By William Burns
The G20 meeting in China was the first substantial contact the new post-Brexit Tory Government has had with the outside world. It was a chastening experience.
The pompous and self-aggrandising claims that Britain’s great weight in the world could lead it to dictating new global trading and other arrangements is simply a fantasy. Much bigger, more powerful forces are also involved and will seek to determine the outcome in their interests. This in turn will dictate the actual course of negotiations. Domestically, the Tory party leadership has been acting in its own narrow Party and group interests in calling the referendum and in the factions formed in the campaign. But the British ruling class will demand that the Government will have to serve their interests in such a fundamental issue as the Brexit negotiations. Other major states are not prepared to sacrifice their interests to the fantasies and economic total lack of realism of the Murdoch Press, Daily Mail or Daily Telegraph.
The Japanese Government displayed more forethought about identifying those interests that almost anyone in ruling circles in Britain. It produced a 15-page memo (pdf) effectively arguing for the status quo, full access to the single EU market, no tariffs, no removal of any European agencies, full access for financial services and free movement of employees. The agencies referred to include the European Banking Authority and the European Medicines Agency, which must by law be established in a European Union member state. Their relocation implies the relocation of the all the bank headquarter and medicine patents functions of Big Pharma that deal with them.
Japan rarely makes an important international intervention without the approval of the US. For his part, Obama said that the vote was the ‘wrong way’ and that there was a danger of trade relations ‘unravelling’ after the vote. Australian Prime Minister Turnbull’s spoke of the prospect of striking a trade deal with the UK, but his trade minister Ciobo said this could only take place after a trade deal had been concluded with the EU.
There is no greater encouragement for Brexit economic fantasies from Europe itself. The EU Commissioner for financial services has said there can be no ‘passport’ arrangements for UK finance firms and banks without accepting freedom of movement. Switzerland, despite passing a referendum against free movement has had to concede on this in order to allow a passport for its insurers. Italian PM Renzi says Britain cannot be allowed to cherry pick access without free movement. Yet one of the great ironies of the Brexit vote is that the ultimate arbiter on this, and so the most important person in British politics is now Angela Merkel.
These interventions are not based on malice. It is simply that international leaders seem to have a better grasp of economic realities than almost anyone in the Tory Government. The EU is a market of 500 million people and the UK 65 million. The UK is a $2.7 trillion economy, the EU is more than $19 trillion – the largest economic unit in the world, with a market even larger than the US. The EU is always going to be far more important for international trade negotiators than the UK. The same applies with even greater force to multinational corporations looking for profitable investment opportunities. Within the EU, its own working arrangements will evidently take precedent over Britain’s demands.
Contact with the real world, as opposed to the fantasies of the Brexit supporting Tory press, is already causing reverberations inside the Tory leadership. Significantly David Davies, the new ‘minister for Brexit’ was publicly corrected by Theresa May when he told parliament that it was ‘highly improbable’ the Britain would remain in the single market. Liam Fox was slapped down for saying British business executives were too lazy to expand abroad (in reality they are not lazy, they invest too little). Fox has a non-job, as no really serious trade negotiations with non-EU countries can begin until after Britain has left the EU, if it ever leaves. The Prime Minister herself was derided in parliament for the inability to move on from parroting ‘Brexit means Brexit’- but of course that is not an accident as there is no coherent actually achievable path for British capitalism in which damage is not done to the British economy by leaving the EU.
It is probable some in the Tory leadership are fantasists, who would happily try to bring back grammar schools, Empire and smog. But this is not true of the British capitalist class which ultimately control the Tory high command – if the British bourgeoisie were that stupid its rule would have ended a long time ago and a Tory high command showing the same degree of stupidity would be ousted
It is in the vital interests of the dominant sections of the British ruling class that it must not be cut off from the EU and that it enjoys the foreign direct investment that flows from full access to the single market. There is no plan B.
At the same time the most trusted political party of the ruling class, and for the time being its only reliable party of government, has led British capitalism into the mire. It is in the vital interests of big capital that the Tory party gets itself and the economy out of the mess it has now created. This cannot be done quickly or easily. The struggle around policy towards the EU unleashed by the economic fantasies involved in Brexit is only in its infancy.
The truth is leaving the EU under capitalism not only will make working people poorer, as has already begun, but it is economically irrational for the most powerful sections of British capital and other countries. At the G20 Theresa May was firmly informed that if the British population wish to vote to make themselves poorer by Brexit due to the fantasies of the British right wing press no other country is going to bail them out and other states have no intention of sacrificing their interests to the Tory Party’s factional manoeuvres.
Because under capitalism Brexit is economically damaging the struggle around it, and the political dynamic it has unleashed, has just begun.