Britain

Ten years on from the Brexit referendum, is Trump pushing the UK back into the arms of the EU?

Relations have certainly improved, as has security cooperation. But progress on economic cooperation remains meagre.

Practical and political hurdles include:

  • the EU is broadly satisfied with its existing trade deal with the UK, and has more pressing priorities than trying to deepen their economic ties;
  • the EU is reluctant to give the UK special treatment (“no cherry picking”), though it is being more flexible in a few areas;
  • the UK remains hemmed in by Labour’s election-manifesto red lines: no return to the single market, customs union or freedom of movement;
  • the UK still wants to have its cake and eat it, eg, participate in parts of the single market without making EU budget contributions;
  • even now, the UK is reluctant to choose the EU over the US.

What might break this deadlock?

A pro-EU shift in the UK. Starmer’s weakness is pushing him towards closer alignment with the single market, while his leadership rivals favour a customs union with the EU.

But given Labour’s red lines, any big shift would likely come only in its next manifesto – and only be implemented if Labour wins the next election, which must be held by 2029.

The EU’s position may also evolve. Fast-tracking Ukraine’s entry by offering it a form of associate membership sets a precedent that could be applied elsewhere. In the wake of Trump’s rupture of the global order and Western alliance, the EU is looking at ways to cooperate more closely with allies such as Canada, which could prompt fresh thinking about institutional flexibility.

The biggest catalyst for change could be an even greater sense of common threat – eg, if Trump quits NATO.

But so far there hasn’t been a strategic discussion on the underlying issue of how to protect liberal democracy from the forces trying to destroy it, and how the EU-UK relationship fits into that. 

It would make sense for the UK to rejoin the EU but sadly that still seems a distant prospect.

Read my latest piece for the Brussels Times.

Trump’s tariff setback – and what it means for Europe

Donald Trump likes to call himself “Tariff Man” and even “king”. But on 20 February, the US Supreme Court ruled that his use of particular emergency powers to “unilaterally impose tariffs of unlimited amount, duration and scope” on all and sundry was illegal.

That setback throws much of Trump’s trade strategy into chaos, deprives him of his favourite form of geopolitical leverage and constrains his freedom of action going forward. He is not, after all, an absolute monarch when it comes to commerce.

The justices’ ruling also casts doubt on the many trade agreements that are premised on Trump’s unilateral tariffs – not least his one-sided deal with the EU that was struck at his Turnberry golf course in Scotland last August.

But while the Supreme Court’s willingness to stand up to Trump is good news – not least for Americans worried about their country’s accelerated slide into authoritarianism – it does not prevent Trump achieving his protectionist aims by other means. Indeed, if it prompts Trump to lash out and other countries to retaliate, it might even end up making matters worse.

Read my article for Brussels Times.

Europe needs to rearm much faster

Later this month, NATO is set to agree targets for higher defence spending, by an as-yet-unconfirmed future date.

But Europe needs to rearm massively, right now. The threat from Putin is imminent, as is the risk that Trump abandons Europe, or betrays it by siding with Putin.

While this will eventually require tax rises and/or spending cuts, the best way to fund such a big emergency boost to defence spending is by borrowing more for a few years, preferably collectively. This could involve a coalition of willing governments, both EU and non-EU.

Done right, this could also help streamline military procurement, better integrate Europe’s fighting forces and even provide a much-needed lift to Europe’s struggling economies.

My latest Substack essay explains how best to do this.

A Brexit reset?

Boris Johnson won the December 2019 UK general election on the promise that he had an “oven-ready deal” to “get Brexit done.” But while the UK did leave the EU in January 2020, Johnson’s deal included a deeply contentious protocol governing the special trade status of Northern Ireland. British Prime Minister Rishi Sunak’s successful negotiation of an amended deal with European Commission President Ursula von der Leyen is thus a welcome development – one that could mark a turning point in UK-EU relations.

Read my latest piece for Project Syndicate.

Britain’s immigration system isn’t fit for purpose

Britain’s immigration system isn’t fit for purpose. Its political targets are perverse. Its guiding philosophy is reminiscent of Soviet-style central planning. The resulting rules are unworkably complex. Their administration by the Home Office mixes incompetence with malice.

The upshot is heavy-handed controls that still leave voters feeling that things are out of control. That’s bad economics and bad politics. Even international students – fee-paying, politically uncontroversial, future ambassadors for Global Britain – are now turfed out once they’ve obtained a UK degree. Madness.

It could soon get even worse. The only bit of the system that works well – EU free movement – is set to be scrapped. Such is the perceived imperative to keep out industrious, enterprising young Europeans that the government seems prepared to sacrifice the UK’s unrestricted access to lucrative EU services markets to do so.

The danger that Britain will pull up the drawbridge is real. But if – a huge if – further knee-jerk populism can be resisted, there is also a political opportunity to craft a more sensible immigration system.

My latest for CapX

Don’t believe the hype about Corbyn

I posted the following thread on Twitter earlier.

While some voted Labour cos they wanted Corbyn to win, many did so cos they thought he couldn’t. Doubt he cd win election except by accident

2. Clearly, some in UK r hard left. Many r fed up with austerity. Corbyn mobilised students & some who feel left behind. But..

3. Many also voted Labour cos moderate Labour MPs reassured them Corbyn couldn’t win. Others wanted to deny Theresa May a landslide…

4. In Kensington & elsewhere, rich Remainers who r hardly socialist felt safe to reject May’s hard Brexit. Cosmopolitans rejected nativism.

5. & many other reasons. Many voters would behave differently if they expected Corbyn as PM rather than May (or her successor). Ends

Apart from insults and trolling, the main response was “what is your evidence for this?”. It’s my analysis, and like any analysis it may be partly or wholly wrong, but let me amplify a bit and add some evidence to substantiate it.

It’s clear that very few people expected Labour to win the election – only 12% did, according to a Survation poll just before the election – and Labour indeed didn’t win. That was the frame in which people decided to vote Labour: while some genuinely wanted Corbyn to be PM, those who didn’t want him as PM still felt safe to vote Labour for all sorts of reasons, local (eg they liked their moderate Labour MP), tactical (eg they wanted to deny the Conservatives a big majority), protest (eg they opposed May’s Brexit at any costs) or otherwise. Anyone who thinks that Kensington, one of the wealthiest constituencies in the country, has suddenly gone socialist is certifiable.

Many Labour MPs and canvassers reported negative feelings towards Corbyn on the doorstep and explicitly tried to reassure voters that it was safe to vote for them because Corbyn couldn’t win. Some went as far as writing to their constituents to that effect. See, for instance, this reporting piece in the Guardian (which backed a vote for Labour).

Many people were put off by the choice between a hard-Brexit Conservative Party and a hard-left Labour Party, while the Lib Dems are still discredited by their time in coalition. YouGov’s focus-group findings are particularly telling:

Participants believed that both of the two main parties have entrenched political stances that are further to the right and left than in previous years, and there are perceived to be few options in the middle for those who see themselves as politically centrist. For these participants, the choice for whom to vote is unclear, as they feel ideologically separated from both Labour and the Conservatives. Related to this, many participants were considering tactical voting. Some had a stronger sense of the party they did not want to be in power than the one that they did. Related to a need for more choice, there was both a strong appetite and expectation for a new centrist party to emerge after the election, with France’s En Marche party an example of how this could be successfully achieved.

 

While Corbyn clearly appealed to some voters who might otherwise not have voted Labour, notably students, there is ample evidence that he was net negative for Labour. YouGov, whose model predicted seemingly unlikely results such as Labour winning Canterbury, found that only 34% of voters thought Corbyn was competent and 31% strong (although 49% found him honest and 46% likeable). Survation – whose final poll had the Conservatives on 42% and Labour on 40%, almost the same as the actual result – found only 81% of those intending to vote Labour thought Corbyn would make the best PM.

Now, of course, nobody can know for sure how a future election might pan out. But a coalition of convenience around Corbyn on the basis that he couldn’t win is unlikely to translate into an actual parliamentary majority in an election where voters think he could win. Indeed, so squeezed is the vote for the smaller parties that even if Corbyn could somehow hang on to that disparate coalition of convenience, the only way he can get a majority is by winning votes off the Tories. Good luck with that.

UPDATE on 12/6

A new poll for Survation after the election puts Labour ahead of the Conservatives by 45% to 39%. Does this contradict my thesis? No. What people say in a poll immediately after an election when nothing is at stake tells you very little about how they will vote in a future election when there is a lot at stake for them. For instance, in June 1979, just after Margaret Thatcher won the election, polls put Labour ahead. The test of my thesis is the next election.

Theresa May’s election gamble

Theresa May is likely to win the UK’s snap election on 8 June. A big parliamentary majority and not having to face voters again until 2022 could give her more flexibility in negotiating and implementing Brexit. But contrary to what she claims, that wouldn’t strengthen her negotiating position vis-a-vis the EU; if anything, it would weaken it.

With politics so unpredictable these days, there is also a risk that she will do less well than expected.

And May is taking a much bigger gamble with the survival of the UK. She can scarcely deny Scots a vote on independence before knowing the outcome of the Brexit negotiations, since she is now asking Britons to vote in similar circumstances. With many Scots leery of being dragged into a hard Brexit by a Conservative UK government in thrall to English nationalism, the (emotional) case for Scottish independence could be compelling, as I argue in my latest column for Project Syndicate.

Mayday in the UK

Conservative Brexiteers – who campaigned for the United Kingdom to vote to leave the European Union – continue to blather about building an open, outward-looking, free-trading Britain. But the UK is in fact turning inward. Prime Minister Theresa May, who styles herself as the UK’s answer to Angela Merkel, is turning out to have more in common with Marine Le Pen, the leader of France’s far-right National Front, than with Germany’s internationalist chancellor.

Read my Project Syndicate column on Britain’s illiberal turn.

Quoted in CityAM on Brexit, migrants and housing

In CityAM Mark Sands quoted me in a piece on the impact of migrants on housing and public services on 1 June.

Fellow economist Philippe Legrain, who supports liberal migration rules, slammed Fox’s comments. “This is more than dog whistle politics, it’s just demonising migrants for the failings of the British economy and the British public sector,” Legrain said.

“The bigger issue with the British housing market, which would exist even with much less immigration is planning restrictions which prevent us building extra housing. Generally EU migrants also pay in more than they take out so any pressure that exists on other public services is due to the failings of the public sector. In short, Liam Fox is talking rubbish.”

Read the full article here.