The importance of economic stability!


When the British people in a referendum decided to leave the European Union, there was dialogue and debate about the commercial, economic and trade bloc that would replace the EU. The most likely new trading partners would seem to be English-speaking countries, such as the United States, Canada, Australia, New Zealand and South Africa.

All of these countries were former British colonies with similar values and objectives and the same depth of security and intelligence coordination, along with good trade relations. Britain could also seek to compensate for its exit from the EU by entering into trade agreements with Commonwealth countries, which were once ruled by Britain and with which the UK continues to have a political relationship. However, many of these countries are underdeveloped and might be a burden on the British economy. It is unlikely that they would be able to invest in Britain and contribute to its economic growth.

What is happening today either through a referendum (as in Britain) or through the decisions of the executive presidency (as in the United States) is an explicit threat to all existing international institutions, treaties and agreements. The commercial trade war between the United States and China includes raising tariffs on goods from both countries, but in fact it may result in economic damage as a result of the disruption of relations between the two countries.

China is the largest investor in US government bonds, and today it is increasingly one of the most important industrial investors in various sectors in the US economy, especially in the automotive sector and accessories. China sees itself as an “economic partner” for America while Donald Trump sees China as a fierce economic “enemy”, quietly and cleverly pursuing the secrets of industry and technology that distinguish America and make it a leader. The US also has a very important “position” in the Chinese economy. It has huge investments there in many different fields, from iPhone to Starbucks to General Motors among hundreds of other companies.

The world is interconnected, and an economic bullet fired by one side may return to the one who fired it. The lines of contact are intertwined and interests are now common. The exact details of Britain’s withdrawal from the EU are not clear and in fact it may be that the separation will be in “theory” only. Some think that Britain is looking for a back door to return to the EU but with new conditions, and this was the reason for the recent resignation of pro-Brexit ministers in the current British government.

These trends in international relations can lead to fear, anxiety and panic, and, as capital is cowardly by nature, can result in a lack of economic stability. History has taught us the importance of a stable economy and we would be well advised to remember that lesson.