India's economy has sped ahead of the UK's's for the first time in over a century, due to the slump in the value of British sterling versus the US dollar. While global rankings are looking up for India, its people are suffering on the ground, because of Prime Minister Narendra Modi's controversial decision to demonitise the 500 and 1,000 rupee bank notes. Is this due to Brexit or is the Indian economy actually surpassing that of the UK's? And what does this mean for bilateral trade post-Brexit? Gregor Irwin, chief economist at Global Counsel, looks at the impact of these developments.
China is about to take measures to curb the wave of foreign acquisitions by Chinese companies that has grown rapidly over the last 18 months.
Draft policy papers released online at the end of last month outlined a new policy whereby government approval would be required for foreign acquisitions valued at more than US$10 billion (S$14.3 billion), or US$1 billion if the target was considered to be outside the acquirer's core business.
Britain’s automotive industry, once ailing and plagued by strikes, now hums with the vibrancy of a global manufacturing hub. But the level of integration, previously lauded, has made the carmakers especially vulnerable after Britain’s vote to leave the European Union.
“The car industry really did take the prospectus of the E.U. at face value,” said Stephen Adams, a partner at Global Counsel, a political risk firm in London. “It relies on the free circulation of goods in the E.U. not just to sell products but to make products.”
An upcoming World Trade Organization deadline is offering European steel producers and other manufacturers an opportunity to lobby for a framework that would allow for higher duties on Chinese goods.
Most likely, the EU will modify the lesser duty rule, resulting in higher duties on imports from China, said Stephen Adams, a partner at London-based consulting firm Global Counsel LLP.
Wall Street Journal | European companies with Chinese supply-chains brace for new anti-dumping framework
On Dec. 11, the European Union could grant China “market economy status,” making it harder under WTO rules for the EU to protect its industries from what it deems as unfair trade practices by Beijing.
The effort poses risks for companies that have outsourced parts of their supply chain to China, according to Stephen Adams, a partner at Global Counsel LLP, a London-based consulting firm. “When you have outsourced…to China, you see duties as a cost factor and not as protection,” he said.
London is confident it has a strong hand — the question is how to use it. The calculations are like no other negotiation; even trade talks are a poor guide, as they typically involve willing partners aiming for future liberalisation.
“Brexit is a completely different dynamic,” said Stephen Adams of the Global Counsel advisory group. “You have an unwilling partner on the EU side. The aim is not hypothetical new market access but determining how far to roll back the liberalisation of billions of euros in trade that is already flowing.”
It's estimated that leaving the EU will cost Britain $280m a week over the next five years. In the first budget since Brexit, UK Finance Minister Philip Hammond downgraded his 2017 economic forecast and said the national debt would grow. In fact, it will balloon to above 90% of the UK's gross domestic product. That will wipe out any savings made from not having to pay into the EU's budget. Will the new budget help the so-called JAM families, those households "just about managing" to make ends meet? Gregor Irwin, chief economist at the Global Counsel, looks at the cost of Brexit.
Europe’s financial rules are shifting under the feet of Brexit negotiators, as the EU moves to harden its regulatory regime in ways that could shut out the City of London after the UK leaves the union.
Stephen Adams, partner at Global Counsel, the advisory group, said: “In some ways this is a reminder that there is a basic asymmetry in the EU-UK relationship. It is their market and they will set the terms for accessing it. Clearly, not everybody in the single market believes that London’s place as Europe’s financial centre is inevitable or eternal.”
Boston Consulting Group, law firm Herbert Smith Freehills and advisory group Global Counsel teamed up to consider the potential impact on three different sectors if the UK left both the EU single market and the EU customs union without any new trade agreements in place.
After looking at a fictional automobile manufacturer, fashion retailer and chocolatier, the group concluded that the carmaker would be hit the hardest, while the retailer would feel the least impact.
Donald Trump’s electoral win has boosted populist stances in Europe and created uncertainty for the banking sector.
Advisor at think tank Global Counsel, David Capparelli, comments: “I think the move towards a more protectionist stance was on the way for quite a long time before the Trump victory. If you look at the French proposal that was announced a couple of days ago on how to reform EU trade policy it does go in that direction. But I’m not entirely sure this is going to translate into a more protectionist policy – but a less liberal trade policy.”