Brexit might make the United Kingdom into the new Australia. That is a prosperous English-speaking nation; with an advanced social welfare system, and a thriving economy.
Britain does have a lot going for it economically including:
A very advanced social welfare system that includes the bureaucratic but successful National Health system.
The home of English – the most widely used language in the world and the basis of international pop culture.
A vibrant pop culture that influences the world including music, books and movies. This includes everything from Agatha Christie to the Beatles to Harry Potter.
A growing manufacturing sector. Tata Motors (NYSE: TM) plans to add 10,000 workers to build electric Land Rovers and Jaguars in the UK, The Financial Times reported. Siemens just opened a £310 million turbine blade factory in Hull.
Increasing industrial growth, British manufacturing has grown every month since Brexit in June, The Financial Times reported.
A climate that’s very favorable to business. Business investment increased by .9% during the third quarter of 2016.
A thriving consumer segment, household consumption increased by .7% in third quarter more than economists had predicted.
A government that is willing to try radical new social experiments. Scotland’s government is planning to test a basic income scheme for example.
One of the world’s oldest and most effective democratic governments.
A very effective legal system that does a good job of protecting property and individual rights.
A central bank (the Bank of England) that is willing to research new financial technologies such as cryptocurrencies. The Bank of England even operates its own FinTech Accelerator.
A thriving financial sector.
One of the most stable governments in the world. There has not been a major upheaval in Great Britain since the Glorious Revolution of 1688.
Close proximity to Europe and easy transportation via the Channel.
Strong national institutions, particularly the monarchy and parliament.
All this gives Britain the ingredients for major economic success – if the government and people get the recipe right. There’s also a lot that can go long because the UK is an older, larger, more complex and far more diverse nation than Australia is.
The biggest threat to British success might be all the historical baggage the nation has. That includes a long history of class warfare, and ugly ethnic animosities. The most dangerous of these arise in Northern Ireland; which has a long history of terrorism and civil unrest that often spills over to Great Britain.
A potentially destructive wild-card is Scottish Independence. Scotland’s leader First Minister Nicola Sturgeon is dedicated to it, and Brexit has stirred up new demands for separation. A Scottish exit would damage Britain by depriving the nation of North Sea oil.
Reform of Britain’s popular but ponderous welfare system is vitally needed. There are some moves in that direction, but the popularity of some programs; particularly the National Health will make progress difficult.
How Europe Threatens Britain’s Success
Another threat to British success that is often underestimated is Europe. The European Union, which is Britain’s primary trading partner, is an economic basket case. Low economic growth is made worse by political turmoil in Italy and negative growth rates in France.
Immigration and terrorism are two threats from Europe that might have catastrophic effects on Britain. Italy alone is coping with more than 170,000 asylum seekers and an economy that’s smaller than the one it had before the 2008 economic meltdown. There’s also $400 billion in problem loans in Italy; that is equivalent to 20% of the country’s gross domestic product.
Real havoc might be wreaked if Italy were to leave the European Union and revive its currency the lira – which would presumably be worthless. Europeans might wake up to find the equivalent of a third-world nation in their midst.
If the European countries cannot fix their problems; particularly the debt crisis, Britain might find itself with no customers for its factories products. A collapse of the Euro would also deprive the City of London of many of its customers.
The whole plan for post-Brexit success depends on a prosperous Europe and a successful European Union. If those things do not occur, it is hard to see how Britain would be able to maintain its economy. There simply is no trading partner that can replace the EU for Britain.
Lack of Natural Resources
A major difference between Britain and Australia is natural resources. The UK has few natural resources beyond North Sea Oil, which is dwindling. Britain’s last deep-pit coal mine closed last year so the country now depends on imported natural gas. Even most of its coal is now imported – largely from Russia.
Much of Australia’s success is built on abundant natural resources including coal and iron ore. Not to mention large reserves of metals such as gold.
A lack of natural resources can be a godsend to a nation by forcing it to develop other capabilities. Britain has a vast amount of intellectual capital, including a literary tradition, a strong and highly creative pop culture, the world’s most influential theater scene, a history of innovative manufacturing and strong tech and finance sectors.
A long-term benefit is that the lack of resources will force Britain to develop technologies; such as wind power and electric cars, that might serve as the backbone of new industries. The switch to lithium-ion batteries might reduce both revenues from North Sea Oil, and Britain’s dependence on imported petroleum products.
Some Valuable Human Resources the UK has
One resource that should not be underestimated is Britain’s universities; which are among the world’s oldest and most famous colleges. Oxford and Cambridge in particular have the potential to become research hubs with government support.
An intriguing resource is the National Health; which under the right conditions, can be transformed into a gigantic nationwide laboratory for medical research and development. Opportunities there include the development of new drugs and the testing of next-generation medical technologies.
Medical tourism is a potential industry that might develop around the National Health. Demand for advanced medical procedures will grow as the world’s population ages, creating a market for medical treatment especially for individuals from developing nations.
Tourism is another British industry that might experience serious growth. The big opportunity in tourism will come if the UK can prove it is not as vulnerable to terrorism and political unrest as European competitors, like France and Italy.
Recent terror attacks have devastated France’s tourism industry. Some other sectors such as retail, real estate and hotels in London stand to benefit from increased tourism.
Britain is in a pretty good position right now, if it can avoid political unrest, terrorism and separatism. Under sensible leadership the United Kingdom has the potential to create a dynamic economy that can sustain it through the 20th Century.