What was old is new again.
If you thought that Britain was an aging doddery has-been barely managing the gentility of its decline, think again. In a stunning proof that how countries manage themselves matters, Britain is on a tear. How this happened is full of lessons for the rest of us.
In 2014, Britain overtook France to become the second-largest economy in Europe in terms of gross domestic product. And according to the Centre for Economics and Business Research (CEBR), on current trends by 2030, Britain will have overtaken a flagging Germany to be number one in Europe and the fifth-largest economy in the world.
And according to the Legatum Institute's global Prosperity Index, the U.K. is "the entrepreneurship capital of Europe. The U.K. ranks 6th globally for entrepreneurship and opportunity and 70 per cent of Britons now think the country is a good place to start a business. This is the highest in the EU and higher than almost every developed nation in the world."
It doesn't hurt that Britain stayed out of the euro, the currency of most of the members of the European Union. Lack of its own currency (along with population aging) is one of the factors the CEBR points to in explaining Germany's projected relative decline. Moreover, it is Britain's long-term openness to newcomers over the years that is feeding its demographic and economic dynamism.
Those positive factors aren't enough, however. Britain has made a large bet on the animal spirits of its entrepreneurs and they are coming through in spades. The government has been dramatically cutting the cost of doing business. Not only is corporate income tax falling, but the cost of starting a business is as well. In just a few years, the cost of starting a business has fallen by half and now stands at £81.45 ($160), the third lowest in the world.
Nor is this growth limited to the wealthy and dynamic southeast. While it continues to enjoy the highest business startup rates in the nation, the two regions hardest on its heels are the northeast and northwest, as Scousers and Geordies show levels of entrepreneurial energy perhaps not seen since Queen Victoria was on the throne.
Perhaps surprisingly for an economy many still associate with sunset industries, Britain's renaissance is being led by software and high tech, married to an openness to the best ideas wherever they are to be found. That's why Britain and the U.S. are both energetically investing in each other's tech sectors, creating a transatlantic partnership premised on markets, innovation and entrepreneurship that will lead the world.
That's assuming of course that current trends continue. There are lots of ways Britain could stumble. They could elect Labour Leader Jeremy Corbyn as prime minister. If there is a poster child for the declinist nanny-state consensus that brought Britain to its knees until Margaret Thatcher hit it with her handbag, Mr. Corbyn is it.
Then there is the threat of Scottish secession. The non-Scottish part of the U.K. is so big relative to Scotland that it would likely be relatively little affected, but Scotland would be choosing divorce just at the moment when membership in the union is about to pay its most handsome dividends.
More important than either of those, however, are the threat of withdrawal from the EU and a declining British appetite for immigration.
Britons must know that the greatest enemy of prosperity is uncertainty and that a British exit ("Brexit") from the EU is a big gamble whose consequences are, to say the least, unknowable. No one has more sympathy than I with British frustration with smug eurocrats' absurd and interfering ways and it is undeniable that there are deep cultural differences between the long tradition of individual freedom and limited government in Britain versus the statism of the Continent.
On the other hand, the picture of British prosperity I have been painting proves that Britain can blaze its own trail even while remaining in the EU. Moreover, Britain and its continental allies such as Holland, Sweden, Poland and other market-oriented northern Europeans represent a powerful reform bloc within the EU that a resurgent Britain could lead if only it would get over its Europhobia.
Liberal Britain has also been one of the best countries in Europe in terms of its openness to immigration and its success in opening its economy and institutions to newcomers. That openness is an integral part of the economic success it is enjoying. Yet Britons are getting more and more anxious about immigration, egged on by nativist loudmouths. The political class needs to show they have the spine to manage large-scale immigration unapologetically in the national interest.
Britain's world-leading days are far from over, unless, through ill-considered choices, they decide otherwise.