Following its decision to leave the European Union (EU), the UK was at the centre of attention at the annual G20 Summit this week. Prime minister Theresa May faced mixed receptions from world leaders who were gathered in Hanghzou, China, to talk trade, economics and finance.
The prime minister, who planned to use her first major outing on the world stage to sell the UK as a global leader in free trade, was quickly confronted with harsh warnings about the consequences of leaving the EU and her responsibilities to keep world trade flowing.
US president Barack Obama was among one of the first meetings for May. He assured the prime minister that the US was interested in nurturing its “very special relationship” with the UK but at the same time said the US would prioritise bloc trade deals with the EU and pacific nations, essentially reiterating that the UK was still at the back of the queue.
Meanwhile, Japan published a 15-page document warning the UK that it faced an exodus of Japanese companies in financial services, pharmaceuticals and the automotive trade, if it did not secure free trade tariffs and “single passport” systems with Europe.
The document, which was published on the Ministry of Foreign Affairs website, pointed out that Japanese manufacturing firms such as Nissan, Mitsubushi and Honda faced being hit with trade tariffs when importing parts from the EU as well as when transporting final products for export to the EU.
The US and Japan made it clear that their interest in the UK was hugely impacted by the country’s access to the European single market, and that continued access was vital going forward.
May’s meeting with host president Xi Jingpin was one that was also much anticipated after the UK prime minister put a spanner in the works of a major nuclear energy project that China is a partner in. Shortly after her appointment in July, May announced that the £18bn Hinkley power plant, that would be built by France’s EDF Energy and China General Nuclear Power Corporation (CGN), would need further review. A green light on the project was expected this summer.
Jingpin offered the UK prime minister some respite saying that he is willing to be “patient” over the Hinkley decision and that China is “open” to bilateral trade arrangements with the UK.
Back at home, during prime minister’s question time May said she was reassured by her discussions during the G20 summit, despite there being no concrete outcomes.
“The signals emerging from G20 summit brought no greater clarity to the UK’s global economic relationships post-Brexit,” country risk research director at IHS Markit, Laurence Allan, tells GTR.
“The UK government presented its discussions with Mexico, Australia and South Korea as positive, in that those countries were open to discussing future bilateral trade relationships. But those generic statements, framed in diplomatic language, contained no substance nor indicators as to what that might mean in practical terms.
“On the other hand, statements made by the US and Japan underlined that until the detail on timing and substance of Brexit are clarified between the UK and EU, other G20 members remain cautious about the shape of their future relationship with the UK.”