John Longworth sits on the Hottinger Group’s Advisory Board, was Director-General of the British Chambers of Commerce, and is a leading Brexiteer. Here, John writes in a personal capacity, and all views expressed in this piece are his alone.
If the latest reports from Berlin are to be believed the Germans are insisting on substantial payments in order that the City banks have “access” to the EU market.
It is not clear whether “access” means equivalence, in which case UK based banks are being discriminated against versus US or Japanese banks, which is outrageous; or something better, in which case it would be unprecedented for the EU and completely undermine Barnier’s position. It is clear that Barnier is being instructed to take a hard line in order that the Germans can mug us, if the reports are true.
We should bear in mind that while financial services contribute to the treasury they represent 8% of the economy, less than manufacturing. In addition to this, only 9% of financial services is subject to passporting; there is a Single Market of sorts in these services which represents just 0.7% of GDP. Of course there are additional professional services supporting this activity but we should not let the tail wag the dog and it is only worth so much. As for the rest of financial services or indeed Services in general, there is no single market in the EU do why should we expect to have “access”?
The government need to wake up to what is in the country’s interests and start to bat for Britain.
Meeting with Barnier.
It may have come as a surprise to some of my colleagues at the meeting with Barnier, but not to me, that the EU is determined to put the “EU project” ahead of the employment prospects and wealth of its citizens and, as a consequence, take a very hard line with the UK in the upcoming negotiations. The Gaullist Mr Barnier accepted my compliment that he had successfully won the first round of negotiations, albeit against a weak adversary in the form of the UK government. It was clear that he and his EPP (European Peoples Party) colleagues, who control all the major EU institutions, are determined that the UK should be shackled as much as possible in respect of our newly won economic freedoms in order that we may not compete with the EU.
The position of the Chief Negotiator is entirely rational and internally consistent if the “project” is key to the interests of the EU (and certainly to the chief EU paymaster, Germany) and it is vital that our government grasps this.
Britain has the prospect of prospering with or without an EU trade deal, provided we retain our newly won freedoms and are prepared to leverage these. The chances of a special arrangement for the UK are limited, so an early resolution of the likely outcome is essential if business on both sides of the channel is to have time to plan and implement necessary measures. Certainty on the direction of travel is more important than the outcome itself. I made these things clear to Mr Barnier and also that there is an increasing majority in the UK in favour of getting on and leaving the EU. Brexit is happening and Britain is determined to see it through.
Crucially, the meeting made it clear to me that the British government needs to adopt an equally tough line in the interests of our country, equal to that of the EU 27, and that will include an early view on whether a trade deal is likely to be forthcoming, with serious preparation for a no trade deal scenario. In any event the government must be prepared to leverage our economic freedoms to boost business and the economy, with or without a trade deal, rather than trying to preserve a poorer version of what we have now. which can only result in our being worse off. Preparations for this must start now.
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