Trade Commissioner for Europe Of the United Kingdom Kerry Morgan, who recently visited Belgrade, speaks for "Vreme" about economic cooperation between the UK and Serbia, the crisis with NIS-, Expo 27, as well as the investment potentials of Serbia that have yet to be used.
"WEATHER" How would you rate trade relations and overall economic cooperation between the United Kingdom and Serbia? What would you highlight as the main strengths and where do you see the greatest room for improvement?
CARRIE MORGAN: This was my first visit to Serbia in the role of His Majesty's Trade Commissioner for Europe, and it was important that I could see first-hand how our trade relations with Serbia are developing. Last week's UK-Western Balkans trade conference Building Futures, held at the brilliant new creative industries and innovation center "Ložionica" in Belgrade, attracted more than 300 delegates from companies across the UK and Western Balkans and was a testament to the opportunities that exist for growth. The fact that President Vučić came to open this conference speaks volumes about our common ambition to expand our economic cooperation, and I was delighted by the positive coverage in all the media.
I would describe our current trade relations as good, but with a lot of room for growth. Last year, our trade balance broke the £1 billion mark for the first time and continues to grow, particularly in some of the fastest growing sectors of the economy, such as digital services. The UK is the second largest exporter of services in the world and they account for 45 per cent of our total exports. The Modern Industrial Strategy, announced in the UK over the summer, prioritizes eight sectors for growth, including clean energy, technology and digital. This will further improve our offer of companies that are among the leaders in the world in those branches of the economy in which Serbia is looking for professional partners and at the same time provide fertile ground for the growth of Serbian companies and entrepreneurs who want to join the global market through Britain.
Serbia has some really brilliant companies in the IT sector and, of course, many of them are associated with the UK as the digital capital of Europe. This is one of the main reasons why the UK has become the third largest partner of Serbia in trade in services. Serbia is also an export market for some of our biggest and most successful brands, such as AstraZeneca and Jaguar Land Rover.
Last week's trade conference was primarily focused on the infrastructure and energy sectors. I am delighted to see so many great British companies interested in helping Serbia achieve its ambitions through business partnerships, to transform your road and rail infrastructure and to accelerate your green transition by increasing investment in renewable energy sources. The UK can offer what this region needs to succeed: with the technology, services and knowledge needed to drive growth, development and the green transition, but also high standards of quality and ethics, to help Serbia and its neighbors integrate into the EU single market.
Serbia is often described as an attractive destination for foreign investments. In your opinion, what makes the country attractive to international investors and which sectors show the greatest potential? Has this profile changed in recent years??
Serbia has many advantages as a potential destination for British investors looking to expand their global presence. One thing that I heard more than once from British companies at the trade conference is that they are delighted with the quality of the workforce in Serbia. You have extremely capable people. Also important is your strategic position, at the crossroads between East and West, in a region that is experiencing one of the highest levels of growth in Europe. The Government of Serbia also plays an important role in encouraging foreign direct investment, either through investment in infrastructure or through subsidies. For example, I heard that there is a new series Robin Hood filmed entirely in Serbia, but with a mostly British cast. The tax refund offered by the government to filmmakers means that Serbia is increasingly recognized as an attractive destination for creative industries.
At the same time, just like Britain, Serbia will need to continuously develop to keep pace with rapid changes in the global economy. For example, as wage levels rise, you will need to work harder to remain competitive as a manufacturing base. You will also want to invest in technologically advanced sectors such as digital, artificial intelligence and biotechnology, which I know are important priorities for your government. This is where partnerships with a developed economy like the UK can be extremely useful.
Great Britain left the European Union after a referendum in 2016. years, while Serbia continues to strive for EU membership. In your opinion, what would be the key economic benefits for Serbia if it were to join the EU?
Britain left the Union for its own reasons, but we fully understand and support the reasons why Serbia wants to join the EU. Your geography, history and the structure of your economy are very different from ours. 64% of your exports go to the EU single market, and an additional 15% to the CEFTA countries, which will also join the EU in the future. That compares to only 6% of your exports going to China, or just 3,5% to the Commonwealth of Independent States.
It is instructive to look at the experience of your neighbors who joined the EU 15 or 20 years ago. GDP per capita in Romania and Bulgaria grew sixfold in the first 20 years within the EU. Here in Serbia, you managed to develop your economy during the last decade, but not fast enough to reduce the difference compared to the EU average. So the evidence is clear: joining the EU is a logical choice for Serbia and the sooner you implement the important reforms necessary for accession, the better things will look for the prosperity of this country and its citizens.
Serbia faces a significant challenge in relation to the sanctions imposed on the NIS-u. How do you view this situation?? Do you believe that Serbia should work on reducing its dependence on Russian influence, especially in the energy sector?
Yes, absolutely. I think it is clear to everyone that Europe was too dependent on Russia to meet its energy needs. In a polarized world, it is necessary to diversify your key suppliers so that you are not too dependent on any single source, especially when that source is Russia. We have all seen how Russia is ready to use energy as a political lever in countries, including Serbia, where it almost has a monopoly. I was quite surprised that Russia is talking to third countries about selling NIS, but it seems that it is not ready to sell this key national resource back to Serbia, which would be the obvious choice.
Like everyone else in Europe, Britain has been working hard to remove our energy dependence on Russia and reduce our dependence on CO2 overall. We are proud of the progress we have made, becoming the first G7 country to completely phase out coal from our electricity generation and recently closing the last coal-fired power plant. We are a global leader in areas such as wind energy exploitation, carbon capture and innovative fuels. It was great to see many experts from Britain at last week's trade conference, they are people who can help Serbia accelerate local renewable energy production, decarbonize existing industry and switch to new fuels like hydrogen or nuclear power, as well as innovative technologies like Rolls-Royce's Small Modular Reactors (SMRs).
In which areas do you see the greatest opportunities and the strongest potential for deepening cooperation between Serbia and Great Britain?, as well as between Serbia and the wider EU?
One of the biggest opportunities lies in being able to help finance transformative infrastructure projects. We have a tool called UK EF (UK Export Finance), through which the British government gives a sovereign guarantee that allows Serbia to borrow money on the international financial markets based on our credit rating, not on its own. This makes it much cheaper and more affordable for you. The prerequisite is that we expect at least 20% of the value of the projects to be made up of exports (goods, machinery, services) from the UK. It seems to me that this is it win-win situation and I would like to see this instrument used even more in the region. Serbia and companies from here get affordable financing, and it also opens up space for exceptional British companies to enter the Serbian market, which bring with them world-leading technology and expertise, as well as the highest corporate standards.
We have secured up to five billion pounds of UK EF funds for Serbia alone. So far we have helped in the construction of the Moravian Corridor and I hope that we will be involved in many more important projects in the future. It was great to hear President Vučić talking about the new railway infrastructure that would connect Serbia with Bosnia and Herzegovina and North Macedonia. In the Western Balkans, projects that connect governments and peoples across borders are incredibly important and we would love to help fund more such initiatives.
Belgrade is preparing to host Expo 2027, which is promoted as a great opportunity to improve international cooperation, attracting investments and strengthening regional ties. At the same time, the project has sparked a public debate about its costs, planning process and long-term sustainability. From your perspective, how realistically Expo 2027 can contribute to the economic development of Serbia and what risks or uncertainties should be taken into account?
I think it's quite normal and natural for the public to ask questions and maybe even be a bit skeptical at the start of a big project like Expo 2027. I remember when we won the bid to host the London 2012 Olympic Games. A lot of people I know weren't convinced it was a good idea, but in the end it turned out to be a triumph that showed the world the best that Britain had to offer. I hope that Expo 2027 will be an opportunity for Serbia to do the same.
It is clear that hosting an event of this scale is expensive and that citizens have a right to know if the tax money they pay is being spent efficiently. During the London Olympics we worked hard to ensure that investment was sustainable for the future, so that there would be a lasting, positive legacy for the country. As well as the new infrastructure, the Olympics also gave us a platform to refresh the UK brand, i.e. the way we present ourselves to the world. In the run-up to the London 2012 Olympics, the UK launched the GREAT campaign, a new national brand and campaign aimed at boosting tourism, study, trade and investment in the UK. The campaign was extremely successful, continues to this day, and was copied, on a global level, by some other countries.
Transparency International also praised the organizers of the Olympic Games for fair and transparent public procurement. I know that the issue of corruption is a concern for many citizens, not only in connection with the Expo 2027 exhibition, but also more widely. I will repeat, one of the great advantages of working with British companies is that you can be assured of the highest working standards. A UK company that accepts or offers a bribe anywhere in the world can be held liable in a UK court.
Investors often emphasize the importance of the rule of law, regulatory predictability and transparency. In your opinion, which reforms or improvements in the business environment in Serbia would most strongly encourage new investments or the expansion of existing ones?
I think you have already listed most of them yourself. It is obvious that the first thing that investors are looking for is a stable and predictable environment, so finding a way through dialogue and reforms to solve the current political challenges in Serbia is very important. However, British investors tell us that they want stability in a broader sense as well. This means professional and well-regulated institutions that can make fair decisions quickly. This means courts that can make objective judgments in trade disputes, without external influences. This means an efficient and transparent system of taxation and administration that minimizes opportunities for corruption.
The United Kingdom ranks second in the world in terms of "soft power". It's not just because of our music, movies or football. It is the result of the strength of our institutions. Investors know that if they come to the UK, they will be treated fairly and will be able to take advantage of our low corporate rate. Therefore, strengthening institutions is the best way to improve the business environment in a country.
I want to share one more thought with you at the very end of our conversation. Serbia is an exciting and dynamic market, but it is also a small market, viewed from the perspective of British investors. That's why close cooperation with your neighbors and presenting the regional offer is really important. This is one of the reasons why we were delighted to host the Berlin Process this year and to contribute to the construction of a common regional market that aims to enable the efficient movement of people, goods, services and capital throughout the Western Balkans. We hope that this process of regional economic cooperation will be wider and faster in the future. It is in the interest of Serbia.
