16 October 2019

The world is changing fast – and Brexit Britain must adapt quickly


Do you know much about Dar es Salaam?  Perhaps you might only be vaguely aware of this remote coastal city in Tanzania.  But by the time your grandchildren are your age, more people will live there than in all of France.

Population growth in Africa means that a whole load of places we currently consider unimportant are going to be big.  Really, really big.  Within 70 years, there are likely to be twice as many Nigerians as there will be Americans.  Countries like Congo or Uganda will each have populations larger than the UK, Germany, Canada and Australia combined.

When you think of a great military power, I doubt Pakistan is the first country that springs to mind? And it’s not.  Yet a country that could scarcely feed itself a generation ago now has submarines capable of firing cruise missiles.  India and Pakistan together now have a greater nuclear capability than the UK.

Profound changes in the balance of demographic and military power are underway.  Yet they seldom seem to merit a mention in a European media obsessed with Brexit or Donald Trump’s latest tweet.

All across the Western world, generations have grown up assuming that the natural order of things is to see those they elect strut their stuff on the world stage.  At the G7 summits, the leaders of France, Germany, Britain, Italy and Canada rub shoulders with the leaders of America and Japan.

It is unlikely that four of these states would qualify to even attend a meeting of the world’s seven largest economies by the end of next decade.

Back in 1980, what was to become the European Union accounted for a third of global economic output, while China produced a paltry 2%. Today, Europe’s share of world economic output has fallen by half, while China has a larger economy than all of Europe combined.

It’s not only China that’s ascendant either.  From Vietnam to Indonesia – even Ethiopia – countries that were economic nonentities only a decade or so ago have enjoyed stellar rates of growth. If this continues these economies will no longer be backwaters, but as important as any place in Europe.

In fact, the danger is that it’s Europe that becomes the backwater. Maybe you think I exaggerate?

Take a look at a list of Europe’s largest companies; its striking how many are either oil companies (Shell, Total, BP), carmakers (Volkswagen), or big banks and insurance companies (Allianz, HSBC).

They are behemoths born in an analogue age, intensely vulnerable to both technological disruption and overcapacity as others produce what they make, only better and cheaper.  A similar list of the largest firms in the US – or even China – would contain a number of tech giants, like Google, Facebook and even Huawei.

Just as France and Britain continued to occupy diplomatic centre stage after the First World War, European states in 2019 behave as if they have a relevance in world affairs that economic and demographic reality might not long sustain.  European states, for example, cheerfully frustrate US efforts to deal with Iran, yet hardly have enough military hardware to protect their own vessels in the Gulf. The implications of that ought to be unsettling, yet European leaders seem unfussed, enveloped in a comfort-blanket of complacency.

Europe’s elites urgently need to start dealing with the world as it is, not as we wish it to be.

Back in 2012, Germany’s Chancellor, Angela Merkel rather sensibly observed that Europe accounted for 7% of the world’s population, a quarter of economic output but about half of all welfare spending.  It was her way of suggesting that the European social and economic model was unsustainable – without serious reform to improve European competitiveness.

Yet in the seven years since, neither she nor any European leaders have undertaken anything like the kind of reforms needed to make European economies competitive.  If anything, new regulations, such as GDPR rules on data, have further inhibited Europe’s capacity to innovate.

Europe’s elites find it easier to grandstand than to undertake the difficult reforms needed on labour law and pension provision. They behave like a bad CEO who prefers to chair endless meetings, rather than focus on the state of the company’s balance sheet.

Now that Britain is leaving the European Union, we have a real chance to start doing things differently with reform and realignment.

Having a competitive economy requires meaningful deregulation. Specifically, the capacity of the state bureaucracy to stifle wealth-creation under a blizzard of red-tape and compliance needs to be systemically reined in.

Beyond that, we need to build new airports and other sorts of infrastructure.

Today, UK school students barely make it into the top 30 in international maths rankings. If we are going to thrive, this needs to change. The sort of reforms that were started under Michael Gove need to be ramped up.

We need far-reaching institutional change, too. Britain today is run by state institutions designed in the mid-twentieth century. They are slow and often seem set up to fail. Too often it seems as if the nineteenth century Northcote-Trevelyan review was the last word in civil service reform. Something even bigger is needed to overhaul the shape of public administration.

Too often British foreign policy has been about the pursuit of prestige. It is our interests, not our aggrandisement, that we should seek to secure. Diplomatic postings to Tanzania might not have quite the same cache as those to Paris, but one day soon they might matter more.

If the UK were to achieve all of this, we would offer other European states an example of how things could be done. From outside the European Union, we might yet do far more to encourage the kind of reform needed within Europe than we were ever able to achieve from within.

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Douglas Carswell was an MP and co-founded Vote Leave. He runs the Centre for Economic Education