August 17, 2016

UK aid should help Britain trade

UK aid should help Britain trade

Chris Everett argues the international development budget should be used to develop a series of proposals to support emerging markets trade with the UK.

Liam Fox’s trade brief is perhaps the most exciting of any current minister. Tasked with securing the faith, investment, and openness of markets from America to Australia, the good doctor will shape both British economic and foreign policy for years to come.

The majority of Fox’s remit will be to secure free trade agreements beyond the WTO’s “Most Favoured Nation” rule, and to plant the seed of British influence within trading blocs such as ASEAN and Mercosur. Yet with such a variety of states and regional groups to cut deals with, Fox’s options need to take on a more diverse form than simply reciprocal trade agreements.

One example of going beyond free trade is combining elements of Priti Patel’s considerable foreign aid budget (~£12.2 billion) with a policy to bolster markets for British goods and, more particularly, services. UK law restricts foreign aid only to be used for the purpose of reducing poverty – though thankfully the Department of International Development keeps this definition strikingly broad. Causes of poverty (such as lack of education, underdeveloped infrastructure, and appalling medical conditions) are also within the remit of the foreign aid budget.

It would not be an illogical leap for Fox and his supporters to argue that a lack of free trade – or worst, a glut of regulation – can also cause poverty and harm development. Certainly organisations such as the IMF and WTO would argue this was the cause.

With this argument in mind, Fox should develop a series of proposals to support emerging markets to develop and trade with the UK. In particular Fox should look at tackling the “credit gap” for smaller companies within these markets. Closing this gap – caused by companies in poorer countries unable to access significant credit – means more business for Britain at each stage. It means more lending and investment for British banks, trusts, and funds; more companies able to afford Britain’s hi-tech goods; more diverse suppliers for British retailers to choose from.

Take Africa. Many of the poorer countries on the continent lack sufficient credit checking bureaus, which has an effect on slowing local private investment. I propose that Fox establish a pan-African credit risk assessor, designed for use by British and local banks, using DfID’s considerable resources to support a more enhanced, uniform system of checks that can also incorporate relationship banking where credit histories are totally unavailable (a common problem for SME owners in Africa’s less developed states).

This approach lacks the unwelcome market intervention of a government run bank (which could further harm Africa’s nascent financial sector) while providing an information hub for British and local businesses to help them with their investment decisions. In the spirit of Brexit, it will even allow smaller firms to make international lending decisions without costly risk consultancies, while ensuring a degree of uniform (and ideally limited) financial regulation across the continent.

Fox and Patel, two veteran right-wing free marketers, should grasp the opportunity in front of them to simultaneously generate trade and alleviate poverty, all while steering clear of costly investment decisions. In post-Brexit British development policy, there is no reason aid cannot equal trade.

5.00 avg. rating (96% score) - 3 votes
Chris Everett
Chris Everett is a reporter for Guido Fawkes, specialising in data journalism, politics, and foreign affairs. He has an MSc in International Public Policy from UCL, and has previously been involved in both Conservative and Liberal Democrat politics. In his spare time he enjoys reading Middle English, golf, and watching cult cinema.
  • Shadow Warrior

    Hammond is continuity Brown. He is a hand-wringing lefty looking for clever wheezes to raise more tax in ways that people don’t immediately notice.

  • captainslugwash

    I predict the Budget will attempt to show the Left how caring the Tories are, and it will be funded by screwing over the working man.
    If Corp Tax comes down, I bet Divi tax will be going up.
    I would love to be wrong.

  • skynine

    We really need to look at tax credits, in particular in work tax credits that encourage people to work part time to preserve the benefits. 45% of women work part time and I would hazard a guess that tax credits are the main cause. This leads to low pay, low skill work in supermarkets and the retail sector including coffee shops. The government needs to get back to the employer paying people to do a job for economic reasons rather than to get onto the tax credit ladder. Like all government benefits it distorts the market and diverts government expenditure into non productive areas.
    The refrain that the government has cut expenditure is not true, it increases every year as more and more goes into welfare.

  • MrVeryAngry

    fat chance

  • MrSauce

    So, when wouldn’t we want a ‘budget for growth’?

  • Rob

    I note that the UK Government has just slapped on a 25% tax charge for anyone moving abroad and wishing to move out their private pension from the UK.

  • SonofBoudica

    The Remoaners will do their utmost to sabotage the Government’s negotiating position. They do not want a successful outcome; they want a failure. They want to be able to scream “Told you so!” from the rooftops.

  • EnglandLaments

    Thank goodness for Andrew Neil, the one media hack who scares the pants off the established politicians. He was spot on with Heidi Allen!

  • joshuafalken

    I had a very long, hard, studied and considered look at the hope, care and aspirations of all Europeans, before I voted to get the UK out of the toxic grasp of Brussels.

    The European Union and it’s charge of “ever closer union” has borrowed and spent its way to oblivion, whilst enslaving the working and middle classes in debt.

    The central control mantra of the unaccountable Brussels ruling elite, delivered through a mixture of socialism, globalism and corporatism is entirely responsible for the populist revolt by the millions of “Just About Managings” across Europe.

    We must remember the ultimate goal of socialists, globalists and corporatists is control, not prosperity. see—-not-prosperity.

    Social equality and economic growth always fail under central control and fighting against the Brussels doctrine on behalf of all Europeans is why I voted for Brexit.

    Britain has a long history of helping Europeans depose tyrants and Brussels is just the latest incarnation.

    Britain is the most racially advanced and accepting society on the planet. We welcome those in need and those that can help us with open arms and a smile; that will not change.

    We are also one of the most innovative, talented and open societies in the world, which why everyone wants to live here. However, we cannot fit everyone in, so we have to have clear, balanced and fair immigration policy which is where the arguments start between the monetarists and humanists will never be reconciled.

    I thought long and hard before coming to the conclusion that leaving the EU was in the best interest of all Europeans, as Brussels is toxic and cannot be reformed from within.

    Also, I find it insulting that people who voted Remain have insufficient faith in British ingenuity, compassion and skill to get a good deal for us and see the Europe that we love get a better deal from Brussels and the reform that European people deserve. and

    The politics of left verses right are dead because neither have delivered the promised economic growth and social mobility for anyone, but themselves. The populists are not selfish per-se, they just want to take back control of their own destiny that left/right politicians have freely given away and/or exploited for their own ends. In my constituency, the local residents group are taking over the councils as politicians ignore voters, so Westminster should beware of the well-organised, local resident independents at the next election. This is a peoples revolution which should be shouted from the rooftops, but liberals remained deafened by the socialist, globalist and corporatist “vested interests” that have spectacularly failed us and are obediently crying foul and fake.

    There will be an initial unpalatable inflationary cost to fighting globalism and rolling back central control that few appear to have factored in, but dismantling failed left/right vested interests should eventually free libertarian socially-conservative capitalism from the shackles of TBTF corporatism to feed economic growth and social mobility.

  • agdpa

    The EU usually makes the wrong decision – on immigration, on freedom of movement, on the euro, on the Ukraine, etc. etc. Little hope it will get Brexit right.

  • brownowl

    Eh? Reference please!

  • Neil2

    Sod caring. Screw the spongers and breeders. Kill HS2. Stop all “green” subsidies. Slash “foreign aid” and walk away from the EUSSR with immediate effect.

  • Rob
  • John C

    What a confused article. It conflates surveillance by the security services with poor defences against fraud.

  • John C

    Err, it’s the UK that’s leaving the EU, not vice versa.

  • John C

    Me, now. ‘Growth’ is a manic obsession.

  • La Face Nord

    Mr Redwood – are you aware of the Biased BBC website? It’s been exposing their agenda for a long time, but I imagine you’ve been well aware of the BBC’s agenda for quite some time…

  • Contact Rvtech

    The post is great

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