Importance Score: 72 / 100 🔴
A report by TheCityUK, a trade body, examining Britain’s export performance in financial and professional services may have been better received at a different time.
The study highlights the significant contribution of various regions across the nation to the UK’s strong performance in exporting financial and professional services globally.
To date, former US President Donald Trump’s trade disputes have primarily targeted tangible goods such as steel, aluminum, and automobiles, with the stated intention of creating a fairer environment for American companies. Financial services have largely been untouched by these measures.
Research from TheCityUK reveals that despite modest overall economic growth in Britain, exports of financial and professional services demonstrated substantial growth, averaging an 11 percent annual increase between 2018 and 2022.
This robust expansion in financial and professional services exports raises questions about the broader economic potential of the UK if similar growth rates were achieved across all sectors.
In 2023, the United Kingdom’s surplus in invisible exports – services and intellectual property – reached £78.9 billion.
Regional Strength in Services Exports
Data suggests that a considerable portion of this surplus originated from trade with the United States. Furthermore, the benefits are not limited to London’s financial district; approximately 47 percent of exported services are generated from regions throughout Britain.
Current discussions between the UK and the US regarding trade cooperation are predominantly centered on a digital trade agreement aimed at reducing digital taxation.
Meanwhile, Republican members of the US Congress, particularly those representing rural and agricultural areas, are advocating for the White House to secure greater access to British markets for American farmers.
TheCityUK is urging for improved access for financial services to markets in Switzerland, India, and the Arabian Gulf through new free trade agreements. Notably, the US is not prioritized in these requests, reflecting the sector’s current success in the American market without a specific trade deal.
UK Labour Leader Keir Starmer should exercise caution regarding the extent of any proposed ‘economic deal’ with the US President, particularly in light of these dynamics.
Uncertainty in US Trade Policy
Market anxieties surrounding Trump’s trade policies are largely attributed to the ambiguity surrounding his objectives.
This uncertainty stems from conflicting viewpoints. Trump has characterized tariffs as a strategic tool to compel other nations to dismantle trade barriers. Simultaneously, he aims to incentivize the relocation of supply chains back to the United States.
Former US trade advisor Peter Navarro has argued that tariffs present a significant revenue opportunity. He suggested that a consistent 20 percent levy on all imports could generate an estimated $6 trillion over a decade.
Such revenues could potentially finance substantial tax reductions for America’s middle class, mirroring policies aimed at supporting working families in other nations.
Former Treasury Secretary Scott Bessent has proposed a more nuanced approach, suggesting that each trading partner could be assigned a unique ‘tariff’ rate based on bilateral negotiations.
This tailored strategy has instilled confidence in both the UK and India that they might mitigate the most severe impacts of potential US trade actions.
Stephen Moore, an economist affiliated with the Heritage Foundation, a think tank closely aligned with Trump’s ideology, posits that the President’s ultimate goal is to reduce tariffs overall, rather than increase them.
The Heritage Foundation advocates for a focus on supply-side tax cuts. However, these contrasting objectives of encouraging domestic manufacturing and generating revenue through tariffs have created confusion on Wall Street.
This policy uncertainty has prompted hedge funds, central banks, and investors to diversify their portfolios, shifting away from the ‘magnificent seven’ technology stocks towards investments in gold and European equities.
Clarity on US trade policy is anticipated, which should enable analysts to reassess market strategies and potentially reduce current levels of uncertainty.
Remembering Lord Kalms
The passing of Lord Kalms, founder of Dixons, at the age of 93, marks the end of a significant chapter in British business history.
Lord Kalms was a prominent figure in retail, a ‘titan’ alongside industrialists like Lord (Arnold) Weinstock and Lord King of British Airways. He cultivated a productive working relationship with former Prime Minister Margaret Thatcher.
At Dixons, Kalms demonstrated foresight by embracing emerging technologies, notably mobile telecommunications, with considerable enthusiasm.
He was also known for his strategic acquisitions, most notably the takeover of Currys in 1984, which involved protracted negotiations regarding valuation.
As the son of Jewish immigrants, Kalms was a staunch advocate for business ethics and a driving force for modernization within Anglo-Jewry. He was known to engage with leading figures from business and diplomacy.
In 2005, Lord Kalms and the author participated in a BBC broadcast for Rosh Hashanah (Jewish New Year), focusing on corporate ethics. The program was filmed within Dixons’ flagship store on Oxford Street.
Lord Kalms’ enduring legacy includes the continued success of Currys, which remains a prominent retailer even as many other high street electronics chains have struggled to adapt to the online marketplace.