by Thomas Wash | PDF
Ever since the United Kingdom defeated the Spanish Armada in the 16th century, it has typically kept Europe at arm’s length. The victory not only showed that the British could successfully defend itself from invasion, but that it was an important power in Europe. This newfound confidence along with the Commonwealth’s growing manufacturing prowess gave it an air of superiority over its continental colleagues. After defeating France in the Napoleonic Wars in 1815, therefore becoming the world’s superpower, this sentiment became deeply entrenched into the British psyche.
However, British sentiment took a hit after World War II. As the second war on the continent in forty years, it pushed the U.K. to the brink of collapse. Humbled, the British pursued peaceful coexistence with the rest of Europe as they attempted to rebuild their country. They not only sought collaboration with the rest of Europe but also supported greater integration. That being said, the U.K. has struggled to accept a subordinate role within Europe as it seems to believe it is superior. As recently as December 2020, Education Secretary Gavin Williamson joked that the U.K. was the first developed country to approve the coronavirus vaccine because it “was a much better country” than others.
Understandably, British hubris has often rubbed other European countries the wrong way. The underlying friction between the two sides came to a head after the European Union rejected the U.K.’s request to be exempted from the EU’s immigration program. This decision not only paved the way for Brexit but may have also set the stage for a potential trade war. In this report, we will examine the history of British-EU relations, discuss the Brexit vote and fallout, and briefly review how the relationship has changed since the U.K. left. As always, we will end with a brief discussion of market ramifications.