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“Britain in 2030: four post-Brexit scenarios”: the localisation scenarios

October 18, 2017

This is the third of a series of four blogs springing out of our scenario set on Britain in 2030. Our first blog dealt with some aspects of the model; we then addressed the two ‘global’ scenarios, and this one deals with the ‘local’ ones.

SAMI Futures model

In our last blog we said, “It is not the role of foresight to be political; it is our role to envision options and possibilities which provide frames for thinking about the future world.” We know that our scenarios will be interpreted politically – indeed, the previous blogs have been – but it is important to note, again, that we do not make political judgements in scenario planning: we look at the impacts of the political judgements which others make. Scenarios, particularly ones based as this set is, on balanced axes, have the advantage that they reflect all sides of a position in broad. Whilst there will inevitably be other factors in play, including Taleb’s ‘black swans’, axis based modelling at least allows for an examination of a position in the round.

The globalisation scenarios in the previous blog looked at developments of the world as it currently is: aspects of a globalised world where globalisation itself can take two divergent paths. The localisation models assume that that path is, essentially, rejected because of our projected near term “global crisis”, and the world order develops along more fractured lines.

Our “localisation” scenario prefers social cohesion over competition in a patchwork world. Globally engaged players become more inward looking – and especially we see the US giving up its role as global policeman – and migration barriers increase. Trade and other international agreements are built around a patchwork of one-to-one bilateral agreements. In particular, this affects those issues where wide international agreement is necessary to keep a policy effective: climate change would be the greatest impact here as international climate agreements become more difficult to sustain.

Social cohesion improves: communities of interest and civil society generally gets a big boost, as people look to use technology to develop alternatives to big corporations, take ownership of their own data and develop alternative currencies. Society becomes more diffuse in the absence of strong central governments and companies but it also becomes more bonded across interest groups. Entrepreneurs can gain economic and political power, though there is a tendency to prevent it from being centralised in too few hands – something replicated in governments, as some states fragment into their smaller constituent parts.

The UK’s decision to leave the EU is less relevant than it at first appeared – the country becomes one amongst many, suffering as the EU’s cohesion diminishes but benefitting in its ability to be part of the prevalent bilateral agreement model. There is a distinct possibility that the Union will break down as the various constituent parts choose to go their own way.

When we move from the social focus to an economic one (the scenario called “Fragmentation and competition”), we see a number of differences. Europe maintains coherence at its core, but it is the coherence of a fortress. Borders are tight. Competitive advantage is all; competition from low-wage economies continues to drive down real wages in advanced economies, but also promotes the development of new technologies – which are closely protected by patent barriers.

The impact of our postulated crisis leads people to draw different lessons. Competing systems with different tolerances for threats such as systemic collapse and cyber-attack avoid the risk that centralised economic and political systems can collapse, but those competing systems compete with each other for advantage. This is not just financial; corporations increasingly want to be in low tax communities with low legislative burdens, so governments respond by lowering corporation taxes, and loosening laws on the protection of workforce rights. The impact on tax revenues affects states’ ability to deliver on the “cradle to grave” welfare system. Automation lowers costs, but drives people out of work, and internal cohesion suffers, though the grey economy provides an element of informal employment. Migration of the highly skilled becomes easier; of the lower-skilled more difficult.

Trade is the tool for diplomacy; trading blocs with large consumer bases and substantial low cost manufacturing, such as China and India, are confident players on the world stage. Smaller countries focus on a narrow range of specialisms.

For the UK, pinned between fortress Europe and an inward looking US, competing as a global player is difficult except in very specific areas – education, financial services, aviation and some specific high technology applications becomes key to the economy. Tourism is no longer about ‘cool Britannia’, but the “heritage theme park” of history and tradition. Benefitting also from its language and still respected legal system, the “British model” of tight industrial focus, low tax and regulation, and determined international trade negotiations, becomes one other smaller countries work hard to replicate.

The localised world is “harder” than the globalised one. The liberal mantras of the post-war settlement have broken down, and the world is more competitive, less cooperative and in many ways harsher. But there are places in it for countries to succeed – though whether those countries are all the ones we are currently used to is somewhat moot.

Our final blog in this series will seek to draw some conclusions – common themes, and common differences, and try to draw together what the world, specifically for the UK, will look like in 2030.

Written by Jonathan Blanchard Smith, SAMI Associate.

The views expressed are those of the author and not necessarily of SAMI Consulting.

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