The Post-War Economic War
Economic War: As Theresa May prepares for a crunch summit with her European counterparts, we take a look at what might happen if the UK Government loses control over its economy. The ‘economic war’ is the politically charged term used to describe the acrimonious trade war between Britain and Ireland, which spanned the entire 1930s. Economic analysts see the possibility of a major recession in the UK after the vote to leave the European Union, while Ireland’s Finance Minister Simon Coward has warned the UK not to try to dictate the pace of its exit from the EU. He also said that a hard Ireland will lead to a hard landing – and the former Irish finance minister, Michael Noonan, suggested that a hard Ireland could lead to financial crises.
the Leave camp won a decisive victory in the UK general election, with the leave campaign winning by a margin of 12 seats to Leave Britain. However, many Remain voters did not back the Leave campaign, as they feared that a hard Brexit was likely to mean bad terms for the UK economy. Some economists had suggested that a hard Brexit may lead to a recession. One of the main arguments put forward by Remain was that it would avoid a messy breakup of the UK economy and lead to economic growth. The Vote Leave group claimed that a hard Brexit would put employees at risk in the long run and result in job losses.
If the economy suffered a prolonged recession,
it would be even worse than the global recession, which was the worst since the Great Depression. It is important to remember that the last thing the British government wants is another round of economic wars. Some economists believe that a hard Brexit would lead to tariffs on imports from the EU, and this could lead to a sharp increase in the cost of goods. The U.S. and other members of the European Union (EU) are currently imposing their kinds of trade sanctions against the U.K. and may follow suit if there is another hard line by the British government.
The Remain camp
also accused the Leave Campaign of seeking to provoke a military conflict with Russia, even hinting that it might seek nuclear weapons to justify a war with Russia. However, Russia has denied this, stating that it has no desire to go to war with the U.K., although it reserves the right to defend itself if it feels its rights to its territorial integrity are being threatened. However, U.S. officials believe that Russia may be contemplating some kind of military action to protect its Kaliningrad region from what it regards as a threatened attack by the United Kingdom. The Russian government has also threatened to annex neighboring nations in Eastern Europe if the U.K. pursues an aggressive stance toward Russian speakers in neighboring states.
One of the biggest areas
of possible future friction between the U.K. and the EU will likely be the economic war with Germany. The U.K. is dependent on Germany for many things, from paying its bills to protecting the EU with membership to maintaining its military forces in Afghanistan. However, German Finance Minister Wolfgang Schaeuble has warned that the UK could find itself the victim of a “tsunami” if it seeks to leave the EU after it has decided to pull out of the institution. He has likened the British move to the formation of an alternative currency in Europe, saying, “A currency union can only come apart if it loses its values. That is exactly what is happening here: the values of the EU are losing.”
The prewar buildup of industrial capacity
in the UK had a hand in the country’s economic recovery from World War II, but the post-war economic warfare may cause another round of recessions. In addition to prewar industrial capacity, the post-war economic warfare led to lower living standards for many Brits due to the excess capacity of Britain’s economy and the resulting high inflation rate. This new higher standard of living has been built on a shaky foundation: the cost of living index has risen steadily on the back of a faltering economy and an overstretched banking system, which has seen thousands of banks lose business and the worst hit being the finance sector, which has suffered the biggest hit by the recession. As the situation remains fragile, the government has been forced to implement stringent measures to curb inflation, holding down the prices of essentials like food and fuel and trying to raise employment levels. Although it appears that the government has done enough to stem inflation, the ongoing need to stimulate the economy through the industrial capacity building will likely see fresh industrial base building projects pushed ahead.