I would like to thank the World Trade Centre for inviting me to talk about BREXIT this morning. I want to make a few points on the referendum and the UK’s trading relationship with Ghana before opening the floor for questions, and I am sure you have many. I will try to answer them but - and this is not a cop-out by me, just a statement of an obvious fact – there are many more questions than there are answers to at this early stage.
Firstly, and I’m sure you might expect me to say this; Britain is a truly great country, thriving and prospering on the world stage. We fully intend to remain so. So, allow me to recall some powerful facts that I trust will speak for themselves.
The UK is a permanent member of the UN Security Council, of NATO, of the G7, the G20 and the Commonwealth. Our voice is prominent on the world stage. We are the only fully developed national who are already meeting the UN target of giving 0.7% of GNI in official development assistance to the developing world; and the NATO target of spending 2% of GDP on defence.
The UK is the 5th largest economy in the world. In recent years, the UK has been the fastest-growing economy in the G7 and one of the strongest major advanced economies globally. The World Economic Forum Competitiveness Report assesses the UK to be in the global top ten for competitiveness. We are in the top ten, too, for ease of doing business: Britain is one of the best places in the world to start and grow a business. The UK has always been an outward-looking, globally-minded, trading nation – we always will be.
And the UK remains a great place to do business. London is regarded as the world’s leading financial hub; we have the largest market share in the world for financial services. We also lead other countries in insurance, computer and information services.
Our business and popular culture continues to draw in the best and brightest students and businesspeople year after year. We have a world leading reputation for creativity, which represents 10% of our exports. We are home to 18 of the world’s top 100 universities, and four of the top ten. We are a truly multicultural, multiracial society.
The British Council is the world’s leading cultural relations organisation, reaching over 500m people in over 115 countries each year as a key part of the UK’s soft power capability to build knowledge and understanding between the UK and wider world. The Premier League is the most watched football league in the world. The BBC World Service is the world’s largest international broadcaster, broadcasting news, speech and discussions in 28 languages and reaches 246 million people worldwide. All that is testament to just how strong the UK soft power brand is – in sports, the arts, music, drama, entertainment, design, education – you name it.
So, Britain is open for business, committed to peace and security, and a leading supporter of the international rules-based system. Our commitment to our extensive security cooperation with international partners remains steadfast.
So, that is my pitch on why the UK still matters. I’m proud to be one of its official representatives. We hold fast to a vision of Britain that is respected abroad, tolerant at home, engaged in the world and working with our international partners to advance the prosperity and security of our nation for generations to come. We must and will be more active, more outward facing, more energetic on the world stage than ever before, shaping a bright future for the UK as a global trading nation and open economy.
Now, back to Brexit – the reason you have invited me here today. On 23 June, a month ago, the people of the UK voted to leave the European Union by 52%x to 48%. The new Prime Minister, Theresa May has been very clear that Brexit (as it has become known), means Brexit. But the formal process of starting our withdrawal from the EU and negotiating a new relationship with it hasn’t started yet. It may not start until early next year: the timing is one of the most important single decisions our new Prime Minister will take. She has said that we would take our time to secure a ‘’sensible and orderly departure”.
In the meantime, I want to reassure businesses and investors that there will be no immediate change. For now, the UK is still a full member of the EU, and goods and services will still trade freely across borders.
To be clear though: Brexit means Brexit and we will make a success of it. While our future relationship with the organisation that is the EU is still to be determined, we are not somehow leaving the continent of Europe. We will want the strongest possible economic links with our European neighbours, as well as our close friends in North America, the Commonwealth and other important partners around the world.
On the economy, Britain is ready to confront what the future holds from a position of strength, fully prepared to face the challenges ahead. The UK has the highest employment rate in its history, low and stable inflation, and rising real wages. The budget deficit has been cut by almost two thirds from its post-war peak in 2009-10 and banks are required to hold more capital reserves than before the financial crisis.
Action by the government and the Bank of England over the last six years has substantially strengthened the resilience of the financial system. Capital requirements for the largest banks are now ten times higher than before the crisis. That means banks can continue to lend to UK businesses and households during challenging times. As the Governor recently said, the Bank of England’s stress tests have shown that the major UK banks can withstand larger shocks than the one we currently face.
The UK has the talent, law, institutions, infrastructure, and the most competitive environment in Europe to endure as a magnet for inward investment. If we secured the right deal for Brexit, the UK could become an even more attractive place in which to live and invest. The UK’s value proposition is still intact. Indeed, just last week we saw the acquisition of the UK chip designer ARM by Japanese SoftBank: that shows that not everyone is suddenly hitting the pause button on their investments and that many still see great opportunities in the UK. The UK is fundamentally resilient, including its financial services industry in London, which, as I’ve already said, remains the world’s leading global financial centre.
The Government’s objective is of a Brexit deal which will support a strong Britain and a strong Europe. We know that what business and markets need is certainty, and while there are no guarantees, we can already give some clarity about the government’s position going in to the negotiation. The Government’s ideal components of a new deal, of our new relationship with the EU, would include an arrangement on zero tariffs and zero quotas; some controls on freedom of movement; and passporting or equivalence for financial services.
But what of our relationship with countries outside the EU, like of course this one. Well, we will also look to secure Free Trade Agreements (FTAs) with countries around the world including Ghana. Trade deals aren’t agreed overnight. For some, we will be able to build on existing frameworks; others will have to be negotiated from scratch. These negotiations will be wide ranging: including sector requirements from agriculture to financial services as well as regulatory issues such as customs, competition, and procurement.
Some sectors will slot into new deals relatively straightforwardly and others will be more complicated. We will therefore bring together policy experts from across government to ensure that we know what the UK needs. However, the key thing for all of us here today is to see the opportunity this provides.
We are, in essence, starting from a blank piece of paper when it comes to trade deals. Freed from Brussels’ more bureaucratic tendencies we will be able to tackle any excessive red tape that can choke small businesses. Right now, we are happy to have preliminary scoping discussions for a bilateral FTA, but cannot yet get into detail until we are clear on the direction of travel between the UK and EU. In Ghana, as elsewhere, we will consult government, business and other interested groups on what that future might look like. We have been encouraged by the interest already shown in a future bilateral FTA by a range of non-EU countries, including some of the UK’s closest allies.
The new Prime Minister, Theresa May, places great emphasis on trade and investment and as an endorsement of this has created a new government department for international trade which will focus on trade negotiations, trade promotion and investment. Our government is currently doing a lot to promote exports and attract investment: that work definitely does not stop regardless of the EU referendum result. The ambition remains for the UK to improve its position in the global league table for trade - we are currently sixth.
Ghana is the UK’s fifth largest export market in sub Saharan Africa. Ghana has strong economic, historical and political connections to the UK. Although global exports have declined in recent years, bilateral trade in goods and services between the UK and Ghana was just over £1bn according to the most recent figures available, namely for 2014. In Ghana we have identified future big ticket opportunities in for increased bilateral trade and investment in three key sectors including in mining, oil and gas, and in infrastructure.
A diversification of exports to Ghana and exports from Ghana to the UK benefits both of our countries. In the UK, it is business that contributes the majority of taxes which then go to fund our schools, hospitals and defence. So if business is winning then we all win. In Ghana, we hope our bilateral trade helps create jobs, increase prosperity and boost the formation of human capital. There are partnerships to be formed with Ghanaian companies, investments to be made, innovative goods and services to trade, bringing more jobs, and prosperity.
And for smaller businesses, we are delivering and expanding a digital offer which matches exporters and potential exporters in the UK to demand for British goods and services overseas. We have had great response to this offer from companies in Ghana. We are keen to build stronger links between the UK and Ghana’s business sectors and to share UK skills and expertise. I would therefore encourage you to visit and talk to my UK Trade and Investment team at the registration table outside this hall for more information on our free online match making opportunities and how the team can connect you to UK companies that could help your business grow.
There is a long way to go to negotiate our exit from the EU, from new trade deals to new arrangements for thousands of separate pieces of EU legislation on the UK statute book, so my message is clear, this is a new opportunity for the UK and our trading relationship with the world. The UK is very much open for business with Ghana. The key message here is that we have a strong economy in the UK: we remain a fantastic place to invest, and have plenty of innovative, successful businesses who are keen to do more business with Ghana to help grow the economies of both our countries. We will make Brexit work. Now, I am eager to hear your views and work together so we can get the best possible deals for the UK and Ghana.