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The infoshot to help kick-start your week

New UK-EU post-Brexit deal

Last week kicked off with the UK and the EU reaching a new agreement on post-Brexit relations. The deal will add an estimated extra £9bn to the UK economy.

According to Nick Thomas-Symonds, the UK’s chief negotiator, it marks “a new chapter in our relationship with the EU.” The major parts of the deal include:

• Fishing – the new deal will maintain EU boats access to UK waters until 2038, yearly quotas on the number of fish countries are allowed to catch will continue and a £360m fishing and coastal growth fund will invest in new technology and equipment.
• Defence – a formal UK-EU defence and security pact has been setup, and the agreement may, in the months ahead, enable UK arms firms to access the £150bn fund Security Actions for Europe (Safe) which provides loans for defence projects.
• Passport gates – UK tourists will be able to use e-gates at more EU airports and a new passport system will make it easier for pets to travel.
• Carbon – both sides have come to a UK-only deal worth £25m a year that will save UK firms £800m in taxes and protect UK steel from EU tariffs.
• Farming – checks on food exports to the EU will be reduced and the UK can now sell raw burgers and sausages to the EU for the first time since Brexit.

On a less positive note, as expected, April’s rise in household bills pushed UK inflation to 3.5%, its highest rate in more than a year.  Water, gas, council tax and electricity bills all went up on 1 April, pushing inflation above the Bank of England’s (BoE) 2% target.

Political chaos in US seeps into markets

Another chaotic week in the White House saw Trump ambush South African President, Cyril Ramaphosa with false claims of white genocide and Harvard University file a lawsuit against the administration’s attempts to stop it from enrolling foreign students.

The chaos found its way into the markets on Friday when Trump threatened the EU with a 50% tariff on exports and proposed a 25% tariff on any smartphone made outside the US.

According to US figures, the EU is sending $600bn in goods to the US and importing $370bn. Trump blames this deficit on “unfair” policies on cars and agricultural products. The threat came hours before the US and EU were set to have trade talks. Thankfully, over the weekend Trump agreed to extend the deadline to negotiate the tariffs until 9 July. The European Commission Chief, Ursula von der Leyen said the EU was “ready to advance talks swiftly and decisively” following the pause.

The proposed smartphone tariff wiped approximately $70bn off Apple’s share price on Friday, pushing the company’s valuation just below $3tn. Following reports that Apple was planning to start assembling US bound iPhones in India, Trump reiterated his stance that “we want you to build here”. Analysts think that moving production to the US could take years and significantly drive up the price of iPhones. Wedbush Securities estimated last month that an iPhone made in the US would be three times more expensive than now at $3,500.

Trumps “big, beautiful” bill got through the House of Representatives on Thursday. The bill will extend the tax cuts from Trump’s first term, provide more money for defence spending and fund mass deportations. It will also make the corporate tax rate cut of 35% to 21% permanent and reduce Medicaid spending by placing new requirements on able-bodied adults and immigrants. Before it goes into law, the bill now needs to get through the Senate by its 4 July deadline. Concerns over what the bill will mean for US debt saw 20 and 30-year government bond yields jump above 5.1%, and the 10-year yield hit 4.6%.