On Tuesday, the PM said that Britain should "strike trade deals with old friends." But Commonwealth countries are either far away, relatively poor—or bothby Paul Wallace / April 21, 2017 / Leave a comment
Theresa May got her way this week as MPs overwhelmingly endorsed her decision to call a snap election. When making that surprise announcement after the Easter break the prime minister said the early poll was needed to strengthen her hand in negotiating a Brexit that will include the freedom “to strike trade deals with old friends and new partners all around the world.” That strategy has been dubbed Empire 2.0 in Whitehall, an irony always likely to get lost in translation given Britain’s chequered colonial past. Even so, the economic notion it encapsulates is worth exploring. Can Britain make up for lost access to European markets by dusting off its ties with the Commonwealth or is this no more than a forlorn exercise in economic nostalgia?
The idea turns the historical tables. When Britain first applied to join the Common Market in 1961 under prime minister Harold Macmillan it still retained strong commercial ties with the Commonwealth not least in importing cheap food. Indeed, those links were an important reason why French president Charles de Gaulle vetoed British membership, which he feared would disrupt the agricultural protection that France had won at the Treaty of Rome in 1957. The rationale for Britain joining the European club then and now was economic as much as strategic. Britain was falling behind other fast growing European countries in part because its industries relied too much on sluggish markets in the Commonwealth.
Inside what became the EU Britain did eventually manage first to arrest that relative decline and then to reverse at least some of it especially in the decade or so before the financial crisis. But that improvement in economic performance is apparently of no consequence any longer. The advocates of Empire 2.0 believe the pastures are greener after all in the Commonwealth, the economic substance of which was abandoned in 1973 when Edward Heath realised Macmillan’s ambition and took Britain into Europe.
Proponents of Empire 2.0 say that the world has changed since it is now the emerging economies that are thriving. Research from the IMF in its latest World Economic Outlook spells this out. Whereas as recently as the 1990s over 60 per cent of world growth came from advanced countries, now around 70 per cent derives from emerging…