Friday 07 September 2018 8:49 am

A Brexit deal without services threatens the whole of Europe

London and the UK have been at the heart of global shipping for over 300 years.

During that time, the sector has seen empires built and dismantled, world wars fought, global power shift, and periodic financial crises.

What has remained constant through the ages has been trade between nations, and the role of the maritime sector in facilitating that trade.

Civilizations have been built around this most efficient mode of trade – London, arguably the most globally connected city, was founded with the river Thames running through its heart. With maritime services as the oil that greases the wheels of global trade, we ignore their importance at our own peril.

They say that a good barometer of market confidence is the number of new skyscrapers we see being built in London’s increasingly eclectic skyline.

If you have recently traversed the roadblocks around the Baltic Exchange (the heart of maritime London), you will surely agree: London is not shrinking, it is very much alive and kicking.

The London market – rooted in serving the maritime sector – holds a commanding global position in financial and professional services. To have such a dynamic services hub in Europe is an asset for the whole continent, and both the UK and EU have a shared interest in maintaining that position.

And the EU appears to be taking note. Michel Barnier has been talking up a deal, and last week went so far as to state that the EU plans to form “a partnership with Britain such has never been with any other third country”. This apparent pragmatic shift from the EU’s chief negotiator certainly feels like a change of tone, after two years of hard negotiations and “red lines” from the bloc.

It is clear why. With the rapidly approaching divorce deadline, diplomatic sources from EU capitals tell us that there is increasing pressure on Barnier to agree a mutually beneficial deal as soon as possible.

While Britain should clearly welcome the shift, we must keep pressure on both the UK government and the EU to demonstrate why a pragmatic deal, crucially including services, is vital. The bespoke partnership that Barnier speaks of must encompass mutual recognition for services.

A seamless transition for services trade post-Brexit is immensely important for the UK economy. But for the EU, too, there is every reason to want to conclude a deal including services. EU companies will want to be able to service their clients here, and the maintenance of London as the pre-eminent global services centre is equally in our European partners’ interests.

This is particularly true for maritime services. Last year, London beat the powerhouses of Singapore, Shanghai and Dubai to be named the leading city in the world for maritime professional business services.

If London were to lose its status, it would be the centres of New York and the far east that would benefit, shifting the balance of power away from Europe. The EU has every reason, therefore, to want to maintain a leading global services centre on its doorstep – close, familiar, and mutually beneficial.

Brexit was always going to result in access to the EU market being less easy. And UK maritime is a prudent sector – in the event of a deal that excludes services, we have developed a number of proposals to supercharge the UK’s global attractiveness as a place to do maritime business and ensure our continued pre-eminence.

Although our preference is for a deal with the EU encompassing services, we have to prepare for every outcome, and as we’ve seen throughout history, UK maritime will adapt and respond to circumstance.

But any dogmatic divorce will damage both sides. We need a pragmatic and mutually beneficial deal encompassing services. There’s new wind in the sails of these negotiations. Let’s make the most of it.