W. 35 Policy Watch
The Swedish National Bank Leaves Policy Rates Unchanged
The Swedish National Bank leaves the policy rate unchanged at 1.75%, writing in a press release that domestic growth, as well as inflation, has been higher than the June forecast, and that the risk of underlying inflation rising as a consequence of supply disruptions in the Middle East remains. Other factors like the oil price reducing since spring and the increasing GDP point towards a stronger market and an economic recovery. However, when removing recent fiscal measures and keeping in mind the US-Iran conflict, the executive board deemed that the probability of an increase of the policy rate later this year remains.
Boost in UK Economy Ahead of Autumn Budget
Reuters reports that new data show a stronger UK market than expected. This brings a boost for new Prime Minister Burnham and Finance Minister Healey ahead of the coming autumn budget. The service sector shows its best growth in six months, and consumer confidence hit a two-year high in August.
Some economists argue that the boost is simply an inadequate seasonal adjustment; however chief economist at tax and consultancy firm RSM, Thomas Pugh, tells Reuters that “[...] if we're not careful, we might have to stop talking about resilience and actually start talking about a reasonable economic performance this year.” The Office for National Statistics noted that strong investment in tech equipment and growth in industries related to the AI boom could now be starting to become visible in the hard data. The biggest risks are still inflation, the state of the public finances, and that borrowing costs could increase. These worries are linked to the risk that price rises have pushed government borrowing in most of the advanced economies and the ongoing US-Iran conflict.
UK Government Appoints Minister for Artificial Intelligence
The Rt Hon Kanishka Narayan has been appointed Minister for Artificial Intelligence, a position in the Department for Business, Innovation, Science, and Trade. GOV.UK writes that the minister of this new post will be responsible for, amongst other things, AI policy, AI growth zones, sovereign AI, and AI research.
UKEF Initiatives to Drive Growth and Decarbonization Across the Aerospace Sector Announced at the Same Time as Swedish Government Announces Strategy for Aviation Competitiveness
UK Export Finance recently announced initiatives to drive growth and decarbonisation in the aerospace sector. These initiatives include financing to increase production of UK-based sustainable aviation fuel, with the purpose of driving industrial growth and reducing emissions. Further, steps will be taken to broaden the eligibility criteria, so that a broader range of financing options for UK-based sustainable aviation fuel can be considered. These initiatives come at the same time as the Swedish government announces a new strategy to strengthen aviation competitiveness.
In a report, Andreas Carlson, Minister for Infrastructure and Housing, presents several focus areas and priorities which are important for the development of aviation. The continued cooperation between the state, regions, and trade and industry is highlighted as a key factor in the new strategy. In the report, securing access to sustainable fuel and facilitating an effective international aviation market are also presented as key initiatives.
The EU-US Trade Deal Enters Into Force as President Trump Imposes New Tariffs
The EU-US trade deal, reached in July 2025, entered into force on the first of July 2026. Through the deal the EU has implemented its main commitments by eliminating tariffs on imports of US industrial goods. Further, US tariffs on most sectors including cars, pharmaceuticals, and lumber have been capped at 15%. Several safeguard measures have also been a part of the deal. Amongst others, the Commission can withdraw EU tariff preferences if the US fails to honour its commitments. A deadline for the US to lower its up to 50% derivative tariffs on steel and aluminium, to be in line with the 15% ceiling, by the end of 2026 is also a part of the terms.
At the same time as the trade agreement has entered into force, President Trump has imposed new tariffs on goods, citing a failure to ban imports made with forced labour. Whilst the claims of forced labour can be debated – Nobel laureate Joseph Stiglitz writes in The Guardian that the tariffs are hard to justify because of a 2024 EU law banning imports of goods produced with forced labour – the Commission stays positive. Olof Gill, deputy chief spokesperson for the European Commission, notes that the EU is positive to the fact that the tariffs are in line with the cap of 15% agreed in the trade deal, as reported in Politico. Others, like the EU’s foreign affairs chief Kaja Kallas, are less enthusiastic, telling Reuters that a deal was made and kept on the EU’s part, and that the recent tariffs therefore are a negative surprise and an indication that the agreement is not being kept.
EFRAG Opens Public Consultation Period for Article 40a of the Accounting Directive
Under the Corporate Sustainability Reporting Directive (CSRD), certain non-EU undertakings are required to produce sustainability reports from 1 January 2028. The European Commission is required to adopt a reporting standard (ESRS) for these undertakings. Therefore, EFRAG has developed the ESRS for Certain Non-EU Undertakings in Accordance with Article 40a of the Accounting Directive Exposure Draft. It is now open for public consultation, and the feedback will contribute to the finalisation of EFRAG’s advice to the Commission.