As an economist, I naturally focus on the economic aspects of the EU. The EU is
mostly about economics. To counterpoise sovereignty as an alternative
perspective to economics misses an important point: most EU rules
stem from the economics of free trade within the EU. The EU wants
common regulations to make it easier to trade. The EU wants
restrictions on state aid to prevent countries giving their own firms
an advantage over others in the union. Much the same applies to
labour market and environmental standards.
Economics is also
involved in another aspect of being in or out of the EU, and that is
how the UK sees its place in the world. Is the UK’s identity partly
a European identity, or does the UK ‘stand alone’, independent of
all multinational blocs. Anyone interested in this question should
read an excellent and compact essay
by the ‘Red Historian’, Robert Saunders.
Those who want us
out of Europe need to address why the UK became part of Europe in the
first place. After the war, the UK had tried a different strategy.
After all, being part of Europe did not look very attractive in the
aftermath of a war that had destroyed large parts of it. Instead the
UK tried to forge its place in the world based on its history, a
history of empire.
This involved three
elements: the remains of Empire, the Commonwealth, and our special
relationship with the US. Harold Macmillan spoke of Britain playing
‘Greece’ to America’s ‘Rome’, acting as a wise counselor to its idealistic but naive successor. But that strategy failed,
because neither the Commonwealth or the US were particularly
interested in playing their allotted roles in this scheme.
Two quotes from
Saunders’ essay are indicative. The American Dean Acheson said ‘The
attempt to play a separate power role’, he declared, ‘a role
apart from Europe, a role based on a “special relationship” with
the United States, a role based on being the head of a “commonwealth”
which has no political structure, or unity, or strength … this role
is about played out’. Privately, Harold Macmillan agreed: ‘all
our policies at home and abroad’, he lamented, ‘are in ruins’.
This is why we
became a part of the EU. The UK wanted to continue to play some
significant role in the world, and our attempt to do so independently
of Europe had failed. So now we have left the EU, is there any coherent vision
of an alternative strategy?
In the Brexit debate
you can hear an echo of the failed post-war strategy. No trade deal
with the EU is now apparently called the Australian relationship,
because that sounds better. We also hear an echo of an even earlier
history, when appeals are made to the UK’s buccaneering spirit.
However, as Adam Curtis explored
in a 1999 documentary (HT Adam
Tooze), there is a modern counterpart to this, which
is the story of how we ended up selling weapons to Saudi Arabia. But
as Robert Shrimsley points
out, this vision conflicts with the government's new found need to
worry about left behind regions with what some ministers call 'legacy
industries'.
Yet stories and
exceptions apart, the truth is UK industry is not particularly
buccaneering. This has nothing to do with being constrained by the
EU, as a comparison with Germany makes obvious. In fact the opposite
is the case. One of my first jobs after I graduated was looking at
the steady and significant decline in the UK’s share of exports in world trade, which
was something of an obsession among UK policymakers.
The UK’s weakness
is perhaps not surprising in a country where the middle classes regard an engineer
as someone who fixes your washing machine. What the UK does well is
produce financial, business and other services. But to successfully
export these often requires pretty deep trade agreements, like the EU
single market. Which is why our export share within the EU rose so
substantially
after the Single Market was formed. Which major economies are going
to enter into the equivalent of the Single Market with the UK?
There is little sign
that the current government, and particularly those who lead it,
understand anything of this. Comic book stories substitute for solid
evidence. They have shown us nothing to suggest that the UK can
continue to have any voice among those of dominant players like the
US, EU, China, India, Russia and Japan. As Robert Saunders writes
“In writing a history of Britain as a small power, it pretends that nothing has changed: that a nation stripped of its colonies, its industrial power and its control over global finance has the same options today as in the age of its pre-eminence. That means that we are not being serious about the choices in front of us.”
Does the UK need to
have a special place in the world? Can we not accept that others will
take the key decisions, and we will just have to do what we can in a
world over which we have no control? As Saunders notes, in a benign
world this might be tenable, but we no longer live in a benign world.
This is where the economics of trade re-enters the equation. A UK
with no big country or union to help protect it will be at the mercy
of any big global player that wants to gain some trade advantage at
our expense.
For many in the ERG
the implicit answer to this problem is the United States. They are
encouraged by Trump’s enthusiasm for Brexit. They fail to see that
his enthusiasm is based on antagonism towards the EU and his
desire to exploit our weakness. For those who have a nostalgia
for days of glory that weakness will be hard to take, as it will be
when our legacies of empire are gradually taken off our hands along
with the trappings of international influence.
For all these
reasons, Brexit is not tenable in the long term, as those who tried
and failed to make it work after the war finally understood. Their
conclusion will be our conclusion after Brexit: for the UK to
flourish in a secure environment it has to be part of the EU. The
only question is how long this realisation takes and the manner of
our rejoining.
