Labour’s First 100 Days: Navigating the Future of UK and International Trade
Key Takeaways:
The 2024 UK General Election resulted in a decisive victory for Labour under Keir Starmer, positioning the party to shift away from key Conservative policies while tackling significant domestic priorities such as green energy, education, and public health.
Labour's economic platform emphasises wealth redistribution through progressive taxation, substantial public investment in infrastructure, and an ambitious green transition. However, concerns about capital flight and investor confidence have led to the promise of looser regulations.
Starmer's government aims to strengthen UK-EU relations, forge new trade partnerships, and build alliances with emerging powers like India, while managing existing diplomatic commitments. Labour prioritises pragmatic international engagement, particularly with China and the Indo-Pacific, while maintaining strong ties with the US.
Key challenges include managing capital flight risks, balancing climate goals with industrial impacts, and addressing labour market reforms that could strain small businesses.
Transition from Sunak to Starmer
The 2024 General Election ended 14 years of Conservative rule, with Keir Starmer's Labour Party winning a decisive victory. In order to pursue his mandate, Starmer needs to overturn much of the previous Conservative agenda and has been under immense pressure to steer the country in a new direction. The Labour government must answer to a strong mandate for change, while delivering on reform promises in areas like green energy, education and public health. This transition will be closely observed domestically and internationally, with governments and investors monitoring shifts in economic strategy, climate targets, and foreign policy priorities.
While Sunak will be remembered for negotiating the Windsor Framework, supporting Ukraine, and managing long-term COVID-19 recovery, Starmer's focus lies in stabilising UK-EU relations, forging new trade partnerships, and developing a more nuanced vision for the UK's global role. This vision is based on what Foreign Secretary David Lammy calls “progressive realism”, an evolution from Labour’s earlier approach of moral realism and a response to the Conservative-led Global Britain. The Prime Minister will navigate shaky political ground while auditing Britain’s China policy, commitments to Israel, and relationships with the Global South. He aims to foster new alliances with emerging powers like India, deepen ties with Gulf states, and reassess Euro-Atlantic relations, managing inherited diplomatic positions and tackling formidable international challenges. The prospect offers both challenges and compelling opportunities for global business, including new investments, expanded market access, and enhanced regulatory stability.
Labour policies
The Labour Party’s policy framework going into the 2024 General Election was grounded in a mission-driven manifesto aimed at addressing the UK's pressing social, economic, and environmental challenges. Under Keir Starmer’s leadership, Labour rebranded itself with five key "missions" guiding their policy agenda: achieving higher sustained growth, making the UK a clean energy superpower, improving the NHS, making Britain's streets safer, and ensuring every child has access to excellent education. Labour's plans include reversing some public service cuts, aiming for net-zero emissions by 2030, and fostering innovation and equality. These goals represent a shift from the previous Conservative government's emphasis on austerity measures and Brexit-focused policies.
Labour’s vision for the economy and energy is a significant departure from Conservative policies, which have traditionally emphasised market deregulation, lower taxes for corporations, and a more hands-off approach to state intervention. Labour’s policies focus more on active state involvement in wealth redistribution, sustainable growth, and reducing regional inequalities, while also addressing pressing issues like food security and environmental resilience.
Labour's Economic Policies
Progressive Taxation and Wealth Redistribution
Labour’s economic strategy is grounded in the idea of a fairer redistribution of wealth, which it intends to achieve through a progressive taxation model. Recent announcements from Chancellor Rachel Reeves suggest the possibility of business tax increases to help fund public services. This raises concerns for multinational corporations about capital flight, particularly as the UK seeks to remain competitive in a post-Brexit landscape. While Labour hopes increased tax rates on the highest thresholds will attract sustainable, long-term investment, the balancing act between raising revenues and maintaining investor confidence remains critical.
Investment in Public Infrastructure and the Green Economy
Labour’s commitment to public investment is another cornerstone of its economic platform. The party has pledged significant investment in infrastructure, including transport, housing, and green energy. One of the flagship policies is the establishment of a National Wealth Fund, designed to finance projects that will stimulate regional development and address the UK's regional inequalities. To fund this, Labour plans to increase borrowing to invest in projects in long-term infrastructure, technology, and green industries, which the Government deems essential for the UK’s long-term economic stability.
Moreover, Labour’s concept for Great British Energy is a bold initiative, targeting net-zero carbon emissions by 2030 through massive investments in renewable energy infrastructure, electrification of transport, and energy-efficient retrofitting of homes. This ambitious shift contrasts with Conservative policies, which focused on incremental environmental change and industry self-regulation. Labour expects its commitment to green energy to attract international investors who prioritise Environmental, Social, and Governance (ESG) factors as it signals the UK as a leader in clean energy innovation. However, the pace and scale of the green transition should raise concerns about the costs to industries dependent on fossil fuels and the impact on consumers, particularly potential rises in energy prices during the transition period.
Workers' Rights and Employment
Labour’s emphasis on workers’ rights is central to its economic vision. Key policies include raising the minimum wage in line with the cost of living, banning zero-hour contracts, and strengthening trade unions. Labour’s approach to employment is sharply different from the Conservative model, which focused on flexibility in the labour market through deregulation, and minimal interference in contractual relationships between employers and employees. Labour’s proposals aim to ensure that workers benefit directly from economic growth, but there are concerns about how this might affect businesses, particularly small and medium enterprises (SMEs), which may struggle with higher wage demands and increased regulatory burdens. Labour’s defence is that fair wages and secure jobs are essential for a healthy economy and that higher consumer spending power would drive growth.
Economic Appeal to International Investors
From an international perspective, Labour's focus on domestic growth through targeted regulation for key sectors and a commitment to a green economy seeks to enhance the UK's global competitiveness. The newly proposed UK Industrial Strategy, 'Invest 2035,' highlights the country's core strengths — high-quality research, innovative firms, a strong regulatory framework, and a skilled workforce. These efforts, along with plans to reduce bureaucracy, align with global trends in renewable energy and ESG standards, making the UK attractive for investors focused on long-term growth.
However, Labour faces a balancing act. While signalling its pro-business stance, the government’s recent hints at potential tax increases, such as higher National Insurance for employers, may raise concerns for multinational corporations used to more liberal tax regimes. Labour must reconcile its desire to attract investment with the need for public revenue, and international investors remain cautious given uncertainties surrounding Brexit’s long-term impact on trade, as well as the party's commitment to both workers' rights and economic growth.
Concerns for international investors surfaced last week when Transport Secretary Louise Haigh publicly criticised P&O Ferries, just as a £1 billion investment decision regarding their London Gateway port operations looms. While the government is keen to attract foreign investment, internal divisions—such as ministers openly condemning key investors—raise questions about policy stability and could heighten the perception of regulatory and reputational risks for businesses considering long-term commitments in the UK.
Agenda for Foreign Policy
Overarching Themes
One hundred days into office, Starmer has begun working on blending pragmatism, renewed alliances, and a revitalised commitment to international engagement, with the aim to reposition the UK on the world stage, drawing on inspiration from allies far and near, and marking a new era in British diplomacy. Revisiting the UK’s China Policy, Indo-Pacific strategy, and relations with the EU are among his top priorities. Labour has urged the Security Council to convene over Sudan, reversed the Conservatives’ decision to halt UNRWA funding, and immediately scrapped their Rwanda Policy. Just days ago, it agreed to transfer sovereignty of the Chagos Islands to Mauritius. The party has pledged to secure new free trade agreements, spearhead the discussion on trade modernisation, and negotiate sector-specific deals that boost British service exports. The foreign policy agenda is poised to increase UK influence in major geopolitical challenges and holds the potential to steer global governance along new trajectories.
China Strategy
Despite promising a full review of its China policy within the first 100 days, this has yet to be published. This aimed to recalibrate the bilateral relationship through a three-pronged strategy: to challenge, cooperate, and compete, and marks a departure from the ‘Protect-Align-Engage’ strategy introduced under Sunak. It indicates a shift from cautious protectionism towards a more balanced and synergistic relationship. The move has been positively received and mutually reinforced, as evidenced by a recent exchange between Xi and Starmer.
Labour has already taken steps to implement a more measured strategy while demonstrating independence from allies pursuing more sweeping trade measures by choosing not to follow the EU, US and Canada in imposing tariffs on Chinese EVs. Wary of potential retaliatory tariffs, the decision will protect vulnerable British exports like whisky, pharmaceuticals and luxury cars, which enjoy strong market performance in China. Those in emerging technology, exempt from dual-use restrictions, can expect favourable conditions as the UK seeks to foster joint efforts and innovation in these cutting-edge arenas. This is especially the case for businesses in solar, as China continues to dominate the global solar market. It experienced an astonishing 167% growth in capacity during 2023 alone, and saw investments rising by 40% year-on-year to USD 890 billion, comparable to the GDP of Switzerland for that year.
Indo-Pacific Strategy
Labour has described the Indo-Pacific Strategy as ‘central’ to its foreign policy vision. This is reflected in the ascendency of regional linchpins Japan and India to the forefront of international policy priorities. As the region becomes keystone, South Korea, by extension, is likely to receive similar status as a strategic partner; drawing on momentum from the multiplex Downing Street Accord, signed under Sunak, and recent exchanges on security, green energy, and trade between President Yoon and Starmer in Labour’s first week. Ongoing disputes in the South China Sea will necessitate renewed attention to Southeast Asia.
The Philippines looks to secure strategic interests in defence and maritime security, while Singapore is keen to continue its Strategic Partnership with the UK, initiated in 2023, and to collaborate on advancing areas like AI, renewable energy, sustainability, and digital technologies. Malaysia is intent on growing economic ties through the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), a free trade bloc comprising countries like Japan, New Zealand and Chile. As the UK waits to officially join the CPTPP, with the agreement coming into force on 15 December 2024, it has begun exploring enhanced trade relationships with member countries. Amid these diverse interests, Lammy recently visited Vientiane and signed the inaugural joint statement between ASEAN leaders and the UK, securing commitments for the Green Fund Transition, valued at over GBP 40 million across a five-year period, and the ASEAN Power Grid. Pan-regional prospects abound for businesses with an interest in green infrastructure, AI and marine technology.
South Asia Strategy
Fresh relations with South Asia, primarily with India through a renewed India partnership, draw on progress from the Roadmap to 2030 and Enhanced Trade Partnership, each signed under Sunak and Johnson respectively. While Sunak placed importance on bringing together efforts in finance and healthcare, Starmer will add security and climate change to the agenda and continue initiatives in technology and education, with talk of a free trade deal on the table. Prioritising pragmatism with Modi has ensured that Russia has not become a geopolitical roadblock; the Foreign Secretary recently travelled to New Delhi to begin negotiations, and announced a new technology security deal on July 25th that will deepen collaboration in AI, semiconductors, and critical minerals, presenting manifold opportunities for businesses.
India is growing influence militarily in the Indo-Pacific, having deepened defence ties with Indonesia, Vietnam and Singapore to balance US-China competition, while advancing its interests in the blue economy and marine development. Following talks with his counterpart, Subrahmanyam Jaishankar, Lammy has confirmed that the UK and India will similarly amp up cooperation in this domain. The country is making significant strides in space affairs, acknowledged in the Roadmap to 2030, boasting over 400 space companies and a space economy projected to reach USD 44 billion in the next decade. Elsewhere, Labour has endorsed the new interim government of Bangladesh, while increased engagement with Pakistan is set to bolster regional integration and advance climate goals.
The Special Relationship
Relations with the US will remain central to British foreign policy, with strong ties in defence, intelligence, and trade. The UK will also drive collaboration in finance, healthcare, and life sciences. In line with this, Lammy has expressed full dedication to advancing AUKUS, with landmark gains already attained in relaxing export restrictions that will allow for expanded defence trade, and, separately, a new Memorandum of Understanding (MoU) on supply chain resilience signed between the three nations. Recent decisions under Labour, including the withdrawal of the UK’s objection to the International Criminal Court (ICC)’s arrest warrant for Binyamin Netanyahu, and suspension of 30 arms export licences to Israel on grounds of International Humanitarian Law, reflect a more stringent stance on International Law, and a sharp pivot from steadfast US Israel policy anticipated to remain under both Harris and Trump administrations.
Middle East Strategy
In the Middle East, Starmer’s focus will be on regional peace and security, pushing for an immediate ceasefire between Israel and Gaza, facilitating the release of hostages, and ensuring unimpeded aid to the Gaza Strip. Plans to further relations with Gulf states are also underway, from newly announced plans with Kuwait to deliver UNICEF aid to Yemen and Gaza, to greater investment with the UAE and bringing conflict mediation with Qatar to the fore. The Sultan of Oman met with Starmer in early August, while KSA Prince Faisal bin Farhan joined the Foreign Secretary to discuss joint defence, security and economic cooperation days later.
Relations with the EU
The party is also likely to face pushback from the EU in fishery policies, due to measures taken under Sunak to ban bottom trawling, prevent overfishing, and increase the number of Marine Protected Areas (MPAs) in British waters. Whilst beneficial and in line with the UN Global Ocean Treaty, on track to be ratified by the UK under Starmer, unilateral decisions were taken without EU input, going against co-management objectives. Nonetheless, the bloc is largely satisfied with the current Trade and Cooperation Agreement (TCA) and considers the upcoming 2026 review as more of an administrative formality, so Labour will be forced to calibrate ambition against Brussels’ Brexit fatigue.
It was to Germany that Lammy made his first trip as Foreign Secretary, and to the Republic of Ireland that he made his first phone call. The party is generally anticipated to be more Europe-leaning compared to the Conservatives and will seek to reconfigure ties with the continent. Labour pledges to negotiate a UK-EU security pact, and to renegotiate key aspects of the Brexit deal, focusing on the Trade and Cooperation Agreement (TCA) where it currently falls short. Energy, climate change and food security will remain top concerns, as will Ukraine.
Ukraine Strategy
The likelihood that the new government will waver on Ukraine is very low, despite mounting domestic fiscal strains. On X, the FCDO announced new sanctions against Russia, Belarus, and Iran, targeting Russia’s ‘shadow fleet’ of vessels and cargo ships tied to ballistic missiles used in the war with Ukraine, the Lukashenko government for its involvement, and select Iranian entities linked to the same missile supply. The sanctions set a clear benchmark on Labour policy for Kremlin facilitators. Labour will play a leading role in paving Ukraine’s path to NATO membership, and on visit to Lithuania, began efforts towards a Special Tribunal for the Crime of Aggression. It also pledges to work with allies to seize and repurpose frozen Russian state assets to aid the country.