Mark Rutte is right to call Britain a ‘diminished country’ – anyone who thinks otherwise is still deluded about Brexit

Brexit only works if Britain is transformed into a globalised neoliberal paradise (or hell), and even then it is a bit of a gamble

What do you do when an old friend warns you that you are about to do something stupid?

You could try listening.

The Netherlands is one of Britain’s closest and most valued economic and political partners. An old friend. The Dutch are also notoriously blunt, to the point of rudeness – which is something you need to get used to.

So when the Dutch prime minister, Mark Rutte, says that Britain has become a “diminished” country and faces “insurmountable” problems because of Brexit, you need to allow for that traditional directness – but also that they are annoyed about losing such a valuable ally in the EU, and they don’t want to see us indulge in an orgy of self-harm, even if it means they will pick up some new trade and jobs in the process.

Rutte is right. Britain is about to become diminished. Literally, perhaps. In a few years, it is conceivable that Northern Ireland will, through some chaotic combination of economic mishap and political frustration, form some closer relationship with Ireland, very possibly just in time for the centenary of Irish independence in 2022. Scotland, too, may find itself arguing for more and more devolution, out of sheer anger at what is being done in its name by – basically – the English. The United Kingdom, if it survives, will be united in name only.

Economically diminished? Yes. People often parrot the line that the UK is the “fifth biggest economy in the world”. It is not. Once you strip away the vagaries of exchange rates, Britain ranks closer to 10th. As Rutte pointed out, “It is neither the US nor the EU. It is too small to appear on the world stage on its own.”

How long will this little island – with its sluggish economy, collapsing currency and political instability – be able to maintain its armed forces, welfare state, the permanent seat on the UN Security Council, isolated remnants of empire (Gibraltar, the Falklands) and its taste for expensive German motor cars?

It will soon have to come to terms with a new reality. The people will react badly, because no one has bothered to explain to them what is going on – honestly. In a sluggish, even shrinking economy, there will be more civil and industrial unrest – rats fighting in the sack over a diminishing wealth. It is as simple as that.

Every so often a country has to face up to its diminished circumstances, and it is a psychological shock. It happened in the Suez Crisis, in 1956 – a moment when the British realised they could no longer pursue an independent foreign and military policy that is without the approval of the United States. Brexit represents another moment like that. It is one where the derided EU – and Ireland and Spain – can wield unprecedented leverage over post-imperial Britain. The balance of power has shifted.

It’s not inevitable, this long, slow relative decline to a state of genteel eccentric poverty. It is possible, theoretically, for Brexit to “make Britain great again”. However, no one ever published a plan for it. No one ever answered the “what next?” question about Brexit in the referendum. It was all too easy, a one-way bet, only an upside. That’s the failure on the part of the Leave campaigns; they never said how painful it was all going to be.

The big picture Brexit plan should have been about how to make the British economy competitive on a global scale once it loses the protections of the EU. The package – the plan – would comprise reducing industrial and commercial costs, including wages; liberalising product and labour markets further; abolishing most, if not all, external tariffs and quotas on food and other imports; pushing the public and private sectors alike to boost investment, and thus productivity, at the expense of consumption; necessarily scaling back the welfare state; allowing massive devaluation of sterling, and with suitably high interest rates to restrain the resulting inflation; generally letting rip with tax breaks and lighter regulation for business and entrepreneurs; and increasing immigration.

Brexit only works if Britain is transformed into a globalised neoliberal paradise (or hell), and even then it is a bit of a gamble. There is irony there.

That stuff, though, is on no one’s agenda. There is no public mood for it. Quite the opposite. All we ever hear is about how we can stay in some form of the customs union, “regulatory alignment” about higher environmental standards and stronger worker rights (ie, union power), maintaining farm subsidies and spending more on public services. None of that will make Brexit a success. It will only lead to the “diminished country” Rutte warns about.

The time has surely come for the public to be confronted with a plan for the consequences of Brexit and asked if they still want to go ahead. They deserve it. It is not too late.