Brexit threats and opportunities: Britain's new post-Brexit relationship with the EU

Eleanora Mancino: Hello. Welcome to our latest event, Brexit Threat and Opportunities with our esteemed guests, Ms Bernardine Adkins, Mr Simon Gleeson and Professor Jonathan Portes will discuss the implications of Brexit with special emphasis on the main threats and opportunities arising from the new connection between the UK and the EU.

Ms Adkins is a solicitor and Belgian advocate and Head of EU trade and competition law at international law firm, Gowling WLG. Mr Gleeson, partner at Clifford Chance, joined the firm's financial regulation group in 2007 where he specialises in international markets law and regulation. Professor Portes is a professor of economics and public policy at KCL and an expert in a wide range of economic policy issues and international economic international issues. Professor Portes, the floor is yours.

Professor Jonathan Portes: Thanks very much, Eleanora. Thanks for inviting me. So it is now 6 February. For those of us who have been, I think it is fair to say, both horrified and fascinated by the ethical and economic events of the last five years. In some ways this month has been a bit of an anti-climax. We have been waiting for Brexit to actually happen for a good four years. Well, it has happened and what does it mean, and in some ways of course we do not really know. We know that there are maybe queues at ports that is partly because people are not shipping stuff. It is partly of course because the impact of the pandemic on the economy has been so huge that it is actually very difficult to tell what the impacts of Brexit are. So at the same time, we can see headlines like that of today when Grant Shapps the Secretary of State for Transport blithely assures us that everything is moving precisely as normal, that there are no queues, that trade is flowing as normal and at the same time, a rather scary splash headline in today's Observer based on a survey by the Road Haulage Association which tells us that our exports to the EU have fallen by more than two thirds. If it were true and it probably is not once you take it with a pinch of salt and an absolutely horrifying figure. So after all the politics, we are now confronting the realities of Brexit. What does it actually mean for the UK economy, for UK society? What are the implications of the new UK trade and cooperation agreement which was signed on, I forgot whether it was Christmas Eve or Christmas Day itself as when they finally put the finishing touches to the spreadsheet showing which fish would be British and which would be European after Brexit, but we now have that document. We now have this new relationship for better or worse, businesses small and large are going to have to make it work and so tonight we have two very distinguished experts in the legal field but covering rather different aspects of the law as it pertains to our trading relationship with the EU both in the general commercial and training sense and particularly as respects the financial sector, and we are going to try and explore what does this new relationship mean? What will it mean for business? What will it mean for London as the financial sector? What will it mean for the regulatory requirements that business face both here in the UK and should they wish to trade with the EU in the future, to what extent is what we have seen so far, are there teething and transitional problems which will quickly resolve themselves and we can get back to business as normal and to what extent are there more far-reaching structural change are in our trading relationship.

So that is probably enough from me. I doubtless will say more as we go on and give away some of my own views but I really do want to hear from both Bernardine and Simon so I am going to start with a couple of fairly open questions? First Bernardine, what do you think are the really major changes that result from the transition from where we were effectively up until 31 December if not members of the EU still continuing to act as if we were members of the EU and now what are the real big headlines, what are the most important changes for business, in particular, to be aware of? You are still muted.

Bernardine Adkins: So, in many ways, it was not a surprise in the sense of by and large we kept to what Theresa May told us was going to happen in 2017 at Lancaster House. We are out of the Customs Union. Therefore yes in principle the UK can actually conclude free trade agreements with other countries. We are also out of the single market so from a good perspective we now have borders between the UK and the rest of the EU, and also do not forget, we now have a border in the middle of the UK between Great Britain and Northern Ireland as well; so that is good and now people are grappling for the first time with rules of origin because it looks great in principle, free trade carrier-free but actually you only get free tariffs if you can prove that your goods are of UK origin and there is a rub. So there is a huge amount of work around that. Then on services, services have largely been neglected. Really, we are flipping back on to the WTO rules around freedom of services. We have got, really, a baseline which is free market access, we are not going to be discriminated against just because we are British as opposed to Japanese or anything else but there is so much to be built on vis-à-vis financial services for example so rather than the old mutual recognition where we basically harmonise up to a certain standard around prudential supervision public health for example and then we mutually recognise each other, we are flipping back on to this notion called equivalence whereby the EU unilaterally will decide in these services areas, does the UK meet the EU standards in which case yes we will let you come into our market and play so it is very much the power there is in the EU so the big question which I am sure Simon will come on to is the UK going to accept that or just take its toys and say sorry we are going to play with our regulatory systems and we are not going to wait around for equivalence. So there is a huge seismic change but the one point I would make and maybe it is a legal geeky point but I think it is fundamentally important; what we have now is an international trade agreement between States, so as individuals and as businesses, we are crudely insects. There is nothing we can do to force that enforcement and we have lost that character of European, EU law is it- was it directly effective whereby we could take it, enforce it in a national court. We have lost that connection to ensure and enforce rights as such and I think that is absolutely a fundamental seismic change.

I probably have got on for long enough now.

Jonathan:No, no, that is fascinating and that really is something which we do not talk about very much that loss of the principle of direct effect and hence the right to be able to appeal to the principles of EU law in our national courts when it comes to regulatory or business issues but it will be very interesting to see as that realisation sinks in how that actually affects us but I am not going to talk too much. I am going to hand it straight over to Simon to give some views from his perspective of what he thinks what the big deal is.

Simon Gleeson: Absolutely. One of the curiosities about trade arrangements all over the world is that they tend to sort of work for goods and they tend to sort of not work for services. This is a general thing. I mean the general agreement on tariffs and services is very much the runt of the WTO litter, whereas the GAT sort of works, the GAT certainly does not. Europe's attempts over the years to write a services directive have been disastrous. Governments get really worried about the provision of cross-border services into their territories because they feel they are potentially not protecting their local citizens and the way that this has always worked is that, it is really hard to do cross border services and it is particularly hard in financial services because the idea of your citizens depositing their life savings with some foreign bank that collapses, it is just terrifying so even in the GATs, even in sort of global trade agreements, you have this thing called the prudential carve-out that says oh but we do not need financial services, financial services are different and special so when it comes to financial services the really weird thing about the way the European Union was constructed was the fact that it did have a robust cross-border financial services passport-ing arrangement. That is almost unknown in the rest of the world. It was very strange but was there because the UK wanted it to be there. Of course, once the UK steps out of that legislative passport it is back into the ordinary world of cross border service provision which is not on your nelly which is roughly where we are at the moment so effectively financial services provided from the UK has gone from the most permissive cross border environment in the world to nothing which is roughly where we are at the moment.

Jonathan: So as Bernardine said there we will of course be seeking some form of, we are seeking to rebuild some part of that relationship by seeking equivalence in some respects at least for trading our financial services exports to the EU, is there any realistic prospect of that happening.

Simon: Absolutely none whatsoever. One of the baffling things about the coverage: a lot of Brexit has been the sort of cheerful assumption that oh well there is the possibility of equivalence. Well, the key point here is this. I mean UK regulation is pretty similar to US federal regulation, in fact, it is damn nearly identical. There is absolutely no cross border passport between those two markets. The mere fact the rules are the same gets you absolutely nowhere in this regard. The point that our friends in Brussels have made absolutely clear is they are only going to grant equivalence when it is Europe's interest to do so.

Now what is important about that is Europe has recently produced a communication that makes absolutely crystal clear where it things its priorities are and it thinks its priorities are to develop an on-shore financial market. Now if that is your starting point you absolutely do not grant cross border rights to anyone because what the European Union will do for the rest two or three years is to try and close its borders as tightly as it can to cross border financial service provision of any kind to see whether it can create an onshore deep and liquid financial market of its own, and it is absolutely explicit in the policy communication, the reason for that is that they perceive that Europe loses its strategic autonomy if it is dependent on a financial services centre outside Europe and if you or I were sitting in Brussels, that is exactly the conclusion that we would come to as well because it is right but if that is where Brussels is coming from then you can deduce I think without too much difficulty that there will be no equivalence certainly for the next two or three years not financial services anyway. I mean why would they?

Jonathan: Bernardine what Simon said sort of reflects a lot of the commentary when it gets here is that this is a deal which is once you clear aside all the smoke and mirrors is very much a deal that could have been designed from a mercantilist perspective at least could have been designed by the EU. That is to say for exports of goods, it provides the EU with tariff-free access to our markets and of course we have a huge trade deficit in goods. As for services it gives us little or nothing and allows the EU to exclude us from their markets. Is that your perspective too?

Bernardine: Yes absolutely and the only positive I can see is that we did actually did stay in the horizon programme which is around collaboration around RND so that much is good but it is really slim pickings in terms of what we came away with quite frankly.

Jonathan: I think which in terms of how trading in good is going to work. If you mention rules of origin, my understanding is that that part of the agreement has not really begun to kick in yet in the sense that in particular for goods that are coming here from the EU we are really not enforcing rules at all at the moment as far as I can tell still to come and business still has to grapple with is what happens when the UK actually starts imposing the controls which were set out in the agreement.

Bernardine: Yes the real pain is going to start to kick off in April because at the moment the UK pre-Christmas issued this thing called the border operating model explaining how it is going to work the border and is to be given a lot of easements because it knows people are ready so April it is going to start the phytosanitary checks and this is about food and health around food. This is going to come as a massive shock to people because it is so detailed. Things like you think well it is a frozen pizza where is the problem? It is like no, no, no, it has got cheese on it which is of animal origin so you need to find a vet to sign off on that to get that out so those phytosanitary checks are going to start hitting in the UK in April so that is when I think we are going to start to see shortages in the supermarkets as they may not have adjusted fast enough and then at the moment people can defer customers payments until July so again there is going to be another pain is going to happen in that period of time so it is slowly going to come through over time. Plus a lot of people stockpiled so we have got a little window; this is actually a little honeymoon period believe it or not quite frankly. We have yet really, really to see the red pain around rules of origin, and the other thing is the UK has always been a very, very open market so we take a lot of components in from all over the world, not just the EU but in order to get preferential tariff treatment you need to be of UK origin so you have to establish that and you have to have all the documentation, you have to really know your own supply routes to be able to confidently say it says on the invoice this is of EU origin and then you also have to ask well what is the product, what is the tariff customs classification, what are the specific rules of origin on that particular product, am I within that and then you can have all the challenges coming through did you apply the appropriate classification, do you owe money, do they owe you money etc. etc. so a world of pain is coming everybody's way.

Jonathan: And how do you think that because there are a number of different ways that business could respond to that. They could, one is simply that actually it is a lot more forms but in the end, we will learn how to cope with them and to the extent, there are extra costs, we will just increase our prices it on to consumers. One is to actually say this is just not worth the hassle, we are going to have to restructure our supply chains and that could be in a number of ways, it could mean sourcing for importers, taking goods from outside the EU or from inside the UK instead. It could mean the re-localisation of supply chains that have grown up across Europe. Do you have any sense of how that will apply, what businesses, how they are going to respond?

Bernardine: It is fascinating, one size does not fit all. Every company, every product line, every supply chain is really very, very specific so it can vary from we are not pulling out of the UK but we have plans to expand. We are not doing any more, we are now going into Germany or people are just going to regularly feel the pain, we have got enough flexibility in our profit margin to take on an extra burden, that extra cost or we are going to pass this cost down to the consumer or absolutely we are going to get to grips with it, we are going to get the software in place, work out what supply chains. Others will use it as an opportunity to work out their supply chain because they have grown up over 20 or 30 years and no one has ever really blown the dust off it and said, actually is this the most effective way of doing it. So some people are using it as an opportunity to revise their supply chains, modernise them and ask, are they procuring in the most efficient way possible. So it really does vary according to the specifics of the company and also the regulatory system that they are operating under as well.

Jonathan: And Simon the same set of questions applies I think in the financial services and associated services sphere, what will the response be from the UK and European firms?

Simon: It is a very interesting question because the problem, this is particularly clear in finance and the service, the regulators have this sort of paradigm of a person doing a thing in a place. You know the bloke picks up the phone up to the client and says do you want some securities. The client said yes and that is a service provider in one place or the other. This business does not work like that and has not worked like that for many years and the trouble with everything increasingly happening in Cyberspace is that to the extent it can be said that physically it will happen anyway, it probably happens on the Server Farm in Iceland so the questions of exactly where is the theme you are trying to regulate done in the first place is much harder in the world of services than it is in the world of physical goods because at least with physical goods you can point to the thing and say it is there. I do not know what you point to when you try and identify where a security transaction is affected. The other thing, there has been all sorts of chat about equity security's trading has moved from the UK to Europe. What has actually happened is a bunch of messages that used to pass over one server which was ostensibly owned by a company in the UK, now passes over a different server, which is probably next door to it, which is ostensibly owned by a company in Belgium. If you think about stock exchanges as big things of people in top hats and pillars- that is a big change. You think about the stock exchange as something that exists on a server farm somewhere wherever, it is not. So to the extent that what you are seeing, what it looks like from my perspective anyway is you have got a massive rebuilding of the booking model that sits behind the business but in terms of the impact on what the actual people are doing thus far there is not much.

Jonathan: So what happens? So that equity trading moves from London to Paris, or Delhi, if not in any meaningful physical sense, what does that mean economically? What does it mean for jobs and tax revenue or does it not mean anything at all?

Simon: The square root of nothing really. I mean as we all discovered at the early stages of this, the reality of the thing is that the contribution that the City makes to the UK is really very little to do with tax paid by banks, it is to do with tax paid by people who live and work here and by the fact that because they live here, they spend their money here. That is where the economic benefit for the UK is and as increasingly the location of the services gets divorced from the location of the people then it becomes harder to predict. So at the moment, the answer to the question what has the impact been on financial services is not terribly much at all. Now the one thing I can tell you and I suspect anybody knows that having spent my entire life doing financial regulation, I know two things, one of them is the short term impact of regulatory change is much less than you think it is going to be. The other is the long term impact a regulatory is generally a great deal larger than you think it is going to be so the fact that nothing terribly much has changed thus far does not necessarily tell us anything interesting about what the world will look like in five or 10 years time.

Jonathan: Well indeed and so before we move onto the next set of topics, that is a good cue  for me to ask you both if I forced you now to say well what is in your areas of expertise more generally what do you think will and will not have changed in five years time that makes a difference to jobs, to incomes, to London to the rest of the UK indeed to the European Union, what do you think will have changed, what will not have changed? Bernardine, you are not on mute so you can go first.

Bernardine: I think we are looking at this notion that the UK is going to deregulate, I am not seeing it because if you look at actually what the UK has done already, it has made things infinitely more complex and difficult. Two example sanctions, we have always had our own sanctions regime but it is by and large agreed with the EU whereas before it was two years in jail for serious breaches, it is now 10 and where it was fairly simple prohibitions adopted into UK law, now it is drafted in such a complex fashion. Another example is the national security and investment bill, which will require- which is about foreign direct investment also direct investment which the Government wishes to oversee that in certain sensitive areas which in fact will include food at the extreme. That is a mandatory filing. In the UK we normally never have mandatory filing for mergers in the competition sector, so quite unheard of. What I am observing, things are actually getting more complex, more regulated in contrast to what the Brexit bounce is supposed to be. The other thing that I am seeing is that we may actually stay rather static. Clearly, whether it is actually the EU that is going to evolve now that we are outside of the EU, we have obviously lost that influence and I can see that in competition law for example. There is a big, big re-assessment of competition law and what does it do for good at this game. So to date, it has always been the Chicago School of Economics as they call it, the 'laisse faire' free hand of the market, everything is seen from the consumer welfare paradigm whereas there is thinking coming from the US, and people can be rude about it and call it hipster economics, brandised thinking which is basically, competition law should be actually trying to facilitate fairness, equality of payment, environmental controls etc, etc. There seems to be more appetite for that accommodation of competition policy in the EU than in the UK. The UK is very much 'no, we are going to stick to our traditional econometrics test, human welfare is king, we are not going to go down that hipster route.' So I would not be surprised if actually ironically in many respects we stay static and it is the rest of the world that moves away. That is just what I am seeing at the moment.

Simon Gleeson: I am always fascinated. I want to know who it is who thinks that Singapore is this lightly governed deregulatory heaven. I can assure you having done some financial regulatory work in Singapore, quite a bit of it over the years, I can tell you that the idea that Singapore is a deregulated paradise is a very long way away from the truth. The curiosity about this is that the UK has written Europe's financial regulations for the last 30 years so it is not at all surprising that there is absolutely no particular desire either in the UK industry or in the UK Government to move away. There are some interesting questions about where Europe goes but there is a bigger issue here and I must confess I do not know whether this is cheating but I would love to put a question to you Jonathan on this point. To what extent can these sorts of regulatory changes actually reverse an existing economic trend? Because the trend in financial services has been unmistakable for the last 100 years. It has been to move to a smaller number of more concentrated services. It is no different from a number of other industries in that regard. So the question that you are looking at in financial services is, do you think the effect of regulatory changes potentially so great that it can put an industry-wide trend into reverse. Now I must confess my instinct is that it probably cannot and the reason for that is that the building blocks of financial services are human beings and the simple economics of being a banker are, you want to be in the place where there is the largest possible number of alternative employers. No this explains in a nutshell why financial services concentrate in a smaller and smaller number of places because it increases the bargaining leverage and bargaining power of the individuals who are the basic building blocks in business. So my forecast is that Europe will not succeed in building its own financial centre because it will simply be unable to persuade enough high-quality people away from their optimal source of revenue. But it just takes us back to the question of, assume a thoughtful and intelligent government using every lever it can to try and force and industry to change tack. How successful are those levers capable of being when facing a broad trend. I do not know.

Jonathan: I think that is a fascinating approach in that it does indeed go much wider than Brexit and raises … So when I, and I am guessing roughly Simon that you might be about my age but, when I was growing up in London, so my parents moved to London in the early 1970s, I was six or seven at the time, and during the 1970s, inner London saw its population fall by about 20%25 because there was still light manufacturing which had been one of the things London did was essentially was completely destroyed. It was no longer economic to do that in London. And I remember what a mentor of mine then said, it was at that time a BBC engineer telling me about fibre optic cable and how it would destroy cities because once you had fibre optic cable and the communication technologies that would facilitate, why would anyone want to live in an expensive crowded city when you could work from home from Devon or Scotland or whatever. Now of course he was completely and utterly wrong for the very reasons that you have just set out which is that people like people and want to be close to people. Or at least he was wrong for about 30 years. So the interaction of Brexit with the impact of COVID, whether COVID is, in fact, the shock which tells us that actually working from home is feasible when working remotely is feasible at scale in a way which it had not been before, what that implies for the economics of London I think is a fascinating question and really a very, very important one and one which I genuinely do not know the answer to and whether there is in some sense whether this will indeed prove to be a turning point for cities in general and for agglomeration economics and the economics of being near to other people which had been so important. I sincerely hope it is not because I suspect again, probably like the two of you and probably like most of the people watching this, I view that the things that come with being in a city like London, not just the economics but it is very hard indeed to say.

Let us perhaps pass on now to two people and what the implications are of the ending of free movement and the very, very limited indeed provisions on mobility for work or business purposes that are contained in the TCA. What impact is that likely to have. I do not know which of you wants to go first on that one.

Bernadine: I am happy to have a go. So from an EU perspective, what we enjoyed as the full freedom of movement, people, capital and services. So we have lost the free movement of workers, of people, which means that actually instead of the EU deciding whether we as third-country nationals can gain access to the EU, this is a question that is still for the competence of individual member states. So to the extent to which you can gain access to employment in an EU country, say France for example, it is very much a question of actually looking at the specific rules of France. And so throughout the TCA, in certain areas, for example, the provision of legal services being one I am most aware of, yes you have got the principles of market access to provide English legal services as long as you do not do EU services and non-discrimination and then there is a tonne of exclusions. So individual member states have got their own exclusions. And so we are going to be seeing that replicated time and time again across all the professions. So it is going to be very hard. We really are. From an individual perspective where we are going to feel the pain in that people have lost something, so much of the under-wiring of our economy and how we lived our lives, that aspect has gone. Unless, of course, I think you can find an Irish grandmother in which you have got an Irish passport and you called them. So that I think is going to be very problematic. Also access to professions. You have got provisions on mutual recognition of professions. But you have got very similar provisions like that under the Canada free trade agreement and they have never used them. So as Simon was saying earlier, it is not good when the trust is not there, it might not be possible to achieve that. And again, some member states insist, for example, Belgium, insist that if you wish to be a Belgian lawyer for example you have to be an EU national and that we will see - you will see the Daily Mail was talking about how disgraceful that the French insist on you being a French national if you wish to provide or an EU national ski instruction and we are going to be seeing that replicated as it all comes home to roost, putting it extra crudely. Simon, I do not know what views you have on that?

Simon: It is interesting. From a finance perspective, the area where it has become most painful is international travel. Now, for the benefit of some of the younger listeners, it used to be possible to go to Europe on a regular basis and many people did. Consequently, when folks were designing their Brexit strategies and their post-Brexit strategies, these tended to be premised on the idea that the bank or the firm or whatever would have a European subsidiary and somebody from the UK would slip over there fairly regularly just to keep an eye on what is going on and make sure it was all under control. Do that for more than about 60 days nowadays and you will find yourself in prison for working without the appropriate visa. One of the big difficulties here is that once the UK rejects the deal on this subject with the EU, we are back into the world of national legislation. So if I am a London based banker and I need to go to Paris regularly and I need to go to Frankfurt regularly and I need to go to Madrid regularly, I need another couple of lawyers to work on my visa applications or to work out when I need a work permit, what sort of work permit I need. Whether I can go from France to Spain or whether I have to go through Germany. The complexities of this issue are enormous and again, as Bernadine was saying earlier, we have gone from a world where these things were completely invisible to a world where, if you are a highly mobile senior executive, you are not going to be able to do anything without checking with the legal department first which is going to make life slightly more complicated.

Bernadine: And that analysis is going to be quite difficult. First of all, you are going to have to work out under GATs what mode of service provision you are doing, is 1 - 4 and then you have to ask yourself, what is the service, what are the 59 possible services. Then you have to say, OK, what state are you going to again? OK, what have they deposed before GATs in terms of what facilitations do they allow? It is an absolute minefield.

Jonathan: Do you think this an area where things where both sides might decide it is in their interest to try and improve the TCA a bit over time? There is less of an obvious protectionist justification on either side really for very restrictive rules and regulations on business visits for example. At least in the UK side, you do see people, as, for example in the discussion of touring musicians saying, this is just crazy, why can't we work together?

Simon: But do not forget, this UK government was elected on a platform of taking back control which was more or less universally interpreted as meaning taking back control of immigration. If I were a UK politician, I would take the view that making any concession at all to Europe as regards allowing Europeans to come to the UK, would be politically very dangerous. And if that is the case, then I cannot image Europe saying anything other than, terribly sorry, you are the loser here.

Bernadine: That is right, yes.

Jonathan: And what about for people coming here, obviously the same rules apply, but how do you think this will affect, in particular, firms in London which give employment to huge numbers of Europeans which have benefitted from the ability to do this without worrying about rules, regulations or red tape.

Simon: Quite interesting. I mean the UK's rules on business travel to the UK are actually miles more liberal than almost any other European country going the other way. Now that is all part - it is not so much that the UK thinks that is the right thing to do, it is more, that is where it has been forced to go. Because if you are trying to be an international commercial centre, you cannot have barriers to entry. So I think for as long as the UK wants to be a financial services centre, it is going to be forced to allow much more generous access to Europeans. And of course the context of the conversation we just had, that then becomes a problem. Because if you have got more generous rules, you have got nothing to trade-off. So you can see this across financial services generally. The reason that Europe puts up barriers to UK banks doing business in Europe whereas the UK does not put up barriers going the other way is precisely because the UK actively wants to be a financial centre and is therefore forced to liberalise its access rules whether it likes it or not which takes it out of the poker game as far as the tit for tat policy is concerned.

Bernadine: What I think is also going to be interesting to watch is the countries with which we aspire to have free trade agreements, India being an obvious example. The first thing India has asked for really when May went over to see, over to India, was what he said, can we have some visas, please. So it will be interesting to see what happens there. Having said that, I am sceptical that we will get a free trade agreement with India because India has never done a large free trade agreement. It is against Indian instincts I think. But, yes, that is going to be something that people are going to ask to have put on the table with other free trade agreements with other third countries.

Jonathan: Well that is a good segue into precisely that topic. Interestingly, of course, that has been one thing where the Johnson government has moved quite a long way from the Theresa May government. We have actually, in the new immigration system which will apply to both Europeans and non-Europeans, this is my particular topic of course in Brexit, is that we have actually given the Indians a lot of what they would have wanted and which Theresa May, who really did not like immigration at all, was unwilling to go, but in terms of liberalising the rules for people coming from India, in particular students and skilled workers, we have gone some way. I think actually as you said Bernadine, for other reasons, the prospects of a free trade agreement with India, are at best many, many years off on the most optimistic reading. But what do you think, and Simon you mentioned this as well before a rather pessimistic aside about the prospect of getting anywhere on financial services with the US, what are the realistic prospects of trade deals in particular with the US but also other countries. And going beyond the headlines of 'would there be a deal', what realistically might the UK be able to get out of such deals?

Simon: Well I do not think there is the slightest prospect of a broad spectrum trade deal with the United States because I think agriculture will kill it. So I think what deals there are, are probably to be sector by sector. Now the interesting thing about financial services in this regard is that one or two folk on both sides of the Atlantic have worked out that, if you had sort of broad and deep alliance between the UK financial regulator and the US financial regulator, that duopoly would basically control global financial services. And that is quite an appealing prospect on both sides of the pond and it is actually a particularly quite appealing prospect in DC. I think one of the points about the US's position was always that, it was only too happy to agree to broad regulatory co-operation and access with those countries which is regarded as being properly regulated. And that created an unbreakable block in US discussions with Brussels over financial services because the Brussels position was always because it had to be, you cannot just grant equivalence for the UK/France happening. If you are dealing with Europe you have to grant equivalence to everybody including Hungary, Bulgaria and whatever and that was the point at which the US said, sorry, no. Now that problem has now gone. I think, you know, US policy is like Brussels' policy, it is like everybody else's policy, it is exclusively self-interested. But the US, the question for the United States "what is in it for us" of a bilateral deal with the UK now has a very different set of dynamics to it for the question of what, how might we deal with European Union work? Interestingly, if you have got that duopoly starting to establish itself, there are quite a number of other jurisdictions: Australia, Singapore, Hong Kong, others, who would be very happy to jump into that particular boat. So you can see something like that happening but, as I say, I do think it is probably sector-specific and probably regional. I do not know, I think Bernadine may be more optimistic than I am, but I cannot help feeling the days of the broad scope trade agreement between major nations probably are not coming back for a bit.

Bernadine: No, I think that is probably right. I think, two comments there. One on the general question of these, you know, free trade agreements with third countries. One for me, one of the big disappointments of the TCA is that it did not have this thing called triangulation of Cumulation - it is a bit of a geeky phrase. It basically means so at the moment you have, you know, preferential tariff treatment if something is exclusively either EU/UK origin. But what the UK wanted was to say look we have got to free trade a bit with Japan, you have one, please can we treat something also of Japanese origin, can you deem that to be also of UK origin and the EU said no. So from a goods perspective in terms of, you know, having very complex supply chains I think that was a real disappointment and it would be good if over time we can build relationships where we could get that triangulation Cumulation. But on the US trade agreement, if one is to speak to the UK Government, they say negotiations are very, very advanced, they are working on very advanced objectives, which surprises me because I mean, certainly with the EU, from what I see, my perspective is very much if you are not putting agriculture on the table we are not getting out of bed - we are not talking to you until agriculture is on the table- which is why I am surprised to hear that these texts are so evolved. That said, you know as you said it is now America first, Joe Biden is very much jobs first, American jobs first, so I do not know what we are going to throw under the bus so to speak in order to achieve that free trade agreement. As you know there are winners and losers, is it going to be politically acceptable in the UK, and then also you have got issues with Congress because essentially, as I understand it, they have, if we went to get this deal through we effectively need to do it by July in terms of the Congress mandate to oversee FTAs. So there are, I mean, huge amounts of optimism coming from the UK Government, but if you speak to other people there is deep, deep scepticism that that is possible for a US deal.

Simon: But, yes, sorry, just one point about that. I mean I think the thing that people tend to forget, look at any piece of coverage in a broad distribution newspaper in this country about a potential trade deal and this is as true of the Guardian as it is of the Daily Telegraph. What you will see is a ten column inch article, the first column inch will say oh, trade agreement, which sounds like a good thing and the whole of the remainder of the article will be talking about the threats to particular industries within this country that that deal would pose. In contrary to popular perception, trade deals are staggeringly politically unpopular because the beneficiaries shut up and those who are going to get hurt complain like mad.

Bernadine: Also I think, there are things involved, the less I think that the UK has to learn it needs to be transparent when doing these free trade agreements. That was a massive lesson that the EU learnt when they were negotiating with the US indeed they thought they had a deal and forgot to ask everyone else about it. They learnt the lesson they must start, you know, circulating draft mandates, the must-have open conversations to allow the European parliament select committees. Here I am afraid we have yet to learn that lesson and I am hoping over time as things evolve the Government will learn you need to open, transparent, evolve, everybody if need be have the industry in the next door to the negotiations meeting saying this is what happens to the industry if you do this. Because we are seeing now as things unfold, you know the fiasco with shellfish, for example, you know the UK not understanding the legal position on that. So, maybe we have got some hard lessons to learn but one thing, lesson we absolutely have to learn is about transparency and adequate consultation in good time.

Jonathan: Yes, well, precious little sign of that from this Government at the moment I am afraid. But let us try and be optimistic, or at least forward-thinking - what about all the new freedoms that we now have outside the dead hand of EU rules on things like state aid and competition policy. Both what do you think the Government will actually do substantively with its new powers, with a different state aid regime? You know, we know that on March 6 in Rishi Sunak's budget he is going to try and distract us from some of the less positive economic news which, to be fair, is not entirely his fault. But by talking about, you know, there will no doubt be a lot of announcements about free ports, about other things which we are now able to do because of Brexit. Both what do you think the Government will do in this area and what difference will it make?

Bernadine: I could go first. I think observers of this need to, when everyone is watching this you need to distinguish in what the Government is saying in a press release and the reality. The two things do not match and a great example of this is state aid. We had a press release saying yah-boo it was a dreadful system, we have got a fabulous system now. Attached to that was a document, a consultation document, of 40 basic questions of what sort of a regime are we going to have. We do not know and now we have got the TCA and we have committed to an independent authority and what I find interesting, it is very much, I would say, encouraging litigation, third party challenge of the grant of state aid, so I see it is an area that is going to be increasingly fraught, increasingly litigious. So if the UK does go down its much more fluid open deregulated system, cooked into what it must do is litigation. So if I was, you know, a recipient of state aid and some of it, nowadays, especially in the area of energy, are huge amounts of money to get the clean energy going, I want certainty. So actually business is going to be crying out for a good, robust system and not a free-for-all, free-wheeling, let us just wait until someone takes a pot shot at you at the WTO which seems to be the noise we are currently getting. So again, I just think the devil is going to be in the detail of this and where we think we are going to end up is, I would think, probably somewhere very different. What I find slightly amusing is the language they are using, the terminology. It is not state aid anymore it is now subsidiary control. We do not talk about undertakings anymore, they are economic actors and what is this, are we scared somehow we will be tainted, you know corrupted by EU law creeping across? Is this to stop, you know, the ERG from word searching state aid when they look at the document? I mean it is extraordinary the way we have departed from the tried and tested terminology that we all understand into something else. I do not understand what we are trying to achieve there other than arguably open up far more law cases and far more uncertainty moving forward. But we are, at the moment, very much in limbo as to what is going to happen.

Simon: That is undoubtedly right. You know, you have got good careers advice to young lawyers wondering what to get into. Trade law, competition law, oh my goodness there are opportunities there and if you know a little bit of economics that will help too. You know, the curiosity about a lot of this, I mean it is perfectly correct that the EU competition law framework and in particular the state aid brief was an absolute disaster. You know a five-year-old in a kindergarten could have done a better job of tidying it up. So, it is not that it is a brilliant system we are stepping out of, but you did get the impression that those in charge of stepping out of it only discovered at a very late stage that they were going to have to have something else to put in its place. Which is, really, what explains this extraordinary consultation document which gives the impression somebody thought of the point on Monday and had themselves to produce a document by Wednesday. So, I do not know where we go on this. We are going to have a system. We are going to need a system. You know what, it is going to look very similar in very broad outlines to the one we have just stepped out of and you know, in a different world the same is true of financial services and we are going to have all sorts of ability to write new rules, but we wrote the rules that we are stepping out of, so we cannot see any particular desire to write them. Even if you look at the political drivers, the classical example, those, some of those who financed the Brexit campaign were very heavily motivated by a piece of European Law called the AISND. You also have the Investment Fund Management Directive which was basically the imposition of a slightly clunky regulatory regime on hedge funds. Now everybody hated that for a whole bunch of reasons, it was not just the hedge funds that hated it, everybody hated it. But, you know what, it is there. Now technically the Government could say, you know what, we have decided we are going to deregulate hedge funds. I can assure you they are not going to say that. You know, even the Daily Telegraph would struggle to support that one. So by the time you have finished looking at your new freedoms and saying what is it we actually want to change, what they are actually going to change is probably pretty minor relative to what is there already. So I mean certainly this is true of not only financial services but every other area that I have looked at. There may well be freedoms but there does not seem to be any particular plan for using those freedoms in any particular way.

Bernadine: Another point I was going to say that also is going to stymie whatever the, possibly stymie what the UK Government may put in place. Something that came out of this sum is a white paper from the European Commission basically saying we are going to have a state aid regime vis-à-vis third country, third party, sorry third-country companies operating in the EU who have been recipients of subsidies in their member states.

Simon: Yes.

Bernadine: So damned if you do, damned if you do not. So there is a regime being put in place in the EU at the moment and there is a real appetite for it to come into place. So that needs to be taken into account as well.

Jonathan: I think that illustrates the extent to which the EU, although we may have left the EU, that does not mean we have left a world where we are now in a world where we can simply ignore what happens in the EU. I think we are basically at the end of our time here. So if either of you, if both of you want to have thirty seconds, to sum up, or to add anything that you feel I have missed out please do, before I hand it back to our host.

Bernadine: No, I think Brexiternity is probably the right word rather than Brexit. This is ongoing, we have only just started the journey.

Simon: That is absolutely right. We are all going to be studying European law for decades to come.

Jonathan: Well that at least is an optimistic note. European law, trade, international economics are all subjects which are very much not going away. So thank you both Bernadine and Simon very much indeed, that was absolutely fascinating. I learnt something and I am sure everyone else did and I will now hand it back to Shavika and Eleanora to close the event.

Eleanora: Thank you, Professor. That is the end of our webinar. A massive thank you to our guests for taking the time to be here today and for your informative and thought-provoking discussion. Finally thank you to all those who joined. We hope you liked the event as much as we did.