Why pragmatism, not ideology, shaped Britain’s approach to the global economic order

Martin Fitches and Michael Leger say history teaches important lessons for today’s policymakers

We are at a pivotal moment in the reshaping of the global economic order. Uncertainty is high. But it’s far from the first time in history that we have lived through such a significant period of flux.

In this article, we demonstrate why history matters and how government officials can learn from the way the UK has navigated out of crises in the past. We will share some reflections on how to get the most out of historical research, as well as recommendations on how policymakers can work most effectively with professional historians.

UK in the GEO: A potted history

The UK has been instrumental in the creation of the global economic order as we know it today, starting with the expansion of the British Empire in the mid 1600s, followed by the Industrial Revolution one hundred years later and continuing well into the 20th and even 21st centuries. English law and the English language continue to provide the structure for international commerce and serve as the global lingua franca. Thanks to our Special Relationship with the US, we were pivotal in designing the rules and institutions that paved the way for a long period of stable economic growth after the Second World War. Then, the world needed a new way of thinking about how to encourage open trade, how to govern international money and how to rebuild after the disasters of global conflict. Together with Americans, British economists and diplomats led the way in outlining the roles of the International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organisation (WTO).

The UK’s continued role as a global financial hub, strengthened by our participation in the offshore dollar system, meant we were heavily affected by the global financial crash of 2008–09 and therefore played a key leadership role in the G20’s response. We have been a core strategic partner of Europe as well as the US. Our membership and influence over the creation of the world’s biggest single market – and subsequent decision to leave it – put us at the centre of one of the biggest events shaping the global economic order in recent times.

It is not an exaggeration to say that at key moments the UK has led transformations in the GEO. Now as a middle power, we are witnessing existential challenges to global economic institutions made for the realities of the 20th century, hence the 2025–26 Heywood Fellowship team’s ambition to develop a refreshed UK strategy for navigating the changing global economic order.

In our research so far, we have identified three key lessons from history: that Britain’s approach to the global economic order has always been pragmatic, not ideological, and has changed dramatically over time; that the global economic order is dynamic, and that flexibility and ambiguity are important for success; and that multilateral frameworks should be seen as tools that might not be useful one moment but can become useful later.

The following are two short case studies that bring these lessons to life.

The League of Nations, the Gold Standard and preferential trade

The British were key architects in the creation of the League of Nations after the First World War, but they were also among the first to break its rules. The League was established to prevent war and economic coercion and to encourage open trade and the return of the gold standard. The proponents of the League understood that prosperity was necessary for peace, and that international administration and cooperation was crucial to achieve that end.¹ A small group associated with the Liberal Party, called the Bryce Group, was first to flesh out a blueprint for the League during the war: they sent their plan to the US and for five years campaigned for it. Historians have since shown that the plan was not associated with utopianism, idealism or even pacifism, but with realism. Britain, and others, recognised that they needed an international forum through which to prevent the outbreak of another war and to prevent nationalist economic policy.

The economic recovery after the shock of the First World War took much longer than expected. Gradually, the UK broke each of the international rules it had designed. For example, there was immense pressure to return to the gold standard because it was what people associated with the old order. In the end it took the UK six years to get back on the gold standard after the war, and only six years to leave it again. That was because in the Depression its binding nature became an obstacle to stability rather than the hallmark of stability for which many hoped. It hamstrung Ramsay Macdonald’s capacity to respond to domestic social and financial upheaval, encouraging him to abandon the very part of the international order that was previously central to Britain’s empire and the shared commitment to the League of Nations’ peace plans. Britain turned protectionist with the 1932 Import Duties Act, effectively protecting domestic workers and industry from foreign competition. These tariffs catalysed British manufacturing, and by some assessments made the UK the second fastest growing economy behind Nazi Germany for five years. When push came to shove, Britain strategically pivoted to stay ahead.

For a long time, the League of Nations and its rules were viewed as a failure. More recently, historians have shown that even though its success was short lived, it did lay out a precedent for the IMF to follow. Britain’s economy may have buckled from the constraints it had put on itself in the 1920s, but at least the League left a blueprint for how to build international economic order two decades later.

The GATT and preferential trade

Britain, we all know, played a key part in establishing the IMF and the World Bank at an international conference in Bretton Woods, New Hampshire, in 1944. What is less well known is the highly influential role of the British team of negotiators in making the rules of the GATT (the precursor of the World Trade Organisation) more flexible, signed three years later in 1947. The irony of the GATT is that it is famously known to have been responsible for globalising the liberalisation agenda in the second half of the 20th century. Yet at its founding moment, UK representatives were pushing for greater ambiguity and case-by-case interpretation of countries operating in the grey area of trade liberalisation, precisely so that Britain could gradually ease its imperial preferences rather than opening up too quickly and exposing the domestic economy to a sudden shock. The Americans, by contrast, wanted to push for complete and unfettered free trade underpinned by multilateral agreement.

The reason they conceded to the British view was because the economic case for gradualism was well-grounded in evidence and compellingly made by the British representatives: Hugh Dalton, Stafford Cripps and John Maynard Keynes. The British successfully diluted the more simplistic American goal by creating a more flexible multilateral framework. Table 1, which sets out the American pre-negotiating positions and the successful British outcomes, illustrates the point.

Table 1: American compromises on economic principle – 4 key issues

Table from J Miller, ‘Origins of the GATT – British Resistance to American Multilateralism’, 2000.

What the case tells us

The main lesson of both these cases is that a combination of self-interest and a desire to find mutually beneficial solutions has always lain at the root of UK policy towards the global economic order. Concretely:

1. We have used multilateralism as a means, rather than an end in itself, to achieve our goals. There is often a tendency to interpret our history as a straight line from mercantilist empire to bastion of free trade, but the pendulum between openness and protectionism has often been swinging. The UK has always depended on foreign trading relationships to secure economic stability and on rules and norms to stabilise international trade, but as the League of Nations and GATT examples both show, we have also been unafraid of breaking the same rules we created if it’s in our economic interest.

2. For international economic orders to work, they require flexibility and exceptions. Even Adam Smith, when critiquing the Navigation Laws in The Wealth of Nations, argued for exemptions around national security and moments of transition. Tolerating flexibility and ambiguity in international economic relations can sometimes be a source of strength, not a failure. In extreme moments, international agreements, particularly those that are too rigid, tend to be overridden by domestic needs, and this is as true for Britain as for any other country. Taking economic theory or imposed order to their extremes has never been the British way. The world is dynamic and changing, which means the global economic order and multilateralism is a tool that must be used differently in different periods.

3. Even when old orders and rules no longer seem relevant, it is rarely necessary to reinvent the wheel. The seeds sown by the League of Nations were critical to the success of the Bretton Woods institutions. For nearly a decade after it assembled in 1999 in response to the Asian financial crisis, the G20 was helpful but not instrumental; then during the great financial crisis, it proved to be the most effective multilateral tool Britain could deploy in response.

Bridging historical expertise and policy practice – Martin’s perspective as a civil servant

As an experienced policymaker, I’m embarrassed to admit that I have used history in my policymaking less than I would have liked. Yes, as I embarked on negotiating the UK’s Free Trade Agreement with New Zealand, I had an appreciation for the history of imperial preferences and the impact on New Zealand when we joined the European Economic Community. And yes, as I led our post-Brexit strategy for the World Trade Organisation, I appreciated the role that the UK had played in the creation of the Bretton Woods institutions and how these institutions had evolved over time. However, my understanding in both instances was partial, and had I had a more sophisticated understanding, I believe I could have been more thoughtful and confident, even if it might not have changed my overall strategy and advice to ministers.

Too often, understanding history – particularly over longer time periods – seems obscure and a nice-to-have. The Heywood Fellowship has provided me with the opportunity, including working with a historian on our team, to better appreciate the history of a policy area that I have worked on for 10 years. I can now see the benefits of understanding deep historical perspectives as we design policies for today and the future. At heart, we know that context and perspective are critical for good policymaking. History provides this context.

With this in mind, I want to share a few tips on working with history in policymaking.

1. History can provide us with a frame of reference, insights about the debates going on at the time and the conditions that made a particular policy a success or not. Importantly, it can help us avoid pitfalls that we’ve already experienced, though it does not offer quick and easy answers.

2. Translating history into practical application today is a skill. Policymakers and historians often speak different languages, and this can lead to misinterpretation or misunderstandings. Historians can provide expert and detailed accounts of what happened in a particular period or era, but they will not necessarily have thought about how this applies to a current policy problem. Extracting lessons requires careful listening and targeted questions.

3. The big challenge for policymakers is how to most effectively and regularly engage academic expertise for pressing policy challenges. In our research, we have convened a number of roundtables involving historical experts. Running seminars or workshops can improve understanding and nuance of a period better than reading the literature or conducting a single conversation with a historian. A number of groups work to bring together the historian community and policymakers, notably the History and Policy group at the Institute of Historical Research and Cambridge’s Downing Battcock Institute.

A final word: Jeremy Heywood was a leader in urging the UK to adopt more open policymaking practices by engaging deeply with experts in and outside of Whitehall. At moments like the present, with so much change and uncertainty, open policymaking practices are more vital than ever. We should ground ourselves in history and look to those that came before us to help us chart a path forward.

Martin Fitches is Visiting Fellow of Practice as part of this year’s Heywood Fellowship. He has held a range of senior trade policy roles since Brexit, including as Deputy Director of Multilateral Trade Policy and the WTO, and most recently as Co-Director for US trade policy at the DBT.

Michael Leger is Policy Fellow as part of this year’s Heywood Fellowship. He is a PhD Candidate in International Political Economy at the University of Cambridge.

To understand the wider work of this year’s Heywood Fellowship, the team’s first paper sets out the context and diagnosis of the current challenges facing the UK as it navigates the changing global economic order and offers some initial thoughts on how the UK might need to adapt.