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UK Election: What's happened

The headline numbers from Thursday’s UK election are stunning: the former governing Conservatives have been reduced to 121* seats and the Labour Party will now form government with 412 seats in Westminster. 

From an international trade perspective, we do not expect to see significant policy changes in the short-term. Keir Starmer has indicated that he wants to improve the relationship with the EU but is not looking to rejoin the trading bloc. The Labour Party has shown support for many of the other trade deals the UK has recently signed, such as the CPTPP, and seems set on a strategy of incrementalism. Deep in the Labour Manifesto is the following aspiration: 

“We will lead international discussions to modernise trade rules and agreements so they work for Britain, promoting deeper trade and co-operation including through the World Trade Organisation and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Labour supports implementation of the OECD global minimum rate of corporate taxation and backs international efforts to make sure multinational tech companies pay their fair share of tax.”

In terms of the CPTPP, the UK ratified its accession to the deal shortly before the election but it also needs a majority of the existing Members to ratify their accession before it comes into force. Canada is one of those countries that need to ratify the deal, which will hopefully happen by October 2024. 

Many of the policies and commitments from the Labour Campaign depend on growing the economy: taxes are already high and increasing them will prove incredibly unpopular. The focus for the new regime is to grow the economy so that the tax base increases. There are many facets to that growth but a clear focus must be on international trade. 

The Canada-UK free trade agreement negotiations ended abruptly earlier this year but with a public commitment from the Secretary of State for Business and Trade to keep talking: whether the new government will take up this agreement and carry it over the line is not clear. The Labour Manifesto section on international relations, Britain Reconnected, includes two photos of Keir Starmer with foreign leaders: one with President Zelenskyy of Ukraine and the other with Prime Minister Trudeau.

*as of Friday morning there were still 2 seats to be declared.

Thank you for all those who joined us on July 4th as we watched the results unfold.

The British Canadian Chamber of Trade and Commerce


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