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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is chief executive of the CBI, the employers’ organisation
As the spectre of protectionism casts its shadow over the world economy, now is a moment to leave old arguments behind. Instead, we should take action. Leaders are currently preparing for the EU-UK summit next week. Markus Beyrer, director-general at BusinessEurope, and I, bolstered by the strength of the 25mn businesses we speak for across Europe, call on them to choose prosperity over politics.
This is the first time that the CBI, the UK’s leading business voice, and BusinessEurope, representing over 40 European federations, have come together to publicly outline the business priorities for a refreshed EU-UK strategic partnership. In a formal letter to UK Prime Minister Sir Keir Starmer and president of the European Commission Ursula von der Leyen, we have set out the concrete steps needed to improve this crucial relationship.
With war on our doorstep in Europe, co-ordinated and collaborative action on defence and industrial capabilities is a priority. However, uniting against common threats cannot be the ceiling of our ambition; renewing the UK-EU economic relationship must not be left to “any other business” on the agenda.
Business has no desire to rehash the Brexit referendum, nor trample on the red lines negotiators have already outlined. Both sides bring baggage to the table. But we can’t afford the legacy of the past decade to determine the future of the next — this summit must deliver critical progress.
The EU and the UK share the North Sea and have aligned their net zero ambitions. Energy co-operation between them could deliver both energy security and a resilient, low carbon economy. The EU-UK Trade and Cooperation Agreement committed to “giving serious consideration to linking respective carbon pricing systems”. But progress has been glacially slow.
With both our emissions trading schemes phasing out free allowances, this is the moment to link them, to create a deeper, more liquid and effective market. A mutual exemption to our respective carbon border adjustment mechanisms would prevent new trade barriers hindering electricity imports and stalling joint grid projects in the North Sea. Neither the UK’s clean power target nor the EU’s vital electrification needs can be met without this.
Mobility has become an overly politicised issue and risks trapping us in stagnation. But people travelling across borders is very different to permanent migration if they are doing so to deliver services, which represent 48 per cent of our total bilateral trade. Everyone wants our powerhouse services sector to thrive and grow. That’s not cakeism, it’s pragmatism. Both sides need to focus on making this happen, whether by enhancing short-term business travel or through mutual recognition of professional qualifications.
The UK leaving the EU’s regulatory and customs regimes has left companies on both sides of the Channel with their own Brexit red tape to deal with. For those hit with the resulting higher costs, failing to make progress now would be a lost opportunity to create an environment where businesses thrive.
Reducing those costs doesn’t require re-entering the customs union. A sanitary and phytosanitary and a veterinary agreement would support agricultural and food products moving with less friction across borders but without compromising high standards of food safety and animal health. Such an agreement would also ease the flow of trade between mainland Britain and Northern Ireland. Recognising each others’ testing and certification would also reduce barriers to trade in goods. The EU already has such agreements with the US, Canada, and several other countries, so why not the UK?
None of this would infringe on political red lines in London or Brussels. This is pragmatism to unlock prosperity — the sort of leadership and vision that businesses on both sides of the Channel want to see from the summit next week.
