Why services really count
HOW Brussels and Remain factions at Westminster have managed to bamboozle the Government (and, for that matter, Labour) into thinking that a customs union, or something like it, is the be-all and end-all of Brexit negotiations is astonishing.
it is no more than a strawman, focused on the irish border-crossing and diverting policymakers from real prizes.
As exciting as it is that the UK once again has a vibrant car design and making sector, there is no escaping the fact that when it comes to exports we are a disappointment.
Britain’s huge strength in Europe, the US and across the globe is in services.
This does not refer to haircuts and celebrity chefs, as terrific as Toni & Guy and Heston Blumenthal may be.
The most important thing which the Prime minister and Chancellor should be shouting from the roof tops is services.
As the 2017 report from financial services industry body, The City UK, points out, financial services earned Britain a surplus of £57bn last year – £69.3bn when related services such as legal and consulting are counted. That’s before creative services, ranging from Star Wars movies to Ed Sheeran, are added.
A fat, forensic dossier on financial services has been passed by the Bank of England to the Government detailing areas of competitive advantage and potential regulatory solutions. The favoured approach is mutual recognition (or equivalence). This works for the UK at present because many of the rules originated in London. As innovation comes along, some kind of adjudication process will be required to sort out divergences.
At recent Washington financial gatherings, Philip Hammond talked up the need for more open and global services deals. But no one in Westminster appears to be listening.
Unless the Government takes it forward with urgency and willpower, Britain’s most embedded competitive advantage could be placed at risk.
Bully boy
THiS brings us to New York corporate raider Edward Bramson and his assault on Barclays. investors in the bank will be aware that it has been an underwhelming performer, plagued by ethical problems which has slowed turnaround.
Far bigger shareholders, such as long-term owners Capital Group, Qatar Holdings and Blackrock, should not allow themselves to be bullied into reshaping the enterprise by a 5pc holder focused on making himself and cohorts richer in the immediate term and not worrying about the dead bodies left behind.
Bramson’s declared goal, unhelpfully outlined in New York, is to rip Barclays’ investment banking operation apart. He kindly consents to leaving mergers and acquisitions teams in place and allowing the bank to do ‘high value’ public offerings and bond sales – but thinks cash equities, currency and fixed trading desks can be axed.
Even sceptics about the social good to be derived from casino banking have to recognise that it is part of the package if you are to be a functioning investment bank.
Barclays is the last UK institution standing in this space, and for all its faults has a strong franchise having acquired (on the cheap) most of Lehman’s US corporate clients. if it stops being a full-service investment bank it shrivels into territory better occupied by Lazard, Greenhill, Rothschild and the rest.
That’s not good for Barclays or London as a global financial centre.
Family affairs
THE economics of today’s royal wedding are, like the monarchy, bathed in mystique.
Generally speaking, the taxpayer seems to get a good deal from the 85pc it receives of the £328m profit derived from the £12.4bn Crown Estates. The Queen’s 15pc share, and income from the Duchy of Lancaster, are also subject to taxes since they were negotiated by John major’s government during a rare burst of republican fervour.
in comparison, the cost of the nuptials held on state property at Windsor is £32m.
As Britain moves to toward a European farewell, rekindling the pomp of the UK monarchy can be no bad thing. An American bride should (as international Trade Secretary Liam Fox says) underpin the transatlantic relationship.
Last year 1.56m American tourists, taking advantage of a depreciated pound, travelled to the UK and spent £1.4bn. if global publicity for Harry and meghan were to lift US tourism by just a couple of per cent, then the wedding would be paid for.
imagine the uplift if a future royal were to find a Chinese partner.