Britain's Queen Elizabeth. Eddie Mulholland/ REUTERS
LONDON - Queen Elizabeth II helped the United Kingdom muddle through. The country’s longest-serving monarch, who has died aged 96, had been on the throne for a decade when U.S. Secretary of State Dean Acheson quipped that the country had “lost an empire and not yet found a role”.
Her 70-year reign brought dignity and stability as Britain morphed from a manufacturing economy to a seller of services to the rest of the world.
There are economic parallels between the beginning and the end of Elizabeth’s reign. In 1950, Britain had a trade surplus in manufactured goods insufficient to offset a larger deficit in food and materials, while the country’s war-inflated government debt exceeded 200% of economic output. In 2022, national borrowing is once again heading towards 100% of GDP. Meanwhile, the country’s surplus in services trade may not be enough to offset the rocketing cost of imported energy. Today, as seven decades ago, Britain’s ability to maintain its standard of living depends on attracting foreign investment and financial flows.
The country’s role as a magnet for global capital was one of the enduring features of the queen’s reign. Around the same time that the new monarch was finding her feet, regulatory changes in the United States prompted a huge volume of financial activity to shift to the City of London. Britain’s ability to take a cut of the so-called eurodollar market helped finance its trade deficit. A reputation for reliable laws and stable institutions was key to reassuring international investors.
Elizabeth was a key pillar in this structure. Since the monarchy was restored in 1688, Britain has been ruled by its parliament and its sovereign, with the latter often playing a silent role. The queen perfected the ability to reliably say nothing controversial in public while holding regular audiences with the 15 prime ministers who passed through Downing Street during her reign. The message was clear: Despite periodic political and economic crises, the constitutional foundations remained solid.
At the same time, Elizabeth was a powerful global representative. Association with her image lent allure to countless British products, often literally: 800 British companies derived kudos from supplying their products “by appointment to Her Majesty the Queen”.
More broadly, the monarchy supported an economy whose exports of services had expanded from around 5% of GDP in 1950 to almost 15% at the end of the last decade. The royal family’s 3,200 annual public engagements and numerous foreign visits helped serve as a sort of giant “buy British” campaign. It’s one of the reasons that American tourists flock to London hotels, that international plutocrats covet English country estates, and that Chinese parents send their children to British schools. In this sense, the queen, who was also head of state of 15 other nations including Australia and Canada, was the ultimate brand ambassador.
In this role, she provided excellent value for money. In 2017 the consultancy Brandfinance estimated that the monarchy generated an annual “gross uplift” to the UK economy of 1.8 billion pounds, far in excess of its annual running costs of 300 million pounds, while accumulating tangible and intangible assets worth 67 billion pounds. Unsurprisingly, the queen featured prominently in studies measuring Britain’s “soft power”.
Yet the country cannot take this stable global image for granted. During the last decade of Elizabeth’s reign, Scotland narrowly voted not to secede from her kingdom. Two years later Britain chose to leave the European Union, creating new tensions in Northern Ireland. Prime Minister Boris Johnson suspended parliament in an attempt to ram through the Brexit deal, and then signed an international treaty with the European Union, which he subsequently threatened to break. Though Elizabeth played her constitutional role, the turmoil reminded the world of the monarchy’s limits in ensuring stability.
The queen’s legacy includes a unique level of popularity in modern Britain. A YouGov poll conducted during the Platinum Jubilee celebrations earlier this year found 62% of Britons support the monarchy. The end of Queen Elizabeth’s long and dignified reign will reveal the extent to which the institution’s enduring appeal depended on her.
REUTERS
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