Committee
Constitution, Europe, External Affairs and Culture Committee 21 November 2024
21 Nov 2024 · S6 · Constitution, Europe, External Affairs and Culture Committee
Item of business
Review of the UK-EU Trade and Co-operation Agreement
Professor Hall
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I totally agree with what has been said on other business services. It is important to set out that that is an area where future research is needed. It is an incredibly broad category, as set out by the Office for National Statistics. There are some activities where the data clearly shows that Scotland does very well—I am thinking of fintech, which is at the intersection between financial services, technology and consultancy—but that do not fit neatly into the Office for National Statistics categorisations. When the ONS set up the business codes, something like fintech did not exist as an activity. We do not accurately know how those new and emerging activities are playing into our economy, so that is still an area of uncertainty. Another important point is that, in many ways, we should not be surprised that other business services are doing well, given how they are traded and the barriers to trade. The barriers to trade in services are not tariffs; they are essentially about regulatory alignment between the two trading parties. In many ways that regulation is sensible and important. I think that we would all agree that we want to be certain about a medic’s qualifications before they operate in our country—there is a really good rationale for that. However, that means that, for services such as consultancy, which have much lower regulatory standards—I could set up as a consultant with no professional qualification if I had the capital do to that—it is much easier to sell services into another country. It is not like being an architect, where you need to have a professional qualification. I have a degree of caution around the data, because a lot of the other business services activity is new and does not fit neatly into our existing data. Another important explanatory variable is that there are services that have quite low barriers to services trade, because they are not reliant on regulatory closure—for example, that applies to those who can operate as information technology consultants.
In the same item of business
The Convener
SNP
Under our second agenda item, we will continue to take evidence on the second phase of our review of the trade and co-operation agreement between the United ...
Professor Catherine Barnard (University of Cambridge)
Thank you very much for the kind invitation to be here. I am a lawyer, so I will leave it to Jonathan Portes to talk about the economics. The TCA provisions...
Professor Sarah Hall (UK in a Changing Europe)
Thank you very much for the invitation to be here. The Office for Budget Responsibility recently concluded that the data that it has seen on Brexit is broad...
Mike Buckley (Independent Commission on UK EU Relations)
I do not want to repeat things that have already been said. I am sure that you are aware that services make up the bulk of our economy—72.8 per cent of our g...
Professor Jonathan Portes (King’s College London)
I echo what Catherine Barnard and Sarah Hall have said. Clearly, there are some additional barriers to the services trade as a consequence of Brexit and the ...
The Convener
SNP
It will be a bit tricky to manage the meeting, given that all the witnesses are online, so I ask members to direct their questions to certain witnesses. If a...
Alexander Stewart (Mid Scotland and Fife) (Con)
Con
Good morning. You have all touched on the challenges that we have faced and that we continue to face in managing the processes for our sectors. Professor Por...
Professor Portes
It is very unfortunate that—as, I suspect, you know—the data on the UK services trade is considerably less timely than the data on its goods trade. We do not...
The Convener
SNP
Mr Bibby has a quick supplementary, and then I will bring in Professor Barnard.
Neil Bibby (West Scotland) (Lab)
Lab
I want to follow up on the points that were just raised about trade in services, although it is largely excluded from the TCA, holding up better than trade i...
Professor Portes
There is quite a lot of analysis but, as I said, it is slightly hampered by the fact that the data is far from ideal even at a UK level, let alone at a count...
Professor Hall
I totally agree with what has been said on other business services. It is important to set out that that is an area where future research is needed. It is an...
The Convener
SNP
I will bring in Professor Barnard on Alexander Stewart’s original question.
Professor Barnard
I will answer the first part of that question, which was about which sectors have been badly affected, so I am looking at the negative rather than the positi...
Keith Brown (Clackmannanshire and Dunblane) (SNP)
SNP
Good morning. I am a wee bit stunned by the diversity in the responses, which go from quoting the OBR talking about a 15 per cent drop in trade intensity ove...
Professor Hall
I do not have balance of payments figures readily available, but there are indications that the impacts have been different across the UK. I refer you to Pro...
Mike Buckley
On the difference between the OBR saying that there is a 15 per cent drop in trade intensity and other people saying that things are not so bad and are much ...
Keith Brown
SNP
Before I bring Professor Portes in, I note in response to what Mr Buckley has just said that the vast majority of the evidence that the committee has heard h...
Professor Portes
Picking up the original question about the difference between the OBR assessment and mine, I note that the answer is easy—there is no difference. The OBR sai...
Keith Brown
SNP
I will bring in our last witness. Professor, on that point, you said that, even with the best will in the world, the information is not available. There is n...
Professor Hall
I think that that was Professor Barnard. I do not have anything to add on your question.
Professor Barnard
On your point about goods versus services—you specifically mentioned seafood producers—you are absolutely right. We are mainly talking about services, but wh...
Stephen Kerr (Central Scotland) (Con)
Con
I would like us to try to get our arms around what we are talking about. We are exclusively talking about services here. The UK is currently the third bigges...
Professor Barnard
I am a lawyer, but it is clearly dominated by services.
Stephen Kerr
Con
Does anyone have a more definitive split?
Mike Buckley
They are not necessarily what you want, but I can give you some statistics that I have in front of me. They are on our services exports, but not necessarily ...
Stephen Kerr
Con
Those are global figures rather than being specifically on exports to the EU.
Mike Buckley
Yes.
Stephen Kerr
Con
Professor Portes, do you want to comment? You are speaking, but we cannot hear anything.
Professor Portes
The muting is happening centrally; it is being controlled from Edinburgh and not from London. The picture may be slightly misleading. Our exports to the EU ...