Reaction to the King’s Speech leads ‘The Day in Trade’, as international trade, economic security and improved UK-EU relations featured early and often in his Majesty King Charles III’s speech to parliament, where he laid out the Labour administration’s legislative plans for the year ahead.
The government also got a piece of good news today (14 May), as the UK experienced a high rate of economic growth in the first quarter of the year, despite ongoing political and supply chain uncertainty.
The King’s speech
King Charles III delivered his speech to parliament yesterday (13 May), revealing the government’s legislative agenda for the year ahead.
“An increasingly dangerous and volatile world threatens the United Kingdom, with the conflict in the Middle East only the most recent example,” the King said in his address.
“Every element of the nation’s energy, defence and economic security will be tested.”
As expected, the government is planning to seek improved trading and economic relations with Europe via the European Partnership Bill. Controversial Henry VIII clauses are still expected in the act, which would allow ministers to amend laws with limited parliamentary oversight, as the UK seeks ‘regulatory alignment’ with the EU.
Other expected acts set to be introduced included the Small Business Protections (Late Payment Bill), the Steel Industry (Nationalisation) Bill and the Energy Independence Bill.
Marco Forgione, director general of the Chartered Institute of Export & International Trade, said that “economic security was, rightly, front and centre” of the speech.
“Events over the past few years have surely highlighted to us all the ever-increasing importance of prioritising measures which build the UK’s domestic resilience against the buffeting of international crises. We cannot predict when crises will occur, but what we can do is support businesses in being ready to respond.
“This focus on resilience shows a clear realisation that the UK’s supply-chains aren’t just a part of our economy, they are our economy. Growth will only be achieved if UK businesses successfully build their international trade.”
The King’s speech took place against a backdrop of political instability, as questions swirled around the leadership of prime minister Sir Keir Starmer. Health secretary Wes Streeting is expected to resign from cabinet and launch a challenge against the embattled PM.
Financial markets reacted poorly to the ongoing instability.
UK economy
Latest figures from the Office for National Statistics (ONS) suggest that the UK experienced an unexpectedly high rate of growth in the first three months of the year.
The ONS estimated that UK GDP growth hit 0.6% in the first quarter of 2026, led by the services sector which grew by 0.8% over the same period, with a 0.3% growth in March, despite the ongoing war in Iran roiling supply chains.
Chancellor Rachel Reeves said that the figures showed her government has the “right economic plan”.
“The choices I have made as chancellor mean our economy is in a stronger position as we deal with the costs of the war in Iran. Now is not the time to put our economic stability at risk.”
However, James Benford, ONS director general for surveys and economic and social statistics, said evidence pointed to some weakening going into the second quarter.
“Indicators of consumer demand suggested some easing during the month. That is consistent with anecdotal evidence from firms that reported to us a weakening in some areas of consumer spending in March, following the conflict in Iran.”
ING economist James Smith said that he wasn’t “convinced” by the data, raising questions about the way in which it was being seasonally inflated.
The ONS’ separate quarterly services report found that the value of imports and exports both increased in the first quarter of 2026. Notably, the total value of goods exports rose by £2.3bn, with a £2.7bn increase in exports to the EU making up for a £0.4bn decline in goods exports to non-EU countries.
Strait of Hormuz passages
The UK Maritime Trade Observatory (UKTMO) has reported that a vessel has been seized off the coast of the UAE.
In a statement, the UKTMO said that an unnamed vessel had “been taken by unauthorised personnel whilst at anchor and is now bound for Iranian Territorial Waters.” The incident occurred northeast of the UAE city of Fujairah. No further details are yet available and investigations are ongoing.
The news came as more ships were reportedly transiting through the strait of Hormuz. The Japanese supertanker, the Eneos Endeavor, and two liquefied natural gas (LNG) carriers both transited through the strait over the past day, bringing the total number of successful transits to ten.
Japanese PM Takaichi Sanae appeared to confirm the success of the transit in a social media post. Sanae said that she viewed it as a “positive development, including from the perspective of protecting Japanese nationals”.
Other headlines
- The International Maritime Organization has opened its latest session of the Maritime Safety Committee in London (13 May), where member states are expected to discuss the Strait of Hormuz and its impact on sailors
- China has renewed hundreds of import permits for US beef plants, as US President Donald Trump and his Chiense counterpart Xi Jinping continue their meetings in Beijing
- UK manufacturers have warned of “significant problems” arising from the government’s plans to double tariffs on steel tariffs, according to the FT
Yesterday in trade
- Xi and Trump meeting in Beijing got underway, as with discussions expected on Taiwan, Iran and tariffs
- Jensen Haung, CEO of chipmaker Nvidia, was a last-minute invitee to the summit, joining a delegation that included Apple CEO Tim Cook and Tesla’s Elon Musk
- The UK government provided more detailed guidance on how firms can apply for compensation for indirect costs associated with low-carbon electricity policies
