Bound by Gravity or Living in a ‘Post Geography Trading World’?* Expert Knowledge and Affective Spatial Imaginaries in the Construction of the UK’s Post-Brexit Trade Policy

A key battle has been fought within the UK cabinet on the direction of post-Brexit trade policy. The opposing sides have favoured either continued alignment or a ‘hard’ break with the European Union’s (EU’s) regulatory and customs regime, in the latter case to allow the UK to pursue an independent and ambitious trade policy agenda. Contrary to much commentary on ‘post-truth’ politics, both sides have relied on rival forms of expertise to support their claims. I argue for the need to not only re-emphasise the malleability and political nature of expert knowledge, but also appreciate its emotional bases. The Treasury has led the charge in favour of a softer Brexit by drawing on econometric (‘gravity’) models that emphasise the economic costs of looser association with the EU. In contrast to this attempt at technocratic legitimation, the specific legal expertise drawn upon by cabinet advocates of ‘hard’ Brexit has appealed to an emotive political economy of bringing the UK, and its (in this imaginary) overly regulated economy, closer to its ‘kith and kin’ in the Anglosphere, deepening the UK ‘national business model’. I conclude by calling for more explicitly emotive and values-based argumentation in the public debate on the UK’s future trade policy to improve the quality of democratic deliberation.     

Brexit,the City and the Contingent Power of Finance

Brexit poses a profound challenge to the economic fortunes of the financial services sector in the United Kingdom (UK) because it threatens to sever access to the single market in the European Union (EU). Recognising this, the City of London’s largest financial firms and main representative bodies supported a Remain vote in the June 2016 referendum, and subsequently lobbied for a ‘soft’ Brexit policy to preserve the City’s lucrative passporting rights. Despite this, the government led by Theresa May pursued a ‘hard’ Brexit policy which threatened to leave the UK outside the single market. How can we explain the City’s apparent failure to influence the UK’s Brexit policy? We argue that whilst the UK financial sector wielded formidable latent structural power, its capacity to translate this into instrumental influence in the policy process was constrained by three factors: the political statecraft of Brexit, leading the government to downgrade the concerns of the financial industry; the reconfiguration of institutional structures, which undermined the City’s voice within government; and constraints on business organisation, caused by collective action problems and heterogeneous preferences. These three factors constitute important scope conditions which highlight the contingent power of finance in liberal market economies.     

Brexit and the Politics of UK Growth Models

Brexit has reopened and repoliticised the debate about future growth models for the UK economy. This contribution argues that this debate is built around historically specific path dependencies that reflect the particular character of public debate about British political economy, while also suggesting that the debate around Brexit takes place at a very distinctive moment in the history of democratic capitalism in Europe. This combination gives the renewed politicisation a specific and perhaps perverse character. The paper considers how we should approach debates about growth models, paying particular attention to the importance of the politics of support. It suggests that recent debate about growth models has been largely subsumed within the politics of Brexit, which has politicised that debate, albeit through the emergent political economy frames that Brexit has provoked. The paper explores the ways in which the demise of three key props of European democratic capitalism – a sustained period of economic growth, a governing philosophy that subordinated the market to wider social purposes and strong political parties – play out in the context of Brexit and the search for a new politics of support.     

Skill Formation,Immigration and European Integration: The Politics of the UK Growth Model

ABSTRACT

While a reluctant European player now heading for the Exit, the UK was also an enthusiastic adopter of several key EU economic policies – namely, the skills and technology policies of Agenda 2020 and labour mobility. These initiatives worked with existing British policy, and structural biases, to exacerbate the already bifurcated structure of UK capitalism – between the high-paid technology and financial services sector on the one hand, and low-cost, low-wage sectors on the other hand. In particular, and central to the argument of this paper, immigration from Eastern and Central Europe after 2004 helped to sustain low-cost manufacturing and services industries by undermining firms’ incentives to invest in training. This combined with endemic failures in the UK’s skills system, which is heavily geared towards producing graduates with general skills but neglects the needs of mid and lower segments of the labour market. EU integration, therefore, exacerbated cleavages over skills between high- and low-productivity sectors and may have contributed to social divisions that led to Brexit.     

The political economy of Brexit: explaining the vote

The UK’s closely contested Brexit vote to leave the EU is expected to have a significant impact on the UK and EU. While calculating the impact of Brexit is difficult since the UK is still formally a member of the EU, understanding the vote is possible. Leading up to the referendum, public opinion was divided along demographic and economic lines. This article uses referendum results at the local government level to test whether national, racial, religious and economic factors actually influenced the vote. Results indicate that demographic variables played a role while economic variables did not.     

Paying Our Way in the World? Visible and Invisible Dangers of Brexit

The UK economy has long been associated with a weak balance of payments, reflecting an underlying growth model reliant on private household consumption. A deficit in goods trade, chiefly with the EU, has been offset by surpluses in services trade and foreign investment earnings. The Single Market provided wider markets for the UK, but did not fundamentally alter Britain's structural weaknesses. The Brexit vote took place against the background of Britain running its largest peacetime current account deficit. Financing Britain's external position represents a key challenge post-Brexit. Post-Brexit models for Britain partially address this. Any emergent model will critically depend on the nature of the Brexit deal with the EU, not least in terms of the impact on financial services and on supply chains. This paper sets out the recent evolution of the UK's current account position, particularly in relation to the EU. It then highlights particular areas of potential disruption from Brexit and sketches out scenarios of possible evolution of the Britain's external position in response to this.     

Policy uncertainty and international financial markets: the case of Brexit

ABSTRACT

This study assesses the impact of the Brexit probability on both the UK and on international financial markets, for the first and the second statistical moments. As financial markets are by nature highly interlinked, one might expect that the uncertainty engendered by Brexit also has an impact on financial markets in several other countries. We first estimate the time-varying interactions between UK policy uncertainty, which to a large extent is attributed to uncertainty about Brexit and UK financial market volatilities. Second, we use two other measures of the perceived probability of Brexit before the referendum, namely daily data released by Betfair and results of polls published by Bloomberg. Based on these data sets, and using both panel and single-country SUR estimation methods, we analyse the Brexit effect on levels of stock returns, sovereign CDS, 10-year interest rates in 19 predominantly European countries, and those of the British pound and the euro. We show that Brexit-induced policy uncertainty will continue to cause instability in key financial markets and has the potential to damage the real economy in both the UK and other European countries. The main losers outside the UK are the ‘GIIPS’ economies: Greece, Ireland, Italy, Portugal and Spain.     

Making sense of Brexit losses: An in-depth review of macroeconomic studies

Almost all economic assessments of Brexit conclude that there would be significant losses for both the UK and the EU. This paper examines the driving forces behind these results. We consider the strong economic relationships between the UK and EU both at the sectoral and macroeconomic levels that are at risk from Brexit. We review fifteen studies that explore various Brexit scenarios (hard and soft) and explain why their different methodologies and assumptions yield different degrees of economic damage. Our review concludes that GDP losses for the UK from a hard Brexit range from 1.6% to 7.8%, while a soft Brexit would moderate the losses by roughly half. We also find that potential UK trade agreements with third countries could partially compensate for significant Brexit losses.     

Introduction: Is the European Union Capable of Integrating Diverse Models of Capitalism?

ABSTRACT

The causes and consequences of the Euro crisis have led comparative political economy scholars to question whether European integration can accommodate diverse models of capitalism. This special issue addresses two important questions about the compatibility of diverse growth models within the European Union (EU): Are some growth regimes better suited to European integration than others? and does the EU favour a particular constellation of domestic institutions? Contributions within this special issue provide a qualified yes to these questions, concluding that the EU favours export-led growth models whilst it penalises and discourages domestic consumption-oriented growth paths, particularly those that are financed by debt accumulation. While recent comparative capitalism literature highlights that European monetary integration has favoured export-led growth regimes, contributions in this special issue outline that the EU’s prioritisation of export-led growth over domestic demand-led growth is present in other facets of integration, including EU accession, financial integration, the free movement of people, fiscal governance and the Europe 2020 growth strategy. Findings here provide important insights for both the European integration and comparative capitalism literature, highlighting that the unique economic ties being forged within the European project may be problematic for those countries outside northwestern Europe and for workers in low-wage domestic sectors.     

Marx 200: The Abiding Relevance of the Labour Theory of Value

ABSTRACT

Marxist political economy is alive and well, and not just because of the habitual turn to Marx in response to any crisis of capitalism. Both through Capital and through the continuing evolution of Marxism, Marxist political economy offers valuable insights that can illuminate the modalities of social and economic reproduction and the relationships between (different aspects of) the economic and the non-economic. Marxism’s presence has been felt through its own internal debates and debates with other approaches to political economy, and even through its influence on those reacting against Marxism. The key to the continuing relevance and analytical strengths of Marxist political economy lies in its capacity to provide a framework of analysis for unifying disparate insights into and critiques of the contradictions of capitalism across the social sciences. The instrument for forging that unity is Marx’s theory of value, the potential of which is examined and illustrated with reference to the Sraffian critique and two key concepts in Marxian political economy: the value of labour power and financialisation. They are explored in the light of the processes of commodification, commodity form and commodity calculation.     

What's Left for ‘Social Europe’? Brexit and Transnational Labour Market Regulation in the UK-1 and the EU-27

The paper examines UK government positions on the regulation of transnational labour in the context of Brexit. Through an analysis of EU regulations on posted workers – the practice whereby a company based in one EU member state sends workers to carry out a service in another EU member state – the paper argues that the UK has consistently advocated further liberalisation of transnational labour markets in EU level decision-making, a position consistent with promoting increasingly ‘flexible’ labour markets at home. Brexit marks a turning point. Demands from British workers for stronger protection against liberalising pressure help explain the UK's recent shift towards relaxing its opposition to ‘market-correcting’ EU initiatives like the revised posted worker directive. Brexit provides a window of opportunity for the revitalisation of ‘Social Europe’ in the EU-27, without a longstanding veto player at the bargaining table, but one more likely focused more on upholding national labour protections than initiating new supranational policies.     

The Structure of the ‘EU’ropean Ensemble of State Apparatuses and Its Geopolitical Ambitions

Against the backdrop of the international political and economic system’s increasing fragmentation, this article attempts to analyse the geopolitical ambitions of the EU. Currently, the EU strives to become an independent global power. For this purpose, the EU tries to establish greater independence from the US and, to a certain degree, from its Member states. This is closely linked to (a) the emergence of the Euro as a currency competing with the US dollar for the status of the ‘global reserve currency’ and (b) the construction of a common foreign and ‘security’ policy. Taking the German literature on the political economy of the state and on the European Integration, insights from neo-Gramscian International Political Economy, and the ‘scale debate’ in Anglophone geography as point of departure, I analyse the European ensemble of state apparatuses and demonstrate that these ambitions have failed, due to the status quo of a fragmented Europe.     

Estimating the trade and welfare effects of Brexit: A panel data structural gravity model

This paper proposes a new panel data structural gravity approach for estimating the trade and welfare effects of Brexit. Assuming different counterfactual post‐Brexit scenarios, our main findings suggest that the UK's exports of goods to the EU are likely to decline within a range between 7.2% and 45.7% six years after Brexit has taken place. For the UK, the negative trade effects are only partially offset by an increase in domestic trade and trade with third countries, inducing a decline in the UK's real income of between 0.3% and 5.7%. The estimated welfare effects for the EU are not different from zero, but some members like Ireland are expected to also experience welfare losses.     

Finance,power, and the British balance of payments

ABSTRACT

The Brexit referendum marks a critical juncture in Britain’s political economy. Benjamin Cohen argues that a nation’s monetary sovereignty lies in its balance of payments (BoP) flexibility (2008, 2015). I argue that a country’s position in the global financial régime must also be accounted for when explaining its BoP dynamics. This allows us to understand why, while sterling has long lost its ‘world currency’ status, Britain’s BoP exhibits some of the same features associated with American ‘exorbitant privilege’. To appreciate the UK’s own BoP flexibilities as well as to flesh out the Anglo-American axis in the international financial order, I compare the UK’s external balance sheets with those of the US. Given the complexities and uncertainties inherent in BoP analyses, I advise against micro-analyses of the BoP in favour of a broader approach that takes into account macro-dynamics as well as the International Political Economy (IPE) concerns outlined above. Elaborating such an analysis for the UK BoP, I explore the potential implications of Brexit for Britain’s external balance sheets and its political-economic future. While Britain’s financial power has helped insulate its balance sheets from external shocks, Britain’s impending departure from the European Union heralds a period of considerable uncertainty.     

ADMINISTRATIVE CHANGE IN THE EU: A CROSS‐COUNTRY EMPIRICAL STUDY ON THE CONTEXTUAL DETERMINANTS OF NPM REFORM RHETORIC

Framed within the paradigm of New Public Management (NPM), structural reforms in the EU aimed at modernizing the public administrations of Member States (MSs) have long since been a priority area of the EU's economic policy. Since the 1990s, these reforms have been sharply intensified across European countries with the declared purpose of enhancing economy, efficiency and effectiveness in their national public sectors’ organizations. In line with the European Commission's recent research initiatives in search for novel quantitative data on NPM in the EU, this paper studies European parties’ NPM reform rhetoric. More specifically, it investigates the MSs’ institutional, economic and political context within which parties have declared their intention of reforming national administrative systems. Thus, it sheds light on the MSs’ domestic factors that are associated with the diffusion of the NPM values across the political discourse of EU's national parties.     

长波理论的数理解析及其对新发展格局的启示——纪念我国著名马克思主义经济学家高峰先生

高峰先生是我国马克思主义政治经济学与现代资本主义研究领域的著名专家。先生视野开阔、涉猎广泛,在其众多的研究著述之中对长波理论的考察格外引人瞩目。本文系统地回顾了先生针对资本主义经济长波,从资本积累理论切入,所提出的"技术—制度—市场"三元分析框架。在此基础上,尝试构建一个包含着异质性资本的单一部门模型,以说明技术变迁和劳资关系对利润率以及积累率的影响,并且分析在产能过剩的情况下,外部市场对经济规模与利润总额的拉动作用,进而运用数理政治经济学的方法对三元分析框架进行新的解析。此外,结合先生对资本主义第五轮长波的考察,讨论了中国构建新发展格局的必然性,即由扩张长波转向萧条长波是决定中国经济由国际大循环转向国内大循环的关键因素之一。作为后生晚学,我们希望能够以接续研究的方式缅怀纪念高峰先生。     

Growth effects of EU and EZ memberships: Empirical findings from the first 15 years of the Euro

One of the major economic reasons for the creation of the European Union (EU) and of the Euro-zone (EZ) was an expected bonus of economic growth for member countries. Whilst several studies exist on the growth bonus of EU membership, there are none for the EZ, the latest and deepest step of economic integration in Europe. The aim of this article is to investigate whether EU and EZ memberships enhance growth for their members. In order to perform our empirical analysis, we estimate different growth models restricting the time frame to the first 15 years of the Euro - from 1999 to 2013. We find a positive impact of EU membership on economic growth, but no impact of being part of the EZ, except during the financial crisis, when the EZ has a negative impact on growth amongst its members. Considering the heated political debate related to the Brexit referendum, our results favour a “yes” to the EU but a less clear answer when it comes to the EZ.     

UK's stock market reaction to Brexit process: A tale of two halves

We examine the UK's stock market reaction to 27 events associated with the likelihood of Brexit. Though the overall market reactions to these events is negative, a dissection of these events into the pre and post Brexit referendum events unearth interesting facts. In particular, we find that the market reaction is negative and significant to the events leading up to and including the announcement of Brexit results. This negative reaction is not confined to the day of announcement of the outcome of Brexit referendum only rather it spans over the events that enhanced the likelihood of the Brexit in the pre-Brexit referendum period. However, our results show a positive market reaction to events that occurred after the Brexit referendum. These findings suggest that initially market reacted negatively to the Brexit; however, as the UK's future economic relations with EU started to take a shape, the market started to see the positive side of Brexit. Consistent with this notion, our cross-sectional analysis shows a positive market reaction for the firms that are engaged in foreign sales and that much of the negative market's reaction relates to the firms that openly stated the negative effect of Brexit on their operations. Finally, we do not find evidence of market reaction to UK firms depending on European labor force; however, we do find significantly positive stock market reaction to the firms involved more in international trade. An important caveat of our study is that our reported results are sensitive to the choice of market index.     

The Legitimation of Post-crisis Capitalism in the United Kingdom: Real Wage Decline,Finance-led Growth and the State

Since the 2008 financial crisis, capitalist development in the UK has been marked by both continuity and change. Whilst the Coalition government effectively re-established the UK's ‘finance-led’ growth model, it simultaneously broke with the legitimation strategy which New Labour had advanced in the pre-crisis conjuncture. The Coalition advanced a distinctive ‘two nations’ strategy which sought to secure a limited but durable base of support in a context of fiscal consolidation. This strategy was conditional upon the deep and unprecedented period of real wage decline which took hold in the post-crisis conjuncture. However, the Coalition successfully transformed this potential liability into a political asset, constructing a series of ‘moralised antagonisms’ between wage earners and welfare recipients, on the one hand, and private and public sector workers, on the other. Whilst this strategy secured a limited base of popular support, it also re-embedded a series of structural weaknesses within post-crisis UK capitalism. These imbalances are likely to undermine the stability of the UK’s finance-led growth model in the future and will condition British politics as the country embarks upon the process of leaving of the EU.     

“后疫情时代”韩国国家新政及启示

为应对新冠肺炎疫情给韩国经济和社会带来的负面影响、顺利完成经济结构转型升级、缓解两极分化严重的情况,韩国政府制定了《韩版新政综合规划》,以将韩国发展为智慧国家、绿色国家、温馨国家,并推动韩国在全球政治经济格局中处于重要位置。本文旨在通过分析《韩版新政综合规划》的主要内容,为我国提供政策借鉴。