Thursday 12 April 2018
Trade and finance dominate this week’s economic news: Canada looks to upwardly redefine what a Canada-style deal with the UK would look like as British exports look set to jump spectacularly over the course of 2018. Fears London will drop from its perch as the world’s financial centre have now all but vanished with bigwigs at Goldman Sachs, the Bundesbank and 88 senior business leaders surveyed by Lloyds giving the City the thumbs up.
Canada’s liberal prime minister, Justin Trudeau has taken the unusual step of provoking the European Union by promising Britain an upgraded version of its current trade deal, known as Ceta once the UK has left the EU. No doubt referring first to Ceta’s controversial investor-state dispute provisions – inserted into the agreement to protect Canadian businesses operating in EU states with corrupt judicial systems – Trudeau said: “There will be things in Ceta that are no longer as necessary between Canada and the UK and there’d be other areas where we would be interested in going further.” In particular, there is huge room for improvement with regard to services, Britain’s biggest class of export. Canada, a major proponent of free trade on the world stage is unlikely to be demanding massive concessions. “Canada is firmly of the opinion that the best trade deals are the win-win trade deals,” added Trudeau.
By the end of 2018, the total value of UK exports will touch $1tn, up from $639bn at the beginning of the year, say investment banking giant HSBC. The rise will mark the fastest growth in UK exports since 2011 and comes courtesy of the twin benefits of a weaker pound and the rest of the world economy experiencing an upturn in economic output, fuelling demand. HSBC also reckon the value of British exports will double by 2030 – so much for leaving the EU closing us off from global trade.
Lloyd Blankfein, the CEO of Goldman Sachs has admitted his surprise the vote to Leave the EU has not had “more of a dramatic effect” on the UK economy. Speaking at a live event in Brussels, the banking boss tried to offer a note of caution before admitting a second time how strongly Britain has performed: “Maybe there’s been a lag but certainly, there hasn’t been a dramatic fall-off.” In October Blankfein famously indicated (see below) that Frankfurt would gobble up London’s huge financial sector. Actions speak louder than words however, at the event Blankfein admitted Goldman Sachs have not altered plans to move to a new £1bn headquarters in the City…
Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there. #Brexit
— Lloyd Blankfein (@lloydblankfein) October 19, 2017
…Meanwhile, the boss of Germany’s central bank has said London will remain the world’s “eminent financial centre” largely due to bankers’ reluctance to move to the likes of Frankfurt, Dublin, Amsterdam and Paris. “There is a big willingness to stay in London and some of those who have been asked to go would rather take a cheque and stay than move,” said Andreas Dombret on Radio 4’s the Today programme. Dombret is not alone, a survey by Lloyds found that a whopping 88% of business leaders in the UK believe London will hold onto its status as Europe’s financial hub after Brexit.