Recently, the UK government announced that it has signed a free trade agreement (FTA) with India. The UK government estimates that by 2040, the pact will boost bilateral trade by £25.5 billion (approximately 246.3 billion yuan/RMB) annually.

UK Prime Minister Keir Starmer stated that the agreement will reduce trade barriers amid evolving global trade dynamics. Indian Prime Minister Narendra Modi highlighted that the deal is "ambitious and mutually beneficial.

  85% of products have zero tariffs!  

Under the agreement, India will cut tariffs on 90% of goods from the UK, with 85% of items becoming tariff - free within a decade.

Tariffs on Indian imports of whisky and gin from the UK will be halved from 150% to 75%.

In addition, India will reduce tariffs on various goods imported from the UK, including cosmetics, aerospace products, mutton, medical equipment, salmon, electric motors, soft drinks, chocolate, and biscuits. UK consumers can expect lower prices and more choices in clothing, footwear, and frozen shrimp.

UK Business and Trade Secretary Jonathan Reynolds called it the UK's "largest and most economically significant bilateral trade deal since Brexit."

Regarding trade facilitation, India has agreed to clear goods quickly after customs arrival. It will work with the UK to create a simple trade website portal and publish customs procedures and laws in English online.

Analysts view the UK-India pact as a key move against US trade protectionism. Once effective, it may help the UK gradually improve its trade balance by expanding exports to India.

  The services sector is contracting, putting pressure on economic growth  

On June 6th, local time, data released by the UK government showed that the UK's service sector shrank in April, dragging down the overall economic growth outlook. Analysts pointed out that the weak performance of the service sector will pose new challenges to the UK's economic recovery.

S&P Global's final Purchasing Managers' Index (PMI) for the UK service sector showed that the index fell to 49 in April, below the 50 mark that separates contraction from expansion, and significantly down from March's 52.5. This marked the first contraction in the UK service sector since October 2023.

The data also revealed that the UK Composite PMI final reading for April dropped to 48.5 from March's 51.5, the lowest level since September 2023, indicating a slowdown in overall economic activity in the UK.

UK media analysis suggested that the decline in new orders and employment was the primary cause of the service sector's contraction. In April, both new orders and employment in the service sector fell at a faster rate than in March, indicating a weakening intention of business expansion. At the same time, service sector charging prices recorded their largest increase in nearly two years, which might further suppress consumer demand.

The service sector plays a significant role in the UK economy and is an important pillar of economic growth. The recent contraction in the service sector has triggered market concerns about the UK's economic outlook. Some analysts believe this data could influence the Bank of England's interest rate decision at this week's meeting.

The International Monetary Fund (IMF) has recently revised its economic growth forecast for the UK in 2025 downward from 1.6% to 1.1%. Faced with the situation of sluggish economic growth, the UK government and central bank confront the dilemma of stimulating economic growth while controlling inflation.