Brexit won’t save the UK from being affected by the Greek debt crisis

As major a contributor to the International Monetary Fund, Britain is a creditor of Greece by another mechanism. The only way for one nation to be invulnerable to economic downturns in others is for it to cut off all trading links to the rest of the planet

Greek pensioners have seen their income cut by half or, in some cases, even more (Reuters)

​There was a time – before Brexit and Trump came to dominate, well, everything – when Greece was rarely out of the headlines. Back when the Tory-Lib Dem coalition was imposing its own version of austerity on the British people, Greek national finances were in turmoil. The country was only saved from bankruptcy by vast bailouts from the International Monetary Fund, the European Commission and the European Central Bank.

The price was significant structural reforms of the Greek economy and devastating financial consequences for many individuals. Unemployment spiralled to 25 per cent. Pensioners have seen their income fall by half. Many workers expect to be paid late, if at all. And young people frequently see their future beyond Greece’s border.

With negotiations under way for the next tranche of likely loans, the country is back in the news. A protest movement which seeks to disrupt court proceedings in home repossession cases has added some colour to recent reports.

Yet it is hard to avoid the conclusion that Greece’s travails are rather less engrossing to many than they once seemed. Sure enough, the prospect of the country falling into political anarchy appears to have become much more distant. Moreover, by some estimates the worst of the economic fallout from the debt-crisis which emerged in 2009 has passed – unemployment has fallen to a mere 23 per cent and GDP in 2016 actually rose, albeit by only 0.3 per cent.

Likewise, concern about the possibility of economic contagion appears to have diminished. In the early years of the decade anxiety was rife that, if Greece was allowed to go bust, others would follow in short order. Spain, Portugal and Italy all seemed at risk; debt-laden and structurally inefficient. Indeed, Portugal and Spain both required bailouts, as did Ireland, which had suffered a particularly severe economic contraction after the global crash in 2008. For the most part though, those countries have overhauled their economies to the point where confidence among institutional investors and key international agencies is no longer on a knife-edge.

But in Britain at least, the narrative in respect of the Greek crisis appears to have been affected too by last year’s EU referendum and the political machinations since then. Debates may continue to rage about whether the UK will be better off outside the EU, but the context of those debates places Britain as the driver of its own destiny, rather than as some sort of unwitting cog subsumed by the machinery of the European Union. Unease at the potential impact here of an economic disaster on the other side of the continent has dissipated, as the government and sections of the right-wing media convince us that we can be masters of a rosy future.

At the very least this is illogical. The UK, sitting on the eurozone’s side lines since the currency union was formed, is no more or less immune to reverberations caused by difficulties within the zone now that it was five years ago. The idea that our withdrawal from the EU makes even a jot of difference is delusional. We didn’t pay any share of the EU’s loans to Greece and it had been agreed that the UK wouldn’t be on the hook for any future eurozone bailouts by Europe’s big club. By contrast, as major contributors to the International Monetary Fund, Britain is a creditor of Greece by another mechanism. That won’t change either.

If Brexit was about taking back “control” in a fairly broad sense, then Donald Trump’s victory in the US election sought to rescue “protectionism” from the dictionary of failed economic policies. Both events are now placed at the heart of a broader push back against globalisation. Popular nationalist movements in France, Germany, Italy and the Netherlands are all aiming to capitalise. Scepticism towards the eurozone, especially in Italy and France, is acute.

The motors of this antipathy are hard to ignore: rising inequality and falling living standards are not good adverts for the global capitalist order. But the idea that a retreat to a protectionist approach towards national economics will somehow return individual states to prosperity – or will make countries resistant to financial shocks elsewhere in the world is barmy. The only way for one nation to be invulnerable to economic downturns in others is for it to cut off all trading links to the rest of the planet and become a successful autarky. A few have tried; all have failed.