Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
There needs to be a paradigm shift in UK trade policy towards Asia if the government’s ‘Global Britain’ agenda is to deliver for the UK, according to a new report by Asia House.
The new research highlights a broad stagnation of UK exports to Asian economies since Brexit, with the COVID crisis sharpening the decline. This comes despite high-profile efforts by the UK government to boost non-EU trade.
Based on current trends, Asia House finds that trade with Southeast Asia and China would need to increase by 15 and 20 per cent respectively every quarter to broadly match UK trade with the EU by 2024.
With the Conservative Party poised to appoint a new leader, the new Prime Minister will need to elevate efforts in Asia to bolster the UK economy.
The UK push for new trade deals in Asia has been a cornerstone of current policy, and a source of headlines, but there is skepticism around the magnitude of the economic benefits – for some of the deals – beyond what would have been achieved under EU membership.
Instead, coordinated policy and diversified trade is required for a new trade paradigm with Asia, with the research highlighting the need for improved export finance, targeted growth, and a diversification in exports.
A key way for the UK to achieve a paradigm shift with its Asian partners is through actively diversifying its trading relationships beyond the luxury consumer goods and automobile sectors, the report suggests.
Phyllis Papadavid, Director of Research at Asia House and the report author, said: “Trade growth is essential for the UK economy as it seeks to fight off recession while undergoing a profound shift in its trade relationship with Europe. If government policy is to diversify trade away from European markets, Asia is the market with the significant growth potential.
“However, there are multiple challenges that need to be addressed to unlock UK exports to Asia, including strained diplomatic relations with China and challenges for businesses seeking to trade with Asian markets.
“To accelerate export growth, the next Prime Minister will have to focus on diversifying the sectoral reach of its bilateral trade, and further link trade agreements with mechanisms to assess their long-term impact.”
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