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Geoff Cook

Mourant Consulting

Jonathan Rigby

Jonathan Rigby

Jersey
Global Managing Partner

Global Britain: Beyond Brexit

[Dynamic date]

01 March 2020

IFCs can play a valuable role in building 'Global Britain'.

There have been polarised views of how a post-Brexit Britain might emerge.

For some, separating from the EU bloc risks leaving Britain isolated and companionless. For others, it removes the shackles, freeing Britain to plough its furrow as a Global player and G7 member.

The reality is probably somewhere in the middle, but there are good reasons to believe that the idea of a Global Britain is not too fanciful.

Post-Brexit Britain retains the advantages that have helped it become a top ten global economy.  It will remain an attractive investment destination. It will still have soft and political power – a leader in academic prowess, bioscience, digital innovation, engineering excellence, and financial services.

It's why the idea of Global Britain seems a realistic and achievable vision – a vision put forward in Robin Niblett's Chatham House research paper 'Global Britain, global broker'. Niblett sees Britain as a global influencer, shifting from being a part of the EU supporting cast to a worldwide interlocutor, stimulating trade and investment, offering stability and international capabilities.

It's a vision that acknowledges Britain's inherent strengths, pointing to the shifts in trade patterns and wealth creation from west to east.

But it's also a vision that should resonate with IFCs, particularly the Crown Dependencies and Overseas Territories (CDOTs) because realising that Global Britain status will not be easy.

There are strong historical ties that bind the CDOTs with Britain, and the CDOTs have a shared interest in seeing Britain succeed. Their experience in facilitating global trade, cross-border investment and the pooling of capital can be the foundation for a reciprocal, beneficial and even closer partnership in the future.

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Global opportunity

Writing for Policy Exchange, Lord Hague of Richmond suggests that Britain is at a "moment of reckoning" - it's a reflection that Brexit has consumed Britons and the British psyche almost entirely over the past five years, whilst the rest of the world has continued to move on.

If the vision of Global Britain is to succeed, Britain must be proactive in building the platform to launch a new global ambition.  Trade horizons will need to be reset; new partnerships will have to be forged, and relationships deepened in new and existing markets worldwide.

And the global opportunities are certainly there.  As HSBC's latest Navigator report indicates, there is positivity around the potential of international trade in 2021. But the landscape is becoming more complex, as supply chains transition to an intra-regional focus.

A recent report by Schroders also confirms that London has regained its top position in the global cities Index.

In 2021, we'll see a sustained focus on the Asian recovery. This region has seen a strong resurgence from the pandemic, reflecting the region's experience in managing past episodes. In addition, recent moves by certain governments in Asia to relax foreign ownership rules and promote inward investment will inevitably result in more significant capital flows. Indeed, foreign capital will be critical to Asian economies looking to rebuild. Consequently, there'll be real opportunities across the Asian markets - with many shedding the 'emerging' label, as they increasingly provide stable and sustainable investment returns.

According to the Boston Consulting Group, assets under management for APAC-focused funds grew at an annual rate of 31% from 2015 to 2019. That growth trajectory looks set to continue as APAC economies jump start in the wake of Covid-19.

It stands to reason that exploring ties with the APAC region will be pivotal for Britain - which is why the treaty signed with Japan and the deals with Singapore and Vietnam are so significant.  They fit into a broader strategy of expanding trade and foreign policy ties in the Indo-Pacific region. Britain is also seeking to join the 11-member trade bloc, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The US, an essential trading partner for Britain, should also bounce back in 2021.  As the Americans reassert their global role they will remain a key location for start-up businesses, continuing to score well in terms of the ease of doing business. President Biden will revive relationships between the US and international bodies such as the WTO and the EU, strengthening the appeal of the US as an investment destination and growth market.

Private Capital

The fact that private capital looks set to play an essential role in global economic recovery should also give Britain cause for optimism, given its strength as one of the largest international investment hubs for families and private investors, as well as institutional capital.

Private capital is ready to be put to work as economies deal with massive national and personal debts (which rose to an estimated $257 trillion in 2020) and a pressing need to rebuild businesses and communities and invest in green and sustainable economic growth. Recent General Partner Private Equity surveys have confirmed that deploying capital in 2021 is the main priority for managers.

Britain can play a crucial role in providing much-needed investment, with European private equity deals expected to pass the €480 billion mark this year (Pitchbook).  Add to this the significant numbers of substantial family-owned businesses in APAC becoming more receptive to private capital, and the opportunity is both clear and meaningful.

Pertinent

In many ways the role being put forward for Britain in this new landscape might sound very familiar to IFCs – a neutral, independent, global broker facilitating international trade and cross-border investment.

Despite the apparent opportunity in markets worldwide, including key regions like the US and Asia, Global Britain's route won't be easy. The world today is very different from the world in 2016, when the referendum took place. COVID-19 has dealt a significant blow to the world economy. In a state of accelerated change and flux, China's relationship with global markets is more complex, the US dynamic continues to evolve, and geopolitical competition is increasingly heated.

This backdrop explains why the route to achieving Global Britain is so pertinent to the CDOTs as IFCs.  They have a real opportunity to support the Global Britain vision - because they are neutral and globally-experienced investment hubs, fully aligned with the new post-Brexit era, ideally placed to support and complement Britain's aspirations.

The CDOT IFCs have the digital capability, they are hotbeds of innovation, and they are agile.  They have already embarked on global strategies, with experience in managing and facilitating cross-border capital flows.  They are stable – a rare commodity in today's geopolitical environment – with strong rule of law and anti-corruption measures, and stable democracies.

And this supportive role should result in a win-win for Britain and its new partners worldwide, with IFC activity typically deploying investment into their real economies –  infrastructure, businesses, research and development and real estate. Reputationally, that's a powerful proposition, with Britain and the CDOTs working together to play a crucial role in global economic recovery.

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Positive Future

So far as Brexit is concerned, it's all too easy, against a rising tide of citizen journalism and social media noise, to be swayed by hubris. A more dispassionate assessment of the evidence and facts, however, does point to a positive future.

Britain can be confident in its global ambitions, built on the same strong foundations that have propelled it to 6th place in the world economic rankings. And it can be confident in the British family of IFCs playing a valuable role in helping Britain achieve its international goals.

The British Family of IFCs will, through the provision of efficient administration, transparent  and responsible pooling of capital, the facilitation of cross-border investment and upholding of the highest standards of regulation and business conduct, help Britain and the World, build back better.

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