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Brexit : towards a neoliberal real utopia ?

Emma Bell
p. 45-66

Résumés

Bien que le Brexit soit parfois considéré par la gauche comme une opportunité de tirer un trait sur le néolibéralisme, notamment en facilitant la renationalisation des services publics, la droite du parti conservateur britannique le voit comme une vraie occasion de montrer la voie en matière de déréglementation afin de créer une utopie néolibérale au Royaume-Uni. Cet article cherche à exposer les grandes lignes de cette utopie réelle avant de souligner les obstacles politiques qui entravent la réalisation du projet. Cependant, bien que la création d’une utopie néolibérale après le Brexit soit irréalisable, « le néolibéralisme réellement existant » devrait perdurer, les incertitudes économiques du Brexit plaçant les grandes entreprises dans une position de force vis-à-vis du gouvernement britannique.

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Introduction

  • 1 Jacques, M., ‘The death of neoliberalism and the crisis in western politics’, The Observer, 21 Augu (...)
  • 2 The Economist, ‘Britain’s election offers little respite for its woes’, 3 June, 2017.
  • 3 Johnson, B., ‘Resignation letter to Theresa May’, 9 July, 2018, published by the BBC: https://www.b (...)
  • 4 Bourdieu, P., ‘L’essence du néolibéralisme’, Le monde diplomatique, mars, 1998.
  • 5 Pirie, M., ‘This is NOT a Conservative government’, Adam Smith Institute Blog, 15 April, 2016a: htt (...)
  • 6 Pirie, M., Rebooting Britain: Making the most of Brexit, London, Adam Smith Research Trust, 2016b, (...)
  • 7 Wren-Lewis, S., ‘Brexit and Neoliberalism’, Mainly Macro Blog, 29 October, 2016: https://mainlymacr (...)
  • 8 Smith, R., ‘The Liberal Case for Leave’, Adam Smith Institute, 2016: https://www.adamsmith.org/the- (...)
  • 9 Erik Olin Wright defines the notion of real utopia as follows: ‘utopian ideals… are grounded in the (...)

1The British vote on the 23rd June 2016 in favour of the UK’s departure from the European Union is sometimes interpreted as a vote against neoliberalism. For the veteran political commentator Martin Jacques, Brexit was ‘primarily a working-class revolt’ by those who feel they have not benefitted from the neoliberal policies of the past forty years1. The Economist also suggested that problems such as inequality and social disintegration engendered by neoliberalism ‘explain, in part, why the country embarked on Brexit’2. Yet, for the neoliberals themselves, the ‘Brexit dream’3 is widely regarded as an opportunity to finally create what Pierre Bourdieu once described as a ‘neoliberal utopia’ defined by its own belief system rather than by rational logic4. For Madsen Pirie, co-founder of the neoliberal Adam Smith Institute (ASI), David Cameron’s conservative governments betrayed the conservative (and neoliberal) ideal that central planning should be shunned in favour of ‘the spontaneity of society’, taking the introduction of a ‘living wage’ as a prime example of such deviation from principle5. For him, Brexit has provided the perfect opportunity to take the Conservative Party back to its neoliberal principles and even to go much further down the road towards the fulfilment of the neoliberal ideal, to allow Britain ‘to reboot itself’ and to ‘do things differently’ ‘across every area of public policy’6. In this sense, Brexit represents a ‘neoliberal wet dream’7. Although Boris Johnson, on resigning from the Cabinet in July 2018, warned that the ‘dream is dying’ on account of the government’s acceptance of a softer form of Brexit which will necessitate a considerable degree of regulatory alignment, it is unlikely that the ideal of a neoliberal Brexit will be entirely abandoned. As Roland Smith of the free market think tank the Adam Smith Institute (ASI) conceded, Brexit must be regarded as ‘a journey’, rather than ‘a one-time event’ which might at first accept continued economic union with the EU as a step to becoming ‘a regional player in the global single market’8. Realising a post-Brexit neoliberal ‘real utopia’9 is a long-term plan.

2 The aim of this paper is to pinpoint exactly how Brexit is thought to be capable of delivering a neoliberal ideal before examining the feasibility of this project and finally determining whether it is capable of becoming a real utopia or rather a utopian dream doomed to failure.

The nature of the neoliberal Brexit dream

  • 10 Hermann, C., ‘Neoliberalism in the European Union’, Studies in Political Economy 79(1), 2007: 61-90
  • 11 Glyn, M., The Idea of a European Superstate: Public justification and European Integration, Princet (...)
  • 12 Hayek, F., ‘The Economic Conditions of Interstate Federalism’, 1939: https://fee.org/articles/the-e (...)

3 Despite left-wing criticism of the EU as an institution in hock to neoliberalism (see, for example, Hermann10), for many neoliberals it acts as a barrier to the realisation of their ideals. For the key neoliberal thinker, Friedrich Hayek, the idea of interstate federation per se was not problematic. Indeed, in a 1939 essay, he argued that such a multinational federation could actually assist the liberal project by reducing the role of the nation state and its propensity to interventionism and protectionism11. Writing in 1939, he did not envisage the development of a European Union as a political project aiming to mimic in many ways the nation state12. It is unlikely that Hayek could have ever supported the degree of central planning inherent in the EU as it has developed today.

  • 13 Margaret Thatcher, Speech to the College of Europe, Bruges, 21 September 1988.
  • 14 David Cameron, Speech to the World Economic Forum, Davos, Switzerland, 26 January 2012.

4 Margaret Thatcher was famously opposed to that central planning and, contrary to Hayek, believed that it was the nation state which could provide the best bulwark against the increasingly federalist projects of the EU. In particular, she feared that European ‘red tape’ would thwart her deregulatory ambitions in Britain13. David Cameron echoed these sentiments in a speech to the World Economic Forum in Davos in which he criticised ‘needless red tape’ at a European level that imposes ‘burdens on businesses and governments’ and is responsible for ‘Europe’s lack of competitiveness’14. Whilst both Thatcher and Cameron believed (at least when in power) in the possibility of reforming the EU from within, many pro-Brexit neoliberals believe that exiting the EU is the only way to release Britain from the ‘unnecessary’ regulatory frameworks that they believe hinder free trade.

  • 15 House of Commons Exiting the European Union Committee, EU Exit Analysis: Cross Whitehall Briefing, (...)
  • 16 The new rules were introduced in 2017 to regulate Europe’s financial industry in an attempt to incr (...)
  • 17 Bootle, R., Jessop, J., Lyons, G., & Minford, P., Alternative Brexit Economic Analysis, 2018, p. 14 (...)
  • 18 Singham, S., Tylecote, R., Plan A+: Creating a prosperous post-Brexit UK, IEA Discussion Paper 95, (...)

5 In their alternative Brexit economic impact analysis to counter the official Whitehall analysis published last January15, neoliberal pro-Brexit economists Roger Bootle, Julian Jessop, Gerard Lyons and Patrick Minford wrote of the need to dismantle ‘damaging EU regulation’ such as the Markets in Financial Instruments Directive (MIFID II)16 and ‘needless restrictions on labour market flexibility’17. Similarly, it its alternative Brexit plan to that put forward by the government in summer 2018, the neoliberal think tank, the Institute for Economic Affairs (IEA), criticised EU regulation as ‘damaging to growth’ and argued that ‘tying the UK to future EU regulation is a major threat to the UK economy’18.

  • 19 Theresa May, Speech at Mansion House, London, on future UK-EU relations’, 2 March 2018.

6 Ditching such regulations is regarded as the principal means of realising the ‘Brexit dream’ or what the IEA describes as the ‘Brexit prize’ (ibid.). It is considered as only way of realising Theresa May’s vision of a truly ‘Global Britain’ which ‘thrives in the world… and reaches out beyond our continent, to trade with nations across the globe’ to become a ‘champion of free trade’19. This is regarded as the magic recipe for a prosperous, competitive and productive Britain. It is seen as the principal means of avoiding social and economic protectionism that the neoliberals regard as inherent to EU labour regulation and programmes such as the Common Agricultural Policy.

  • 20 Farnsworth, K., ‘Taking back Control or Empowering Big Business? New Risks to the Welfare State in (...)

7 The context of Brexit is certainly creating a favourable climate for the implementation of neoliberal flagship policies such as deregulation, privatisation and tax cuts. Beyond ideology, the hard economic reality of Brexit, whereby the EU (along with other nations) will likely end up competing more intensively with the UK for investment, means that businesses find themselves placed in a favourable ‘buyer’s market’ in which they can demand that government provide attractive tax and regulatory regimes to ensure they remain in Britain20. Yet, as we shall see later, the very conditions that may facilitate the neoliberal Brexit dream also risk consigning it to the realms of fantasy. For now, we shall attempt to delimitate the shape that a neoliberal Brexit utopia would take.

“A bonfire of regulations” ?

  • 21 Theresa May, 2018, Mansion House Speech, op. cit.
  • 22 HM Government, The Future Relationship between the United Kingdom and the European Union, Cm 9593, (...)
  • 23 Department for Exiting the European Union, Withdrawal Agreement and Political declaration, 25 Novem (...)
  • 24 Jacob Rees-Mogg, quoted by Tolhurst, A., ‘“That’s not Brexit”: Jacob Rees-Mogg blasts Theresa May’s (...)
  • 25 Jessop, J., ‘The case for free trade – no ‘ifs’ or ‘buts’’, Institute for Economic Affairs Briefing (...)
  • 26 Pirie, M., The Neoliberal Mind: The ideology of the future. London, Adam Smith Institute, 2017.

8Unsurprisingly, given the neoliberals’ vehement opposition to EU regulatory regimes, a key element of their post-Brexit ideal entails limiting the regulations that they regard as barriers to free trade. Indeed, this is one of the key reasons for rejecting Single Market membership which would entail full compliance with its regulations. Yet, Theresa May has rejected the notion of ‘a bonfire of regulations’, accepting that any future trading partnership with the EU will necessitate the acceptance of common regulatory systems, notably with regard to state aid and competition policy21. Similarly, the government’s white paper favours the establishment of ‘a common rulebook for goods which would limit the UK’s ability to make changes to regulation in those areas covered by the rulebook’22, as does the Withdrawal Agreement23, even though at the time of writing (December 2018) this is unlikely to be approved by Parliament. Nonetheless, steps may be taken towards scaling back on some forms of regulation. Whilst trade deals often entail common regulation, they may also place pressure on Britain to deregulate in some areas. Arch-Brexiteer, Jacob Rees-Mogg has insisted that regulatory alignment with the EU is impossible if Britain wants to be free to offer incentives to other countries when negotiating trade deals24. Similarly, the IEA has suggested that for Britain to become ‘a champion of free trade’ and set an example to other nations currently following a protectionist bent, Brexit should encourage her to act unilaterally to reduce her own tariff and non-tariff barriers25. Madsen Pirie has also argued that this is a natural neoliberal stance to take since neoliberals ‘take the view that giving their citizens access to cheaper foreign goods makes them richer’26. Furthermore, given Britain’s small size compared to other large, industrialised nations with whom she may seek to develop new trade deals, unilateral tariff deregulation outside a customs union with the EU could certainly be one way in which she could make herself more attractive in the global marketplace.

  • 27 HM Government, 2018, op. cit.
  • 28 Donald Trump, cited by Tom Newton Dunn, ‘Tump’s Brexit Blast’, The Sun, 13 July 2018. Although he s (...)
  • 29 ‘Passporting’ rights at present apply to the European Economic Area (EEA), allowing authorised firm (...)
  • 30 Spence, P., ‘Chlorinated Chicken: Why you shouldn’t give a cluck’, Adam Smith Institute Briefing Pa (...)

9 A policy of regulatory unilateralism would also ensure that Donald Trump’s protectionism would be no serious hindrance to a future independent UK-US trade deal which is strongly supported by the Prime Minister, the Confederation of British Industry (CBI) and neoliberal think tanks such as the ASI. Furthermore, given Trump’s threats that the kind of Brexit outlined in the government’s white paper27 could ‘kill’ any future trade deal with the US28, the British government is likely to find itself in a very weak negotiating position vis-à-vis the United States. A future UK-US trade deal could notably encourage the deregulation of food standards with a relaxation of the current ban on chlorinated poultry imports likely to be part of any future deal. The ASI recommends relaxing the ban, which it claims is based on ‘irrational prejudice’ rather than scientific evidence, (perhaps rather optimistically) in exchange for more favourable trading terms for Britain, perhaps including ‘passporting’ rights29 for Britain’s financial institutions30.

  • 31 Twenty-five member states formally adopted the pact as an international treaty in March 2012: the T (...)
  • 32 An FTT would be a tax of between 0.1 and 0.01% on financial transactions between financial institut (...)
  • 33 Singham, S., McBride, C., Improving Global Financial Services Regulation, IEA Discussion Paper 88, (...)
  • 34 Ibid., p. 42.
  • 35 Singham and McBride suggest that ‘the UK is by far the most interconnected financial market to the (...)

10 Financial services is one of the key areas to be affected by deregulation post-Brexit. Indeed, it was largely a desire to protect this industry from EU regulation that caused such friction between the Conservative-Liberal Democrat coalition government and European institutions following the financial crisis of 2008. Cameron notably vetoed the EU fiscal compact in 201131 after failing to secure concessions excepting Britain’s financial services sector from new regulations and he was vehemently opposed to the introduction of a Financial Transactions Tax (FTT)32. It is therefore unsurprising that Brexit is regarded by neoliberals as an opportunity to ensure that financial regulations at both a local and global level evolve in what the authors of an IEA report on financial regulation post-Brexit describe as ‘a less anti-competitive direction’33. They recommend that any future trade agreement between the UK and the EU ‘includes a financial services chapter that gives the maximum liberalisation possible in the areas of market access and national treatment across all modes of supply’34. Given the importance of UK financial services markets to the EU35, the UK may have reasonable bargaining strength in this area.

11 Furthermore, at a global level the IEA report suggests limiting the role of the nation state in regulation by entrusting dispute resolution to an independent Investment Tribunal System, following the model of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada36. The system allows private companies to bring claims against nation states when CETA rules are breached, such as when investors are not thought to have been subject to ‘fair and equitable treatment’ (article 8.10), or when their interests arising from concessions ‘to search for, cultivate, extract or exploit natural resources’ are negatively affected (article 8.1). Whilst the deal was hailed by the European Commission as ‘a progressive trade agreement’37, notably by ensuring that governments cannot be sued when they regulate in the public interest, civil society organisations fear that the dispute mechanism will empower corporations over nation states (see, for example, Corporate Europe, 201738). This is precisely why such mechanisms are so attractive to neoliberals.

12 In an attempt to attract foreign investment and to facilitate new trade deals, the deregulation of the labour market is also a post-Brexit neoliberal priority. The IEA, for example, regards Brexit as an opportunity to remove ‘needless restrictions on labour market flexibility’39. Yet, significant steps have already been taken in the UK in this direction since at least the 1980s, notably with the attack on trade union rights and the introduction of flexible working practices, leaving the UK with the weakest employment protection legislation in Europe40. The UK has succeeded in obtaining opt-outs from key elements of EU employment legislation such as the Working Time Directive. Furthermore, the existence of regulatory divergence between the UK and the EU tends to suggest that business as a whole has managed to adapt to the current regulatory regime and largely accepts it as a price worth paying for access to the single market, despite some cries to the contrary, notably from SMEs41. This indicates that there may be no ‘bonfire of regulations’ with regard to the labour market.

  • 42 Theresa May, 2018, Mansion House Speech, op. cit.
  • 43 HM Government, op. cit., p. 40.
  • 44 Ramsay, A., Geoghegan, P., ‘Dominic Raab: Is he the IEA’s man in government?’, OpenDemocracy, 10 Ju (...)
  • 45 Kwarteng, K., Patel, P., Raab, D., Skidmore, C., & Truss, E., Britannia Unchained: Global lessons f (...)
  • 46 Raab, D., Escaping the Strait Jacket: The regulatory reforms to protect jobs, Centre for Policy Stu (...)

13 Indeed, May has claimed that in areas like workers’ rights, there will be no ‘race to the bottom’42. The government’s Brexit white paper states that ‘existing workers’ rights enjoyed under EU law will continue to be available in UK law on the day of withdrawal’ and commits to the ‘non-regression of labour standards’43. However, workers’ rights may be under threat in the long term should the Brexiteers gain power. Dominic Raab, the former Brexit Secretary and potential challenger to Theresa May, has been described as ‘the IEA’s man in government’ who has spoken publicly of the influence the think tank has had in shaping his ideas and is closely involved in the Free Enterprise Group in Parliament, a group closely linked to the IEA44. In a book co-authored with four other conservative MPs, Raab railed against the economic burden of employment regulation which he claimed amounted to 7.9 per cent of GDP45 and, in a pamphlet written for the free market thinktank, the Centre for Policy Studies (CPS), he proposed abolishing EU Agency Workers Regulations and the Working Time Directive, arguing that they impede freedom of choice46. It is likely that he, along with other like-minded neoliberal travellers, such as Kwasi Kwarteng, recently appointed to the Brexit department, will regard Brexit as a chance to implement his proposals should May’s more moderate Brexit proposals collapse. Yet, given what we have said above, this is not even necessary. Being in the EU has not so far prevented regulatory divergence or hindered extreme employment flexibility, as exemplified by zero-hours contracts. Even in the event of close regulatory alignment post-Brexit, it is unlikely that the UK will find itself subject to any new regulations designed to protect casual workers and could even erode rights further.

Boosting the private sector

  • 47 Theresa May, Speech on the NHS, Royal Free Hospital, London, 18 June 2018.
  • 48 See, for example, Guinan and Hanna, 2017 (Guinan, J., Hanna, T., ‘Lexit: The EU is a neoliberal pro (...)
  • 49 Spence, op. cit., p. 2.
  • 50 HM Government, op. cit., para.49(a): 25.
  • 51 Theresa May, Answer to Prime Minister’s Questions, 7 February, Hansard, 2018c: https://hansard.parl (...)
  • 52 This assumes that the NHS constitutes an attractive market for US investors. Yet, The Economist cal (...)

14Regardless of whether or not the private sector receives a regulatory Brexit dividend, it certainly seems likely that it will receive a financial dividend. Despite Theresa May’s promises, echoing those of the ‘Leave’ campaign, that Brexit will provide a dividend for public services, such as the NHS47, in practice it seems that they are threatened by privatisation. Whilst those in favour of a Lexit (a left-wing version of Brexit) often suggest that leaving the EU would facilitate renationalisation48, neoliberals see it as an opportunity for enhanced privatisation, particularly of public services. For the ASI, post-Brexit Britain could ‘allow potential partners access to parts of its economy that the EU would never have accepted’49. The Brexit white paper seems to pave the way, promising to introduce ‘general provisions that minimise the introduction of discriminatory and non-discriminatory barriers to establishment, investment and the cross-border provision of services, with barriers only permitted where that is agreed upfront’50. This provision recognises that, in the context of new trade deals, economic partners are likely to seek access to new markets, including in public services. During a round of Prime Minister’s Questions in the House of Commons early in 2018, Theresa May refused to explicitly rule out the possibility that the NHS would be opened up to American healthcare providers as part of a future US-UK trade deal51. Furthermore, should Brexit have a strong negative impact on Britain’s economy, the privatisation of an increasingly expensive service may seem like an attractive option to cash-strapped governments52.

  • 53 Pirie, op. cit., 2016b, pp. 7-8.
  • 54 The Prime Minister has promised to reduce this rate further to 17% by 2020. See Gemma Parker and Ge (...)
  • 55 Farnsworth, op. cit., p. 713.

15 The private sector may also benefit from tax cuts. Madsen Pirie goes so far as to advocate the total abolition of corporation tax in post-Brexit Britain, claiming that this ‘would make the UK a very attractive location for world businesses, and drive a real boost to economic growth’53. Again, Britain does not need to exit the EU to take such a step – Ireland already has the exceedingly low rate of 12.5 % whilst Britain’s rate is already the lowest of all the G7 countries at 19 %54 – but leaving the EU may make it even more imperative to reduce taxes as Britain seeks to compete globally for foreign investment. In order to compensate business for additional costs resulting from Brexit and to create ‘a new USP (Unique Selling Point) to replace the promise of access to EU markets’, Farnsworth argues that the UK government will have to cut costs for businesses55. He highlights the likely cuts to taxes and regulations, as advocated by the neoliberals, but, interestingly, he also suggests that tax-payer funded state support or ‘corporate welfare’ will be strengthened.

  • 56 Farnsworth, K., Cole, L., & Conn, M., Oiling the Wheels: Nissan, private investment and British cor (...)
  • 57 Ibid.

16 The case of Nissan, the Japanese car manufacturer present in the UK since 1986, serves as an example. The company is of extreme importance to the British economy and employs 7 500 million people in the UK with a further 30 000 British jobs being supported by its supply chain. As a result, Nissan has ‘nearly unprecedented bargaining power with the UK government’ which is likely to do all in its power to prevent the company from relocating to an EU member state in order to avoid export tariffs56. It is estimated that from 1984-2017, Nissan received £ 797 million in various forms of corporate welfare, including loans, research and development grants, tax relief and other support57. In the current uncertain climate of Brexit, the government has been forced into agreeing to ‘further undisclosed demands’ from the multinational.

  • 58 Pirie, 2017, op. cit., p. 32.
  • 59 See Dardot P. & Laval, C., La nouvelle raison du monde : essai sur la société néolibérale. Paris, L (...)

17 Increasing private sector dependence on government is far from the neoliberal utopian ideal whereby the market ought to determine the success or failure of companies. As Pirie puts it, ‘Neoliberals favour fair and open markets, not cronyism, which they regard as rent-seeking, the use of political power to gain greater return than they would receive in a fair and open market’58. Yet, this is what neoliberalism has always meant in practice : strengthening corporate power rather than liberating markets59.

Challenges to utopia

  • 60 Brenner, N., & Theodore, N., ‘Cities and the Geographies of “Actually Exisitng Neoliberalism”’, Ant (...)

18 In practice, the ideology of neoliberalism is always constrained by political reality. Pressure exerted on various fronts may mean that the realisation of a ‘real’ neoliberal Brexit utopia is consigned to the realms of fantasy. Yet, it seems that Brexit will help to ensure that ‘actually existing neoliberalism’60 will survive and even be strengthened.

  • 61 Brexitcentral, ‘House of Lords defeats Government 14 Times on the ET Withdrawal Bill at Report Stag (...)
  • 62 The UK in a Changing Europe, ‘Survey of MPs reveals Theresa May and Jeremy Corbyn face significant (...)
  • 63 This means allowing MPs to vote to either accept or reject the final Brexit deal negotiated between (...)

19 Parliamentary pressure in particular is currently putting a halt to the most extreme Brexit fantasies. In the course of the passage of the EU (Withdrawal) Bill through Parliament, the House of Lords forced 14 defeats on the government, forcing it to make major concessions, notably accepting to retain EU law relating to employment and equality rights and health and safety standards (although these rights can be revoked post-Brexit via further primary legislation)61. Despite vocal opposition from some Conservative MPs to anything but complete and absolute separation between the EU and the UK, the majority of MPs would seem to reject this version of Brexit. In a survey conducted at the end of 2017, 80 % of Conservative MPs supported a reasonably ‘soft’ form of Brexit : i.e. a comprehensive trade deal with alignment to EU rules, whilst 56 % of Labour MPs even favour retaining membership of the Single Market62. Although there is no guarantee that MPs will have a ‘meaningful vote’63 on a final Brexit deal after MPs voted by 319 to 303 to reject a House of Lords’ amendment to the EU (Withdrawal) Bill, it is important for May’s own legitimacy to propose a deal that is acceptable to a majority of MPs, however difficult that might be.

20 The neoliberal Brexit dream is of course also constrained by the EU itself, which, as the Withdrawal Agreement makes clear, is unlikely to support any deal that fails to respect its red lines, notably regarding a soft border in Ireland which would necessitate regulatory alignment with the EU, although this position may paradoxically made it more likely that May’s deal will be voted down, thus fulfilling the wishes of many neoliberal Brexiteers.

21 However, should a no deal Brexit scenario come to pass, Theresa May’s government could face a vote of ‘no confidence’, triggering a general election. It is of course possible that a hard, neoliberal Conservative could end up as Prime Minister, especially if there is majority popular support for a hard Brexit. Recent opinion polls reveal a very small swing for remaining in the EU64 yet just before the Brexit white paper was released in July 2018, 40 % of those polled believed that May was ‘aiming for a Brexit that is too ‘soft’ and would give too much power to the European Union’65. Only 12 % thought she was aiming for a Brexit that was ‘too hard’66. This suggests that a hard neoliberal could succeed in winning over the popular vote67. Even so, a post-Brexit neoliberal real utopia could be a hard sell. Whilst ‘taking back control’ over issues such as immigration could prove attractive, any negative post-Brexit effects on standards of living and labour market deregulation could prove unpopular and difficult to implement in the long-term.

  • 68 Springford, J Brexit and EU Regulation: A Bonfire of the Vanities?, Centre for European Reform, 201 (...)
  • 69 HM Government, op. cit., p. 20.
  • 70 CBI, The Room where it Happens: A guide to the EU bodies and regulators that matter to business in (...)

22 Furthermore, opposition to a neoliberal utopia also comes from the very quarters that will purportedly benefit the most from Brexit. Business does not adhere unanimously to the idea of a ‘bonfire of regulations’. In purely practical terms, the impact of existing EU regulation on business is minimal, suggesting that the arguments in favour of deregulation are more ideological than necessary. A report from the neoliberal Centre for European Reform suggests that ‘a bonfire of European rules would not transform Britain’s economic prospects’68. European directives on working time and agency workers actually have very limited impact on growth and prosperity. According to the report, the main barriers to the free market are domestic (planning rules, for example). The Confederation of British Industry (CBI) seems to agree. It has welcomed reassurances from the government69 that the UK will seek continued participation in EU regulatory agencies in the fields of medicines, chemicals and aerospace to avoid barriers to trade70. Indeed, the majority view from business seems to be that, far from hindering free trade, regulatory alignment can facilitate it.

  • 71 Smith, op. cit.
  • 72 Ibid.
  • 73 Peck, J., Constructions of Neoliberal Reason, Oxford, Oxford University Press, 2010, p. 7.

23 This view is to some extent supported by some neoliberals themselves. For Roland Smith of the IEA, the problem with the EU is not so much that it imposes too many constraining regulations on member states but rather that the EU is simply no longer relevant in a globalised world. Smith argues that the EU is simply no longer the most relevant institution when it comes to determining the rules and regulations governing global trade71. Indeed, as he points out, ‘a large and growing body of single market law is now made at global level and handed down to the EU which in turn hands it down to the member states’72 This means that the EU is nothing more than a middleman which prevents the UK from directly shaping the rules at the real ‘top table’, which is ultimately to be found within supranational institutions such as the World Trade Organisation. For Smith, regulations cannot be dispensed with altogether, as EU regulations will simply be replaced by global regulations, but he believes that the UK as an independent nation would have more sway in deciding what form those regulations might take. Accepting trade regulations is far removed from a neoliberal utopia according to which markets should be perfectly self-regulating. Smith’s attitude reflects a certain realism. Indeed, as Peck points out, the pursuit of the ‘free-market nirvana’ devoid of regulations has proven to be essentially futile. Once neoliberals find themselves in power, they are constantly forced to ‘fix’ markets by tinkering with regulatory systems. As a result, neoliberalisation ‘is not the antithesis of regulation, it is a self-contradictory form of regulation-in-denial’.73

Conclusion

24 In conclusion, Brexit certainly provides an unprecedented opportunity for neoliberal purists to pursue a dream of trade and labour market deregulation to the extent that Britain could be released from EU regulations and driven by a desire to make herself as attractive as possible for business in the global marketplace. Yet, no matter how politically disruptive these neoliberals may be – resigning from Cabinet and threatening to destabilise the Prime Minister – they face significant constraints. Most notably, their dream is not shared by the majority of MPs ; it is likely to be rejected by the EU ; it meets opposition from business ; and it may prove unpopular with the general public. Furthermore, the economic challenges posed by Brexit place business in an extremely strong bargaining position vis-à-vis government, exacerbating trends towards ‘crony capitalism’ and consequently undermining the neoliberal dream of entirely unconstrained, self-regulating, independent markets.

25 Nevertheless, while Brexit may not allow the creation of a neoliberal utopia, it does help to ensure that neoliberalism as it is actually practised on the ground remains unchallenged. The British State will find itself under continued pressure to provide various forms of corporate welfare and to bend and adapt current regulatory measures to protect and strengthen markets in the face of global challenges. If we accept that ‘real’ neoliberalism is more about protecting corporate power than free markets, then neoliberalism post-Brexit will likely continue to thrive, albeit in a bastardised form that is largely dependent on State assistance for its survival.

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Notes

1 Jacques, M., ‘The death of neoliberalism and the crisis in western politics’, The Observer, 21 August, 2016.

2 The Economist, ‘Britain’s election offers little respite for its woes’, 3 June, 2017.

3 Johnson, B., ‘Resignation letter to Theresa May’, 9 July, 2018, published by the BBC: https://www.bbc.com/news/uk-politics-44772804 [consulted 11 July 2018].

4 Bourdieu, P., ‘L’essence du néolibéralisme’, Le monde diplomatique, mars, 1998.

5 Pirie, M., ‘This is NOT a Conservative government’, Adam Smith Institute Blog, 15 April, 2016a: https://www.adamsmith.org/blog/this-is-not-a-conservative-government [consulted 11 July 2018].

6 Pirie, M., Rebooting Britain: Making the most of Brexit, London, Adam Smith Research Trust, 2016b, p. 2.

7 Wren-Lewis, S., ‘Brexit and Neoliberalism’, Mainly Macro Blog, 29 October, 2016: https://mainlymacro.blogspot.com/2016/10/brexit-and-neoliberalism.html [consulted 11 July 2018].

8 Smith, R., ‘The Liberal Case for Leave’, Adam Smith Institute, 2016: https://www.adamsmith.org/the-liberal-case-for-leave/ [consulted 12 July 2018].

9 Erik Olin Wright defines the notion of real utopia as follows: ‘utopian ideals… are grounded in the real potentials of humanity, utopian destinations that have accessible waystations, utopian designs of institutions that can inform our practical tasks of navigating a world of imperfect conditions for social change’ (Eric Olin Wright, Envisioning Real Utopias, 2009: p. 4). He explores the possibilities for the development of left-wing utopias, yet there is no reason why the notion of real utopia could not be applied to right-wing visions to the extent that their proponents believe that they can improve the human condition by applying an ideal of free and unconstrained markets on the ground.

10 Hermann, C., ‘Neoliberalism in the European Union’, Studies in Political Economy 79(1), 2007: 61-90.

11 Glyn, M., The Idea of a European Superstate: Public justification and European Integration, Princeton, Princeton University Press, 2005, p. 74.

12 Hayek, F., ‘The Economic Conditions of Interstate Federalism’, 1939: https://fee.org/articles/the-economic-conditions-of-interstate-federalism/ [consulted 11 July 2018].

13 Margaret Thatcher, Speech to the College of Europe, Bruges, 21 September 1988.

14 David Cameron, Speech to the World Economic Forum, Davos, Switzerland, 26 January 2012.

15 House of Commons Exiting the European Union Committee, EU Exit Analysis: Cross Whitehall Briefing, 2018: https://www.parliament.uk/documents/commons-committees/Exiting-the-European-Union/17-19/Cross-Whitehall-briefing/EU-Exit-Analysis-Cross-Whitehall-Briefing.pdf [consulted 11 July 2018].

16 The new rules were introduced in 2017 to regulate Europe’s financial industry in an attempt to increase transparency and restore investor confidence.

17 Bootle, R., Jessop, J., Lyons, G., & Minford, P., Alternative Brexit Economic Analysis, 2018, p. 14: https://www.economistsforfreetrade.com/wp-content/uploads/2018/03/Alternative-Brexit-Economic-Analysis-Final-2-Mar-18.pdf [consulted 11 July 2018].

18 Singham, S., Tylecote, R., Plan A+: Creating a prosperous post-Brexit UK, IEA Discussion Paper 95, 2018: https://iea.org.uk/wp-content/uploads/2018/09/PLAN-A-FINAL.pdf [consulted 6 November 2018].

19 Theresa May, Speech at Mansion House, London, on future UK-EU relations’, 2 March 2018.

20 Farnsworth, K., ‘Taking back Control or Empowering Big Business? New Risks to the Welfare State in the post-Brexit Competition for Investment’, Social Policy 46(4), 2017: 699-718.

21 Theresa May, 2018, Mansion House Speech, op. cit.

22 HM Government, The Future Relationship between the United Kingdom and the European Union, Cm 9593, 018, p. 49:: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/724982/The_future_relationship_between_the_United_Kingdom_and_the_European_Union_WEB_VERSION.pdf [consulted 12 July 2018].

23 Department for Exiting the European Union, Withdrawal Agreement and Political declaration, 25 November, 2018, https://www.gov.uk/government/publications/withdrawal-agreement-and-political-declaration

24 Jacob Rees-Mogg, quoted by Tolhurst, A., ‘“That’s not Brexit”: Jacob Rees-Mogg blasts Theresa May’s new customs plan, saying it is “hard to think of a worse idea”’, The Sun, 4 July 2018.

25 Jessop, J., ‘The case for free trade – no ‘ifs’ or ‘buts’’, Institute for Economic Affairs Briefing, 29 September, 2017: https://iea.org.uk/publications/the-case-for-free-trade-no-ifs-or-buts/ [consulted 12 July 2018].

26 Pirie, M., The Neoliberal Mind: The ideology of the future. London, Adam Smith Institute, 2017.

27 HM Government, 2018, op. cit.

28 Donald Trump, cited by Tom Newton Dunn, ‘Tump’s Brexit Blast’, The Sun, 13 July 2018. Although he subsequently retracted this statement, reported in The Sun newspaper, describing it as ‘fake news’ and declaring that he is favourable to a UK-US trade deal would be ‘a tremendous opportunity to double, triple, quadruple’ trade between the two nations: Donald Trump, video of press statement, 13 July, 2018 available on Politics Home: https://www.politicshome.com/news/uk/political-parties/conservative-party/theresa-may/news/96823/watch-donald-trump-accuses-sun [consulted 16 July 2018].

29 ‘Passporting’ rights at present apply to the European Economic Area (EEA), allowing authorised firms in member states to carry out their activities unrestricted in any other member state. Brexit risks the withdrawal of passporting rights from UK financial institutions, making the obtention of passporting rights in other nations particularly pressing.

30 Spence, P., ‘Chlorinated Chicken: Why you shouldn’t give a cluck’, Adam Smith Institute Briefing Paper, 2017: https://www.adamsmith.org/research/chlorinated-chicken [consulted 12 July 2018].

31 Twenty-five member states formally adopted the pact as an international treaty in March 2012: the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG) stipulates that national budgets must be in balance or in surplus by ensuring that the annual structural deficit does not exceed 0.5% of GDP.

32 An FTT would be a tax of between 0.1 and 0.01% on financial transactions between financial institutions. The EU proposed introducing such a tax in September 2011 but member states have, at the time of writing, failed to reach agreement.

33 Singham, S., McBride, C., Improving Global Financial Services Regulation, IEA Discussion Paper 88, 2018: https://iea.org.uk/wp-content/uploads/2018/06/GLOBAL-FINANCE-REGS-PAPER_WEB_FINAL.pdf [consulted 12 July 2018].

34 Ibid., p. 42.

35 Singham and McBride suggest that ‘the UK is by far the most interconnected financial market to the EU and the continuing flow of capital from the UK banking system is important to EU businesses (ibid.: 19).

36 Ibid., pp. 16-17.

37 European Commission, ‘CETA explained’, 2018 http://ec.europa.eu/trade/policy/in-focus/ceta/ceta-explained/index_en.htm [consulted 12 July 2018].

38 Corporate Europe, Gold-digging with Investor State Lawsuits, 2017: https://corporateeurope.org/sites/default/files/attachments/gold_digging_with_investor_state_lawsuits.pdf [consulted 12 July 2018].

39 Bootle et al., op. cit., p. 15.

40 OECD, OECD Indicators of Employment Protection, 2018: http://www.oecd.org/els/emp/oecdindicatorsofemploymentprotection.htm [consulted 11 July 2018].

41 Coulter, S., Hancké, B., ‘A Bonfire of the Regulations, or Business as Usual? The UK labour market and the political economy of Brexit’, Political Quarterly 87(2), 2016: 148-156.

42 Theresa May, 2018, Mansion House Speech, op. cit.

43 HM Government, op. cit., p. 40.

44 Ramsay, A., Geoghegan, P., ‘Dominic Raab: Is he the IEA’s man in government?’, OpenDemocracy, 10 July, 2018: https://www.opendemocracy.net/uk/brexitinc/adam-ramsay-peter-geoghegan/dominic-raab-is-he-iea-s-man-in-government [consulted 12 July 2018].

45 Kwarteng, K., Patel, P., Raab, D., Skidmore, C., & Truss, E., Britannia Unchained: Global lessons for growth and prosperity, Basingstoke, Palgrave Macmillan, 2012.

46 Raab, D., Escaping the Strait Jacket: The regulatory reforms to protect jobs, Centre for Policy Studies, 2011: https://www.cps.org.uk/files/reports/original/111114155257-escapingthestraitjacket.pdf [consulted 11 July 2018].

47 Theresa May, Speech on the NHS, Royal Free Hospital, London, 18 June 2018.

48 See, for example, Guinan and Hanna, 2017 (Guinan, J., Hanna, T., ‘Lexit: The EU is a neoliberal project, so let’s do something different when we leave it’, The New Statesman, 20 July, 2017) who argue that the ECJ’s interpretation of article 106 of the Treaty on the Functioning of the European Union (the Lisbon Treaty) prejudices public ownership. The article (art.106 (2)) states:
Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in the Treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Union.
Furthermore, article 107 (1) states:
Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.
These articles certainly allow for public services to be opened up to competition. The EU does protect Services of General Interest (SGI), defined as ‘services that public authorities of the EU member countries classify as being of general interest and, therefore, subject to specific public service obligations’ although these ‘can be provided by the state or by the private sector’ (European Commission, ‘Services of general interest’, 2018: https://ec.europa.eu/info/topics/single-market/services-general-interest_en [consulted 12 July 2018]). Furthermore, EU directives explicitly favour opening up certain public services to the private sector. Directive 2012/34/EU, for example, encourages such practices with regard to the railways:
In order to render railway transport efficient and competitive with other modes of transport, Member States should ensure that railway undertakings have the status of independent operators behaving in a commercial manner and adapting to market needs.
This would suggest that EU membership is to some extent a hindrance to (re)nationalisation projects and that it certainly does not preclude privatisation provided that certain service standards are upheld.

49 Spence, op. cit., p. 2.

50 HM Government, op. cit., para.49(a): 25.

51 Theresa May, Answer to Prime Minister’s Questions, 7 February, Hansard, 2018c: https://hansard.parliament.uk/Commons/2018-02-07/debates/B3EF2D42-D1CF-4293-BCB1-FE3086EB84AD/Engagements [consulted 11 July 2018].

52 This assumes that the NHS constitutes an attractive market for US investors. Yet, The Economist calls this assertion into doubt on account of the financial difficulties in which many existing NHS trusts find themselves and the extreme complexity of the service: see The Economist, ‘An American trade deal raises the prospect of more private involvement in British healthcare’, 9 February 2017.

53 Pirie, op. cit., 2016b, pp. 7-8.

54 The Prime Minister has promised to reduce this rate further to 17% by 2020. See Gemma Parker and Gemma Tetlow, ‘Theresa May pledges to push on with cuts to corporation tax’, 22 June 2017.

55 Farnsworth, op. cit., p. 713.

56 Farnsworth, K., Cole, L., & Conn, M., Oiling the Wheels: Nissan, private investment and British corporate welfare, Corporate Welfare Watch, 2017, p. 10: http://www.corporate-welfare-watch.org.uk/wp/wp-content/uploads/2017/10/170927-nissan-report-final.pdf [consulted 12 July 2018].

57 Ibid.

58 Pirie, 2017, op. cit., p. 32.

59 See Dardot P. & Laval, C., La nouvelle raison du monde : essai sur la société néolibérale. Paris, La Découverte/Poche, 2009 ; Peck, J., Theodore, N., & Brenner, N., ‘Postneoliberalism and its Malcontents’, Antipode, vol. 41, n°S.1, 2009: 94-116 ; Harcourt, B., The Illusion of Free Markets: Punishment and the Myth of Natural Order. Cambridge MA, Harvard University Press, 2012; Crouch, C., Can Neoliberalism be Saved from Itself? Social Europe Edition, 2017: https://www.socialeurope.eu/book/can-neoliberalism-saved [consulted 26 February 2018]; Bell, E., & Christoph, G., ‘The Slow Retreat of Neoliberalism in Contemporary Britain’, in Dawes, S., & Lenormand, M., (eds.), Neoliberalism in Context, Basingstoke, Palgrave, 2019.

60 Brenner, N., & Theodore, N., ‘Cities and the Geographies of “Actually Exisitng Neoliberalism”’, Antipode 34(3), 2002: 349-379.

61 Brexitcentral, ‘House of Lords defeats Government 14 Times on the ET Withdrawal Bill at Report Stage’, 8 May, 2018: https://brexitcentral.com/house-lords-voted-amendments-eu-withdrawal-bill-report-stage/

62 The UK in a Changing Europe, ‘Survey of MPs reveals Theresa May and Jeremy Corbyn face significant political challenges over Brexit’, 22 January, 2018: http://ukandeu.ac.uk/survey-of-mps-reveals-theresa-may-and-jeremy-corbyn-face-significant-political-challenges-over-brexit/ [consulted 11 July 2018].

63 This means allowing MPs to vote to either accept or reject the final Brexit deal negotiated between the UK and the EU.

64 Curtice, J., ‘Have Voters Changed their Minds about Brexit?’, BBC News, 12 March, 2018: https://www.bbc.com/news/uk-politics-43336351 [consulted 12 July 2018].

65 NatCen, ‘What UK Thinks: EU’, 2018: https://whatukthinks.org/eu/questions/do-you-think-theresa-may-is-aiming-for-too-soft-a-brexit-too-hard-a-brexit-or-that-she-is-getting-the-balance-between-a-soft-and-a-hard-brexit-about-right/ [consulted 11 July 2018].

66 Ibid.

67 Yet, it would be difficult for an extreme Brexiter to win the support of the Conservative Party. The failure of the 12th December 2018 no-confidence vote in Theresa May by 200 votes to 117 suggests that the hard Brexiters are in an (albeit significant) minority.

68 Springford, J Brexit and EU Regulation: A Bonfire of the Vanities?, Centre for European Reform, 2016, p. 6: https://www.cer.eu/publications/archive/policy-brief/2016/brexit-and-eu-regulation-bonfire-vanities [consulted 12 July 2018].

69 HM Government, op. cit., p. 20.

70 CBI, The Room where it Happens: A guide to the EU bodies and regulators that matter to business in the Brexit negotiations, 2017: http://www.cbi.org.uk/index.cfm/_api/render/file/?method=inline&fileID=AC1BA892-B623-4250-A976B8CAAC833DC0 [consulted 12 July 2018].

71 Smith, op. cit.

72 Ibid.

73 Peck, J., Constructions of Neoliberal Reason, Oxford, Oxford University Press, 2010, p. 7.

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Emma Bell, « Brexit : towards a neoliberal real utopia ? », Observatoire de la société britannique, 24 | 2019, 45-66.

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Emma Bell, « Brexit : towards a neoliberal real utopia ? », Observatoire de la société britannique [En ligne], 24 | 2019, mis en ligne le 01 mai 2020, consulté le 19 janvier 2021. URL : http://journals.openedition.org/osb/3196 ; DOI : https://doi.org/10.4000/osb.3196

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Emma Bell

Professeur de civilisation britannique à l'Université de Savoie

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