Friday 12 July 2019 4:46 am

The UK trade team had better up its game – and fast

Kate Andrews is associate director at the Institute of Economic Affairs.

Yesterday, on talkRADIO, secretary of state for work and pensions Amber Rudd confirmed that, regardless of who wins the Conservative leadership contest, the option to leave the EU without a deal will be “part of the armoury” for the new government.

While not quite the “do or die” remarks that Boris Johnson gave to the radio station a few weeks before, this is still an extraordinary repositioning from Rudd, who during the run-up to 29 March was one of the leading parliamentarians working to prevent no-deal Brexit.

Her pivot follows that of her favoured leadership candidate, Jeremy Hunt, whose journey has involved backing Remain, standing firmly against no-deal, and now preparing for it as a “last resort”.

While no one, including our leaders, can tell us what the future holds for Brexit, this change of heart from Remain-voting MPs is more evidence that a no-deal outcome has been an underpriced for some time. 

The begrudging acceptance from powerful and unlikely operators like Rudd would suggest that, while there’s certainly not a majority to actively pursue it, there may be less pushback to it if the EU refuses to engage with the UK on changes to the withdrawal deal negotiated by Theresa May.

What are we to make of no-deal arrangements? Tackling the essentials – like access to medicines, air travel and port operations – has understandably been the focus of preparation so far. But it’s time that comprehensive no-deal prep focused on the opportunities to be seized in such a circumstance, as well as covering the basics.

One of the major opportunities of Brexit remains the ability to strike free trade deals in a timelier and more advantageous way than if Britain were negotiating as part of the EU bloc. 

There have been some positive rumblings around post-Brexit trade, including the free trade outline signed with South Korea last month, and the 12 non-EU countries and regions Britain has signed mutual recognition agreements with to continue seamless importing and exporting when the UK leaves the EU.

But it’s not all good news. Leaked documents yesterday revealed that Britain has struggled to make meaningful progress towards a free trade deal with the US, despite the positive rhetoric for doing so on both sides of the Atlantic.

The economic ties between America and Britain should make a free trade agreement a real possibility. The US, as a single country, is the UK’s largest export market, as well as its largest investor – American firms have invested nearly $750bn in the British market. 

In areas like health and agriculture, there are no doubt points of contention, but this should not stand in the way of finding areas to agree mutual recognition.

The UK needs an early win like a trade deal with the US, Australia or New Zealand, to help outline a template and process for talks with countries like China – where the negotiations will be harder, but the gains may be even greater. 

It’s both disappointing and worrying that more progress hasn’t been made with the UK’s closest ally, when both financial and political will are working in Britain’s favour.

Of course, improving trade relations outside of the EU will not fully compensate for a fracturing trade relationship with the 27 member states. 

Securing a departure deal and a free trade agreement with the bloc that accounts for 44 per cent of UK exports is still the most desirable option. There’s no version of a no-deal Brexit that can completely avoid disruption along the way.

But if it were to happen – and it is certainly one of the possibilities come October – the UK needs to be prepared, not simply in terms of the necessities, but also to reap the benefits of unabashed independence.

The UK trade teams need to get back on track, fast.

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.