Oct 31st 2019

What Happens to the United Kingdom Now? 

by Chris Patten

Chris Patten is a former EU Commissioner for External Relations, Chairman of the British Conservative Party, and was the last British Governor of Hong Kong. He is currently Chancellor of Oxford University and a member of the British House of Lords.


 

LONDON – The United Kingdom’s Brexit psychodrama continues. Although the UK government and the European Union reached a revised withdrawal agreement in mid-October, Prime Minister Boris Johnson was unable to push the deal through Parliament so that the UK could leave the bloc by his hoped-for date of October 31. EU leaders have therefore granted a further three-month extension of the Brexit deadline until January 31, and the UK will now hold a parliamentary election on December 12, which may help to resolve the current impasse.

Johnson secured the withdrawal agreement partly by reversing his previous position and accepting a customs border between Northern Ireland and the rest of the UK, and partly by settling for worse terms than his predecessor, Theresa May, had negotiated. Although the deal still must clear some parliamentary hurdles – and, here, the upcoming election could be the biggest hurdle of all – we may before long be able to see for ourselves how good or bad Brexit will turn out to be.

But perhaps I should revise the phrase “before long.” Assuming Brexit happens, if the first few years afterward are economically tough for the UK, Brexiteers will tell us that we should just give it time. In fact, one of Johnson’s senior ministers has said that we might not know the full economic impact of Brexit for 50 years. Between now and then, the results will need to be good to make up for what we are going to lose by leaving the EU.

It was Harold Macmillan, the UK’s prime minister in the early 1960s, who concluded that the country should join what was then the European Common Market to reverse systemic, long-term economic decline. Between 1951 and 1973, Britain ranked last among OECD economies, with average growth of just 2.7% per year. Japan grew the fastest, expanding at an average annual pace of 9.5%, while Germany, France, and Italy clocked in at 5% or above.

UK policymakers were obsessed with the question, “What went wrong?” We tried our own version of French central planning. We invested in new hospitals and roads, and closed loss-making railway lines. But we always eventually came back to the need to join the new European grouping that we had originally treated with disdain.

Another Conservative prime minister, Edward Heath, eventually got us through the European door following the death of Charles de Gaulle, who as France’s president had been an inveterate opponent of UK membership.

From 1973, when the UK joined, to 2016 (the year of the Brexit referendum), our economy grew faster than those of Germany, France, and Italy. And after the real launch of the single market in 1992 – one of Margaret Thatcher’s greatest achievements – the UK performed considerably better than its traditional competitors, at least until 2016.

Of course, other factors – such as Thatcher’s trade-union reforms – contributed to Britain’s success. But the overriding story was one of economic decline before EU entry, and a jump forward after we joined. Moreover, the UK secured this success pretty much on its own terms: we did not join the euro, we promoted free trade, and we pioneered the EU’s enlargement into Central and Eastern Europe.

But what will life be like after Johnson’s deal is in place? Mark Carney, the governor of the Bank of England, has said that the withdrawal agreement will be better for the UK economy than a disorderly Brexit, although tellingly, he suggested that it might be less positive than May’s deal would have been. (Of course, hers, too, would have left the country weaker than if we simply remained in the EU.) More revealingly, Johnson’s Chancellor of the Exchequer, Sajid Javid, has declined to produce an impact assessment of the new proposed deal, fueling suspicions that the government is far from confident about the outcome of such an evaluation.

After all, how can the UK possibly be better off outside its closest and largest market than inside it? Why should we be able to negotiate bigger and better trade deals with other countries on our own rather than as part of a market almost ten times our size? Some optimists believe that the UK can take the world by storm as a deregulated, free-market trader (“Singapore-on-Thames”). But they ignore the fact that stripping away environmental regulations, health and safety checks, and workers’ rights would be politically calamitous for the Conservative Party.

Assuming the UK leaves on the terms of Johnson’s deal, it will have until the end of 2020 to negotiate a free-trade agreement with the EU, with the government seemingly regarding Canada’s existing FTA with the bloc as its preferred model. But projections of the UK’s future economic performance under different Brexit scenarios ranked this option as the second worst, just above a no-deal rupture.

One of the many downsides of a Canada-type arrangement is that it hardly covers services, in which the UK had a trade surplus of £29 billion ($37.3 billion) with the EU in 2018. That is one reason why an agreement like this would suit the EU much more than the UK. In addition, a Canada-style deal would entail checks at the border for many if not most manufactured goods.

All this is a reminder that even after the UK leaves the EU, it faces years of difficult talks in which it will be negotiating from a position of weakness. True, the sun will still rise every morning, and we will still have many world-class institutions, companies, and assets. But the cohesion of the UK itself (comprising England, Scotland, Wales, and Northern Ireland) will be strained by policies driven by malignant English nationalism.

Moreover, we will be poorer. In fact, according to estimates by economic think tanks often used by the government, we probably already are 2.5% less well off than we would have been without the Brexit process. It is odd for a country to choose to be less prosperous and less influential in the world.

Some say that this doesn’t matter. But let’s see what happens when we have less money for all the things we want to do as a country and as individuals. Promises and predictions regarding Brexit will soon be tested against reality. When they are, I wouldn’t want to be one of Johnson’s Brexiteers.


Chris Patten, the last British governor of Hong Kong and a former EU commissioner for external affairs, is Chancellor of the University of Oxford. 

Copyright: Project Syndicate, 2019.

 


This article is brought to you by Project Syndicate that is a not for profit organization.

Project Syndicate brings original, engaging, and thought-provoking commentaries by esteemed leaders and thinkers from around the world to readers everywhere. By offering incisive perspectives on our changing world from those who are shaping its economics, politics, science, and culture, Project Syndicate has created an unrivalled venue for informed public debate. Please see: www.project-syndicate.org.

Should you want to support Project Syndicate you can do it by using the PayPal icon below. Your donation is paid to Project Syndicate in full after PayPal has deducted its transaction fee. Facts & Arts neither receives information about your donation nor a commission.

 

 

Browse articles by author

More Current Affairs

Jan 17th 2020
EXTRACT: "Thanks to cutting-edge digital technology, cars are increasingly like “smartphones on wheels”, so manufacturers need to have access to the latest patented 4G and 5G technologies essential to navigation and communications. But often the companies that hold the patents are reluctant to license them because manufacturers will not accept the high fees involved, which leads to patent disputes and licensing rows."
Jan 13th 2020
EXTRACT: "Recent polling from Pew Research demonstrates how the public’s attitudes toward the US and President Trump have witnessed sharp declines in many nations across the world. In Europe, the Americas, and the Middle East favorable attitudes toward the US went from lows during the years of George W. Bush’s presidency to highs in the early Obama years to lows, once again, in the Trump era. And in our Zogby Research Services (ZRS) polling we found, with a few exceptions, much the same trajectory across the Middle East."
Jan 13th 2020
EXTRACT: "In the absence of a declaration of war against Iran, the killing of a foreign official – by a drone strike on Iraqi territory – was possibly illegal. But such niceties do not perturb Trump. The evidence is that Trump’s decision was taken without consideration of the possible consequences. The national security system established under Dwight D. Eisenhower, designed to prevent such reckless measures, is broken to non-existent, with ever-greater power placed in the hands of the president. If that president is unstable, the entire world has a very serious problem."
Jan 9th 2020
EXTRACT: "It is possible that Trump’s reverential base won’t be sufficient to keep him in the White House past 2020. But such ardent faith is hard to oppose with rational plans to fix this or that problem. That is why it is so unsettling to hear people at the top of the US government speak about politics in terms that rightly belong in church. They are challenging the founding principles of the American Republic, and they might actually win as a result."
Jan 7th 2020
EXTRACT: "If anything has become clear in our recent Zogby Research Services (ZRS) polling in Iraq, is that most Iraqis are tired of their country being used as a playground for regional conflict, especially the conflict between the US and Iran. In fact, our polling has shown Iraqis increasingly upset with the role played by both the US and Iran in their country. Majorities see both of these countries as having been the major beneficiaries of the wars that have ravaged their nation since the US invaded in 2003. "
Jan 5th 2020
EXTRACT: "Under his [Suleimani's] leadership, Iran helped Hezbollah beef up its missile capabilities, led a decisive intervention to prop up Syrian President Bashar al-Assad, supported the Houthi rebels who have been waging a war against Saudi-led forces in Yemen, and backed a wave of resurgent Shia militias in Iraq. According to Gadi Eizenkot, who completed his term as the Israel Defense Forces’ chief of general staff last year, Suleimani had plans to amass a proxy force of 100,000 fighters along Syria’s border with Israel."
Dec 31st 2019
EXTRACT: ".....stunning technological progress during the 2010s makes it possible to cut GHG emissions at a cost far lower than we dared hope a decade ago. The costs of solar and wind power have fallen more than 80% and 70%, respectively, while lithium-ion battery costs are down from $1,000 per kilowatt-hour in 2010 to $160 per kWh today. These and other breakthroughs guarantee that energy systems which are as much as 85% dependent on variable renewables could produce zero-carbon electricity at costs that are fully competitive with those of fossil-fuel-based systems."
Dec 31st 2019
EXTRACT: "Predicting the next crisis – financial or economic – is a fool’s game. Yes, every crisis has its hero who correctly warned of what was about to come. And, by definition, the hero was ignored (hence the crisis). But the record of modern forecasting contains a note of caution: those who correctly predict a crisis rarely get it right again. The best that economists can do is to assess vulnerability. Looking at imbalances in the real economy or financial markets gives a sense of the potential consequences of a major shock. It doesn't take much to spark corrections in vulnerable economies and markets. But a garden-variety correction is far different from a crisis. The severity of the shock and the degree of vulnerability matter: big shocks to highly vulnerable systems are a recipe for crisis. In this vein, the source of vulnerability that I worry about the most is the overextended state of central-bank balance sheets. My concern stems from three reasons."
Dec 14th 2019
EXTRACT: "Conspiracy theories about sinister Jewish power have a long history. The Protocols of the Elders of Zion, a Russian forgery published in 1903, popularized the notion that Jewish bankers and financiers were secretly pulling the strings to dominate the world. Henry Ford was one of the more prominent people who believed this nonsense."
Dec 13th 2019
EXTRACT: "In previous British elections, to say that trust was the main issue would have meant simply that trust is the trump card – whichever leader or party could secure most trust would win. Now, the emerging question about trust is whether it even matters anymore."
Dec 5th 2019
EXTRACT: "Europe must fend for itself for the first time since the end of World War II. Yet after so many years of strategic dependence the US, Europe is unprepared – not just materially but psychologically – for today’s harsh geopolitical realities. Nowhere is this truer than in Germany."
Nov 23rd 2019
Extdact: "The kind of gratitude expressed by Vindman and my grandfather is not something that would naturally occur to a person who can take his or her nationality for granted, or whose nationality is beyond questioning by others. Some who have never felt the sharp end of discrimination might even find it mildly offensive. Why should anyone be grateful for belonging to a particular nation? Pride, perhaps, but gratitude? In fact, patriotism based on gratitude might be the strongest form there is."
Nov 20th 2019
Extract: "Moody’s, one of the big three credit rating agencies, is not upbeat about the prospects for the world’s debt in 2020 – to put it mildly. If we were to try to capture the agency’s view of where we are heading on a palette of colours, we would be pointing at black – pitch black."
Nov 17th 2019
Extract: "Digital money is already a key battleground in finance, with technology firms, payment processing companies, and banks all vying to become the gateway into the burgeoning platform-based economy. The prizes that await the winners could be huge. In China, Alipay and WeChat Pay already control more than 90% of all mobile payments. And in the last three years, the four largest listed payment firms – Visa, Mastercard, Amex, and PayPal – have increased in value by more than the FAANGs (Facebook, Apple, Amazon, Netflix, and Google)."
Nov 14th 2019
Extract: "Trump, who understands almost nothing about governing, made a major mistake in attacking career public officials from the outset of his presidency. He underestimated – or just couldn’t fathom – the honor of people who could earn more in the private sector but believe in public service. And he made matters worse for himself as well as for the government by creating a shadow group – headed by the strangely out-of-control Rudy Giuliani, once a much-admired mayor of New York City, and now a freelance troublemaker serving as Trump’s personal attorney – to impose the president’s Ukraine policy over that of “the bureaucrats.” "
Nov 4th 2019
Extract: "Trump displays repeated and persistent behaviours consistent with narcissistic personality disorder and antisocial personality disorder. These behaviours include craving for adulation, lack of empathy, aggression and vindictiveness towards opponents, addiction to lying, and blatant disregard for rules and conventions, among others." The concern is that leaders with these two disorders may be incapable of putting the interests of the country ahead of their own personal interests. Their compulsive lying may make rational action impossible and their impulsiveness may make them incapable of the forethought and planning necessary to lead the country. They lack empathy and are often motivated by rage and revenge, and could make quick decisions that could have profoundly dangerous consequences for democracy.
Oct 31st 2019
EXTRACT: "......let’s see what happens when we have less money for all the things we want to do as a country and as individuals. Promises and predictions regarding Brexit will soon be tested against reality. When they are, I wouldn’t want to be one of Johnson’s Brexiteers."
Oct 21st 2019
EXTRACT: "Were Israel to be attacked with the same precision and sophistication as the strike on Saudi Arabia, the Middle East would be plunged into war on a scale beyond anything it has experienced so far. Sadly (but happily for Russian President Vladimir Putin), that is the reality of a world in which the US has abandoned any pretense of global leadership."
Oct 20th 2019
EXTRACT: "Europe also stands to lose from Trump’s abandonment of the Kurds. If, in the ongoing chaos, the thousands of ISIS prisoners held by the Kurdish-led Syrian Democratic Forces escape – as some already have – America’s estranged European allies will suffer. Yet Trump is unconcerned. “Well, they are going to be escaping to Europe, that’s where they want to go,” he remarked casually at a press conference. “They want to go back to their homes." "
Oct 15th 2019
EXTRACT: "Assuming the House ultimately votes to impeach Trump, the fact remains that there are far fewer votes in the Senate than will be needed to convict him and remove him from office. But the willingness of Congress – including the Senate – to continue tolerating his dangerous conduct in office, including threats to US national security, is now truly in question."