I keep reading posts about what a great trading nation Great Britain is, or was, or could be after Brexit so I tried to look for ‘United Kingdom’ in the global list of countries by net exports.
I was not surprised to find Germany near the top and consequently also the EU, although strictly not a country and therefore listed in third position for reference only. I quickly found Ireland and Netherlands on the list and France and Italy. But where was UK I wondered? I had to use the ctrl-f function to find you and astonished to find UK second from the bottom next to USA.
America of course long ago stopped worrying about running a huge trade deficit. They had some clever professors at the Chicago School of Economics figure out that, as the whole world traded billions of barrels of Oil in dollars, the greenback would keep its value, even if they stopped making actual stuff like cars and airplanes. Just Google ‘Chicago Boys’ and find out what damage they did to economies worldwide, e.g. in Chile.
Practically the whole world has figured out that America has been scamming the rest of us with a currency that is practically worthless. Poor people work long hours in sweatshops all over the world to satisfy the insatiable demand of American consumers. No wonder the British establishment like John Redwood and Rees-Mogg thought they too could play that game.
Only…. Great Britain is really little England with proud Scotland, Wales and Northern Ireland attached. The Pound of the Bank of England is no more this great reserve currency every central bank in the world wants to stuff in its vaults in the 21st century, than they admired the Dutch Guilder in the seventeenth century. That idea and practice died along with the British Empire sixty years ago.
Meanwhile the Euro goes from strength to strength. Not only does the EU represent the single biggest consumer market in the world, they actually also make stuff that people worldwide want to trade for in return. Quality and style!!
Oil producing nations increasingly specify they want payment in Euros for their black gold. Why would they want to be exposed to Micky Mouse money like the dollar or Sterling?
So I got to laugh when I listen to Brexit shouters who predict the always imminent demise of the Euro and the EU as a whole. This idea flies in the face of the markets. Not even Greece or Italy want to go back to their own Micky Mouse money Drachma and Lira.
As long as Brexit shouters think Free Trade is just about buying stuff abroad for bits of fancy paper with the Queens head, without producing enough stuff to trade in exchange, they are in for a bitter disappointment. These bits of paper are really IOU’s and the bearers of these debt bonds will one day come and collect what’s due to them. They will buy more than just marmalade. They’ll own the country.
By staying in the EU a different chart can be plotted for the UK economy. By adopting the Euro the U.K. can build further on its strength in the ‘Services Industry’. The services sector represents already 80% of the UK economy. Think software rather than hardware. Export your cool culture rather than your nationalists backwardness. Brexiteers just can’t get their head wrapped around this idea. They still think they’re the workshop of their old empire. They still think fisheries are important for their fish and chips. Come on guys, it’s 0.1% of your economy you get hot under the colour over and most of what you catch in British water is sold to EU, not eaten by you!
So come back in the EU fold. Play on your strengths rather than nostalgia. Be cool again and re-educate those stupid Leavers.