Theresa May’s global Britain against Philip Hammond’s Brexit fog

theresa-may-davos-2017

Theresa May at World Economic Forum 2017 in Davos (World Economic Forum, 2017)

The 2017 edition of the World Economic Forum will be remembered for long. This year’s event carried indeed a lot of attractiveness, not only because for the first time a head of state from the People’s Republic of China was invited to the alpine city of Davos, or because the world is preparing to welcome a protectionist American administration, but also because it was the first one after the Brexit. With her speech, UK’s Prime Minister Theresa May tried to reassure the world the UK after Brexit would take on a “leadership role” in free trade, while British Chancellor Philip Hammond later admitted “Brexit fog” impact on investment.

Klaus Schwab, Executive Chairman and founder of the World Economic Forum, immediately moved the attention to the delicate Brexit question while welcoming Mrs. May on the stage. “I was born before World War Two, and for me Europe was a big dream, a dream of neighbours having born again to feel united”, he said. “But I’m also a democrat, and for this reason I have to accept the majority will of British people”, he added. “I would be pleased to hear that you will not leave Europe but you will have hopefully a very amicable divorce with the European Union”.

May’s “manifesto”

UK’s PM didn’t seemed too touched by such sentimental appeal, and started a speech that was certainly designed to reassure the world on Great Britain’s intentions after the decision of leaving the 28-member bloc. “This morning, I want to set out a manifesto for change […], I want to show how, by taking a new approach that harnesses the good of what works and changes what does not, we can maintain – indeed we can build – support for the rules-based international system”, May said. “And I want to explain how, as we do so, the United Kingdom […] step up to a new leadership role as the strongest and most forceful advocate for business, free markets and free trade anywhere in the world”, she added.

A “Global Britain”

Mrs. May went straight to the point. “I speak to you this morning as the Prime Minister of a country that faces the future with confidence”. “For a little over six months ago, millions of my fellow citizens upset the odds by voting […] to leave the European Union and embrace the world”, she said, and immediately unveiled the core of her message: “They chose to build a truly Global Britain”, she declared.

“I know that this – and the other reasons Britain took such a decision – is not always well understood internationally, particularly among our friends and allies in Europe. […] We are a European country […], but we are also a country that has always looked beyond Europe to the wider world”, she said. “And it is why we are by instinct a great, global, trading nation that seeks to trade with countries not just in Europe but beyond Europe too”.

International trade

A “Global Britain” is indeed the key, the pillar of the whole theme delivered by Mrs. May at Davos, the response she and her team have designed to explain to the world the decision her country has taken back in June last year. British PM’s speech came after difficult weeks, where UK’s top Ambassador in the EU resigned, and many European leaders shed doubts on the ability of the country to negotiate a good deal with Brussels. Theresa May was in Davos exactly to reassure businesses and political leaders that Britain would remain open for business after it quits the European Union, and that it will still be a top player in international trade.

Chancellor Hammond’s Davos truth

The message is clear, the objective too, but there was also space for some doubts on the future of the UK at Davos. British Chancellor Philip Hammond, during a conference in Davos last week, indeed has acknowledged that Brexit uncertainty may cause firms to delay investment. Speaking at the World Economic Forum, the British politician, who has been Chancellor of the Exchequer since 13 July 2016, said some firms were “quite understandably […] waiting for the fog of Brexit to clear”. “But other businesses that are not so dependent on access to European market, on trade barriers have continued to invest”, he also said.

Mr. Hammond continued his speech in Davos saying that Britain was ready for the challenges after Brexit and ready to reinvent itself. “If we were to be, by some catastrophe, closed off from those markets we would have to reinvent ourselves”, he said. “And I just want to send out a clear message that we’ve reinvented ourselves before…we will do so again if we have to”, he declared. He added that business was waiting “to have a better understanding what the future looks like.

“Political necessity”

Chancellor Hammond also stressed the importance of quitting the EU within two years, as repeatedly specified by PM May in the last couple of months, and said leaving within two years was a “political necessity”. “We think it can be done in two years if there is a political will on both sides to reach agreement on our exit and at least agreement on the broad principles of the end state that will exist between the UK and the European Union”, he said. There was also space in Mr. Hammond’s speech for him to blame former PM Tony Blair for the Brexit. Indeed chancellor Hammond said Mr. Blair’s failure to control “the flow of workers” from Eastern Europe fuelled the anti-immigration sentiment that led to the leave vote.

An analysis on the approach

Both PM May and Mr. Hammond were eager to reassure the World Economic Forum attendees that the UK would emerge bigger and better from the divorce with Brussels, but the Chancellor sounded a bit more pragmatic than the PM. PM May seemed more nervous about the big challenge of convincing investors to trust Great Britain in this particular moment, and she spoke to a broader but also unspecified audience of “old friends and new allies right around the world” to entwine commercial bonds with. May’s call to a Global Britain and to an international approach to trade are more than understandable at this stage, but the question is: is the UK really a more international economic power outside of the EU?

Prime Minister May has a very windy road ahead and a delicate mission to complete. Convincing the audience, not only in Davos, that the UK won’t lose any trade appeal and that will still be a rate A player after leaving the world’s number 1 economy, won’t be easy. Indeed, the mission may take more than what she showcased at the World Economic Forum.

Difficult surroundings

A few prominent US media outlets revealed last week, right after Theresa May delivered her speech, that international banks have started revealing plans to relocate jobs outside the UK. Bloomberg last week reported that JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he thinks “there will be more job movement than we hoped for,” while HSBC Holdings Plc CEO Stuart Gulliver said staff generating about 20 percent of London revenue may move to Paris.

According to the New York Times, HSBC and UBS have warned they could move around 1,000 jobs out of London, while JPMorgan Chase has said that it may have to move 4,000 staff members. The New York Times also quoted Andrew Parmley, the Lord Mayor of London and Head of the City of London Corporation, as saying he was “not surprised” by the looming departures and said “it is inevitable that people would be speculating about what to do next”. He also argued that some of the thousands of jobs that are likely to leave London may return if Mrs. May can “negotiate a good deal for financial services” though. The world, not only Davos, is eager to know how.

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