Brexit Britain is economically resilient and well positioned for a much-needed economic rebound, as the seventh freest economy in the world. This is one of the key findings of the just-released 2021 Index of Economic Freedom, an annual cross-national study by The Heritage Foundation.
2020 has been an extraordinary year on many fronts, from public health policy to national security and economic policy. Over the past year, the global economy has been strained, with the economic livelihoods of billions of people severely disrupted by the deadliest pandemic in more than a century, as well as the responses of governments to it, in the form of lockdowns, travel bans and persistent trade protectionism.
Clearly, the long-term solutions to our challenges do not lie in more government controls. They lie in a return to free market principles. The rapid development of new vaccines by the ever-innovative and dynamic private sector promises to put an end to the coronavirus crisis. American and British companies have been at the forefront of vaccine development, and their work is literally saving the free world.
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The UK economy entered 2020 with many challenges, but also with fundamentally strong economic competitiveness in place. Key hurdles included negotiating a historic post-Brexit trade deal with the EU, weaker-than-expected productivity growth and persistent regional disparities in economic development. At the same time, the UK economy was operating at full employment at the start of last year, inflation was under control, household and corporate debt burdens had declined significantly since the 2009 global financial crisis and the system overall financial system was functioning well, reinforced by market openness and regulatory efficiency.
Although the unexpected global pandemic, which originated in China, has wrought significant human and economic devastation in the UK, the overall impact has been mitigated by a proactive and aggressive policy response. Two lockdowns and ongoing travel restrictions have hit Britain’s economic activity hard, leading to a sharp drop in GDP. But a robust fiscal, monetary and financial strategy led by the government of Boris Johnson, offered by the strong fundamentals of the British economy anchored in the pillars of the free market, has helped to contain unemployment and insolvencies.
Once again, the catastrophic predictions for the UK economy since the Brexit vote in 2016 have not materialized.
Significantly, the UK economy as a whole has proven remarkably resilient, withstanding the downturns caused by lockdowns and restrictions. Britain’s economy rebounded 1% in the final quarter of 2020, as reported by the Office for National Statistics, while Germany grew just 0.1% and the French economy sagged. contracted by 1.3% over the same period. And, as Reuters reported, “UK businesses fared less poorly than expected during the February lockdown and are optimistic about growth prospects later in 2021,” based on the latest Purchasing Managers’ Index. (PMI) of the United Kingdom.
According to the 2021 index, the UK remains “mostly free” as the seventh freest economy in the world. Britain’s economy has lost some ground this year, but has maintained its position higher than other major Western G-7 economies, including the United States, Canada, France and Germany. .
There will be many opportunities for greater economic freedom in the post-Brexit UK economy. Freed from the constraints of European Union bureaucracy, the UK economy could register substantial improvements in key policy areas such as freedom of enterprise and freedom to trade.
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Global Britain deserves and should become a more vibrant business hub, because expanding trade and investment is not just about opening up the market, although that remains crucial. It is also advanced by a strong rule of law, effective regulatory efficiency and small size of government, areas in which Britain fares much better than many of its European regional competitors.
From a broader foreign policy perspective, it is important to remember that the US-British partnership is the beating heart of the free world. Washington and London must work together to further strengthen the special relationship between two of the largest and freest economies in the world. These include moving forward quickly with a historic bilateral trade agreement that will not only facilitate economic recovery from the pandemic, but also bolster investment and job creation on both sides of the Atlantic.
As the Heritage Foundation has argued, an Anglo-American trade and investment agreement will be a force generator for increased economic dynamism and prosperity, and will play a key role in reinvigorating the global free trade agenda. This is a unique opportunity that the United States and Britain must seize to reinvigorate and modernize the engines of growth in the private sectors on both sides of the Atlantic.
Now is the time to act and pursue greater commercial freedom and global economic freedom.
This piece was originally published in The National Interest https://nationalinterest.org/blog/buzz/america-and-brexit-britain-time-economic-alliance-180138