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November 17, 2024 - 1:00pm
The Governor of the Bank of England, Andrew Bailey, warned on Thursday of the need for the UK to “rebuild” relations with the European Union. By the weekend, this was starting to look like a pre-emptive strike. On Friday Stephen Moore, a key economic adviser to Donald Trump, cautioned Keir Starmer not to get too close to the EU if he wanted a free trade deal with the US.
Britain’s Labour government now finds itself with a decision that it is singularly ill-equipped to take. Should it follow the Bank of England’s advice or that of the incoming president of the USA? Peter Mandelson, the frontrunner for the US ambassador role, hopes that Britain can “have its cake and eat it” by staying on good terms with both sides. Perhaps, but it seems unlikely that Britain can at once become closer with the EU and secure a trade deal with America. The next US government is already rattling its trade war sabres with the EU, and Moore’s comments indicate that Trump wants to know on whose side Britain is going to be.
This leaves Starmer with a difficult choice: pick the EU or the USA — or try to play one side off against the other. One point for siding with Brussels is that much more of Britain’s existing goods trade is with the EU than with the US, and that the UK is unlikely to sustain much damage from US import tariffs. On the other hand, the American economy is far more dynamic than the sclerotic EU, with much healthier medium-term prospects. What’s more, with the Ukraine war the US has already shown willingness to use its geopolitical weight to damage European economies. American trade restrictions may well go beyond goods imports.
Given the UK’s weak economic position, it is probably wise not to antagonise the Americans or their mercurial soon-to-be president just yet. And given the obvious geopolitical and economic edge the US holds over the EU, it might also be wise to side with the stronger party in a trade war the UK cannot avoid. A further complication is that any free trade deal with the US may require significant divergence from single market regulations, putting much more pressure on the Northern Ireland Protocol if the EU decides to interfere with intra-UK trade in response.
It is important not to imagine that either of these choices can have more than a limited effect on Britain’s chief economic problem — its lack of productivity growth. Nevertheless, getting the geopolitics wrong will not improve matters, and some choices will have to be made.
The decision requires a government which is able to think ruthlessly about where the national interest lies, to think politically. Labour should be ready to abandon its reflexive Europhilia and instead consider how it might take advantage of both a Brexit and an American president that it instinctively despises in order to get the best deal available from both sides. In the process, one possibility is that Labour may have to call the EU and Dublin’s bluff over the Irish border and make some serious contingency plans for the future government of Northern Ireland if that doesn’t work.
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SubscribeIf Britain hasn’t learned already that trying to have your cake and eat it does not work out well, it is beyond help.
It’s decision time, but I don’t see any reason why you can’t separate out certain issues while taking a strong decision on your future direction of travel.
For trade and the economy: go with the US.
For defence and security: reassure Europe that you are committed to NATO and open to cooperating on other projects that complement it.
Oh, and saying yes to the EU youth mobility scheme might also be a good idea, I don’t understand the acutely twisted knickers over that. Unless the EU tries to use the scheme to stick Britain to it by hitching it up to some kind of loosening of trade restrictions, in which case the UK should say no (could compromise your ability to enter into a trade deal with the US).
One could do that. Some of the predictable consequences would be:
American food standards and product standards; huge damage to British agriculture; US data protection rules; in the slightly longer term US drug prices and US hospital chains? After all, why should British socialist idea about health services be permitted to restrict the opportunity of US compainies to make profits? And once the UK had definitively opted for American standards over European ones, they would have no way out and no choice but to take what the Americans wanted to give them.
Personally I would rather have UK policies written in Brussels than in Washington – the European cultures are a lot closer, and in Brussels they have to listen to you first, whereas in Washington paying attention to your vassals is seen as a sign of weakness. But if you would rather take your orders from Washington, that is certainly a viable alternative.
The latest “big” regulations that have come out of Brussels (ie the GDPR and the Supply Chain Directive) as well as the high handed way it has conducted negotiations with trade partners like the Mercosur countries is indicative of a bloc stuck in old ways of thinking as the world sprints forward – not to mention delusional about its own status and power (which is one thing it shares with the UK at least). All this guff about being a “regulatory world power”…not really translating well in the real world, is it? Why would it be a good strategy long term for Britain to reverse back into that morass?
For the same reason that people – mistakenly – voted for Brexit. Britain in the EU would have more power and more influence on its own rules and destiny than it would as an appendage to the US. In the EU Britain is one of the collective rule-makers. With a US trade deal it is merely a rule-taker. The idea that Britain could swim proudly and freely in a sea full of sharks was always a pipe-dream. The real choice is between being part of a swarm, and being a servant to one of the sharks. The swarm offers more freedom of movement. Whether the servitude offers a better life worth the diminished independence is what needs to be decided.
Of course some people despair of their own polity to the point that they prefer to be governed by foreigners. Italy was happy with the EU in part because they thought that Brussels might govern them better than Rome did. I forget which country is yours, but are you saying that Britain is so hopeless that Britons would be better off being governed from Washington?
I see no reason why the UK can’t continue to try to improve our relationship with the EU without kow-towing to a single ‘requirement’ they might have in mind. That’s precisely what Brexit was for… to escape that stranglehold.
If Starmer the Farmer Harmer can’t look after those who produce through the efforts of their labour at home, he’s got no chance abroad, where both the EU and the incoming US government will make nice noises about him but be laughing their socks off behind his back. In fact, i’ve finally identified what that look on his face is: it’s the look of someone who knows he’s disrespected by people who matter.
Why does anyone think Mandelson will help the UK’s cause if he becomes US Ambassador either? For sure, he can wield a cocktail and do small talk, but his outright smarminess will likely grate on American sensibilities.
In terms of getting caught between Europe and America then… yes, preferably in a leaky lifeboat.
Is it absurd to think that the fictional states created in the imagination of Orwell, Oceania, Eurasia and Eastasia, are actually manifesting before our eyes?
As someone who has worked in Europe and the US I think this is a no-brainer. If we want prosperity we should stick with the US. This is especially true now that some sort of sanity is returning to Washington. It could be a long time before that happens in Europe.
I wonder how the Irish govt would react to a trade war and pressure on American companies currently located in Eire to return home. I think any border issues might fall by the way.