Time to choose

by Sean Rickard

Eight years since the shamefully disingenuous referendum, the costs of Brexit for hard-pressed businesses and households continue to mount.   Arguably the most insidious cost was to cast the UK adrift in an increasingly polarising world, the dangers of which have now been exacerbated with Trump’s re-election.   Prior to Brexit the UK enjoyed the economic security of EU membership, it had a close open and trading relationship with America and was building strong links with China.   The decline from this enviable position to the friendless isolation of Brexit is an utter failure of statecraft.   Outside its natural trading bloc, Britain, is exposed to the risk of a highly protectionist America and its hostility to Starmer’s attempts to rekindle something of the pre-referendum ‘golden era’ relationship with Beijing.

Many who still cling to the chimera of Brexit benefits, are displaying the same delusion in supporting Trump.   These apologists, when challenged about the impending costs of Trumponomics, suggest he is not serious.   Unfortunately, all the signs are, he is.   By choosing to target Mexico and Canada as well as China, he is confirming that the campaign threats were not fanciful.   Significantly, he signed the Mexico-Canada-America trade deal that he now intends to tear-up – seemingly the disregard for international treaties/rules has spread beyond Tory Brexiters.   The rationale – surely an oxymoron where Trump is concerned – for his tariffs is as much about getting target countries to alter their policies in favour of the US as influencing trade.   Trump intends to use tariffs as a weapon of diplomacy, even coercion, on topics entirely unrelated to global trade, and all the signs are that Trump will expect the UK to adopt its traditional obsequence and to roll over for him.    

No doubt the likes of Farage and the pro-Trump press  – who remain in denial regarding the costs of Brexit – will try to haul the UK into Trump’s orbit.   Peter Mandelson – with one eye on becoming the next UK ambassador to Washington – has plagiarised the thoughtlessly Brexiters’ claims, that we must look to having our cake and eating it in our dealings with the EU and US.   Mandelson, a former European Commissioner for Trade, must be more aware than most that the scope afforded by Brexit to strike trade deals elsewhere was, in economic terms trivial.   According to the OBR a trade deal with America would add about 0.16 per cent to GDP per year which should be contrasted with its estimate that Brexit is costing 4 per cent of GDP per year and circa £40bn in tax revenue for public services.   The failure of the pro-Brexit Tories to secure a trade deal with the US confirms that there is little of substance in the ‘special relationship’ cliché.   Indeed, an ‘America first’ Trump would demand key concessions from the UK including adopting a radically different approach to regulation and the environment while accepting politically contentious imports such as chlorine-washed chicken or hormone-raised beef.  

Thus, Starmer is presented with an unenviable dilemma.   He promised that economic growth would be his priority but running scared of the pro-Brexit tabloids and the threat of Reform in the ‘red wall’ seats, he has made little progress in building a closer economic relationship with the EU.   Rather he seems to cling to the idea that Britain can chart an economically successful middle path between the EU and US despite all the evidence to the contrary.   A middle path raises the prospect of being squeezed in a deepening US-China trade conflict.    Indeed, Starmer’s business secretary has warned that Trump’s threat of a full-blown trade war between China and the west would leave the UK deeply exposed, code for damaging what are already bleak growth prospects.    The idea of a middle path is bizarre: the US and the EU take fundamentally divergent approaches to regulation in areas such as climate change, carbon taxes and supply-chain monitoring.   Attempting a position between the EU’s regulated compliance environment and a deregulated US would leave the UK highly exposed and in a state of considerable uncertainty.   Moreover, under Trump the US may shift away from green energy, whereas the EU and UK are following transition paths.   In short, any closer relationship with Trump’s chaotic policies, would rule out a closer relationship with the EU.  

The key question is whether Trump’s return will force Starmer to become more realistic in his approach to Brussels.   The governor of the Bank of England used his Mansion House speech to remind the government that Brexit is a continuing cost to the economy and urged it to be alert to and welcome opportunities to rebuild relations with the EU.   Meanwhile the cost of Brexit continues unabated with the Fashion Roundtable representing an industry comprising 72,000 businesses. Reporting a 60 per cent drop in its exports to the EU since 2019.   The incoming Labour government promised stability and a clear vision for industry, yet it has created a sense of inertia in no small measure by its inability to take meaningful steps towards a closer relationship with the EU.   The vacuous phrase ‘making Brexit work’ may have suited the election campaign but now is the time for leadership.   A failure to make clear that the UK will pursue the path that serves its longer-term interest i.e., a closer relationship with the EU, makes a mockery of promised stability and clear vision.  

It is untenable for Starmer to believe he can continue to avoid making a choice.   The election of Trump and his phalanx of shockingly, inappropriate Cabinet appointments, makes it abundantly clear that in its heart Britain is a European country.   The musings of Musk that Britain should emulate America rather than ‘socialist’ Europe, only demonstrates the ignorance and self-obsession of Trump’s acolytes.   In its economic policies. its lack of natural resources and, above all, in its values and expectations of the state, Britain is much closer to the EU.   Hopefully, Trump’s resurgence will prove the reality check that delivers a UK-EU rapprochement by the early 2030s.