Feeling let down and aghast by the government’s lack of coherence on Brexit, the former Goldman Sachs chief economist — best known for coining the acronym “BRICs” to describe the fast-growing economies of Brazil, Russia, India and China — opted instead for some down time and went traveling with his family.
Now back in London, and unfettered from government, O’Neill has time for reflection. As he navigates his way around a fancy open-faced sandwich in London’s members-only Arts Club, he paints a bleak picture of post-Brexit Britain.
The U.K., he says, will struggle to retain its status quo in the global economic pecking order. In reality, it is more likely to be in a “worse position than it is today, sadly.”
He’s fresh out of a meeting with university leaders at the House of Lords, where he is a life peer — Baron O’Neill of Gatley — and he’s thoughtful and focused by their concerns over Brexit.
If the U.K. stands any hope of coming away from Brexit without too much harm, it needs to look for “aligned self-interests,” he says. “Unless we can demonstrate in a post-Brexit way to the world at large that the U.K. has got something it can contribute that others can’t, why is anyone else going to go out of their way to do us any favors?”
But this requires forward planning and thought. Sadly, he says, most people involved in policy, including Foreign Secretary Boris Johnson, “are just involved in their tea leaves of the week of politics, which is very depressing.”
“They don’t think about the world outside of the U.K. when they get out of bed,” he says.
O’Neill is particularly skeptical of a proposal by the May government to give special “sector deals” to Britain’s “industries of the future,” like robotics and artificial intelligence, if there’s a fighting chance they could blossom to be world leaders.
The whole idea of “picking winners,” he says, is “fraught with problems.” Few foresaw that Apple, a company that nearly went bust 20 years ago, would be where it is today.
The U.K. should instead adopt a “business philosophy” like South Korea, for example, making sure investors that support R&D get proper encouragement and preferential treatment. He thinks the U.K. should ban share buybacks and instead spend serious amounts on R&D, incentivized through tax treatment.
“The other reality check, which the government is choosing to ignore,” is the importance of staying in the European single market, he adds. The U.K. car industry, for example, is exporting more cars than it has done for over 40 years. Tariff-free trade is crucial for the sector because cars are made from thousands of parts from all over the world.
“The profit margins are so thin that if you suddenly have a lot of new tariffs, it will change the model entirely,” he says. Since the North America Free Trade Agreement — opening up trade between Mexico, the U.S. and Canada — Mexico has become an auto manufacturing hub, because it’s cheap and they can freely sell to the U.S. But it only exists because of that single market, he cautions.
With freedom of movement of trade comes freedom of movement of people — but immigration, in O’Neill’s eyes, is another black mark against May and her advisers.
“If we’re cutting ourselves off from the most skilled people from around the world in key industries and most importantly in our universities, where arguably Britain does have a global edge, it’s kind of madness,” he says.
O’Neill is no less critical of the government’s international efforts. The rhetoric — popular among many who campaigned to leave the EU — of refocusing trade efforts on the Commonwealth is “embarrassing,” he says.
“Greece is bigger than New Zealand,” he says. “Banging on about a free-trade deal with New Zealand is going to make zero difference to Britain’s future in terms of trade.” If the U.K. is determined to turn away from the EU, it would be far more sensible to concentrate on the large, rapidly-growing economies he has made a career of studying: the BRICs. China and India in particular. He also sees opportunity in Nigeria. “Its population will be bigger than the U.S. in 30 years,” he says.
That, he is quick to repeat, would require the U.K. to have something special to offer — and here again, the government is missing an opportunity.
Starting in 2014, O’Neill spent 18 months leading a major research effort into the global economic impact of superbugs, or antimicrobial resistance (AMR) — and he still gets animated when talking about it. “Not only is AMR a substantive issue, but it’s soft power,” he says.
As he traveled the globe with his team, pushing AMR onto the agenda of the G20 and U.N. General Assembly, the issue caught fire among many of the leaders of the world, from developed and developing countries. Global policymakers would tell him, “Wow the U.K. is so cool and so bold and so visionary,” he says. “And we’d hear it everywhere, including in Washington.”
To O’Neill, this presents a golden Brexit opportunity. “If you look at the countries in the world that are vulnerable to the severe consequences of AMR, it’s the BRICs and large parts of Africa,” he says.
O’Neill was tasked with the AMR job by former Prime Minister David Cameron. He says he’s approached the current government on this, but to no avail. May hasn’t mentioned it, and Johnson, with whom he spoke directly about it, “seemingly shows no interest.”
“Why can’t the U.K. take a major global lead on this?” he asks. Maybe “because it was Dave’s” initiative.
Author: Helen Collis