Business groups have hailed the UK’s membership of a major Indo-Pacific trade bloc as a potential boost to the City today despite analysis showing a meagre growth bump from the deal over the long term.
Business and Trade Secretary Kemi Badenoch formally signed a treaty in New Zealand this morning for the UK to join the now 12-nation CPTPP trade bloc.
The CPTPP was first agreed in 2018 between 11 countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Membership of the group will strip back trade barriers between the UK and member states and comes amid a push from the government to forge stronger post-Brexit trade ties with the Pacific.
The deal was hailed as a “great achievement” by lobby group TheCityUK today, which said the pact will deliver a boost to the UK’s financial and professional services sector.
“CPTPP membership gives UK-based firms from across the financial and related professional services industry deeper access to business opportunities in one of the fastest growing regions in the world, including new preferential access to Malaysia, an important CPTPP market with which the UK has no free trade agreement,” CityUK chief executive Miles Celic said in a statement.
“It also paves the way for close working and alignment on innovative approaches to digital trade, regulatory cooperation and liberalising trade in services, which will ultimately boost UK exports and drive growth across the country.”
The bloc has swelled to a scale of £12trillion but analysis given to the government suggests the deal will boost UK exports by just £1.7bn, imports to the UK by £1.6bn and GDP by £1.8bn in the long term, Sky News reported today.
However, business group the British Chambers of Commerce said the deal will “open up new opportunities for our businesses in both inward and external investment”.
“The UK has bilateral trading terms negotiated with nine of the eleven current members, but no agreements had been reached with Malaysia and Brunei, so the new terms will be of particular interest for traders in these markets,” William Bain, Head of Trade Policy at the BCC, said.
“There are not many multi-national trade agreements like this one, and it offers new prospects in a fast-growing region of the global economy.”
The chief of HSBC UK Ian Stuart, CEO at HSBC UK added that the deal was a “significant milestone for UK trade” and said it would enable “ambitious British businesses to connect with the world’s most exciting growth markets for start-ups, innovation and technology.”