The UK’s general election has delivered the widely expected result of a victory for the Labour Party. A majority of 174 means that Keir Starmer will lead the United Kingdom as Prime Minister for the next 5 years.
“You have given us a clear mandate, and we will use it to deliver change. To restore service and respect to politics. End the era of noisy performance, tread more lightly on your lives and unite our country.”
Keir Starmer, UK Prime Minister
2024 UK Election Results
So, the question for business leaders now is what this means for international trade and the logistics sector. The manifesto placed large emphasis on economic growth and prosperity, but what does this look like in reality for business leaders?
What have the Labour Party promised regarding the UK’s relationship with significant trading partners like the European Union and USA? Can businesses leaders expect deregulation and warmer relations? What are the sustainability targets and how are they likely to impact logistics in the coming years? Here we explore the key points of Labour's election win for logistics and business.
An audit into UK/China relations
A big concern for UK businesses with international supply chains, is the prospect of deteriorating relations with China. Outgoing Prime Minister Rishi Sunak said at a dinner in November 2022 that the “golden era” of relations was over and that previous ties had been “naïve”.
Labour have promised an end to what they call ‘14 years of uncertainty over China’.
“Labour will bring a long-term and strategic approach to managing our relations. We will co-operate where we can, compete where we need to, and challenge where we must. We will improve the UK’s capability to understand and respond to the challenges and opportunities China poses through an audit of our bilateral relationship. We will always act in our interests and defend our sovereignty and our democratic values.”
Therefore, we all await the outcome of Labour’s promised audit into UK/China relations. However, what the Labour Party cannot predict is the actions of other nations and development world affairs.
Significant disagreements over key issues remain between the UK and China. What happens over these is likely to be the driver of any business disruption between UK and Chinese trade in the coming years.
Labour have made clear their desire for a strong, growing economy. Most economic analysts understand that is heavily linked to good trading relations with the Asian nation.
An improved relationship with the EU
In their manifesto, the Labour Party categorically ruled out a return to the EU single market, customs union and return of free movement, meaning a degree of customs bureaucracy is certain to remain. Throughout the campaign they were keen to stress they would not threaten the Brexit outcome.
However, they have made clear a desire for better relations with European trading partners. Describing an “an improved and ambitious relationship with our European partners” in their manifesto. But what does this mean in reality? Well, no one really knows yet. Including the Labour Party.
This is of particular pertinence for food and drink traders. Working on simplifying current SPS regulatory requirements, to prevent unnecessary border checks is said to be high on the agenda. Specifics on this again are unclear at present.
As it stands currently, the next deadline for changes to customs requirements is October 31st 2024. From then, Safety and Security declarations will be required for all goods moving from the EU to Great Britain. For more information, see the current Border Target Operating Model.
Constructive work with the US administration
Regardless of Labour Party desires, the new UK government is going to have to adapt to growing protectionism in the United States. Much uncertainty remains over who will be leading the USA beyond November 2024, but that’s an article for another day.
What we can say is that neither the Democratic or the Republican party appears interested in signing a free trade agreement with the UK. The appetite for protectionism in the US appears high at central government level.
However, the foreign office is expected to continue pursuing state-level Memorandums of Understanding, as it has signed already with Florida, Indiana and others. There could also be a heightened focus on industry-specific agreements.
It's understood that further strengthening relations and trade with the US is high on the agenda of new Foreign Secretary David Lammy.
"The vast majority of the MoU agreements that have been signed are with states that were won by the Republican party at the 2020 election. It's also true that Trump's Administration had begun negotiations over a free trade deal, before Biden's stopped it after his election victory.
This could suggest that UK/USA trade relations would be warmer under a Republican Administration after November. But no one really knows at this stage."
Liam Launders, Head of Sales, WTA
A return to the 2030 phase-out of new internal combustion engine cars
Labour’s climate change commitments are heavily focused on clean energy, rather than decarbonising transportation, which leaves questions to be answered for the logistics sector.
Prior to the manifesto launch, Labour's high-profile and controversial decision to abandon a £28bn per year pledge to meet Net Zero targets took plenty of headlines. However, within the manifesto were some promises for road transport.
There will be a return to the 2030 phase-out of new car internal combustion engine sales. A proposal which was pushed back by the Conservatives to 2035, to the delight of some in the industry but the dismay of others.
At this stage, there are no details on the phase-out of vans and HGV’s, which are clearly more important dates for the road freight sector.
“We need to see Labour developing and implementing a strategy that tackles the challenges to EV adoption and creates long-term reliable funding, particularly for commercial and public sector fleets, which stand to have the greatest environmental impact.”
Richard Staveley, CEO, EO Charging
The Road Haulage Association has congratulated Keir Starmer on his victory, however took the opportunity to highlight the challenges facing the road freight sector.
“We’re operating in a climate of mounting cost pressures and uncertainty which we must tackle. We’re clear that collaboration between government and industry is vital as we develop ideas and solutions that will help unlock our country’s economic potential and drive future growth.”
Road Haulage Association UK
RHA’s manifesto ahead of the result included taxation relief for the sector and increased investment in infrastructure. We can be confident that they will be lobbying for that with the incumbent government.
Corporation tax to be capped at current 25%
Labour’s manifesto promises for corporation tax to be capped at the current 25% for the entire parliament, which is the lowest level in the G7. There is also a promise to retain the full expensing system for capital investment.
“A stable business environment, a stable political environment, will help attract investment.”
Greg Jackson, Octopus Energy CEO
Overall there is a message from new Prime Minister that the changes he wants to implement will take time. However, what he appears keen to provide immediately is a sense of stability for businesses.
Time will tell if he is able to deliver it against a backdrop of pressing decarbonisation targets and an increasingly instable global backdrop.
Whatever the business environment of the coming years, you can be sure of successful navigation with WTA as your logistics partner. Whether it's through our expert operation team, or regular news and market information. WTA are the partner for an increasingly unstable world. Reach out today.
