Donald Trump wants to make a free-trade deal with Britain a priority after Brexit. Matthew Lynn explains why that's great news for these five industries.
At the G20 summit last weekend the US president, Donald Trump, repeated his promise of making a free-trade deal with the UK a priority. That might mean a deal that's ready to go in 2020. That is a big opportunity. The US is, alongside China, the world's largest economy. And as the proposed TTIP free-trade agreement between the US and the EU now looks dead in the water, we can forget about our EU rivals matching our access to that market any time soon. There is a lot to play for. Here are five industries that should come out ahead.
First, fashion. The textiles industry in the US is heavily protected, mainly because of low-cost competition from Asia. But you can't slap tariffs on to protect cheap shoes without hitting expensive ones as well. We have some of the best designer labels in the world, as well as some traditional manufacturers with the kind of heritage that well-groomed consumers aspire to. As barriers come down, we can hugely increase sales.
Second, culture. The UK is second only to the US itself in creative industries such as publishing, music and film. If we can harmonise legal standards, our firms can expand their presence massively in the US. There's no reason why copyright and licensing laws should not be made compatible, as well as for public procurement in areas such as textbooks.
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Third, airlines. Under the existing rules a carrier operating in the US has to be at least 75% American-owned. In a free-trade deal our pretty good airlines, from Easyjet to British Airways, should do well against their fairly terrible ones. There is no reason why American flyers wouldn't want either our cheap and cheerful budget operators, or more upmarket luxury flights.
Fourth, infrastructure. America has been hostile towards foreign ownership of infrastructure assets from ports to energy companies over the last 20 years. It likes to keep them under American ownership. But we have some big players in that industry as well, from Centrica to National Grid to Severn Trent. Some, such as Centrica, already operate in the US but it should be a lot easier for them to expand once we have a deal.
Finally, technology. We have one of the fastest-growing tech sectors after the US itself, with app companies, fintech, and software businesses growing at rapid rates. Even better, the EU is increasingly at war with the American tech giants, constantly searching for new legal actions to take against them. But linking more closely with the US tech industry should strengthen our own players, while giving them more access to that country's 321 million English-speaking consumers. A free-trade deal can only accelerate its growth.
True, there will be threats as well. The US has huge companies in agriculture, food, healthcare, technology and media, and as they win unfettered access to our market, some of our companies will find it hard to survive. Food companies in particular will be challenged by cheaper American rivals.
But there will be losers as well as winners from any deal, and overall a US-UK trade deal will offer tremendous opportunities for companies and for investors in the businesses that stand to benefit. The US is already the largest single destination for our exports, accounting for £45bn of sales in 2016, compared with £30bn for Germany, the next largest. But businesses will need to be ready to exploit these opportunities and government to support them. And they need to start working on that now.
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Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
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