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Trevelyan goes travelling

Written by Katie Armour, client manager
Edited by Scott Reid, associate partner

21 February 2022 

Good morning,

Anne-Marie Trevelyan, the secretary of state for international trade, will embark on a whistle stop tour of Indonesia, Japan and Singapore this week as the UK edges closer to becoming a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – or CPTPP, for short. The Japanese government has been tasked with overseeing the UK’s application and has confirmed Britain can move to the second market access phase of negotiations. Joining the CPTPP is a cornerstone of the UK government’s post-Brexit trade plan and has roots in Professor John Bew’s security review, which was released last year. Trevelyan will oversee the launch of this next stage of the application process and will “[fly] the flag for Global Britain” with trade talks aimed at deepening ties in the region. Once this phase is initiated, the UK will have 30 days to submit its market access offer, including its plan for tariffs, to existing members (Japan, Canada, Australia, Vietnam, New Zealand, Singapore, Mexico, Peru, Brunei, Chile and Malaysia). The pact covers a free trade area worth over £8.4trn, where members cut tariffs on the vast majority of goods and meet provisions on digital trade, data, and financial, professional and business services. All 11 members must agree to allow new entrants and Trevelyan has branded it “one of the largest and most exciting free-trading clubs in the world”. China put in a bid to join in September last year but because of concerns about its quest for economic dominance and abysmal human rights record, observers don’t expect it to get a fast pass. Earlier this month, in effort to sow good will in the region, the UK signed an agreement with South Korea to reinforce pandemic-damaged supply lines for key products like semiconductors. Trevelyan suggested doing so highlighted the UK’s “Indo-Pacific tilt in action”. It’s careful and consistent language mirrored by former foreign secretary Dominic Raab when he launched the CPTPP application during a trade trip to Vietnam, Cambodia and Singapore last summer. So why the focus here? What’s motivating the tilt? Kings College London Professor John Bew’s international relations paper, mentioned at the outset, which was commissioned by Downing Street and is now being treated as the de facto manual on Global Britain, described the Indo-Pacific as “the world’s growth engine” and “the centre of intensifying geopolitical competition”. Integrating with the region’s “multilateral economic and common defence arrangements” is, in his view, both good for business and an important safety step to forge new meaningful alliances in the face of China’s rapid growth. When probed on this plan an associate of Bew told Politico, “For the last 300 years, every time the world has been in flux there has been a British voice and very often a British fist or pen on the table controlling the next turn of the wheel. This could be the first time in 300 years that’s not true. Will we be a hegemonic power like China or America? No. But if we invest properly can we be the convener of, say, the next 10 largest powers?” In Bew’s view the economic gravity of the world is shifting to the Pacific basin. With that blueprint to go on, it makes sense ministers are focusing their efforts on trade (and power tussles) in a new arena.

News

The Queen has tested positive for Covid-19 and is experiencing “mild cold-like symptoms”. Buckingham Palace has reported she plans to continue to conduct light duties from her Windsor Castle home throughout the week.

Boris Johnson has warned that Russia is planning the “biggest war in Europe since 1945” and told the BBC that “in some senses” the plan has already begun. Speaking from Munich, where world leaders are meeting for an annual security conference, he also warned that any conflict would be “bloody and protracted”.

The prime minister has also confirmed that lateral flow and PCR tests will not continue to be issued for free as the UK government moves to encourage personal responsibility around Covid measures instead. Johnson highlighted the £2bn cost per month to the taxpayer and said we will be testing “at a much lower level”. (£)

Business and economy

significant leak of Credit Suisse data has revealed the secret owners of upwards of £80bn held by the Swiss bank. Details of 30,000 of the bank’s clients were leaked by a whistle blower who was motivated to expose “immoral” secrecy laws.

NatWest has announced it will end relationships with some companies who it deems not to have “credible” plans to cut emissions. In 2020, NatWest said it would stop lending and underwriting for companies with more than 15% of its activities related to coal and to large oil and gas producers, unless they had credible transition plans by the end of 2021. (£)

Rio Tinto is revelling in an “iron ore bonanza” and is set to unveil one of its largest ever annual dividends. The news comes as the company “battles to improve its tattered reputation” after scandals where its treatment of aboriginal caves and reports of a culture of widespread sexual harassment, racism and abuse at the company have been in the spotlight. (£)

Columns of note

John Harris writes in The Guardian that a post-covid world is “coming into view” but questions where the payback is for two years of death and suffering. He questions the strength of the government’s “build back better” plans especially in the light of rising living costs.

Dominic Lawson argues in The Times that Labour is right to fear Sunak’s “winning ways” and suggests that Keir Starmer’s team view the “personable chancellor” as the “obstacle to victory”. (£)

Markets

The week ahead

Investors are likely to remain cautious this week as diplomatic efforts to avert war in Ukraine remain inconclusive.

MPs will return from recess this week and the prime minister is expected to announce the government’s “living with Covid” strategy, which could include the end of self-isolation. The first minister is also expected to publish Scotland’s longer-term Covid-19 strategy on Tuesday.

In the US, markets will be closed on Sunday as the country celebrates Presidents Day.

On Wednesday, Bank of England governor Andrew Bailey will appear before the House of Commons treasury committee to discuss the bank’s quarterly Monetary Policy and inflation.

What’s happening today?

Interim Dividend Payment DateInvesco Bd In

Interim ResultsFinsbury Food                    TristelDechraSylvania Pl

did you know

When lightning strikes sand or sandy soil, it fuses together the grains to create a small glass-like tube known as a fulgurite. (Source: Met Office)

Parliamentary highlights

Source: Financial Times

House of Commons

The House of Commons is in recess and will next sit on 21 February 2022.

House of Lords 

The House of Lords is in recess and will next sit on 21 February 2022.

Scottish parliament 

There is no scheduled business today.

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