The world is moving on from Brexit now, just about. Theresa May’s been off to see European power-broker Chancellor Merkel and in true European style it’s been agreed that the issue will be kicked down the road, to early 2017 at the very least. Does that mean Brexit won’t now happen? – no, it probably will still happen unless something major and unforeseen occurs between now and then.
What type of event might that be? Well, under certain circumstances a coup in Turkey might do it, or perhaps more realistically an unravelling of NATO sparked by the election of Donald Trump.
This is not as wild as it sounds. Trump has already said publicly that as president he might not stand by America’s NATO allies unless they’ve fulfilled their “obligations” to the US.
That sort of thinking will effectively allow America to pick and choose who to help when, and why, rendering the treaty itself unworkable. Since the collapse of the Soviet Union in the early 1990s NATO has been searching for a role, so from the point of view of a populist American Trump’s position isn’t wholly irrational.
It would however leave the European Union as the only institution across Europe with the credibility and power to form some sort of front against would be predators and/or competitors like Russia and China. And in the absence of NATO, the UK and its hitherto Atlanticist electorate might think again about whether it wants to be outside of the only remaining regional power structure of relevance.
Does the UK and the do the people of the UK really want the Germans in charge of European military as well as economic affairs?
It remains to be seen. But what all this speculation points to is that in the wake of Brexit uncertainty is only going to increase. If you thought anything was solved by that vote, think again. The process has only just begun.
What’s actually happening, slowly, but inexorably, is the break-up of the 70-year long political consensus which followed World War II. This was largely a consensus built by the English-speaking peoples, to coin a Churchillian phrase, so it’s perhaps unsurprising that the widest cracks and the most anguished cries are issuing out in English too.
Neither the American nor the English working man is getting any richer these days, and what’s more his identity is under threat from all sides. What, if you are a plumber from Sunderland or a white working class labourer from Texas do you have to be proud about these days. The liberal left attack your idea of self and nation while free-marketeers on the right attack your income by importing immigrant labour to keep their own standards of living high, all under the cover of “the free movement of peoples.”
In these circumstances a vote for Brexit or Trump makes all sorts of sense, and it points to the gradual disintegration of the political structures we’ve known since 1945. NATO will be missed, as it served a real role during the Cold War. And entities like the United Kingdom, whose days are surely now numbered, will become the subject of even more nostalgia than they now are.
But who really will miss the bands of ineffectual politicians who’ve been running the USA and the UK, if and when these two countries do fall apart. MPs in the UK have for twenty years or so been under an increasing barrage of media attack, both in the mainstream and across an increasingly powerful variety of social media too. In the US, politicians are no more loved and the situation is even more polarised.
The US is a country born of a thirteen state rebellion against an 18th Century foreign king, held together by a flag, a constitution and the English language. Is there more? Ask Donald Trump.
But what does this mean for the global economy as a whole? Well, for one thing, those who are long on gold can be comfortable in this position. The Brexit noise may be dying away, but what it points to is still coming over the horizon. The next event in the disintegration of the post-war order could be Donald Trump. But if it isn’t, it’s likely to be something else before too long.
Paradoxically though, the world’s economy, and thus by extension the world’s investors may not do too badly out of all this. If the dominance of the English-speaking peoples over the world fades, then the time of the Chinese will have come. But to be secure in the number one spot the Chinese will have to build plenty between now and then, when the time comes and, like the Americans did, it may have to go to war to cement its position.
In the more immediate term, economic growth is likely to dip slightly post-Brexit. Nonetheless, the US is still in growth, so is the world, and so, for now at least, is the UK. That overall picture remains positive for metals and miners, as well as a whole raft of other global industries, even if the squeeze will stay on the English-speaking working man.
Longer term, even if it does come to armed conflict in the end, as David Cameron said it might in the run-up to Brexit, investors can at least take heart that previous major wars have historically stimulated huge economic growth. And conflict would be good for gold too.