David Henig / Jun 2023
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There’s a generalised feeling of hopelessness around UK trade and economic prospects right now. Amid generally poor performance and forecasts, those who always opposed leaving the EU suggest there’s nothing to be done without rejoining. On the leave side the view is increasingly that Brexit has been sabotaged so that there really is little that can be done except incite the mob against the enemy within.
Even if one can move beyond these base positions, with regard to the EU there is a weird kind of agreement that they wouldn’t offer us anything anyway, while broader trade deals are no longer seen as the answer either. Not least when the Prime Minister overseeing implementation of the Australia and New Zealand Free Trade Agreements in effect denounced them for their agricultural provisions.
Parallel universes not being available we can’t just move to the UK never having left the EU or having had the immaculate Brexit. Meanwhile, business must carry on, employing people, trying their best to overcome new barriers to trade, hoping to find new investors into the UK. As a country we need them to be successful, and that means we need to snap out of the torpor, to find solutions.
Helpfully, thinking about how the UK could trade better has been the mission of the cross-party, cross-business UK Trade and Business Commission since 2021. I’ve been fortunate enough to be part of this as Expert Adviser, as we’ve heard from businesses, politicians and various stakeholder organisations across the country. The frustrations have been substantial, particularly with a government that doesn’t seem to want to listen and respond, but equally there has been energy and ideas to offer if ever that changes.
Such engagement has led to the publication of the UK Trade and Business Commission blueprint for UK trade, featuring 114 recommendations that can improve UK trade. These cross sectors, whether manufacturing or services, different regions of the UK, trade with Europe and further away, and different government policies affecting trade. That’s the breadth we need to consider if we’re serious about meaningful improvement.
Headline recommendations are substantive and progress various policy discussions towards solutions. Regulatory alignment with the EU unless there is a strong economic case otherwise to provide predictability for businesses and investors, improvements to the Trade and Cooperation Agreement, greater focus on implementation of other Free Trade Agreements and on mobility of people, better oversight from a new Board of Trade and Parliament.
Importantly, these recommendations reflect what our experienced Commissioners believe to be realistically deliverable. In many cases, actions the UK can take without others, for example in terms of our regulatory and visa policy choices, or the way government works with stakeholders and Parliament oversees this. These would on their own be clear improvements.
Where negotiations are involved, starting with the EU, there can be no guarantees but reasons to think what is recommended is achievable. The message from Brussels, reinforced by my own visits, is that if the UK want to talk about improvements to the Trade and Cooperation Agreement, that provide better outcomes for both sides, then doors will be opened for discussion. There has been much talk about a TCA review or renegotiation in 2026, but this of itself is not significant, rather the UK and EU will need a joint political process to produce a joint ‘road-map’, a process well known in the trade world. From that would then follow some immediate actions, alongside a programme of talks in different areas with various target dates to implement them within the TCA.
While the economic impact of recommendations is not quantified, providing a better investment climate, removing barriers to food and drink trade, improving the way government works with stakeholders, rekindling a belief in UK trade, should all be positive. Not least as modern trade is about a myriad of small challenges rather than the simple cuts to tariffs which dominated discussions in days long gone. This is similarly the reason why discussion of rule making or rule taking tends to be overly simplistic – given multiple rule setting bodies exist at various levels.
These are turbulent days for trade globally, particularly for middle sized economies like the UK, as the major powers undermine the core WTO rules with their own approaches. We were of course a pioneer of erecting barriers after 2016, presenting an inadvertently accurate spin on repeated UK government claims to be a trade policy leader. Moving on from this, facing up to our new reality while tackling the real largely non-tariff barriers our businesses face, will also allow the UK to return to a more natural role as convenor in discussions to maintain international economic rules.
All of this can be achieved while not prejudging how the UK’s Brexit debate will evolve, even if that may leave some on both extremes frustrated. For those who wanted to leave the EU but with a certain amount of pragmatism, this is an improved version less damaging to the economy. If you want to rejoin the EU, this would need to start with improved relations as envisaged in the report. Take your pick.
Proud as I am to be part of the team producing this report, most of the credit should sit with the individual businesses, trade associations, politicians, and other stakeholders who provided evidence. There is a lot more though that can be said about improving UK trade, and that’s why coming up later this month is the Trade Unlocked event, the largest discussion on the subject since 2016.
Times for UK business have been tough as new barriers to trade have been erected by a government that didn’t seem to want to engage meaningfully. There have been some glimmers of hope recently that both parts of this problem were being at least recognised. Our report will hopefully accelerate the change in showing what can realistically be done better to benefit the whole country.
The full report can be found here.
