Philip Hammond – 2018 Speech to European Business Summit

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 24 May 2018.

Thank you for inviting me to speak at this conference, and to address this distinguished group this afternoon.

It’s apt that I speak today on the anniversary of another momentous event for European unity and shared values.

Sixty-two years ago today – as a war-torn Europe rebuilt itself – countries across our continent came together to form a positive vision of a tolerant, free Europe…

…where talent and hard work was recognised…

…and established a new pan-European partnership.

I am not speaking about the Treaty of Rome, or the formation of the European Economic Community…

…but of the first Eurovision Song Contest.

And I can tell you that today, the Eurovision Song Contest is one of the very few issues that generates as much debate and strength of feeling in the UK as the European Union itself does.

But we all take part in it…

…and we all accept the rules of it. Even when we lose.

And today, I want to reflect on the enduring shared values of our continent…

…and on the shared opportunities, and the shared challenges that lie ahead.

And this summit…

…bringing together leaders from both government and businesses…

…comes at an important time for our continent:

Because while the global and European economies have recently enjoyed a period of relative strength…

…we cannot take this for granted…

And the geopolitical context is increasingly uncertain…

…whether it’s the presence of an emboldened and re-arming Russia on Europe’s eastern doorstep…

…the ongoing escalation in tensions across the Middle-East…

…or uncertainty around the policy of Europe’s largest trading partner, the US, on trade and tax reform.

And governments across Europe…

…and indeed around the world…

…are having to manage a rising tide of sentiment among our electorates, against the conventional wisdom of free trade, globalisation, and the benefits of the liberal market economy…

…an argument that as leaders in government and business we must make all over again;

These are challenges that face all of us across this continent…

…challenges we must confront if we are to deliver the security, prosperity and higher living standards for our citizens for which we all strive.

But my message this afternoon is that there are significant shared opportunities too…

One such opportunity that I spend a lot of time talking about, is presented by the coming technological revolution…

…a revolution that will shape people’s lives and have far-reaching implications for our economic model…

…and will have a long-term impact on all our economies, far bigger in scale than the United Kingdom’s decision to leave the European Union.

Of course, such profound change brings with it major challenges…

…such as evolving our tax and regulatory systems…

…our competition policies, so they are fit for…

…for the digital age…

ensuring that our people have the skills they need to prosper in a world of increasing automation;

and convincing them that everyone can share in the proceeds of this technological change and the economic growth that can flow from it….

At a time of unprecedented scepticism of our liberal market economic and political model…

That requires collaboration and cooperation.

And if we want European values and interests to prevail in this debate we must ensure that Europe speaks with one voice.

Of course, as Chancellor of the Exchequer of the United Kingdom, my most immediate priority is our negotiation with the EU…

…but the point is, that the challenges and opportunities facing our economies and societies are shared challenges and common opportunities…

…And our shared values and shared history….

…go back far beyond our membership of the European Union…

…or even Eurovision…

…and they will continue far beyond the timeframe of Brexit.

And our continent’s shared commitment to economic openness, democratic values and human rights…

….and our shared belief in the power of the liberal market economy to deliver rising living standards for all of our people…

…remains unshakable.

With our different history, culture, and outlook, the British people decided that the deep political integration to which the EU institutions increasingly aspire, was simply not right for Britain…

…but the British people have not, and never will, turn their backs on free, open and fair trade with our European neighbours. That is an established part of our economic culture – going back to Hanseatic times and earlier.

Britain is leaving the political institutions of the EU; but it is not leaving Europe

And British prosperity is, and always will be, closely bound to European prosperity.

So Europe’s success – and the success of the Euro as a currency – is very strongly in Britain’s interest, and we will not do anything which jeopardises that success.

Our economy is recognisably a European-style economy…

…with high levels of consumer and worker protection, a highly developed social welfare system and strong environmental standards…

…and it is the clear wish of the British people, regularly demonstrated, to keep it that way…

…as we build a new deep and special partnership with the European Union.

We have made significant progress since Article 50 was triggered, just over a year ago…

…both in our own internal debate about what Brexit should mean…

…and in our negotiation with the EU.

The first stage in the negotiations successfully settled many withdrawal issues, including the UK’s financial obligations, in December.

And in March we reached agreement on a transition period, running until the end of 2020…

… during which businesses can operate exactly as before…

…ensuring only one set of changes, at the end of that period, that businesses have to navigate.

We are now focussed on our future customs relationship, and our future economic partnership, and I’ll briefly say a bit about both.

I know that for business getting clarity on our future customs relationship is a top priority…

…and so it should be a top priority for European governments too.

EU27 businesses export more services to the UK than to any country outside the EU.

Almost 80% of Irish poultry exports go to the UK…

…one eighth of German automotive exports…

…10% of all French cheese exports.

And here in Belgium, almost half of the total tonnage handled at the port of Zeebrugge last year, went to, or came from, the UK – up from just a third in 2011.

Over 1 million cars were transported between Europe and the UK via Zeebrugge…

…up 80% on seven years ago.

The UK is exploring two possible future customs models…

…both are “works in progress” with more work to be done…

…but we are confident that, building on the work we have done already on these models…

…we can develop a solution that responds to the concerns of business…

…minimises frictions and burdens at and behind the border…

…avoids new barriers in Ireland…

…and sustains our trade with the EU27.

And beyond customs, we seek a comprehensive future economic partnership …

…a partnership that protects the supply chains and established trade relationships that I have just talked about…

… safeguards the jobs and businesses that depend on them on both sides of the Channel…

…and promotes the values we share across the continent of Europe.

And of course, in doing so, we don’t have to start from scratch.

The UK and EU27 are in a unique positon:

…with deeply interconnected economies and supply chains…

…a starting point of common regulatory standards and regimes…

…and unrivalled collaboration in everything from trade, security and defence…

…to people to people exchange, education, science, technology, culture and many other shared areas.

There are a range of possibilities for the shape that our future relationship could take…

…and those of you who follow UK media, as I know many of you do, will recognise there is a range of views in the UK about those options.

And we will set out in the coming weeks more detail on the British Government’s ambition for a mutually beneficial future relationship between the EU and the UK…

…in the context of our vision for the UK’s future role in the world.

For example, we’ll seek a comprehensive system of mutual recognition to ensure that, as now, products only need to undergo approvals in one country to show that they meet regulatory standards across Europe;

We’ll explore the terms on which the UK could maintain a continuing relationship with EU agencies, such as those for chemicals, pharmaceuticals, and aerospace, so that they continue to benefit from UK expertise and we can deliver such a system of single approvals;

On services we have the opportunity to establish a broader agreement than has ever been done before, including continued recognition of professional qualifications, and a labour mobility framework that enables travel to provide services to clients in person.

We seek a bespoke partnership in financial services, that will enable the ongoing delivery of cross-border financial services in both directions, while protecting financial stability and maintaining fair competition.

I believe it is very much in our mutual interest to maintain access to London’s financial services market for Europe’s business and citizens.

We manage in the UK more than EUR1.5 trillion of assets on behalf of EU clients;

Around two-thirds of debt and equity capital raised by EU corporates is facilitated by banks based in the UK. 78% of European Forex trading and 74% of European interest rate derivatives trading takes place in the UK. These are services that businesses rely on to run their operations efficiently, with the benefit passed on as lower prices for consumers in all 28 EU countries…

…and more competitive exports to the rest of the world.

And we should be under no illusion about the significant additional costs if this highly efficient market in London were to fragment.

Costs that would be borne by Europe’s businesses and consumers.

And more prosaically, while we are working through the spectrum of issues in relation to our future relationship…

…we are also making progress with the introduction, application and transformation of the many technical systems and processes that underpin the trade relationship between the UK and EU so that we are ready for exit whatever our future relationship.

But reaching a vision of a deep and comprehensive future relationship will only be possible if both sides want it.

A deal only works if it works for both parties as we say: “it takes two to tango”.

And I am saying this to you this afternoon, because I fear that many EU opinion-formers in government and in business, see the Brexit challenge as simply one for the UK to resolve.

And I understand the temptation to say “let the brit’s sort out what they want – and then come back to us”.

But this has to be a two-way conversation.

Because the final deal won’t be determined simply by what Britain wants…

…it can’t be just about British prosperity and British jobs…

…it must also be about European prosperity and jobs.

And if EU27 Member States don’t want to have a close future economic, security, technical relationship with the UK…

…then it won’t happen.

So we need a frank conversation about our shared appetite for such a future close partnership.

Do we both want it? Or don’t we?

If we do, let’s focus on making a deal that works.

Personally, I passionately believe that all of us in this room, and across Europe, should be interested in an outcome that properly reflects the 45 years that we have spent together as members of the EU…

…that reflects our shared history and shared values…

…and looks forward to the challenges and the opportunities, which we will face so much more effectively by working together.

There is no denying that there are a range of complex issues to resolve…

…but I believe that with the political benefits articulated by the Member States; with the economic logic, articulated by the voice of business…

…we can make the case for a close future partnership – the UK, the EU; governments and businesses…

…working in the common interests of all of our citizens.

Ensuring Europe’s voice in the world…

…a strong voice for the values that reflect the lessons of our Continent’s long and turbulent history…

…at a time when others sometimes appear tempted to forget those lessons…

…to step away from those values.

So let us resolve today to work together to ensure that all of Europe remains an open, outward looking free-trading Continent…

…attracting talent and capital from around the world.

Let us build a future partnership that we can be proud of…

…one that will stand the test of time

…and that will support the prosperity, security and living standards of our children, and our children’s children.

The voice of business a decisive influence as we take this debate forward…

…and I look forward to the common sense, pragmatism and economic logic of business playing a crucial role as we shape our future relationship

Thank you.