Michael L. Davis

After five frenzied weeks, our friends in the United Kingdom have a new prime minister, Rishi Sunak. Maybe he’ll prove less crazy than the others, maybe not. But why should we care? Shouldn’t we just worry about our own uniquely American brand of crazy?

If only it were that simple.

The U.K. matters to us in every way you can imagine, culturally, politically and economically. That’s always been true, of course, but it’s even more true today as ideas cross the Atlantic at the speed of light. We love “The Great British Baking Show,” and they like to watch “Yellowstone.” NFL games are played in Wembley Stadium; Wrexham Football Club jerseys are going to be a big Christmas gift here. And as to politics … well … American and British politicians seem to imitate each other on everything from immigration to hairstyles. Boris Johnson was a thinking man’s version of Donald Trump. Rishi Sunak looks kind of like a slimmed-down version of Ron DeSantis.

Even before that unpleasantness with King George III, our economies were connected. But since globalization and the internet, those economic connections have become much tighter. If you worry about what might happen to our economy, worry about what might happen to their economy.

Some of the things that link the U.K. and the U.S. economies are obvious. The U.K. is our seventh-largest trading partner. We sell them everything from ultra-high-tech electronics to prime beef.

London and New York are the world’s two most important financial centers. And how you rank the two cities really doesn’t matter. Wall Street and The City are identical twins. All the major financial institutions have a huge presence in both places.

But wait, there’s more. The U.S. economy’s connections to the European Union are nearly as tight as our connections to the U.K. That matters because the Sunak government has to make some hard choices about Brexit that will seriously affect our economic relationship with Europe.

Nowhere is that more important than in a place you probably don’t think about as often as you should: Ireland.

Although it’s a small island on the periphery of Europe, Ireland has transformed itself from nearly the poorest place in Europe to one of the richest — Irish GDP per person is the second highest in Europe. And most important for us, Ireland’s success followed its powerful commitment to globalization. Ireland is home to almost 900 U.S. multinational firms that employ nearly 200,000 people.

And so the question we need to be asking is whether those Irish/American relationships are threatened by decisions the Sunak government has to make regarding the details of the post-Brexit border between Northern Ireland — which, remember, is still part of the U.K. — and the Republic of Ireland, which is firmly embedded in the European Union.

To outsiders, this seems like nothing more than a debate over the minutiae of trade — the stuff of interest only to bakers in Belfast and brewers in Brighton. But those sorts of things are challenging; that’s why they have yet to be resolved. If the Sunak government gets it wrong, we could end up with a hard border — complete with passport checks and customs inspections — between Northern Ireland and the Republic. That, in turn, might reignite the tensions between the different factions in Ireland — remember the horrific violence of “the Troubles” ended less than 25 years ago.

Nobody wants that to happen, of course, so it probably won’t. But still, it could. And if it does, the win-win economic relationships that have been so kind to Ireland and the United States will be dealt a grievous blow.

OK, I could go on and on, but you get the idea. The modern economy looks a lot like the skeleton in that kids’ song about how “the foot bone’s connected to the leg bone, the leg bone’s connected to the …” Everything really is connected. And right now, the British are shaking the whole skeleton. I can’t say what, if anything, is about to break, but I’ll be watching. You should too.

Michael L. Davis is an economics professor at the Cox School of Business at Southern Methodist University in Dallas. He wrote this for InsideSources.com.

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