French President Emmanuel Macron and German Chancellor Angela Merkel could be issued a huge blow if Britain secures a comprehensive Free Trade Agreement (FTA) with the US.
The first round of UK-EU trade talks ended last week, with negotiators acknowledging there were significant differences in what both sides wanted. Brussels still insists on maintaining its current fishing rights in British waters and wants London to agree to a number of EU regulations, including environmental standards, workers’ rights and state aid rules. On the other hand, London is demanding the right to diverge from those rules in order to be able to strike new trade agreements around the world.
According to the UK’s top negotiator David Frost, post-Brexit Britain “only wants what other independent countries have”.
As tensions are set to rise in the next round of talks, scheduled to start on March 18, Vote Leave insiders Lord David Owen and Douglas Carswell suggested in an interview with Express.co.uk that French President Emmanuel Macron and German Chancellor Angela Merkel could be issued a huge blow in the talks if Britain secures a comprehensive Free Trade Agreement (FTA) with the US.
In a recent Spectator report, John Keiger – a former professor at the University of Cambridge – argued that for France, Brexit is the best opportunity to dethrone London as the continent’s banker.
The report reads: “According to the widely respected Z/Yen ‘Global Financial Centres Index’, New York is the most competitive financial centre in the world, followed by London in second place.
”But, on current trends, Paris and China’s financial centres are on track to overtake London by 2021.
“The post-Brexit negotiations are Paris’s opportunity to dethrone London.
“It has already snapped up the European Banking Authority from London and Macron manoeuvred France’s former finance minister Christine Lagarde into her seat at the head of the ECB.”
However, Lord Owen explained that Mr Macron’s plans could easily be scuppered by a UK-US trade deal – which Britain hopes to strike by 2020.
The former Foreign Secretary and SDP co-founder argued that if the City of London and New York become interconnected following a comprehensive agreement, there is no chance Frankfurt or Paris will attract more business.
He said: “If New York is linked to London, and they have all that clout and authority.
“They will be able to put in cheaper things.
“Now, they have already put people in some other European countries because of Brexit, but unless they want to put up barriers, their industry is going to start saying: ‘I am sorry, I am getting an offer from JP Morgan London that is significantly lower over a ten year period investment. I can’t afford to not give it a go.’
”The City of London is very adaptable and it will have to compete. They are going to have to start cutting their costs and their bids will be lower.
“If they are closer to America, they can then pull in all that finance.
“In most of these big deals, money goes where the cheapest thing is. They don’t care about boundaries. Business doesn’t.”
Lord Owen added: “I don’t think myself we should underestimate the City of London getting closer to American city financing, allowing us the flexibility to underbid.
“Being told by a politician you have to use Frankfurt or Paris is nonsense. Unless they want to go to a completely regimented, protectionist system, those people will not go. They will not get the investment.”
Moreover, according to former Ukip MP Douglas Carswell, the FTA with the US could also deal a huge blow to Mrs Merkel – as German businesses might find relocating to post-Brexit Britain incredibly profitable.
He told Express.co.uk: “I think a US-UK free trade deal is pretty much lined up. There are vested interests on both sides.
The reason why I think it is so straightforward to do is because I believe the basic approach that Donald Trump and Boris Johnson want is mutual standards and recognition.
“Meaning: If it is legal to buy something in Clacton, it should be legal to buy it and sell it in North Carolina.”
Mr Carswell added: “I am fascinated by this because one of the implications is that we could have an FTA with North America fairly soon.
“But there is an interesting question.
“Imagine you are a German car manufacturer and you have already seen a 5 to a 7 percent decline in the European car market.
“But in a few years time, you realise that if you relocate your factory to Sunderland, you will be able to sell your Audis, Mercedes tariff free to the US.
“That is why I think a trade deal with the US is so important and so significant.
“Up until now the assumption on the EU side side has been that this is zero sum game.
“An economy of 65 million people against an economy of 500 million people.
“It is not.
“That’s not how trade works.”
According to Mr Carswell, Britain could strike an FTA with the US by November 2020 – a month before the end of the transition period with the bloc.
In this way, US President Donald Trump could deliver a blow to Mrs Merkel and Mr Macron as closer ties between Washington and London as the opportunity of “dethroning” London will be scuppered if a US trade deal is agreed.
However, coronavirus fears dealt a blow to the UK’s trade ambitions after a delegation of six US states cancelled this week’s visit.
Representatives of Virginia, Tennessee, Georgia, Mississippi, Maryland and Oregon were meant to meet Department of International Trade (DIT) officials to discuss opportunities for state-level agreements with the UK.
But talks between the two sides have been postponed due to fears about the global outbreak.
The teams had planned a dinner of oysters and Guinness on St Patrick’s Day, but this has also been called off.
Allie Renison, head of EU and trade policy at the Institute of Directors, said the outbreak had come at an unfortunate time for the Government, which aspires to create a “Global Britain” through trade deals post-Brexit.
She said: “If this becomes the new normal that becomes a huge issue for the Government in terms of trying to match the narrative with the ambition.”