Theresa May Arrives in Davos as U.K.’s Post-‘Brexit’ Slide Continues


Much of Britain’s receding status comes from its decision to abandon Europe — Brexit, in the parlance — and to remove itself from a realm of some 500 million people that sprawls from Ireland to Greece. Given that nearly half of Britain’s exports land within the European Union, any rupture to this trade could cost the country substantial treasure.

Around the world, every major economy is now growing in a synchronized wave of expansion that has finally put the finish on a wrenching global downturn that began a decade ago.

“It is the best moment in the global economy since the ’50s,” said Kenneth Rogoff, an international economist at Harvard University.

Britain stands out as one of the weaker performers. Its economy probably expanded by just 1.7 percent last year and is expected to grow by only 1.5 percent this year, according to the International Monetary Fund.

By contrast, the I.M.F. estimates that the United States economy will grow by 2.7 percent this year, and the 19 nations that share the euro currency will collectively expand by 2.2 percent.

Britain’s weak performance is due in large part to market sentiments about Brexit. The vote sent the British pound plunging against both the dollar and the euro. Although the pound has recovered much ground since then, Britain has been choking on the effects of the shift: A net importer of goods, Britain is paying higher prices for products it brings in from Europe, China and elsewhere, contributing to inflation that is running at a 3 percent annual pace.

And the country’s pending divorce from Europe has marginalized its role within the bloc just as European leaders are channeling the Continent’s newfound economic strength into furthering their integration.

“Who sees the U.K. as an important discussion partner?” asked Hans-Paul Bürkner, chairman of the Boston Consulting Group, based in Frankfurt.

In recent months, Mrs. May has pursued a split with Europe that changes as little as possible, while simultaneously trying to evade the wrath of anti-European members of Parliament in her governing Conservative Party.

Mrs. May’s government hopes to negotiate a transitional arrangement with Europe that allows Britain to remain within the single European marketplace and customs union to ensure that trade continues unabated.

The price of such arrangement will almost certainly be Britain’s continuing to make substantial contributions to the European budget while still living by European rules, including the free movement of people — the very item that provoked the electoral backlash that delivered the Brexit vote.

President Trump’s administration has sought to bolster Britain’s place in the world while offering its support for Brexit. Speaking to reporters on Thursday, Steven Mnuchin, the Treasury secretary, sought to reassure Britain that its so-called special relationship with the United States was intact.

“I do think we’ve had a very special economic relationship, and we expect that to continue,” Mr. Mnuchin said, hours before Mr. Trump was scheduled to meet privately with Mrs. May.

The president remained intent in striking a bilateral trade deal, Mr. Mnuchin added. “As soon as the U.K. is ready, we’d be prepared to negotiate a very attractive trade deal,” he said.

But so long as Britain remains within the European customs union, it cannot negotiate trade deals with other countries. Such negotiations are the sole preserve of European bureaucrats in Brussels.

And trade between the United States and Britain is already so free of tariffs that a deal would probably be of far more symbolic importance than a spur to increased commerce.

In her speech, Mrs. May steered clear of any discussion of the particulars of Brexit, instead devoting most of her time to calling for a new social compact that would bring social media platforms to heel for enabling trafficking in hate speech and facilitating communication among terrorists.

Above all, she cast Britain as a country that is not in retreat.

“The United Kingdom has a proud history of stepping up and seizing the opportunities of our time,” she said. “We stand ready to do so again.”

By that point, several people attending the speech were standing and walking toward the exits.

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