British politicians have historically prided themselves on their lack of introspection. Unlike their European counterparts, they have mostly eschewed the language of economic planning and abstract models. However, Brexit is forcing a re-evaluation of national economic and political purpose. Theresa May and the Chancellor, Philip Hammond, who delivered his first Budget on 8 March, have threatened to change the UK’s “economic model” if the EU denies it the post-Brexit trade agreement that it desires. Rather than slinking off “like a wounded animal”, Mr Hammond has said, Britain would “fight back” by cutting taxes and regulation.
But what is the model that the UK would abandon? To characterise it as “liberal” is simplistic. Though Britain has one of Europe’s most flexible labour markets, it also has one of its most redistributive tax and benefit systems. It combines light economic regulation with a restrictive planning regime, and it maintains the social-democratic jewels of the NHS and the triple-locked state pension. Mrs May and Mr Hammond have stated that their aim is not a radical break with this approach. Indeed, the Prime Minister’s support for state interventionism, an industrial strategy and workers’ rights encourages the thought that the threat of it is merely a negotiating tactic. Yet if Britain is to remain what Mr Hammond described as a “mainstream” European economy, reform will be required.
Content from our partners
