In his Last loyalty display Before Donald Trump, the secretary in the United States of the Treasury, Scott Bessent, described the president's tricks on the prices as a deliberate act in the creation of “strategic uncertainty”. According to Bessent, the certainty is overvalued and Waywardness brings a lever effect to the negotiations that will generate the best commercial offers for the United States.
This confident conversation reminded me of Brexit, where former Prime Minister Boris Johnson promised that the United Kingdom would get a “big affair” from the EU, while his driving acolyte Michael Gove insisted that Great Britain “would hold all the cards” in negotiations.
Brexiters thought that the trade deficit of British goods had given them a winning hand and that the commercial barriers that Great Britain wanted to erect with the EU would benefit British exports. I know – it made no sense even at the time.
Normally, in economics, we treat the bygons like Ugones. You must expect in the future and not think about past decisions that cannot be canceled. But on this occasion, where there are similarities, it is worth seeing the amount of milk overturned by Brexit.
Between the 2016 referendum and the UE-UK trade and cooperation agreement on January 1, 2021, the United Kingdom created its own strategic uncertainty with multiple ambitions, tactics and prime ministers. Commercial investment has stored, Sterling has dropped and inflation has exceeded that of other countries. Before 2016, Brexiters complained that the United Kingdom was economically “chained to a corpse”, but growth performance previously greater than the United Kingdom compared to the EU quickly disappeared.
These losses have not been recovered. Since the free trade agreement in 2021 with the EU brought the certainty of higher commercial obstacles to Great Britain, the reduction in the flow of goods through the canal was the most notable. The quantity of exports of British goods is lower now than in 2016 or 2021 and Great Britain is the only country in the G7 to have this file.
Of course, it is possible to explain the aspects of this shocking performance. A part comes from fuels, which is more likely to reflect the drop in northern sea oil production rather than Brexit. And the export performance of British goods with the not EU countries are about as poor as for the EU, which suggests a problem with the United Kingdom as a whole. Service exports have done well.
But it is impossible to build a coherent argument that Brexit benefited the British economy. The diminished role of Great Britain has a vigorous debate on the excessive quantity of damage and if it is wiser strive in the United States or the EU in the hope of being thrown out of one of their tables.
Mark Carney, who was intimately involved in Brexit, as governor of the Bank of England and must now negotiate with Trump as a Canadian Prime Minister, Put it well On weekends, saying that Brexit lessons are now applied in the United States. “When you break or break into business relations considerably with your main business partners … You end up with slower growth, higher inflation, higher interest rates, volatility, lower currency and a lower economy,” he said.
It was painful to live this experience in Great Britain. Modern capitalist economies are extremely resistant, so there is rarely this cathartic moment when the whole country realizes that it has made a terrible mistake and moves away from the edge. There is therefore no doubt that the Trump administration will continue to peddle fantasies on its strategic brilliance, while fighting internally for daily tactics and trade agreements that best recreate the advantages that the United States already had. Trade is relatively unimportant for the American economy, and it can withstand many of these nonsense without necessarily collapsing.
But a stagflationist shock is only that. When it comes to a calculation in a few years, the American economy will be lower and its position in the world has decreased. Brexit teaches you this.
