Brown predicts minimalist ‘wafer-thin’ deal will emerge

Two competing views of Britain are now at war and an isolationist ‘stand-alone’ outlook has taken psychological pre-eminence over that of an outward-looking trading economy, ex-UK prime minister Gordon Brown has said.

“So you’ve got these two views of Britain, one a nationalist view and one a patriotic view, and they are competing with each other.

"For some time the nationalist view has triumphed and that is why we are leaving the European Union.

Brexit is a mistake

“That is to my regret because I think it is a mistake, and we will regret it,” the former Labour PM told the IBA Virtually Together 2020 Conference.

Brown said that economic pressures have built up in Britain and people felt they were not being listened to, by their governments or by the EU.

“My own view is that we will oscillate between these two positions, but pretty soon people will be in a more co-operative frame of mind,” he said.

Defence and security

“I don’t think that Britain is going to pull away from America, or even actually, on defence and security, with the rest of Europe. 

“This is an unfortunate episode which reflects what has happened in these last ten years, populist, nationalist, protectionist pressures have arisen,” he said.

Economic war

Brown said he expected a Brexit deal because Britain cannot afford to enter 2021 in an economic war with Europe.

He said that President-Elect Biden’s arrival has signalled that the Irish border agreement cannot be broken, and this will push British PM Boris Johnson into a deal with the EU. 

“I doubt it will be no-deal,” he said. 

“It will be a minimalist deal, a paper-thin deal, but we will be in a relationship with Europe.

The former PM said the relationship between Britain and America survives beyond individual leaders and beyond administrations because it is based on a shared sense of values and a common bond that won’t be broken.

Brown said that Margaret Thatcher had told him that the secret to her relationship with US President Ronald Reagan was that he was more afraid of her than she was of him. 

“Every prime minister finds a similar way of relating to their opposite number,” he continued. 

Breach

“I think there will be a relationship. It may not be as good if there is a breach in the Anglo-Irish Agreement.”

The former PM continued that there are at least ten serious points of contention between the US and China and that we are moving towards "one world with two separate systems".

As a rising power, China will avoid taking on the established power and avoid ending up in conflict and confrontation with the established power, Brown said.

President Xi Jinping of China has also said that his country will avoid the ‘middle income trap’ of stalled economic and industrial development, such as in Latin America.

Chinese incomes will rise very, very fast, Brown predicted, and will catch up with consumer spending in the West in the next 20-30 years.

Co-operation and containment

China’s future relationship with the West will need “as much co-operation as possible and as much containment as necessary,” he said.

It is impossible to imagine every issue being resolved, he continued, but the US and China will try to work together where possible and will be honest about their disagreements.

Human rights in China must be kept at the forefront of people’s minds, however, even if there is co-operation on climate change, the economy and Africa’s future development.

Unlike during the Russia-US Cold War, China is still very much part of international institutions such as the IMF and the World Bank, Gordon Brown pointed out..

Co-operation will be tough and there will be hard talks but the opportunity must be seized to work together on economic recovery, he said.

He pointed to space exploration which has now evolved from a contested US-Russia race for supremacy, to a model of international co-operation.

The same should be possible on earth, he said.

Brown said that the world economy loses £400 billion a year to tax avoidance and tax evasion and this money could be used to eliminate poverty. 

International cooperation is the key to eliminating transfer pricing which is unfairly depriving national treasuries of finance, he said.

“When I was in government, we did make a breakthrough on the automatic exchange of tax information,” he continued. 

Tax havens

It is now possible to isolate and ban tax havens that continue to hide money that should be subject to proper taxation, he said.

Recovering that money involves co-operation between lawyers, accountants, policymakers and regulators, he said.

The OECD needs to move faster and get tougher on those countries which refuse to abide by the rules, he said, with trade sanctions to force them into the international community.

He said that tax havens are now seeing themselves undercut by other rogue states, with even worse behaviour.

Blame games

“What been missing over this past year is a sense that we can build a better future together. There has been conflict, blame games and tension, but scientific advances are based on international co-operation,” he said.

“You have got to build for the future by hoping, not wishful thinking, but hoping which means there is a certainty about what you want to see happen,” he said.

In his closing remarks, IBA President Horacio Bernardes Neto said the virtual 2020 IBA conference had reversed an adverse pandemic situation and the month-long ‘technological marvel’ had attracted a record number of 12,500 delegates from 160 jurisdictions.

“The way in which support for the association was expressed during the online event, and on social media platforms, was heart-warming,” he said.

Protect the rule of law

“Importantly, we gave thought to what we could each do to promote and protect the rule of law, which sadly is under attack in too many countries,” President Horacio Bernardes Neto said.