On Thursday, 20 October, Greg Hands MP gave the University of Cambridge’s annual Alcuin Lecture. Greg’s lecture at the University’s Department of Politics and International Studies (POLIS) was titled “Global Britain? The future of British trade after Brexit” and formed part of the Department’s so-called Brexit Week.
Previous lecturers include Chancellor of the University of Oxford and former UK Government Minister and Governor of Hong Kong, Lord Patten; former Prime Minister of Sweden, European Union Special Envoy to Former Yugoslavia, and High Representative for Bosnia and Herzegovina, Carl Bildt; former European Commissioner for Trade, Lord Mandelson; former President of the European Commission and Prime Minister of Portugal, José Manuel Barroso; among other prestigious predecessors.
POLIS’s Brexit Week featured several interdisciplinary discussion events which sought to engage both students and the local community in key current debates about Brexit and the United Kingdom’s future relationship with the European Union. The discussions ranged from “How and why did we get here?” to “Europe beyond the referendum”.
Greg’s lecture drew on his experience as Minister of State for Trade and Investment in the new Department for International Trade in the exciting few months since its creation. Greg’s lecture started with an emphasis on Britain’s history as a trading nation in part to explain what “Global Britain” really means. He then moved on to discuss what kind of a trading environment the Government would like to foster in the world. Greg even gave his opinion as to what “Brexit means Brexit” actually means.
Speaking after giving the lecture, Greg said: “It was a great honour to return to my alma mater to give the Alcuin Lecture at Cambridge’s Department of Politics and International Studies. I was proud to be able to remind those attending that Britain will always be a great trading nation, and that this Government fully intends for the UK to be the most fervent champion of free trade. After all, it is my job – and that of my Department – to ensure that we continue to strive towards this ambition.
“Just because the United Kingdom is leaving the European Union does not mean that we are leaving Europe. I see no contradiction in the UK having a bright future outside the EU, while maintaining and even strengthening our links with our European neighbours.
“I would like to thank Dr Chris Bickerton at POLIS for the invitation to give the annual Alcuin Lecture, and for being given the chance – like Alcuin himself – to recognise the pre-eminence of trade in terms of global influence and prosperity.”
A copy of Greg’s speech can be found below.
It is a pleasure, an honour and a privilege to be back here in Cambridge to deliver this year’s Alcuin Lecture.
And what a prestigious list of lecturers to follow: Carl Bildt, Chris Patten, Peter Mandelson, Jose Manuel Barroso and more!
But none of these speakers, great as they are, were involved, at the time they gave the lecture, at the heart of government at a time of something both as critical and as topical as Brexit. This is quite a lot of work – so it’s also a rare evening out for me!
I know this lecture is part of a series set up by Lord Brittan on Britain’s role in Europe – and I should start by joining you, David [Runciman], in paying tribute to Leon Brittan, a year on from his death. Speaking of Leon Brittan, I feel sure you might want to have at some point the only other MP who attended Robinson College, namely Nick Clegg, as he actually worked for Leon Brittan in Brussels, but I leave that to you, the organisers to arrange!
My first-class Cambridge education might have been an ideal training ground for European politics. I graduated in history, mainly twentieth century German and Eastern European history, but I also was in and out of both the Modern Languages and Oriental Studies faculties, with Tripos parts in all of German, Czech & Slovak, Turkish and Arabic, some of which I have retained to this day, and serve me well in my new environment.
I am particularly close to all things German. My wife is German, my children are bilingual. I lived before coming to Robinson in what was then called West Berlin, and spent most university vacations there. From there, I developed a close knowledge of the captive nations of Eastern Europe, and the alternative, Soviet socialist system. These days, you have to travel a long way to see a fundamentally different political system, perhaps Pyongyang, Havana or Caracas. Then, you could be there in less than half an hour from where I lived.
I became acquainted with European business and economics during my time as a financial trader in London and New York, before entering politics. Upon entering Parliament, I was probably one the few of the new intake that could say they had moved into a less unpopular profession!
But I am here tonight in my capacity as Minister of State for Trade and Investment at the newly-formed Department for International Trade.
This evening’s lecture is titled “Global Britain – the future of British trade after Brexit.” On reflection, I must admit it’s a title that is full of hidden meanings and ambiguity. What exactly is Global Britain? What kind of trading environment does Britain want to help foster in the world? And what does “Brexit means Brexit” actually mean?
I will touch on all these questions during the course of this lecture, but I’d like you all to leave with this thought. Britain will always be a great trading nation and going forward, we aim to be the most fervent champion of global free trade. It is my job and that of my department’s to ensure we continue to strive to this ambition.
Leaving the EU doesn’t mean leaving Europe, and I see no contradiction with seeing a bright future for the UK outside the Union, yet maintaining and even strengthening our links with our European neighbours. But more of this to come later…
On the 24th June, I didn’t wake up and feel any less European. I campaigned for the Remain side. My half-British, half-German nine year old son was in tears. But I take a pragmatic view of Brexit, and, in any case, being European is an intrinsic part of my British identity and always will be.
And if we’re short of inspiration, we only need to delve into our rich trading history. And there is no better place to start than Alcuin himself.
Alcuin was a true European. Born and raised in York, his great intellect brought him to the Court of Charlemagne, whose Carolingian Empire stretched across the continent like a proto-EU, encompassing France, Germany, Italy, the Low Countries, and Northern Spain.
Then, as now, Britain stood apart from the continent. Yet while the Channel protected our island from the military might of Charlemagne, it also acted as a conduit for trade. Letters from the period, many of them in Alcuin’s own hand, make reference to the English ships that arrived, every day, at Carolingian ports across France and the Low Countries.
These missives represent the first documents of English diplomatic history. Among the negotiations of marriage and guarantees to protect travellers there are constant references to the commercial interests that bridged the Channel; Charlemagne himself mentions the fine English cloth that is highly prized by the Franks. It is telling that, even as diplomatic relations deteriorated, trade was protected and permitted to flourish.
Charlemagne himself was unknowingly at the centre of a classic British – German misunderstanding 1,200 years later. Margaret Thatcher had famously frosty relations with German Chancellor Helmut Kohl. Kohl decided he needed to show Mrs Thatcher a more human side, and invited her to stay in his homeland of the Rhineland. He decided to take her to Aachen Cathedral, and showed her the grave of Charlemagne. It was supposed to be a small part of a simple history tour, but Kohl’s English was poor, and Mrs Thatcher couldn’t speak any German, and somehow Mrs Thatcher was given the impression that Kohl wanted to be the next Charlemagne! There was a mistranslation of the word “gross” – which in German means both large and great. Charlemagne is in German “Karl der Grosse” and this was mistranslated as “large”, and Mrs Thatcher took it as a reference to the 1.93 metre high giant, Helmut Kohl, rather than to Charlemagne, and the rest is history.
Returning to the history, England continued to trade throughout the Middle Ages: with London, York and Norwich prospering from trading fine woollen cloth with the Hanseatic League across Europe in exchange for timbers and furs.
In the ensuing centuries, we pioneered innovative transport networks: dredging canals and laying the world’s first rail track throughout the country - to transport goods faster and more efficiently than ever before. We ushered in the first and second industrial revolutions.
From the repeal of the Corn Laws in 1846, Britain was the pre-eminent voice for global free trade. From the signing of the world’s first free trade pact - the Cobden-Chevalier agreement of 1860 - to the establishment of General Agreement on Tariffs and Trade (GATT) in 1947, examples of our dedication to the principles of free trade are scattered across Britain’s history.
Trade is in our DNA: we have always been an outward looking, big thinking country and that won’t change. This nation of shopkeepers, as Napoleon famously quipped, has sold wine to France and tea to China. Let’s bear this in mind as I move onto the events of the past few months.
On the 23rd June, the British people issued a clear instruction to the Government. As I said, I campaigned for the “Remain” side, including here in Cambridge, but I am a democratic politician and I recognise a mandate when I see one: a 1.2 million person majority for leaving the EU. Indeed, more British people have voted to leave the EU than have voted for anything else, ever.
“Brexit means Brexit” is simply the acceptance of the democratic will of the British people – regardless of whether you voted in or out.
To try and remain in the Union by stealth or through a backdoor would be to undermine the very values that we purport to live by, and would unleash a significant and greater crisis in this country.
For all of us, the task is now to make a success of Brexit. To ensure that leaving the European Union does not compromise our prosperity, our society or our values. We in government must seize this opportunity to reshape the United Kingdom’s relations with the world. We must always be clear that to leave the European Union is not to turn in on ourselves or become introspective.
Instead, the United Kingdom can retain its pre-eminence by positioning itself at the heart of an increasingly interconnected world. I believe that we as a nation are uniquely placed to capitalise on the era of globalisation. Britain is intrinsically internationalist.
There are some who doubt Britain’s ability to thrive in this new world. Let me provide 3 rebuttals.
First, while our future trading relationship with the EU is yet to be determined, it is clearly in both the UK’s and the EU’s interests to strike a mutually beneficial future arrangement.
The EU has a £60 billion trade surplus with the UK, and of the 10 markets with which we have our biggest trade deficit, 7 are in the EU.
From our side, 44% of UK exports go to the European Union.
That should provide the raw materials of a deal.
Even our supply chains are increasingly intertwined. Let’s take Airbus’s fully integrated European manufacturing network: with wings built in South Gloucestershire, tailfins in Getafe, final assembly in Toulouse, and paint and interior work taking place in Hamburg.
Our largest supermarket, Tesco, operates an integrated supply chain that services four Central European markets, and if you look at the European car industry you’ll see that parts have criss-crossed the Channel for decades; one in five BMW engines are made in the UK.
It is clear that a messy divorce in trade, as in life, benefits neither partner.
Over the past weeks and months much has been said about whether the UK would be better off with a hard Brexit or a soft Brexit – as though the question was how do you like your Brexit in the morning?
The issue here is that the UK is neither like Norway or Switzerland, nor Canada or Turkey. We cannot simply transplant other models and make it work for us. What we need is a model that’s right for the UK: one that ensures our current strengths such as ICT, automotive, aerospace and financial services are protected and one which recognises our historic and unique trading relationship with our European neighbours.
In keeping with the breakfast analogy, I think my former colleague William Hague was on to something when he called for a Goldilocks Brexit – an arrangement that is just right for Britain.
And over the past few months my colleagues and I have been speaking to UK and overseas businesses so that we start designing a future trading relationship with the EU and the rest of the world that is right for British businesses and consumers as well as those around the world.
I recently visited all of the U.S., Korea, Germany and Turkey where I spoke to a variety of business associations. I reassured them that Britain remains open for business and tried to understand their priorities and challenges around trade and asked what this government can do to help.
By the way, I was also able to do some promotion of Cambridge University on the side, taking time out with a leading Korean corporation to seek their sponsorship of the proposed Korean Studies Centre here, a project which I first discussed with my Oriental Studies head of department, Professor Peter Kornicki, some years earlier.
Returning to the matter in hand, it’s important to note that we want the EU to succeed, we just don’t want to be governed by it. This is not a zero-sum game; both the EU and a UK outside of it, can prosper together. And, as we leave, we intend to do so in a way that ensures minimal disruption for our European partners with whom we will continue to have strong economic, political and security bonds. As I said before, we are not leaving Europe; we are re-joining the rest of the world.
Machinery of Government
The second basis for why we should have reason to be optimistic is that the UK is now better equipped than ever to thrive in this new world. Governments are not usually known for being fleet of foot, but this government reacted within weeks to establish two new departments – the Department for International Trade and the Department for Exiting the EU. Both will ensure not only that the UK leaves the EU smoothly, but that we become a beacon of open trade when we do.
I am delighted that for the first time in many years, international trade has its rightful place back at the heart of government, with a seat at the Cabinet table.
When the UK trades with the world, our economy is stronger, our societies and public services are healthier, and we cement our role as a key, powerful player on the world stage.
Trade is fundamental to the prosperity of the United Kingdom and the world economy. Our trade with the world is equivalent to over half our national income. Free trade is a significant job creator, provides us with goods and services from around the world, and increases our pay packets.
It has also helped raised the living standards of people around the world, showing that the moral case for free trade is just as important as the economic one.
The Department for International Trade has broadly three areas of focus.
First, we will promote British goods and services across the world, find and develop new markets, and foster a new and vibrant export culture.
Second, we want to continue attracting the levels of investment into the UK that has made us the leading European destination for foreign direct investment. Also crucially, we need to refocus our efforts on our own overseas direct investment: maximising our overseas earnings and ensuring that UK investors are securing healthy returns. This is essential if we are to re-balance our current account which stands at a record deficit.
And finally, we will begin to take on the functions of trade policy – including trade negotiations – for when we leave the EU, as well as continuing to push for a fairer, rules based system for global trade and investment.
The Department, for the first time, brings together the three pillars of trade – promotion, finance and policy – all under one roof. We will rally the whole of government, industry and one of the largest overseas networks in the world to champion UK PLC.
We do not underestimate the scale of the challenge that faces us. Let’s take exports as an example.
The UK has experienced a deteriorating trade performance since 2011, with our exports growing more slowly than some of our G-7 counterparts including the United States, Germany and France. Only 11% of UK businesses export anything beyond our shores and only 6-7% of our goods exporters sell to high growth markets, such as China and India.
Exports as a % of GDP in the UK are the lowest of all 28 EU members, at just 21%. The next lowest is Greece at 22.5%. Germany is at 35%.
There is no getting away from these disappointing figures, and they lay bare so much unfulfilled potential in our economy.
However, there are actually some excellent examples of what can be achieved when ambitious and innovative British businesses start looking further afield.
In 1975, just a stone’s throw away from my constituency in a South Kensington flat, the first ever designs of a folding bicycle were drawn up. It was an innovation that set the cycling world alight.
Cyclists now peddle Brompton Bikes in cities like Tokyo, Chengdu, Barcelona and Hamburg - to name a few. With 80% of its bikes exported to 44 markets – Brompton is a shining example of how highly British innovation, quality and heritage is perceived around the world.
The truth is that it has never been easier to export. With the growth of e-commerce you can now export from your garage, living room or local coffee shop.
Who here owns, or knows someone who owns, a satchel from the Cambridge Satchel Company?
It was a business idea conceived around a kitchen table in this city that owes its very existence to e-commerce. From 3 bags a week to 300 and then to 3,000 all in the space of the first three years, the company now sells to over 80 markets around the world and is even listed on TMall – China’s biggest e-marketplace which gets 100 million visitors a day.
Research shows that companies that export are more profitable, resilient and productive. My department wants businesses to move the conversation on from “Should I export?” to “Why am I not already exporting?”
For those who say there isn’t a demand for their products overseas – we have a campaign called “Exporting is GREAT” – part of the Government’s GREAT branding - that shows to UK businesses thousands of live overseas business opportunities.
For those who say there isn’t enough support – I would say the level of support is unprecedented. We have around 60 commercial partners as part of Exporting is GREAT – from logistics firms to telecoms all standing ready to help UK firms on their export journey.
And finally for those who say it’s simply too difficult – we will soon launch the world’s first directory of UK exporters, so overseas buyers can easily find the UK exporter that’s right for them.
UK fundamentals and capability
The third, and final, reason why I believe the UK will succeed outside the EU is because of our strong economic fundamentals and world beating capability.
As a former Treasury Minister, I know better than some the strength and resilience of the British economy.
We are the sixth largest economy in the world, which, even post referendum, is seeing the highest employment levels in history, low and stable inflation and the highest manufacturing output for two years.
Recently, the IMF revised their post referendum predictions, to say that Britain will actually be the fastest growing G7 nation this year.
And our world leading capability is spread right across the UK.
In the North West of England, a car rolls off the production line in Jaguar Land Rover’s Halewood plant every 80 seconds, en route to 170 countries worldwide.
The East Midlands, as a region, is one of the largest assemblers of jet engines in the world whereas the West Midlands is the only UK region which has a goods surplus with China – valued at around £1billion.
London is a world leader in financial services, and did you know that Scotland exports 38 bottles of whisky every second? The Scots sell more whisky in a month than France’s yearly cognac sales.
And I am delighted that Cambridge is Europe's largest technology cluster. Around 57,000 people are employed by the more than 1,500 technology-based firms in the area, which have combined annual revenue of over £13 billion.
This is why investment has continued to pour into the UK since the referendum. You may have heard of GSK’s recent announcement to spend £275 million on three factory sites here in the UK; and of Japanese firm Softbank’s purchase of Cambridge’s very own ARM – Britain’s largest technology company.
And it shouldn’t surprise anyone why this is the case. We are the highest ranked major economy for ease of doing business – according to the World Bank. We have a system of commercial law that is envied around the world and which underpins the trust that many investors place in the UK; we have a low regulation and low tax economy; we’re in the right time zone for global trading; and we have a highly skilled English speaking workforce.
These are the UK’s credentials and the reasons why, in or out of the EU, the world knows we are open for business.
Before I finish, I want to talk about Global Britain and what it means for me.
If anything, I hope that what I’ve already said today shows that Britain has always been and continues to be outward looking and internationalist.
Global Britain is a country with the self-confidence and the freedom to look to the economic and diplomatic opportunities in every corner of the globe. We should constantly seek to position ourselves at the centre of this increasingly interconnected world – to help shape our environment rather than be shaped by it.
It means using our enviable position in some of the most powerful alliances and organisations in the world – The UN Security Council, NATO, the G7, the G20 and the Commonwealth - to push for a global environment centred on a strong rule of law, a democratic spirit, and open, tolerant societies.
Let us also not forget the cultural aces up our sleeves that are so crucial to our global influence.
I am standing in one of four UK universities that are consistently ranked in the top 10 throughout the world. We have more Nobel Laureates than any country outside America; the Premier League is the most watched football league in the world and the BBC World Service is the largest international broadcaster – broadcasting in 28 languages to almost a quarter of a billion people worldwide.
And to come second in both the Olympics and Paralympics this summer shows just what can be achieved by a determined nation of just under 65million people.
But where I think Britain can play its most effective global role now is to lead the charge for a system for freer and fairer trade. There is a growing protectionist instinct rearing its head in some countries, and according to a recent report by the World Trade Organisation, G20 countries are the biggest culprits.
In a globalised world the concepts of time and distance are becoming increasingly irrelevant. The proliferation of technology has created a global customer base and the most mobile and information rich world population in history.
The pace of change is incredible. We live in a world where by 2020 80% of the adult population will own a smartphone, where there are currently well over a billion websites and where Palmerston – the Foreign Office cat – has more than double my Twitter followers…yet has only posted 58 times.
The more we retreat into our shells, the further we will fall behind in the global race and for the UK, this is not an option.
We all know the benefits of free trade. Consumers benefit from a competitive market place, which leads to cheaper, more innovative and better quality products.
Businesses benefit from a shop window of products from continents rather than individual towns and cities. In the year before the EU-Korea Free Trade Agreement was agreed, the UK sold just over 2000 cars to South Korea. Three years later that number reached over 13,000. Businesses also benefit from the flow of knowledge and ideas across borders, which make them more productive.
But the moral aspect of free trade is also worth noting. You will struggle to find an international aid package that has been more effective in emancipating the world’s poor than open trade. Look at China and India and you will see a correlation between those economies starting to liberalise and the emergence of hundreds of millions of their people above the poverty line.
Of course globalisation has not benefited everyone equally. While its benefits are often widely dispersed and sometimes overlooked, the impact on certain industries and certain areas of the country, by the pace of technological change, is acute and concentrated. People can be left disillusioned and disaffected.
In what may be a career limiting move, I will echo what Peter Mandelson said in this very lecture eight years ago. He spoke of the “Openness Boom”, which was the term he attributed to the integration of huge swathes of the world’s population into the global economy. I agree with his diagnosis in that, and I quote, “If the progressive challenge in the twentieth century was to humanize capitalism, its work in this century is to humanize the openness boom.”
We should be bold with our ideas and policies to ensure that when we open ourselves up to the world, we aren’t at the same time turning our backs on those who may be struggling to adapt. This means investing in our people – through education, skills and re-training – so that through trade, we can build a society that benefits the many over the few.
We also must warn of the dangers of insularity. While protectionism is often popular in the short term, and sometimes a vote winner in limited areas, the tragic irony is that it is often the poorest in society that lose out. If America was closed to trade, its poorest people would forfeit 62% of their purchasing power. The price of everyday products would skyrocket. The very same arguments that were made over 150 years ago in this country against the Corn Laws are still relevant today.
So where other nations are hanging back, a global Britain will carry the standard of free and open trade as a badge of honour.
The Prime Minister said she wanted the UK to be the most passionate, consistent, and convincing advocate of free trade anywhere in the world.
We will continue to work within the World Trade Organisation to build on its successful work in eradicating red tape across borders, phasing out distortive export subsidies, and scrapping trillions of dollars’ worth of tariffs.
However, where progress has stalled at the multilateral level, the UK must be ready to look to more bespoke plurilateral and bilateral arrangements to ensure that the global marketplace remains fair and free.
In conclusion, we have just been through potentially one of the most transformative times in British political history.
In a time of tumultuous change and uncertainty, it is reassuring that we can always fall back on the ideals and values that have shaped this great country – democracy, a strong rule of law, tolerant societies and a willingness to engage with the world.
Free and open trade is a key part of that. It has given us our influence, importance and prosperity.
If we are to embrace the world, we must, like Alcuin and the Carolingians, recognise the pre-eminence of trade.
We now have a golden opportunity to do so, and I am confident we will not waste it.