LONDON – Britain’s finance minister will tell Wall Street on Monday that his country’s shock decision to leave the European Union doesn’t mean it’s turning its back on the world.
With Britain’s currency tumbling and warnings of tough economic times ahead, George Osborne will try to reassure American investors after last month’s “Brexit” decision.
“The pillars of our special relationship with the U.S. will be maintained and strengthened. Our economic trade ties with North America must now become stronger,” Osborne, officially known as “chancellor of the exchequer,” wrote in a column published in the Wall Street Journal Monday.
“My message is simple: Britain may be leaving the E.U., but we are not withdrawing from the world. Britain will be a beacon for free trade, democracy and security, more open to that world than ever,” he wrote. Britain will become "more outward-looking, global-facing,” not less, he said.
British voters last month voted 52-48 percent to take their country out of the European Union, the 28-member economic and political bloc that comprises the world’s largest unified consumer market, with 500 million people stretching from Romania to Ireland.
Markets have been in turmoil since the vote three weeks ago, with the British pound tumbling to 31-year lows against the U.S. dollar.
Mark Carney, the governor of the Bank of England, has said businesses and households were already suffering from “economic post-traumatic stress disorder” after the global financial crisis, and that Brexit would compound this.
Many private sector economists expect the central bank to cut interest rates as soon as this week to try to counteract the shock.
With this turmoil in mind, Osborne has spoken to House Speaker Paul Ryan (R-Wis.) twice in the past two weeks and will meet “leading figures on Wall Street” Monday, then travel to China and Singapore next week. Between those trips, he will host Treasury Secretary Jack Lew in London “to see what more we can do together.”
London has become a major financial center in Europe and some analysts have warned that companies might move their European headquarters to the continent if the U.K. loses access to the single market.
The victory of the “Leave” campaign came as a shock to many here – including, it seems, to the Treasury department, which has been scrambling to contain the fall-out.
The top civil servant in the Treasury, permanent secretary Tom Scholar, told a parliamentary committee last week that his department had not formulated any contingency plans in case Britain decided to leave the E.U. Instead, it simply wrote two reports outlining the negative economic implications of leaving, the Financial Times reported.
The size of the economic impact will depend on the kind of exit Britain makes from the E.U.
If London is able to negotiate to keep access to the single market, the kind of deal that Norway currently has, then the impact would be relatively small, economists say. But if the U.K. will be treated like any country outside Europe and have to pay tariffs, the impact would be much greater.
Osborne will be trying to broker a favorable deal, but a clearly angry Jean-Claude Juncker, president of the European Commission, has told the U.K. there will be no "a la carte" membership of the single market.
Britain’s decision to leave the E.U. means it will need “stronger links with its friends and allies around the world,” starting with the United States, Osborne wrote in the Journal column.
“It is now in the overwhelming interest of both countries to do so. We are each other’s largest investors, with almost $1 trillion invested in each other’s economies,” he wrote, saying that the U.S. had 10 times as much money invested in the U.K. as in China.
More than a million people in the U.S. work for British companies, while a similar number worked for American companies in the U.K.
“The U.K. is a leading financial center serving not just the continent of Europe, but the entire world,” Osborne said. “As I will tell Wall Street, we want more finance in London, not less.”