At the Conservative Party conference, every fringe event was consumed by one burning question: how can we ensure Brexit Britain becomes a prosperous trading nation?
Tuesday’s fringe event, hosted by UK Finance and the Legatum Institute, put this question to Foreign Secretary Boris Johnson.
“I think it is going to be very successful,” remarked the Foreign Secretary reiterating his optimistic outlook for a Brexit Britain.
He was confident that free trade agreements will come in at a steady pace, said Mr Johnson, although he admitted “they won’t be necessarily there, signed-sealed-delivered by the next election.”
He was joined at the event by UK Finance CEO Stephen Jones, who called for “an ambitious, 21st Century trade deal, that reflects the needs of the modern service based economy.”
Currently, the UK is the second largest exporter of services in the world and services represent 80% of our GDP. Despite this, Mr Jones said the government has published a paper on trade and goods, but not on trade and services.
He encouraged government to dedicate more focus in this area as “we have a unique opportunity to be the trailblazer in this space.”
Mr Johnson agreed with the CEO saying: “There are massive opportunities for this country to be a leader and campaign for liberalisation of trade in services.”
It is critically important that we ensure the attractiveness of the UK in the international financial sector, said Mr Jones, which is achievable only through “expert commercial diplomacy designed to sell our strengths abroad, open-up opportunities for export, and improve the conditions for UK based exporters.”
The CEO emphasized the importance of ensuring that regulatory treatment should not disadvantage UK firms providing services across borders to an EU customer. He also warned against reverting to an insular position “unless we are prepared to see the same treatment of UK based firms seeking to maintain their activities in Europe.”
In this regard, the Foreign Secretary offered a positive outlook, saying: “We can achieve complete regulatory equivalence with our friends and partners in the EU.”
He continued: “We will be able to take back control of our regulatory framework and legislation. And that will not be in order to have a race to the bottom, but to regulate better.
“It may well be that as things develop there are areas in our economy, where we are particularly strong, we may want to do things differently from the Brussels Commission.”
“We may look to have a different regulatory framework from that ordained by the EU. And that will be of a great benefit to our friends and partners because they will have the stimulus of another approach.”
Mr Jones urged the Government to complete transitional arrangements early, so as to ensure a limited impact on customers and prevent cross border financial services from facing a ‘cliff edge’ moment. He added that ‘early’ means “by the end of 2017 at the latest to avoid firms being forced to leave the UK.”
But they can only come after we have a comprehensive services agreement with the EU, said Mr Jones.
“This will require regulatory diplomacy and mutual trust between regulators to build a truly global financial services market. So we must work together to overcome the challenges and we must work hard to not undo what has been established to date, and we’ve got very little time if we are to achieve the prize of a comprehensive trade agreement in services by 2019.”