The Long-term Legacy of Brexit

David and Helen are joined by Diane Coyle and Anand Menon to have another go at pinning down the long term consequences of Brexit. Now we have a deal, what are the prospects for rebalancing the UK economy? Do EU politicians want a post-Brexit UK to succeed or to fail? Can Labour really avoid re-opening the Brexit wars for the next four years? Plus, an update on the next series of History of Ideas.

Talking Points: 

Because of Brexit there is more friction in trade with the EU. 

• People will feel the friction more and more as we get back to normal volumes of trade.
• Right now the volume is relatively low both because of Covid and because of seasonal fluctuations (things slow down after the holidays).
• It will be hard to disentangle Brexit effects from Covid effects. 

We will be talking about Brexit for a long time.

• Future governments will be able to score easy economic wins by aligning more closely with the EU, although this may involve political trade offs. 
• This may not be true when it comes to financial services. 
• This trade agreement means that choices have to be made over and over again.

The British economy is taking two shocks: separating from the EU but also separating from what Osborne and Cameron called a golden era of UK-China economic relations.

• EU policy and British policy on China are diverging.
• The Uk government may focus more on India and other non-Chinese Pacific economies.

Brexit does create some opportunities.

• The UK is a world leader in AI, and there is a commitment to investing in energy technology, especially green energy.
• The UK is also a world leader in higher education and the creative sector; the problem is that the government has declared a sort of culture war.

A German-led EU tends to treat geopolitical questions as primarily economic questions rather than long-term security questions. 

• China is going to put that commitment, formalized in the China Investment pact, to the test.
• Britain is now the liberal European state when it comes to foreign policy.
• The institutions that have been so successful at managing intra-European imbalances now prevent the EU from being an effective actor in international relations.

Mentioned in this Episode:

• Johnson’s piece for The Financial Times on green energy
• Anand on the HuffPo podcast with Rosie Duffield
• The UK in a Changing Europe
• ‘Who Killed Soft Brexit?’ Jill Rutter and Anand for Prospect

Further Learning: 

• EU and China agree new investment treaty (from the FT)
• More on Germany and EU politics on China

And as ever, recommended reading curated by our friends at the LRB can be found here: lrb.co.uk/talking