They were not words I was expecting to hear from a former ardent Remainer, now a member of Sir Keir Starmer’s Cabinet, but my ears did not deceive me. “This is a benefit of Brexit,” the minister confessed privately to me.
They were not denying that leaving the EU was a massive blunder, costing UK plc a great deal, but they could now see real opportunities to grow faster than our European neighbours. All by imposing lighter regulation than Brussels across vital sections of the economy, with the Prime Minister pinning especially high hopes on the UK leading with artificial intelligence.
But achieving this will require great diplomatic subtlety and sophistication – staying friends with the EU and US, allowing the UK to profit while keeping out of potential trade wars.
Donald Trump is no friend of multilateral alliances including the EU. This week he warned that “they’re going to get tariffs”, complaining loudly that Europeans don’t buy American in terms of cars, agricultural produce and energy.
Fortunately, neither the EU, and still less the UK, are first in the new President’s line of fire. Trade between the two blocs already accounts for 40 per cent of global GDP. China, Mexico and Canada are Trump’s prime targets. In crude economic terms he wants to shut out China and annex his North American continental neighbours.
For Europe the major economic consequences of his economic strategy will be collateral damage as global trade slows down.
Comments this week from EU Commission President Ursula von der Leyen and trade commissioner Maroš Šefčovič underline that Europe is keeping calm and thinking pragmatically. Von der Leyen hinted that the EU would be open to buying more US liquid natural gas, a no-brainer for the UK as well, should Trump succeed in his bid to drive down the price of fossil fuels.
Speaking at the Davos World Economic Forum, Šefčovič said the EU “could consider” allowing the UK to join the Pan-Euro-Mediterranean Convention, known as PEM. This allows goods to move across borders tariff-free and includes the EU, Switzerland, Norway and some North African nations.
The UK has not ruled out the offer and has clarified that membership would not cross Starmer’s red lines against joining the single market or currency union.
Labour is keeping an anxious eye on the Reform UK voters breathing down its neck in more than 90 constituencies, but it is still, wisely, moving closer to the EU. Starmer is to attend a full meeting with his EU counterparts next month. There are a range of possible deals on the table over the coming years as the EU and UK reset and re-open formal relations – on veterinary standards, recognition of professional standards, Erasmus and movement of young people, carbon emissions and even fisheries. None of them will be easy.
Britain’s key sweetener is on defence. If the Government can find a way to maintain and boost its traditionally major contribution to Nato, that will please both Brussels and Washington – but it would be very painful for the Treasury. Trump’s biggest beef with Europe is not over trade but over his demand that the continent should pay for its own defence.
The trick for the UK will be to diverge from the EU in other areas. Jonathan Reynolds, the UK Trade Secretary, has been quick to point out that, if it comes to it, this country could be largely exempted from tariffs on goods because our main export to the US is in services.
The UK now has one Trump card: Brexit
Read MorePeter Mandelson, the UK’s ingoing man to Washington, is a trade veteran and has already pointed out that he expects his talks with the Trump administration will concentrate on what is produced from “clicks and portals” rather than “bricks and mortar”.
Starmer says he wants a trade deal with the US. It would be political suicide for Labour to undercut farmers and import chlorinated chicken by doing the deal Trump has suggested on agriculture.
American tech is much closer to this President’s heart. The UK already hosts some of the key innovators in this vital growth sector. While the EU’s Digital Markets Act places onerous burdens on Big Tech, the UK can afford to adopt a lighter touch even if that involves taking some risks.
Trump has already issued executive orders to torpedo global co-operation on the taxation of multinationals. Rachel Reeves has it in her power to make the UK a more attractive base for trillion-dollar companies.
Ministers know that the UK must draw closer to Europe in its own economic interests, to cut red tape and improve national security. At the same time this country is no longer in a trade bloc. We are a small independent player which must take full advantage of the flexibility we were promised when we voted to take back control.
Adam Boulton presents Sunday Morning on Times Radio
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