Dharshini David
Deputy Economy Editor
Getty images
The warnings of a global recession have intensified while the trade war heats up.
Wednesday evening, the main animus seems to be between the United States and China which flows from the prices that are ever increasing from each other.
For most other nations, Donald Trump has taken a break by putting higher taxes on American imports for 90 days.
This means that these countries will now face a decrease of 10% – the same level as Trump as that imposed in the United Kingdom during his first announcement last week.
The United Kingdom seemed to have died light compared to other savings.
However, British exporters are still faced with an additional charge on goods sold in the United States and there are many other ways in which the United Kingdom will be affected, from growth to inflation.
The exact impact remains very uncertain. But some of the emerging fallout can have an upward advantage – and here is why.
Business
The most directly exposed to the United Kingdom to this trade war are the British companies – from car manufacturers to food producers – selling goods in the United States.
While American importers who buy their products pay 10% more, they face a dilemma of repressing profits, sharing pain through the supply chain or hoping that customers will be ready to pay higher prices.
They already risk a breach of their sales from prices, threatening jobs and investment plans. Other companies could also be pressed by more competition, if cheap imports from other nations are diverted to the United Kingdom – China makes a third of world goods.
And the complexities of global supply chains mean that British activities will notice the impact of prices in other countries.
Growth
The growth blow via trade will probably be less marked in the United Kingdom than elsewhere, partly because of what Great Britain sells to America.
Two -thirds of British exports to the United Kingdom are services – such as bank, insurance and advertising – which are not subject to prices. The success of the United Kingdom in this area makes it a particular area of force in its commercial portfolio.
But this strength can also be weakness.
Certain exports of services are linked to goods; Think of after-sales or marketing services. The demand for these could be affected by prices in the United States.
Sales of exports of services could be more widely affected elsewhere if the demand from other countries suffers.
Some members of the advertising industry are already worried because the expenses of their services often have to suffer when there are budget cuts.
And this commercial success could be vulnerability.
The Bank of England notes that the size of the UK exports sector compared to the economy and its financial sector means that it can be sensitive to risks to the financial stability of lower global growth.
It is for all these reasons that Chancellor Rachel Reeves warns that growth in the United Kingdom will be affected, even if we are now on a playground with other countries in terms of 10%tariff.
It is worrying, not only for households and businesses, but for the sums of the Chancellor – the lower growth is more pressure on public finances.
This is why there have been speculation that we can see more tax increases coming the fall budget, if it were to stick to its tax rules.
Isas and pensions
The compounds this dilemma – potentially – are movements on the links of the links.
These are generally considered to be safe investments during periods of conflict, but there have been signs of intense sale, which could result in higher loan costs for governments.
And wild oscillations in stock markets around the world, informed by the increased risk of global recession, was not good news for investors in the United Kingdom.
When stock prices drop, they reduce the value of products such as ISA and pension funds.
But as experienced analysts warn that this kind of funds are long term. The oscillations in the value of investments tend to be smooth over time – and most people do not draw these funds day by day. Overall, households here are less exposed to the stock market directly than those in America.
Interest rate
There may be a silver lining on market volatility.
The prices of oil and raw materials such as copper and sugar have dropped.
This can be good for lower inflation, as is the diversion of cheap products from countries that find it difficult to sell in the United States.
In a lower growth context, investors speculate that the Bank of England could reduce interest rates four times more this year, praising a potential relief for millions of households.
The Bank of England itself noted that, in any case, British households are well placed to resist the storm; Our debt compared to our income has been at its lowest level since 2001.
In addition, the banking system, the bank’s judges, is well placed to absorb shocks; The lessons of the 2008 financial crisis were tilted.
Thus, in a tumultuous world, British growth is likely to suffer as we ended up in the cross winds. Although there may still be the strange light point to watch.
