London skyline

London's voice on Brexit

02 August 2018

The Mayor of London, Sadiq Khan, today writes that the kind of Brexit being proposed by the Government risks doing harm to London's economy.

 

"Ever since the EU referendum, one of my most important jobs has been to make sure London’s voice is heard and to fight for a Brexit deal that is in the best interests of all Londoners.

I’ve been doing this for more than two years now and it’s what I’m continuing to do day in, day out because jobs, livelihoods and our future prosperity is on the line.

It beggars belief that only now has the government finally started to listen to businesses across the country and acknowledge the need to maintain frictionless trade in goods with the EU after Brexit.

Sadly, the proposals to protect this trade in goods – put forward by the Prime Minister in the government’s most recent white paper – are complex, untested and needlessly expensive for our businesses. But even more concerning is the fact that the government’s latest approach completely fails to meet the needs of our leading service sectors – a concern shared by business leaders in London and around the country.

When you consider how integral these industries are to our economy – and how many jobs they support – this isn’t simply reckless, it’s a total dereliction of duty.


The kind of Brexit now being proposed by the government risks new trade barriers that would damage the ability of our world-leading creative, technology, legal, professional and financial services to do business across the EU. Service industries account for 92 per cent of London’s economy, but they are also vitally important to towns and cities across Britain. They account for around 82 per cent of Birmingham’s economy, 83 per cent in Leeds, 92 per cent in Manchester and 91 per cent in Edinburgh.

So the government’s current plans for Brexit would cause huge economic harm not only here in London, but up and down the country. Increasing the UK’s international trade around the world in services is difficult to accomplish. Barriers relating to regulation, the recognition of qualifications and the movement of workers from one country to another are hard to break down.

The Single Market, however, eliminates these barriers for much of UK services’ exports across Europe – a huge advantage for our services-orientated economy. While the UK has a large trade deficit with the EU in goods, by contrast we presently enjoy a £28bn surplus in services.

The government now risks effectively surrendering the UK’s dominance in services trade, with no coherent strategy for how it intends to secure agreement on our future access. This is beyond shameful.

Cities such as Paris, Amsterdam and Frankfurt are working hard to persuade businesses in the financial and professional services to move tens of thousands of jobs – and potentially hundreds of millions of pounds of investment – out of London and the rest of the UK.

Any failure to protect our trade in services would be bad, but it’s clear there is now a grave risk Britain could crash out of the EU with no deal at all.

That’s why I’ve instructed my officials to step up preparations to help manage the potential chaos of a ‘no deal’.

The responsibility for a lot of these preparations rests with government. But I will take action where necessary and ensure the needs of London are appropriately addressed.


I’ll continue to put pressure on the government, for example, to make sure that London’s businesses are properly informed and prepared for Brexit. The government must increase its dialogue with business as a matter of urgency, and I am working with companies to press for this to happen more quickly.

But above all else I urge the Prime Minister to start putting the national interest ahead of her own narrow political interests, and her country ahead of her party. We’re now running out of time and nearing the cliff edge.

The government must change course immediately and accept that staying within the Single Market and the customs union is the only way to protect jobs and growth in London and across the UK."