Britain and India Ink New $6 Billion Trade Deal

What Happened?

Indian Prime Minister Narendra Modi and British Prime Minister Sir Keir Starmer signed a new multi-billion-dollar trade deal yesterday. According to statements by both leaders, British cars and whisky will be cheaper to export to India while Indian textiles and jewelry will cost less to export to Britain under the terms of the new trade framework.

 The new trade deal follows three years of negotiations between India and Britain, and the deal also lays the groundwork for improved cooperation between the two countries to help reduce illegal immigration.

Why it Matters

The new trade deal comes as both India and Britain are looking for ways to improve economic conditions for their respective populations. India is undergoing a rapid and widespread industrialization effort designed to modernize its economy and provide better paying jobs for its growing population. Britain is looking for ways to grow its own economy, which has stagnated in recent years leading to poorer living conditions for its citizens.

India’s population has surpassed China’s, making India the most populous country in the world. With a growing number of young people looking for employment, India is looking for ways to expand economic activity and grow its job sector at the same time.

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Indian Prime Minister Modi said thanks to the new trade deal ‘Indian textiles, footwear, gems and jewelry, seafood, engineering goods will get better market access in the UK and people and industries in India will be able to access products made in the UK.’

Britain has seen its own economic fortunes worsen in the past decade. If Great Britain were to become the 51^st state in the United States, its economy would rank 51^st, lower even than the current poorest state in the U.S., Mississippi. Britian’s Prime Minister claimed the new trade deal will lead to the creation of thousands of new jobs, which are sorely needed in the U.K. 

According to The Economist, Britain has seen a steady economic decline in the past two decades. GDP growth has been cut in half in the years since the global financial crisis, and after inflation, wages have remained stagnant even as the cost of living has increased. Britain’s economic woes have created a host of social and political problems as well, including a growing backlash against immigrants who live on government welfare programs. 

How it Affects You

British leaders in Parliament have touted the new deal with India as a model for international trade and a clear alternative to the trade wars they accuse the Trump Administration of launching. While the new trade deal by itself is unlikely to solve the economic problems in India or the U.K., it could help improve those conditions for both countries.