Aurelia Butler

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For Stonemaier Games, it will be a roll of the dice whether the US-China trade truce can save Christmas.President Donald Trump’s deal with Beijing last week came just in time for the tabletop game publisher based in St Louis, Missouri, to plan orders for year’s end with its Shenzhen-based supplier at reduced tariff rates.But the holiday production run will still be “much more modest than usual”, says Jamey Stegmaier, head of the privately owned company that produces strategy games such as Wingspan. “There’s too much uncertainty.”The company has filed a lawsuit with 10 other small businesses to challenge Trump’s authority to impose tariffs. “There was no due process, just an agent of chaos raising tariffs from 20 per cent to 145 per cent in the span of one week,” Stegmaier adds. On Wall Street, the memory of “liberation day” is fast receding, with the benchmark S&P 500 soaring back to near-record levels this year having recorded heavy losses after the disorder of April 2. But for Main Street, the pain is set to endure, with the president’s haphazard approach to overhauling the global trading system harming confidence in an economy it was designed to help. While April’s consumer price index rose less than expected, most economists believe the cost of goods will soon increase. Diane Swonk, chief economist at KPMG US, says last month’s reading could be “the last subdued inflation print for a while”.And the trade tensions are not over yet. Another cliff edge in the president’s trade policy — a fresh 90-day deadline for talks with China after which tariffs could be pushed up again — has added to a climate of uncertainty. “The market has overbought the deal,” says Steve Hanke, a Johns Hopkins University economist who worked as an adviser to Ronald Reagan. “Trump still thinks he’s running Trump Enterprises, not the US economy.” Some content could not load. Check your internet connection or browser settings.While the détente has cut the chances of a serious recession, the US president’s handling of the trade war could continue to cast a shadow for the rest of 2025, unwinding years of stellar growth and raising the prospect of a bout of stagflation that would leave policymakers at the Federal Reserve in a tough position.Concerns have been intensified by the decision of Moody’s to strip the US of its triple A credit rating, as it warned federal deficits will widen to almost 9 per cent of GDP by 2035, up from 6.4 per cent last year.The anxiety extends to every economy tied to the US. Valdis Dombrovskis, the EU’s economics commissioner, tells the FT the global trade war has had “quite a sizeable negative impact” on its own forecasts, which revealed a sharp downgrade to the global growth outlook. It “creates negative confidence effects which affect first and foremost investment decisions”. The US-China deal “undid a decent amount of the damage”, says Jason Furman, economist at Harvard University who worked in Barack Obama’s Council of Economic Advisers. “But we’re still going to get a bunch of inflation, we’re still going to get slower growth. And we still don’t know how this play is going to end.”The relief among global investors following US Treasury secretary Scott Bessent’s agreement with Chinese vice-premier He Lifeng in Geneva a week ago is understandable. At its height, the chaos pushed the effective US tariff rate at close to 26.8 per cent — the highest since 1903, according to the Yale Budget Lab, and ushered in a month-long freeze in US-China trade. A collapse in transpacific shipping volumes led retailers to warn of empty shelves — and the president to tell US children to content themselves with “two dolls instead of 30” this festive season.During the first week of May, the Port of Los Angeles saw a 30 per cent decline in imports as fears over the Trump administration’s tariff policies chilled trade. Gene Seroka, the port’s executive director, forecast higher costs for US consumers for coffee, avocados, and bananas.US companies responded by throttling production. Church & Dwight, makers of Arm & Hammer baking soda and Trojan condoms, said it would sell or shut down its Flawless hair remover, Spinbrush electric toothbrush and Waterpik showerhead businesses to mitigate a “significant portion” of its exposure to tariffs, which it estimated at $190mn over the next 12 months. Some content could not load. Check your internet connection or browser settings.Even longtime supporters of Trump’s pro-US manufacturing policies were rattled. “On January 1, I felt good. Trump had a pro-business, pro-manufacturing plan and I was positive,” says Harry Moser, president of the Reshoring Initiative, an organisation that supports US companies’ efforts to bring production back home. “On April 2, I felt he had complicated the issue and gone way too high on most of the countries, including our allies.” At meetings of finance ministers in Washington last month, Bessent began attempts to steer the US administration towards a détente. The Treasury secretary tried to reassure his counterparts the period of peak instability had passed, participants said. That culminated in the agreement that averted a hard decoupling of the Chinese and US economies as they slashed respective tariffs by 115 percentage points for 90 days. Hopes for trade pacts with other countries were buoyed by an earlier US-UK accord. Yet even as the dust settles, companies and investors are still warning of enduring damage. The average US effective tariff rate remains at 17.8 per cent, according to the Yale Budget Lab, more than seven times the 2.5 per cent level Trump inherited going into his second term. On January 1, I felt good . . . On April 2, I felt [Trump] had complicated the issue and gone way too high on most of the countriesThe US-China tariffs “are still much higher than they were a few months ago, as are the tariffs from many other countries”, says Karen Dynan, an economist at the Peterson Institute and a former chief economist in the US Treasury under Obama. “So you still have tariffs putting a meaningful amount of strain on consumers and businesses.” Despite few expecting a return of levies as high as 145 per cent, the president’s barriers on Chinese products still look set to lead to higher prices at US retailers.Many helped stave off some price increases by frontloading imports ahead of April 2, but that advantage is expected to dissipate quickly. Walmart, the largest retailer with more than $550bn in US sales, warned of more expensive back-to-school supplies and holiday gifts later this year. “Even at the reduced levels, the higher tariffs will result in higher prices,” said chief executive Doug McMillon in an earnings call. (Responding in a social media post, Trump urged Walmart to “EAT THE TARIFFS and not charge valued customers ANYTHING”.)The Yale Budget Lab says the average US family would pay $2,800 more for the same basket of products purchased last year, should tariffs remain at their current level, with lower-income homes more exposed. Chinese products being sold in the US have already seen marked increases in retail prices, according to analysis of high-frequency data from PriceStats by Alberto Cavallo of Harvard Business School.But it is not only tariffs that are pushing costs up. The scrapping on May 2 of the so-called “de minimis” exemption, which meant importers could bring in products from China worth less than $800, not only free of duties but with next to no paperwork, is set to further add to prices and limit choice. “What we ended up doing with de minimis is we turned supply chains into fast food — you expect it fast and cheap. As a consumer, we just get on the internet and say, ‘I want to order this shirt, I want to pay the lowest price possible, and I want it tomorrow night’,” says Bernie Hart, vice-president of customs at global logistics firm Flexport. “We’re slowly turning that off.” The change is already weighing on corporate thinking. AlphaSense data compiled for the Financial Times showed the number of analysts’ calls mentioning de minimis shot up from five for the whole 2024 to 28 times over the past 30 days alone. Some content could not load. Check your internet connection or browser settings.After the Geneva talks, the tariff rate was also lowered on goods worth less than $800, but importers still face a stack of paperwork that for many small businesses will prove nigh on impossible to fulfil. “The level of granularity that is expected is quite high,” says Brie Carere, executive vice-president and chief customer officer for FedEx to analysts last week. “So there’s not just an immediate financial barrier. There is an audit, a compliance barrier.” Even so, many US companies believe the scrapping of the de minimis exemption will help them in the long run by hurting Chinese ecommerce rivals such as Temu and Shein more than themselves. “Duty-free ultrafast fashion that has flooded the US market over the past few years undoubtedly put some pressure on our price competitiveness,” said James Reinhart, chief executive of online thrift store ThredUp on its latest analysts’ call. “We believe the closure of the de minimis exemption is likely to cause higher prices for these goods and to reduce production volumes.” Government officials say the US economy — the standout global performer since the pandemic — remains strong. In recent weeks, Bessent has claimed Trump’s plans to make his 2017 tax cuts permanent and deregulate housing, energy and finance will, together with tariffs, usher in a “golden age”. We’re at a transformational moment in time. It’s not all worked out . . . but it looks brighter and brighter every single dayArthur Laffer, an economist best known for the eponymous “Laffer curve” which holds that lowering tax rates can increase the revenue raised, says extending the 2017 cuts, which Congress is expected to do over the course of the summer, would produce “spectacularly wonderful” results for the US economy.Others disagree, saying the measures raise the prospect of a fiscal crisis. Moody’s said the extension would add more than $4tn to US deficits over the next decade, citing it as part of the reason for downgrading its credit rating.Laffer — an adviser to several Republican US presidents, including Richard Nixon, Reagan and Trump — believes the administration will eventually lower tariffs to levels that boost free trade. “There’s a good chance that we’re at a transformational moment in time,” Laffer tells the FT. “It’s not all worked out. We have a long way to go. But it looks brighter and brighter every single day from my perspective.” Yet while the hard data show little signs of damage from tariffs so far, surveys of business and consumer confidence point to a dour mood. The University of Michigan’s closely watched sentiment measure hit its second-lowest level on record in May and showed even Republicans were souring on Trump’s economic policies. Misty Skolnick, co-owner of Uncle Jerry’s Pretzels, a small, family-owned bakery operating out of Pennsylvania, says sales are already down as the chaos of April 2 creates a “ripple effect” throughout the economy. “People are unsure of what’s happening,” she says. “Spending money on an artisanal pretzel isn’t necessarily at the top of their mind at this time.” Some content could not load. Check your internet connection or browser settings.Many economists still predict anaemic growth.“The impact on consumer and business sentiment has been very negative, [hitting] capex and spending decisions in the coming months,” says Nikolay Markov, an economist at Pictet Asset Management, who is still forecasting a 1.1 per cent expansion in 2025, less than half last year’s level of 2.8 per cent. “There’s an upside but not to the extent that we need to upgrade now.” Whether or not higher prices become baked into businesses’ and households’ calculations of future inflation will be crucial in determining if the Fed will feel able to cut interest rates from their current level of between 4.25 to 4.5 per cent. The Fed’s vice-chair, Philip Jefferson, said on May 14 that he had “adjusted down . . . expectations for economic growth this year” in the wake of the tariffs, which he predicted would fuel price growth if sustained.How much of the tariff-based price shock will stick will also depend on whether companies feel that their customers will be willing to stomach higher prices. The April CPI release showed signs of a fall in so-called discretionary spending — an indication that Trump’s policies might already be weighing on demand. Airlines and hotel room rates fell outright, while the cost of sporting events slumped by more than 12 per cent month on month. Julie Drews, co-owner of beer specialists The Brew Shop, in Arlington, a prosperous suburb close to Washington, believes it could be difficult to pass on additional costs at a time when their customers have already faced wave after wave of inflation following the pandemic. “I don’t want to raise prices again,” says Drews. “I can feel that people are still feeling sensitive.” Vance Sine, a manager at retailer California Electric Supply, thinks his suppliers might leave him with little choice. “It almost seems like a cash grab — since everyone is increasing the prices, they jump in,” says Sine, whose business is in the city of Chula Vista, near the Mexican border. For now, the sense of uncertainty persists. “There will be relief over the easing of tariffs, but [importers] cannot carry on as if nothing has happened,” says Peter Sand, of shipping data firm Xeneta. “If we have learnt anything in the past few months, it is to expect the unexpected.” Data visualisation by Alan Smith More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Poland’s stock market has emerged as one of the world’s top-performing bourses this year, helped by the country’s relatively insulated position from the global trade war and an expected boost from neighbouring Germany’s fiscal “bazooka”.The benchmark WIG Poland index has climbed 28.6 per cent year to date — despite slipping on Monday after an unexpectedly close first-round presidential vote — placing it ahead of other strongly performing markets such as Chile and Greece. In contrast, the US’s benchmark S&P 500 is up about just 1 per cent.The rally has been driven by a “significant inflow of foreign capital”, according to Tomasz Bardziłowski, chief executive of the Warsaw Stock Exchange, due to Poland’s healthy economy as well as the equity market’s rising dividend payouts and comparatively low valuations. Polish stocks trade at a 15 per cent price-to-earnings discount to the MSCI Emerging Markets index.The market has also proved popular due to the fact that about three-quarters of Poland’s commerce is conducted within the EU. That has made it less vulnerable than others to the trade war launched by US President Donald Trump and a more attractive bet for some investors.“The market is small enough for foreign capital movements to have a visible impact,” said Piotr Arak, chief economist at Poland’s VeloBank. “Trump’s trade war also diverted capital flows from the US to emerging markets like Poland and parts of Latin America less affected by tariffs.” The WIG index is about $135bn in size, compared with $2.9tn for the UK’s FTSE 100 and more than $50tn for the S&P.Poland, which cut interest rates this month for the first time since Prime Minister Donald Tusk returned to power in 2023, is also benefiting from a huge increase in planned spending by neighbouring Germany, its biggest trading partner.Germany’s struggling economy sparked jitters in Warsaw last year. But those concerns had given way to hopes for a positive knock-on effect for Poland from the “bazooka fiscal stimulus” package drafted by the new government in Berlin, said Kamil Stolarski, head of equity market research at Santander Poland. The Polish economy grew 3.8 per cent year on year in the first quarter of 2025, the second-fastest rate in the EU after Ireland and well above the bloc’s average growth of 1.4 per cent, according to Eurostat data. Meanwhile, analysts forecast that earnings per share for Warsaw-listed companies will grow on average by about 10 per cent in 2025. Financial services companies, which account for two-fifths of the WIG, are raising dividends after posting bumper earnings. Polish banks had combined profits of 42bn zlotys ($11bn) in 2024, up from 27.6bn the previous year.Poland should “remain resilient during these turbulent times, thanks to its diversified economy, a large domestic market and limited direct trade exposure to the US”, said Beata Javorcik, chief economist at the European Bank for Reconstruction and Development.Poland will have the strongest economy this year among the EU’s formerly Communist countries, with annual growth of 3.3 per cent, according to the EBRD’s latest forecasts. Domestic politics have also been encouraging investors. The return of Tusk and his pro-EU coalition has unlocked billions of euros in previously frozen EU funds. The government has begun deploying this money — largely on infrastructure and energy transition projects — as it seeks to move away from the country’s reliance on coal.Shares in state-controlled energy groups have surged, with oil company Orlen up 53 per cent and utility PGE rising 56 per cent since the start of the year.The WIG lost 0.8 per cent on Monday, as attention now turns to the presidential run-off election on June 1. Rafał Trzaskowski, who is Tusk’s candidate, is facing an unexpectedly tight contest against Karol Nawrocki of the opposition Law and Justice (PiS) party, after Trzaskowski only narrowly won the first round on Sunday. A Trzaskowski victory in the run-off would enable Tusk’s government to proceed with long-delayed reforms previously blocked by outgoing president Andrzej Duda, a PiS appointee. But a Trzaskowski defeat is seen as likely to destabilise Tusk’s coalition and could even force early parliamentary elections. “A victory of the candidate of Tusk’s party would be supportive for investors’ sentiment towards Polish assets, while a defeat could provoke new concerns about Poland remaining on the reform path,” said Piotr Bujak, chief economist at PKO BP, Poland’s largest bank.Both presidential contenders have placed national security at the heart of their campaigns, echoing Tusk’s November warning about the “serious and real” risk of global war. Yet investors have recently focused instead on Trump’s diplomatic efforts to negotiate a truce between Russia and Ukraine. That could position Poland as a strategic hub for Ukraine’s eventual reconstruction.“I think that one key reason for the market rise is that investors are really betting on peace in Ukraine,” said Andrzej Kubisiak, deputy director of the Polish Economic Institute, a think-tank.“Poland’s strong economic showing in the EU is boosting investor confidence, though the outcome of peace talks still poses a risk to further gains on the Warsaw exchange.” More

.css-13hw3ep{margin-bottom:var(–o3-spacing-s);}.css-eh7lb7{margin:0;}Join FT EditOnly .css-79fz17{-webkit-text-decoration:none;text-decoration:none;}$4.99 per month.css-1h69zf4{margin:0;white-space:pre-wrap;font-family:var(–o3-type-body-base-font-family);font-weight:var(–o3-type-body-base-font-weight);font-size:var(–o3-type-body-base-font-size);line-height:var(–o3-type-body-base-line-height);color:var(–o3-color-use-case-support-inverse-text);}Access to eight surprising articles a day, hand-picked by FT editors. For seamless reading, access content via the FT Edit page on FT.com and receive the FT Edit newsletter. More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldPresident Donald Trump’s “big, beautiful” tax bill risks sharply increasing the US public debt, sparking alarm among investors and fuelling questions over how long the world will finance Washington’s largesse.US long-term borrowing costs rose at the start of this week, after a congressional committee on Sunday advanced a budget bill that is estimated to add trillions of dollars to the federal deficit over the next decade by extending tax cuts. The bill progressed after Moody’s on Friday stripped the US of its pristine triple-A credit rating. The bill and credit downgrade have added to anxiety over the sustainability of US public finances at a time when many investors and analysts say the debt and deficit are at uncomfortably high levels.“It’s like being on a boat heading for the rocks and having those running the ship arguing over which way to turn,” Ray Dalio, billionaire founder of hedge fund Bridgewater Associates, told the Financial Times. “I don’t care whether they turn left or right as much as I care that they turn to get the ship back on course.” The proposed legislation, which Trump has repeatedly dubbed as “The Big, Beautiful Bill”, would extend sweeping tax cuts passed in 2017 during the president’s first term.It would also make big reductions to the Medicaid insurance scheme for low-income individuals and to a food aid programme. Hardline Republicans are pushing for greater spending cuts.Karoline Leavitt, White House press secretary, on Monday said the bill “does not add to the deficit”, echoing other Trump administration officials who have suggested the tax cuts would accelerate economic growth.But, the non-partisan Committee for a Responsible Federal Budget estimates the legislation would increase the public debt by at least $3.3tn through to the end of 2034. It would also increase the debt-to-GDP ratio from 100 per cent today to a record 125 per cent, the group said. That would exceed the rise to 117 per cent projected over that period under current law.Meanwhile, annual deficits would rise to 6.9 per cent of GDP from about 6.4 per cent in 2024.The surge in public debt would need to be financed by investors, with the Treasury department accelerating its sales of bonds. However, there are signs that debt investors will insist on higher yields to buy the debt, increasing borrowing costs.The 30-year Treasury yield on Monday rose to a peak of 5.04 per cent, its highest level since 2023 after the House Budget Committee advanced the legislation and on the heels of Friday’s Moody’s rating cut.“We’re at an inflection point in the Treasury market where in order for Treasuries to stay at these current levels, we need some good news on the deficit, soon,” said Tim Magnusson, chief investment officer at Garda Capital Partners. “The bond market is going to be the disciplinarian if there needs to be one.”Edward Yardeni, president of Yardeni Research, reprised a term he coined in the 1980s to describe a market backlash to fiscal looseness: “The bond vigilantes have saddled up, they are ready to make their move,” he said.Dalio said the US needed to rapidly cut its deficit to 3 per cent of GDP by some mix of reducing spending, raising revenues and lowering real borrowing costs.Bill Campbell, portfolio manager at investment group DoubleLine, noted that it was “underweight” 20- and 30-year Treasuries. “It doesn’t look like there is a serious effort to rein the debt in,” he said.The US has long been able to run big deficits compared with other countries because of the vast global appetite for Treasuries, as the world’s de facto reserve asset, and the dollar.This has given the US significant flexibility in its public finances, in the view of rating agencies. But the latest challenge comes at a time when fiscal worries and angst over Trump’s tariffs make investors more concerned about their exposure to dollar assets.“The key problem is that the market has over the past two months structurally reassessed its willingness to fund US twin deficits,” said Deutsche Bank’s George Saravelos. The combination of “diminished appetite to buy US assets and the rigidity of a US fiscal process that locks in very high deficits is what is making the market very nervous”, he said.Additional reporting by Steff Chávez More

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Show video infoLondon and Brussels have agreed a post-Brexit reset of relations that Prime Minister Sir Keir Starmer claimed would be worth £9bn to the UK, but he faced immediate claims he had “surrendered” by agreeing to keep British fishing grounds open to EU boats for 12 more years.The UK concession on fishing opened the way for a wide-ranging deal including a security and defence pact and the promised removal of much red tape for British farm exports and energy trading with the EU.The agreement, described by European Commission president Ursula von der Leyen as “historic”, was unveiled at a London summit on Monday, the first between the two sides since the UK left the EU in 2020.Britain and the EU are seeking to deepen their ties five years after Brexit, as Donald Trump’s US presidency strains transatlantic relations over issues including trade tariffs and Russia’s full-scale invasion of Ukraine.Speaking after the agreement was unveiled, UK chancellor Rachel Reeves said she hoped it would lead to further EU deals to smooth trade.Referring to Monday’s agreement, she added: “It’s significant but there are things I think we could do to make trade easier.” She was disappointed the deal did not include plans to help British musicians to tour in Europe.Britain had previously proposed an extension of EU access to its fishing grounds of only four to five years, but Starmer’s Labour government agreed to a longer-term deal in return for open-ended provisions to ease UK food products’ entry into the bloc. Current access arrangements for EU fishermen to UK waters were due to expire in 2026.Von der Leyen said the agreement marked a “new chapter” in the EU’s relationship with the UK, while Starmer hailed it as a “common sense, practical” solution that moved on from the “stale old debates” about Brexit.Show video infoBut Conservative leader Kemi Badenoch denounced the deal, saying the government had “surrendered” on fisheries and the fact that Starmer had agreed to accept Brussels rules on food standards to facilitate easier trade.Reform UK leader Nigel Farage wrote in the Daily Express: “This isn’t Starmer’s first time bending over backwards to appease EU interests. His betrayal of British jobs and national priorities has been evident since the day he took office.”Starmer said that, together with a plan to link the UK and EU’s carbon emissions trading systems, the streamlined food exports rules — delivered through a proposed veterinary agreement — would bring £9bn of economic benefits to Britain.The two sides in talks at Lancaster House on Monday More

The EU and UK have announced a “reset” of their relationship some four years after the original post-Brexit Trade and Cooperation Agreement between the two sides came into force. The three-part deal includes commitments to work together on a new security and defence partnership and measures to improve trade in agrifoods and electricity. Overall economic impactSir Keir Starmer said the reset deal would boost the economy by £9bn a year by 2040, but analysts said this would only recoup a tiny fraction of the costs of Brexit.The Office for Budget Responsibility continues to forecast that Brexit will have a 4 per cent long-run hit to GDP, and will shrink UK imports and exports by 15 per cent. The government estimated the GDP uplift from the reset deal at 0.3 per cent in 2040 — an increase that Paul Dales, UK economist at Capital Economics, said was not a “game-changer” for the economy.He added the deal was only “chipping away” at the costs of leaving the EU single market. “You are not reversing Brexit in terms of the economic changes.”Benefits have been limited by government’s self-imposed red lines that prevent the UK from rejoining the single market or a customs union, added Andrew Goodwin of Oxford Economics. Others have been more optimistic. Research group Frontier Economics suggested “deep” regulatory alignment on goods trade could increase GDP by 1-1.5 per cent — though such an expansive realignment appears a long way off.Easing food and plant exportsA veterinary agreement between the two sides — the most significant element of the deal — will reduce the need for costly checks and certificates on animal and plant products, reducing red tape for exporters and lowering prices for consumers.Food and drink exports to the EU have fallen by more than a third since 2019 as businesses struggled to meet the bloc’s requirements, according to the Food and Drink Federation lobby group However, an Aston University study estimated that UK agrifood exports to the EU could be boosted by more than 20 per cent as a result of a high-alignment veterinary agreement.UK producers and retailers that continued to export to the EU complained that conforming to the post-Brexit rules added thousands of pounds in costs to each load they shipped.Supermarkets hope that a deal can be completed early next year, according to one retail executive, allowing them to shut down post-Brexit trade compliance departments that cost millions of pounds a year. The UK will need to align with the EU’s rules on animal and plant health, prompting opposition parties to accuse Starmer’s Labour government of once again making the UK a “rule taker” from Brussels.But Peter Hardwick, trade policy adviser at the British Meat Processors Association, said this was a “common misunderstanding” because the UK already has to abide by EU standards to export to the bloc. Some content could not load. Check your internet connection or browser settings.Concessions on fishingThe chief concession has seen the UK extend EU fishing access to British waters for 12 years, a decision the Scottish Fishermen’s Federation labelled as “disastrous”.The deal cements the existing agreement, which has seen EU catches in UK waters drop a quarter in five years. UK negotiators initially offered access for only four years, but agreed to 12 years after late-night talks to win the larger economic prize of the veterinary agreement.UK food and drink exports to the EU were £14bn in 2024. In contrast, fishing accounted for just 0.04 per cent of economic output. The UK is even a net importer of fish, its fleet having almost halved over the past 30 years. Starmer argued that the concession was worth it to secure the vet deal that would allow UK salmon and shellfish producers to export more easily to the EU. The UK exported around £1.2bn in fish and shellfish to the EU in 2023, according to UK government statistics — a figure that industry body Salmon Scotland said would be boosted by the deal. Relinking to the EU energy market In a concession to London, Brussels committed to work towards reintegrating the UK into the EU’s internal energy market, enabling the smooth trading of electricity between member states.Requiring separate power auctions after Brexit has cost the UK about £400mn. Having a single internal market would cut costs and boost the investment case for renewable energy projects in the North Sea. Consultancy Baringa estimated that total savings for consumers from an integrated market could reach €44bn a year. In a surprise to the industry, the two sides agreed to work out “in detail the necessary parameters” for the UK to rejoin. “It’s a real coup,” said Adam Berman, deputy director of the industry lobby group Energy UK, that would give an “immediate sense that the UK and EU are willing to take barriers away from [renewable energy] projects”.There are also talks on linking the UK and EU’s emissions trading systems, though it is unclear whether these will be completed in time for the UK to avoid a new carbon border tax called CBAM that comes into force next January. Security and defence partnership A new security and defence partnership — which was not part of the original post-Brexit deal — is another step forward in rebuilding the EU-UK relationship.The wide-ranging deal is similar to those the EU has signed with six other countries including Japan, South Korea, and North Macedonia, and opens the door to restoring the institutional co-operation that was ruptured by Brexit.The UK foreign secretary and EU high representative for foreign affairs will have twice-yearly meetings and regular invites to top-level EU meetings, including quarterly European Council summits.The document sets out a long list of aspirations for the relationship, including dialogue on cyber security. The pact also opens the door for the UK to negotiate participation in the EU’s €150bn loans-for-arms fund, which would be a win for UK defence industries that create £10bn in annual exports, according to lobby group ADS. However, the terms of the deal are still to be determined, leading ADS chief executive Kevin Craven to describe the pact as “somewhat underwhelming in the lack of detail”.But Lord Peter Ricketts, former UK national security adviser, said there was significant value to restoring institutional ties with the EU. “We have lost countless opportunities to influence their thinking and planning on issues which matter to us. The host of new dialogues agreed today will give us back a role in decision shaping.”Youth and professional mobility The political challenges of the reset are clear in Labour’s reluctance to embrace Brussels’ request for a youth mobility scheme to enable 18-30 year olds to live and work more freely across the EU and UK.The document leaves open the question of how large any such scheme will be, saying only that the number of participants must be “acceptable to both sides”, setting up a difficult negotiation to come.There is no offer of a deal for touring artists, a Labour manifesto pledge. On business mobility, there is only a vague commitment to “set up dedicated dialogues” on business visas and the recognition of professional qualifications, another manifesto promise. More