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11 Jan 2021

Econ Digest

BREXIT DEAL issue begins to ease... but COVID-19 pandemic remains severe

      The United Kingdom (UK) and the European Union (EU) have finally reached an agreement prior to the end of the transition period in their post-BREXIT relationship. From January 1, 2021, both parties will continue to trade goods without import duties as before. KResearch views that the agreement will help to somewhat ease pressure on the UK economy in 2021, as the UK still relies heavily on goods imported from the EU, but will not help the UK economy accelerate in the future or make a big difference to the current situation. Although the UK is now able to carry out its economic policies more independently, the UK will lose its strength as a manufacturing and service center, as well as its status as a regional financial center.
       In 2021, the COVID-19 pandemic issue remains a key factor that will affect the UK purchasing power and economy for at least another half a year from 2020. While many Thai products will benefit from the new UK import tariff structure (UK Global Tariff: UKGT), Thai exports to the UK in 2021 will tend to inch up slightly, thanks largely to a low base in 2020, with tentative growth of around zero to 3 percent and a total export value of approximately USD3.08-3.18 billion. Thai products that may benefit from this new tariff structure include rubber gloves (excluding surgical gloves), trucks/pickups, jewelry, seasonings and prepared pet foods available at retail stores. Nevertheless, the development of economic relations through an FTA should remain a goal for the Thai government. If Thailand were to succeed in establishing an FTA with the United Kingdom, Thai products should benefit from further reduction in tariffs, particularly on the automotive and parts that are still subject to high tariffs, and may have the chance to be integrated into the UK production chain.

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