Britain’s bid to create global deal in services

Britain plans to lead a major drive to create a global trade agreement for selling services around the world in a move that could add billions to the UK economy. 

Senior Ministers and City lobby groups have held private talks in recent weeks about spearheading a plan to open up global markets so that countries including Britain can export services such as banking, insurance and legal advice to fast-growing economies. 

An agreement could open up Africa, Asia and the Middle East to City firms and other British companies that sell world-leading services. 

A new dawn?: Senior Ministers and City lobby groups have held private talks in recent weeks about spearheading a plan to open up global markets

Advisers close to the Government said the move to press for an agreement had been made possible by Brexit. They said leaving the EU had unshackled Britain from countries with other priorities. This was clearing the way for UK representatives to launch negotiations later this year at the World Trade Organization. 

About 80 per cent of Britain’s economy is based on services – ranging from music, theatre, education and healthcare to investment banking and auditing – while many countries in the EU are much more reliant on trading goods. About 50 per cent of UK exports are service-based. 

Barney Reynolds, a City lawyer at Shearman & Sterling, said: ‘The UK will be at the forefront of pushing for a global agreement because we are free traders and we’re very strong on services. It’s not a pipe dream.’ 

Former Minister Dr Liam Fox said: ‘As International Trade Secretary and the UK’s nominee for WTO Director-General, I championed the cause of the liberalisation of global services as the big prize from Brexit. We need to lift our horizons and lead an international effort to remove tariffs and legal barriers and agree global standards.’ 

Negotiating through the WTO – which brings together 164 countries – could mean agreeing with nations from the US to Japan and China to open markets for trading services. 

Finance experts said such a deal would deliver a huge boost to UK companies that operate internationally. 

One expert involved in the talks said: ‘Rolls-Royce sells jet engines, but a lot of the value in that export comes from the services contracts attached to the jet engine – the maintenance contract and the engineers that would come over and service them.’ 

The talks come as time runs short for the UK to strike an agreement with the EU by the end of March as the precursor to a full financial services deal. 

Hopes that the EU will agree a deal for London-based banks and the City to freely sell across the Channel are fading amid concern that Brussels is attempting a land-grab on this crucial part of the UK economy. 

Mel Stride, chairman of the Treasury Select Committee, said: ‘Where I sense we are moving is to look more to multilateral and international arrangements [on financial services] – basically to be more outward facing, rather than in the EU’s orbit.’ 

David Collins, a professor of international economic law at City University, said: ‘If an agreement were there, it could open up overseas markets to British financial services which would be worth billions of pounds.’ 

He said an agreement could create a ‘common set of standards’ and a recognition of professional qualifications. 

‘Services are not geographically dependent like goods so New Zealand, for example, could suddenly become a market for services because you could do transactions there instantly.’ 

Ministers and lobby groups are understood to be keen to sell to rapidly growing economies including India and those in Africa. Collins said: ‘Nigeria’s population will be bigger than the US population in ten years. Africa has been at the forefront of cutting-edge technology. It was the first place you could pay for things on your phone.’ 

But experts warned that progress on WTO talks could be slow. Britain is forging ahead with one-on-one talks with other nations at the same time. 

Catherine McGuinness, policy chairwoman of the City of London Corporation, has been taking part in talks with the US which have focused on agreeing a ‘green deal’ for financial services. 

A source said the meetings could make it easier for British asset managers to sell funds to the US if it can be shown they have a high score on climate change, for example. 

McGuinness said: ‘We’re seeing real momentum behind green finance with firms on both sides of the Atlantic realising the huge opportunities to work together.’