Simon Tilford :
Britain’s sense of economic invulnerability is even more puzzling. Why does a country that is significantly poorer than Germany, with fewer internationally competitive industries and greater dependence on foreign capital and managerial expertise, believe it can afford to quit the single market? Britain’s economic performance is no better than France’s and on some important measures – especially productivity – far worse. Yet nobody from France’s political mainstream seriously thinks that the French economy would thrive outside the EU.
Much of the British elite know little about how Britain’s economy compares. Few realise that three-quarters of the country is poorer than the EU-15 average; that Britain’s growth performance has been mediocre at best; or that there are relatively few British-owned and managed businesses with a strong record of growth. There are bright spots in the British economy, but its commanding heights owe much to foreign capital and expertise. Foreign-owned businesses generate more than half the country’s exports, and many of these exports are intermediate goods – links in international, predominantly European, supply chains. These companies are especially vulnerable to Britain leaving the single market. If the British economy were more locally owned and managed, it would be easier to understand the British complacency over the economic impact of Brexit. But for a developed country so dependent on foreign capital to do something so damaging to its ability to attract that capital has few precedents.