Brexit Isn't Serving the Cause of "Global Britain"
Boris Johnson snookered cosmopolitan conservatives into voting to exit the EU, now they are regretting it
As the second anniversary of Brexit, Britain’s formal exit from the European Union, approaches next month, some free-market “globalists” who supported the “leave” motion are having buyer’s remorse. They had thought that freedom from the restrictive rules of distant European bureaucrats would mean that Britain would become the free-market equivalent of “Hong Kong or Singapore on the Thames.”
But that was a wet dream: Breaking with the EU was never going to mean less restrictive immigration policies. But even when it comes to free trade, Britain’s post-Brexit record is quite mixed.
The Britain-based Spectator magazine’s editor, Fraser Nelson, a free-market globalist and a self-described Europhile who nevertheless reluctantly voted to leave the EU, recently wrote a piece in The Daily Telegraph expressing disappointment and disillusionment at Britain’s post-Brexit policy direction. He regretted that he had bought Prime Minister Boris Johnson and House of Lords member Dan Hannan’s happy talk that “leave” would not mean “drawbridge up” in Britain but “out, and into the world.” Now, he plaintively asks: “Where are these sunlit uplands?” Apparently, they were having a party at Downing Street when the rest of England was in a complete lock down that Johnson imposed at the height of the pandemic.
Setting that scandal aside, buying Johnson’s Brexit argument required ignoring both political and electoral reality.
Brexit was initially approved by British voters in 2016 by a narrow 52% margin. No doubt, those who voted for the referendum had very different notions of why Brexit was desirable and what should follow. There were radical free-market types that chafed at the EU’s zealous regulatory edicts requiring member states to meet all kinds of nonsensical requirements in order to access the European market. However, they were only a small part of the coalition. The larger part by far were voters who either were concerned primarily with a notion of national sovereignty or who saw Brexit as an opportunity to undo Thatcherism and revert to the British nationalism of the 1945-‘79 period. They wanted a self-governing Britain with a government that took an active economic role and leaned more toward economic nationalism.
This was clear when the leave campaign implied that the reason to get out of the EU was that the UK could subsidize and protect domestic steel producers, spend more money on the National Health Service (Britain’s nationalized health care system), and reduce or stop immigration. The mastermind of that campaign, Dominic Cummings, Johnson’s political strategist, argued forcefully that talk of “Global Britain” was never going to win and what was needed was a focus on national renewal with the emphasis on national. He also argued in his blog, and elsewhere, that the British state should be transformed into a project-oriented body with a much more interventionist role in the economy.
The results of the 2019 general election in which the Conservative Party won with a landslide show that it was Cummings message that resonated with a politically diverse set of voters. Those who were critical for both the outcome of the Brexit referendum and this election were largely older working class and lower middle-class voters in former industrial areas. The Conservative Party made major gains in the north of England that had previously been a traditional Labor stronghold as well. These voters combined a clearly left-of-center economic position and support for government economic activism with cultural traditionalism and attachment to a traditional notion of national identity and patriotism. This translates not just into an activist regional and industrial policy but also economic nationalism, hostility to globalization— in particular, immigration.
Indeed, Brexit initiated and the 2019 election cemented a realignment of British politics around a new axis that pitted cosmopolitans against nationalists of both the left and the right, something that cosmopolitans like Nelson who voted to leave are beginning to realize only now. What’s more, their disenchantment is likely to grow.
If the Conservative Party wishes to remain in power with this new electoral coalition, it’ll have to tilt towards the interests of these voters while retaining as many as possible of its traditional core supporters. The latter tend to be more free-market oriented than the newer voters, to be sure. But even their support for free enterprise is declining because ultimately nationalism and national identity trumps economics for them.
That’s why Prime Minister Johnson is taking a hard-line position on immigration despite massive labor shortages in the U.K. right now. He recently blamed the fall of the Roman Empire on “uncontrolled immigration” and insisted that he is not going to return England to the “same old broken model with low wages, low growth, low skills and low productivity.”
One would predict that the same electoral calculations driving his anti-immigration stance would also lead him to embrace an industrial policy approach in the name of economic nationalism. This is precisely what is happening. His government has made little to no effort to roll back most EU regulations. Rather, the aim is to tweak the regulations so as to make them serve some notional British national interest.
However, there is one important qualification to Johnson’s economic nationalism— and that relates to trade policy. Historically, the UK public has strongly favored free trade—to a degree unmatched elsewhere in Europe. The reason is the unusual support for free trade among working class voters going all the way back to the 1840s. Ever since the repeal of the Corn Laws in 1846, the principle of free trade has been part of the popular culture of working-class and lower middle-class Britain in particular. Protectionism has been regarded (correctly) as a conspiracy by special interests to raise the costs of living for ordinary people so as to enrich themselves. This explains why the Labor Party and the trade unions have mostly favored an open trade policy while the more nationalistic Conservative Party has sometimes supported protectionism.
This means that even when the electoral incentives prod in the direction of a more interventionist and nationalist economic policy, full-blown protectionism may not be in the cards for Britain. Instead, we are likely to see a hybrid position that combines free trade (notably in food but elsewhere as well) with other forms of intervention such as the deliberate use of government purchasing to assist domestic “champions.” This is in sharp contrast to the United States where historically, from Alexander Hamilton onward, protectionism has been popular, not least among blue-collar Americans.
There is evidence that this is indeed the direction that the Johnson government is going. There has been a big push to enter into trade agreements with other countries and open up trade with places such as India and Australia where previously this was not possible because of the common external tariff and trade policy of the EU. All of this is broadly popular—however much certain special interests may dislike it. This would suggest that while the hopes of globalist and free-market Brexiters will be disappointed on the whole, they may be somewhat fulfilled on trade.
But the operative word is “somewhat.”
Indeed, when one examines many of the trade agreements thus far, it turns out they are mere reiterations of the previous EU deals. Moreover, negotiations with non-EU countries such as India and Australia are proving to be slow and difficult. The reason is the nature of trade policy today which reflects the growth of an international system of harmonized regulations. This is the end result of a process that goes back to the founding of GATT in 1947. No longer are trade deals focused primarily on abolishing tariffs or quotas. They are exercises in regulatory harmonization and alignment, given that conflict of regulations is now the main barrier to trade and exchange. This is a very difficult and complex process, and subject to serious problems of capture by special interests.
In addition, there is tension in what target voters want even on trade. They want free trade with other countries, but they don’t want their government to scrap subsidies for domestic companies that prospective trade partners object to because such policies make these partners less competitive in Britain. Clean free trade agreements will require a considerable amount of political courage, which it is not clear that the Johnson government possesses.
But if after Brexit, Johnson can’t even deliver significantly better trade deals, it’ll show that he sold the globalists a bag of goods. Brexit might have put Britain on an accelerated path of economic nationalism that combines strong restrictionism with aggressive interventionism. It is ironic that globalists like Nelson might have had a hand in this by picking the wrong side.
Stephen Davies is the Head of Education at the Institute of Economic Affairs in London. He has published several books, including The Wealth Explosion, The Economics and Politics of Brexit, and The Streetwise Guide to the Devil and His Works.
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