UK News

Insights from the UK and beyond

from Hugo Dixon:

Brexit process would be messy

Imagine the British people vote to quit the European Union in the referendum David Cameron has promised to hold by 2017. What happens next? What, if any, special relationship would the UK seek to retain with the EU? Would it be able to negotiate what it wanted? And how would the economic damage unleashed by years of uncertainty be kept to the minimum?

These questions aren’t just troubling British businesses, the vast majority of which want to stay in the EU so they can enjoy full access to its single market. They are also worrying some eurosceptics who are concerned that, even if it would be good for Britain to quit the EU, the process of getting from A to B could be messy.

Hence, the launch of a 100,000 euros prize by the Institute for Economic Affairs, a UK eurosceptic think-tank. It will announce later this month the shortlist for the best essay to answer the question of what measures are needed to ensure a free and prosperous economy after an “out” vote in a putative referendum.

But don’t get your hopes up. The last time British eurosceptics launched a high-profile essay prize, the Wolfson Prize, it was to work out the best way for a country such as Greece to quit the euro. The winner, Roger Bootle, who is incidentally one of the judges of the IEA prize, came up with a not terribly realistic scheme based on maintaining secrecy until the last minute.

from Breakingviews:

Britain can gain from China’s empire builders

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Britain once had nothing to offer China but silver and opium. Now it has holidays, banks and building sites. George Osborne, the UK Chancellor of the Exchequer, and London’s mayor Boris Johnson are using visits to Beijing to say just how welcoming the UK is likely to be. It’s a triumph of openness, and provided the UK chooses its partners carefully and the Chinese are tactful, both sides will benefit.

from Anatole Kaletsky:

Learning budget lessons from Japan and Britain

While the world is transfixed by the U.S. budget paralysis, fiscal policies have been moving in several other countries, most notably in Japan and Britain, with lessons for Washington and for other governments all over the world.

Let's start with the bad news: Shinzo Abe’s decision to increase consumption taxes from 5 to 8 percent next April. This massive tax hike, to be followed by another increase in 2015, threatens to strangle Japan’s consumer-led growth from next year onwards, since Abe looks unlikely to offset this massive fiscal tightening with stimulative measures that would maintain consumers’ spending power. Even if Abe delivers on his vague promise to compensate with business tax reductions, these will only aggravate the over-investment and corporate cash hoarding that have long distorted the Japanese economy. Meanwhile, the government’s willingness to risk economic recovery in the cause of fiscal discipline implies that those of us who believed Abe was making an unconditional commitment to do whatever it takes to achieve economic recovery were simply wrong. Now that the forces of budgetary austerity have reasserted themselves, Japan’s probability of ending its decades of stagnation is much reduced.

from John Lloyd:

Goodbye to all that centrism

How much longer will the political center hold in Europe? Its erosion, years in the making, is only picking up speed. In Italy, the latest political crisis presages the collapse of the centrist left-right coalition. In Austria, a recent election barely gave a similar coalition enough votes to continue governing. The European Union nations are hurtling toward elections next spring for the European parliament, which will bring real debate and divide to what has been a largely consensual assembly. Not far separated from the yolk of the financial crisis, nationalism is the politics of the times.

While Europe’s economy is making a slow, small improvement (with exceptions in the south), its politics are becoming much more fragile. Most economists say that the crisis can only be fully remedied by taking more powers into a powerful Euro-center, one that’s fiscal, financial, macro-economic, and thus political. Brussels believes it must be done: but no national government, even Germany’s, believes it could deliver popular approval for the move. The crisis is already forcing integration, yet causing citizens to recoil from the EU. That’s the central contradiction of Europe, stark and grim.

from Breakingviews:

UK’s politicians race to the bottom on policies

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The next UK general election is in 2015, and the country’s politicians are already engaged in a classic pre-electoral sport: the race to the bottom. They are desperate for policies which please voters and the competition is fierce. Popularity is the aim, populism is the method. None of it is going to do the economy any good.

from The Great Debate:

China’s commitment to growth will drive the global economy

From outside China, the Bo Xilai trial looks like the Chinese news event of the year, one of the preoccupations of Western media, along with corporate corruption and the clampdown on American and European companies. Yet these issues are no more than sideshows to the most important economic event of recent times, the unveiling and ratification of a major program for reforms for the next decade, which will occur at the Chinese government’s third plenum in November. The reforms promise to bring another great leap forward in China's dramatic ascent.

Chinese officials will reveal how long China will need to make the transition from an investment-led, middle-income country to an innovative, consumer-driven, high-income one -- and thus when it will become the world's largest economy. Can China circumvent what we know as "the middle-income trap" that has for decades denied high-income status for Latin America and Asian countries like Malaysia and Thailand?

from The Great Debate UK:

UK recovery, but not on the high street

It was only a few days ago that George Osborne declared victory on economic malaise saying that the UK economy has turned a corner. The economic data has improved dramatically in the last six months, which gave Osborne a battering ram to launch a political attack on the Labour Party. Osborne used his moment in the sun to prove Ed Balls and all on the other side of the political bench wrong, saying that his austerity programme is right for Britain.

However, a little over 24 hours after Osborne’s speech a report from the Local Data Company made for uncomfortable reading as it detailed grim conditions on the UK’s high streets. High Street vacancy rates remain stubbornly high; out of 650 town centres in the UK the average vacancy rate is 14.1 percent, which is basically unchanged since February.

from John Lloyd:

Mark Thompson’s two-front war

Mark Thompson is a burly, clever, self-confident, occasionally slightly intimidating man who until a year ago ran the BBC and is now chief executive officer of The New York Times Company. He’s been at the center of a very open row with his previous employer and one much more covert with his present one -- not so much because he’s a troublemaker (though he seems to find it easily) but because trouble is being made for news media with high standards.

Thompson was the subject of a recent piece in New York magazine, which reported growing tension between him and Jill Abramson, the Times’ executive editor. It claimed that “the role of ‘visionary’ at the paper, traditionally held by the news chief, was now being ceded to Thompson,” and that he was usurping some news functions. Author Joe Hagan’s sources were mostly unnamed: one of them told him that Thompson had said to “a Times executive” that “I could be editor of the New York Times: I have that background.” That’s not an emollient statement for Abramson, two years into her job.

from John Lloyd:

Why democracy is an insufficient force against WMD

The British parliament’s refusal to countenance military intervention in Syria, and President Barack Obama’s decision to delay a strike until Congress approves it, point to a larger, even more dangerous contradiction of the mass destruction age.

That is, parliamentary democracy and weapons of mass destruction (WMD) sit ill together. Each confounds the other’s natural working.

from Compass:

How to win the vote — and the war — on Syria

President Barack Obama’s surprise decision to seek congressional authorization for punitive cruise missile strikes against Syrian government targets presents the West with a perhaps final opportunity to align rhetoric with reality, and policy with purpose, in its response to the Syrian civil war.

The bad news is that the White House, by gambling on its ability to convince a recalcitrant Congress to go against an isolationist public mood, has opened itself up to the very real possibility of defeat as its opponents will seek to embarrass what they consider a reluctant, irresolute Commander-in-Chief. The good news is that that path to winning the vote in Washington is paved with setting out a new and credible course for a diplomatic solution to the crisis that can justify an act of war.

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