The best future is built by optimism. Britain needs a global vision that both transcends and includes the EU.
Eversheds Sutherland is committed to help shape that vision. Our global clients need clarity and stability. So does the whole commercial world. Revolutionary times are no place for timid minds. All of us, politicians and business people alike (whatever we think of Brexit), must think bigger.
The UK and the EU must use Brexit as the anvil to forge a new grand bargain. Aggressive nationalism is on the rise. This is no time for squabbles about monies owed or minimally adjusted migration targets. Both sides must resist the siren voices of parochial pessimism.
Instead, the EU and the UK should strive to strike the biggest and most ambitious free trade deal ever made. Both sides should seize the chance to bind the EU and UK tightly together, with low tariffs and treaty access to the Single Market. The UK’s sovereignty-based European Court of Justice (ECJ) sensitivities could be dealt with by a WTO-style dispute mechanism. If this sounds politically difficult, it is surely better than painful and piecemeal negotiation – wedged between a newly EU-sceptic US and a revanchist Russia.
With vision, such Single Market access can be reconciled with EU free movement. People voted for “control” of EU migration. Control does not mean stop, reduce or even increase. It simply means the power to decide. A sovereign UK can decide to remain open to talent, with easy access for skilled or in-demand people who have jobs to go to. The EU has the flexibility to impose migration controls within its free movement system for public interest reasons. So there should be room for a sensible sovereign compromise.
We must stay close to the EU, the world’s largest Single Market and our biggest export partner. But Brexit also means we must reach out to the US and the wider world. The US is the international economy’s Jupiter. It accounts for 15.8 per cent of global GDP and is our biggest single-country export partner. As our Eversheds Sutherland combination recognises, no one can be global without a US presence. So securing a US trade deal is the UK’s post-Brexit Task Number One.
Some see EU and US trade deals as separate negotiations to be played off against each other. In reality, they will be closely connected. A US Chamber of Commerce report has stressed that US businesses want the UK to remain an “open, strong and wide gateway” to the EU’s Single Market. So any US trade deal must dovetail with our EU one: on tariffs, transitional arrangements and regulation. Achieving this will be like playing Tetris on a thousand screens.
We should be optimistic about (but not wilfully underestimate) that challenge. On the plus side, there is a strong drive – in both the US and UK – to clinch an early trade deal. The prize is huge. The US is already the UK’s single largest inward investor. In return, the US receives nearly 25 per cent of all UK outbound investment. We must work with our American friends to turn this mutual enthusiasm into a trade deal that sets a new global standard.
To thrive, London must align itself with these historic trends. London is at a crossroads. During the referendum, it was capital of Remainia. Hostility to its dominance drove some of the Leave vote. Now London needs to speak with a fresh voice to the rest of the UK. Any sign of cockney crowing over being a quarter of UK GDP and one third of UK tax revenue will not be well received – either outside the metropolis or in government.
Instead, London must rise to the challenge of the times and forge a new deal with the rest of the UK. It must help the UK achieve a more multi-city German-style national model. London can do this both through its tax revenues and by relocation of some of its economic functions. If this seems uncomfortable, it is better than the alternative of continuing regional inequality.
As well as helping to revivify its own UK hinterland, London must remain fully open to talent, trade and global markets (including the EU). Rather than asking for a special Brexit deal, London should make the case for Single Market access, mobile talent, tariff-free trade and passporting on a UK and sector wide basis. Because all of the UK’s major economic centres thrive on these freedoms. For example, Birmingham has a vibrant financial services sector and Manchester a vital technology hub. We need to unite as one UK to get the best deal – not just for London, but also for its sister cities across the country: Edinburgh, Leeds, Bristol and Newcastle among them.
And we must not forget our next generation businesses. London has become a hive for fintech and TMT. These companies are the future. They are also among the most mobile organisations on earth. They can work in any city with an entrepreneurial culture, strong connectivity and good coffee. They are staffed by hyper-educated, cosmopolitan people who want to move easily from country to country, unconstrained by clunky border controls.
London and the UK must remain open to their talents post-Brexit. Berlin and Paris are already doing their best to tempt them away. “Fed up with the fog? Try the frogs” is Paris’s campaign strap-line. So London and the UK must fight to retain and attract these key people: with incentives, world-class IT infrastructure, connectivity and exceptional espressos.
Fastening TMT and fintech into the UK’s economic ecosystem is a Brexit priority, but we should not neglect the UK’s wider financial service industry. It is one of the world’s greatest. London leads the way here, but the whole UK is fed by our omnipresent financial services sector. London is the Battlestar Galactica of the world’s financial city fleet: 41 per cent of the total forex market and 20 per cent of the cross-border lending market.
Frankfurt and Paris cannot absorb this vast agglomeration of infrastructure, people and expertise. But there is no room for complacency. Because New York and Tokyo could. The UK must get a Brexit deal that keeps the world’s financial centre here. Equally, UK businesses must be global, so they can follow the money wherever it goes.
As Donald Trump reminds us, we live in an age of deals. There are many deals for us all to do – with the EU, the US, the wider world and between our own cities and citizens (to create a country that works for everyone). We should approach these vast transactions with ambition and an innovative spirit, reaching out to our negotiating partners with openness and courtesy.
Eversheds Sutherland is determined to help promote a spirit of enthusiastic optimism as we all work together to reshape our 70-year-old post-war order. Because if we get these deals right, and stay open to business and talent, we will have moulded our time of convulsive change into a better world. We cannot change history, but we can choose the future we build from it. So let’s get these deals done.