ALEX BRUMMER: Australia deal is the kind of uncomplicated approach to trade Britain needs – UK agriculture must adjust to a new reality
Of the 60 or so trade accords of one kind or another signed by the UK as a result of leaving the European Union, few have garnered as much attention as the deal with Australia.
It might have been thought that this would be among the easiest. After all, putting cricket to one side, the Aussies are kith and kin, share a language and have the same Head of State. The Union Flag still flies on its ensign.
Yet International Trade Secretary Liz Truss’s effort to sign a free trade deal with Sydney has met blowback from the agricultural lobby. As the son of a farmer, I spent school days jumping off straw stacks and selling eggs at the farm gate, and have never shaken off my interest in the countryside. Farming Today on Radio 4 and The Archers are an endless source of fascination.
A lot of beef: Liz Truss’s effort to sign a free trade deal with Sydney has met blowback from the agricultural lobby
For all my admiration of farming, and the blanket broadcast coverage, it is worth remembering that it contributes just 0.61 per cent to national output. In the last week, amid war in the Middle East, surging global commodity prices and a governance scandal at the core of the BBC itself, the Aussie-sceptic chorus has been deafening. We have heard from tenant farmers fearing that competition from Down Under will destroy margins. Beef producers have expressed fears that pesticides used in Australia could contaminate Britain’s pure food chain. And Welsh shepherds are concerned that a modern Aussie approach to sheep-shearing will somehow undermine their model.
The unspoken theme is that UK agriculture became so dependent on EU subsidies, anything which changes the status quo and exposes UK food production to competition should be resisted.
The constant invocation of superior British food standards avoids any reference to the diseases which have ravaged UK herds in recent decades, how horse meat found its way into beef burgers and how this green and pleasant land has been turned rape seed-yellow. Leaving the European Union was all about escaping the bloc’s inherent protectionism and going global.
The tariff-free, quota-free deal with Australia is precisely the kind of uncomplicated approach to trade Britain needs. The proposal of a 15-year transition is more than generous to agriculture.
Britain’s new trading relationships have thrown up all sorts of problems. This week a maker of natural beauty products, a Brexit supporter, lamented to me that his exports to Europe were down by 60 per cent.
He blamed non-tariff barriers in the shape of onerous customs requirements at borders, notably in Germany. Free trade is the ultimate objective and avoidable friction is occurring. But agriculture, like everyone else, must adjust to a new reality.
One doesn’t know whether to laugh or cry at the disclosure that Klarna, one of the world’s most highly valued fintech companies, is eyeing a London float.
Founder and chief executive Sebastian Siemiatkowski reckons that the City can make up any loss of business for being outside the EU by becoming the global fintech centre.
Until now it has been widely assumed that Klarna, valued at £22billion at its last fundraising, would choose the Nasdaq for its initial public offering. The Swedish-based tech pioneer offers a click-through form of ‘never-never’ financing to online shoppers and pays its way through the charges it levies on major customers such as Boohoo. Its credibility has been enhanced by the presence of Brit Michael Moritz, the financier behind Silicon Valley giants, as chairman.
Siemiatkowski draws attention to London’s flexibility on fintech floats in contrast with the EU’s more rules-based approach.
The UK has several fintech stars in the making including Monzo, Revolut, and Atom. Others haven’t made the cut, most recklessly Greensill, which brought tech to supply chain finance, and Amigo, which looks doomed after a regulatory clampdown.
Nevertheless, the threat of new age finance to traditional banking and credit card companies cannot be underestimated.
Allianz has decided that the offer for UDG Healthcare by Clayton, Dubilier & Rice doesn’t cut the mustard and wants a higher price.
In contrast Schroders, 9 per cent holder of John Laing, has thrown in the towel and committed to the KKR deal.
It clearly couldn’t resist the endorsement of Laing chairman Will Samuel, a former Schroders director. How cosy.