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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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SubscribeI 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.
If 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?
Being part of the EU WAS the British elite despairing of its own polity. As A J P Taylor said joining the EU wasn’t a policy, it was an absence of policy.
The UK had little influence in the EU as Cameron discovered. Merkel had huge influence, effectively just deciding EU immigration policy by herself in entire disregard of any other member and the Dublin agreement.
And the UK should govern itself, in its own best interests; not the EU or the USA (although becoming a US vassal during WW2 didn’t help…).
Absolutely. The trouble is that when you are not strong enough to order everybody else about, the real world imposes some choices.
Being part of the EU allowed Britain to negotiate with third parties as part of a stronger block, gave access to a large market, and gave influence on the decisions of the entire block. As the EU works, they have to listen to you, and they try to reach compromises – but you do have to follow the EU rules (and the EU interferes in a very wide range of areas). A US trade deal will give Britain better access to the US market, at the cost of letting the US set standards etc. for Britain – and they do not have to listen or compromise. Making no deal with anyone leaves Britain free to select any policy or product standard she wants – at the unfortunate cost that very few people would want to trade and Britain would be poorer for it.
My own judgement is that Britain had more power to impose its will on the world as an EU member than it has outside the block, and that anyway you cannot keep your complete freedom if you are weaker than the countries you want to trade with. As one Danish minister put it: “There are two kinds of countries in Europe – those that are too weak to do well on their own – and those that have not figured it out yet“. One can certainly argue that Britain would be better off depending on the US than on the EU – but there is no point in gaining freedom of choice, when it also means that you will be too weak anyway to do the things you want to do.
This just feels like over-simplistic zero sum game thinking. The whole point of trade is that both sides get some benefit. The benefits may not always be equally shared, but they are shared. Otherwise there is no trade.
Yes, the point of trade is that everyone benefits. But the question here is who sets the rules? The trade deals Britain joins determine what kind of food or other products can be sold, what they cost, what production methods are used, who can sell in the market, who get rich and who go broke, what the privacy protections are, how e.g. health care can be organised, … UK producers, US producers, and different groups of consumers have quite different interests, and it makes a great difference to all of them whether the UK has to adapt to rules set in Washington or in Brussels (given that the UK is not in a position to impose its own rules, and is not in a particularly strong negotiating position with either).
“The real choice” yada yada. Yes, every single political entity has its real world constraints, including both the US and China, but smaller nations can be effective custodians of their own interests and welfare to a significant extent. Switzerland, Iceland, South Korea, Singapore and others. The UK was probably guilty of gold plating a huge number of EU regulations which other countries, downplayed or evaded, but this did not represent the triumph of some brilliant communitaire policy, but costly impediments to our own welfare. It hugely overestimated the benefits of EU membership. Even in the short term, Britain’s economic performance in the 1970s was not transformed by EU membership but by Thatcher’s reforms. You completely ignore the productivity argument, which actual or de facto membership of an increasingly bureaucratic international organisation significantly worsens the chances of addressing.
It is certainly possible that there is a policy that would greatly boost Britain’s productivity, but that was impossible while in the EU. It is just that five years, four prime ministers, and two government parties after Brexit no on has yet come up with any policy that might do it. The costs of Brexit are clear; the productivity benefits are still pie in the sky. Maybe it would have been better to think up those productivity-boosting policies first, and then left the EU when it was clear that it was blocking Britain’s way forward.
The conflation of international trade and basic sovereignty is something done by cynically by people who do know better so people like you who seem not to can parrot it to help them out.
The so-called EU standards are often worse than ones we established on our own. GDPR was the most God awful pointless mess and here it translated to paying yet another tax, this time to an ‘information commissioner’ it has achieved nothing and solved no problem it hadn’t itself created.
I doubt you’ll ever click ‘accept all’ on the cookies box, because it is so important to scroll down the companies chasing data, and read up on them to see whether you agree with their policies and aims, or not. But I would bet 99% of folk do just click and continue…. but never mind, where’s there’s another little tax you can bet it will go up soon enough.
Almost all of us will have already eaten this supposedly awful American food if we’ve ever been to the US. We’re still here. And people are always free to choose between the supposedly awful food and the better stuff. We don’t outlaw selling cheaper, lower quality cars because they’re cheaper or lower quality – only when they don’t meet the safety standards. Letting people choose is almost always the right way to go. And if this becomes a complaint about animal welfare, all I have to say is why then do we allow halal animal killing if we really care about that so much ?
Just my view – you’re mistaken if you really think that British culture is closer to European states than its former colonies (US, Canada, Australia, New Zealand – Five Eyes incidentally being about the highest trust international group there is – there’s far more mutual trust with these guys than the EU states). I’ve seen both up close. In government, legal system, business culture and much else we’re far closer to the Anglosphere. Which really shouldn’t be any surprise.
I doubt it. But then I am European myself, which obviously colours my opinions. As for the food, the reality is that given the choice 95% of all food will follow US standards (lower production costs), and anything else will become a low-volume, high-margin niche that only the well-off can realistically afford. The possibility to choose is more theoretical than practical. The British electorate have always been free to vote for a party that would lower animal protection, environmental and other standards and get cheaper goods that way. So far they have chosen not to do so. A US trade deal will remove that choice.
Do you count Waitrose, organic food and farmers markets as a “niche” then ? We have plenty of working examples of people choosing to spend a bit more to get what they consider to be higher standards and quality.
A US trade deal would actually *increase choice*. Which is precisely why it’s being opposed. By those who want to restrict choice for others.
We allow Halal food because we’ve already been conquered.
Harsh! but probably true!
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?
Rather ….
Only because they already HAVE been manifested. Orwell understood it was happening after WW2.
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.
I would think our best option would be to join with the US on any trade war just before the Irish do. It’s more likely though we will join with them just after the Irish do. Let us be in no doubt though, when the chips go on the table, the Irish will have bet on the Americans.
The Republic will play on its “special relationship” with the USA, as it always does.
Poor old Starmer must be in turmoil. He’s desperate to lead us back into the EU (hence the repeated assurances he won’t) on the other hand he wants national growth without allowing individual wealth; a US deal would promote national growth but wouldn’t make it off the ground if he insisted on restricting individual wealth. He’s probably tempted to go with the EU and simply invent more double-speak to explain that a shrinking economy and EU control is really growth and more national control.
All nations depend on other nations to survive and thrive (unless you are North Korea). By that token, the USA is not “independent”, nor is the UK, nor is any nation upon the face of the Earth. As a free-trader needs his customers, the customers themselves have customers, and so on and so forth. In or out of the EU, the UK was not “independent”, nor will it be. Perhaps it is a little more independent than it was, however ….
But the USA will become “independent”. It doesn’t actually need any other nation to survive and thrive. It will probably become isolationist and the vassal states will have to look after themselves. The EUs mountain of regulations won’t help it fare too well in that environment.
I humbly disagree, friend. No man is an island; no one and no nation can survive and thrive alone. Yes, the USA needs the UK; the UK needs the USA; both our nations need as many friends and partners as possible. We are stronger and happier when we are together.
Indeed no man is an island…but a country with the resources of the USA most certainly can be.
I think within fifty years it effectively will be, probably because its people will want it, having tired of its imperial role. Trump is merely the beginning of the process.
Canada, for instance, has an abundance of minerals that the USA needs. The USA and Canada have a massive trade relationship that benefits both nations.
Canada is basically a next door subsidiary of the USA. Other countries in the US empire aren’t. Like Britain in the Roman empire, they will be left to look after themselves.
I don’t think this is a “bad thing”. It is way past time the sheltered countries grew up. The Asian ones already are, the Europeans…not so much. They merely pretend they are of consequence because they know Uncle Sam looks after them.
The US could be self sufficient though.
The two tangible benefits of leaving the EU that everyone understood at the time of the referendum were 1) reducing legal immigration numbers and 2) an FTA with the USA. Both will considerably improve the lives of the British people. And both are within reach of a government with the wit and will to do so.
He will probably be caught between the US and China. Europe will be a sideshow just making life complicated.
I take some comfort that Stormin Starmer is the best-dressed leader of the West courtesy of Lord Alli.