Will British corporatism replace EU mercantilism?

Will British corporatism replace EU mercantilism?

by Miles Saltiel
article from Monday 20, January, 2020

WE ENTER the decade (no pedantry please about when decades kick in) in new political conditions: it’s not so much a Tory government with a healthy majority for the first time in 23 years and an unchallenged mandate for Brexit; it’s more a Prime Minister with brio, whose governing philosophy may be closer than I would like to 1970s corporatism. It is understandable that some partisans for Brexit have been winding down their business with a victory lap. There is no question that the agenda has changed from the principle of the thing – contested almost to the last minute – to details of implementation.

First, however, some thoughts on the mood of the country since the 2016 referendum. For the first half of my adult life, old lags were given to point to Suez as the nadir of national disharmony. I was seven in 1956, so the episode passed me by: the accounts I’ve since read give me the sense that it was something of a civil war between Tory boys. Brexit was far worse than this: it extended to every corner of the country and we sat through it for much longer. Current attitudes are signalled by the pollsters, Opinium, who report that 47 per cent of Tory voters feel “disgust” towards Labour voters, 68 per cent of Labour voters return the compliment, and over 62 per cent of all voters see the December election as divisive. Unfortunately, the pollsters don’t have sufficiently long runs of data to benchmark these results, but they hardly bring a smile to the face.

And yet, and yet… no-one of my vintage can forget the grim sixteen years of capitulation to Trade Union heavies between 1969 – Barbara Castle’s In Place of Strife – and 1985, the defeat of the miners’ strike. The rule of law was restored only after street and workplace disorder, picket-line violence and uncounted deaths from failed deliveries of food, fuel and medicine, coupled with the intermittent breakdown of supply of utilities and transport (at that time, the former entirely and the latter largely state-owned) and municipal services. However unpleasant the last forty-three months, they don’t hold a candle to the incandescent public calamity of the early years of my adult life.

Let us turn to the future. On Friday, Sajid Javid told the Financial Times that the UK will seek no alignment whatever with EU regulations after 31 December, consistent with the weakened final version of the Withdrawal Agreement and streamlining the negotiations in prospect. Brussels will see this as an opening gambit, but they could well be wrong. The two sides have learned different lessons from the original negotiations. Brussels sees that its aggressive approach paid off; London has seen slides of the EU’s opening position, which confirm the Commission’s inclination to ask for the moon. We expect that the UK will reply by seeking to limit the conversation, confining itself to asking what the EU will offer for free access to our market in goods. Brussels may bridle at this restriction, but if the UK is content with a bare-bones trade-deal, there is not much more to be done. The campaign of legacy producers for “frictionless trade” is on its last legs: the famous integrated supply-chains of car and aircraft manufacturers are going to have to adjust at the expense of the shareholders, subject to whatever domestic concessions Javid has up his sleeve – freeports, anyone?

As to services, the Single Market was always something of a joke, save for transport and financial services. The City had hoped to carry on as formerly under “equivalence “, but now that also looks off the cards. European corporates after international equity and sovereigns keen on the last few basis-points will have to decide how much they are willing to give up for access to London’s markets. History tells us how this goes – remember Eurodollars? – but it could be uncomfortable all round for a year or two, particularly if the Bank of England’s new Governor decides to go further than Basle in taking a stern view of credit quality for duff European public and financial borrowers.

I’m not a great one for victory laps. To my mind, they argue with the common sense of getting on with our neighbours, let alone “magnanimous in victory, gracious in defeat”, now too platitudinous for the self-righteousness of our times.

I expect there are constitutional lessons to be learnt, but I’m happy to leave them for the customary confusion of our moving-target arrangements. The national agenda is now to make the most of new economic and trade institutions. Will Boris use his honeymoon to go for economic freedom or to install corporatism at a national level? Given his September claim to be “basically a Brexity Hezza”, I’d have to say that the auguries are disheartening.

This explains why – after a fair amount of soul-searching – I’ve decided to keep up this blog, following up these themes to the point where our future relations with the EU are more-or-less resolved. So, I’m hoping, that will be the end of December this year. This is a good moment to thank you, my readers, for your support and encouragement over this extraordinary episode in our history. Your comments, from the worlds of politics, finance and industry, have added immeasurably to the scope of my understanding and – I’d like to think – the quality of my observations. Hold tight for the final stretch.

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