{"id":42761,"date":"2023-07-31T18:46:26","date_gmt":"2023-07-31T22:46:26","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/what-the-u-k-s-investment-minister-says-brexit-britains-economic-strategy\/"},"modified":"2023-07-31T18:46:27","modified_gmt":"2023-07-31T22:46:27","slug":"what-the-u-k-s-investment-minister-says-brexit-britains-economic-strategy","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=42761","title":{"rendered":"What the U.K.’s Investment Minister Says Brexit Britain’s Economic Strategy"},"content":{"rendered":"

About the author:\u00a0<\/em>Edward Price<\/em><\/strong>\u00a0is principal at Ergo, a global intelligence, consulting, and forecasting firm. A former British trade official, he also teaches at New York University\u2019s Center for Global Affairs.<\/em><\/p>\n

New York City is hot. Too hot. When I meet the U.K.\u2019s new Investment Minister, Dominic Johnson, it is 95 degrees. But Johnson exudes bonhomie, joyously tapping my chest with rolled up papers and shaking my hand. He\u2019s in town to meet Americans investing in Britain.\u00a0<\/p>\n

\n

And he\u2019s beaming.\u00a0<\/p>\n

\u201cFDI into the U.K. is going extremely well,\u201d he tells me. That\u2019s foreign direct investment, and it\u2019s as good an indicator as any of the Brexit promise that Britain would be open for business. \u201cIt\u2019s hit the highest peak ever, at $2.7 trillion.\u201d That\u2019s a rough doubling in a decade, a result of which any government would be proud. We take our seats and Johnson explains the U.K.\u2019s goals: \u201cThe prime minister has a single ambition: to turn us into a science and technology superpower.\u201d\u00a0<\/p>\n

Seven years after the Brexit vote, it appears the U.K. has a plan.\u00a0<\/p>\n

At this point, a disclaimer. I\u2019m a former British official. I served in the British Consulate in New York and I want the country to succeed. But I know as well as anyone that the country\u2019s reputation for stability has been damaged. Exiting Europe was far from smooth\u2014it\u2019s taken five prime ministers. One of them, Liz Truss, was rushed out after she spooked markets.\u00a0<\/p>\n

Right now, U.K. economic data is a mixed bag. The Organization for Economic Cooperation and Development is forecasting 0.3% growth this year and 1% in 2024. At least consumer price index inflation is trending down, from 8.7% in May to 7.9% in June. But, in Britain\u2019s defense, the global economic environment has been\u2014and is\u2014quite tough.\u00a0<\/p>\n

So, I push Johnson on the details. What exactly is the U.K. selling now?\u00a0<\/p>\n

\u201cWe\u2019re selling extraordinary people, the extraordinary R&D base the U.K. has,\u201d Johnson says. Two officials take notes and some unbidden sodas arrive. But Johnson is midflow: \u201cIf we aren\u2019t at the forefront of AI, advanced manufacturing and pharmaceuticals, then we won\u2019t have the economic strength for wealth and security in the future.\u201d\u00a0<\/p>\n

That\u2019s quite the prognosis. Ministers rarely admit that the future might be worse. So I ask for more, for his underlying analysis.\u00a0\u00a0<\/p>\n

\u201cIn my lifetime, there have been two great tidal movements. These tides were low inflation and ever-increasing globalization. Now, in the last five years, that has reversed.\u201d\u00a0<\/p>\n

It\u2019s a good observation. Price increases may be slowing in the U.S. and France. But all told, inflation lingers. The days of free money are over. Meanwhile, trade is fragmenting. Consider the list of new words: onshoring, nearshoring, friendshoring, decoupling, de-risking. The heyday of global trade is dead.\u00a0<\/p>\n

Did Brexit kill it?<\/p>\n

\u201cWhat was the Brexit decision? To enable Britain to be a global trading power, rather than simply locked into an important but single market trading zone,\u201d Johnson says. We have heard this argument before. It\u2019s the Global Britain mantra, the idea that Brexit would free the U.K. to trade. So far, the best new deal has been Britain\u2019s accession, this month, to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. So far, any gains are in the future.<\/p>\n

But Johnson makes another interesting point. \u201cWe are the only government in the world trying to negotiate free trade deals right now. That\u2019s not uncontentious.\u201d The phrase \u201cnot uncontentious,\u201d uttered by a Brit, means very contentious. Many countries pursue deeper trade relations with their neighbors. But as we sip at the sugary drinks, I think I see what Johnson means. Many other trade arrangements are hardly liberal. And many are also regional. Think China\u2019s Belt and Road. Think the EU. So is Britain not just a force for regional trade, but for international<\/em> trade too?\u00a0<\/p>\n

\u201cWe are pushing against the deglobalization trend,\u201d Johnson explains, \u201cand Brexit was part of that.\u201d In a world of fewer goods, disrupted supply chains and more costly capital, Johnson is arguing that the U.K. can keep truly global markets alive. \u201cA change in the relationship between the U.K. and EU will allow Britain to do far more than it could before. And we are allied with Europe, so that will allow Europe to get stronger too.\u201d<\/p>\n

A year ago, all this positivity would have been odd.\u00a0<\/p>\n

Brexit made it difficult for the U.K. and EU to agree about even minor economic issues. But Russia\u2019s war in Ukraine has prompted a collective response that will make collaboration everywhere easier. The U.K. led the way in sending arms; the EU followed. Throw in Rishi Sunak\u2019s Windsor Framework\u2014the prime minister\u2019s recent agreement with the EU on Northern Ireland\u2014and Johnson\u2019s thesis appears to be correct. Britain and the EU can indeed cooperate. And Britain can innovate, remaining the center of global capital flows and leading the pack on next-gen tech.\u00a0<\/p>\n

But there\u2019s an elephant in the room: China. This one could sink our boat. The Americans, Britain\u2019s strongest ally, are checking China\u2019s rise. Meanwhile China, a source of future business for London, is rearming. How does the U.K. avoid this brawl?\u00a0<\/p>\n

Johnson puts his soda down. \u201cBrexit gives us a chance to flex our diplomatic muscles and to be what we always were\u2014the fulcrum nation in the world. We should assume that role again. And Rishi Sunak has already started to do that,\u201d Johnson says. He\u2019s referring to the Windsor Framework and the Atlantic Declaration. The latter is a plan for U.S.-U.K. cooperation in what you might call the strategic economy, things like AI, the green energy, and critical minerals.\u00a0<\/p>\n

There\u2019s time for a final question. Johnson is a Conservative. An investor by profession, he is undoubtedly a free-markets guy. So how does he square that philosophy with what is, essentially, the U.K.\u2019s new industrial policy?\u00a0<\/p>\n

\u201cThe government should be a de-risker, not an investor. So I\u2019m very comfortable with the need of government to partner with the private sector and develop these massive, capital intensive projects.\u201d The proof of this claim is in the pudding. Tata Motors recently chose the U.K. for a multibillion-dollar electric car battery plant. The U.K. government gave that project support.\u00a0<\/p>\n

My conclusion? If the U.K.\u2019s big plan goes well, the country will be able to surf the wave of the 21st century, innovating at home and managing global funds from east and west alike. The alternative is bleak\u2014an unimaginative slide into irrelevance.\u00a0<\/p>\n

Now Johnson must run to a dinner. And I must run to a train. So we shake hands again. A nation of tea-drinkers, we haven\u2019t finished our sweet fizzy drinks.\u00a0\u00a0<\/p>\n

But then, Johnson\u2019s punchline: \u201cWe must think much, much bigger,\u201d he tells me, still smiling as he leaves. And on that, two Englishmen agree.\u00a0<\/p>\n

Guest commentaries like this one are written by authors outside the Barron\u2019s and MarketWatch newsroom. They reflect the perspective and opinions of the authors. Submit commentary proposals and other feedback to\u00a0ideas@barrons.com.<\/em><\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

About the author:\u00a0Edward Price\u00a0is principal at Ergo, a global intelligence, consulting, and forecasting firm. A former British trade official, he also teaches at New York University\u2019s Center for Global Affairs. New York City is hot. Too hot. When I meet the U.K.\u2019s new Investment Minister, Dominic Johnson, it is 95 degrees. But Johnson exudes bonhomie, […]<\/p>\n","protected":false},"author":1,"featured_media":42762,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-42761","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nWhat the U.K.'s Investment Minister Says Brexit Britain's Economic Strategy | iFintechWorld<\/title>\n<meta name=\"description\" content=\"About the author:\u00a0Edward Price\u00a0is principal at Ergo, a global intelligence, consulting, and forecasting firm. 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