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HSBC: a moment of truth for ‘global Britain’

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Since the EU referendum in 2016, ‘global Britain’ has become a favoured catchphrase of government ministers. It’s a convenient slogan to describe a shift in the focus of the UK’s commercial and diplomatic activity, away from Europe towards more distant parts of the world.

However, as Britain nears agreement with Australia on a free trade agreement (FTA), UK farming interests are up in arms about the prospect of liberalised trade in agricultural products, especially beef. This is no surprise, given that any deal with Australia will likely shape subsequent FTAs with other major agricultural exporters.

Nevertheless, Australia is the obvious starting point for the UK’s first stand-alone trade agreement since Brexit. The UK enjoys a surplus on the trade, which is heavily skewed towards services, especially business and professional services, finance, travel, and tourism.

The question for the UK government is whether its haste to strike FTAs is in the best interest of British businesses, and whether the rush to tilt its commercial and diplomatic stance towards the Indo-Pacific region will cause too much ground to be given to hardened trade negotiators.

Mark Berrisford-Smith, head of economics, commercial banking at HSBC UK, said: “Given the UK’s long-standing comparative advantage in many services sectors, ranging from banking and insurance to management consultancy, legal services, and education, the acid test of any deal struck with Australia, as well as the ones that will follow it, is whether they offer enhanced access for businesses involved in these sectors.

“Will it be easier for UK firms to set up operations in those countries with which FTAs are concluded? Will it be easier to move staff in and out of those countries? Will firms have flexibility on where they store client data? And will professional qualifications obtained in one country be recognised in the other?

“The UK is a global services powerhouse, being the second largest exporter after the US. There will be little point in going to all the effort of reaching FTAs if this fact isn’t recognised, and if it doesn’t bring commercial advantages to British businesses.”

Read the full economic commentary here