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1 Introduction
Ladies and gentlemen, It is a pleasure to speak to you this evening.
The Society of Professional Economists was originally established back in 1953. That was four years before the Bundesbank was created. Much has changed in the global economic landscape since then.
Growth and prosperity have risen to unprecedented levels due to globalisation, the rules-based order and trade integration, in particular. Those factors are now fragmenting, however, as I will talk about later. The Cold War rivalry between the United States and the Soviet Union has ended. Today, the defining strategic rivalry is between the US and China.
But, I’m glad to say, the friendship between the UK and Germany – and between the Bundesbank and the Bank of England – is deep and enduring. Many thought Brexit would see the UK diverge significantly from the EU.
It is true that Brexit represented a profound turning point. It has been dampening trade between the two sides and is having a tangible day-to-day impact on businesses and people’s lives. But ten years on from that referendum, it appears – at least to me – that UK divergence has been rather limited. If anything, the UK is now seeking closer cooperation with the EU and, in selected areas, also greater regulatory alignment.
Looking ahead to the next UK/EU summit, both sides are seeking to deepen their partnership further in matters ranging from youth mobility to defence and security. I am very pleased to see the UK and its European neighbours pursuing closer relations once more.
I would argue this has something to do with the fact that the EU and the UK are facing quite similar challenges. Indeed, both are facing the same forces of geoeconomic fragmentation. That’s a term the IMF defines as a policy-driven reversal of integration, often guided by strategic considerations.