The authoritative source for independent research on UK-EU relations

23 Jul 2020

Relationship with the EU

Role in the World


Britain’s (or, more precisely, England’s) Brexit was primarily a ‘No’ to the EU. For a long time, it remained unclear where this turning away from something positive was to lead.

Now the formula being used to describe the future role of the country is Global Britain. It is full of fantasy and wishful thinking − both a chimera and a fairy tale.

This, at least, must be the conclusion when comparing the expectations that drove Brexit against present-day realities.

Global Britain faces head winds

Global Britain is intended to open up a return to global free trade. However, this vision comes at a most inopportune moment. The peak of multilateral free trade has passed, and the prevailing winds are all blowing in the other direction.

Since 2016, the USA has been pursuing a strict ‘America first’ course, with punitive tariffs as a central element of Trump’s foreign policy.

For the present administration, foreign trade is seen primarily through the lens of protecting jobs in the USA, and using tariffs and sanctions as leverage for political ends.

The President is in the midst of an election campaign, and will negotiate with all the rigour he can muster. The diktat from Washington could be no less troublesome than the alleged diktat from Brussels.

The cake is getting smaller

Regional and bilateral trade agreements are displacing global free trade, and the Covid-19 crisis is accelerating this trend.

World trade is subject to renationalisations, protectionist trade barriers and regional obstacles. Supply chains are being shortened to make them less vulnerable.

Gigantic government financial aid programmes flow exclusively into national economies, and distort international competition. This makes accusations of dumping, punitive tariffs or other restrictive measures more likely.

The WTO is only a shadow of its former self, and its dispute settlement procedure is paralysed. Since the Doha Round ended in 2008, no further world trade talks have been held under the WTO format.

And the USA is threatening to leave the WTO. What is a global trade regime worth if the largest economic, financial and trading power threatens to withdraw?

World trade is becoming politically charged, and political disapproval is increasingly manifesting itself in economic sanctions. Trade is politically conditioned.

Even allies are affected by sanctions. Political friction could, for example, adversely affect trade relations with China.

The global economy is expected to shrink by five percent this year. With Brexit, the British are losing their privileged access to one of the most productive regional markets with high living standards and enormous purchasing power. They will have to cut a new piece out of a smaller cake elsewhere.

Loss of control

The hope of regaining control of national borders turns out to be an illusion. The Northern Ireland Protocol creates a hybrid role for this part of the United Kingdom: one country, two systems. Northern Ireland remains part of the EU’s economic order without having a say in Brussels.

A new control regime will have to be imposed on the Irish Sea that will likely encourage smuggling and black-market activities ­− perhaps even tolerated by authorities that are inadequately equipped or deliberately turn a blind eye.

To put the provisions of the Protocol into practice will prove an almost superhuman task, requiring close and trustful cooperation between British and EU authorities. The basis for such trust is shaky.

Even if the Joint and the Specialised Committees were to operate smoothly, the political authorities of Belfast would still remain excluded from decisions that affect their vital interests. ‘’Take back control’ may apply to in London; for the regional governments in the United Kingdom, Brexit means a loss of control.

Migration has changed but not dropped

A core demand of the Brexit campaign was better control over immigration. Migration from EU countries has fallen to less than half of what it was in 2015/16. But immigration from non-EU countries has risen and is now as high as total immigration in 2016.

Immigration has not fallen, it has just changed its form. In the Hong Kong crisis, the Prime Minister has promised local residents with British overseas passports unrestricted entry with a work permit.

This could affect up to three million Hong Kong Chinese − ten times the current level of annual immigration, and more than all EU citizens currently residing on UK territory taken together.

By contrast, emigration is increasing. British citizens are applying en masse for citizenship of other countries: in Germany, applications have soared by 3,000%, in Ireland by 800% and in France by 500%.

Brexit does not save money

The UK’s obligation to contribute to the EU budget − so far about £10 billion net per year – will cease at the end of the transition period. But these savings will be offset by huge new expenditure.

The UK government will have to provide national subsidies for farmers and fishermen. It will have to build up national authorities for environmental issues, medicine approvals, and product safety.

New customs and border controls will be needed, requiring perhaps 50,000 workers and the corresponding infrastructure. Plans for a ‘no deal’ exit alone have swallowed up £2 billion.

The British economy is facing high transformation costs and risk. All larger companies have set up special teams to prepare for the consequences of Brexit at an estimated cost of £5 billion.

After Brexit and Covid-19, tax revenues will plummet, but expenditures will rise steeply. The latest budget estimates for 2020 are alarming: expenditure: £1,050 billion, revenues £780 billion, deficit £270 billion (15% of a GDP likely to shrink by 10%).

At the beginning of 2016 the pound was worth €1.30, after the referendum it fell to €1.20. Today it stands at €1.10. Experts believe a course below parity by the end of the year to be quite likely and that amounts to a devaluation of almost 25% within five years.

England risks losing something irreplaceable: sympathy and respect. Doubts are growing about the reliability of the government in London.

Crude demands, gloating taunts, chaotic decision-making and a relapse into Stalinist polemics leave even Anglophile observers shaking their heads in bewilderment.

The ancient chimera was a mythical creature, a product of pure poetic imagination − part lion, part goat and part dragon. Global Britain also appears to be a fairy-tale fantasy − inspired by hubris, nostalgia and utopia.

By Dr Rudolf G. Adam, lecturer at the University of the Federal Armed Forces Neubiberg (Munich) and author of Brexit Revolution.



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