At a Crossroads: The UK and the Neoliberal World Economy

Introduction: The End of The Neoliberal Era

The United Kingdom (UK) is at a crossroads. It has the sixth-largest economy in the world, but it is dominated by a financial sector that breeds deep inequality at home and abroad. Exacerbated by an unnecessary and unproductive fiscal framework, the country has been left economically vulnerable post-Brexit, compounded by years of low (public) investment, rising workplace precarity, the privatisation of public services and the dismantling of social security. ¹ Efforts to promote economic growth proceed according to a repackaged version of the neoliberal fever-dream: overhauling planning regulations; building data centres and military technologies; and de-risking investment for the private sector. Failing economic transformation, this is fertile ground for the rise of the authoritarian far-right.

Simultaneously, the UK confronts a new global conjuncture. The previous regime of neoliberal financial globalisation, while still formidable, is breaking down under the weight of US-instigated trade wars, an emergent Cold War and assertive middle powers flexing their state-capitalist muscles. Since the 2008 financial crisis, the US has steadily weakened while China has emerged as the world’s second-largest economy and developed leadership in advanced manufacturing, critical supply chains and high-tech sectors. As its structural power declines, the US has struggled to maintain its global primacy through threats against allies, the weaponisation of trade dependencies, repeated acts of military aggression and withdrawal from dozens of the world’s multilateral institutions, all of which are destabilising the old liberal order and have made the UK’s “special relationship” with the US a growing source of insecurity. ²

Amid this turmoil, the UK’s position in the global order is shifting. As explored below, the UK was an originator and enforcer of the neoliberal regime that has undergirded US trade, financial and military hegemony for the last forty-five years, helping to create a macroeconomic environment incompatible with global development, security, or a safe climate. As the world enters a new age of multipolarity, for the UK to make a progressive contribution to the global economy of the future, it urgently needs to transform its economic model and its foreign policy. With these stakes in mind, this two-part essay examines the UK’s present role in the global economy — charting the institutions of global economic governance, the financial system, the global trading regime and the architecture of US military power — and proposes a new strategy, grounded in green economic planning and green internationalism, to support collective flourishing and planetary safety.

The UK’s Role in the Neoliberal World Economy

i. Global economic institutions

The UK has long played an important role as an enforcer of the old order. After the Second World War, it was a founding member of the institutions that govern the global economy, notably the World Bank and International Monetary Fund (IMF). Since the late 1970s, these institutions have helped implement a neoliberal regime of financial globalisation centred on dollar hegemony, propelled by the logics of market-based finance, in which finance has penetrated all socio-economic activities, and the US dollar has served as the world’s reserve currency. ³ This economic architecture has, in varying ways, failed working people in the UK and across the world. States were subjected to market discipline, insulating markets from democratic processes, under the banner of economic integration. Driven by the exploitation of the Global South and working-class people everywhere, this regime has always been an attempt to maintain an institutionally flexible imperial economy, shifting from explicit colonisation to strategies of economic dominance under the mirage of political independence. ⁴

The World Bank and IMF play an essential role in shaping capital flows to the Global South, and in each, the UK is the sixth-largest shareholder, mirroring the power imbalances of the global economy. ⁵ From the 1970s, the lending from these Global North-dominated institutions was conditioned by the structural adjustment programs of the Washington Consensus, which dismantled developmental states, privatised public services, forcibly opened markets to private capital, and removed environmental and labour protections. Today, Global North states use these institutions to push a repackaged version of these logics under the banner of the Wall Street Consensus, where finance for development is conditional on Global South states “liberalising” their economies as part of the “de-risking” programmes supposedly required to mobilise Northern private finance into “bankable” development projects in the South. ⁶ The UK continues to play an important role in this. For example, the UK holds a central role in the World Bank’s Climate Investment Fund, which, with $7 billion committed (and over $1 billion from the UK), seeks to mobilise private capital through such de-risking tools for climate action. Although such institutions have played an important role in buttressing the neoliberal order, the UK’s role in the architecture of neoliberal globalisation extends beyond its institutional contributions, encompassing the financial system, the trading order and military power.

ii. Global finance

One of the UK’s most important functions in the neoliberal order is its role within the financial system. The City of London is one of the world’s leading financial centres, long shaping the development and trajectory of global capital. ⁷ The status of the City reflects a heritage spanning centuries: British finance maintained the infrastructure of imperial power, providing loans for the slave trade, wars, and trade expansions, and financing the Industrial Revolution. ⁸ In the years since, the City has helped create and enforce a global financial system that structurally constrains the development prospects and sustainability of the global majority and extends the power of finance far beyond that of most states. ⁹

As a financial centre, London is the world’s largest net exporter of financial services, a centre of global equity trading, cross-border lending (14.6 per cent of global flows) and foreign exchange markets (38 per cent of global turnover). It is also home to some of the largest asset management, private equity, hedge fund, insurance and pension markets in the world. Domestically, the financial sector employs 614,500 people and contributes nearly £100 billion in tax revenues, even as it drives declines in the labour share of national income and allocates only 20 per cent of its capital to productive investment.

Yet globally, the City helps to buttress a financial system in which state autonomy is a function of financial and economic power. At its apex, the US economy is granted an exorbitant privilege as the issuer of the world’s reserve currency, enabling it to maintain high levels of debt to finance state spending. This capacity could be used to support productive investment. Instead, much of it is used to finance tax cuts for the uber-rich, surveillance, police repression and a $1 trillion military budget. While benefiting US imperial power, this system is fundamentally unstable and crisis-prone to the detriment of the global majority, driven by the dollar cycle and by American monetary policy’s role in shaping global growth and liquidity cycles. ¹⁰

After the US, highly developed economies such as the EU, Japan, the UK, Australia, Canada and China have significant (but lower) levels of autonomy. At the bottom of the hierarchy are Global South states whose access to dollar credit is gated by credit rating agencies that are systematically biased against them, even as they face higher capital costs and dependence on volatile external finance, pushing many towards debt distress. ¹¹ Frequently unable to borrow in their own currencies, many Global South states are highly vulnerable to shifts in global liquidity conditions, changes in monetary policy in apex economies, and even small changes in their balance of payments, which together severely limit their developmental autonomy. ¹²

Despite the size of its financial sector and the benefits it gains from this unstable system, the UK contributes little to international climate action or development finance, on which many Global South states depend. Between 2023 and 2030, Global South states (excluding China) were estimated to require $2.3–2.5 trillion per year to finance climate action. Yet in 2023, as overall global climate finance reached $1.9 trillion, only $196 billion went to emerging and developing economies. While UK banks invested £75 billion (2016–2023) in large-scale fossil fuel projects, cuts to development budgets mean that the UK provided only £3 billion in climate finance last year.

As shown above, between 2019 and 2023, UK climate finance commitments to the Global South totalled $14.3 billion, yet a tenth of this was siphoned off to UK-based private consultancies. Although the UK’s climate finance contributions in recent years have mostly been in the form of grants, with the African continent receiving the majority (20.8 per cent, $6 billion), efforts are underway to increase private-sector involvement. At the same time, whatever the form and distribution, UK climate finance contributions are a fraction of what is needed by Global South states.

The distribution of climate finance reflects the fundamental inequality of the global financial system, built in the image of US imperial power and enforced by the City of London, which acts as a significant impediment to the sustainable development and stability of the global majority. While firms in the City of London accumulate vast profits, and the UK government collects its share of tax revenues, countries in the Global South are subject to fiscal constraints. Global South sovereignty is accordingly constrained not just by limited access to (dollar) credit, but also by the instabilities and dependencies created by the system’s structure. When faced with rampant corporate power, rising geopolitical competition and global instability, the meagre sums of development and climate finance offered to Global South states in return are not just derisory but, adding insult to injury, are also now in decline.

iii. International trade

The UK’s position in the architecture of neoliberal globalisation is also shaped by its role in the global trade regime. In 1995, it was one of the founding members of the World Trade Organisation (WTO), which has set the rules of global trade, and, through the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement, provided a framework for global governance of intellectual property (IP). Yet, because the capacity to bargain within the WTO remains a function of economic power, the neoliberal global trade regime it enforced has promoted a vision of “free trade” shaped by transnational firms from the US, Europe and Japan. This has pushed Global South states into subordinate positions in commodity chains, suppressing wages, prices and profits, and has compelled them to export cheap resources and labour. It has also dismantled trade protections and growing industries, constraining industrialisation efforts. And it has commodified knowledge, restricting access to crucial technologies needed for development. ¹³ Today, the UK remains an enthusiastic advocate of such “free trade” norms, for example through recently helping to broker a WTO deal on global services liberalisation, which seeks to promote the interests of service-exporting developed economies like the UK while displacing jobs in the nascent services industries of the Global South.

The UK’s role in this trading order is deep-rooted. Between the nineteenth and early twentieth centuries, the UK was the world’s leading imperial power, accruing vast wealth and profits from colonisation. ¹⁴ At the turn of the twentieth century, meanwhile, the value of the UK’s foreign assets reached nearly 200 per cent of GDP — outside of a handful of other European states, the rest of the world had negative foreign assets — contingent on colonial transfers and extraction, such as one-off tributes. This allowed Britain to finance enormous trade deficits, including significant deficits on cheap primary commodities used as manufacturing inputs to power Britain’s imperial economy. By the 1980s, this regime had morphed into a neoliberal and neocolonial global economy. Under this new regime, the growth and capital accumulation of Global North states like the UK would continue to rely on the appropriation of value from the South, but now through dynamics of unequal exchange in the cheap labour and raw materials that pay for imports from the Global North. Between 1960 and 2018, this amounted to $152 trillion, with the accumulation accelerating from the 1980s onward. ¹⁵

In more recent years, the UK’s position in the global trade regime has been shifting. Although the UK remains the sixth-largest economy in the world — ranked fourth globally in the value of imports and exports of goods and services (2023), with total UK trade valued at £1,703.4 billion (2024) — it has deindustrialised faster than other advanced economies. In 1948, the UK accounted for around 12 per cent of global goods exports; by 2018, it accounted for 4 per cent of goods and services combined. In place of manufacturing, services — including research and development, financial services, and professional and management consulting — have become central to UK trade, accounting for 56.2 per cent of exports in 2023. And this gap between goods and the blurrily defined category of “services” is widening: service exports rose by 73 per cent between 2010 and 2024, while goods exports stagnated, making the UK the only G7 economy with a higher value of service exports than of goods.

Today, in the wake of Brexit, efforts that echo Britain’s imperial era have been made to recalibrate the UK’s trade policy regime, hoping to reposition the UK as a global power and a significant trading state. ¹⁶ The 2025 Trade Strategy promoted new trade agreements in hopes of rebuilding capacity as a “champion of global free trade”; meanwhile, numerous new trade deals have been signed, frequently replicating the standards of EU membership. ¹⁷ Despite Brexit, much of the UK’s trade continues to be with the EU, accounting for 55 per cent in 2023.

Yet, as part of efforts to reinvigorate post-Brexit trade, plans to promote “Global Britain” appear confused, caught between a rhetorical desire to rebuild Britain as a global trading power and the reality of the country’s more recent role as part of the supporting cast of American empire. ¹⁸ In Africa, this agenda simply entrenches the unequal relationships Britain has maintained under the neoliberal global trade regime. While bringing few, if any, development dividends to the continent, the UK government and firms have intensified trade, aid and finance links that risk undermining sovereignty and development prospects, part of the new scramble for African resources. For example, Ghana was initially reluctant to sign a 2020 trade deal with the UK, concerned that it would replicate the controversial “free trade” deal previously signed with the EU. However, under threat of rising tariffs, the UK pressured Ghana into signing an agreement that extended liberalised trading terms, required it to dismantle its own protective tariffs, and risked tens of thousands of job losses in Ghana’s banana and tuna industries.

Amid flag-waving rhetoric, Britain’s continued advocacy of and role in the global trade regime perpetuate the exploitation of the Global South under the banner of “free trade”. Now, as it faces a new global conjuncture, the UK remains wedded to a trade approach that increasingly seems to be a thing of the past. On the one hand, the logics of free trade are rapidly being dismantled by trade wars and new tools of state capitalist economies, and on the other, those same logics have long pushed Southern states to specialise in the export of cheap primary commodities, thereby restricting efforts toward industrialisation that would support autonomous development.

iv. Military power

Since the middle of the twentieth century, the UK has held an important role in US-led military architecture, as a leading member of NATO and a nuclear power. Despite its pretensions of being a force for global stability, the reality is that the UK’s role as a military power has focused on armed interventions in the Global South and support for strategic allies, even as they commit war crimes, atrocities and genocides that destabilise the global order.

Now, amid the turn towards Cold War and the unravelling of global order by its closest ally, the UK is moving to “war-fighting readiness”, committing itself to spending 5 per cent of GDP on national security by 2035. To do so, the UK government promotes a model of military Keynesianism, where military spending is relied on to stimulate the economy. Despite evidence to the contrary, the recent Strategic Defence Review (2025) argued that “[d]efence has significant untapped potential to be a new engine for growth”.

The UK has long been a source of global instability alongside the US, its closest military ally. Since 1945, the UK has been involved in planning or executing 42 coups to remove foreign governments across the Global South, involving its intelligence agencies, covert and overt military interventions and assassinations, including Iran in 1953, the Congo in 1961, Oman in 1970, and Libya in 1996, among numerous others. The UK has supported the US in its post 9/11 wars, which killed 940,000 in direct conflict and 3.6–3.8 million people through the devastation of social and economic infrastructure. The UK maintains a global network of military bases, used extensively by the US, including in the latter’s recent attacks on Iran. The UK also uses arms exports as a tool of military leverage. Over the last twenty years (2005–2024), the UK was the sixth-largest exporter of major arms — excluding components — in the world, accounting for 3.9 per cent of global supply. Between 2010 and 2019, UK arms companies signed export contracts worth more than £86 billion. And while the UK government perceives arms exports as a source of geopolitical influence, they have a deeply destabilising impact on the world order.

Most of Britain’s arms flow to the Middle East. In 2023, this began to change as the war in Ukraine escalated, and as the UK accelerated exports and aid to the country, including £10.8 billion in military support, 85,000 for military drones in just 6 months, £70 million for 350 ASRAAM air defence missiles, and £1.6 billion for 5,000 Thales light-weight multirole missiles, much of it manufactured in the UK. Despite this, Ukraine accounts for only a small share of the UK’s major arms flows in the medium term. Instead, Saudi Arabia has been the destination for 24 per cent of the UK’s major arms exports over the last two decades. Between 2021 and 2024, 23 of the 84 countries receiving UK arms exports — including Saudi Arabia, the US, Turkey, Israel, Syria and others — have used them, including missiles, rockets, grenades, bombs and explosive munitions, on civilian populations, resulting in tens of thousands of deaths and injuries.

Saudi Arabia is the UK’s biggest arms customer, purchasing over £20 billion in arms since 2015. Since 2015, the Saudi-led coalition’s intervention in the Yemeni civil war has caused the deaths of hundreds of thousands of civilians, involved indiscriminate airstrikes that targeted civilians and civilian infrastructure and created a catastrophic humanitarian crisis, with UK-made missiles, bombs and fighter jets playing a central role. Such arms were accompanied by technical support, training and maintenance provided by BAE Systems to the Saudi Air Force, as well as by BAE and Ministry of Defence personnel stationed in Saudi Arabia to support the war effort. Without these services, the Saudi air force would not have been operational.

The UK is also a major arms supplier to Qatar and the UAE. In addition to their involvement in the Yemen war as coalition partners, Qatar and the UAE are among the powers intervening in Sudan, driven in part by a desire to access its rich agriculture and mineral resources. While supplying weapons to the Rapid Support Forces (RSF) — the paramilitary group implicated in creating a catastrophic famine, committing war crimes and genocide, and displacing millions — Qatar and UAE have also maintained ties with the Sudanese government by supplying humanitarian aid. Even after the UN Security Council received intelligence that British-made weapons sold to the UAE were being supplied to the RSF, the UK government has continued issuing export licenses.

Britain has also exported arms to Israel for many decades and provided intelligence, military and political support during its genocidal war on Gaza post-2023. The UK maintains close ties with Israel through ongoing defence contracts with Elbit Systems, one of Israel’s biggest arms companies, supplying military equipment and weapons to the Israeli military. The British arms industry is also a key partner in the F-35 stealth combat aircraft program, producing a minimum of 15 per cent of each fighter jet that has been used in Israel’s bombardment of Gaza.

Despite pretensions to act as a force for global peace and security, the UK has a central role in the architecture of US military power and overseas intervention. UK arms exports, considered by the British establishment to be key tools for exerting geopolitical influence, act as a crucial incendiary to conflicts around the world. Meanwhile, in support of the US, the UK has repeatedly demonstrated that the“rules-based order” only applies to select countries, inadvertently unwinding part of the foundations of the old order.

Conclusion

In support of American hegemonic power, the UK has helped construct and enforce a global regime that favours the development of a select few wealthy states and their multinational firms at the expense of the global majority. Reflecting its long imperial legacy, the UK has helped maintain the existing set of supranational institutions, trade and intellectual property regimes that keep Global South economies in a state of underdevelopment. The City, one of the world’s major financial centres, plays an important role in a global financial system that destabilises the world, limiting crucial financial flows and constraining development prospects in the Global South. Through the international trade regime, the UK has helped enforce terms of trade that are deeply inequitable, manifesting as a dynamic of unequal exchange. Britain’s use of military force alongside the US has violently compelled more countries into this global regime, thereby expanding opportunities for capital accumulation at the expense of Southern autonomy. Together, these factors have created a macroeconomic environment inhospitable to sustainable development, with significant ramifications for efforts to improve international security and global sustainability.

Although the UK continues to participate in climate diplomacy forums and has made notable progress in building renewable energy capacity, its support for a global economic regime that chronically undermines the development efforts of the Global South also undermines efforts towards global sustainability. The UK helps enforce an economic regime that generally constrains the Global South’s capacity for sustainable development, let alone the particularities of climate adaptation and mitigation interventions. Underdevelopment and insecurity reduce states’ capacity to pursue a green transition, but the deepening climate crisis will only worsen these dynamics over time, amplifying climate risks and vulnerability, which, in turn, feed back into reduced developmental capacity and heightened insecurity. Although the worst and earliest impacts of these entangled processes will occur in the Global South, Global North countries will feel them too: increasing global instability, insecurity and underdevelopment will lead to ongoing economic shocks and reduce the collective capacity to respond to the existential threat of the climate crisis.

New crises are unwinding the global order, opening opportunities for collaboration and creating significant dilemmas for states worldwide. Within this, the UK’s position as a trading, economic and financial power, as well as a military force, has long proved detrimental to citizens at home and the global majority abroad, contributing to patterns of underdevelopment, insecurity and unsustainability. At the same time, Britain’s “special relationship” with the US is becoming an increasing source of instability, and like the EU, the UK is caught between the US–China rivalry and has so far struggled to articulate a coherent strategy in response. In short, the UK economy and its external positioning need structural reform. As will be explored in the next part of this mini-series, the UK now faces a divergent choice between defending an increasingly violent and unstable US-led order or forging an internationalist strategy that supports a transition to a democratic, secure and sustainable global regime for all.

Acknowledgements

The author would like to thank Ilias Alami for his thoughtful comments and feedback.