When prime minister Theresa May said she wants “Britain to be what we have the potential and ambition to be: a great, global trading nation that is respected around the world and strong, confident and united at home”, she is fundamentally changing the political and economic model that has governed the country for the past 40 years, and ignoring lessons from the past that go back even further, writes Martin Smith, Anniversary Professor of Politics, University of York.
In the 1970s, faced with a long-term economic and political decline, Britain turned to Europe as a market for its goods and for a political relationship that ensured its continued influence through a regional alliance. May seemed to be aiming for Britain to become a free trading nation that has global rather than European ambitions. This is reminiscent of 19th-century Britain, which built predominance through imperial trading relations and enforcing free trade.
What May seemed to be overlooking is that Britain’s position in the world is not what it was. As the 19th-century German economist, Fredrich List, recognised, only the strongest economies have an interest in free trade as they have the competitive advantage. In the 19th century, when Britain was promulgating free trade, it was the most powerful nation in the world. It was the home of technological innovation.
Now, Britain has the lowest level of productivity in the G7. In a free and open market, it is likely to be flooded by imports or see a real crash in the value of the pound, with the inflationary consequences that will produce.
In 1585, English scientist Thomas Hariot dreamt of the opportunities Atlantic trade would offer to Britain as he strove for his country to break away from continental and Mediterranean trading routes to ensure a profitable future for him and his countrymen. Silks, wine, oil, oranges, lemons would all come from the New World – and indeed, Atlantic trade did boom and Britain prospered.
But it was the European continent that facilitated this success by making the necessary trade deals possible. More than 400 years later, the UK is once again dreaming of the unimaginable riches that could be had by breaking away from the old continent. Brexit would have globalisation in trade as the answer, but over the past four centuries as its empire has risen and fallen, it is Europe that provided the UK with many of its most sought after commodities. It’s hard to imagine this changing much in the future.
In the 16th century, European expansion into the New World was in full swing. Britain was certain that the Atlantic Ocean would offer unlimited opportunities and incredible wealth. It hoped for the same fortunes that had befallen the Spanish – a land full of gold, silver and a native population that it could enslave.
But the British were soon disappointed by their discoveries. The northern part of the Americas did not have the same mineral-rich mines as the south. There was, however, fertile soil ideal for growing crops. And so the British began to set up plantations; displacing the native population, importing slaves, growing tobacco, cotton, sugar, and fishing cod. These staples soon proved extremely profitable and enriched both planters in the colonies and merchants at home while funding what would go on to become a great empire. Finally, Britain thought, it was possible to break the continental yoke and find new lands and markets.
Unlimited opportunities seemed to lie ahead, but it was not to last. The empire rose and shrank, and despite the importance of newly emerged Atlantic links, the Mediterranean remained crucial for Britain’s balance of trade and ensuring its global exchanges.
Even under full imperial expansion, tapping into continental markets as sources of imports and as consumers of British exports was still essential. Britain soon became one of the most important markets in the world as it re-exported American products all over Europe and beyond. But, again, the balance of trade relied upon the continent, and non-European trade was profitable only because of existing continental demands.
Spain, for example, was a crucial trading partner throughout the 16th and 17th centuries. Britain needed to tap into the Spanish imperial markets that were vital for the development of its booming economy at home. Spain acted as a bridge for moving American gold, silver and dyes to the north of Europe, in exchange for Atlantic cod and the tools Britain needed to build its colonies. Meanwhile, Mediterranean fruit went to the British Isles, together with olive oil, Ionian currants and Levantine spices.
As Giada Pizzoni writes in her forthcoming book on the period, the British had an insatiable appetite for Mediterranean products and the new global markets were part of a system that helped Britain balance its books with Europe. Ultimately, it was continental Europe that made Britain’s global exchanges truly viable and the North American trade profitable. Despite the focus on the Atlantic, the Mediterranean stayed relevant, representing almost half of British imports and exports.
Now, as before, Britain aims to revitalise its links with the world beyond the EU. It is looking to the US, India, China, Japan and Australia for trade deals. Surely, it thinks, all those countries are waiting to rekindle their old commercial links. Perhaps, but the rules of the international system have changed – in colonial times Britain benefited from slavery and unfair trade practices.
Then there’s the issue of what Britain will export to these countries. A great deal of UK manufacturing and the exports produced is built on EU single market supply chains. As before, Britain remains reliant on its neighbours and biggest trade partner at present.
It is undeniable that the discovery of new territories and trade routes in the 16th century brought Britain benefits. But this trade was successful because Britain was able to trade these products with continental Europe.
Needless to say, we live in different times and the goods (and services) being traded take a different form. But Britain should learn from its history where it was reliant on the rest of Europe for its successful global trade and the fact that it has never been able to break away from the continent, despite repeated attempts.
Swayed by notions of being the plucky island nation that saved Europe from fascism, and by (very) long tales of a “glorious” imperial past, the UK had an inbuilt exceptionalism right from the start. However, just ten short years later, the six nations that had started the European Union were recovering well from World War II while Britain lagged behind economically. At that time it had become the “sick man of Europe” and, by the early 1960s, it wanted into the club.
Eventually becoming a member in 1973, the challenges membership brought for certain sections of British society were on display from the outset. Many on the right liked the economic elements of the project but feared social integration in Europe. On the left, some favoured international solidarity but were unenthusiastic about the economic ethos underpinning the European project.
These matters remain central to the Brexit muddle of 2019, which with its recently announced extension, possibly to October, looks set to remain a headline issue. Whatever scenarios unfold in the coming months, it seems that incredibly, all options remain on the table.
This article was original published by The Conversation website.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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