Barton during a visit to Luxembourg spoke with Delano about potential areas of trade and investment growth between both countries, the role sustainability plays in all of this and how the post-Brexit relationship is being cemented.
The commissioner’s visit came ahead of a Luxembourg Chamber of Commerce trade mission to London in June, where a new Luxembourg-UK business club is set to launch.
What was the purpose of your visit to Luxembourg? And who did you meet while you were here?
My job as trade commissioner to Europe is to encourage trade and investment between the UK and other European countries and the relationship with Luxembourg is really important. I was here to encourage UK exports, to attract inward investment from Luxembourg. And also just to learn and understand more about the Luxembourg-UK trade and investment relationship.
Luxembourg is historically close to the UK, but what relationship do you see as trading partners in the current context?
We already have a really strong trade relationship and investment relationship, which is very good. On the trade side, it's worth about £13bn a year. Over 90-95% of that is in the services sector, in financial services, other business services--telecom, IT and so on. That's a really strong base.
What I think I've seen over these last couple of days is how many different areas there are where we've got the potential to really grow that. We've looked at defence, retail, newer opportunities within the financial side, at technology. We've looked at rail and transports aspects. There's a whole breadth of sectors where we can further grow. We've discussed the space area where there's a lot of synergy between both UK and Luxembourg interests.
I’ve come away further enthused, not only about the size of the trade relationship, but also the potential
I'd also mention the sustainability side, because that has come through in almost every discussion I've had. Cearly both the UK and Luxembourg are very committed to improving sustainability. And that's something that we really want to encourage for wider environmental reasons, but also something which opens up enormous new trade and investment opportunities. I’ve come away further enthused, not only about the size of the trade relationship, but also the potential.
Services account for a large amount of trade, and financial services within that. Are you planning to target any sectors in particular within that industry in the future?
We had very good discussions with the financial sector here, and we're talking about the synergies between our two markets. For example, a lot of asset management is based in the UK and a lot of funds here.
Again, to pick up on the sustainability side, the area of green finance is one where there's a lot of connection. We're talking about new opportunities for supporting newer SME companies to access finance alongside the big players and use private equity capital.
There's a very rich variety of areas where we can see both sides growing. And, of course, the technology theme, fintech in its many guises, is something that's developing on both sides. It’s a much wider and more diverse sector than sometimes appreciated.
How has Brexit changed the trade relationship that the UK has with Luxembourg?
The last two or three years clearly have been challenging for everyone in terms of trade, because of covid and adjusting to the new trade relationship. And certainly, at the beginning of 2021, we saw a significant drop in UK exports. But it was interesting to see how quickly that recovered as businesses adjusted. Over 2021, as a whole, exports from the UK were higher than they were pre the Brexit referendum.
The major transition has happened. The EU-UK Trade and Cooperation Agreement is a world class trade relationship. It's at least as good as the relationship that either the UK or the EU has with any other country outside the single market customs union. That gives a strong basis for trade going forward.
So, yes, there's been a transition that has been difficult for some. But at the macro level, the main adjustments have happened. And now we've got a really good basis for growing in the future. And lots of appetite, I'd say, on both sides.
You said when you were appointed that you wanted to reduce barriers to UK trade in Europe? What is the scope to cut red tape and reduce those barriers?
One really important thing as we've made the transition is helping provide clarity for businesses on both sides on what are the new rules and helping them to adjust to those. That is something that we've provided. And I know the Luxembourg side have as well. One of the healthy signs is the number of inquiries has been reducing very significantly as people have got used to it.
The relationship won't be the same as when we were both in the same single market.
Some of the areas where, going forward, we could do more together include the recognition of qualifications between different sides. That's an area we'll be interested in exploring over the coming period. Mutual recognition, agreements, standards--those are some of the aspects where I think we can further improve. There can be glitches at the border and customs arrangements. We can unblock those. We've sensed a real desire on both sides to do that.
The relationship won't be the same as when we were both in the same single market. Some of those barriers reflect the new relationship, but where we can smooth the glitches, which is what we're working on, will make a really big difference to businesses and consumers.
You’ve mentioned sustainability a few times. How can trade become greener? What would be some of your top priorities?
One is the investment side. Supporting, for example, on the UK side major expansion plans for offshore wind, developing the hydrogen sector, ramping up solar, improving energy efficiency, transforming our transports, system. Almost every bit of economy has changes to make, and that requires very significant investment. The international flow of that is really useful. And likewise, we can help in the other direction. And then the trade that supports that, for example, the consultancy and the design and the logistics around making these investments. Trade and investment are a critical lever to making the transition that we need in our economies.
You’ve been here for a couple of days. What are some of the follow-up actions that will be coming out of this visit?
In every interaction we've had with individual businesses, we've identified areas where we can connect people with potential buyers or sellers, or where there's further information that we can provide on opportunities.
I think there's also support on the government-to-government side. We've discussed areas where there's scope to cooperate more and learn more from each other, be that on, for example, finance or on the space sector.
And then more generally, there's the advocacy side, the opening of the new business club in London. That's a really good next step to be able to use that and amplify messages, to tell the great story there is not only of how good UK-Luxembourg trade and investment is now but how it can grow.