How to generate more UK growth was the question on everyone’s lips yesterday, as chancellor Rachel Reeves outlined her plans at the annual Mais Lecture and voices from across industry, government and academia debated the UK economy at the New Stateman’s ‘Igniting Growth’ conference.
There good news on one major challenge for the UK economy – rising oil prices due to the ongoing Iran war – after prices dropped following an Iraqi deal which could create an alternative route for exports from the region.
Mais Lecture
Chancellor Rachel Reeves delivered the annual Mais Lecture at Bayes Business School in London yesterday (17 March), emphasising the need to shore up relations with Brussels and devolve power to the UK’s regions to spur growth.
Her remarks come hot on the heels of disappointing GDP data for January, as the economy failed to grow at all. There are also ongoing concerns about the impact of the Middle East war, with elevated energy costs posing problems for businesses and consumers.
As anticipated, Reeves reiterated the need for closer ties with Europe to strengthen the economy, telling attendees that no trade deal done with a single other country can provide as much benefit as the neighbouring “bloc we share borders with and have supply chains in”.
She added that no partnership is more important to the UK and repeated her argument that enhancing the UK-EU relationship is “one of three strategic choices” necessary to boost growth, alongside developing ‘growth corridors’ between intellectual hubs in Oxford and Cambridge, Liverpool and York, and accelerating AI adoption.
Rhetoric about empowering the UK’s cities and regions in the wake of decades-long industrialisation – an argument made by both the current Labour and recent Conservative governments – was also deployed. She said it was no coincidence that the US is “the most politically centralised of advanced democracies, and one of the most geographically unequal”, as she outlined plans to give regional mayors a share of national tax revenue.
Reviewing the address, Chartered Institute of Export & International Trade public affairs executive Will Poulain said that Reeves' commitment to the EU relationship is "very welcome".
"Since the UK left the EU, a high proportion of British businesses have been struggling to export to the UK's biggest trading ally.
"The chancellor highlighted that UK divergence from EU regulation should be an exception, not a norm. This shows the government understands the challenges faced by UK businesses and is committed to reducing trade friction with the EU."
Igniting growth
These themes were also prominent at the News Statesman’s ‘Igniting Growth Conference’, also yesterday, at which speakers from government, industry and academia convened to set out their vision of how to spur UK growth.
The need for better industry-academia collaboration was touted by panellists in a session on how manufacturing can drive growth.
Amanda Wolthuizen, Imperial College London’s vice president for communications and strategic engagement, said that while greater collaboration between government, industry and academic is welcome, it’s vital not to overlook parts of the supply chain beyond this. She warned that, if not done properly, this “triple helix approach” can pit regions against each other and risks investors viewing the UK as “a series of clusters”, rather than a single, functioning ecosystem.
Comparing the UK to the US, Julia Willemyns, co-founder of the Centre for British Progress, said the UK’s key problem is that it doesn’t have enough “world-leading” businesses, noting that 90% of UK firms are SMEs. The US’ higher growth is powered by its ‘Magnificent Seven’ tech companies, and if the UK wants to emulate this success, it needs more “superstar companies”.
Labour MP Mike Reader, chair of the All-Party Parliamentary Group for Trade & Investment, disagreed and highlighted the substantial contributions of UK SMEs to the UK economy and manufacturing supply chains, telling the audience “Boeing don’t make the plane, small businesses do”.
He added that what’s necessary is to support growth is giving these firms better access to finance, enabling them to invest and grown on their own terms.
Attending the conference from the Chartered Institute, senior public affairs executive Oliver Greensmith said that the conference "echoed the chancellor’s core Mais Lecture message: that harnessing the UK’s international trading relationships is key to unlocking economic growth".
"Only through improving access to finance and establishing an attractive tax environment, can SMEs export, upscale and become competitive on the world stage. This business dynamism is what drives innovation and investment - which will grow the UK economy."
Oil reprieve
Amid energy market turmoil caused by the Iran war, a spot of good economic news, as an Iraq-Kurdistan deal, reportedly struck this morning, is offering an alternative route to the Strait of Hormuz.
The deal will enable Iraq to resume oil exports from its Kirkuk oil fields to the Turkish port of Ceyhan, after the Kurdistan Regional Government allowed Baghdad to access one of its oil pipelines, Reuters reports.
Following the announcement Brent crude fell 1.55% to US$101.80 per barrel. However, it’s been noted that Iraq’s oil supplies have also been disrupted by the ongoing conflict, with Bloomberg reporting that they’re down a third on levels seen before the crisis, at 1.4m barrels per day.
A senior analyst at Swissquote, Ipek Ozkardeskaya, told the Guardian that the ongoing threat of shortages is likely to keep prices “under upward pressure”, however confirmation of an alternative route for oil exports mean that “the initial surge in oil prices seen at the start of the war could ease”.
Iran’s attacks on Western-affiliated commercial vessels transiting the key shipping strait are continuing to challenge relations between the US and Europe. US President Donald Trump’s calls for allies to send military resources to the strait have gone unanswered, after which he told reporters that European countries “don’t want to help”.
“We as the United States have to remember that because we think it’s pretty shocking.”
The friction comes as Al Jazeera reports a growing number of commercial vessels have been safely using the Iranian waterway, providing they’re linked to allied nations like China and India.
EU de minimis questions
The FT reports that Belgium’s top customs official, Kristian Vanderwaeren, has warned that removing the ‘de minimis’ threshold of €150, under which imported goods do not attract customs duties, will have a limited impact on curbing cheap Chinese imports.
The measure has been introduced following the US’ removals of its own cap last year to stem an escalating increase in goods exported by Chinese e-commerce sites Shein and Temu.
Vanderwaeren said that while the removal of de minimis would “simplify” the process for imports, goods would still be cheap enough that the change would not deter European consumers from buying them.
He said rising Chinese imports into the EU were ultimately the result of Trump’s election:
“At a certain moment the Chinese were afraid that they would not have the possibility to import their products in the United States anymore.
“And therefore they are looking at other markets and Europe has been a very good market.”
Elsewhere in the headlines
- “Iceland in a few weeks or months. And maybe Canada at some point.” That’s French foreign minister Jean-Noël Barrot joking that Canada could be one of the next countries to join the EU accession pipeline, as he highlighted the bloc’s global appeal at the Europe 2026 conference in Berlin.
- Trade associations for cannabis-derived products have warned of adopting Brussels’ rules as the EU-UK reset progresses. Currently, UK products can contain five time the European legal limit of cannabis-derived CBD, at 10mg.
Yesterday in trade
- UK prime minister Sir Keir Starmer met Ukrainian president Volodymyr Zelenskyy in London, as Zelenskyy aims to keep support for Ukraine high on allies’ foreign affairs agendas
- The government announced a new £1bn “major youth employment drive” and an overhaul of apprenticeships
- The UK is set to slash quotas and up tariffs on imported steel, to keep domestic manufacturing competitive
You can read yesterday’s trade news here.
