American Handelsdeal can help the British economy, but will not transform this

The British government has made faster economic growth its number 1 mission. But attempts to start were repeatedly knocked off the course by a world economy that winds from one crisis to another.

On Thursday, British officials seemed to win. The country will be a form of announcing Trade agreement with the United States That will alleviate the impact of recent increases in American rates.

President Trump said on social media on Thursday that the agreement with Great Britain “is a complete and comprehensive one who will strengthen the relationship between the United States and the United Kingdom for many years to come.”

British officials have been negotiating in Washington for months, because they wanted to isolate their country from Mr Trump’s wish to reform the global trading order. They also wanted an economy to protect barely avoided a recession At the end of last year was and was on its way for a relatively strong recovery later this year.

However, civil servants not exemptions last month When Great Britain was hit with the rates of 10 percent “basic line” that Mr Trump imposed on the US trading partners.

Britain is also subject to 25 percent rates for cars and steel, and its leaders are concerned about endangered rates for medicines and moviesTwo important exports. Like other countries, predictions for the economic growth of Great Britain have been reduced due to trade insecurity.

For a number of reasons, the expected deal with the United States will be welcome in Britain. It’s likely justifies convincing that the Prime Minister, Keir Starmer, brought to the president (including an invitation from King Charles for a state visit) and can overshadow A setback in local elections last week.

It can also support certain sectors, including The car -Groot -BritainThat was the most risk due to high rates. Cars form around 10 percent of the value of export of British goods to the United States. Many are luxury cars, such as Jaguars, Aston Martins and Bentleys, made with adapted details in Great Britain. These car manufacturers have found it economically unaffordable to move production to the United States and have paused shipments there.

A trade agreement will probably also increase the consumer and business sentiment, what it did Both recently worked.

But there are limits how much the overall British economy would eliminate. Although the United States is an important trading partner, trade flows are strongly crooked in the direction of services that were not influenced by higher rates. Great -Britain exported £ 137 billion in services to the United States last year.

More than 60 percent of the companies reported that they expected American rates to have no impact the following month A recent study by the Office for National Statistics.

Although Great Britain and the United States have been in commercial negotiations for five years, it is unlikely that the current deal will be a complete free trade agreement that reduces the rates in a wide range of goods and increases access to many services, such as the Pact Groot -Britain and India Signed this week. An even greater price for Great Britain would be a closer relationship with the European Union, which represents about half of British trade. Some progress on an EU deal is expected later this month at a top in Britain.

Trade uncertainty also weighs on the Bank of England, which reduces the interest rates on Thursday to 4.25 percent.

Since last year, British policy makers have carefully reduced the rates due to concern about the pressure of the continuing price and a short -term bump in inflation that is expected this year. But some had recently emphasized the risk of economic growth of commercial uncertainty, which is expected to dampen company investments and consumer spending. In general, policy makers were divided on this decision. Five members, a majority, voted for the quarter point; Two voted to hold and two voted for a greater reduction.

Economists have said that the greater threat to Great Britain is the uncertainty that Mr Trump’s trade policy created worldwide instead of rates on Great Britain.

Great -Britain is vulnerable to external shocks, and the economy would suffer if others, such as the European Union and the United States, would fall into a recession.

“The center of the British story is not rates; they are domestic factors,” says Benjamin Caswell, an economist at the National Institute of Economic and Social Research. It reduced his prediction for the economic growth of Great Britain to 1.2 percent this year, which predicted weak business trust and higher cost pressure. Companies are also confronted with higher taxes on wages, which came into force last month and could increase inflation.

The slow prospects means that the government can be confronted with increasing taxes or reducing government spending this year.

“Rates have caused a lot of uncertainty, but I don’t think that the government should get rid of the hook,” said Mr. Caswell.