Trade experts indicate Theresa May’s willingness intervene with economic policies rather than promoting Britain’s free trade capabilities could make investors think Britain is not really open for business.
Policies such as an energy price cap, Conservative industrial strategy and a renewed emphasis on reducing immigration could, ultimately damage the country’s standing, experts claim.
Victoria Hewson, a lawyer at the Legatum Institute Special Trade Commission said: “The challenge is going to be that some of the policy direction we’re hearing from the outgoing government and in the Conservative party manifesto around industrial policy is at odds with that open trading agenda.
Conservative leader Theresa May
“If we’re going to be moving in the direction of market intervention and price caps, that is going to give us potentially some difficulty with trading partners who will look at those kind of policies with some suspicion.”
Her comments were echoed by Stephen Booth, director of policy and research at the think tank Open Europe, when both attended a City Week event last week.
Mr Booth said: “What the UK now does and the decisions it takes on its approach to free trade are hugely important – that is why some of the measures in the Tory manifesto are of slight concern. The attitude to immigration is one, and also on greater intervention in markets.”
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Mrs May has used the rhetoric of advocating laissez-faire economics, saying she wanted Britain to be “the global leader in free trade” after Brexit, as the country will be free to strike its own trade deals once more.
It appears though that questions remain over just how committed she is to free markets.
The party’s manifesto pledges to create a “proper industrial strategy” while critics of a cap on energy prices indicate that it was originally a Labour plan under Ed Miliband.
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Theresa May's more left-wing policies could scupper future trade deals, according to experts
Some of the policy direction we’re hearing from the outgoing government and in the Conservative party manifesto around industrial policy is at odds with that open trading agenda
Victoria Hewson, lawyer at the Legatum Institute Special Trade Commission
Mr Booth said: “The job of Brexit will be to offset any losses in terms of market access we have with the EU, and either gaining market share through agreements with other countries, or making ourselves more attractive to other markets in terms of building our ability to export to those markets.
“That doesn’t have to be through a bilateral trade agreement – there are lots of things you can do through trade promotion or bilateral investment agreements. Clearly we are at a time in which interconnectivity and the movement of people is very important. That is why I think the issues around immigration are going to be key to the UK’s future success, and our attitude to our openness there is going to be very important.”
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He added: “The UK does have to think about what it is offering the rest of the world and obsess less about bilateral trade relationships, because that takes two to tango, if not more – there are lots of things the UK can and should be doing on its own. Brexit is an opportunity and it makes this a necessity.”
Ms Hewson added that she believed the British public tended to be in favour of free trade.
She said: “I don’t sense that protectionism is particularly at the forefront of people's minds – in fact, people are still very much in favour of Britain as a global trading nation.”