already confronting a hugely challenging and potentially harmful situation – Brexit.
While many may claim that Brexit has already been accomplished with the eventual passing of the Government’s withdrawal bill in 2019, the reality is that the UK remains part of the Single Market until January 2021. And although the focus has understandably been on containing Covid-19, officials in Westminster cannot lose sight of this and must ensure the proper preparations are made in the months ahead.
Much of the core messaging in favour of Brexit during the 2016 referendum concerned the UK’s ability to forge its own trade policies and tariffs. Boris Johnson, of course, was a figurehead for the campaign. This promise of a brighter trading future must convert into a reality; and soon, or else the UK economy will take another hit as the accumulative damage from the tariffs involved from trading with the world on WTO terms sets in – affecting most supply chains and, in turn, both businesses and consumers.
Many of these worst-case-scenarios can be avoided if the UK successfully maintains the deals it currently enjoys as an EU member state. One example is the EU-Mercosur free trade agreement: a free-trade-bolstering pact between the EU and South American countries finalised in June 2019, which took 20 years of negotiations to accomplish. If Boris Johnson’s government manages to replicate such deals before we leave the Single Market, the damage involved with any type of Brexit may be minimised.
Thankfully, it seems the Government has identified the importance of maintaining such relationships and has placed global trade back on their agenda. At the start of July, Government sources revealed that the UK would soon be pushing ahead with its own ambitious independent trade policy – its first since 1973.
Mr Bhakta: reasons for long-term optimism.
The key to recovery
When the Government’s begins to enact the UK’s first independent trade policy in a generation, it’s imperative they do so in a level-headed, well-thought-through manner. Rhetoric and ambitious promises are one thing, but realistic and timely solutions are going to be important.
Global trade will undoubtedly play a huge part in the UK’s post-pandemic economic recovery, meaning that making the right preparations for the UK’s departure from the Single Market has become doubly important in the face of the global, virus-induced recession.
The risks of not doing so could be disastrous. A failure to implement new trade deals could scupper any hopes for a prosperous UK deeply involved in global trade and, instead, would lead to higher tariffs and further restrictions on UK imports and exports. Supply chains across every industry would be affected, and a post-Covid economic recovery would take even longer than it would have otherwise.
I retain faith, though, that Boris Johnson’s government will heed this advice and give global trade the importance it deserves in the coming months. If the necessary decisions are made to further facilitate global trade throughout the UK’s economy, we should soon be enjoying the benefits of the increased tax receipts and internal prosperity sooner rather than later.
Atul Bhakta 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.
