Laurie Macfarlane
@lmacfarlane.bsky.social
Co-director @FutureEconScot.bsky.social Fellow UCL IIPP and the Democracy Collaborative. Co-author ‘Rethinking the Economics of Land and Housing’
As the article points out, our leverage is greater if we act with Europe. But it’s still a one-sided battle, and Europe isn’t exactly united.
Britain + Europe urgently need a plan for decoupling and reindustrialisation. But I think it’s wise to avoid knee-jerk escalation.
Britain + Europe urgently need a plan for decoupling and reindustrialisation. But I think it’s wise to avoid knee-jerk escalation.
January 19, 2026 at 9:21 PM
As the article points out, our leverage is greater if we act with Europe. But it’s still a one-sided battle, and Europe isn’t exactly united.
Britain + Europe urgently need a plan for decoupling and reindustrialisation. But I think it’s wise to avoid knee-jerk escalation.
Britain + Europe urgently need a plan for decoupling and reindustrialisation. But I think it’s wise to avoid knee-jerk escalation.
In this sense, I sympathise with Starmer. There’s simply not much we can do in the short-term that doesn’t make things worse.
This is the brutal reality of realpolitik. In Britain we’re not used to being on the losing side, but here we are.
This is the brutal reality of realpolitik. In Britain we’re not used to being on the losing side, but here we are.
January 19, 2026 at 9:21 PM
In this sense, I sympathise with Starmer. There’s simply not much we can do in the short-term that doesn’t make things worse.
This is the brutal reality of realpolitik. In Britain we’re not used to being on the losing side, but here we are.
This is the brutal reality of realpolitik. In Britain we’re not used to being on the losing side, but here we are.
The big problem: in any tit-for-tat, the US has far more powerful weapons than we do, because we are in essence a vassal state.
They could crush us in every arena — economic, financial, technology and military. If it’s a race to the bottom we will lose, badly.
They could crush us in every arena — economic, financial, technology and military. If it’s a race to the bottom we will lose, badly.
January 19, 2026 at 9:21 PM
The big problem: in any tit-for-tat, the US has far more powerful weapons than we do, because we are in essence a vassal state.
They could crush us in every arena — economic, financial, technology and military. If it’s a race to the bottom we will lose, badly.
They could crush us in every arena — economic, financial, technology and military. If it’s a race to the bottom we will lose, badly.
A fire-sale of treasuries would be the financial equivalent of setting off a nuke. And it would likely be met with a nuclear response.
Given how intertwined we are with the US, and the size of our finance sector, any turbulence in bond markets would have considerable blow back on us.
Given how intertwined we are with the US, and the size of our finance sector, any turbulence in bond markets would have considerable blow back on us.
January 19, 2026 at 9:21 PM
A fire-sale of treasuries would be the financial equivalent of setting off a nuke. And it would likely be met with a nuclear response.
Given how intertwined we are with the US, and the size of our finance sector, any turbulence in bond markets would have considerable blow back on us.
Given how intertwined we are with the US, and the size of our finance sector, any turbulence in bond markets would have considerable blow back on us.
Finally, the big one: Treasury bonds.
The UK is now the third largest holder of treasuries, so in theory this should provide leverage. But weaponising this comes with a big risk of collateral damage.
The UK is now the third largest holder of treasuries, so in theory this should provide leverage. But weaponising this comes with a big risk of collateral damage.
January 19, 2026 at 9:21 PM
Finally, the big one: Treasury bonds.
The UK is now the third largest holder of treasuries, so in theory this should provide leverage. But weaponising this comes with a big risk of collateral damage.
The UK is now the third largest holder of treasuries, so in theory this should provide leverage. But weaponising this comes with a big risk of collateral damage.
On regulating big tech: this could be powerful symbolically, but it’s not huge economically.
And if we hit this hard, we can expect the US to punish our exports. This suffers from the same problem as tariffs: they can hurt us far more than we can hurt them.
And if we hit this hard, we can expect the US to punish our exports. This suffers from the same problem as tariffs: they can hurt us far more than we can hurt them.
January 19, 2026 at 9:21 PM
On regulating big tech: this could be powerful symbolically, but it’s not huge economically.
And if we hit this hard, we can expect the US to punish our exports. This suffers from the same problem as tariffs: they can hurt us far more than we can hurt them.
And if we hit this hard, we can expect the US to punish our exports. This suffers from the same problem as tariffs: they can hurt us far more than we can hurt them.
On tariffs: the UK could retaliate, but the stakes are highly asymmetric:
🇬🇧 exports to 🇺🇸 = ~7% of our GDP.
🇺🇸 exports to 🇬🇧 = ~0.7% GDP.
America’s tariffs hit us far harder than ours would hit them. There’s only one winner in a trade war — and it’s not us.
🇬🇧 exports to 🇺🇸 = ~7% of our GDP.
🇺🇸 exports to 🇬🇧 = ~0.7% GDP.
America’s tariffs hit us far harder than ours would hit them. There’s only one winner in a trade war — and it’s not us.
January 19, 2026 at 9:21 PM
On tariffs: the UK could retaliate, but the stakes are highly asymmetric:
🇬🇧 exports to 🇺🇸 = ~7% of our GDP.
🇺🇸 exports to 🇬🇧 = ~0.7% GDP.
America’s tariffs hit us far harder than ours would hit them. There’s only one winner in a trade war — and it’s not us.
🇬🇧 exports to 🇺🇸 = ~7% of our GDP.
🇺🇸 exports to 🇬🇧 = ~0.7% GDP.
America’s tariffs hit us far harder than ours would hit them. There’s only one winner in a trade war — and it’s not us.
Britain couldn’t have picked a worse time to pursue its fantasy of becoming an “independent great power” once again.
This was never going to survive contact with reality. But ironically it’s the US — who Brexiteers wanted closer alignment with — that is teaching us this lesson.
This was never going to survive contact with reality. But ironically it’s the US — who Brexiteers wanted closer alignment with — that is teaching us this lesson.
January 19, 2026 at 6:20 PM
Britain couldn’t have picked a worse time to pursue its fantasy of becoming an “independent great power” once again.
This was never going to survive contact with reality. But ironically it’s the US — who Brexiteers wanted closer alignment with — that is teaching us this lesson.
This was never going to survive contact with reality. But ironically it’s the US — who Brexiteers wanted closer alignment with — that is teaching us this lesson.
Europe as a whole is different. It is both less reliant on the US and its scale means it has some cards it can play. As I put it in the above piece:
“While the EU lacks technological leadership but has considerable trade power, the UK has neither.”
“While the EU lacks technological leadership but has considerable trade power, the UK has neither.”
January 19, 2026 at 6:20 PM
Europe as a whole is different. It is both less reliant on the US and its scale means it has some cards it can play. As I put it in the above piece:
“While the EU lacks technological leadership but has considerable trade power, the UK has neither.”
“While the EU lacks technological leadership but has considerable trade power, the UK has neither.”
Not only does Trump not care — he’ll happily weaponise every vulnerability to get exactly what he wants.
Tariffs, sanctions, withdrawing intelligence and nukes — nothing is off the table. And Britain has virtually no meaningful leverage it can apply in response.
Tariffs, sanctions, withdrawing intelligence and nukes — nothing is off the table. And Britain has virtually no meaningful leverage it can apply in response.
January 19, 2026 at 6:20 PM
Not only does Trump not care — he’ll happily weaponise every vulnerability to get exactly what he wants.
Tariffs, sanctions, withdrawing intelligence and nukes — nothing is off the table. And Britain has virtually no meaningful leverage it can apply in response.
Tariffs, sanctions, withdrawing intelligence and nukes — nothing is off the table. And Britain has virtually no meaningful leverage it can apply in response.
I was bracing myself for a bumpy four years, but Trump 2.0 really has surpassed expectations.
Britain’s initial strategy for dealing with Trump’s belligerence was to roll out the red carpet. This has backfired in spectacular fashion.
Britain’s initial strategy for dealing with Trump’s belligerence was to roll out the red carpet. This has backfired in spectacular fashion.
January 19, 2026 at 6:20 PM
I was bracing myself for a bumpy four years, but Trump 2.0 really has surpassed expectations.
Britain’s initial strategy for dealing with Trump’s belligerence was to roll out the red carpet. This has backfired in spectacular fashion.
Britain’s initial strategy for dealing with Trump’s belligerence was to roll out the red carpet. This has backfired in spectacular fashion.
Read the full @futureeconscot.bsky.social budget analysis here:
Scotland’s Budget: Tough Choices Delayed, Not Avoided
Our analysis of Scotland's Budget for 2026/27.
www.futureeconomy.scot
January 15, 2026 at 12:06 PM
Read the full @futureeconscot.bsky.social budget analysis here:
The US already spends as much as the next 10 countries combined.
This isn’t about “defense” — and they’re being extremely open about it.
This isn’t about “defense” — and they’re being extremely open about it.
January 8, 2026 at 2:35 PM
The US already spends as much as the next 10 countries combined.
This isn’t about “defense” — and they’re being extremely open about it.
This isn’t about “defense” — and they’re being extremely open about it.