14 | the world today | august & september 2016

Britain in 2030

As Britain now advances towards an uncer-tain future, it will need a leader who can chart a steady course. Theresa May, as the new prime minister, faces uncertainty enough without flirtation with the notion that Brexit might still be avoided. The peo-ple have spoken, and their choice is irre-versible, a point she quickly acknowledged following the referendum vote. It is time to make the best of it, to build a new Brit-ain, and to look towards new relationships with Europe, the United States, China and the rest of the world. There is much that can be gained in coming negotiations that will determine the lasting diplomatic and economic consequences of the Brexit vote and the UK’s future sources of wealth and influence.

Brexit’s longer-term diplomatic and economic consequences First, May and her negotiators will have to determine the new UK relationship with the European Union. The best outcome for Britain’s international influence and its economy would be to follow the ‘Norway model’ towards membership of the Euro-pean Economic Area but not the EU, allowing for privileged, though less than total, access to the single market. That out-come won’t be easy to sell at home since this model would still require the UK to contribute to the EU budget and accept EU regulations while the permitted curbs of migration from EU countries are unlikely to satisfy the Leave voters. Nor will it be easy to persuade European gov-

ernments to accept this outcome, since the German and French governments in par-ticular are loath to support so generous an offer. Better to demonstrate that exit comes with consequences much more severe than such a deal would offer.

Britain is likewise unlikely to follow the ‘Switzerland model’, because that result would force the UK to continue to accept free movement of labour from other EU states while having to forge individual agreements with EU members to gain par-tial access to the single market. Britain might manage to follow the ‘Canada mod-el’, allowing for an arrangement similar to the ‘comprehensive economic and trade agreement’ that Canada has negotiated with the EU. That would provide the full-est possible access to the single market without having to open borders to EU workers or help fund the EU bureaucracy. Given these advantages, it would take con-siderable time for British negotiators to persuade their EU interlocutors that this is a deal the EU can afford to accept. There are other models to consider, as well, and variations on those listed above.

Yet, the British leadership must recog-nize that the European Union will become much more fragmented in coming years. Recent surveys suggest that in both France and Italy, a majority of poll respondents would like to see EU exit referendums of their own. Even if Italy’s Matteo Renzi can move forward with structural political and economic reform in coming years, and France’s Marine Le Pen never comes clos-

Surviving BrexitIan Bremmer on how Britain should chart its future adrift from Europe

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the world today | august & september 2016 | 15

Britain in 2030

16 | the world today | august & september 2016

Britain in 2030

can restore faith in the legitimacy of gov-ernment. The most important of Britain’s municipalities offers a case in point: let London welcome skilled labour to build a truly globalized city, one that attracts investment and top talent as an incubator of world-class technology and financial services.

Whatever the damage Brexit inflicts on Britain’s financial sector, the opportunity to shed EU-imposed regulation can help London compete even more effectively with New York, Singapore and Frankfurt as a hub for finance. In addition, preserving British wealth and influence means pre-serving the United Kingdom. Devolve more power to Scotland and Northern Ireland to answer the demands of their citizens for greater autonomy over their own lives.

Britain will also need a more ambitious foreign policy, and the good news is that the nation is blessed with one of the world’s finest foreign service corps. In a world in which global leadership is in increasingly short supply, a world buffeted by political, economic, and military crises, the need to diversify international partnerships, to pivot among political and commercial partners, will be more important than ever. This is why Britain’s decision in 2015 to ignore US warnings in order to become a member of the China-led Asian Infrastruc-ture Investment Bank represents the wisest foreign policy investment Britain has made in recent years – though better advance communications with Washing-ton will minimize the damage of these deci-sions in future. At the same time, Brexit makes British leadership within NATO more important than ever as an institu-tional bond with Europe and the US.

Unfortunately, Brexit makes a pivot strategy both more necessary and more dif-ficult to achieve. But in coming years, and whatever the obstacles the country faces as a diminished power, Britain will need to build the best possible relations with core EU states such as Germany and France, with emerging giants such as China and India, with members of the Common-wealth and with the United States. Only through diversification of partnerships can Britain absorb the various shocks it will surely face in years to come.

Ian Bremmer is president of Eurasia Group and author of ‘Superpower: Three Choices for America’s Role in the World’. @ianbremmer

er than her father to the Elysée Palace, a peculiarly anti-EU brand of populism, with appeal to voters on both the left and right, will become a lasting fixture of politics in both of those countries. Just as David Cam-eron hoped to protect his Conservative party’s vote share by borrowing a bit of the UK Independence Party’s messaging, so French and Italian leaders will try to navi-gate the rough waters ahead. Add that exit referendums are more likely in the Neth-erlands and Austria than in France and Italy, and the scale of threat to EU unity comes into view.

Nor is Europe done with its migrant cri-sis. For the moment, government-made obstructions in the Balkans and an EU deal with Turkey have sharply slowed the flow of desperate humanity from the Middle East and North Africa towards Europe. Yet, Europe’s agreement with Turkey depends on both a unanimous decision by EU leaders to grant Turkish citizens visa-free travel throughout the Schengen area and on the Turkish government’s willing-ness to rewrite anti-terrorism laws to com-ply with EU standards on human rights and freedom of speech.

Neither of these things is likely to hap-pen, particularly so after the failed coup in Turkey of July 15, and we can expect another surge in the migrant crisis that will shape European politics for many years to come. It might even threaten Angela Mer-kel’s stabilizing role as Germany’s chancel-lor − and as soon as federal elections are held next autumn. The likeliest longer-term result of all these pressures is a multi-tiered European Union, one in which some governments have greater rights and responsibilities while others opt for an à la carte approach to EU rules. (In that con-text, and depending on the long-term agreement that Britain is able to strike with the EU, Brexit might make Britain the envy of many lower-tiered states.)

Given the volatility that Europe is there-fore likely to produce, future British gov-ernments will continue to try to improve political and economic ties with China, which will become the world’s largest economy in coming years. Yet, Britain will have to work harder than before on this project. Incomplete access to the European single market will make Britain less appeal-ing as an EU anchor for Chinese investors, and the country’s reduced voice in inter-national politics, the inevitable result of a less dynamic economy, will increase incen-tives for China to continue to deepen trade

and investment ties with Germany at Brit-ain’s expense. Britain’s ‘special relation-ship’ with the United States will continue, though Washington, like Beijing, will value it less. The United States will be much more inwardly focused in coming years as future presidents contend with public scepticism of foreign policy adventures that might result in a long-term commit-ment of US troops and taxpayer dollars.

Brexit will deal a significant and lasting blow to Britain’s all-important banking sector as (collectively much larger) Euro-pean banks compete for business and investment opportunities. The pound will lose more ground against the euro and the dollar during the period of uncertainty over Article 50 negotiations. Over time, the pound may even lose ground to the Chinese yuan as a store of value.

What is to be done? To protect British wealth and influence in coming years, those who hope to preserve Britain’s engagement with the world should stand down long enough to allow the most xenophobic of the Brexiteers to discredit themselves. It is sensible to hedge bets on too close a relationship with frag-menting Europe, but no nation will thrive without a coherent strategy to expand eco-nomic frontiers through trade and invest-ment, to promote the national interest abroad, and to remain open to immigrants.

Future British leaders would be wise to devolve more power to regional and municipal governments, and to private-sector actors. If national (and supranation-al) governments are increasingly discred-ited in the developed world, it is best to let locally elected officials develop policies that more effectively meet the needs of constituents. If nothing else, this approach

‘Brexit will deal a significant and lasting blow to Britain’s all-important banking sector as European banks compete for business’