‘Putin has weaponised the hypocrisy of the West’: Unpacking the post-Brexit world with Warwick’s Dr Thiemo Fetzer

It’s the elephant in the room whenever ministers speak about the economy, immigration, or the cost of living; nearly a decade later, it’s hard to find a politician who doesn’t keep an uneasy silence when the ‘B-word’ is mentioned. Brexit has knocked 5% off the country’s GDP and isolated the UK from its European allies. Now, the EU is signalling it’s open to renegotiations – but is this a can of worms anyone is willing to reopen? Today’s world is very different from 2016.

So, with that in mind, on the ninth anniversary of the referendum, I called Dr Thiemo Fetzer, booting up Zoom from a caravan somewhere in the Italian lakes. I’m relying on a tenuous Starlink connection guided by the invisible hand of Elon Musk, a relationship Dr Fetzer compares to the role of digital infrastructure in manipulating information during the referendum. It’s a fitting scenario in which to discuss a post-Brexit world where communication and data-sharing are more manipulable and unstable than ever.

A self-confessed “accidental economist” who was briefly tempted by a career in Silicon Valley, Dr Fetzer is currently a Professor of Economics at the University of Warwick and the University of Bonn. His work, situated broadly within the field of international political economy, has been featured in The Guardian, Financial Times, and Bloomberg, among other papers. Dr Fetzer has advised policymakers across the world. One particular focus of his work is the global coordination of climate action.

Closer to home, Dr Fetzer uncovered a correlation between regions hardest hit by austerity and higher support for Brexit, suggesting that an anti-austerity ‘protest vote’ may have made the difference between Leave and Remain. Dr Fetzer’s paper sparked debate among academics and commentators alike (including GB News’ own Matt Goodwin, who declined to elaborate on his criticism of the paper). On the other end of the political spectrum, Dr Fetzer’s analysis heavily influenced a viral video by Jonathan Pie.

Dr Fetzer is, in many ways, the perfect person to talk to about Brexit; he has a comprehensive understanding of British and European policy as well as personal stakes in the UK’s relationship with the EU, being a German national. Crucially, Dr Fetzer remains forthcoming with his criticism of the politicians and press culpable for Brexit.

The unlearnt lessons of austerity and the rise of populism

Brexit marked a ‘watershed moment’ when politicians no longer had to offer ‘a political product that is internally consistent’ – that is to say, policy based in reality

“It’s been sort of a unique precedent in the realm of political competition, the 2016 EU referendum, because it was run as a campaign by the Leave side as being a different product for every different person, right?” Dr Fetzer begins. He explains that this was made possible by an unprecedented use of social media data on a large scale to target ‘lookalike audiences’. In layman’s terms, advertising was streamlined through the identification of similar online audiences. You’d receive targeted ads whether you were motivated by sovereignty, animal rights, or wonky bananas.

Brexit marked a “watershed moment” when politicians no longer had to offer “a political product that is internally consistent” – that is to say, policy based on reality. Dr Fetzer points out that in the pharma industry, for instance, regulation exists to prevent companies from marketing products – like a supposed cure for cancer – in misleading and blatantly disingenuous ways. “But since it’s politics, you know, we struggle because people would say being able to promise people stuff that is logically inconsistent is just freedom of expression.”

In short, people were “conned into voting for something that never had any chance of becoming a political reality”. That’s deeply unhealthy for a representative democracy. So why isn’t anyone talking about Brexit? Dr Fetzer first outlines one of the most interesting findings of his research: that, paradoxically, Brexit has led to ‘levelling up’, but not in the way you might expect.

“What our research seems to indicate is that everybody is poorer. But actually the places like London are much poorer relative to the places that would traditionally have been seen as left behind. So basically, there’s pain for everybody, but it’s less pronounced in the places that had been more left behind [in the first place].” Dr Fetzer’s paper, co-written with three other academics, terms this ‘levelling up by levelling down’. The complex nature of the economic picture is one reason why it’s difficult for politicians to relitigate the referendum. But the scars run deeper than that; there’s a swathe of policy decisions whose ramifications still need to be reckoned with, most importantly, austerity.

It was in these circumstances that populism gained a footing. The Syrian refugee crisis, a very visible demonstration of uncontrolled borders, ushered in a new call from the anti-immigrant right to ‘take back control’ – a slogan undoubtedly appealing to many people. “They saw that their public goods were getting shit, libraries were being shut, you know, roads were not being repaired,” Dr Fetzer says. “And that, of course, is the consequence of austerity, not immigration. That’s been a narrative that’s been transplanted that was politically convenient. But countering that requires a statistically literate press.”

A “statistically literate press” is, unfortunately, severely lacking when it comes to rejecting out-of-context populist narratives, as Dr Fetzer explains: “There is always a crazy one-person story of something ridiculous happening to somebody that can be trumped up into a massive national story, and through that the story might become a policy constraint. It’s very easy to then create crazy narratives that have no statistical backing, but you can weaponise individual stories, right? And in the case of immigration, this is exactly what happened.”

The best example of this is the Boston case study in another of Dr Fetzer’s papers; the Lincolnshire market town was highly unusual in seeing both high immigration and severe cuts due to austerity. This was seized upon by right-wing populists as evidence of damaging, uncontrolled immigration and reported uncritically by the media, whom Dr Fetzer says did not check whether there were other factors at play, such as austerity.

Farage is now positioning himself to become Prime Minister on the back of a wave of concern about the economy and immigration – having espoused a policy which has harmed the economy and, in fact, led to record-high immigration. This ‘doom loop’ of economic nationalism-induced damage epitomises the precarious state of post-2016 politics, with the growth of populism and an impotent press. And yet, did the Brexiteers have a point?

In a new age of information, the modern state isn’t working

Part of the problem with the narratives surrounding Brexit is that there are legitimate grievances with fundamental structures of the EU, namely, the whipping boy of the Eurosceptic right: freedom of movement. By exploiting the Schengen Area’s 90-day limit, you could have homes with obfuscated ownership in several different EU countries and avoid taxes entirely. Dr Fetzer attributes this to the absence of a European fiscal authority which could track individuals’ movements within the continent.

That’s not the only issue caused by Europe’s absence of data infrastructure. “It’s still entirely possible for Russian operatives to enter into Europe via Hungary and possibly carry out acts of sabotage. And so there’s now been a weaponisation of freedom of movement in a way by countries within Europe, and it’s all made possible by a lack of transparency in the data space, a lack of data sharing.”

The picture Dr Fetzer paints is of a state, or rather a model of statehood, which is not fit for purpose. Despite the fact that we’re experiencing a technology shock, “it’s as if the government chooses to not have the informational capacity”. Lessons should have been learnt from the pandemic, which exposed structural flaws in both the UK and EU’s digital identity provision and lack of market integration, respectively. He sums up: “We need to consider this as basic infrastructure.”

Take the Energy Bills Support Scheme, which was provided following the invasion of Ukraine; all households were given £400, some via monthly vouchers, when instead councils could have offered a direct rebate to council tax dependent on those households’ income. The situation is comparable to the US physically posting cheques to households during the pandemic. “It seems very inefficient, very inefficient in terms of the policy response, right? And so you could develop an information layer that could allow for more targeted forms of redistribution.”

Progressivity in taxation is a social policy objective. Having firms pay, for example, a penalty if they do not employ people with disabilities is a social policy objective. It means that we want to have a society that also provides dignity for individuals who had a shit draw in the lottery of life

– Dr Fetzer

Much like with taxation, a new information layer (essentially a system which manages data exchange) could come with social policy objectives, Dr Fetzer explains. “Progressivity in taxation is a social policy objective. Having firms pay, for example, a penalty if they do not employ people with disabilities is a social policy objective. It means that we want to have a society that also provides dignity for individuals who had a shit draw in the lottery of life.”

Rolling out infrastructure like smart meters would be streamlined by an improved information layer. To achieve this, however, “you have to remove yourself from the idea that the invisible hand of the market economy just solves that miraculously, because it doesn’t”. “I would like to think that our liberal societies are superior in many ways,” Dr Fetzer reflects, “but on this one, it seems that we have a clear failure of data and information markets.”

At the same time, the UK and Europe must compete against authoritarian competitors, like China, which can plan with far longer time frames than democratic governments. “But then it’s a matter of how we rewire and reconfigure our democracies in order to be able to compete. It’s not about abolishing democratic principles to begin with.” Brexit – Dr Fetzer is emphatic – was an abolition of those principles. “That’s why I keep on iterating in my policy and advisory work that we need to rethink the role of the state in the economy … We have to redefine the informational boundaries of the state, potentially the boundaries of the firm and the role of the firm in economic systems more broadly.”

These boundaries are being challenged by megacorporations, particularly in the US, a striking example of a broken system. Despite his assertion that he “love[s] America”, Dr Fetzer doesn’t shy away from the reality that “it’s also incredibly brutal as a society”. He describes living in Chicago and seeing police standing at every block to safeguard the university’s staff and students. “This is not what a healthy society looks like.”

He continues: “I always feel like the US – and increasingly the UK and parts of Europe as well – have turned insecurity and the perception and feeling of being insecure into a business model. But this is not a business model that breeds healthy minds.” The anti-migrant rhetoric that fuelled Brexit is but one example of this business model.

Are Europe and the UK’s ‘sunlit uplands’ in sight?

If push comes to shove, I see the possibility of a European moment arising in the wake of Europe being under threat from multiple adversaries

– Dr Fetzer

Dr Fetzer remains positive about the future of Europe, however. He even concedes that there may be some small upsides to Brexit, such as its deterrence of individualism among EU member states. “If push comes to shove, I see the possibility of a European moment arising in the wake of Europe being under threat from multiple adversaries,” he says, naming Russia, China, and the US.

One way that market integration and cooperation may be improved, beyond factors like the influence of AI and external geopolitical pressures, would be the creation of a shared defence system. Obstacles persist, though, some of them posed by historical relationships between member states.

“The German-Polish relationships are difficult, to say the least. Half of Poland used to be German. Half of what is now Belarus used to be Polish, you know, European history is messy as fuck, right?” Having Germany rearm without guardrails might, then, cause anxiety in Eastern Europe.

And those are only the domestic problems. On the world stage, Europe (and that includes the UK) has been routinely humbled and humiliated. Dr Fetzer says that “there’s been no more visible degradation of European players by the Americans” than during the Israel-Iran crisis. His criticisms have since been further vindicated, with the EU’s meek acceptance of an unbalanced trade deal and continual snubs by Trump during the Ukraine peace negotiations.

This hasn’t been helped by double standards when it comes to climate obligations, of which Dr Fetzer is highly critical: “We’ve been preaching to the rest of the world to cut their fossil fuel subsidies – well, as soon as crisis hits, we’ve expanded our [subsidies] massively to an unprecedented volume.

“Putin has weaponised the hypocrisy of the West because it’s very difficult to cut through in developing countries [when you say] oh, you have to cut your fossil fuel subsidies, which is going to cause hardship to low-income households at least in a transition phase.” One need only look at Russia’s leverage thanks to the West’s dependence on oil and gas, as well as Putin’s increasing influence in the Global South, to see the problems this has created.

There may yet be light at the end of the tunnel for a Europe and UK besieged by populism and grappling with state infrastructure maladapted to the modern age, even if the journey will be a long one. Dr Fetzer strikes a positive note; despite the ever-increasing fragmentation of our societies (Brexit being an obvious example), he speculates: “I would like to reject that this is the long-term direction that we’ll be heading to because humans do crave community … I would like to think that the one thing that kept humanity going for thousands and thousands of years is curiosity.”

Although, as he himself admits, he’s “a structural optimist in everything”, it doesn’t hurt to look on the bright side – even if we’re still waiting for Boris Johnson’s ‘sunlit uplands’ to materialise.