U.K. Eyes Wall Street Access in Post-Brexit U.S. Trade DealBy
Fox says U.K. will succeed even if May gets no EU Brexit deal
Sees finance as key part of future trade talks with the U.S.
The U.K. is eyeing a deal with the U.S. to give London-based banks free access to Wall Street, International Trade Secretary Liam Fox said as he predicted Britain’s economy would thrive even without a Brexit deal.
In an interview with Bloomberg, Fox said he wanted to open up commerce with the U.S. "in every sector" including financial services, which he anticipated would form a key part of future trade talks between London and Washington.
“We would like to see as open a trading environment as possible” between the U.K. and the U.S., he said. “It’s a fair bet that given the shape of the U.K. economy and the shape of the U.S. economy that the service sector will play a very important part in what we look at.”
Securing easier entry to Wall Street would potentially compensate British banks for any post-Brexit loss of access to the EU and also provide Prime Minister Theresa May with leverage in her negotiations with the EU. Executives increasingly assume Britain’s withdrawal from the EU will cost banks with operations in London so-called passporting rights, which enable them to provide services across the bloc.
U.S. President Donald Trump indicated a willingness to discuss a trade agreement with the U.K. when he and May met at the White House in January. Reports then suggested his team wanted to offer the U.K. an EU-style passporting arrangement. Asked whether he also wanted to explore plans like this for financial services, Fox said: “Oh yes, I have an appetite to liberalize in every sector.”
He said he hasn’t started detailed talks with the U.S. yet, but hoped more work on the transatlantic agreement will get under way once his American counterpart Robert Lighthizer is confirmed as Trump’s new trade representative, which he said could happen next week.
His comments come as both Britain and the EU prepare to engage in formal talks for the first time. Each side is seeking to gain strategic advantages before negotiations begin, as the clock ticks down to the U.K.’s exit in March 2019. Fox is one of the strongest advocates of Brexit in government, having argued long before the June referendum that Britain would be better off outside the EU.
In his interview, Fox said opportunities for expansion elsewhere in the world will give Britain’s financial sector a brighter future. In particular, he sees the potential to exploit the U.K.’s status as a world leader for fintech innovation to drive business, with no credible threat to London’s status as a world leader for finance.
“The potential for us to lead in this next financial services revolution may make what we did in the last iteration of that revolution look almost an underachievement,” said Fox, speaking on the fringes of a government-sponsored fintech conference in London. “When you’re getting people who are relocating from Silicon Valley to the U.K., you can tell that there is something going for us -- and it isn’t the weather.”
The U.K. has a competitive regulatory environment and a policy of “producing and encouraging” innovators, he said. “What people fail to understand about the current dominance we have in financial services is that it’s not an accident; it’s because we have the professional financial-services infrastructure to support not just the current industry but the innovative industries as well.”
“Under the Bank of England, we have a regulatory framework that’s globally respected -- and cannot be replicated in any short space of time by anybody at all -- which is why I am so confident about the future of London as the preeminent financial center.”
Fox argued the U.K. is in an “extremely strong” economic position as it prepares to begin formal divorce talks with the EU, due to natural assets such as the English language and its time-zone for trading, combined with low taxes, prestigious universities and a respected legal system.
While leaving the EU with no trade deal in 2019 would harm the people of Europe and “send ripples” into the world economy, Britain would continue to “do well,” he said.
“Of course we will continue as a successful trading nation and as an investment destination -- the fundamentals of our economy are extremely strong,” Fox said. “We will both survive not reaching an agreement but it’s preferable that we do reach one.”
May has already said she could walk away from talks without signing a new trade pact if the offer from Brussels isn’t good enough. Fox’s declaration that Britain doesn’t need a trade agreement with the EU to succeed, and is already looking to gain wider access to the U.S. financial markets, reinforces the impression that the premier won’t take a Brexit deal at any price.