LONDON — Chancellor Rachel Reeves has insisted that the government’s new trade deals will boost growth, after the Office for Budget Responsibility (OBR) snubbed a request to count them in its growth forecast. In its pre-budget forecast on Wednesday, the OBR acknowledged that new trade deals “have the potential to increase U.K. trade and GDP,” including the government’s Brexit “reset” deal with the EU and its free trade agreement with India. But the budget watchdog indicated that neither of the deals had met the criteria to be included in its forecast. As elements of the U.K.-EU reset deal were still under negotiation, the OBR said there was “not sufficient detail to assess their potential fiscal and economic impacts.” In the case of the India deal, the OBR said it could be seen to increase GDP by 0.13 percent, in line with the government’s impact assessment, but only once ratified. When it came to the U.S. trade pact — which saw the U.K. hit with 10 percent baseline tariffs on most goods — the OBR noted that some “details of the future trading arrangement are yet to be negotiated and confirmed.” The assessments came as a disappointment for Reeves, who had pinned her hopes on trade as a booster for growth. In an interview with the BBC on Thursday, the chancellor said she was “confident that the growth policies that we’re pursuing will grow our economy,” pointing to trade deals with the EU, India and U.S., as well as planning and pensions reforms. “Why do I say that?” Reeves added. “Because the OBR said in the spring our economy would grow by 1 percent this year. They revised it up yesterday to 1.5 percent. The IMF, the OECD, the Bank of England, also revised up their growth forecasts for this year.” “So I’ve defied the forecast this year, and I’m determined to defy them next year and the year after, because it is absolutely the case that the best way to fund our public services and keep taxes down is to grow the economy.” GLOBAL HEADWINDS While the U.K.-EU reset deal and India deal are not included in the OBR’s current forecast, it does offers some hope for the future. “The result of the UK-EU strategic partnership and the Youth Mobility Scheme are still being negotiated and therefore there is not sufficient detail to assess their potential fiscal and economic impacts,” it said. “We will consider whether any such impacts should be included in the forecast once the full details of the agreements have been finalised, published and agreed by both the EU and UK. This is the standard approach we have taken to assessing the fiscal and economic impacts of trade deals and other international agreements.” The assessments came as a disappointment for Reeves, who had pinned her hopes on trade as a booster for growth. | Neil Hall/EPA Once the U.K.-India free trade agreement is ratified by both countries, the OBR said it could increase real GDP by amounts rising to 0.13 percent by 2040, in line with the government’s impact assessment. But Reeves has less reasons to be cheerful about the state of trade overall, with global trade growth expected to slow from 3.7 percent in 2024 to 2.3 percent in 2026 in line with the IMF’s forecast. Speaking at a Resolution Foundation event on Thursday, OBR chair Richard Hughes said tariffs and global trade restrictions had played a part in their decision to downgrade productivity. “There are some new global headwinds in the global economy since our forecast in March — U.S. tariffs going up and also just wider global trade restrictions being put in place,” Hughes warned. “Trade wars are very bad things for everybody, especially an open economy like the U.K., which relies a lot on trade as a driver for growth so and for the first time that I’ve seen in my career, the IMF is actually forecasting over the next five years trade falling as a share of GDP.”

MUMBAI, India — Donald Trump’s tariffs are accelerating Britain’s dash to strengthen ties with India — even if that means putting trade before morals. Prime Minister Keir Starmer spent this week leading the U.K.’s largest-ever trade delegation to India, flying with 125 business chiefs to Mumbai to sign investment-driving agreements. It marked an all-singing, all-dancing bid to boost Britain’s stagnant economy — and help both countries diversify away from the United States. Dealing with New Delhi, however, isn’t straightforward. Two major diplomatic differences loomed in the background of the mutual charm offensive between the former British colony and its one-time imperial ruler.  First, and perhaps most significant, is India’s continued funding of Russia’s invasion of Ukraine by buying of millions of barrels of oil from Moscow. Narendra Modi displayed his fondness for Vladimir Putin just as Starmer’s mission was preparing for lift off — writing a happy birthday message to his “friend,” and sending his best wishes for the Russian president’s “good health and long life.” That’s not a message Britain — a staunch supporter of Kyiv — would endorse. But Starmer, the progressive leader of the center-left Labour Party, displayed only reticence when it came to public grilling on these hot-button topics — with the quest for new avenues of trade getting top billing in the realpolitik era of Trump 2.0. As one high-ranking Downing Street official put it: “You don’t get to choose who your world leaders are.” They were, like others cited in this piece, granted anonymity to speak candidly to POLITICO during the delegation to Mumbai. STRINGING BRITAIN ALONG India spent years stringing London along over a free trade deal coveted by a post-Brexit Britain. First came Boris Johnson. Britain’s then-prime minister bullishly declared on a visit to India in April 2022 that the deal would be signed by the Indian festival of Diwali. It wasn’t. Later came Rishi Sunak, particularly revered in India for becoming the first prime minister of Indian descent to lead the former colonial power. Despite that, he never held much hope for striking a deal with the notoriously-difficult negotiators, and was booted out of office without clinching an agreement. Then came Trump’s return. When the U.S. president swiftly made good on his threats to hit nations, both friend and foe, with tariffs, it sent world powers scrambling for alternative markets. Just five months after Trump’s second inauguration, Modi dashed to Britain to ink a free trade agreement that the British government argued would mark a multi-billion pound export boost for the U.K. Trump has only highlighted India’s need for new trading partners with his imposition of steep tariffs on New Delhi over Modi’s refusal to stop buying oil from Moscow. Journalists traveling with Starmer to India pressed the British PM on whether he’d tell Modi to divest. He dodged the question.  India spent years stringing London along over a free trade deal coveted by a post-Brexit Britain. | Ashish Vaishnav/SOPA Images/LightRocket via Getty Images At a press conference after spending the day with his Indian counterpart, Starmer answered two questions on the subject in only the most opaque terms. When the cameras stopped rolling, aides clarified that the pair had indeed discussed Russian oil. It’s not the first time Starmer has played the global pragmatist, regardless of the moral matters at stake. Starmer held a landmark meeting with Chinese President Xi Jinping last year, and twice declined to condemn the jailing of dozens of pro-democracy figures in another former British colony, Hong Kong, under authoritarian laws imposed by Beijing. The U.K. “mustn’t lose … the opportunity for our economy,” Starmer said, opting not to publicly rebuke Beijing over what is an affront to many in Britain. ‘HARD TO TAKE’ U.K. trade policy expert David Henig noted that trading relations between the U.K. and India had gotten off to a far better start for Starmer than his predecessors. But, he said, there’s “a long way to go” to ensure this leads to better government and business relations because of the challenging rules and politics of the country. “India’s relations with Putin are part of this picture and speak to a bigger issue — that it probably will never be an entirely reliable partner,” added the director at the European Centre for International Political Economy. For one, the Hindu nationalist is accused of overseeing democratic backsliding in India. Indeed, the second point of U.K. contention with New Delhi is the case of Jagtar Singh Johal, a British Sikh activist who has been jailed for eight years in India without a full trial. A United Nations panel described his detention as arbitrary as far back as May 2022. His family and supporters were pushing Starmer to take action on his trip. Starmer’s response to a question on whether he raised Johal’s ordeal was muted, with no public rebuke over the case. “Yes, we did raise proportionate cases,” he said. “We always raise them when we have the opportunity to do so.” Johal’s campaigning brother Gurpreet was disappointed that Starmer “didn’t even mention his name.” He added: “That is hard to take.” GRAND WELCOME Modi tried to court Trump but the pair have reportedly had a spectacular falling out in recent months. That may in part explain why Starmer’s welcome to India was so grand. Thousands of flags lined the streets of Mumbai with his and Modi’s face on, welcoming the British leader to the city. That will have been quite the shock for the prime minister who, if he tried to pull off a similar stunt back in Britain, would risk riots, or at least large-scale vandalism.   “My understanding is PM Modi said to the Maharishi government, please make sure that the prime minister understands how welcome he is in India,” said a second British official. “It is absolutely extraordinary,” they added. “I’m used to quite a level of welcome in Delhi for foreign leaders — I’ve never seen anything like this.” There were announcements from British universities, a defense deal — and a Bollywood studio committed to producing three new films in Britain, potentially representing thousands more jobs. British film industry leaders acknowledged the need to diversify partnerships away from Hollywood has only been heightened by Trump’s threat to impose 100 percent tariffs on foreign-made films. While in Mumbai, Starmer stayed in a palatial hotel overlooking the Gateway of India, built under the British Raj to commemorate the arrival of King George. After India won its independence struggle locals took to calling it the “Getaway from India,” because the last British troops fled from here in 1948.  Now it could symbolize quite the opposite — and much like under the British Empire, trade could end trumping most other values.

LONDON — British and American officials have restarted talks on steel tariffs in the run-up to U.S. President Donald Trump’s state visit next week. After months of radio silence over the summer, negotiations to implement new quotas lowering the duties on steel and aluminum exports to the U.S. began again earlier this month, two people close to the talks told POLITICO. It comes as Donald Trump prepares to travel to the U.K. for a historic second state visit, with British officials hoping to use the occasion to push for a breakthrough on tariffs as well as a long-coveted tech partnership. Britain’s steel and aluminum makers have faced 25 percent tariffs at the U.S. border since March. While U.K. firms dodged Trump’s doubling of those duties in the spring, negotiations to lower tariffs further — as promised in May’s trade pact — have been slow-moving. The talks are also politically sensitive for Britain’s governing Labour Party, which is facing pressure from the insurgent Reform UK party in the country’s industrial heartlands. “We know they’ve been talking about steel again and looking at the U.K.’s proposal on quotas,” said one of the people familiar with the negotiations. Like others quoted in this report, they were granted anonymity to speak freely about ongoing talks. Mike Kemp/In Pictures via Getty Images U.K. trade officials “really want to get something over the line,” said the second person familiar with the talks, noting that the discussions were “quite advanced before the pause over the summer began.” ‘RAPID DISCUSSIONS’ During a split-screen Oval Office phone call in May, Trump and Prime Minister Keir Starmer announced an agreement promising “rapid discussions” to secure a quota for U.K. exports of the metals. The deal would allow a certain amount of steel, aluminum and their derivative products to pass from the U.K. into the U.S. at tariff rates significantly lower than 25 percent. When Trump visited Scotland in July, he said a reduction in his tariffs on U.K. steel and aluminum would come “pretty soon.” But five months after the May deal was signed, the U.K. is still lobbying U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to get the White House to put those quotas in place. “The longer this goes on, the more uncertain it is, the more damaging it is, the less likely we are going to get growth, and the more threat there is to the jobs that are associated,” said Chris Southworth, head of the International Chamber of Commerce UK. There is “a great opportunity” to conclude the steel talks on the fringes of the state visit, Southworth added. “We need a solution quickly.” MELT AND POUR RULES The U.S. has strict rules on imports of steel and aluminum, meaning the metals must be melted and poured in their country of origin to qualify for tariff relief. But the requirements have been a tall order for Britain’s steel sector after its largest exporter to the U.S. — Tata Steel UK’s Port Talbot steel mill — shut last September. The firm is switching to greener arc furnaces which aren’t expected to start operating until 2027. In the meantime, the firm has been importing steel from its plants in India and the Netherlands. “I don’t think these are unmanageable issues,” said a person briefed by the White House. “If the U.K. can figure out how to agree to the ring-fencing demands of the U.S., then I think it should be pretty easy.” Mike Kemp/In Pictures via Getty Images One solution, they said, “could be they just have a lower … quota to protect against the Indian steel coming through, and then have an agreement to raise it automatically once [Tata’s Port Talbot site] comes back online.” Trump’s state visit is “exactly the kind of opportunity to make an announcement in front of the TV cameras,” the first person quoted above said. “If it’s not now, I worry about when it will ever happen.” “We are committed to going further to give industry the security they need,” said a U.K. government spokesperson. “We will continue to work with the US to get this deal implemented as soon as possible and in industry’s best interests.”

LONDON — Britain’s business and trade ministry is preparing to cut 600 roles from its overseas network, raising concerns about the government’s ability to support British exporters abroad. The ministry is also reeling from a sweeping Cabinet reshuffle, with all of its previous ministers moving into other departments or leaving government over the weekend. It comes as the U.K. navigates a rapidly shifting global trade order and battles to attract investment to drive the government’s growth agenda. The overseas cuts are part of a broader plan to reduce the Department for Business and Trade’s headcount by 20 percent — with most redundancies expected before April 2027. A figure familiar with the developments said staff are concerned about the pace and scale of the cuts.  While a Voluntary Exit Scheme ran in June, uptake fell short of the department’s target, according to the person. Permanent Secretary Gareth Davies is now refusing to rule out compulsory redundancies. James Manning, a former U.K. trade negotiator, said: “While efficiencies are clearly needed given the fiscal challenges facing the government, reducing the U.K.’s overseas trade policy and promotion staffing at a time when the global trade system is under extreme strain is a clear risk.” He added that “it will likely make it harder for ministers’ to deliver on their pledge to boost support to U.K. exporters, as set out in the Trade Strategy published earlier this year.” Some export promotion work is expected to shift to foreign office staff, with diplomats asked by former Foreign Secretary David Lammy to promote the U.K. overseas.  But Manning, now a director at FTI Consulting, warned: “Given the UK’s trade expertise has been highly concentrated in the Department for Business and Trade and its predecessor departments, it is also unlikely that the FCDO will be able to immediately plug the capability gaps this will inevitably create.” THREAT OF OFFICE CLOSURES  DBT is also threatening the closure of nine regional offices outside London — with planned consultations due to begin. These include Bristol, Cambridge, Glasgow, Guildford, Ipswich, Leeds, Newcastle, Nottingham, and Titchfield.  The Guildford office has already closed, while the Bristol and Titchfield offices are set to shut in early 2026, according to the person cited above. These regional offices help local businesses access government support and promote trade and investment in the region.  PCS General Secretary Fran Heathcote said the government has done this “without even a nod to union consultation and without offering any kind of rationale.” She called the 20 percent reduction of staff “a personal disaster for many of our dedicated members as well as for the effectiveness of the department.”  “Any agreed future changes must be transparent and implemented carefully to help allay the serious anxiety that DBT staff are feeling,” she urged.  The Department for Business and Trade said no final decision had been taken on where cuts would fall, adding it is standard practice to review agreements when office leases come up for renewal.  “As part of Government plans to reshape the state and deliver our Plan for Change, DBT will support a leaner and more efficient Civil Service, helping to reduce administration costs by 15% by the end of the decade and to avoid duplication across departments,” said a DBT spokesperson. “In line with these plans, we propose to reduce the Department in size, but we will look to avoid redundancies wherever possible.”

LONDON — Brexit Britain wants to become an offshore haven: not for low taxes or deregulation, but for animals. In May, Keir Starmer announced plans to align with EU rules on agriculture and food standards — in a bid to smooth trade with the U.K.’s largest neighbor. But behind the scenes, London wants an exception to the rules: keeping the stricter animal welfare standards brought in since Brexit. The U.K. last year prompted cheers from NGOs by banning the export of live animals for slaughter. Ministers said the practice — legal in the EU — “causes animals unnecessary stress.” London has also swooped in to protect sea birds and sand eels from rapacious EU fishermen and has signaled plans to legislate foie gras off British menus. It’s all a bit of a departure from EU rules, when alignment — to protect the integrity of the bloc’s single market — is the price of lifting the troublesome border checks. Two people familiar with preparations for U.K.-EU talks told POLITICO that London was keen for an explicit carve-out on animal welfare in the U.K.-EU Sanitary and Phytosanitary Agreement. One of the people, a British official who was granted anonymity to discuss the talks, said the government did not want the negotiations to become “a race to the bottom on standards.” PRECEDENTS The roadmap for negotiations agreed by Starmer and European Commission president Ursula von der Leyen at a summit in the spring already concedes that the SPS deal will “include a short list of limited exceptions.” As POLITICO has previously reported, the U.K. is expected to push for a carve-out for selective-bred crops to be on this list. But it’s also seen as a vehicle for London’s animal welfare aspirations. It wouldn’t be the first time Brussels has indulged a third country on the matter. The SPS agreement the EU has with Switzerland — seen as a model for the upcoming British accord — also includes its own carve-out on animal welfare. It’s all a bit of a departure from EU rules, when alignment — to protect the integrity of the bloc’s single market — is the price of lifting the troublesome border checks. | Matt Cardy/Getty Images “Switzerland was able to maintain some of its animal welfare standards, which are higher,” Professor Emily Lydgate from the U.K. Trade Policy Observatory told the House of Lords European Affairs Committee last month. Politically, such an exemption would also make things much easier for the British government. Starmer’s EU reset plans have so far faced little substantial political opposition — even from hardline Brexiteers. But throw in a bit of animal cruelty, and voters might start to take a rather dimmer view of the whole exercise. The British prime minister, who once purchased a field in the leafy English county of Surrey so his mum could look after rescue donkeys, probably knows better than to mess with Britain’s animals. “One of the main platforms those who wanted to leave the EU stood on when campaigning for Brexit was that we would be able to improve animal welfare standards, it is therefore essential that any agreement that is entered into still allows the UK to have higher animal welfare laws,” Edie Bowles, executive director at The Animal Law Foundation said. “Not only that, we should ensure that those animal welfare standards are robust and not undermined by lower welfare imports. The U.K. public cares deeply about animal welfare and wants to see it paid more than just lip service.” TWO-WAY STREET It’s possible the SPS deal might not end up being just a one-way street on animal welfare. Bowles said the U.K. had just lowered legal protections for chickens by “legalizing the practice of handling chickens by their legs, which causes significant welfare issues and is currently prohibited in the EU.” She added that it was also “essential that along with not accepting lower welfare imports the U.K. does not fall behind the EU … what the public want is an agreement in place that encourages a race to the top between the two parties, rather than a race to the bottom.” There may end up being some compromises. Ahead of last year’s general election Labour’s environment chief Steve Reed said his party would “ban the commercial import of foie gras, where ducks and geese are aggressively force-fed.” Some commentators have since noted that ministers are yet to re-state this plan in government. Asked about plans for a carve-out, a U.K. government spokesperson said: “Following the UK-EU Summit we will be finalising the details of our SPS agreement, which will make trade with our biggest market cheaper and easier. We won’t get ahead of those negotiations but we have been clear about the importance of setting high animal welfare standards.”

British Prime Minister Keir Starmer signalled that the U.K. will play a role in providing airdropped aid to the Gaza Strip as he faces growing pressure to recognize Palestinian statehood. Israel said on Friday that it will allow airdrops of food and supplies from foreign countries into Gaza in the coming days. “News that Israel will allow countries to airdrop aid into Gaza has come far too late — but we will do everything we can to get aid in via this route,” Starmer wrote in an opinion piece for British newspaper the Mirror. “The images of starvation and desperation in Gaza are utterly horrifying,” he said. “We are already working urgently with the Jordanian authorities to get British aid on to planes and into Gaza,” he wrote. The head of the World Health Organization, Tedros Adhanom Ghebreyesus, said earlier this week that Gaza is suffering from a “man-made” mass starvation because of an aid blockade into the territory. The United Nations World Food Program has warned that almost one in three people in the Gaza Strip are going for days without eating. Airdrops to Gaza have been criticized for being dangerous and inefficient.  Starmer has been facing growing calls to recognize Palestinian statehood. A third of British MPs, including some of his own Cabinet ministers, have signed a letter calling for the U.K. to recognize a Palestinian state. The prime minister said that “recognition of a Palestinian state has to be one of those steps” to achieve peace in the region, although “it must be part of a wider plan that ultimately results in a two-state solution and lasting security for Palestinians and Israelis.” French President Emmanuel Macron said this week that France intends to recognize a Palestinian state in September at the U.N. General Assembly.