 Good morning everybody. Oh, good morning everybody. Um, excuse me Can we turn that down a bit and welcome to the Wall Street Journal session on Britain and the EU? The way forward in conjunction with the World Economic Forum For the last six months since the shock vote or surprise votes by Britain to leave the EU Theresa May has made it very clear that Brexit means Brexit But there has not been a lot of detail this year this week rather there's been some clarity around that in her speech And she's made two speeches Britain will leave the single market Britain will take back control of its borders and will Come out from under the jurisdiction of the European Court of Justice at the same time though She has set out this vision for Europe to be a beacon of free trade to be a Center for the best and brightest in the world to strike a Ambitious, I think the word was free trade agreement with the EU and to be its best friend and Neighbor, so we have some clarity or at least part of the jigsaw for the future of Britain's relationship with the EU of course We are still waiting to hear what Britain believes Brexit means. Oh, sorry what Europe Believes Brexit means and we will have an interesting and complex negotiation for the next two years to get that but to discuss Both Theresa May's vision and also how that is likely to interact with Europe's vision and how these Talks will progress. We have a fabulous paddle here this morning Philip Hammond is chance-driven exchequer for the UK and former foreign secretary Mario Monti is president of Baconi University in Italy. He was the European Competition Commissioner for a long time in Brussels and was all but also the Prime Minister of Italy Nari Woods is Dean of the Blavatnik School of Government at Oxford University and has studied and taught in New Zealand The US and the UK and Jez Staley is chief executive of Barclays Bank in the UK formerly of JP Morgan where he ran several big divisions out of New York So please welcome our panel So before we start I've actually been struck How many people who I've spoken to who still don't believe that Brexit does mean Brexit So can we just have a quick show of hands for those who still believe that the UK will not actually when it comes to it leave the EU? Messages finally go. Oh, wow. There you go. Okay her speech. Good. So we start from that premise. That is a good start I'm gonna start with you Philip Talking to people this this week There were people who thought Brexit didn't mean Brexit, but they're not in this room But there was a huge Divergence of opinion around what Brexit would mean for the UK There were some people who thought that economically it wouldn't have a discernible impact The city would be fine and we'd look back and it would be a great outcome Other people have a much much more negative view around What it could mean for the economy for financial services and for trade But one thing that was fairly consistent particularly among business leaders was this need for some form of certainty as they make their their plans for the future You and Prime Minister Theresa May have talked about an implementation period an opportunity to give people some time to adjust and Avoid them rushing into decisions based on worst-case scenarios ahead of time because it is a compressed time frame Can you give a sense of what that actually means in practice? What are you actually hoping to achieve with this period and how quickly do you need to achieve it for it to have an impact? well, first of all Businesses business clearly dislikes uncertainty And the consistent message we get from businesses give us clarity good bad or indifferent Let us know the outcome as early as possible because whatever it is We can plan for it. We can live with a Variety of outcomes as long as we know what they are the problem We've all gotten and and I think the important thing now and one of the key issues for us in the Prime Minister making this speech This week is to move from a period when we've been kind of in our separate silos hurling verbal rocks at each other and and avoiding the real issue is that we've now set out an Agenda which allows this to become a shared issue a shared problem that has to be solved and and I'm very confident that our key interlocutors in the European Union do see this as as an issue a challenge that we will work together on Resolving and one of the key problems one of the key challenges We have is that the treaty sets down a pretty rigid time frame once we've triggered the process Which we've said we will do by the end of March our Supreme Court will rule next Tuesday Whether we have to push a bill through Parliament to do that or whether we can do it with executive authority Either way, we should be able to serve the notice end of March and we have to do Two key things we have to negotiate our exit from the European Union and all the complications of that and we have to Negotiate a future Suite of relationships between Britain and the EU and I say a suite because it isn't just a free trade agreement Our relationship with Europe is much more complex than that and the challenges facing Europe are much more complex than economic challenges security challenges Irregular migration challenges Scientific technical educational collaboration all of these things we have at the moment and all of these things we would like To continue to work closely with Europe on So the challenge is how do we do an exit negotiation? scoping a future relationship and Then managing this time frame which says we will leave the European Union in if we serve the notice in end of March 2017 we will leave the European Union end of March 2019 that's effectively a political necessity in terms of the UK Political situation and it's the legal position of the treaties But we have to face the fact that there are many transitions that will be involved business transitions Governmental transitions if we change our customs arrangements, we will need significant new infrastructure at the borders Between Europe the European Union and the UK if we have different migration arrangements We will need significant new IT systems. For example, these cannot be built and deployed in a few months. They're going to take Years in some cases. So we're gonna have to have a practical discussion about how we manage that transition and At the same time we should try to give as much clarity as possible to business So I hope that I hope that what will happen is that after we serve the notice We will start to engage With our European Union interlocutors in a discussion That will be a constructive engagement and it will become clear I hope fairly quickly that there is a shared ambition to get to an end-state Arrangement that will mean maximizing the reciprocal access to each other's markets and the level of cooperation across this range of non economic Areas as well so that the fog gradually clears and people outside the room businesses in particular Gain a clear understanding that the intention of both sides is to have a strong collaborative Relationship in the future the detail of how we do that will emerge later But I hope that it will become clear that there is that shared Ambition and that those on both sides because we have them both in the European Union and in the UK who do not want that Outcome who do not want a strong ongoing cooperation after Britain leaves The European Union have been seen off by the majority who do want us to continue to collaborate closely with our European neighbors and Just to clarify so is that Pali also a need to do it quickly to avoid people taking Decisions based on worst-case scenarios just because they have to given the compressed time frame If if we don't give businesses clarity if we don't give governments clarity, it's not just business We would have to start spending money on Systems on a precautionary basis. So would some of our EU neighbors I mean France in particular because of the cost of the border Ireland Will have to start spending money on a precautionary basis that may be abortive spending that's economically suboptimal it's economically suboptimal if large businesses Make contingency plans which involve spending money that may later be written off So the more clarity we can give the better for the economies of the EU and the UK Mario in two years time given the compressed time frame. Do you think we will have a firm deal between the UK and The EU and is it likely to look? Anything like or close to Theresa May's vision that she laid out this week. I Believe so I believe that in recent days. We have all gained the clarity and I very much subscribe to the Chancellor's spirit of a Down-to-business negotiation without any residual acrimony and in a very highly constructive spirit because at any rate so much remains In common in terms of interest and I welcome this clarity My view on what will be in the medium-long term the economic consequences of Brexit on the UK and on the EU Does remain very negative. However, I Will not go here into the details, but I thought I might try to reflect for one minute on Whether or not we are going to see a British contagion in terms of this integration now We are speaking here today on the very day in which the Far Western potential this aggregator of the European Union Makes the oath of office. I hope that that commitment will not feature very prominently in the oath But at any rate has been somewhat proclaimed and So well, will there be in a EU already under stress because of this More rough treatment from Washington and under the impact of Brexit will there be a tendency towards further this integration I believe not and Let me see the thing at three levels Governments heads of governments in particular political parties and the public opinion well in terms of Leading figures in governments of the member states, I believe what happened Can lead the 27 other leaders to reflect quite a bit because David Cameron Was different from the others only in terms of magnitude most of the current leaders of member states do play the game for domestic political purposes of Extracting as much as possible from the EU by damaging its reputation By making its decision Confusing in order to gain more political support Now Mr. Cameron did this whom I admired and admire did these two and Untold level because of course he called for the referendum not in the European interest Not in the British national interest not in the interest of his party but in the interest of his position within his party and he Put his country and the whole of Europe on the line to achieve this The consequences at least in these months has been rather devastating not only for him personally But because the whole political establishment in the UK has been blocked paralyzed and made uncertain So I believe that the others Will find this an admonition to be a bit more careful in the game of destroying the EU in order to improve their positions Party-wise of or personally domestically Political parties, however It is undeniable that those movements that there are in France Italy in all countries Having seen that the secession is possible are Boulder are Boulder and what about the public opinion at large The Bertelsmann Foundation published I think a month ago a poll which they do regularly on the willingness of Citizens of the main member states of the EU to stay or to leave interestingly enough a Few months after Brexit in all countries the percentage of those wanting to leave the EU has gone down I regret very much that in my country Italy The percentage is the highest But in all countries it has gone down. So I think this at least Circumstripes the immediate risks for contagion but much will depend on How we will settle the negotiations and here I must say and I will conclude with this note Chancellor and I and others were in September in Bratislava for an informal ecofin Council at that point. There was in my view still the temptation in many EU member states To play the game of who is nicer to the UK nicest to the UK in terms of Granting special status within the single market that would have been an organized Suicide of the European Union and now with the clarity expressed by the Prime Minister and since Bratislava with the polite determined Toughness expressed in particular by the Chancellor of Germany the other Chancellor out there And I show you play. I think there is scope for a more orderly and less Disaggregative course of the negotiations Thank you very much No, when you look at the The speeches laid out and some of the reactions you I'm sure heard and Davos this week Can you give a sense of what are the biggest challenges and opportunities in this process from Britain's perspective? Well, I think to make this work to do you know for the European Union countries for the other 27 this is the first time they're doing a divorce and It's hard to get 27 countries to agree to do something for the first time You know if I was being flipped I'd say it's it's hard to get a train ticket reimbursed from the European Union within a year Let alone, you know a divorce settlement, but but so let's be let's be clearheaded There are three agreements. There's the divorce agreement the transition agreement and then the future Trade agreement and the frictionless borders that the Chancellor so rightly focuses on that's a lot to negotiate and So Europe is going to need you know Britain is going to have to do everything in its power To create a positive constructive mood and I think the government the senior Certainly the Prime Minister and Chancellor Focused on that that their problem is though that You know speaking frankly within their political party not everybody takes that view and there is still in Britain factions who are gloating about Brexit and I think that that creates an unfortunately Unconstructive tone and part of the reason why they're gloating is a very simple fact That the announcement of Brexit caused a devaluation the benefits of which have been immediate to Britain It's got a stimulus effect. It's great for exports The costs of Brexit won't happen the costs of hard Brexit until they occur in two years time and Politically, that's difficult to manage. It's difficult to keep people cool-headed and balanced about some of the difficulties along the road ahead So I think politically You know, this is a big call on both sides and and in Britain there needs to be a Very cool constructive the the cool constructive approach that the Prime Minister and Chancellor are taking is going to have to quickly infect all of their party and and people that supported Brexit to create a constructive tone and the 27 in Europe. This is I don't think they can do it in two years You know if I the ideal would of course be you'd have this sort of 10-year period where you could actually put each piece together and then end up in a kind of Churchillian world of a more coherent EU without Britain and Britain as a Constructive friend sitting alongside it, but I think there's two parts There's two other parts of the Prime Minister's vision Which I think we need to pay attention to and that we need to think about in the future of the European Union and Britain one is that since the global financial crisis in 2008 both Europe and Britain have each worked very hard to put in place financial regulation To avoid the public guarantee backing up banking activities There is a world in which the negotiations sour and it becomes a race to the bottom and I think if we dismantle, I'm not saying that all parts of financial regulation are right some of them are clumsy and Perhaps could be streamlined but the core of that regulation, which is to protect public taxpayers money From the costs of bank failure We mustn't give up in a race to the bottom in the brexit negotiations And I say that because what I hear in the city are two different voices one voice which says Brexit is a great opportunity to enjoy a much more deregulated financial System and for Britain to become that and the other which is actually we want financial passporting We want to stay engaged in Europe, and so we'll we'll push for sort of regulatory equivalents So that's one thing I think it's very important the second and I feel this passionately That for Britain to succeed in a global economy, which it can It needs to be right at the forefront of the knowledge economy One of the great assets that Britain has is it has four of the world's top universities I'm very privileged to work at Oxford University currently the world's number one university on at least one. Thank you But and we only pay attention to them when we went when we win But you know that that aside the fact that we have four great universities is a magnet not just for students and faculty But for companies all around the world What most? jeopardizes our status is immigration constraints That we're fighting against top universities in the United States We have to be as attractive as we possibly can if we if we can't equal their package Which has come into a graduate degree at Oxford and then stay in Britain and work for a couple of years to? Finally polish your CV and then go home or go somewhere else Then we lose our attractiveness and already we can't do that our students have to study and go straight home If we have a tone in Britain, which is that it's less Welcoming of immigrants then Britain can't attract the best talent from all over the world. It doesn't come global Britain It becomes doors shut Britain if we can continue to include students from all over the world in our immigration numbers instead of seeing them as willing purchasers of Britain's Fantastic educational services if we make them part of Britain's immigration numbers debate We're we're Smashing our own kneecaps before we even begin the race. So what I would say to Brits and to the government is in Taking and embracing the world in wanting to become a great economy in the world Don't kneecap your best asset Let us thrive make sure that immigration policies Tell the world that Britain is open and welcoming to the best most entrepreneurial energetic talent from all over without Restraint and constraint because then we can compete with other European countries with the United States and beyond Thank you very much. We'll come back to that point But just I mean I'd love you to react to some of that But also just give your sense the city of London and finance is obviously a massive part of Britain's economy It's tax-based and importantly. It's a big surplus in terms of trade So can you just give a sense of you know what this means for the city in your view? So Obviously in 2007 2008 the world's financial community and the banks at the epicenter Led the world into a pretty calamitous economic collapse One of the silver linings of that I think was was the G20 pulling together and with the G20 said with respect to the banks was One we all need to re-regulate this industry whether it's Brussels or London or New York or Washington or Tokyo We need to Re-govern the financial system so that we don't repeat the errors of 2007 2008 but they also said that as we re-regulate the banks What's very important is that we don't cut off the free flow of capital that we don't as we re-regulate the finance industry create barriers that Inhibit capital flowing around the world because I think that there was a recognition that the free flow of capital in one way Is the oxygen of commerce and you shut that off which actually what's what happened the financial crisis and you create the economic calamity that we saw the view that I have is post-Brexit The other reality is the European Union and the UK will both recognize the primary importance of keeping the free flow of capital and To threaten to cut off the free flow of capital in order to try to gain a certain advantage in terms of financial employment Would be very contrary to what they all agreed with the global 20 And I think contrary to how the governments have actually acted over the last Over the last seven or eight years so much like what happened Post the financial crisis in the real Regulation of banks, I think will happen again as we re-establish this order on the back Brexit and they will not cut off the free flow of capital The other thing that I think is important to remember is is is that free flow of capital There are there are centers of the capital markets in London is definitely one of them It was it would be incredibly simplistic and wrong to believe that London is a Is a capital of the capital markets globally or a capital because of a couple of banks There is an entire ecosystem in the UK which drives its important as a financial system There is a legal system that has a history and a precedent which is critically important for the for the Efficient operations of a of a capital markets, you know one, you know sort of fact point that In in the United States at the heart of the financial crisis. There was about three and a half trillion dollars of defaulted debt The US bankruptcy system Renegotiated that three and a half trillion dollars in 18 months. There's an extraordinary accomplishment Perhaps the only other legal system in the world that could replicate that that could replicate that sort of accomplishment is UK now Europe is very cognizant of that and one hopes that they make progress in In and getting that But I think between the understanding that the free flow of capital is important for commerce whether it's in Frankfurt Paris or or or London will be a guiding principle as we renegotiate the separation of the UK And then also recognizing that this ecosystem that drives a capital markets is so complex It's not going to be determined by one bank CEO saying we're going to move a thousand people here a thousand people there So uncertainty is is a challenge that we all face But the banking industry actually has been facing this uncertainty since 2008 and last time I checked they had a pretty good fourth quarter Okay, so you're positive on the city broadly speaking. Yes. Okay good Just wanted to go actually to to Nari's point first of all about Immigration into the UK. Obviously that was a Big issue in the referendum There's been this attempt for many many years to bring down the net immigration numbers with limited success and there's also the issue of a Large very large number of EU citizens living in the UK and a large number of UK citizens living outside when from a human Perspective how quickly and I'll put this to both of you marry and and Philip Are we going to get a solution? Do you think and people going to focus very quickly on that human element of making? Sure that people's status is clear in terms of where they live and what their rights are going forward Well, we've made a proposition to the European Union that we would be prepared to settle this ahead of the principal Negotiations on a very straightforward reciprocal basis EU nationals who are Established in the UK should have the right to remain and British nationals who are established in the EU should have The same right to remain that proposal was rejected on on the On the principle that nothing can be agreed until everything is agreed, which is okay We were simply trying to remove what is a Human uncertainty in this equation We've been very clear with the 3.2 million EU nationals in the UK that as far as we are concerned They are welcome they play a vital role in our economy and Provided we can Be assured of a reciprocal right for the rather smaller number about 1.2 million EU UK nationals living in the EU Then we would expect that to be settled, but let me let me just take the broader point that Naira has made about The role of our universities which we I absolutely accept is at the heart of Developing the innovative and disruptive technologies which make Which give Britain its economic resilience its its ability to constantly change what it is and what it does And I've said many times that there is no There's there's no immigration system that we will introduce and we haven't decided what it would look like yet There's no system that I can conceive of which will be Intended or designed to cut off the flow of highly skilled highly paid people academics or indeed qualified students wanting to learn that would be a you know exactly as You've suggested that would be shooting our kneecaps off before we've even started and we are not going to do that We don't need to do that because the political debate in the UK around migration is not about Computer scientists and academics and brain surgeons. It's about the the other end of the economic spectrum It's the same debate that that is being held across Europe about the Effect of large-scale unskilled migration in holding down real wages for our own Low skilled indigenous population. That's where the frustration is that we heard we saw vented On June 23rd in the referendum vote So would you restore the rights of graduates to stay and work for a period after they've finished their degree? Because that has been taken away. Well, I'm not I'm not sure that I agree with that. You surprised me there I don't think you're right that the right of graduates in quality institutions who gain Degrees and take graduate level work as far as I understand it unless something's happened that I've missed that exists what we have had to do is clamp down on People coming graduating from frankly low quality Institutions and then doing non graduate trying to do non graduate level jobs So we're clear that it has to be a graduate level employment I'll take this up with you offline But as far as I'm aware anyone who's graduate getting a good, you know a degree from Oxford and taking a graduate level job Has that right for two years to remain in the UK? I'll go on to Mary in one second. We're just to ask one detail here Do you expect, you know trees are made called Europe a best friend and neighbor in her speech Would you expect as this plays out for? Immigration for EU nationals to be easier going forward than say for an American or an Indian or someone from outside the EU Is there going to be some sort of interim level where it's it's easier? Do you think? Well, I think that's an open question and it could be you know, that could be a subject for The negotiations what what we've said clearly is that we cannot accept the principle of free movement The principle of free movement is that any European national without any Requirements or any restrictions can go and simply changes place of residence from You know Bulgaria or Romania to the UK we can't accept that principle Any longer that is not the same as saying we want to close the doors. There is no, you know There might be a few people in the UK Whose vision is of a closed economy where where migrants don't come in but that is absolutely not the majority view It is absolutely not the view of the majority of people who voted to leave and this may be a peculiar Sort of British peculiarity, but it is very important to the British people that we control our borders But most of them do not want to use that control to shut the borders They simply want to have the control and there's a really important distinction there Okay Theresa May has recognized explicitly that we will continue to need to attract the brightest and the best From the European Union and from around the world To keep our economy going to do many of the jobs in what is effectively a full employment economy now And we need them and we will go on welcoming good. Mary. You wanted to step in there and I'd love you also to comment if you can on The future of freedom of movement within the EU itself. There are it's not just a UK issue There is an issue in other countries who are concerned about this. I mean, is there a chance that for the EU itself these rules do change over the coming years These things are cyclical. I remember that not centuries ago, but 10 to 15 years ago 17 years ago There were only three member states of the EU Who did not feel the need to set up Phasing in transition periods for for immigration from the new member states They they were Sweden Ireland and the UK and we at commission were impressed by this Further proof of the openness of mind of the UK so one question in itself, but not for how here is What a fundamental change happened in a short time, but the tour linked the the attitude in the UK now to EU migration is Absolutely for sure derived from the mistake that Blair made to open the floodgates in So it's it's it's a domestic UK affairs. Yeah. Yes. No, but coming to your question. I I Agree that in this cyclical long cycle We are in Free movement of people is is not popular It does however belong logically To the construction of the single market by the way It's important to remind us all of the fact that that the European single market has been perhaps the most successful British export in the last few decades and if I can say so a conservative British export because it was Thanks to the political impunction of Margaret Thatcher and the meticulous Resolution resolve of Lord Cofield That the single market was built and by the way, I regret very much the departure of the UK because Having been for ten years in Brussels in charge of implementing the single market and competition policy No other country had ever been So strongly allied of the Commission in those responsibilities than the UK, but Even if we assume that okay in the next few years We could that derogate a bit even even within ourselves to free movement of people my Worry is the indirect effect, but so you're saying you think that there may be a change that Europe may end up adapting those rules in the coming years Probably not for the reason that I am explaining now Namely that among EU member states among the 27 this would be seen as one of the many possible derogations to the unity of the single market But if one or more member states were to make use of this derogation I would imagine for example another venerable member state France the following day ask a Say to the to the others. Well, as you know, we are all fond of the single market unlike those surprising Brits in France except we don't like the Free market the the single market for corporate control So we object to the acquisition of our precious French companies from outside So you think the rules will stay together just you want to Dive in I just you know, I'm a little bit of back of what the Of what the chancellor said, I don't see the UK are we don't sense that that that that the concern about Migration in any may or any way wants to limit the free flow of intellectual capital You take a and you take an institution like Barclay's which is there and in large member to contribute to my kingdom We have 15,000 employees in India We have we have 9,000 employees in the United States of the executive committee that runs Barclay's is roughly nine people three are from Europe are from the European Union The other six are from countries outside of the UK and outside the European Union and and we When we think about attracting the best people whether it's in technology or it's in finance whether it's in accounting what not we look all over the world and and we want to find the best people not whether they're in the European Union or Within UK, but as a as a global matter and I think the sense and one of the successes of Barclay's in fact of the city of London There's been a an acceptance of us bringing talent wherever it may come from and probably the best thing is to get that really creative Pakistani that went to Oxford and now ends up working at Barclay's in the city of London I don't I don't get a sense that the that the British people in any way want that sort of activity to be curtailed Can I pick up on Mario's vision of where the European Union is going because well, I was good and can I add I was gonna ask you this Just you know, do you see in two years time the EU being? Sort of what it is today, or do you think we will be negotiating with a changing organization? Absolutely? I think That certainly not radical fast institutional change as I mentioned, but I think the European Union is changing I mean look the European Union is a miracle It's a miracle for me every time I walk into the European Parliament and see countries who have had so much conflict among themselves Talking to one another solving their problems in a process, but let's be honest. It's changing the the Eurozone crisis really did spit the European Union into Creditors and debtors and destroyed a certain solidarity that was holding it together and has shown that it's Almost impossible to continue with a deepening integration on fiscal affairs and such like and Let's be realistic about that It feels sometimes in Brussels as though everybody's drinking a Kool-Aid, which is that it's 28 Members and they're all gonna move together and the integration project will continue. It simply isn't Hungary and Poland Are already breaking the European Union norms the cherished a key communitarian values and the European Union members Don't really know what to do about that. We're already seeing defence cooperation emerge powerfully between You know Germany the Netherlands some of the northern countries We're seeing a clear difference in economic view with the northern Creditors as it were and the southern debtors the European Union I think we're going to see after the four elections that are going to take place in Europe and After mrs. Merkel and the French candidates and the Netherlands candidates actually have to present an Electable program to their to their constituents is going to be a European Union in which each Government is going to have to show to its citizens that it is in control to some degree and That as a project we will see a core of European Union countries Continuing on integration and a wider group of European Union countries Still part of the European Union the institutional structure will say the same But they will start going their own way more just as Hungary and Poland already are It's a pity in a way in that changing and uncertain European Union You know, there's a different scenario that Britain might have played which is to sort of be the island of stability While the rest of European Union has their elections has their tumult has their change and then perhaps Negotiate Brexit with cool heads afterwards, but we're not there But I think the European Union will be a very different a different Union in in five years time Not not that it won't exist. It will exist Mario. Do you do you disagree with that? No, I don't you don't okay I believe it is likely and I believe it is even desirable that the Structures evolve I Believe that we should try the European Union to have this evolution happen With the as little as possible requirement of a new treaty because we all know the complexities of that but I see many areas in which New policies are being conceived probably to be carried on by a more limited number of member states I See nothing wrong with Two speed Europe or three speed Europe And but does that make it easier or harder to negotiate a sensible Brexit deal if that change is occurring at the same time? Now that we hear that the Brexit negotiation is going to be almost a blitz in terms of time Because the EU is rather slow in changing its Anthropological configuration Probably it will be possible to conclude the UK negotiation before these changes take place in Europe Okay, I would add just one other thing on on the future of Europe Which is that the 28 countries of the European Union have found it very difficult to punch at their weight In global affairs Europe's the largest donor if you put all its aid package together It's got huge military capacity if you put it all together And yet when we talk about global cooperation and leadership people refer to the United States China and sometimes Russia So I think there's there's it's quite important in an emerging order in which great powers are consolidating spheres of influence and in which the institutions in which Europe has traditionally You know Worked with the United States and the United Kingdom are becoming more marginal in that world It's actually very important that the European Union or a small grouping of European countries Start punching at their full weight that they actually take a place in that emerging Global cooperation among great powers. Hey, Mary wants to dive very quickly and then I want to go to Jason to Yes, and I would slightly amend this Correct picture that you give because it all depends on which policy areas There are only three policy areas where the EU has been given by the member states The competence to act as one. They are trade money monetary policy and Competition policy and there as we know there is no us. There is no China which considers the you Second so just we I want to go to questions in one minute, but just quickly to To Justin to Philip. There's another big event happening today the inauguration in the US How much do you think that the new president is going to affect and play into? Both what happens in the EU but as importantly, you know, what happens with Britain and its ability to both Negotiate a deal with the the EU but also other deals around the world Do you think this is a big impact in this this whole development? well, and one of the Parts of the narrative from a UK perspective is the importance of being able to look beyond Europe to our traditional more traditional partnerships Overseas and the United States is obviously a key trading relationship as well as our most important Strategic political military and intelligence partnership So a change of administration in Washington is a very big issue for us It's also a very big issue for the European Union and you know brexit has introduced uncertainty I think the change of administration in the US has probably introduced an even bigger piece of uncertainty For the European Union. We'll have to see how this plays out my personal View is that the most important part of this is going to be Europe's rather delicate relationship with Russia not just because You know Europe needs security But because internally within the European Union the dynamics of the debate are partly driven by the fact that some of the member states particularly the newer member states have a much more acute focus on The the challenge that Russia represents to them as they perceive it and anything that changes the the settled status quo of A Europe that lives with Russia as a neighbor But but lives under a protective US umbrella as it does that anything that changes European countries perception of that relationship. I think is going to play into the dynamics of the European Union because it is not an exaggeration to say that for Some at least of the eastern partners in the European Union Security is a much more important consideration than economics. It's their number one priority You know, I I think we all have to recognize and I think this has Been seen during the course of this week that that the US electric has clearly challenged this notion of a global economic union and And I think the the hope would should be our needs be that the new administration While fair to challenge the fairness of the global economic union as it has been managed over the last number of decades Is seeking to is seeking to make it more fair and improve the global economic union as opposed to try to break it down and And so I I think if the narrative coming out of the new administration is we want to change whether it's to to make adjustments to NAFTA or or to other Economic treaties to make them better and more fair but not to attack the core proposition of an economic Union globally that could be a constructive Approach extending to the UK and to Europe but for sure if it breaks down to an attack on on trade and a and a fair global economic union That could be a challenge not only for the European Union and the UK discussions, but globally for sure So I want to get a question you want to say something very very very I just wanted to make the point because Jess Jess has just prompted it from me that it's very important to look at the Narratives the debate around the UK Referendum it was not an anti-trade or anti-globalization debate indeed the premise of those arguing to leave Was that we would be able to do more trade with our traditional partners outside the EU a Very keen question at the front here Marina hurts ITV news Chancellor Theresa May in her speech talked about the importance of corporations paying fair taxes yet you Recently issued a threat to the EU that if it didn't provide the deal you wanted you would ensure that Corporations would be lured to the UK with lower taxes Can you comment on that? Yes, first of all, I didn't say that of course, and I didn't issue any threats The UK has a highly competitive corporate tax rate Which will be at 17% by the time we complete the process that my predecessor Embarked upon and I think that's a globally competitive Corporate tax rate and the observation that I made was that Our strong preference is for our economy to remain in the mainstream of European economic norms But that requires access to the market that we've built up over the last 40 years and I very much hope that the outcome will be a Very high degree of reciprocal access between the UK market and the European Union market But it shouldn't be a surprise for anyone to hear That our first duty as an elected government is to protect the living standards of our people And that means the competitiveness of our economy and if we were to be by some catastrophe closed off From those markets, we would have to reinvent ourselves We would have to find another model another way to earn our living to remain competitive in the world And I just want to send out a clear message that we've we've reinvented ourselves before the city of London looks radically different now to the city of London that I Toid with the idea of going into and then didn't when I left university in the 70s a radically different We can reinvent ourselves. We can reinvent our institutions and we will do so if we have to but our clear preference is to remain in that mainstream and I think that's a prize both for the European Union and for the UK that We have a sort of common economic understanding and economic set of values across the European Union Everyone wants to dive in There is a big challenge there because since the financial crisis a lot of Brits have seen Swinging government cuts give them a sense that there is a housing crisis in the south Their access to health and education has diminished and a lot of those people voted Brexit And they voted Brexit because they were persuaded that the reason they don't have housing That's affordable or the reason they're queuing too long for schools or health is because of all the immigrants It's not it's a lot to do with swinging cuts in Government expenditure as a result of the financial crisis and it's hard to see how the government will deliver on Mrs May the Prime Minister's Social policy commitment at the same time as pay the cost of Brexit. Okay Let's go to another question in the middle there Thank You Peter Matheson. I'm the president of the University of Hong Kong and I completely agree with what Professor Wood said about the importance of the universities and I was pleased to hear the Chancellor's response. My question for the Chancellor is about Scotland and Northern Ireland Could you speculate on the implications for Scotland and Northern Ireland and in particular is there any scope for Scotland to negotiate separately with the EU Simple answer to the last question. No It's the United Kingdom that's a member of the European Union The European Union has made it very clear that it can't and won't negotiate with bits of member states And if the European Union ever thought about it, I can assure you that the Spanish government would Very clearly put the European Union back on on on track on that. So look, it's the it's the United Kingdom That's the member state It's the United Kingdom that will negotiate a new relationship with the European Union for Scotland the island Sorry, you think I've can you go to the island part of that? Well, he was talking about Scotland and Northern Ireland Yes, as a United Kingdom for Scotland The important thing to remember is that the single market that we have in the United Kingdom is far more important to Scotland's businesses and Scotland's workers than the single market of the European Union Scotland exports If you think of it that way four times as much to the rest of the United Kingdom as it does to the rest of The European Union now having said that of course we value the Union of the United Kingdom very highly And we trees and mayors made a clear pledge We absolutely intend to deliver on it that we will negotiate With the European Union a deal which takes proper account of the specific interests of the Individual nations that make up the United Kingdom and Scotland does have some specific interests You know oil most of our oil and gas industry is concentrated in Scotland much of our fishing industry Is concentrated in Scotland and so on so Yes, we will negotiate with the interests of the devolved nations as a key part of our negotiating agenda, but no we can't We can't contemplate a separate negotiation by those parts of the UK But I think we've got time for two more questions. So in the middle in the in the back there And I'll come to you afterwards So I delziani Minister of Industry Commerce and Tourism Bahrain It's a two-part question actually what happens after two years if you can't reach a deal with the EU March 2019 and is there a way back for Britain down the line if they wanted to rejoin the EU Is there a mechanism set in place to do so or would you have to go through a second referendum? How does it work? Well, I'll answer the second question first I Don't think that is any kind of likely scenario not least because a country joining the EU now Would be required to sign up to a commitment to become a member of the single currency Zone and that has always been an absolute red line for Britain We've seen since the referendum our currency depreciate Significantly that is the transmission transmission Mechanism and I slightly disagree with Nairi British people are beginning to feel the effect of that through increased inflation which we're already seeing and we will see some more of During the course of this year that is a transmission mechanism that allows Economic shocks to be absorbed in a smooth and automatic way and the European the eurozone Doesn't have such a mechanism for dealing with shocks that impact Differentially on the member countries of the eurozone, so I think this is a this is a permanent decision Britain will make its own way in the world, but having I hope a very close Enably relationship with the European Union on the question of timescale the treat is a clear We will leave the European Union two years after we serve the notice now That if if the negotiations are positive constructive, we're working together I don't see that that needs to be an insuperable problem if we are making good progress But haven't quite got there. We will simply agree that Britain will leave the European Union And we will agree some interim arrangements while we complete The discussion, but we think it can be done in two years if there's a political will on both sides to reach agreement on our exit and at least Agreement on the broad principles of the end state that will exist between the UK and the European Union A very quick very very quick last question Ferdinando Giuliano of La Repubblica in Italy and in a recent interview with our newspaper Geron Disselblum the president of the Eurogroup said very clearly that it would be impossible for the UK to stay in the customs union While seeking trade deals with third partners And it also he also said that it would be impossible for the financial services industry to stay in the single market without the UK being subject to the EU rules regulations including the ECJ now Would you agree with him that it would be impossible for you to stay in the customs union and keep financial services in the single market? Well as precisely because we do accept we don't think it's technically impossible, but we accept the political Imperatives of the European Union which mean that frankly if we said if we'd set out our negotiating position as we want to be in the single market but without freedom of movement and without Regulatory oversight of our financial services sector we want to be in the customs union But at the same time making free trade agreements around the world Of course, we would have presented a very big challenge to our European Union partners And it's precisely because we recognize that that Theresa May has said we will not be in the single market We will look to be in a free trade a negotiated free trade agreement with the European Union from outside The single market and similarly with the customs union We will not look to be a full member of the customs union now. She uses that language deliberately because we think it is in our joint interest to find a way of creating an Efficient and as friction free as possible Means of continuing to trade together assuming we reach a comprehensive free trade Agreement for goods and services. We have a shared problem over the land border between the United Kingdom and the Republic of Ireland Nobody in the European Union wants to see the Republic of Ireland's economy or the political progress of For peace on the island of Ireland undermined by this by Brexit we have challenges around the the trade flows between the UK and the European Union we import huge amounts of fresh Produce from the European Union. It needs to move quickly and efficiently across borders and we think it will be possible Given the technology available in the 21st century to find a solution which allows us to be outside the customs union But having a comprehensive Agreement with the European Union to smooth the flow of goods and services Between the economies of the United Kingdom and the European Union. Thank you very much indeed. I we've run over by one minute I apologize for that, but many thanks to the great panel. Thank you very much