Business and International Trade Secretary gives speech on global prosperity
Keynote address delivered by the Business and International Trade Secretary at the launch of the Legatum Institute's Prosperity Index.
It’s a pleasure to be here at Legatum and launching this year’s Prosperity Index.
The Index was created, as we have just seen, to help decision-makers across the world think about domestic growth and development, seeking policy solutions to drive improvements in prosperity.
When I received the invitation to speak tonight it was as the Secretary of State for International Trade.
Now, I am the Secretary of State for Business and International Trade, and my newly formed Department for Business and International Trade will enable me to achieve a lot more.
As much as I enjoyed the trade brief, I lacked some of the levers to really drive forward the growth advantages of international free trade on a domestic market.
There is so much to look forward to now that I’m looking after this brief.
However, today we are here to discuss global prosperity. So I will be speaking about my five priorities on trade, where the focus is on global rather than just on domestic prosperity.
My first priority is removing barriers that stop businesses succeeding.
Domestically, this means not about taking away any safety nets. It’s about ensuring that we have a modern, dynamic, nimble economy where the regulations are fit for purpose and actually help businesses to start up, grow and export.
Internationally, we want to remove barriers to trade, in particular remove barriers to our exporters.
Leaving the EU was not an end itself, now it is incumbent upon us to realise the opportunities that Brexit has enabled.
One of the things that we can now do with our independent trading policy is make sure that the global trade rules work for the UK, not just the UK and 27 other countries.
So we identify the blockers faced by UK businesses in getting their goods and services into other countries, and we get rid of them.
That’s meant, for example, getting Welsh lamb back on US dining tables for the first time in 20 years. And also opening up China’s huge beauty industry to cruelty-free UK cosmetics.
So we’ve identified, in my department, over 100 key barriers to trade, and we are taking them down one by one.
I know that this is something that Legatum cares very much about so I thought you would be pleased that was the first priority.
The second priority is increasing our exports every year until we hit £1 trillion by 2030.
Exports are a huge driver of economic growth, but, historically, we have fallen behind some of our competitors.
And this is because compared to smaller countries like Sweden, we already have a large domestic market, which means many businesses don’t feel the need to export the way that their comparative businesses would do in smaller countries.
We should be doing better. Not least because English is the international language of business and we aren’t capitalising on it as much as we should do.
So, our job is twofold. At one end, it’s encouraging smaller businesses and showing them that there are markets for their products and services overseas.
At the other, it’s about supporting our world-leading companies. Just as we did with Airbus and Rolls Royce this month in landing the biggest aircraft export deal in the history of global aviation.
In removing market barriers, we make exporting more efficient. So my top two priorities work hand-in-hand.
Thirdly, I want to make the UK the top investment destination in Europe.
And this is important for many reasons.
Without investment, businesses cannot grow. And, without growth, they will not export.
So, in building a business-friendly environment in the UK, we need to keep barriers to investment under constant review.
There are so many reasons why companies, and in fact other countries, want to invest in the UK (our position in the Prosperity Index is one of them, by the way, which is why we need to make sure that we keep doing well).
These reasons come together in the unique offer we have, which is a strong rule of law and stable economic environment; world class institutions and a highly skilled labour force; and our history of innovation and creativity.
There is so much about the UK that will ensure we have a prosperous future, but we don’t shout enough about it.
When I was at the World Economic Forum last month, I was struck by how other countries played as a team and pitched their strengths across public and private sector.
By contrast, UK ministers were alone in trumpeting the immense value of the UK, while our business groups and former politicians were complaining about the country and trying to relitigate Brexit.
So I’ll give you an example. We are constantly being told that our exports are falling. And yet the opposite is true. We’ve just broken the £800bn mark for the first time and are well on the path to our £1tn export ambition.
So some will tell you that all is doom and gloom and we are in decline.
This is nonsense.
Britain remains the unicorn capital of Europe – with more privately held start-up companies worth over a billion pounds more than France and Germany combined.
Of the major economies, we are the per-capita Nobel Prize champions of the world.
Domestic investment was up nearly 10% last year. And inward international investment stock broke the £2tn mark for the first time. So there is a lot to be happy about and a lot to be proud of.
My fourth priority is signing high-quality trade deals.
At the moment I’m currently negotiating our accession into the Trans-Pacific Partnership – this is one of the largest free trade areas in the world, it spans the Asia-Pacific and the Americas, and includes some of the world’s biggest current and future economies.
So, the UK’s membership will add another like-minded partner and strong voice to this powerful alliance, and takes the trade bloc’s GDP to £11 trillion.
But it’s not just about exporting goods or even services. The Trans-Pacific Partnership is also about the geostrategic shift to the Indo-Pacific as set out in the government’s Integrated Review and this really matters for our long-term security.
It also matters for our long-term growth – this is where the global middle class of the future will come from and we need to be a player.
That’s also why we’re pursuing a great trade deal with India. A deal to cut tariffs and open opportunities for UK services, making it easier for British businesses to sell to an economy set to be the world’s third largest by 2050. There are other trade deals in the pipeline – Israel and Switzerland, like us, services superpowers with complementary economic strengths. The Gulf countries too, and many others to follow.
So, you may wonder why trade deals are my fourth priority and not my first. And, I’m going to repeat an analogy I’m sure some of you have heard me use before.
Trade deals are like motorways. They are only useful if there are cars to drive on them, and the cars are exports and investments. That’s what trade is really, and that’s my main focus.
So we are not just the department for getting deals, taking pictures, signing bits of paper. And that will become even more key as I flesh out our role as the Department for Business and International Trade.
And my fifth and final priority is probably the one that is most relevant to all of you here at Legatum this evening.
Free and fair trade is what global prosperity and security are based on. And it is not an empty platitude.
Too often people of think of fair trade as just giving money to poor countries. Fair trade, for me, means ensuring that the rules-based trading system continues to thrive and does not collapse in the face of protectionism.
Trade means treating companies and countries equally and making sure that the rules are abided by. That is what’s going to work for the UK and for the rest of the world.
You will, I’m sure, have heard about the US Inflation Reduction Act. I made my opinions on this clear. We should not have a global subsidies arms race.
Interventions like the IR Act may look good in the short term. But, in the long term, it runs the risk of becoming self-defeating, not least by creating a single point of failure on supply chains.
We won’t deal with the economic challenge that we face from China by acting alone. There are many countries with similar views, not just the UK, the EU, Japan, South Korea or Australia.
The countries who believe in free trade will be stronger acting together. And we have been promoting this as the UK for 70 years since the General Agreement on Tariffs and Trade was agreed.
And I will carry on speaking out on the world stage to promote free trade.
So, my priorities will contribute not just to UK prosperity, but global prosperity.
If we deliver on these, the Department for Business and International Trade will actually become the Office for Economic Growth, which I’ve always wanted us to be. And we will ensure that British values are promoted, perhaps even adopted, across the world, and that will deliver for the people of the United Kingdom.