If only Alan Milward were still alive. Our foremost historian of Britain’s relationship with Europe, and author of the first volume of the official history of the United Kingdom and the European Community, would have brought the full force of his intellect and scrupulous scholarship to bear on the prospectus the Prime Minister has set out for the Brexit negotiations.
Why, he asked, did our first attempt to join the EEC fail in 1963, and our national strategy collapse? “Britain’s weakness in the negotiations did not spring from its tactics”, he wrote in his official history, “but from the direct conflict between its own worldwide strategy, which in the Conservative Party still had powerful adherents, and that of France. It was not a part of the United Kingdom’s strategy to base its economic or political future on European preferences. France, however, would accept nothing less and the outcome was de Gaulle’s veto.” (Milward, A., The Rise and Fall of a National Strategy 1945-1963, 2020 p483).
That history seems wearily prescient now. Should we learn any lessons from it? Contemporary eurosceptics, whose number must now be taken to include the UK government, would doubtless retort that leaving is not the same as joining: we are not petitioning for entry, but quitting. “No deal is better than a bad deal”, as the Prime Minister put it in her Lancaster House speech. Unfortunately, we have been given to such hubris before and it has not served us well. Britain has now played the key cards in its negotiating hand: to leave the single market and the customs union, and end free movement. It is left with the threat of imposing retaliatory tariffs on incoming EU goods and turning Britain into a corporate tax haven – the United Kingdom offshoring itself into one of its own dependent territories. These do not look like strong bargaining chips, even if they weren’t so patently undesirable in their own terms. And, just as in the early 1960s, we are bringing perspectives to bear that are shrouded in the mists of our national history, not the realities of contemporary European diplomacy.
Britain sought entry to the EEC when it became undeniably clear that our post-war economic performance was vastly inferior to that of the six EEC countries. Between 1950 and 1960, GDP grew at an annual average of 2.7% in the UK, compared to 7.75% in West Germany, 5.85% in Italy and 4.6% in France. By the early 1960s, productivity levels in West Germany and France overhauled those in the UK, and have remained higher ever since. Unlike continental Europe, the UK did not successfully integrate commercial and industrial policy in the 1950s. It preferred, as Milward put it, “nebulous rhetoric about global competition”. Thus, “while British diplomats and civil servants, pushed into action by the Bank and the financial interests it represented, argued for a “one world system” in which British industry might well in reality have been at a serious disadvantage compared to its competitors, their European counterparts kept their eyes on the finer details of the relationship between industry and trade. All of them were rewarded by higher rates of growth of productivity in manufacturing than in Britain.” (Milward A, The European Rescue of the Nation-State, 1992, p393).
The post-war regime of fixed exchange rates meant that this loss of economic competitiveness showed up in recurrent balance of payments crises and pressure on sterling reserves. Policymakers were forced to address underlying weaknesses in our economy and direct national resources towards exporting sectors. This drove the change in Britain’s strategy towards the EEC – instead of standing aside, we sought to join the new, burgeoning European market, opening up our manufacturers to the competitive pressures it would bring, as well as to its consumers. The 1960s saw the development of a new industrial strategy to support this economic reorientation. It led to massive investment in our infrastructure, a new regional policy and a huge expansion of further and higher education opportunities.
Today, a floating exchange rate means that sterling bears the weight of adjustment. Our loss of competitiveness is signalled in a weakening pound. It is just that the markets decide its level, not Prime Ministers or Chancellors. They are absolved from addressing the root causes of our current account deficit, as and until inflation eats deeply into living standards or foreign direct investment dries up. When faced with the prospect of a bad Brexit deal and further relative economic decline, our current Chancellor and Prime Minister argue for tax cuts and deregulation, not industrial strategy, capital investment and stronger public services.
In the early 1960s, it was our failure to resolve our relationship with the Commonwealth, and what entry to the EEC would mean for their critical exports to the UK, that sunk our negotiations. But more than that, what the EEC negotiations forced the UK to confront was the accumulated geopolitical and economic problems of the post-war era; not just our relative economic decline or our trading relationship with the old, “white settler” Anglosphere commonwealth, but the economic development needs of India and Pakistan, the political demands for decolonization in Africa, the status of three European territories (Malta, Gibraltar and Cyprus) and the meaning of our Atlantic defence and security relationship after the Suez crisis. As Milward put it, the “cumulative problems of 250 years of British rule” were “all gathered together in one negotiation.” (Rise and Fall p370).
Today that list would read rather differently. But Brexit will still be a prism through which a profound set of national challenges will be refracted. Inter alia, these include: the future of the United Kingdom itself, given Scotland’s vote to stay in the EU and the positions taken by the elected SNP government; Northern Ireland’s relationship to the Republic of Ireland, given our impending departure from the single market and customs union; the balance of economic and social class interests within the economy and political system of the country, and the weight given to the regions and manufacturing vs London and the City; and, most of all, our ability to pay our way in the world, given our longstanding trade deficits. All of this takes place against the radical uncertainty introduced into global politics by the election of Donald Trump. It is a formidable challenge.
Future historians will have to rise to the task of explaining how a marginal political preference that was largely (if not entirely) the preserve of the Eurosceptic right in British politics became the official position of the UK government. We can be pretty sure that the answers will not be found in the Whitehall archives, as they were for Milward. Brexit has become a deeply political process, inside the Conservative Party, and outside it. Official histories will only tell us half the story. But as the negotiations with the European Union get underway, we would do well to learn from our past.