Philip Hammond: Brexit – the British people did not vote to become poorer or less secure

Philip Hammond says people did not vote to become poorer as a result of Brexit.

Philip Hammond says people did not vote to become poorer as a result of Brexit.

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INVESTMENT is critical to securing economic growth; and so is trade. The British public know that. A recent poll showed that 90 per cent of respondents believe that free trade is positive for our economy, regardless of how they voted in the referendum.

We are not about to turn inward. But we do want to ensure that the arrangements we have in place work for our economy. Just as the British people understand the benefits of trade – so, too, they understand how important it is to business to be able to access global talent and to move individuals around their organisations.

So, while we seek to manage migration, we do not seek to shut it down.

Let me quote you from our manifesto, (just in case, by chance, any of you didn’t read it): “Britain is an open economy and a welcoming society and we will always ensure that our British businesses can recruit the brightest and best from around the world.”

Britain has benefited from globalisation, but we must not turn a blind eye to the growing tide of hostility to it in parts of the developed world.

To counter that, we must push for a new phase of globalisation, to ensure that it delivers clear benefits for ordinary working people in developed economies.

To date, much of the thrust of globalisation has focused on the removal of barriers to trade in goods.

“Globalisation 1.0” if you like – expanding the opportunities for major goods exporters like China and Germany to sell their products to a larger market.

But our economy is 80 per cent services.

And many of our areas of greatest competitiveness are in services – for example, finance and insurance, ICT and communications.

So for the UK to be able to share fairly in the benefits of globalisation, we need to lead a global crusade for liberalisation of services.

And we must employ that logic in our Brexit negotiations, to agree a bold and ambitious free-trade agreement with our EU counterparts that covers both goods and services.

The Prime Minister’s Lancaster House speech in January set out clearly the arrangements that the UK would like to agree, built around a comprehensive trade agreement in the context of a deep and special partnership that goes much wider than trade.

But we recognise that this is a negotiation, and our negotiating counterparts, while broadly sharing our desire for a close ongoing relationship, will have their own priorities.

So we must be clear about ours. I have said before, and I remain clear, that when the British people voted last June, they did not vote to become poorer, or less secure. They did vote to leave the EU. And we will leave the EU.

But it must be done in a way that works for Britain on a way that prioritises British jobs, and underpins Britain’s prosperity. Anything less will be a failure to deliver on the instructions of the British people. So, how do we achieve this “Brexit for Britain”?

Firstly, by securing a comprehensive agreement for trade in goods and services.

Secondly, by negotiating mutually beneficial transitional arrangements to avoid unnecessary disruption and dangerous cliff edges.

Thirdly, by agreeing frictionless customs arrangements to facilitate trade across our borders – and crucially – to keep the land border on the island of Ireland open and free-flowing.

To do this in the context of our wider objectives will be challenging.

It will almost certainly involve the deployment of new technology.

And therefore we’ll almost certainly need an implementation period, outside the Customs Union itself, but with current customs border arrangements remaining in place, until new long-term arrangements are up and running.

And finally, by taking a pragmatic approach to one of our most important EU export sector – financial services.

Let’s be honest, we are already hearing protectionist agendas being advanced, disguised as arguments about regulatory competence, financial stability, and supervisory oversight.

We can have no truck with that approach. But we acknowledge that, as Britain leaves the EU, there are genuine and reasonable concerns among our EU colleagues about oversight of financial markets that will then be outside EU jurisdiction, but which provide a vast proportion of economically vital financial services to EU firms and citizens.

We must, and we will, engage with all genuine concerns. And we must be flexible and pragmatic in responding to, and resolving them.

Getting this right will be critical to the future success of the British economy, but it will also be critical to the future success of the EU economy.

We are ready for the challenge.

Philip Hammond is the Chancellor who delivered the 2017 Mansion House speech yesterday. This is an edited version.

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