JohnBull

Britain Alone: "THOSE WHO THE GODS WISH TO DESTROY, THEY FIRST MAKE MAD" (Ancient proverb)

Britain and the European Union.

What's happening to the global economy - and what are the political impacts?

The finance and banking industries are now thoroughly globalised. This means that capital can flow across the world in ways that are beyond the control of national governments. The United States is having to learn that the limits of national economic sovereignty have changed in ways beyond its government's powers to control and the clout of emerging giants such as China and India have changed the game for ever. America is now deeply dependent on Chinese, Far and Middle Eastern capital.

The only hope the world has of corralling the banking industry for the benefit of society will come from global institutions like the IMF and regional ones like the European Union. International partnerships are the evolving model for getting things done - nothing else will work.

World trade in goods and services has also become global - this is simply the fact. Trade is subject to protectionist pressures. The power to impose or clear barriers to free trade now resides with powerful blocs like the EU. Smaller countries that lack the protection of such blocs are extremely vulnerable to discrimination.

There will still be rogue states like Russia, willing to use their vast mineral and oil reserves for geo-political purposes. Again, such problems are not susceptible to lasting solutions by unilateral deals, as the Europeans are realising. Only concerted action by users will have any lasting benefits.

Economic nationalism is dead

The writing is on the wall and has been for some time. The current financial meltdown has made it clear for all except the most myopic to see. No nation can isolate itself from the global economy and hope to close their markets, or control the movement of capital. Very few countries are still trying it - North Korea being a prime example - and the effects on their people through starvation and economic deprivation are clear to see.

Britain as a new North Korea?

This is obviously a ludicrous notion. Why would a country like Britain, with a declining medium-sized economy, much of which is now foreign owned as a result of footloose London-based financial markets that would sell anything for a quick buck; and successive governments that stood limply by and watched it happen wish to cut itself off from the wider world? Why would a country so dependent on a banking industry that owes nothing to British society want to risk playing with fire and become completely enslaved?

Yet there are stirrings in the undergrowth that seem deeply sinister to an objective observer. The UK Conservative Party has a tradition of Euro-scepticism that at times amounts to a hatred of the European Union - and further on the fringe, but coming closer in to the mainstream is UKIP, the UK Independence Party. This organisation has been gathering steam and made a credible showing in the recent UK European elections. The underlying proposition of UKIP is that Britain should leave the European Union. This is often dressed up as "renegotiate" Britain's relationship and become a sort of distant trading partner. This is a ludicrous aspiration. It is highly unlikely that other members would accept any such proposition and detachment from the web of trading, economic, political and financial relationships would leave Britain isolated. The result of this would be a flight towards America, just as that country is moving in the opposite direction, realising that it has to collaborate closely with other countries for its own economic survival.

The British populace is deeply confused, but has been led to hate "Brussels" as a symbol of domination, despite the fact that it is the servant of the member states.

Why such madness?

Britain is an island - rather several islands, situated off the west of Europe. The British political scene has been dominated by England for centuries and the "Independence" notion is primarily driven from the English southern heartland. It is hard to find such vehement anti-European sentiments in Scotland, for example.

Britain once had an empire and occupied a central place as a world power. There is still a sort of nostalgic afterglow of nineteenth century sentiment behind anti-Europeanism. The peddlers of nostalgia yearn for the glorious days of 1939, when Winston Churchill stood tall in his defiance to Hitler. They forget that Britain certainly would have fallen had it not been for:

• The entry of America to the war
• The contribution of Russia to destroying German military power
• The support of the old Empire - and even more important, the contribution of 500,000 Poles under British command and the Polish fighter squadrons, one of which was by far the highest scoring in the Battle of Britain.

None of these supports is available now: the Empire is dead and the Americans know that real economic and political power lies with the European Union

There is an unpleasant streak of xenophobia in certain parts of British society, so that ignorant dislike of foreigners is a part of the "John Bull" tradition. (Although why a national symbol should be a fat, almost certainly drunken and probably stupid man with a dysfunctional dog beggars the understanding).

Successive governments have, until recently, promoted the notion of Britain as a world leader in many industries, but particularly finance. London has been praised as a world financial powerhouse, despite the fact that most of the companies operating in London are not British, owe no allegiance to Britain and could without too much difficulty find other homes if a UK government was to annoy them with notions of regulation or paying taxes.

So Britain, unlike most other European countries, is subject to unrealistic and nostalgic notions about where it stands in the world.

What would happen if Britain were to "leave" the EU?

First, nobody in the sane parts of the political sphere is proposing this. But a process of disengagement could lead rapidly to an unravelling of Britain's relationships, so it is worth speculating on what might happen at the extreme, for the sake of understanding:

• First, disengagement would place huge strains on the United Kingdom. Almost certainly, the Scots would be driven closer to Europe, because that is in their tradition and vital interests.
• Second, Britain, or England, would become even more a hostage to the Global banking industry. Britain as a relatively small player in the world economy would be subject to flows of capital in and out of the country of the sort that EU involvement would prevent.
• It is highly likely that trade barriers to British goods would be raised by the EU in particular. The fact that more than 40% of Britain's trade is dependent on the EU would mean a loss of business and massive unemployment - running to at least 2 million over and above already chronic joblessness
• Then, industries that are based in the UK because of its proximity to European markets would over time migrate away. Motor manufacturing is a prime example
• As Britain's involvement on the inside of European affairs diminished, so would its influence in the world. We have already seen the fantasy of Britain's special influence over the US blown in a pathetic manner by Iraq and Britain's wider influence would follow
• Many industries and many talents that thrive on European connections would also tend to migrate.

The Bottom Line

Britain could become a tragic example of one relatively small country trying to survive in a world economy alone. Unlike Norway, which has prudently controlled its fishing and particularly its oil and gas resources for the national benefit, Britain has splurged the bonanza of North Sea oil on boom/bust economic policies, tax reductions and a long, unsustainable consumer boom.

Unless there is a massive investment-led growth in modern science-based industries, England will become a sort of financial City State surrounded by an impoverished hinterland. The banks didn't invest in industry in the good times, they will not in the future. The investment system needs radical reform if our levels of investment are to get anywhere near our international competitors

Without a positive and closely engaged involvement with the EU, Britain would become a quaint backwater with growing poverty and a massive structural balance of trade deficit - and unemployment problems. The social consequences would be terrible - the fantasy of "Broken Britain" would become a reality.

Those who would wish Britain out of Europe are acting out a death wish on behalf of the rest of us. Those who hanker after more "independence" would do well to reflect on the fact that Britain has not been "independent" in the manner that they imply since the Second World War or before. They are irresponsibly sticking their heads in the sand and wishing for the impossible.

Britain must pursue a line of positive engagement with Europe - that way lies real international influence and a place in world forums. Outside the EU we have no real power.