The British government on Friday said it has secured its first major post-Brexit trade agreement — a free trade deal with Japan — the day after bitter wranglings with the EU.
The UK Department for International Trade said the deal would increase trade with Japan by about ￡5.2 billion (US$19.5 billion).
The UK-Japan Comprehensive Economic Partnership Agreement was yesterday agreed in principle by British Secretary of State for International Trade Liz Truss and Japanese Minister of Foreign Affairs Toshimitsu Motegi during a video call. It builds on the broad EU-Japan deal that came into effect last year, but which is no longer to apply to Britain from Dec. 31.
Britain left the EU in January, but agreed a standstill transition until the end of the year — and is racing to strike both replica and new trade agreements before that date.
“This is a historic moment for the UK and Japan as our first major post-Brexit trade deal,” Truss said. “The agreement we have negotiated — in record time and in challenging circumstances — goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries.”
The deal was an “important step” toward joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, she added.
The British economy grew for a third month in a row in July as pubs, restaurants and other sectors reopened after the COVID-19 lockdown, but it remained about 12 percent smaller than its pre-pandemic level.
After crashing by a record 20 percent in the second quarter, output expanded by 6.6 percent in July, slower than June’s monthly rate, the UK Office for National Statistics said.
Economists polled by news agency Reuters had expected growth of 6.7 percent.
British Chancellor of the Exchequer Rishi Sunak welcomed the figures, but added that people were rightly worried about the coming months.
The British economy has recovered about half of its lost output, but is still 11.7 percent smaller than its level in February, before the COVID-19 pandemic hit the UK.
Capital Economics economist Thomas Pugh said that the data suggested that British GDP would show record-breaking growth in the third quarter after its unprecedented collapse in the April-June period.
“However, July was probably the last of the big step-ups in activity, and a full recovery probably won’t be achieved until early 2022,” Pugh said.
In response, the Bank of England was likely to ramp up its bond-buying stimulus program by a third, or ￡250 billion, Pugh said.
The British economy suffered the sharpest second-quarter fall of any Group of Seven nation in the April-June period.
Hopes for a swift rebound have faded as businesses struggle to cope with social distancing rules and many people remain reluctant to travel on public transport or go to crowded places.
Tensions between London and Brussels over a post-Brexit trade deal are also mounting.
Unemployment is also expected to rise sharply, as Sunak has ruled out extending the UK’s Coronavirus Job Retention Scheme which is due to expire at the end of next month.
The UK Parliament’s Treasury Committee yesterday urged Sunak to “carefully consider” a targeted extension of the scheme and other support measures.
The EU told Britain on Thursday that it should scrap a plan to breach their divorce treaty, but UK Prime Minister Boris Johnson’s government refused and pressed ahead with a draft bill that could sink four years of talks between Britain and the EU.
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