It’s set to be another landmark week for the UK, with the next prime minister set to be confirmed on Friday.
Before then, the UK’s new free trade agreement (FTA) with India will enter into force on Wednesday and the Chartered Institute of Export & International Trade will run a free webinar giving tips on how businesses can navigate disruption from the ongoing war in Iran.
There’s also a significant new package of financing to support UK SMEs to enter international markets from UK Export Finance and the British Business Bank.
Middle East conflict
The week begins, however, with news that the war in Iran continues, with the US military launching a fresh wave of attacks over the weekend.
Tehran has said that these strikes have “rendered futile” the recent peace talks and has retaliated by attacking nations in the Gulf hosting US military forces.
The Islamic Revolutionary Guard Corps issued a statement over the weekend claiming that the Strait of Hormuz was now closed – something that US President Donald Trump has denied.
Oil prices have jumped by over 4% this morning following the disruption over the weekend, the Guardian reports.
Responding to the latest escalation on Times Radio, Marco Forgione, the director general of the Chartered Institute of Export & International Trade, said that “transits through the Strait of Hormuz are much lower today than they have been for the past week, and even the last week is lower than usual.”
“Some ships can’t secure insurance, and they aren’t able to move. This acts as a real blocker for international trade and supply chains, adding to costs.
“The reality, though, is that it’s the uncertainty that’s the bigger issue. After these recent attacks, the shipowners are taking a very long view before they start moving again.”
However, he did note that supply chains have been “very adept” at shifting and adapting to the crisis.
“Each closure of the Strait of Hormuz has less of an impact than the previous closure”.
Global Trade Live
Forgione will also be speaking on a free Global Trade Live webinar being hosted by the Chartered Institute tomorrow (Tuesday 14 July) which is addressing how businesses can navigate ongoing disruption in the Middle East.
Forgione will be interviewed by the Chartered Institute’s head of content, Will Barns-Graham, about the disruption caused by the war so far.
A panel of expert speakers will then address what businesses can learn from this year’s crisis in terms of anticipating future supply chain shocks. The panel includes the Chartered Institute’s imports advisory lead, Ilona Kawka, alongside Victoria Boldison, CEO and founder of Bolst Global, and Ross Jones, head of commercial UK at Aramex.
You can sign up to the free webinar here.
New UKEF SME support
The week also begins with the news that a new scheme has been launched by UKEF and the British Business Bank to provide financing to support more SMEs to grow through exports.
The government statement said:
“Combining UKEF’s export finance specialism with the British Business Bank’s expertise in unlocking lending for smaller businesses, the partnership will address a gap in finance for smaller business exporters, particularly those seeking lower-value working capital loans, broadening opportunities for export growth for a wider range of businesses.”
The agency will provide a guarantee “on a portion of eligible portfolio-level losses, with lenders retaining a share of risk”. The British Business Bank will support by assessing and onboarding commercial lenders. The portfolio guarantee will aim to reduce lender costs and enable scalable SME lending.
UKEF CEO Tim Reid said that making it easier for SMEs to enter international markets is “one of our main priorities”.
“By combining access to finance, digital services and targeted support with the British Business Bank’s expertise in unlocking lending, we can support a new generation of exporters.”
UK-India FTA enters force
On Wednesday (15 July), the UK’s new trade deal with India will enter into force, bringing down tariffs on a wide range of products.
Speaking on a previous Global Trade Live webinar in March, the head of FTA utilisation at the Department for Business and Trade, David Johnstone, said the deal “expected to increase trade between the UK and India by over £25bn by 2040”.
“The agreement's going to cut tariffs on UK exports to India by £400m on day one, and that's going to rise to £900m by year 10, as other tariffs are phased down over time.”
In advance of Wednesday’s implantation date, traders have been advised to register to an HMRC authentication portal to be able to claim preferential origin for their goods – a key step in claiming the reduced tariffs that the deal secures.
Chartered Institute members can get in-depth, practical guidance on how to benefit from the UK-India FTA here.
The UK’s next PM
At the end of the week, Sir Keir Starmer’s successor as Labour Party leader and UK prime minister is set to be confirmed.
Andy Burnham, the former Manchester mayor, is expected to be named as the prime minister, with no contenders to his leadership bid declared at the time of writing. If he remains uncontested, he will enter 10 Downing Street on Friday (17 July).
Before then, he will hold an hour-long online husting with Labour MPs tonight. The window in which Labour MPs can generate enough nominations from their peers to stand in a contest will close at 6pm on Wednesday. The requirement is 20% of the Parliamentary Labour Party, which is 80 MPs.
After this moment, “affiliated organisations, including trade unions, will have between 6pm on July 15 and 6pm on July 16 to make their nominations”, the Labour Party notes.
Should a competitor to Burnham have emerged by this point, but they still require further nominations to get to the threshold required, nominations will then open for the Constituency Labour Party – the official grassroots organisation for the Labour Party – on 20 July and close at 5pm on 31 July.
However, it is currently expected that Burnham will get to Friday without competition, meaning he will be named Starmer’s successor.
In the meantime, Politico reports that Burnham’s team is hoping to spend their last week out of power on developing plans to “reshape Whitehall” and is looking to start with significant momentum. An ally of Burnham told Politico that “he wants a Bank of England moment”.
The FT also reports that the new administration will look to hold an expanded Autumn Budget, combining it with a departmental spending review in order to establish his political priorities ahead of the next general election.
Starmer’s last week
Away from Westminster, Sir Keir Starmer will be in Paris today, where he is meeting French president Emmanuel Macron and European Commission leader Ursula von der Leyen for a meeting of the ‘Coalition of the Willing’.
He is expected to sign the UK up to a €60 billion EU defence loan scheme for Ukraine, which will provide funding for Ukraine to purchase British weapons, according to Bloomberg.
Key dates for the diary
- Monday: Andy Burnham quizzed by Labour MPs at online leadership husting
- Tuesday: Rachel Reeves delivers Mansion House speech; Global Trade Live webinar on the Middle East crisis
- Wednesday: UK-India FTA enters force; England play Argentina in the World Cup semi-final
- Thursday: UK GDP monthly estimate
- Friday: Labour Party leadership special conference expected to confirm Andy Burnham as the UK’s next prime minister
- Saturday: Rough Trade runs a series of gigs to celebrate its 50th anniversary
- Sunday: World Cup final
