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Brexit: Britain bows to its historic adversaries

Is there any comparable case of a great country voluntarily, without any need to do so, placing itself at the mercy of its historical adversaries?

That is what the UK has done.

Britain’s future is now at the disposal of the remaining countries of the European Union. After being weakened by the results of the general election last week, Mrs May will probably not last long as Prime Minister. But she or her successor will be forced to do a deal with Europe that suits the EU rather than the UK. This is because failure to do any deal would be catastrophic for the UK.

British Eurosceptic politicians say Europe will be forced to do a deal because Britain is a big market. Not so. Policy in Europe is made by politicians and bureaucrats, not by business. The priority is the survival of the EU. The proportion of EU goods and services going to the UK is much lower than the proportion of British goods and services going to the EU. In any case, the dominant country, Germany can make up for any slight loss of market share in the UK by expanding booming exports to China and other Asian markets.

With Brexit, Britain’s interests will diverge from those of the EU. They become rivals. While professing friendship, each side will strive to gain advantage over the other. As the Europeans keep telling Mrs May, there can be no such thing as a “successful” Brexit.

There is no chance of a deal with the US replacing the loss of market share in Europe. Mrs May has no clout left with the Trump administration. She’s a loser. Trump is not the man to do business with losers.

Brexit brings less control

How laughable was the promise that Brexit would bring back control! Never have the Brits had less control.

From March 2019, the EU can insist that every one of the 14,000 trucks a day that crosses the UK/EU border is checked for compliance with EU rules. They will require UK citizens to apply for visas before visiting, studying in or working in any EU country. They will end the rights of UK professional services to compete on a level playing field with EU-based firms. Arrangements for the mutual recognition of professional qualifications will end.

Any tinpot EU bureaucrat will be able to make life difficult for British residents, firms and traders doing business or setting up shop in Europe – discrimination that is banned for members of the EU.

EU-based firms can lobby against allowing local and state authorities from using British consultants and other services. In effect, the EU can squeeze the big surplus that Britain earns every year on services trade – a surplus vital to its ability to finance crucial imports.

There is no chance of making up for the loss by expanding exports of services to the likes of India. Sales to emerging markets are just far too small.

By triggering Brexit, Mrs May enables Britain’s old competitors the chance to enforce the equivalent of an economic blockade of the United Kingdom. She has given them the opportunity to repay, with interest, the humiliations they have suffered in the past at the hands of the British. Spain, France, the Netherlands, Germany and not least Ireland all nurse deep historical injuries inflicted on them by the British – as have many other countries and peoples around the world.

Are the Brits about to learn the hard way how unpopular they really are?

President Macron and his team are relishing the prospect.

Economic ignorance

Prospects for a graceful divorce are made worse by Mrs May’s ignorance of economics – an ignorance shared by many of those at the top of British politics. Official economists whose work brings them into regular contact with No 10, Downing Street confirm that nobody around her grasps concepts such as comparative advantage or the global value chain, or their relevance to the Brexit talks.

That is why Mrs May’s boasts about being a tough negotiator come across as being so weird. What is she talking about? Plainly, she does not understand the kind of negotiation that Britain is entering.

Her degree is in geography (second class).

Her ignorance makes a big contrast with, for example, Margaret Thatcher. Lady T took care to brief herself thoroughly. Before a big international economic meeting, she would invite some economists to Chequers, the PM’s county estate, for weekend discussions on economic policy, meetings she would chair herself. Though not an economist, she had a scientific training and tried her best to understand the key points at stake. Not so Mrs May. Thus nobody in 10, Downing Street understands why the UK has benefitted from membership of the EU. They have no insight into the way in which membership led to a great opening up of the UK economy and the stimulus to productivity. Equally, they have no idea how dangerous the outlook for Britain is.

British opinion-leaders blame foreigners

The whole UKIP/Brexit phenomenon has been misinterpreted. Both Britain’s main political parties for different reasons found it convenient to blame foreigners – immigrants, Brussels bureaucrats, excessive savings by Germans, the euro – for Britain’s problems. Jeremy Corbyn, Labour Party leader, blames the EU “liberal state”, which he portrays absurdly as a bastion of free-market ideology.

British politicians insisted that the referendum result showed that the public shared their prejudices. Doubtless the public were influenccd by these views: “If the governor of the Bank of England says it was the euro and the Germans that caused Britain’s financial crisis and unemployment, it sounds preposterous but it must be true” .

But it seems, in fact, just as likely that the Referendum result reflected in reality popular anger against Britain’s own governments, of both political parties, and the governing classes.

People were taking an opportunity to register their anger against the unfairness of British government policies, growing inequality and the total failure by both parties to rise to the challenge of the financial crisis 10 years ago. Ten years after the crisis, and still neither of the main parties has put forward a convincing plan to prevent a repetition of the crisis leading to even greater misery, higher inequality and long-term stagnation.

That is why the economy remains in The Money Trap

And people know it

The British government is like a chess player who has thoughtlessly given away his queen. That is what the decision to trigger Article 50 did. Whatever the British want to do now, and however good their endgame, they can be saved only by a magnanimous gesture from the other side, from Europeans.

Even if the Brits suddenly beg to be allowed to stay after all, that request would probably have to go through European courts.

Guy Verhofstadt, the European parliament’s Brexit representative, described the election result as “yet another own goal – after Cameron now May”, adding: “I thought surrealism was a Belgian invention.”

After watching the Brits score so many “own goals”, will the European show mercy?

The reality is this: by triggering Article 50,  the British announced they would give up for all time their legally-protected rights to live, trade, work and study in Europe on the same basis as other Europeans.

In uniting the rest of the continent against them, they have become supplicants.

European leaders have for years had to endure misplaced and arrogant criticism from the British media, policy-makers, prime ministers, economists, bankers and central bankers – even, I regret to say, from central bank governors.

Now Germany, France and the others can get on with building Europe without the British whining and disrupting progress.

Why should they be magnanimous?

PS To be clear, I do not wish to suggest that the leaders of the 27 are all gloating over Britain’s predicament. Irritation, dismay and bewilderment are rather the prevailing sentiments. But I do believe that, if the UK and its leaders  provoke our erstwhile partners by adopting an arrogant tone, and if the UK holds to Mrs May’s “take-it-or-leave it” approach to the negotiations,  old historical ghosts  will climb out of the history books and start haunting the corridors of power again.

See: Britain’s worst mistake for 1,000 years