Bulletin: US election, interest rates, net zero

US election

Donald Trump has been elected the 47th US president. The Republican party has won control of the Senate and, at the time of writing, is on course to keep their majority in the House of Representatives.

IGD opinion
A second Trump presidency is likely to have consequences far beyond the UK. With control of both houses - even if marginal - the Republicans would have a good chance of passing legislation.

Mr Trump has previously shown himself to be an advocate for anti-free-trade measures, especially tariffs.

Any new tariff measures are likely to be inflationary for US shoppers, with a high risk of triggering countermeasures by other countries - a “trade war”.

Global free trade has already been under pressure for some years and intensification would not support global recovery from the Covid shock.

Mr Trump has also shown himself to be highly focused on the Pacific region and on opposing China, rather than intervening in European affairs.

This may mean that European nations must shoulder more of the burden of their own defence and of protecting trade in other areas.

Interest rates

The Bank of England Monetary Policy Committee (MPC) has decided to lower interest rates from 5% to 4.75%. The MPC stated that CPI inflation is expected to increase to around 2.5% by the end of 2024 “as weaknesses in energy prices fall out of the annual comparison.”

The Governor of the Bank of England stated that it was "likely that interest rates will continue to fall gradually from here. We need to make sure inflation stays close to target, so we can't cut interest rates too quickly or by too much."

IGD opinion
Despite this welcome cut to interest rates, the Bank of England will be mindful of the projected impact of the Budget on inflation. The Office for Budget Responsibility (OBR) forecast that the budget will add 0.5% to Consumer Price Index in 2025. This may change the future path of interest rates.

Net zero report

A new report, A Net Zero Transition Plan for the UK’s Food System, commissioned by IGD and developed by consultants EY and global environmental NGO WRAP, highlights how businesses can work together and with government, and how supply chain disruptions, risk and cost can be managed. The report:

• Provides an independent, evidence-based view for how the UK food system in its entirety, can reduce greenhouse gas emissions in line with a 1.5 degree SBTi outcome and meet the UK’s legally binding national target

• Provides a framework for the food sector to achieve 70% emissions reductions in agriculture and to fully decarbonise heat, electricity and transport

• Outlines 19 steps that the government can take to enable this, with a particular focus on strengthening policy for agriculture and energy

• Proposes immediate action by industry and government to support the domestic farming transition and on a set of standards for food imports

• Shows that 2030 emissions reduction targets are very challenging but achievable

Download the report here.

Obesity blueprint plan

Nesta has produced a toolkit which compares the effectiveness of a wide range of policies focused on reducing obesity. Included in the toolkit are different policy packages designed to illustrate which policies work well together, their impact on obesity levels and total cost.

The recommended ‘prevention and treatment’ package to help the government halve obesity in the UK by 2030 includes:

• Mandate all large food and drink businesses to publish nutritional and sales information about what they sell

• Restrict delivery platforms from advertising HFSS food and drink products with online product placement adverts, such as pop-ups, on their web pages or homepages

• Require front of pack labelling, similar to nutri-score, on food and drink retail packaging

• Incentivise large retailers to meet targets for selling healthier food using the Nutrient Profile Model (NPM) score to ≥ 69 across their entire food product portfolio

• Extend access to weight-loss drugs (Liraglutide and Semaglutide) providing an extra £500 million of ring-fenced funding per year

• Ban price promotions on discretionary food for large out-of-home businesses (restaurants, coffee shops, fast food outlets)

• Further restrict HFSS products advertising on TV, online and public transport

Smoking restrictions

The government has announced that they plan to extend the indoor smoking ban to certain outdoor settings with children’s playgrounds and outside schools and hospitals all being considered, subject to consultation.

This will be part of a wider re-introduced Tobacco and Vapes Bill which also bans vape advertising and sponsorship, as well as powers to restrict the flavours, display and packaging of all types of vapes, as well as other nicotine products.

The government decided against banning smoking in the gardens of pubs and restaurants. The Health Secretary said he didn’t want to cause further harm to the hospitality industry, adding that "people don't want to see their high streets going down the pan".

Bird flu

Avian influenza (Bird Flu) has been confirmed in a commercial property at a premises near Hornsea, East Riding of Yorkshire. A mass cull of all infected poultry will take place.