-Trade deals and rising global protectionism
“Rising protectionism on the back of ultra nationalism has started to threaten global growth. The slowdown in world trade has been much worse than previously reported, with global trade volumes plateauing over the past 18 months amid a rise in protectionism,” according to a recent report by Global Trade Alert.
Its latest data for April this year shows that both exports and imports globally remain below where they were in January 2015 and have moved very little in the period since then.
However, the rhetoric of U.S. President Donald Trump, when it comes to his protectionist policy suggests that more is to come. Trump is dismantling Obama’s legacy by scrapping trade deals such as the Trans-Pacific Partnership (TPP). During his election campaign, he railed against international trade deals, blaming them for job losses and focusing anger in the industrial heartland. If this protectionist approach continues, inevitably it might cost a slowdown in global economic growth.
On the other hand, U.K. Prime Minister Theresa May sees an opportunity of taking first place in the queue for obtaining trade deals with the U.S. Both Trump and May pledged to tighten the bonds between the countries while starting preparations for a trade deal. However, Trump’s unpredictability has put May in a difficult situation at home. Only a few days after May’s invitation to Trump for a state visit, did his executive order of banning citizens of seven Muslim-majority nations into the U.S. create shockwaves across the world.
An online petition calling for Donald Trump to be prevented from making an official state visit to the U.K. has already reached one million signatures. Yet no strong condemnation about the controversial executive order has been forthcoming from May. Understandably May does not want to offend the new president while asking for a trade deal. However, it seems she will face increasing criticism at home.
On the other hand, the U.K.’s intention of signing new trade deals might be an opportunity for emerging economies such as Turkey. May visited Turkey last weekend and agreed to a £100 million defense deal to help develop fighter jets for the Turkish air force. She said the defence agreement "underlines once again that Britain is a great, global, trading nation".
May also said that Britain would enhance trade relations with Turkey, while President Recep Tayyip Erdogan said his country would increase trade to $20 billion.
- Financiers are concerned
May’s decision to leave the single market has raised concerns among financiers based in London. Last week, Citigroup and Credit Suisse became the latest financial service companies to reveal they would be relocating jobs from London because of the probable, post-Brexit loss of the 'passporting rights' that currently allow U.K.-based banks to trade freely across the EU. Barclays, which already has a subsidiary in Dublin, refuted recent rumors about a decision to move the bank’s headquarters to Dublin but confirmed that it is still an option. The U.K.’s largest bank, HSBC, will also move staff responsible for generating around a fifth of its U.K.-based trading revenue to Paris following Britain's exit from the European Union, according to Chief Executive Stuart Gulliver.