Britain Is Getting Back on Track
Successes in Ukraine and the Pacific and Rishi Sunak’s leadership shore up standing lost to Brexit and Covid.
Successes in Ukraine and the Pacific and Rishi Sunak’s leadership shore up standing lost to Brexit and Covid.
War in Europe, crisis in the Middle East, growing tensions across East Asia, and a widening chasm between a beleaguered West and the Global South: Writing a Global View column in times like these is not always the happiest of tasks. But at least one good-news story has been building quietly over the last few months. Global Britain is becoming a reality and the world is better off because of it.
The world has changed since the British voted to leave the European Union in 2016. After Brexit, enthusiastic backers expected an aggressively deregulating Britain would become a kind of Singapore-on-Thames. Russian oligarchs, Chinese moguls and Arab oil sheikhs would flock to London, eager to enjoy a sophisticated financial market that was less regulated and more hospitable than either the EU or the U.S. Free-trade agreements with the U.S. above all, but also fast-growing Asian nations, would more than compensate for the loss of the U.K.’s privileged position in the EU.
That’s not how things worked out, and the world is a much tougher place for middle powers than anyone expected when Brexit passed. Even as Covid disrupted the world economy and shut Britain’s lucrative tourism sector down, the open international economy of 2016 began to wither. Russia’s war in Ukraine and deepening U.S.-China tensions ended the dream that London could prosper as a neutral financial centre. Rising protectionism world-wide made trade agreements harder to reach and highlighted the importance of belonging to big trading blocs like the EU.
On top of this, a spat with the EU over the Northern Ireland Protocol, aimed at keeping the border with the Irish Republic open after Brexit, proved a much larger problem for Britain than Boris Johnson’s government anticipated. The details are fiendishly complicated, but in his rush to “get Brexit done,” Mr. Johnson signed an agreement with the EU that Unionist Protestants in Northern Ireland saw as weakening ties with Britain. The resulting tensions threatened the stability of the troubled region, and by the end of his premiership Mr. Johnson was threatening to break his own agreement with the EU. That stance infuriated Brussels and alienated an Irish-American named Joe Biden, killing any talk of a free-trade agreement between Britain and the U.S.
That’s not where things stand today. Building on foundations laid down in the Johnson era, Prime Minister Rishi Sunak has repaired relations with European partners and Washington even as Britain has carved out a significant place in Asia. Britain at long last may be finding a role.
Britain’s recent foreign-policy successes stand on two pillars. The first is Aukus, the agreement to work cooperatively with the U.S. to help Australia build a fleet of nuclear-powered submarines. The trust among these three countries enables a level of technological and economic cooperation that potentially extends far beyond the submarine program. With Britain moving toward membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (based on the Trans-Pacific Partnership that the U.S. helped negotiate but then refused to join), the U.K. has achieved a stronger presence than any European state in the fast-growing Indo-Pacific region.
Meanwhile, Britain’s unswerving support for Ukraine has put London back at the centre of European politics. Britain’s stance earned deep gratitude from Poland, the Baltic states, Sweden and Finland. That, along with Mr. Sunak’s more constructive approach toward Brussels, strengthened pro-British feelings inside the EU and helped pave the way for the major concessions on the Northern Ireland Protocol that enabled Mr. Sunak to forge the groundbreaking Windsor Framework. If the deal, announced last month, holds up, it would remove a major stumbling block in U.S.-U.K. relations.
The payoff could be substantial. Last week Sen. Chris Coons (D., Del.), a close Biden ally, introduced a bipartisan bill with John Thune (R., S.D.) authorising fast-track talks on a U.S.-U.K. free-trade agreement. The White House plans a Biden visit next month to commemorate the 25th anniversary of the Good Friday Agreement, which ended the violence in Northern Ireland. British negotiators hope for Britain’s eventual inclusion in tech talks between Washington and Brussels.
With an unpopular Tory government facing a revived, de-Corbynized Labour Party, and with inflation wreaking havoc on British living standards and touching off waves of strikes among public employees, foreign-policy success may not be enough to save the ruling Conservatives from the wrath of the voters. But it is likely to help, and if the Sunak government can continue to carve out a serious role for post-Brexit Britain in world politics, the next election could be a much closer affair than most forecasters currently predict.
Regardless, Americans should welcome Britain’s return to the high table of world politics. A stronger Britain means a healthier West, and given the otherwise grim state of world affairs, Washington can use all the help it can get.
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The 28% increase buoyed the country as it battled on several fronts but investment remains down from 2021
As the war against Hamas dragged into 2024, there were worries here that investment would dry up in Israel’s globally important technology sector, as much of the world became angry against the casualties in Gaza and recoiled at the unstable security situation.
In fact, a new survey found investment into Israeli technology startups grew 28% last year to $10.6 billion. The influx buoyed Israel’s economy and helped it maintain a war footing on several battlefronts.
The increase marks a turnaround for Israeli startups, which had experienced a decline in investments in 2023 to $8.3 billion, a drop blamed in part on an effort to overhaul the country’s judicial system and the initial shock of the Hamas-led Oct. 7, 2023 attack.
Tech investment in Israel remains depressed from years past. It is still just a third of the almost $30 billion in private investments raised in 2021, a peak after which Israel followed the U.S. into a funding market downturn.
Any increase in Israeli technology investment defied expectations though. The sector is responsible for 20% of Israel’s gross domestic product and about 10% of employment. It contributed directly to 2.2% of GDP growth in the first three quarters of the year, according to Startup Nation Central—without which Israel would have been on a negative growth trend, it said.
“If you asked me a year before if I expected those numbers, I wouldn’t have,” said Avi Hasson, head of Startup Nation Central, the Tel Aviv-based nonprofit that tracks tech investments and released the investment survey.
Israel’s tech sector is among the world’s largest technology hubs, especially for startups. It has remained one of the most stable parts of the Israeli economy during the 15-month long war, which has taxed the economy and slashed expectations for growth to a mere 0.5% in 2024.
Industry investors and analysts say the war stifled what could have been even stronger growth. The survey didn’t break out how much of 2024’s investment came from foreign sources and local funders.
“We have an extremely innovative and dynamic high tech sector which is still holding on,” said Karnit Flug, a former governor of the Bank of Israel and now a senior fellow at the Jerusalem-based Israel Democracy Institute, a think tank. “It has recovered somewhat since the start of the war, but not as much as one would hope.”
At the war’s outset, tens of thousands of Israel’s nearly 400,000 tech employees were called into reserve service and companies scrambled to realign operations as rockets from Gaza and Lebanon pounded the country. Even as operations normalized, foreign airlines overwhelmingly cut service to Israel, spooking investors and making it harder for Israelis to reach their customers abroad.
An explosion in negative global sentiment toward Israel introduced a new form of risk in doing business with Israeli companies. Global ratings firms lowered Israel’s credit rating over uncertainty caused by the war.
Israel’s government flooded money into the economy to stabilize it shortly after war broke out in October 2023. That expansionary fiscal policy, economists say, stemmed what was an initial economic contraction in the war’s first quarter and helped Israel regain its footing, but is now resulting in expected tax increases to foot the bill.
The 2024 boost was led by investments into Israeli cybersecurity companies, which captured about 40% of all private capital raised, despite representing only 7% of Israeli tech companies. Many of Israel’s tech workers have served in advanced military-technology units, where they can gain experience building products. Israeli tech products are sometimes tested on the battlefield. These factors have led to its cybersecurity companies being dominant in the global market, industry experts said.
The number of Israeli defense-tech companies active throughout 2024 doubled, although they contributed to a much smaller percentage of the overall growth in investments. This included some startups which pivoted to the area amid a surge in global demand spurred by the war in Ukraine and at home in Israel. Funding raised by Israeli defense-tech companies grew to $165 million in 2024, from $19 million the previous year.
“The fact that things are literally battlefield proven, and both the understanding of the customer as well as the ability to put it into use and to accelerate the progress of those technologies, is something that is unique to Israel,” said Hasson.
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