Since the time of Ronald Reagan and Margaret Thatcher, countries around the world have followed America and Britain’s economic example – privatizing, de-regulating and opening up their economies to foreign trade and investment, sometimes known as the ‘Anglo-Saxon model’. Economic Leadership
Now, Britain’s vote to leave the EU and the election of Donald Trump as the next president of the United States signal the end of Anglo-American leadership of the global economy. Neither country will lead the economic liberalization of their regions or the wider world for the foreseeable future.
At their heart, the American and British votes revealed a powerful popular demand to regain control of their national economies. Economic Leadership
For many Trump voters this meant rolling back the laissez faire approach to international trade and investment that they believe has contributed to the stagnation of median wages and rising job insecurity.
The result is a Trump platform that vows to punish those American firms that move jobs offshore in order to prioritise global supply chains. America will also cap, if not roll back, economic integration with Mexico and is poised to abandon or re-negotiate the Trans-Pacific Partnership, the Obama administration’s ambitious effort to deepen liberal market values across the Pacific.
The Brexit vote sends a more complex message. Polls since the referendum imply that a majority of Britons still favour open trade and investment. Membership of the EU Single Market, however, carried obligations that cut to the heart of national sovereignty – in particular, the free movement of labour from other EU members. Many Britons believed the large influx in recent years suppressed wages and overwhelmed public services and housing.
And free-market-championing Brexiteers argued that EU membership imprisoned British trade policy in a tortuous EU collective bargaining system. This prevents Britain from striking trade deals with emerging markets that are tailored to specific British strengths, such as services.
But, once Britain has left the EU, it will no longer play any part in the future liberalization of the EU single market, even though this is currently the destination for some 45 per cent of British exports. Plans for a Capital Markets Union (which had been led by the British Commissioner Lord Hill until his post-referendum resignation), for removing the many barriers to trade in services, and for more open digital markets will proceed without a market-friendly British voice at the table.