Re-balancing the economy through trade post-Brexit
Prospect and Associated British Ports held a joint fringe meeting at Conservative Party conference entitled “How can trade re-balance the economy in post-Brexit Britain?”. The meeting brought together business people, politicians and policy experts to discuss one of the biggest challenges facing the UK economy.
It is now widely acknowledged that, in the run-up to the recession of 2008, the UK economy had become seriously unbalanced in multiple ways: too geographically dependent on London and the South East of England, too few exports, too little investment and an uncomfortably high trade deficit. Whilst “re-balancing” has been talked up a lot over the last decade, progress has often been fleeting. Brexit gives a new impetus to this existing problem.
James Cooper, the Chief Executive of Associated British Ports, opened the meeting by stressing that most of ABP’s ports were outside the South East and generally in areas that had voted for Brexit. Many of these places felt they had been left behind by globalisation and that the economy was not working for them. He argued that policymakers should not see “trade” as a tool to re-balance the economy. Instead they should aim to re-balance the economy as a good in and of itself from which more trade could then flow.
He also noted that there had been a long standing debate on Britain’s productivity issues but suggested that the real problem was not productivity as such but rather the lack of UK products that attracted global demand.
Lesley Batchelor, of the Institute of Exports, argued that many British firms have essentially forgotten how to trade. If policymakers want to boost exports then firms – especially small to medium sized ones – will require a great deal more support than they currently receive. She argued that this was partially a question of training- the expertise that is needed to drive overseas sales is sadly lacking in much of UK business.
Adam Marshall, the Director of the British Chambers of Commerce, discussed some of businesses wider concerns around trade policy and trade policy infrastructure. Progress has been made in recent years in areas like providing export finance guarantees but more still needs to be done. He noted some business concern that not enough work had been done by HMRC in preparation for a potential new customs regime with Europe. He also noted that there was a long history of export promotion policies coming from British governments of all parties over the past decades, of which very few appear to have made a major difference to the trade deficit.
Three government MPs joined the panel – notably two of them spoke of their experience as trade envoys while the third is a member of the International Trade Select Committee. All three were keen to look at the prospects of new trade deals that could be established after the UK had left the EU.
John Howell MP noted the key role played by UK services exports around the world, especially in Eastern and Central Europe in the years after the fall of the Berlin wall. Drawing on his work as trade envoy to Nigeria, John argued that while Nigeria was not yet in a position to strike a free trade deal with the UK, that did not mean that more could not be done to encourage British exports to the region.
Ranil Jayawardena MP of the International Trade Select Committee noted that the British debate on trade was often too gloomy. He pointed to rising exports over the past year and the potential for Britain to act as an international beacon for free trade in the years ahead.
Richard Graham echoed these sentiments and spoke about the potential for more sales to Asia, one of the fastest growing areas of the global economy. In particular he noted the range of products the UK was already exporting to China, from the engines of the Airbus to episodes of Downton Abbey.
Much of the discussion proceeded on the basis that the UK would be leaving the EU customs union. However, it was noted that there was a significant lobby within the business community who wished to remain in the customs union. Adam Marshall noted that many businesses were keen to avoid talking about the “political” issue of customs union membership and instead preferred to concentrate on the concrete things they needed when it came to the ease of doing business with Europe – which is still our largest trading partner. Both he and Lesley Batchelor argued that whilst it was all well and good having high level debates about the opportunities from new trade deals, there was a lot of important “nitty gritty” around customs clearances and origin of contents rules that would have a major impact on firms.
James Cooper argued that, from the perspective of ABP, many of the commonly reported horror stories about the likely impact of leaving the customs union on UK ports seemed overblown. Given the UK and EU would still have the same regulatory framework on day one of Brexit, the need for more checks could perhaps be avoided if both sides acted in a trustworthy manner.
The panel, and indeed the audience, broadly agreed that Brexit could prove to be a catalyst for a reassessment of trade policy and that the UK economy still needed to be re-balanced.
With the support of Associated British Ports (ABP), Prospect hosted a panel discussion at the 2017 Conservative Party Conference on the future of UK trade post-Brexit.
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