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Is it time to rejoin the single market? Tobias Ellwood says yes
(www.theneweuropean.co.uk)
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this post was submitted on 07 Jul 2023
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UK Politics
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Staying in the single market for goods would have certainly helped with many of the logistical issues business and consumers have faced due to Brexit. But remember that the UK/EU Trade and Cooperation Agreement has at least allowed for tariff-free and quota-free trade in goods since Brexit - not as good as the single market, but at least not the worst possible outcome for goods trade.
The UK, however, is a service-based high-skill economy. From a growth and employment and competitiveness perspective, it's trade in the service sector (and ultimately re-entry to the single market for services) that is the big prize we need to shoot for - where the Brexit agreement fell woefully short and which the Tories seemed clueless about the importance of it in the negotiations.They invested huge amounts of political capital in fighting over arrangements for fishing (which accounts for less than 0.1% of the UK economy) but basically never went in to bat on services (which accounts for about 80%).
Sure, but there isn’t really a single market for many services even within the EU anyway. If you’re French, you can’t buy car insurance from Italy or have a German bank account. And those are the upper reaches of the services economy. It goes without saying that you can’t have a cross-border haircut or swimming lesson. The vast majority of services are extremely local by nature.
As for the City, there’s still plenty of Chinese and Arab money to launder so I’m sure they’ll be fine.
Btw, I say all this as a staunch remainer. Brexit was dumb, but it’s free movement and trade in goods where most of the effects are felt.
They literally can and do. It's just so seamless within the EU that people who aren't interested may not even realise they're dealing with a company from another EU country. Being able to sell services cross-border without extra requirements (on top of those applying EU-wide) is the whole point of the single market in services.
While technically true, the number of formal and informal barriers to a single market for retail financial services in the EU is vast. Passporting is mostly just useful for corporate/wholesale business.
I assume services was left out because it's the area where the UK has areas of competitive advantage like fintech, deeptech, life sciences etc.
The EU would have demanded dynamic alignment of regulations for any inclusion and that would negate any advantage that could be gained.
The first test will be AI regulation, the EU has opted for a horizontal approach whereas UK is going for a vertical one which has received a welcome response from the AI industry
https://datainnovation.org/2023/04/the-eu-should-learn-from-how-the-uk-regulates-ai-to-stay-competitive/
Competitiveness counts for little when there are barriers to our competitive service sector even selling their services in the EU.
Competitive in financial services? Doesn't matter, as we don't have passporting anymore, so British banks and insurers have to set up on-shore locally-regulated entities to sell their services in the EU.
Competitive in professional services? Doesn't matter either, as there's no longer any mutual recognition of professional qualifications.
Etc.