Kemi Badenoch attacks own department over 'stale' figures for post … – The Telegraph

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Kemi Badenoch has attacked her own department’s estimate of the economic benefits from the new Indo-Pacific trade pact she has struck.

The Business and Trade Secretary said she could not “stand” the “stale, static, out-of-date” forecast that joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) would add just 0.08 per cent to the economy.

Last week, Britain became the first non-founder member of the CPTPP, a bloc established in 2018 which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The move – which is part of the UK’s post-Brexit “tilt” to the Indo-Pacific region – will give businesses easier access to tens of millions of middle-class consumers and a $10 trillion market.

However, critics have seized on the fact that the Government’s own modelling from 2021 suggests that it will only lead to a 0.08 per cent increase in the UK’s Gross Domestic Product over about 15 years. The Office for Budget Responsibility has separately forecast that Brexit will reduce the UK’s potential economic growth by about 4 per cent in the long term.

‘Static, out-of-date assessment’

Speaking to the Telegraph, Mrs Badenoch dismissed the 0.08 per cent figure.

“I can’t stand this estimate, even though it came from my department,” she said.

“It’s a stale, static, out-of-date assessment that assumes growth is linear and businesses won’t use CPTPP to really expand.

“This deal is about where the world is heading. Demand from the CPTPP countries is expected to far outstrip growth from Europe, this deal is going to meet that demand. It will bring significant economic growth if we use it properly.”

Mrs Badenoch said that the deal was “all about the future”.

“By 2030 over half of the global middle class will be in the CPTPP countries,” she said. “By 2050 they will account for over half of all global growth. In contrast the EUs share of global GDP is set to steadily decline.”

Asked whether the UK could trade effectively with the other nations in the alliance given their geographical remoteness from Britain, the Business and Trade Secretary said: “We certainly can and we already do.

“I visited a business in my constituency called Contamac that already exports to the majority of CPTPP countries, but will now benefit from even lower tariffs.”

UK second largest for services exports

Mrs Badenoch also pointed out that the UK was the world’s second largest services exporter, meaning “our future growth is largely in tech, legal and digital services”.

“CPTPP has great digital provisions and guarantees of a level playing field for service providers,” she said. “This deal will help the UK’s tech sector go global.”

She highlighted other advantages from belonging to the partnership, saying that as the first European country to join, the UK was “getting in early and helping to shape the future direction of the bloc”.

The alliance would give the UK “more resilient supply chains” in the face of protectionism, the rise of China and global shocks, she added.

While the USA decided against joining the proposed predecessor to the CPTPP, Mrs Badenoch said the US “can always rejoin”. “[President Joe] Biden has ruled out free trade agreements but if he wanted to join CPTPP or wanted a bilateral with the UK, as our closest ally we’d always be open to it,” she said.

“I will never be opposed to good trade deals that give businesses more opportunities and help spur growth in the UK.”

Deal could be transformative

Crawford Falconer, the UK’s chief trade negotiation adviser who brokered the accession, said the CPTPP could be transformative.

“This trade agreement definitely follows the money, given the growth potential of the member states,” he said. “It’s a dynamic agreement, which is qualitatively different from a set of bilateral agreements. The whole is definitely much larger than the sum of its parts.

“This a genuinely open, market liberalising regime – it could change the rules of international trade.

“If the US joins, that could well mean we don’t need to then seek a bilateral deal with the US, and we would be in a stronger position than if we had a bilateral deal.”

Douglas McWilliams, the founder of the Centre for Economics and Business Research consultancy, said that the deal was “the real thing”.

He tweeted: “My guess is that trade volumes will build up only gradually but within a generation should fully compensate for trade lost from Brexit.”