Is reigniting the Brexit wars really a clever idea? I personally favored Remain in 2016 but became disenchanted by the campaign’s excessive focus on dubious economic claims. I argued at the time that Remain should offer a positive vision of Europe, rather than doom-mongering. But if Burnham asked for my advice today, I would tell him: don’t look at the polls. Don’t worry about “Bregret” or Labour Party politics. Look instead at the state of the EU, which has changed dramatically since 2016. 

Right now, the EU is not a club you’d want to join. In fact, the sensible Icelanders recently voted against pursuing EU membership. Despite barely surviving the Eurozone’s sovereign debt crisis, the EU never bothered to fix the underlying problems that triggered it, such as a fragmented banking system and the lack of a common capital market. Now another sovereign debt crisis could soon be on the horizon, with French interest rates going through the roof. And if the polls are right about France’s presidential election next year, the political center might shrink or even disappear as a political force, leaving France and the Eurozone under the influence of the far-Right. Does Britain really want to be in the same club as President Marine Le Pen or Chancellor Alice Weidel?

If Britain were to foolishly seek to rejoin, it would doubtless get a raw deal. For one thing, the EU will not be able, or willing, to offer the UK any rebates or opt-outs. In the past, such concessions have been achieved through diplomatic master strokes. Margaret Thatcher negotiated the rebate after driving everybody crazy about the issue. John Major landed the opt-outs, including from the euro, because he would otherwise have vetoed the Maastricht Treaty in 1991. But the age of miracles has passed. Since then, the EU’s finances have deteriorated. Germany is no longer prepared to bankroll the EU as generously as it once did: the fractious coalition in Berlin needs all the money it can get just to survive. Meanwhile, Le Pen has pledged to reduce France’s EU budget contributions. If she succeeds, other European nations will have to pay more; if she does not, she will almost certainly block anyone else from getting a rebate. I cannot conceive of any political constellation that would allow for Britain to rejoin on the cheap. 

In fact, according to my calculations, Britain’s annual contributions to the EU budget would be around £30 billion in today’s money if it were to rejoin. That’s about half of the UK’s entire defense budget. How would Chancellor John Healey pay for this: by cutting defense or welfare spending, or else by raising VAT? Pray tell! 

You might now accuse me of knowing the price of everything and the value of nothing. So let’s talk about value for money. For the most part, Britain’s EU contributions would not go toward investments, such as cross-border railways, hyperscalers, or nuclear fusion. Instead they would be redistributed to other member states. Where is the value in that? 

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There’s another, even bigger obstacle to Britain rejoining the EU: Artificial Intelligence. What almost nobody engaged in the Rejoin debate is thinking about is the sheer extent of the EU’s anti-tech crusade. Since Brexit, the Luddites in Brussels have passed a large number of laws seeking to control the spread of digital technologies and impose their will on the global tech industry. Of these, the 2024 AI Act would be particularly damaging to the UK’s prospects. The European attitude to AI is best exemplified by the German media, which only ever publishes news stories that emphasize the dangers of AI. It views AI as a means through which evil American entrepreneurs could destroy European culture. 

Of all the policy mistakes the EU has made over the years, its tech legislation must be both the most stupid and the most significant. The EU believed in the story that it kept telling itself: if America was an innovation hub and China a manufacturing powerhouse, then Europe was the global regulator. For sure, it used to be. But that was only because world-leading European manufacturing companies, such as the German car makers, set standards for the rest of the industry. Today, by contrast, only four of the world’s 50 largest tech companies are European. The EU has lost the AI race and as a result it has no leverage in the global debate over how AI should be regulated. That debate is limited to Anthropic, OpenAI, the US government, and to some extent China.

Unlike the EU, the UK is a player in AI — albeit a small one. Brexit was not an economic success story overall: in fact, I’d call it a macroeconomic non-event. But AI was a silver lining. Last year, AI investment in the UK took off. This year, the UK poured more capital investment into AI than the whole EU; in a few years’ time, it will probably have invested even more.

Yet if the UK were to rejoin the EU, it would have to sign up to all of Europe’s tech regulations, including the onerous AI Act. If that happened, all current and future investments into UK-based AI firms would be at risk. There is no way the EU would allow the UK to maintain its liberal regulatory regime and become Europe’s only technology hub. And I struggle to imagine a UK government voluntarily strangling what could eventually become the country’s most successful industry.

Given the way the EU is run right now, the UK cannot conceivably return. But Burnham has reduced the question of rejoining to shallow identity politics. The EU is an abstract placeholder for progressive multilateralism. Many of the loudest advocates of EU membership think of business in terms of clichés: they insist, for instance, that business always benefits from the single market — but for many industries including AI, that is just not true. I don’t imagine that many Rejoiners are considering how EU membership would affect the fledgling London-Oxford-Cambridge tech triangle. To do so would upset their lazy narratives. 

In the end, I felt the same way about Leave and Remain as Henry Kissinger felt about Iraq and Iran. He wanted them both to lose. Now, I feel just as pessimistic about Rejoin.

The idea is deliciously fiendish. Combined with Project Smear’s fake numbers, which insist that Brexit has robbed them of much-needed wealth, the public is encouraged to view the EU as an institution that has reached new heights of sophistication — in part thanks to Britain’s absence. The implied message is that poor, ruined old Blighty is unworthy of the transformed bloc. The hope is that if this narrative gains traction, the good burghers of Britain may be spurred into action — if only to prove that they are worthy of higher things.

Will this new tactic work? Almost certainly not. So, why am I wasting your time, dear reader, to alert you to it? Well because, though it will fail, the new tactic is still capable of causing a great deal of damage. In prolonging this clapped-out, regressive, evidence-free debate on whether or not to rejoin the EU, the already much delayed discussion of how to make actual Brexit work for the many is delayed further. 

So let us take a closer look at Project Smear, and deconstruct the statistical falsities underpinning claims that Brexit dealt a massive macroeconomic shock that impoverished the nation. Chief among these is a report entitled “The Economic Impact of Brexit”, published by the US National Bureau of Economic Research, but authored by British and European economists. Its gist is that, a decade after the Brexit referendum, the British economy is 6% smaller than it would have been had voters opted to remain in the EU.

It is interesting to note that a hypothetical has replaced any actual measurement. The argument has shifted from Project Fear’s prediction of recession (which the alert reader will have noticed never happened; indeed, during the 2016-2025 period, the UK outgrew France, Italy, and Germany) to suggest that Britain would have grown 6% faster over the past 10 years had it stayed in the EU. Of course, this is a hypothetical that, sadly, economists can never test since we lack a time machine to return to 2016 and start again sans Brexit. Still, economists insist that they have the next best thing to a time machine: econometric models that can simulate hypotheticals.

As a trained econometrician, I can tell you that the only real utility of these is to make astrologists look respectable. But don’t take my word for it. Look under the bonnet of “The Economic Impact of Brexit” — the report that the BBC, The Guardian and so on have endorsed chapter and verse. What you will find here is an attempt to identify a group of countries that, during the decade preceding the Brexit referendum (2006-2016), were following more or less the same growth trajectory as Britain. By analyzing the economic fortunes of this cohort, the report assesses whether, in the decade following Brexit, Britain’s economic path followed or diverged from that reference group and draws its ill-fated conclusions thereupon.

It sounds like a reasonable method for assessing, not so much Brexit’s impact but at least whether the year 2016 coincided with what economists refer to as a “structural break”. Until, that is, you discover which eight countries the authors selected as the British economy’s doppelgangers. The country they gave the largest weight (60.5%) to is the United States. It is difficult to imagine a more indefensible choice. For 2016 was the year of Trump 1.0, with huge tax cuts following his election. This was followed, in 2020, by Biden’s gargantuan stimulus program. With or without Brexit, the UK’s economy (indeed, any European economy) could never have come even close to America’s post-2016 growth rate. Nonetheless, this study comes to the manifestly illegitimate “conclusion” that Brexit was the reason the UK lagged the US after 2016.

As if the comparison with the US were not silly enough, guess which country was given the second-largest weighting: Greece! That’s when my initial suspicion that the authors had crossed the line from mere incompetence to intentional fraud turned into a near certainty. If these reference countries were meant to track Britain’s growth trajectory between 2006 and 2016, then Greece should have been disqualified immediately. Having shed at least 25% of its national income between the Great Financial Crisis of 2008 and 2016 (in sharp contrast with UK national income which fell by a mere 1% for only a year before it rebounded), Greece was a terrible reference country. Not only was its pre-2016 path nothing like the UK’s, but it was always going to perform, around 2016, what financiers callously refer to as a “dead cat bounce” — a temporary rebound that even a dead cat would make if dropped from a great enough height — something the UK economy was never going to emulate, thus inflating further the mis-measured Brexit effect.

And then there is the small matter of Ireland’s inclusion. Seriously? Do these people not know that Ireland’s national income, its GDP, is a hallucination? Did they forget that America’s Big Tech companies monstrously inflate Ireland’s GDP by booking their global revenues in Dublin for tax minimization purposes? Could m’learned colleagues have missed the simple point that, given Big Tech’s remarkable rise after 2016, comparing Ireland’s post-2016 growth rate with Britain’s would always make the UK look like a laggard for reasons that have nothing to do with Brexit? 

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But then, setting aside these risible national income comparisons, “The Economic Impact of Brexit” goes on to bolster its assessment that Brexit was an unmitigated economic calamity by focusing on the miserable fate of 7,000 UK companies. This, in fact, is the most interesting segment of their report. For it discovers a massive fall in UK productivity — something corroborated by Britain’s Office for National Statistics. Unfortunately, though, as Ambrose Evans-Pritchard has pointed out, this fall took place before 2016 and, if anything, it petered out around the time of the referendum. 

In short, Project Smear was founded on non-credible data. It cannot, like Project Fear before it, withstand even the most cursory of rational analyses. This, then, is why the smarter Rejoiners felt the need to roll out their new psychological approach: the illusory truth effect. Infuse into the public’s consciousness the belief that the EU has, in their absence, become a different, a better beast — one that Britons could no longer hope to join, even if they wanted to. 

Mujtaba Rahman, the European director of Eurasia Group, most recently deployed this tactic. In a piece for the Guardian (where else?) he argues that since Britain’s departure, Europe has been spared London’s constant vetoes. Thus, the bloc was able to simulate many of the benefits of a federation without having to waste time debating a federal constitution or taking chances with member-states’ national sovereignty. This continental consolidation, that Britain has allegedly missed out on, supposedly encompasses four areas.

First, following the pandemic and the formation of the EU’s Recovery Fund (officially known as NextGenerationEU), common borrowing now allows the EU to operate like a fiscal union that is better able than individual member-states to finance things the union needs: like investments in post-Covid recovery, all sorts of stabilizing fiscal transfers, even €90 billion to be gifted to Ukraine. Second, a new common security and defense agenda worth hundreds of billions is in place that extends a protective umbrella over member-states. There is also now a much needed joint industrial policy that transcends naïve free-trade notions and gives European producers a leg-up across the union. And finally, the bloc has a capacity to do that which lone countries, such as the UK, can ill afford to even try: become more assertive vis-à-vis the United States and China. 

It all sounds pretty impressive, doesn’t it? Even a cosmopolitan Briton, or even a Leave voter, could be forgiven for feeling a little miffed at being left out. But each of these examples of Europe’s “continental consolidation” is nothing but smoke and mirrors. In fact, together they reflect developments which are excellent reasons for the UK to remain outside the EU. 

I have been a staunch advocate of a European fiscal union for 40 years, including common borrowing in the form of eurobonds. However, the common borrowing which is now practiced in Brussels is anathema to any sensible advocate of a fiscal union. Its first faux pas is who borrows: not some common Treasury, but the European Commission, an outfit that has no power to tax or even to roll over previous debts, relying for its funds on fiscally stressed member-states that lack a central bank willing and able to support them. Is it any wonder that financiers do not take the bonds Europe uses to procure its common debt seriously, referring to them as sub-sovereign and charging the EU suitably inflated interest rates in the process? 

Then there is the question of what the EU does with the jointly borrowed money. A quick glance at how the EU divvied up the €750 billion recovery fund after the pandemic is enough to send shivers down anyone’s spine: our leaders gathered in a room and haggled for a few hours over how to distribute the spoils, which were then handed out to the oligarchs back home. As I wrote six years ago:

“Imagine the sheer awfulness if parliament had to debate how much would be transferred to Cumbria, to Norfolk or to north Wales from Surrey, Sussex and west London. Britain would be wrecked by divisions that make Brexit look like an amicable affair. And yet this divisiveness has been baked into the EU recovery fund, complete with country allocations drawn up even before we know the effects of the recession on each region. It is almost as if the whole thing were designed by a cunning Eurosceptic.”

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It’s the same with Europe’s current rearmament and industry policies. Long meetings, with scant oversight from parliaments or public scrutiny, take place to discuss how the borrowed billions will be distributed between German, French and Italian weapon manufacturers, and which companies’ products will be part of the “Buy European” directives, whose workers will be protected from Chinese imports, how much of the borrowed money should be sent to Ukraine and so on. The culture of oligarchic merriment which is funded in this opaque manner raises inequality, within and between member-states, to ever greater heights.

As for the claim that the EU would, at least, offer some protection from the vagaries of Donald Trump and a resurgent China, it sounds persuasive in theory — a version of safety in numbers. But in practice? Was it not Ursula von der Leyen, the President of the European Commission, who bent the knee in front of President Trump, in his Scottish golf club of all places, giving him everything he asked for (including a pledge for $700 billion of European investments in the United States which was not in her gift to make)? Is the EU not riven by squabbles between German car industry representatives, who are resisting tooth-and-nail more tariffs on Chinese exports, while their French counterparts are gung-ho about them? 

Even the most ardent europhile can’t ignore the slow and sure disintegration at work here. The building up of unsustainable sub-sovereign debt won’t yield productive investments capable of repaying themselves, but will need to be financed by an already stressed EU budget that spendthrift member-states are working furiously to diminish, not to bolster. Evidently, this is a disaster in the making, not the sensible continental consolidation over which envious Britons should drool. 

None of the above, of course, means that Brexit has been a spectacular success — quite the opposite, in fact. But what it does mean, however, is that Britain’s stagnation will not be reversed by rejoining a hopelessly stagnant, indeed a deindustrializing, Europe. Nor will the UK’s low productivity, low-wage, diminishing prosperity equilibrium be transcended by Andy Burnham’s justified lamentations about how neoliberalism vandalized British industry under Thatcher and Blair. The time for thinking about what a New Deal for the UK entails, undistracted by the “Europe question”, is now.

Brexit was an act of gross economic vandalism. Many Leavers understood that at the time. Most were indifferent. When push came to shove, an economic hit seemed, to those who thought about it at all, to be a price worth paying for autonomy. “Take Back Control” proved to be a winning formula. Ten years on, we are in a better position to decide how much control we have really gained, and how much it has been worth to us. Control and autonomy are legal and constitutional concepts, but their value depends on political realities. In a world of huge nations like the United States and China, it is in the interest of smaller nations to join together in powerful multinational blocs like the European Union (EU). Its members have more control and more global power collectively than they can ever hope to have individually. Britain’s own ability to exercise “control” over its own fate is inevitably more limited outside the EU.

***

The arguments about Britain’s relationship with Europe need to be considered in the light of our long-standing international priorities and current geopolitical position. These show a remarkable consistency. Britain is a European country, sharing the political, economic and intellectual culture of Europe in spite of important institutional differences. Engagement with Europe has been a strategic necessity for Britain for centuries. Ever since the reign of Queen Elizabeth I, it has been a consistent theme of British foreign policy to maintain a balance of power on the European continent and to resist the domination of the continent by any single power. This has been driven by a desire to influence the political priorities of European nations and to shape their policies in Britain’s own interest, something that is difficult to do if the continent is dominated by a single hegemonic power. 

Britain’s single-minded pursuit of this objective has involved the patient cultivation of European allies. Queen Elizabeth I landed armies in France and the Netherlands to contain the hegemony of Spain. In the 18th century, when France was the great European hegemon, British governments intervened to resist it with the support of powerful European allies. Britain was the only European power to challenge revolutionary and Napoleonic France throughout the period from 1794 to 1815, at a time when France occupied much of Europe. Britain’s long stand-off with 19th-century Russia, at a time when Russia occupied Poland and had ambitions in the Balkans, European Turkey and Central Asia, was guided by the same instincts.

The rapid expansion of a newly united Germany in the final decades of the 19th century presented Britain with a new challenge. In a famous memorandum of 1907, the Foreign Office mandarin Sir Eyre Crowe described Britain’s pursuit of a balance of power in Europe as “almost a law of nature”. His point was that now that the dominant European power was Germany, Britain must follow its traditional policy and contain it. In two world wars, Britain intervened to fight the Kaiser’s Germany and then Hitler’s.

For centuries, the bulwark of Britain was not the Channel, but the Rhine or the Oder. The concern was always that, faced with a dominant European power across the Channel, Britain would lose control over its own destiny. The policy was not simply strategic, but also cultural and economic. It was cultural because the long conflicts with, successively, Napoleonic France, Tsarist Russia and Imperial and Nazi Germany were seen as ways of confronting powerful despotisms and preventing the extinction of a liberal world order. It was economic because a Europe dominated by a single power would be in a position to disrupt British trade and finance as Napoleon’s continental system had sought to do. Historically, these instincts have served Britain well.

There has always been a contrary strand of British strategic thinking which rejected this approach. It can loosely be called Atlanticism, although the expression is geographically inaccurate, for it was based on a far wider view of Britain’s world than just the Atlantic. It stood for a policy of disengagement from the problems of the European continent and concentration on the wide oceans. It presented empire and the Navy as alternatives to Europe and the army. It has generally been associated with prominent figures in the Tory party. In his influential tract The Patriot King (1738), the Tory philosopher Henry Bolingbroke, who had been Queen Anne’s chief minister, articulated this view. He urged Britain to avoid getting involved in continental affairs. “The water is more properly our element,” he wrote, “and in it we find our greatest security.” William Pitt the Elder, although not a Tory, had once taken the same view. The Tory romantic Benjamin Disraeli said something very similar in 1866, and Churchill, a liberal at the time but a romantic Tory at heart, said it again in 1901. It was an unwise policy even then, and all three statesmen discarded it when they achieved power. 

Britain has rarely adopted a policy of “splendid isolation”, and when it has done, for example in the 1770s and 1780s or at the end of the 19th century, it has paid a high diplomatic and military price and has soon reversed course. European crises invariably become English ones. Reality dawns on statesmen when they find themselves having to grapple with the problems of international relations. Political disengagement from Europe has often been a slogan, but rarely a viable policy.

Atlanticism received a boost from the experience of the two world wars of the 20th century, which still have a dominant place in Britain’s conception of itself. Even before the United States joined the First World War, it contributed substantially to the funding of the British war effort and was a major supplier of munitions. Its contribution to Britain’s survival and eventual victory in the Second World War was decisive. The British Empire, and especially India and the old dominions of Canada, Australia and New Zealand, made a critical contribution in both wars. The world wars boosted a certain idea of British exceptionalism. Winston Churchill, who believed in the political unification of Europe but without Britain, encapsulated the idea in his History of the English-Speaking Peoples, published in four volumes between 1956 and 1958. This strongly romanticized account presented Britain’s relations with the “old” empire and the United States as a natural brotherhood distinct from its relations with continental Europe. It stood for the notion, common across the political spectrum in the Fifties, that Britain might act as the godfather of European union, but its own destinies were separate, maritime and global. 

Yet, if Atlanticism were ever a serious policy option, it was only so at a time when Britain could deal with the United States, if not as an equal, then at least as a comparable power. That depended on Britain’s status as a world power, the ruler of a global empire and a dominant economic force on the trade routes of the world. In the Fifties, when the European Economic Community was born, these conditions were ceasing to apply.

***

The creation of the European Economic Community and its subsequent transformation into the EU revived all the old geopolitical dilemmas of Britain, but presented them in a new light. British policy after the Second World War was dominated by an obsessive but ambivalent attitude to Germany. At the Anglo-American conference in Quebec in September 1944, the two countries agreed upon a policy of deindustrializing Germany so as to convert it into an economy that would be “principally agricultural and pastoral”. The allied occupation authorities drastically limited Germany’s mining and steelmaking capacity, dismantled its industrial plant, suppressed its industrial patents and destroyed the financial relationships between German banks which had been a major factor in Germany’s industrial strength. Britain encouraged the post-war reconstruction of France so as to serve as its bulwark against a reborn Germany. 

This policy of industrial containment was progressively abandoned from 1947, as the USSR, which was in the process of converting the states of Eastern and Central Europe into satellites, emerged as the principal threat to European peace. In the Fifties, however, the old fear of Germany returned as a result of the spectacular speed of German economic reconstruction. In the course of the decade, West German industrial production increased by a factor of two and a half. Measured by gross domestic product (GDP) per head, West Germany overtook Britain.

The European Coal and Steel Community was founded in 1951. The Messina Conference of 1955 decided in principle to create a Common Market of the six states of the West European continent. The Treaty of Rome gave effect to that decision in 1957. Britain and France both feared a revival of German power, but took precisely opposed views about the implications of these decisions. France regarded European integration as a means of binding an economically powerful Germany into a European bloc which they were confident that they could dominate. France also believed that only an integrated European bloc would be able to stand up to the United States. Britain, on the other hand, accepted the dominant role of the United States in the post-war world order, but believed that the objectives of the six founding members of the Common Market necessarily implied an eventual move to a European federal state dominated by Germany. The prospect rang all the alarm bells that had terrified British statesmen for 500 years. In a memorandum of February 1956, Harold Macmillan, then Chancellor of the Exchequer, declared that the Messina proposals “will mean Western Europe dominated in fact by Germany and used as an instrument for the revival of power through economic means. It is really giving them on a plate what we fought two wars to prevent.”

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Although the prospect of a dominant Germany was a particularly sensitive point, the problem would have been the same whether Germany dominated the new group or not. A supranational state comprising the whole of Western Europe would inevitably marginalize Britain. The only solution would be to join it, a possibility which was rejected out of hand. It was rejected partly because Britain was unwilling to subsume its own sovereignty in a new proto-state and partly because of its preferential trading arrangements with the Commonwealth and the British Empire. Instead, the government tried to persuade Germany and France to abandon their plans and urged the United States to withdraw its support for them. It failed in all three cases. In 1956, Harold Macmillan regarded European integration as a recipe for the division of the world into three spheres of influence, American, Soviet and European. This was a profoundly unwelcome development for Britain, because British attachment to sovereignty would inevitably result in Britain’s exclusion, with dire results for its international influence. Two years later Macmillan, now Prime Minister, told de Gaulle that he was convinced that the Common Market would turn into the modern equivalent of Napoleon’s continental system, an economic and political weapon targeted against Britain.

***

These debates foreshadowed British arguments for and against Europe for the next 60 years. When Britain eventually did join the Common Market at the third attempt in 1973, there was none of the idealism which had motivated the continental founders of the European Economic Community (EEC). It was seen by the politicians as damage limitation and by the public as a mere trading arrangement. There were many factors involved in the decision to join, including the lackluster performance of the British economy in the Fifties and the growing dynamism of the European market. But the main geopolitical factor, especially in the eyes of Macmillan, was the desire to influence the development of Europe in Britain’s interest and to maintain Britain’s historic role in European affairs. As a result, fears about the loss of sovereignty on the one hand and exclusion from a dominant European bloc on the other continued to guide British policy under both Conservative and Labour governments.

For a time the dilemma was evaded. In the referendum on EU membership held in 1975, the case made for membership was entirely about trade, and not about political integration. The political leaders who made the case for EU membership fell into two groups. There were those who believed that the European aspiration to ever closer union was just rhetoric, and that it would never happen. This group has proved to be mistaken. And there were those like Edward Heath, the Prime Minister who negotiated British entry, who understood the direction in which the EU was bound to move, but believed that it would happen gradually, and that over the years a new European identity would be created which the British would accept. This group has proved to be over-optimistic.

In the late Eighties, all the old ghosts came back to haunt the governments of Margaret Thatcher and John Major. There was, first of all, the advent of Jacques Delors as president of the European Commission. Delors was a French socialist who presided over a rapid expansion of the competences of the EU. Under his influence, it moved into areas of social policy in ways which were extremely unwelcome to the Conservative governments of these years. Then came German reunification, which revived the old fears of German domination of Europe. France and Britain divided along the same lines as they had done at the foundation of the EEC. Thatcher was intensely suspicious and publicly fearful. President François Mitterand of France, after some initial hesitation, stuck to the traditional French policy of trying to neuter Germany by binding it into European political structures traditionally dominated by France. Finally, the Maastricht Treaty of 1992 provided for a single European currency. Monetary union was in effect a German concession to France’s integrationist agenda in return for French support for German unification. In Britain, the old geopolitical dilemmas now had to be confronted.

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The Labour government which took office in 1997 set out to mend fences with Europe after the years of abrasive relations under Margaret Thatcher and John Major. The new Prime Minister, Tony Blair, articulated the classic doctrine of British foreign policy. Citing four centuries of history, he declared that Britain’s destiny had always been to “help shape Europe”. “The fact is,” he said, “that Europe is today the only route through which Britain can exercise power and influence.” Enlargement of the EU was the one way in which Britain’s age-old pursuit of a balance of power could be continued. The Labour government continued the policy of its Conservative predecessors of supporting the expansion of the EU to the east, in the hope that this would create informal alliances with aspirant countries in Central and Eastern Europe and dilute French and German influence. The policy of enlargement was successful in one sense. The EU grew to 28 members by 2007, bringing the whole of the west and center of the European continent into its orbit with the exception of Switzerland and Norway (which accepted EU laws by treaty but declined full membership), and the Balkan states (all of which have current applications to join and are adopting policies converging with those of the EU). Yet, in another sense, the policy of expansion failed. The new members turned out not to have the diluting effect that Britain had anticipated. They quickly signed up to the integrationist agenda of the European Commission, except in the case of Hungary and, briefly, Poland. The solidarity of the enlarged community was spectacularly demonstrated by Britain’s inability to fragment the bloc when it came to negotiating the terms of its exit after 2016.

Britain’s dilemmas were encapsulated in the argument within the Labour government about the euro. John Major’s government had negotiated an opt-out from the single currency, but that resolved only part of the problem. The Eurozone would inevitably become a center of European economic decision-making in which Britain, as a non-euro country, would have little influence. Tony Blair wanted to join the euro for political rather than economic reasons. He believed that it would increase British influence in Europe and that it would help to create a European identity in Britain. As a political judgment, that was plainly right. It also reflected the long-standing traditions of British foreign policy. Economically, however, monetary union made little sense. The Chancellor of the Exchequer, Gordon Brown, supported by senior Treasury officials, believed that the issue should turn on Britain’s domestic economic interest and not on her classic pursuit of political influence in Europe. He considered that the UK should not adopt the euro unless certain exacting economic tests of economic convergence were satisfied. As an economic judgment, that was right too, and it was the view which prevailed. It was a seminal moment.

***

Britain’s traditional policy had been to maximize its influence in Europe in order to protect its own economic and strategic interests. By the end of the 20th century, the emergence of the EU as the dominant continental bloc meant that this could only be done from the inside. Viewed in this light, Britain’s withdrawal from the EU in 2020 marked the abandonment of five centuries of intelligent British statesmanship. Without Britain, the EU’s consolidation into a single political bloc, which Britain had always taken the lead in resisting, was likely to accelerate. At the same time, Brexit marginalized Britain, ensuring that it would have no voice and very little influence over the developing economic superpower. 

There is also a more general sense in which Britain’s departure from the EU was a misfortune not just for Britain, but also for Europe. It detached Britain from one of the most imaginative and fertile projects in the continent’s history. The institutions of the EU are unappealing: remote, undemocratic, bureaucratic and foreign. But the EU has transformed the continent’s economic fortunes. It has brought to states on its geographical periphery, such as Ireland, Poland and Slovenia, a large measure of convergence with the historically more prosperous countries of Western Europe. It has eased the emergence of Eastern Europe from dependence on the controlling hand of Russia, and helped to restore and sustain liberal democracy in the countries which disappeared behind the Iron Curtain in 1945. It has contributed to the maintenance of the longest period of peace in Europe’s history. 

British Cassandras have been consistently wrong in their forecasts, tinged with hope, that the EU would collapse under its own weight. They were wrong when they dismissed the project as utopian at its foundation in the Fifties. They were wrong when they said that it would be destroyed by the euro crisis after 2009. They have always underrated the political will to sustain it.

Inevitably, the consolidation of continental Europe has marginalized Britain and reduced its ability to control its own destiny. Announcing the terms of departure agreed with the EU in December 2020, the then Prime Minister Boris Johnson said that at 11pm on 31 December Britain would, among other things, “take back control of our trade policy”, “take back control of our waters, with this treaty affirming British sovereignty over our vast marine wealth” and “take back control of our laws”. These sentiments exhibit a rather primitive attitude to national sovereignty and the ways in which it may be used for national advantage. Entering into a multilateral treaty such as the treaties constituting the EU was not a surrender of national sovereignty. It was an exercise of national sovereignty, involving a partial surrender of autonomy, and therefore of control, in order to obtain advantages which the participants could not have achieved on their own: greater geopolitical weight and friction-free access to a market 10 times the size of their domestic market.

Take, by way of illustration, the emotive subject of fisheries, which is presumably what Boris Johnson had in mind when he spoke of “our vast marine wealth”. In theory, Britain could restrict all fishing in British waters to British vessels. It now has the legal right to do that. But practical realities are against it. About 40% of fish caught by British vessels are landed in the EU, and well over half of fish landed in Britain are exported, mostly to the EU. Moreover, most fish species migrate between British and EU waters. Collaborative arrangements with the EU are therefore required in order to manage fish stocks in the interest of both sides. Fisheries are an interesting example. Because of the high proportion of European fishing stocks located in British waters, it is one of the few issues on which Britain and the EU have comparable bargaining power. Yet this has proved to be of very little practical value.

Looking more broadly at Britain’s relations with Europe, the economic balance is even less favorable. The EU is Britain’s biggest as well as its closest trading partner. It takes about 40% of British exports, whereas Britain takes only about 10% of EU exports, substantially less than the United States or China. As became clear during the Brexit negotiations, Britain depends much more on the EU than the other way round. The political weight of the EU, the size of its market and the asymmetric nature of Britain’s relationship with it means that Britain is bound to be dominated by it whether it is a member or not. The EU sets standards and imposes rules with which Britain is economically bound to comply, even though it is legally a free agent. This has not changed since Brexit. The difference is that Britain now has no say in the standards and rules that the EU applies. A legal dependence has simply been replaced by a practical one. Influence has been traded away for nothing.

The idea that Britain can compensate for this by reorienting its trade towards other markets through trade agreements was much canvassed during the referendum campaign, but it has proved to be an illusion. Almost all the trade deals negotiated by Britain since 2020 have simply replicated the deals that Britain previously enjoyed through the EU. The rest (with Australia and India) are with geographically distant countries and are widely thought to have been dearly bought. The reasons are not hard to find. The move towards global free trade, which seemed so promising a generation ago, has stalled and in many areas has been reversed. Most other markets are at least as protectionist as the EU, and Britain has fewer levers to open them up. International bargaining in this field depends on economic weight.

In any trade negotiation, Britain can offer access to about 70 million consumers, whereas the EU can offer access to some 450 million, more than six times as many. We would have been better off negotiating as part of a coalition of 520 million consumers. The one exception concerns Donald Trump’s tariff wars of 2025. Britain was able to negotiate more favorable reliefs from the United States than the EU, mainly because of Trump’s political antagonism to the EU. How much of an advantage that is remains to be seen. Trump is an impulsive and wayward force in world politics, who will observe US treaty obligations for as long as it suits him and not a moment longer. In the short run, Britain cannot allow its economic fortunes to depend on a partner as erratic and unreliable as the United States has recently proved to be. In the long run, the United States is likely to revert to its traditional support for European consolidation, with an agenda in which Britain will have limited weight.

Trade flows are not everything. However, the trade-off between autonomy and collaboration raises dilemmas which affect British policy-making across the board. An ever expanding range of issues, both economic and non-economic, call for international cooperation, in which political weight counts. The EU’s member states have more control and more global power collectively than they can ever hope to have individually. Britain’s own relative position is likely to weaken in the next few years, as powerful pressures push the EU towards further European integration and ultimately towards the creation of a federal superstate. This is because Europe’s ambitions will be impossible to achieve without developing common political institutions superseding national governments in major policy areas. Obvious areas for consolidation include capital markets, fiscal policy, debt issuance, defense procurement and aerospace. There will be more technological joint ventures on a European scale, such as the Galileo Project for a European GPS system, to which Britain contributed both financially and technically before Brexit but from which it has now been excluded. There will be determined attempts to achieve European autonomy in financial markets, from which Britain’s financial services industries (currently accounting for 12% of its GDP) will be excluded.

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This brings one to the critical question of the relations of Europe and Britain with the United States and China, the world’s current economic superpowers. Donald Trump is likely to add to the pressure for European consolidation. The foreign policy of the United States has passed into the hands of a man who is determined to use the economic and military power of the United States to demand of America’s traditional friends a relationship based on subservience and clientage rather than alliance and shared interests. Europe is unlikely to accept such a relationship, but, outside the EU, Britain may have no alternative. The end of Trump’s presidency in January 2029 can be expected to bring an end to his highly personal and eccentric style of government, but not necessarily to America’s belligerent outlook on the rest of the world. Insularity in foreign relations has deep roots in American politics. Trump himself made no secret of his plans during the presidential election campaign. It must therefore be assumed that a majority of the American electorate welcomed his destructive instincts. The same voters will be around in 2028. Those bidding for Trump’s mantle can be expected to offer them more of the same. The Democratic Party will no doubt offer a less confrontational style of government, but is unlikely to risk its electoral chances by promising to reverse what Trump has done. The ultimate result will be the disintegration of the current web of international alliances centered on the United States, and its replacement by new networks based on other centers of power.

In Asia, the alternative center of power is likely to be China. Seventy years ago, China’s GDP was smaller than Belgium’s. Today it has the second-largest economy in the world, with a combination of relatively cheap labor, plentiful natural resources and impressive industrial and technological skills that enable it to undercut other advanced economies. Under Xi Jinping, it has immeasurably expanded its geopolitical ambitions in the Asia–Pacific region and its economic reach worldwide. Xi’s China, like Trump’s America, looks for relations with other countries based on political clientage. This can descend, in China’s case as in America’s, into crude bullying. Its Pacific neighbors, such as Vietnam, the Philippines and Taiwan, and its African clients, such as the Democratic Republic of the Congo, Zambia, Angola, Djibouti, Kenya and Côte d’Ivoire, have learned this lesson to their cost. In Europe, meetings with the Dalai Lama, protests against China’s persecution of the Uyghurs or of democracy activists in Hong Kong, or official dealings with Taiwan are met with trade sanctions.

Integrated political and economic blocs such as the EU have a better prospect of defending themselves against the suffocating embrace of the United States and China. The EU has proved to be too fragmented to stand up effectively to the United States in the tariff wars of 2025 as China has successfully done. This was cruelly exposed when the EU’s program of countermeasures was undermined by ideological differences among member states, by the economic vulnerability of some of them and by their common dependence on the United States for the defense of Ukraine against Russia. Europe is likely to pay dearly for that weakness. Trump will come back for more. It is difficult to believe that subservience will remain the EU’s policy for long.

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In dealing with China, the EU has not faced the same difficulties and has been much more robust. Lithuania, for example, has been able to stand up to persistent Chinese bullying and trade sanctions provoked by its decision to allow Taiwan to open a representative office in Vilnius. This is because, although Lithuania is a tiny country, it is a member of the EU, which can hit back hard and has done so. The EU is China’s largest trading partner, with a volume of trade in 2024 eight times larger than the UK’s. Britain is not as well placed to resist Chinese pressure over, for example, China’s demand for a super-embassy on Tower Hill, the presence in Britain of Hong Kong dissidents or its universities’ freedom to study China’s human rights record.

The UK has traditionally made the American alliance the cornerstone of its foreign policy and has opted out of the political structure of the European Community. Britain’s “special relationship” with the United States has proved to be both a blessing and a curse. It was critical in the Second World War and in the Cold War. It still is critical to Britain’s security in the fields of nuclear weaponry and intelligence. But it has come at the price of distorting Britain’s view of itself and its place in the world. It has allowed the UK too often to turn away from the reality of being a regional European power some 20 miles off the French coast, with a European history, culture and sensibility. 

It has also encouraged Britain to forget that the United States is some 3,000 miles away and has a hard-nosed view of its own national interest. The special relationship helped lull Britain into taking a more detached view of moves towards European integration in the Fifties and Sixties than was in its national interest. It also offered the Brexiters an opening to argue in 2016 that Britain’s links with Washington might provide an alternative to its participation in an integrated Europe. By promising a quick bilateral trade deal (which never materialized), they suggested that Britain could abandon the EU with equanimity on the hardest of terms. Britain has now discovered that the American comfort blanket is threadbare. As a result, its subservience to the United States seems likely to be more complete and longer lasting than that of the EU.

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It is of course possible that national ambitions among the countries of Europe will prise Europe apart again and prevent the economic and political consolidation that the continent needs. But Britain has too often counted on this happening, while “ever closer union” slowly became a reality. History has borne out Jean Monnet’s prediction that “Europe will be forged in crises and will be the sum of the solutions adopted for those crises”. 

Barring a major crisis in Britain’s own affairs, it is unrealistic to expect Britain to rejoin the EU. What is more likely is a succession of ad hoc agreements for cooperation with the EU in defined areas including economic regulation, international trade, migration, defense procurement and foreign policy. Europe will be in a position to dictate its terms. Some of these agreements will involve substantial British contributions to European budgets. Some will involve accepting the jurisdiction of the European Court of Justice in specific areas. The red lines of the past are likely to fade. In this untidy fashion, Britain will obtain a modest degree of influence over European policy decisions, but it will be substantially less than the control that we might have exercised as members.

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Extracted from The Brexit Effect, 2016–2026, published by Cambridge University Press.