'Trade is increasingly a political tool in a world where old certainties about political relationships have changed radically'

The International Monetary Fund (IMF) this week undermined hopes the UK economy might be on the mend. It says the UK will have the slowest growth rate of any member of the G7 global economies and the highest inflation rate.

It suggests that to get that inflation rate back under control the UK will have to maintain interest rates at present levels, with five per cent likely to be the norm for five years. This undermines government claims that it will half the inflation rate this year. With food prices beginning to fall the IMF forecast for the headline inflation rate looks gloomy, although its views are less about the rate than the ranking of leading economies.

This is what leaves the UK worst off globally.

The government might take comfort from the fact that the IMF has been wrong in the past over UK growth rates, but it is hard to believe this will be the case again. With food prices beginning to fall on supermarket shelves, inflation may drop down the political agenda. Globally FAO figures confirm a continuing fall in food prices, particularly dairy. This is because of the familiar problems of supply, particularly from the southern hemisphere, being out of step with demand from big markets in Asia.

The result is that surpluses are seeking buyers and that is not good news for dairy farmers, facing a marginally less costly winter than last year, but with prices well below profitability levels. This makes it all the more important that as prices fall others along the food chain do not try to pass this back to farmers. They have already taken the hit that is driving lower prices. It would be unfair and wrong to expect them to pay twice.

Global politics have taken on a new uncertainty. The scale of the current conflict between Israel and Hamas could not have been predicted. There is now a premium for certainty and that has to apply to food security. In an increasingly fraught world, issues beyond trade and the implications of trade deals come into play and that may not be good for farmers.

The EU is reportedly close to a trade deal with Australia, possibly by the end of the month. This would give it zero and reduced tariff access to the EU for beef, lamb, and some dairy products, in return for a free trade deal to benefit the wider eurozone economy. A few months ago Australian officials walked away from negotiations in Brussels because Canberra and the EU could not agree on tariffs. Now the politics of a deal have changed. The EU wants access to Australian minerals needed for electric vehicles because it wants to reduce its almost 100 percent dependence on China.

This is how politics and trade become tied up and it will add to the pressure on EU member states to agree on a deal with Australia. They must ratify this unanimously. This is akin to the political logic that drove the UK to join the trans-Pacific trade pact.

This is less about trade than ensuring a political and economic presence in a region well placed to offset the awesome economic power of China, which remains on course to top the United States as the number one global economy. In these decisions, markets become less important than the signals a deal sends. Ukraine has gained access to the EU for political reasons on terms close to what it would achieve as a member state.

This has angered some EU countries bordering it, including Poland and Hungary, driving the success there of anti-EU right-wing parties. This underlines that trade is increasingly a political tool in a world where many of the old certainties about political relationships have changed radically.

The EU sees this as a reason to reassure farmers and to stress the importance of food security. Such an approach was sadly absent at any of the recent political party conferences in England. This contrasts with the EU.

The Commission president, Ursula von der Leyen, stressed in her State of the Union address the importance of farming to the European economy and for food security. She will double down on this at the annual Agricultural Outlook conference, confirming that the farming lobby still carries a lot of influence. Sadly, in the post-Brexit world we now live in, that is not the case here.

It will remain the power and influence agriculture chose to walk away from in 2016.