In her much-heralded Brexit
speech today, UK Prime Minister Theresa May continued to adopt the pose of the
strict headmistress delivering an address on the school’s achievements. She
attempted to be bold and proud, but avoided mentioning that no prizes have been
won this year and the school trip abroad is now cancelled owing to insufficient
funds. The speech was long on rhetorical cliché, yet short on detail that could
not have been deduced from what has already been reported. However, there was a
clear statement that the UK would not aim to stay in the EU single market after
Brexit and, more interestingly, another implicit threat to the EU on what would
happen if there were no good deal for the UK in the forthcoming negotiations.
She seems finally to have got
the message from other EU political leaders that membership of the single
market is part of a broader agreement that includes freedom of movement for
people too. She may also have been informed that the existing EU customs union
agreements (eg for Turkey) are based on trade in goods. They do not include
services, and would not help the UK’s interest in maintaining financial
services access to the EU market. So the PM declared that there will be no such
membership, and neither will there be any payments to the EU budget for these
things. Brexit means Brexit!
Then came the brazen bit: ‘as a
priority, we will pursue a bold and ambitious Free Trade Agreement with the
European Union’. The great thing about this is that, because it is not called
being a member of the EU single market, it will presumably cost nothing!
Nothing at all, since although the UK plans to repeal the European Communities
Act as part of the exit, it will at the same time ‘convert the “acquis” – the
body of existing EU law – into British law’. So, you see, everything can really
remain the same. Well, except that, not being an EU member, the UK can avoid
paying anything into the EU (except for some specially considered exceptional
cases), can control EU immigration and can pay no attention to the European
Court. Which EU member state would not see that as completely reasonable?
If the rest of the EU did not
agree that this was a wonderful solution to an intractable problem, then there
was the threat, one initially posed by Chancellor Philip Hammond in his recent
interview with the German newspaper, Welt am Sonntag. The newspaper
stated that ‘your government sees the future business model of the UK as being
the tax haven of Europe’. Hammond did not deny this, but indicated that it
could happen if they were ‘forced to do something different’. Hammond said
‘If we have no access to the European market, if we
are closed off, if Britain were to leave the European Union without an
agreement on market access, then we could suffer from economic damage at least
in the short-term. In this case, we could be forced to change our economic
model and we will have to change our model to regain competitiveness. And you
can be sure we will do whatever we have to do. The British people are not going
to lie down and say, too bad, we’ve been wounded. We will change our model, and
we will come back, and we will be competitively engaged.’
Theresa May was clearer on this
‘change our model’ option in her Brexit speech when she said that ‘no deal for
Britain was better than a bad deal for Britain’
‘Because we would still be able to trade with Europe
[even with no deal]. We would be free to strike trade deals across the world.
And we would have the freedom to set the competitive tax rates and embrace the
policies that would attract the world’s best companies and biggest investors to
Britain. And – if we were excluded from accessing the Single Market – we would
be free to change the basis of Britain’s economic model.’
Britain is the second largest EU
economy, and the one with the second largest net EU budget payments after
Germany, so it does have some negotiating power. But it is still in a
relatively weak position compared to the other 27 states negotiating as a bloc,
especially if it does not want to make any payments to the EU. The UK
government is obviously not promising to change the capitalist economy, but
merely to change or cut some taxes and regulations that would make
domestically-based business ‘more competitive’ – meaning more attractive for
business. This would be a problem for the rest of the EU, since they would
either lose out or also have to adapt to these changes, so it is a credible, if
desperate, negotiating tactic.
A big problem for the global
capitalist system is that the UK moves are helping to undermine the existing
structures of international political-economic relations that have been slowly
built up over decades. This makes the international policies of all major
states up for grabs, and we can obviously add in Trump's US to the mix. Partly
in compensation for this, PM May went on about how much she valued the
partnership with Europe and how Britain was important for European ‘security’
in terms of its permanent membership of the UN Security Council, nuclear
weapons and ‘intelligence capabilities’.
These are more signs of how the
chronic economic crisis is leading to growing tensions in capitalist policy
making. In Britain’s version of the economic nationalism being introduced by
Trump, Theresa May uses blather about a ‘fairer Britain’, rather than a strident
‘Make GB Great Again’, if only because she knows there is a more vulnerable
position to protect and no ability to force unilateral deals. We will see more
arguments and conflicts between the major countries in the years ahead.
1 comment:
you fail to mention that he UK has a massive trade surplus with the EU and if we go to WTO rules the net gain to the treasury would be in the billions probably double digits, it would not be impossible for the treasury to offset the expense of trade tariffs with subsidies via the tax system to exporters to the EU putting them back on a level playing field, with the huge surplus we have the government would still be ahead by billions. When referring to the banking industry in this scenario (I am no lover of this industry) let it find its own solutions to the problem they are big enough and profitable enough to bear the burden of the mess that they created, because i truly believe we would not be in this mess if not for bailing the banks out for 100's of billions and the austerity it has caused for so long.
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