Nurturing UK/US trade and investment post-Brexit

Trade and investment ties between the US and UK are deep and enduring, standing at the core of the UK-US special relationship. They provide a foundation on which to drive future investments. But the current lack of clarity around Brexit puts it at risk.

According to the 2018 CBI US Sterling Assets Report, supported by Eli Lilly and Company (Lilly), UK companies remain the single largest investor in the US, investing $569bn in the US as of the end of 2015. US companies also make up the single largest investors in the UK, accounting for 24.5 per cent of the UK’s inward investment and supporting 1,349,000 direct jobs. This reciprocal relationship has become an essential part of the UK economy and has helped to drive growth in many of our key sectors, including life sciences.

At Lilly, we have a long history of investing in the UK, having opened the doors to our first UK site in 1934. We now employ around 1,500 people across three sites in Erl Wood (Surrey), Speke (Liverpool) and Basingstoke (Hampshire). We are one of a small number of companies that not only discover, but also make and deliver medicines to patients in the UK.

In the last 10 years, we have invested £1.9bn on UK research and development (R&D), including £48m of investment into Lilly’s Centre for Cognitive Neuroscience at Erl Wood, our largest research facility outside of the US.

Looking to the future

As an American business with a large presence in the UK, we are keen to ensure that the Government makes the continued growth of US/UK trade a top priority and begins a new chapter of transatlantic collaboration and partnership. However, the current lack of clarity on the UK’s future relationship with the EU and the rest of the world poses both immediate economic consequences, as well as long-term risk through the gradual decline of collaborations and investment.

To reassure global investors, the Government must ensure the commercial environment in the UK remains attractive and competitive to international businesses. Key to this is the continued ability to move products across borders.

International boardrooms will direct investment towards markets that enable the wide trading of goods for both manufacturing and final products with ease, seeking to avoid bearing additional costs or administrative burdens.

This is particularly true for the life sciences industry; the ability to move medicines, ingredients and other pharmaceutical supplies freely across international borders is hugely important in modern medicine development. With 82 million medicine packs travelling between the UK and EU each month, unencumbered free trade with the EU is central to encouraging research and discovery, facilitating the manufacture and movement of medicines that are crucial both in preserving public health and supporting long-term economic benefits.

Brexit also offers an opportunity to recalibrate the UK’s trading relationships with major economies outside of the EU and we welcome the UK Government’s ambition to pursue post-Brexit trade deals with a number of countries, including the US.

At the same time, access and uptake of innovation can greatly impact investment decisions. Low and slow uptake of new medicines stunts the competitiveness of a domestic life sciences market and can create a negative impression in global boardrooms. Encouraging the appropriate adoption of new innovations at pace and scale would send a strong signal to international investors and help position the UK as a beacon for international life sciences investment.

However, certainty for business continues to be hampered by disagreement within the UK Cabinet and the difficult parliamentary arithmetic which saw the EU (Withdrawal) Bill amended and delayed. As discussions increase around the potential of a ‘no-deal’ scenario, global sentiment towards the UK is negatively impacted, with the ability of companies to make future investment decisions hindered by a lack of predictability and stability in the UK market.

The most recent proposal from the Prime Minister, agreed at Chequers, outlines continued alignment with EU rules on goods through a free trade area, whilst allowing the UK to negotiate new international trade agreements outside of the EU. A future relationship which sees close alignment with the EU on such matters, alongside the ability to grow international relationships, would be welcomed by the life sciences industry. However, this proposal remains only a starting point for the UK Government.

Lilly is committed to continuing to grow the UK-US relationship post-Brexit but to achieve this, the UK Government must address the concerns of industry and provide certainty on the UK’s future outside of the EU as soon as possible.