It is hard to believe it’s been only 30 years since Francis Fukuyama announced the end of history. It seemed that a new era of globalisation had dawned and we were embarked on an unstoppable march towards ever greater openness in international markets and trade.
Yet in recent years we’ve seen the retreat of this assumption and the resurrection of economic nationalism, the erection of trade barriers and regulatory fragmentation. The lockdowns across the world stemming from Covid-19 threaten to further cement this trend.
For the UK, one of the great architects and beneficiaries of the global trading system, open and liberal markets remain a priority and an asset. Now, for the first time in decades, the UK can again pursue trade deals with old friends and new.
As such I’m very pleased to have been invited to join the Department for International Trade’s new Trade Advisory Groups (TAGs) on both financial and professional services, and to act as an adviser on both those areas. With TAGs being set up to strengthen representation of key areas of activity across the economy, this direct and open engagement with industry will be essential as the government pushes ahead with its ambitions to negotiate far-reaching trade deals with partners across the globe.
In fact, as CEO of TheCityUK, the industry body for UK-based financial and related professional services, I’m proud to say that our industry has long been one of the most vocal champions of strengthening ties with markets across the world. The UK is today the world’s leading net exporter of financial services, valued at £60.3bn in 2018/19 and ahead of the US (£47bn) and Switzerland (£18.5bn). Collectively, financial and related professional services in the UK generated a trade surplus of £81.2bn in 2018/19.
Britain has a leading position in many international financial markets including foreign exchange trading, cross border bank lending and international insurance premium income. This underlines our country’s enviable global competitive advantage in financial services.
For the industry, future trade deals with developed countries including the US, Japan, Australia and New Zealand and the many burgeoning emerging markets across Asia, Eurasia and beyond offer the opportunity to bring products and services to more customers; and through increased trade, support economic recovery in the UK and globally.
So much emphasis in trade talks is given to goods. But around 80 per cent of the British economy is services, and they form a greater proportion of our exports than in any other G7 country. Moreover, the demarcation between goods and services exports continues to blur. For example, in many ways isn’t an iPhone simply a delivery mechanism for services? To match these trends, greater focus in the UK’s new trade agreements on enhancing liberalisation of trade in services will be key for our industry and the wider economy.
And while the UK alone cannot stop a creep towards protectionism, our country can be an important bastion and champion for open and free trade. TheCityUK looks forward to playing its part in making that happen.