MBR_ISSUE 37_Lowres

Malta Business Review
BREXIT
MAKING THE
MOST OF BREXIT
Welcome to the third chapter Global Policy
Lab: Engineering Growth. Donning the white
coats this time around are Charlie Cooper,
POLITICO’s Brexit correspondent, and Mark
Scott, our chief technology correspondent.
Over the next five weeks we want to carry
out a conversation with you, our readers,
and your peers in the policymaking world
to identify and explore the most promising
avenues for the British economy after it cuts
ties with the European Union. We shall look at
global trade, financial services, manufacturing
and the digital economy — as well as any
other ideas you come up with.
But first let’s start with your predictions for
Brexit. Recently, we asked our readers to
respond to a survey. We shall be releasing
results over the next five weeks but here’s
the skinny: Few of you think Brexit will be
good for the U.K. economy. Some 75 percent
of you think Brexit will be “largely negative.”
Another 16 percent think it will be “negative
with significant positives.” Just nine percent
of you think Brexit will be “largely positive” or
“positive with significant negatives.”
We also asked what economic strategies
the U.K. should pursue. Common responses
included innovation in the tech sector and
deregulation in pursuit of free-trade deals
with non-EU countries. There were also a
large number of people (nearly one in five of
those who responded) who rather cheekily
said that Britain’s best Brexit economic
strategy would be to reverse Brexit, or have
a second referendum. As they say across the
Channel, touché.
In November, we have also kicked off a
conversation with a gathering of experts from
government, academia and industry. We will
report the results of this policy brainstorm
in next month’s newsfeed, but if you want
a sneak preview, join us for a Facebook Live
session immediately after the brainstorm at
11:30 a.m., London time.
For those wanting to join the discussion by
email, we have compiled a brainstorm white
paper with some of the questions we shall
tackle. Send us your suggestions, thoughts
and ideas at globalpolicylab@politico.eu. We
would particularly like to hear from those
of you who think Brexit will be positive. As
always, we shall feel free to use your name
unless you say otherwise. MBR
Courtesy: The Politico Global Policy Lab
BREXIT BRITAIN,
TECH TIGER?
Very generously, Chancellor Philip Hammond
kickstarted the Britain-after-Brexit
conversation for us today with his budget
statement.
He began by confirming the government has
set aside an additional £3 billion to prepare
for Brexit, in part as contingency funding for a
no-deal outcome to negotiations. POLITICO’s
chief U.K. political correspondent Tom
McTague has provided us with a handy guide
to Brexit pressures on the budget.
Frequently criticized for focusing on the risks
of Brexit, Hammond reached for the positives,
portraying leaving the EU as an opportunity
for Britain to get ahead of the curve in the
fields of artificial intelligence, automation
and big data. He announced a £500m
investment in the tech industry, singling out
CITY’S CAUTIOUS
SIGH OF RELIEF
Whisper it, but City bosses have been feeling
ever so slightly more optimistic recently.
A tech revolution would be splendid, but
everyone knows the health of the British
economy depends on the health of its
financial and related services sector.
Brexit Secretary David Davis’s speech to UBS
on Tuesday, November 14 was seen as a
watershed moment. He referred directly to
the International Regulatory Strategy Group’s
recommendations for a post-Brexit free-trade
agreement between the U.K. and Europe.
His words were interpreted as showing the
government’s intent to get a bespoke deal on
financial services, cleaving as close as possible
to European-style regulations with mutual
recognition of each other’s systems. City firms
had worried the government would seek a
more distant relationship governed by existing
rules that the EU applies to non-EU countries
— known as third-party equivalence regimes.
Technical stuff, but music to City leaders’ ears.
Banking bosses had previously heard similar
noises from other departments, one industry
insider told GPL, but Davis’ speech was
interpreted as a sign of agreement across
artificial intelligence, 5G and fiber broadband
technologies.
Hammond has said he believes Brexit will give
the U.K. the chance to “explore regulatory
innovations” to allow tech industries to
flourish. His argument is that the behemoth
across the Channel takes a long time to react
when a new technology comes along. A
nimble post-Brexit U.K. could be quicker on
its feet, becoming the natural home for startups.
However, no amount of positivity could hide
the headline announcement in his budget
statement: real gloom in the growth forecast.
U.K. GDP growth over the next five years has
been downgraded since the last forecast in
March. The independent Office for Budget
Responsibility now projects the economy will
grow more slowly — by 1.4 percent in 2018,
1.3 percent in 2019, 1.3 percent in 2020, 1.5
percent in 2021 and 1.6 percent in 2022. MBR
Courtesy: The Politico Global Policy Lab
the whole Cabinet — something that has
been rare lately. “If it’s indicative of a position
that’s coalescing within government, that’s
great news,” the insider said. Whether there
is appetite for such an accord on the EU side
is another matter. Last week, the EU’s Brexit
negotiator, Michel Barnier, reemphasized that
Brexit will mean the end of City firms’ automatic
authorization to do business throughout the
EU — known as passporting rights. MBR
Courtesy: The Politico Global Policy Lab
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