If Britain severs its ties with the European Union, where does it belong? It’s too small to be a continent by itself. Many think it’s too diverse to even be called a country. The Scots and the Irish don’t want out. But the Welsh want to leave. And, most importantly, Brexiteers want out, we are told. And, how many times have we heard “Brexit means Brexit”?
This small island nation is going through an existential crisis. It is anti-EU, anti-immigration, anti-Brussels, anti-globalists… well, you get the picture. In 2016, it was a picture of a nation divided between the privileged world of high-finance and business-minded globalists and the relatively poor, unemployed or under-employed folks trying to eke out a living in the countryside.
As it played out in the Brexit Referendum, it became a divide between London and The City on the one hand and the rest of the country on the other. It took place as the country was still trying to emerge from the financial crisis. In less than three years, we have not made much progress on the Brexit negotiations – at least not in a manner that is acceptable to all political views – but even more telling is how quickly the people, the politicians and the media have forgotten the man who was responsible for it, in the first place.
Then, as now, it is a beleaguered prime minister, trying to pander to the most extreme elements within the party in order to keep the party, government and self in power. In such circumstances, one cannot always expect the best or wisest decisions. The referendum was based on a wrong premise in my view, and therefore, even the solutions on offer seem to be the most ill-advised ones.
So, let us return to the all-important question: where does Britain belong?
From the days of the Celts, Romans, Vikings and the Norman conquests, to the Reformation, the Age of Enlightenment and the birth of liberalism, Britain has always been connected to and is inextricably, a part of Europe. It is a country informed and shaped by centuries of Western thought, science and religious beliefs. It has adopted and shared its values, cultures and practices with the Continent. It participated in conquests of its own, building a vast global empire during the 17th, 18th and 19th centuries and during that time, competed with the Dutch, Spanish, and French empires. Yet, at the same time, Britain was doing trade and conducting economic activity with the Continent, which accelerated after the Industrial Revolution.
Fast forward to the 20th century, when Britain fought two long and deadly wars on the Continent and with the help of its allies, was able to retain its position as a (weakened, yet still strong) economic powerhouse. Britain is not just the birthplace of the Industrial Revolution, it is also where the idea of the welfare state was first born. An idea first championed in the Liberal government of HH Asquith and later conceived and finely honed by William Beveridge, economist and social reformer. His famous Beveridge Report was written as a means to fight the five ills of British Society at the time: disease, squalor, ignorance, want and idleness. Just as Bismarck introduced the Social Insurance system in Germany, so did Britain and almost all of Europe follows these ideals till today. The successes of the Scandinavian economies, in fact, are built on the ideals of a welfare state.
To disown this legacy and to think that Britain can completely break away from European traditions, or the European market, is wrong-headed in my view. True, some of the distancing already took place during the Thatcher era, but she too was supportive of the idea of the European Project, even as the country decided not to join the single currency. And, while it is also true that the European project, in terms of a currency union has its problems, the single trading bloc has worked well for all its members. Smaller countries in particular, have benefited from joining the European Union, since it gives them greater heft economically. Problems with the Eurozone were always meant to be, especially since it is premised on the idea of a monetary union, not backed by a fiscal union; the latter would have meant individual countries giving up their sovereignty.
There are several contemporary economists too, of different ideological persuasions, from Thomas Piketty to Edmund Phelps, who tend to club Britain with America rather than with the Continent. I suppose it is the strong liberal traditions (in the classical sense) and their Anglo-Saxon, capitalist market economies that make the two countries similar. And after all, wasn’t it in America that John Maynard Keynes found greater acceptance for his ideas than in his home country?
But coming back to the decision to leave the EU, the bigger problem is what politicians on every side have done with it. There were a number of options that Britain could have pursued from the Norway model to the Customs Union, but the government of Theresa May dug its heels in under the pretext of “the people have spoken and Brexit means Brexit”. The people of Britain never specified what form and shape Brexit should take. Brexit was never even a question in their heads, until the former prime minister put it there. And the biggest sticking point of a hard, Irish border has still not been resolved. It has taken all this time for Theresa May to even articulate what kind of Brexit she had in mind.
Then, there is, of course, the question of what kind of future Britain will now face. From the likes of Jacob Rees Mogg who thinks that Brexit frees Britain to pursue greater trade with fast-growing China (the darling of every trading country), to Boris Johnson who wants to take back control of Britain and thinks that they can now stitch up their own trade deals with WTO, everybody is offering their own mirages of Britain’s future. If it all seems rather quixotic, it is because governments have never been more out of touch with their people.
The fact is that Britain is most certainly staring at a recession; the only question is whether it will be a mild one lasting a quarter or two or a more severe one. That, of course, depends on what kind of Brexit Britain chooses to have. Many businesses, including banks (finance being the mainstay of the British economy), have already relocated some of their offices to other cities in Europe. Around 43% of Britain’s exports go to the EU. And the EU is the world’s largest trading bloc, representing 16.5% of world exports and imports, each valued at € 2,300 billion to € 2,500 billion. Britain risks not being part of this huge market with all the benefits of reduced tariffs. And if it is the long run that British politicians are looking at, they would do well to remember the words of Keynes who famously quipped, “In the long run, we will all be dead”.
Finally, and most significantly, there is the growing American (read Trump-inspired) influence on Britain and its future. It is no coincidence that the Brexit Referendum and the election of Trump happened in the same year. There is a wave of populist, ethno-nationalism that swept both countries and brought the results they did. It ought to worry Britons and Europeans of all nationalities that the American Alt-Right and Steve Bannon with his toxic, divisive politics, have been campaigning extensively and intensively in Europe from Italy to Bosnia, Hungary, Austria and elsewhere, trying to sell their vision of an aggressively right-wing, white Christian, anti-Muslim, anti-immigrant world.
This is the future awaiting Britain and the rest of Europe, the longer they travel this road. It won’t be just the Russians who will be dividing Europe and undermining Western democracy. It will be the country Britain professes to have a special relationship with. And it will be under the watch of a President who sees an enemy in everyone and has already called America’s biggest allies – Europe – “foes”.
Separated from Europe, Britain will be like an unmoored ship that is rudderless and headed toward oblivion.