Category Archives: UK

Mrs. May must be even bolder to make Global Britain a free-trading success

“Fear not, we are of the nature of the lion.”

–Queen Elizabeth I

There was just enough in Theresa May’s speech today to reassure those who campaigned to leave the EU. Crucially, she made clear we are definitely leaving the Single Market and taking control of our borders. She suggested only a great deal would keep us in the Customs Union in some form, a highly unlikely event. Her tone – and such things matter – was forthright and constructive. Blessedly, we all know where she stands.

At one level, all she really did was confirm that we are going to be leaving the EU. But such has been the paranoia amongst eurosceptics about the prospect of some sort of excessive accommodation that just hearing we are going to be leaving will be enough to have Tory backbenchers cheering.

It was a speech long overdue. Having been almost completely silent on the EU as Prime Minister, May had well and truly lost control of the debate. Eurosceptics, dominant in the Tory Party, feared the worst and the media questioned whether she had meaningful plan. As such, despite addressing EU leaders, it was mostly a speech for a domestic audience – designed to assert control over the debate and to reassure Leave voters that she is on their side.

From that perspective, it was a job well done. But it is hard not to come away from the speech thinking that we should be further ahead by this point. When May took over back in the summer, some Leave campaigners were worried that, as a Remain supporter and someone who has spent relatively little time thinking about the future of Britain’s role in the EU and the world, she would not be well placed to help create a new role for Britain.

To be fair, the physical backdrop to the speech called for a “Global Britain”. And there were many points within the speech where she underlined her aspiration for Britain’s global role – not least in a very upbeat, internationally focused introduction. However, by this time in the process it is not good enough to merely speak in generalities, even if the Prime Minister’s impulses are clearly on the mark. It is time to talk about the specific, glittering geopolitical possibilities that can make May’s Global Britain a success.

While all the world is now to be now Britain’s oyster in terms of securing free trade deals, obviously some bilateral arrangements matter more to London than others. Indeed, in the media’s obsession about the terms of negotiations with the EU, a much larger strategic point has been almost entirely missed: the success or failure of Brexit will have far more to do with whether Britain can secure free trade deals with the Commonwealth countries (Australia, New Zealand, Canada), the US, India, and China, than whatever are the specific terms reached with the economic basket case that is the EU. That is where Britain’s Drakean, swashbuckling, energies must lie.

The great news (it is far better than good) is that the May government is pushing on an open door. Australia, New Zealand and critically Donald Trump’s America (once again the Project Fear establishment should never leave their day jobs and attempt to become actual foreign policy analysts) are itching to quickly negotiate and secure trade deals with the UK. As these three countries all have a solid record of growth–certainly compared with a becalmed EU—this is the first step toward Global Britain. But this is just the low-hanging fruit. The medium-term test is whether India and China (probably in that order) can also reach trade agreements with the UK. This is what the May government should actually be worrying about.

There is a further Holy Grail to attain if Brexit is to lead to a new Elizabethan Age: the Global Free Trade Alliance (GFTA). This proposed trading group would be a coalition of genuinely dynamic economies, voluntarily committed to pushing the free trade envelope. A legislative initiative rather than a trade deal, Parliament would offer GFTA members (chosen by neutral numerical criteria relating to their economy’s openness) access to the UK market with no tariffs, quotas, or other trade barriers, on the single condition they offer the same to the UK and the other members of the club. Such a radical move would over time do nothing less than remake both the UK and the world.

May gave a very solid speech which should encourage everyone that believes in a new, global future for Britain. She gave a speech that even five years ago would have been unimaginable. But we are where are and now is the time to think big. We look forward to hearing a detailed vision along these lines in the next few months.

Written with James Frayne and published in City AM London, January 7, 2017

Why everyone called Brexit wrong: Analysts have become too close to the elites they’re meant to analyse

I have long held heretical views about political risk analysis, which cluster around what I call the ‘plumber’s test’. However bejeweled or slick at marketing a political risk firm may be, what matters in the end is that they are analytically correct.

Just as I don’t invite back my local plumber if he fails to fix the pipes, nor should businesses put up with political risk firms who missed the war in Iraq’s predictable outcome, failed to see the coming of the Lehman crisis, or (more recently) failed to predict the Brexit vote. What holds for my plumber ought to hold for what I do for a living as well.

And yet, astoundingly, for all the million-dollar research departments in the City, and of all the major political risk firms out there, mine is the only one I know of to correctly call the Brexit vote. As far back as my prediction column for City AM in January 2016, we said Brexit would happen, to the general amusement of the commentariat and my competitors. Yet it is not an accident when the pipes are correctly fixed.

The main problem with Brexit political risk analysis revolved around the Pauline Kael fallacy. The legendary cinema critic of the leftish New York Times supposedly went wandering around, following Richard Nixon’s landslide 49 state victory in 1972, wondering how it was possible the incumbent won when everyone she knew voted for the hapless Democrat George McGovern.

There we have it in a nutshell. Top political risk analysts are always part of the elite they are supposed to assess. They all go the same cocktail parties, read the same books, inter-marry and share the same ‘right thinking’ views, all without wondering over-much about the wider world outside the cocoon of conferences at nice hotels. Intellectually trapped within an elite they are supposed to objectively analyse, political risk analysts have not covered themselves in glory recently.

Instead, both analysts and their clients have been shocked over and over again, a singular illustration of their lack of understanding of our changing world. They were gob-smacked by the recent Columbian vote against the Farc peace deal, just as they lapsed into incredulous, petulant rage over Brexit.

Like the mad, perpetually oblivious Roman Emperor Nero fiddling while Rome burned, gormless analysts seem somehow still unaware that–following on from the disastrous Iraq war and the equally calamitous Lehman crisis–most average humans simply don’t trust western elites anymore.

This is a tragedy on many levels. For after 500 plus years, the new world we are living in will not be exclusively dominated by a western ordering power. Following on from the Dutch, British, and American eras of hegemony, we are now entering a time when a rising Asia increasingly matters and where the West no longer calls all the shots. This means that the study of international relations is now truly global, and not just about what happens in Europe or North America. Political risk analysts that keep up with this sea change will do their clients a world of good.

Likewise, we are moving from the bipolar checkers game of US-Soviet great power competition to the far more complicated chess match of an era of many powers, where multiple interactions must be assessed. Standard international relations theory holds that such a complicated world is more dangerous, as there are simply more chances for great power miscalculation, and thus great power war.

On the other hand, there are more commercial opportunities in such a complicated place, if only political risk analysis can guide businesses to see the myriad glittering opportunities on the global chessboard. This world in transition means that there has never been a better or more lucrative time for political risk analysts to get their act together.

Published in City AM Money Magazine, October 2016

How decadent elites lost control of politics the world over


To outsiders, Columbia’s recent referendum on ending its 53-year war with the Stalinist revolutionaries of the Farc seemed the ultimate no-brainer. Putting a merciful halt to a conflict that has killed a horrendous 220,000 souls would seem to require little thought.

Yet when earnest President Juan Manuel Santos put his peace deal to a nationwide vote, shockingly he found that it was rejected (just) by a majority of his undoubtedly war-weary countrymen.

What is going on here? Why can’t elites, seemingly almost everywhere, manage to win referenda that they themselves call on the critical issues of the day?

In the case of Columbia, following an endless half century of conflict, the voters were not prepared to trade justice for peace, not just yet. The Farc leaders–men who had sanctioned bombings, enlisted child soldiers, participated in the drug trade and chained hostages to trees for years on end–were to be given a guaranteed 10 seats in the legislature and immunity from jail (provided they made a full and complete confession of their offences).

To see bloodthirsty murderers rewarded for their crimes—given that the Farc were losing their endless guerrilla war—was an intellectual bridge too far for a majority of the referendum’s voters. The government and outside pundits around the world both made a blithe analytical error in thinking that no value mattered more to the Columbian people than peace; justice, a competing moral good, was simply ignored as all right thinking people must surely value an end to conflict above all else.

Such wrongheaded arrogance has been repeated across the world in referendum after referendum this year, with the elites holding up one common good to the exclusion of all others. Worse, such a viewpoint has denigrated any other moral interpretation as only being adhered to by the stupid, surely playing entirely into the demagogic notion that elites everywhere despise the very people they govern. Despite his referendum failure, President Santos was awarded the Nobel Peace prize on Friday last week; the elite giving another of its members an award for doing what they’d like (never mind the stupid voters).

In the Netherlands—even following on from the likely Russian-backed separatist shooting down of Flight MH 17 which killed almost 300 people on board, including many Dutch citizens–voters rejected an EU trade deal with Ukraine, both because they had simply been asked a rare direct question about the unaccountable goings on in Brussels, as well as out of annoyance over the EU’s pretensions to foreign policy grandeur.

For the Dutch elite, the referendum was narrowly a question of process; for the voters of the Netherlands, it was a rare chance to strike back at an institution they know governs their lives, even as its byzantine workings leave Europeans with very little sense they have political control. Two common goods—process and democratic legitimacy—came into conflict, leaving the gormless elite perpetually surprised it cannot goad its people into doing the only ‘smart’ thing.

The Brexit vote is just another chapter in this larger story. For the cosmopolitan elite, it was self-evident that EU membership was in the UK’s best economic interests, and all right thinking people should support it. For a majority of the British people, self-government, the right for the people of Britain to make their own decisions about economics, immigration and trade, mattered more.

I was not shocked by the result—anyone reading my January 2016 prediction column knows my consulting firm correctly (and almost alone) predicted Brexit—but I was amazed by the temper tantrum of the elite that followed it. ‘We must vote again, as the idiots made the wrong decision.’ ‘Depression is likely to begin immediately.’ ‘The people didn’t understand what they were voting on.’ So it went, without the gormless elite remotely realising that it was their ugly, patronising, ill-informed words which contained the key clue as to why voters rejected both the EU, and them.

Italy’s early December referendum on political reform looms on the horizon. Rather than centring on that important (if somewhat esoteric) issue, instead the vote will be determined by the Italian people’s view of their own hapless elite (growth in Italy is staggeringly not expected to return to pre-Lehman crisis levels until far-off 2025) and an unfeeling German-dominated EU establishment that is making it next to impossible for Rome to recapitalise the country’s wobbling bank system. Do not be surprised if the Renzi government falls over a ‘shock’ defeat here, followed by the elite commentariat’s usual ignorant incredulity.

Until elites find their new Franklin Roosevelt—a man who calmly, stirringly and above all honestly explained to his people their problems and his proposed solutions for them—a man who trusted his electorate, expect this pattern of failed referenda to continue. Perhaps the greatest present political risk in the world is the sclerosis of democratic governments everywhere, who have lost their vital Jeffersonian connection with the very people they are supposed to represent.

Published in City AM London, October 10, 2016.