Brexit will damage UK’s economy, stature and future

Brexit will damage UK’s economy, stature and future

Watching the UK’s national political soap opera known as Brexit is like watching a good friend make a poor life choice. You want to shake the poor soul and implore a change of course, but he ignores or defies you and you shake your head in wonder. Friends of the UK — and I consider myself one of them — watch with anxiety as a country they admire seems to get smaller by the day; her formerly long reach more limited, her politics increasingly chaotic, and her economy set for long-term underperformance.

Let us assume that the Brexiteers had a point, that migration was overwhelming the country and Brussels bureaucrats were stripping their leaders of sovereignty. Even if we assume this to be the case, then we might say that the patient had a mild to severe, non-cancerous pain in its leg that could be treated appropriately. Instead, the Brexiteers chose radiation therapy, chasing a cancer that did not exist. How else can you describe wrenching your country out of a trading bloc that receives more than half of your nation’s exports and makes you a far more attractive place to receive foreign investment?

An important paper by the Washington-based Petersen Institution for International Economics lays out a stark Brexit prognosis. The paper’s authors ran 12 economic simulation models that examined the impact of Brexit on the UK, and virtually every one came out negative. Two simulations came out with a potential positive impact, but the authors concede that those scenarios were “based on unrealistic assumptions.” Just about every major academic study shows similar results. It’s hard to find a long-term forecast that demonstrates a bright post-Brexit future.

This means that the sort of people who voted for Brexit will be hit the hardest. British political scientist David Goodhart outlines a novel dividing line in the UK today in his excellent book, “The Road to Somewhere: The New Tribes Shaping British Politics,” differentiating between “Somewheres” and “Anywheres.”

He describes the Anywheres as the sort of people that dominate British politics, culture, society and the higher echelons of business today. They went to the best universities, work in cities, marry later than average, and possess many of the skills best suited for an increasingly globalized world. In fact, they can plug and play those skills anywhere in the world.

By contrast, the Somewheres “are more rooted and usually have ‘ascribed’ identities —Scottish farmer, working-class Geordie, Cornish housewife — based on group belonging and particular places.” Most of them live close to where they grew up and they are more traditional, patriotic and concerned about cultural dilution due to migration. They are rooted “somewhere” and don’t have the same globalization-ready skills as the Anywheres.

It’s hard to find a long-term forecast that demonstrates a bright post-Brexit future

Afshin Molavi

The Somewheres largely made up the Brexit constituency, while the Anywheres largely voted to remain. Ironically, if things get bad, the Anywheres can take their globalization-friendly skills and go, well, somewhere: To Singapore or Dubai or Shanghai or the US west or east coast, and plug into multiple grids worldwide, secure jobs and consultancies, or perhaps launch a tech start-up, write a blog, leverage their LinkedIn networks, doing the sort of things that come naturally to Anywheres. The Somewheres, on the other hand, are more tied to their communities and often don’t have the globalization-ready skills to easily get up and go. Long-term decline in the UK economy will likely hurt the Somewheres more than the Anywheres.

Proponents of Brexit will dismiss such arguments as the product of elitist thinking and will say that, once the dust settles, the UK can go about the business of setting its own trade rules, building new alliances with a rising East, and winning back its sovereignty. “Singapore upon Thames,” they claim as a mantra. Putting aside the irony of top British political leaders declaring openly that their greatest aspiration is to emulate a former colony, one thing is important to note: If Singapore were a member of a trading bloc that had a gross domestic product of $19 trillion and received more than half of its exports, the city-state would never leave it.

The Brexiteers are right in one respect: Asia is indeed rising, and the geoeconomic tectonic plates are shifting eastward. But Asian powers and companies see the UK as a valuable partner because of its membership in the EU. They already have a Singapore in their neighborhood. They are not looking for a new one.

Over dinner a few months ago in Washington, a prominent foreign investor with extensive holdings in the UK dropped a casual bombshell on the table when he said: “The United Kingdom is over for us. I’m not going to invest seriously there anymore.” The investor was channeling a broad frustration among friends of the UK that saw the country as a shining example of a small island nation that punched above its weight, in no small part because of its openness to trade and its association with a powerful economic association of European countries. They now see chaos, uncertainty and, well, just a small island nation.

  • Afshin Molavi is a senior fellow at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies and is the editor and founder of the New Silk Road Monitor. Twitter: @afshinmolavi
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