Daily Times

Britain’s so-called ‘special relationship’ with the United States was one of the most enduring alliances of the 20th Century, though Brexit and the election of US President Donald Trump have raised questions about its future.

What is the special relationship and how do the United States and Britain compare on key measures?

Economy

The United States is the world’s biggest economy, worth about $20.4 trillion or 23 percent of global GDP, while Britain is the world’s fifth largest, worth about $2.9 trillion or 3.3 percent of global GDP.

While the EU accounts for about half of Britain’s external trade, the United States is by far the biggest single trading partner, followed by Germany, the Netherlands, France and China.

For the United States, Britain is its seventh largest trade partner, after China, Canada, Mexico, Japan, Germany and South Korea. Both Britain and the United States report a trade surplus in goods with each other, indicating they are not comparing like with like.

For decades, both Washington and London were aligned on opening up world markets to free trade. British Prime Minister Theresa May said US steel and aluminium tariffs were “unjustified and deeply disappointing”.

Military

The United States, which spends more on its military than the next seven highest-spending countries combined, has a defence budget proposal for 2018 of $639.1 billion. It has the second largest number of nuclear weapons after Russia.

The US Navy operates a fleet of 14 Ohio-class nuclear submarines, each of which can carry 20 Trident II D5 missiles which have multiple, independently-targeted warheads.

Britain, the biggest defence spender in the EU, spends about 40 billion pounds ($53 billion) a year. France and Russia are the only other nuclear powers in Europe.

Britain has a fleet of four Vanguard-class submarines which can each carry 16 Trident II D5 missiles, which are leased from a pool of such missiles that it shares with the US Navy.

Their militaries have fought side-by-side in Europe, Korea, Kuwait, Iraq, the former Yugoslavia, Afghanistan, Libya and Syria. Britain views the US-led NATO alliance as the foundation of its defence.

Trump has demanded Western allies pay more into NATO. The United States operates out of several military bases in Britain including RAF Lakenheath, RAF Croughton and RAF Menwith Hill.

Intelligence

Intelligence cooperation between the United States and Britain is extremely close and one of the main areas where the alliance works in practice.

During World War Two, the two countries forged a close intelligence sharing deal that was later extended to include Canada, Australia and New Zealand and became known as the “Five Eyes” (FVEY).

The intelligence sharing brings the United States’ modern computer-powered technological spying together with Britain’s more traditional human intelligence operations which are strong in the former Soviet Union, Europe and the Middle East.

Cooperation is close across the main spy agencies at home and abroad. Given their respective complimentary geographical strengths, data collected by Britain’s GCHQ eavesdropping agency is of particular use to the National Security Agency (NSA).

The US intelligence budget (excluding military intelligence) is $55 billion while the UK intelligence budget (for funding MI5, MI6 and GCHQ) is 2.3 billion pounds ($3 billion)

Finance

London and New York are the world’s top two biggest financial centres. While London is by far the biggest centre for foreign exchange trading and international banking, New York is king for bonds and stocks.

London remains the globe’s most attractive financial centre, extending its lead over New York despite Brexit, according to the Z/Yen global financial centres index (GFCI), which ranks 92 financial centres on factors such as infrastructure and access to high quality staff.

London dominates the $5.1 trillion a day global foreign exchange markets: Far more foreign exchange is traded in London than the United States and the rest of the European Union put together. Wall Street’s S&P 500, which is an index of about 500 of the largest US corporations, is worth about $24.26 trillion, according to Thomson Reuters data.

By comparison the FTSE all-share, which is an index of more than 600 shares traded on the London Stock Exchange, is worth about 2.67 trillion pounds ($3.52 trillion), the data shows.

The US bond market, including government and corporate debt, is worth over $39 trillion, according to the Bank for International Settlements. In Britain, the bond market is worth $6 trillion, the BIS data shows.

Published in Daily Times, July 6^th 2018.