The reality is completely different from this.
In some ways, Britain has maintained its presence on the world stage, notably through its response to Russia’s invasion of Ukraine. In the Integrated Review of Foreign and Defense Policy for the authors of (Pre-invasion, 2021), there may be a sense of affirmation: the review predicted that Russia would remain Europe’s biggest and most immediate threat, and it proved to be correct.
However, in early 2023, Rishi Sunak’s priority is not foreign policy, but the economy. Like other countries, the UK is facing record energy and food prices, mainly caused by Russia’s invasion of Ukraine; A global slowdown in manufacturing and increasingly fragmented supply chains, fueled by US-China tensions and China’s zero-Covid exit.
But other challenges are uniquely British. Brexit has left a gap in the UK labor force, not helped by the “great resignation” of Covid, which has become costly for firms struggling to recruit. The Brexit deal created friction for UK-EU trade through extra paperwork, so UK exports to the EU (its biggest trading partner) collapsed overnight, and are now 16-20 per cent lower than if we were in the EU. live in Sterling has also collapsed, and in 2022 it will come closest to dollar parity in its entire history, leading to an increase in inflation. But a weak pound hasn’t protected exporters, as shown by a 16 percent drop in exports to the European Union. Many exporters depend on imports of inputs for manufacturing, and paperwork has made exports costly.
Britain’s economic malaise is perhaps the biggest threat to its role in the world, and the “Global Britain” project that the government has made a defining feature of Brexit.
Firstly, because economy is a sign of reliability. If Britain continues its decline in global GDP rankings, having already overtaken India, it may have to work hard to justify its coveted position in international diplomacy.
Compare, for example, India, which is not in the G7 despite having a larger economy than the UK, France, Canada and Italy. Neither is it on the United Nations Security Council, despite being a nuclear power. Brazil and Indonesia may soon be on equal footing economically. If they could not back up their claims with economic power, Western powers such as Britain would be forced to accept that their place in the table was based entirely on historical legacy.
Second, a weak economy means that there is actually less money available to spend on Britain’s global ambitions. Rishi Sunak has effectively abandoned his predecessor’s ambition of spending 3% of GDP on defence. In the other world, such spending could be a bold way of boosting Britain’s security profile, especially if it positions itself as a major player not only in Europe, but also in the Asia-Pacific region and on new defense technologies. wants to install. In the real world, 3% is simply not affordable, even though the reduction in GDP means it is less in absolute terms.
Similarly, UK aid has effectively been reduced twice: once when the economy shrunk, as the 0.7 commitment is per cent of national income, and again when the 0.7% was reduced to 0.5%. This has not gone unnoticed by UK development partners, particularly in cases where projects have been cut short. Politicians of all parties claim that UK aid is an important part of its soft power, and an important counter to China’s infrastructure investment in Africa and South America. The two-stage cut in aid due to Britain’s economic decline was cited by developing country partners as a reason for deteriorating relations at a recent Chatham House event, which will focus on the West’s response to Russia’s invasion of Ukraine. The Global South comes amid disagreements.
Third, a weak economy sucks political energy out of everything else, including foreign policy. As Britain grapples with energy shortages, strikes and record inflation, the government has had little time to think about Britain’s role in the world or implement an integrated review. The “refresh” of the Integrated Review, originally expected around Christmas, has been delayed until March.
Other policy areas, even long-term economic policies such as boosting Britain’s science and technology sectors, have lagged behind as politicians and civil servants prioritize an ailing economy.
If they were less distracted, UK leaders might have the bandwidth to address some of the long-term weaknesses in the UK economy: to fix productivity, for example, and a 5-20-year gap in education and retraining. Planning will be required. Planning reforms, building homes, transitioning to green energy and finding new business partners take time. But the immediate focus will (quite understandably) be on short-term financial support for families struggling to meet their needs, rather than developing long-term solutions to the root causes.
So, what should the UK government do?
Perhaps the first step is to recognize the role of the economy in UK foreign policy. “Global Britain”, defense spending targets, ambitions in the Integrated Review, aiming to be a “science and technology superpower”… all these things cost money. They are hard to achieve if Britain is perceived as a middle-class economy, if its leaders are busy lighting fires, and if there is actually little money to spend.
The Integrated Review did a good job of “integrating” foreign and defense policy, as evidenced by Britain’s rapid response to Russia’s invasion of Ukraine. However, it did not integrate foreign and economic policy. It did not set out a strategy to generate the growth, trade and tax receipts needed to fund a Global Britain. The hope was probably that Global Britain would pay for itself through new trade deals. Obviously, this has not happened.
The UK should also take advantage of places where foreign and economic policy can complement each other. Trade is the clear priority here, but the government’s new deals (along with Australia and New Zealand) provide little economically. Instead, the UK should focus on reducing friction in UK-EU trade, which will only be possible if it settles its differences with Brussels over the Northern Ireland Protocol – on which some progress has been made recently.
A UK-US trade deal is politically nearly impossible because of political barriers in both countries. But joining US-led initiatives, such as the Indo-Pacific Economic Framework (IPEF) or the US-EU Transatlantic Technology Council, should be less contentious, and could make up for what was lost to Brexit. The UK can also use its new defense partnership with allies in Eastern and Northern Europe to support its defense industry. As these countries expand their military capabilities, Britain’s defense industry could again pivot. It sounds like a win-win: We protect our allies, win contracts, and it’s less ethically dubious than selling weapons to places like Saudi Arabia.
Another win, at least financially, is fixing the UK labor supply. This summer, the UK recorded a record exodus of workers: those who were neither in work nor looking for work increased by 252,000 from February to May 2000, the most since records began in 1971. There is a big increase. The Commonwealth and developing country partners, especially India, pushed for labor mobility including trade talks. But instead of accommodating a mutually beneficial arrangement, the UK home secretary angered Indian officials with anti-immigration comments, stalling trade talks. A new approach will be needed if the government wants to stimulate growth by attracting global talent: this could look like a Commonwealth visa scheme, capping the number of years graduates can stay in the UK, and a visa fee waiver for key science and technology industries.
These measures won’t fix everything: as mentioned earlier, some of the UK’s economic troubles are long-term challenges that need to be addressed through education and training, investment in science and technology, and the continued need for a post-2008 economic model that is less dependent Does the financial sector. But they will be an important way of integrating the UK’s economic and foreign policy ambitions, which, although intricately co-dependent, are rarely treated as such. Perhaps this will be an inflection point, after a year of economic crisis, war and chaos.
David Lawrence is Research Fellow at Chatham House