The Curse of Brexit

Is Brexit Inevitable?

The Guardian reports that the former head of the civil Service, Gus O’Donnell, now a life peer in the House of Lords, thinks not: “Brexit is not inevitable, says former civil service chief

The crossbench peer said: “Lots of people will say, ‘We’ve had the referendum, we’ve decided to go out, so that’s it, it’s all over’. But it very much depends what happens to public opinion and whether the EU changes before then.  “It might be that the broader, more loosely aligned group is something that the UK is happy being a member of.

The Conservative Home website, which very much reflects the views of Tory Brexiteers, has an article by Alex Morton.  Morton was formerly Secretary to the Conservative Party’s Globalisation and Global Poverty Group Policy Group under the Rt Hon Peter Lilley MP, he was later a graduate entrant to the Civil Service and spent time in the Department of Health before leaving to work on Conservative housing policies. He was Head of Housing, Planning & Urban Policy at the Policy Exchange from 2010 to 2013 and he is now a special adviser on Housing and Planning Policy in 10 Downing Street.  His article “Brexit means politics”  is worth reading.  Of particular interest are the following propositions:

We need to return to the successful European Common Market

We are inevitably in a showdown with pro-federalist EU politicians. So we need to get other countries to think that the UK deal may one day apply to themselves.

To win we need to push three key elements. Firstly, we must make it clear we want a Europe of national states – a Common Market of national governments – not just Brexit. This means freedom of movement of goods, services, and capital, but where regulatory difference is accepted, not a single regulatory zone controlled by Brussels; co-operation on crime and other areas, but voluntary and inter-governmental; and smaller (although still operating) transfers of funds between countries.

Secondly, we should not put EU and non-EU citizens on equal footing. Bringing EU migration down to ‘tens of thousands’ means reducing numbers by 20-30 per cent. In 2015, 270,000 EU citizens came to the UK while around 85,000 left, giving net migration of 185,000 a year. Some UK citizens also move to the EU, though the data here is limited, giving us this 20-30 per cent figure. We could reduce unskilled labour through restrictions on in-work benefits, place geographical restrictions on work (so you can come to London but not East Anglia), and limit spousal/family unions to those who can work. But we must give EU migrants a higher priority than others.

Anyone who has been influenced by Peter Lilley MP (who certainly qualifies as a Swivel Eyed Loon Brexiteer) is necessarily suspect, but a lot of what Morton says makes sense.

Will Hutton, the Principal of Hertford College, has a column in The Guardian and last Friday he wrote this:  “Don’t be fooled. There will be damaging fallout from Brexit”.  What he says also makes a lot of sense. Worth a careful read.

Is Article 50 to be triggered quickly?

The  Telegraph has this: “Theresa May will trigger Brexit negotiations without Commons vote”.  The article is based on anonymous sources and although it recognises that there are High Court Judicial Review proceedings to be heard in October which might require there to be a vote in Parliament before invoking Article 50, the assertion is:  “However Government lawyers are confident that they will win, paving the way for Article 50 to be triggered at the beginning of next year, which could see Britain leave the European Union in 2019.”

One can only observe that the Court has already given consideration to the case and it is expected to end up before the Supreme Court bypassing the Court of Appeal.  That indicates that the case raises serious and properly arguable issues of public importance.  The expression “government lawyers” covers a whole spectrum of people with different levels of ability and competence.  One has to wonder whether those who have felt able to assert what the outcome of the proceedings will be before the case has been argued are among the less competent. Herbert Smith Freehills have published a very helpful briefing on the issues which is well worth reading:  “BREXIT – TRIGGERING ARTICLE 50: WHAT ROLE FOR PARLIAMENT?”.

Getting Poorer

As an Old Age Pensioner, I have concerns that prices are going to rise because of the weakness of sterling against the US Dollar and the Euro.  I am leaving tomorrow for a brief visit to France (something close to a booze cruise) and today £1 gets me just EUR  1.17 as opposed to EUR 1.35  at Christmas. Fortunately I still have some EUR bought prior to the Brexit vote.

But I wonder how many OAPS are going to cope this winter as the currency falls though the floor and the weekly shopping bill rises. Let us hope that Teresa May will take things slowly and carefully, negotiating a deal which will save us from the ravages that the curse of Brexit will undoubtedly bring.

Farage & Trump – Yuk

Populist Politics

The United States of America goes to the polls on 8th November 2016 to elect, not only its next President but also numbers of Senators, House Representatives, Governors and various other officials.  Essentially it is a largely two party system:  Republicans -v- Democrats.

This year the Presidential Candidates are Hilary Clinton for the Democrats and Donald Trump for the Republicans.  Historically, the best interpreter of the massive amount of polling which goes on during the US campaign is the team headed by Nate Silver at Five Thirty Eight which daily produces three forecast models:  FiveThirtyEight – 2016 Election Forecast which today gives the following predictions:

  • Now:          Clinton 84.4%  – Trump 15.6%
  • Nov 8:        Clinton 83.3% –  Trump 16.6%
  • Adjusted:  Clinton 74.7% – Trump 25.3%

trump2Pollsters can, of course, get things wrong and the US political establishment is still reeling somewhat from the fact that a mountebank like Donald Trump even got to be the Republican Candidate and might yet be the next President with the ability to launch a global thermonuclear war.   Trump has run a populist campaign playing to fear and prejudice just like Herr Hitler did in between the wars in Germany and as Il Duce Benito Mussolini did in Italy and just like UKIP’s former leader, the dreadful Nigel Farage has done in the UK.

FarageTrumpAnd just just like Mussolini joined Hitler, Farage has gone to the USA to support Trump.  Lucia Graves opines in the Guardian: “Trump and Farage are playing the same dangerous game” –  “The would-be president is harnessing nationalism and bigotry. Like the former Ukip leader, he is more interested in channelling anger than he is in governance”.

The Telegraph also reports on  the Farage visit to the USA with embedded videos here: ‘Nigel Farage tells Donald Trump rally: ‘I wouldn’t vote for Clinton if you paid me‘.

There are lessons here for the UK and perhaps also for the EU, the chief of which is  that one should beware of demagogues whether on the right or the left.

The Labour Party

The Guardian reports: “Labour should continue to fight Brexit, says Owen Smith”.  At least Owen Smith has a credible general approach to the Brexit issue, but it is far from certain that his Labour leadership bid will succeed.  Writing in the Spectator, Tom Goodenough warns: “Owen Smith makes a foolish pledge to block Brexit” in which he points out that the Labour heartlands voted overwhelmingly to support Brexit.  That is true.  Why they voted thus is quite another matter.

However, see also this Brexit briefing in the Financial Times: “Brexit Briefing: What if Owen Smith wins? – Candidate for Labour leadership could have an impact on debate as it evolves”.  The Mayor of London, Sadiq Khan, has this in the Guardian: “Ditch Jeremy Corbyn before it’s too late, Sadiq Khan tells Labour“.

The Independent also looks at the Article 50 process: “Brexit: Could Owen Smith really stop Article 50 and prevent Britain leaving the EU?”  The article suggests that it is possible but it might provoke a backlash from leave voters.

Whether Owen Smith with the support of Sadiq Khan and others in the Parliamentary Party will achieve the success they hope for in the Labour leadership election remains to be seen.  One fears not. Thanks to the efforts of Momentum, it is likely  that the UK Parliament will be left without a credible Labour opposition for the remainder of this parliament – and perhaps for longer than that.

The Conservative Party

TeresaMayThe pressing matter for the Conservatives, as the party in government,  is how to manage the consequences of the Brexit vote.   Teresa May has repeated her mantra “Brexit means Brexit” but this has not as yet been clarified.  The immediate costs of the Brexit Vote have been minimised by prompt action by the Bank of England, but as every person on holiday in Europe or elsewhere will have realised, there has been a sharp decline in the value of the pound sterling.  Today £1 will get one just EUR 1.17.

The Financial Times has this  “The sharp costs of Brexit will be felt soon enough – Britons will get poorer through prices rising more than wages, writes Rupert Pennant-Rea (the Chairman of Royal London and a former Deputy Governor of the Bank of England)“.

The piece concludes: “The British have become poorer than they were before the votes were counted on June 23, and that reality will become clearer as the months go by. Just when real incomes had started to recover from the sharp squeeze of 2009-14, they will be set back again.  The holidaymakers returning from abroad have already tasted what is to come. Whether getting poorer is what 52 per cent of the June 23 voters wanted or expected, it is what is happening”.

According to this article in the Financial Times- “Investors should prepare for ‘Keynesian Put’ – BAML“,  analysts at BAML have coined the expression “Keynesian Put” for the time when government rather than the Bank of England  starts to simulate the economy with spending on projects.

The Chancellor is widely expected to do just that in  the Autumn Statement.  However, the risk is that such a stimulus may have a negative impact for bondholders and that in turn impacts adversely on pension funds. See this FT article:- “Fitch warns of pension deficit ‘cash flow drain’ for UK companies“.

The Guardian has this from its senior Economic correspondent: “Leavers should be ashamed of the harm yet to come from Brexit“.  Worth a read.

Also in the Guardian is this: “Theresa May’s holiday is almost over. She must now define herself“.

Teresa May has the potential to be one of the great “one-nation” Conservative Prime Ministers of this century.

But she will have to be wary of the Swivel Eyed Loons on her backbenches.  The Guardian has a guide to  enable the public to identify this particularly nasty pest:  “How to spot a swivel-eyed loon“.

 

Teresa May and the Swivel Eyed Loons

The Olympic Games

olympic-montageThanks to Mo Farah and so many others,   Team GB has beaten its medal tally at the London 2012 games, coming second in the world after the USA and ahead of China with a total of 67 medals.   Since the modern Olympic era began in 1896, no other country has increased its medal tally at the summer Games immediately following the one it hosted.

The major part of Team GB have arrived back in the UK.  The Manchester Evening News reports: “The national Olympic ‘welcome home’ parade will be held in Manchester… and we couldn’t be more proud!”.  There will another event in London.  The Prime Minister’s spokesman has made it clear that there will be no numerical limit when honours come to be considered.

Unfortunately, it is to be expected  that spin doctors will try to make use of Britain’s Olympic success in relation to the overwhelming issue now confronting the nation.

In the Independent, John Rentoul pointed  out that some of the credit for Team GB’s Olympic success rightly must go to Sir  John Major: “John Major gave us a golden Olympics – what will David Cameron’s legacy be?”  That’s an interesting question.

The Cameron Legacy

Rentoul is, of course, right about Sir John Major’s lasting legacy of arranging  the proper funding of UK sport by the National Lottery but, writing in the Times, Tim Montgomerie points out that another of John Major’s lasting achievements was  “Operation Provide Comfort” – the provision of safe havens for Iraqi Kurds and Shias in Iraq:  “Safe havens can stop the suffering in Syria”.

It is sad also to remember that Sir John, a great “one nation” Prime Minister, also had lasting problems with the Euroseptics in his party (‘Euroseptic’ being a better descriptor for many of them than ‘Eurosceptic’).  But Sir John finessed Maastrict and kept the UK in the EU while Cameron’s lasting legacy must surely   be the botched referendum and the disaster of the Brexit vote.

CameronBrexitThere are however competing views as to how this came about – one of which is voiced in this piece in the Independent: “Brexit isn’t the part of David Cameron’s legacy he should be most ashamed of” in which Holly Baxter argued that the austerity fiscal policy delivered the Brexit outcome. Elsewhere, six historians discuss the “legacy” issue in the Guardian: “David Cameron’s legacy: the historians’ verdict” all of which are worth reading, but in the reader comments there was one reader assessment of Cameron which seemed apposite:-

At the end of the day he proved to be spineless and weak when it came to enforcing discipline over his own party and we all have to live with the consequences of something that came about because of a few swivel eyed loons”.

The Financial Times published an interesting article by Richard Thaler earlier this month: “Britain pays the price for a badly designed Brexit choice“.   Thaler suggests that both the Aeticle 50 procedure and the use of a referendum were examples of bad “choice architecture” (the decision making framework in which choices are made).  He concludes

Since voters were given a choice that was impossible to evaluate sensibly, they should be given the opportunity to change their mind if the facts change — either via a vote of parliament or a second referendum. In short, Brexit should not mean (an immediate) Brexit.

Well, Cameron has resigned and passed the poison chalice of the consequences of the Brexit Vote to Teresa May.  We shall have to see how she will deal with the swivel eyed loons.

Teresa May and the Swivel Eyed Loons

SaveUKJ-screamThe failed former Tory Leader, Iain Duncan Smith, certainly qualifies as a swivel eyed loon and, sure enough he is reported in today’s Guardian: “Iain Duncan Smith calls for Brexit talks to begin as soon as possible“.

We should remember that a 2013 National Audit Office report on IDS’s Department of Work and Pensions found that his department had: ‘ weak management, ineffective control and poor governance; a fortress mentality, a “good news” reporting culture, a lack of transparency, inadequate financial control, and ineffective oversight” as well as wasting 34 million pounds on inadequate computer systems.‘  In effect, IDS played a very large part in screwing up the UK welfare system thus fostering  much of the resentment that led to the Brexit popular vote.   Hopefully the Prime Minister will not be bounced into any hasty decisions by the witterings of this particular loon.

We know from reports at the end of July, that the EU is considering an offer of an emergency stay of free movement for the UK for up to 7 years – see this Guardian report:- “Brexit: EU considers migration ‘emergency brake’ for UK for up to seven years“.

This article in the Guardian sets out in some detail just why the country and the government are not ready to begin negotiations at this time: “Brexit means Brexit … but the big question is when?

david-davis-graphicThis report in  Civil Service World (the house magazine) tells us something about the progress of David Davis’s new Department for Exiting the European Union  (aka ‘DexEU’) “Civil service moves special: Brexit department takes shape“.  Although David Davis is looking for a staff of 200, so far there have been just 40 appointments.

Meanwhile, the turf wars between Liam Fox (International Trade) and Clown Boris (Foreign Secretary) reported by the Financial Times mid month: “Brexit Briefing: More turf wars in Whitehall – Spat between Boris Johnson and Liam Fox shows no sign of fading” appears to have faded after some expressions of Prime Ministerial displeasure.  The reality is that no separate trade deals can be negotiated unless and until the UK has left the EU.

Thus, the Times report in mid Month “Brexit ‘will be delayed until end of 2019′ – Whitehall not ready for talks, warn ministers” will not have gone down well with the swivel eyed loons.  Perhaps unsurprisingly,  the erstwhile Chief Executive of the essentially dishonest Vote Leave Campaign, Matthew Elliott,  has announced the creation of a new website:  “Announcing BrexitCentral“.

Boris2Interestingly, New Zealand reports a peak in UK citizens enquiring about emigration after the Brexit vote: “Tenfold increase in interest from Brits wanting to move to New Zealand since Brexit referendum“.

One incentive suggested was:  “We’re more than 18,000 km from Boris Johnson“. – which could be an important consideration.

In some respects, many issues will have to await the decision of the High Court on the issue whether leaving the EU requires Parliamentary approval as opposed to relying on the Royal Prerogative.  That’s for after the Long Vacation.

It is refreshing to report that a Conservative MEP, has written s very sensible piece on the Conservative Home blog which is well worth a read:  “Vicky Ford: What the other EU member states are thinking about the Brexit negotiations“.  It provides a very valuable insight into the complexities of the issues.  Would that other MEPs could contribute their views.

 

 

 

 

Brexit Battles

 

The Sunday Times reports: “Brexit ‘will be delayed until end of 2019’ – Whitehall not ready for talks, warn ministers”.  The article is worth reading as much for the comments of the readers as for the content of the article itself which simply reports that the Civil Service needs more time to get the infrastructure for negotiating Brexit into place.

However, this is going to infuriate the hardline Brexiteers in the Conservative Party and the Mail on Sunday has this story:-

Tory rebels to demand Theresa May set a timetable for the UK’s EU departure in bid to avoid ‘Brexit Lite’. Theresa May is facing an autumn ambush from Eurosceptic MPs – Sceptics plan to launch at least two cross-party groups – Fears Mrs May is not pushing for Brexit hard enough yet – She’s said she won’t invoke Article 50 this year

John_RedwoodThe Mail is, of course, a newspaper for schoolboys written by schoolboys but it does have a following.  The only Conservative name mentioned in the story is, unsurprisingly, John Redwood, the MP for Wokingham who was briefly (and unsuccessfully)  Secretary of State for Wales (1993-1995) under John Major and who twice (unsuccessfully) sought the leadership of the Conservative Party in 1995 and 1997.  The political sketch writer, Matthew Paris, considered Redwood to be rather like Spock in Star Trek – and he is sometimes referred to as being a Vulcan.  His former wife is reported as agreeing with that: see this in the Telegraph: “He is capable of awful cruelty. He is a Vulcan, not a human being“.

Whether or not Redwood is a Vulcan, he is certainly a longtime Eurosceptic and indeed a Euroseptic.  It is entirely credible that he will be a troublemaker for Mrs May and planning some kind of back bench revolt.

The Sunday Telegraph had a report on a squabble between the Brexit Ministers:  “Liam Fox and Boris Johnson locked in feud over who controls Britain’s foreign policy”.  But this morning The Times reports: “PM tells Fox and Johnson to end Foreign Office turf war“. The fact is, of course, that the UK cannot negotiate foreign trade deals at all unless and until it has exited the EU and until the negotiations with the EU are complete, there is not much for Dr Fox to do other than to “fly the UK flag” and get his embryo Department into shape.

The Guardian also took up the same story: “Liam Fox tried to wrest control of Foreign Office duties from Boris Johnson” with the added information of another blunder by Fox’s department:  The leaked letter is the second blunder for Fox’s department in recent days. On Friday, it removed from its website a confusing press release that appeared to announce that the UK would still trade with the EU under World Trade Organisation rules after leaving the bloc, “until any new trade deals are negotiated”. Trading under WTO rules would mean that businesses were subject to steep tariffs on goods exported to the EU, including a 10% duty on cars and 12% on clothing, and having no access to the EU’s service markets or financial service markets. The department said the press release had been issued in error.

2106093779_bf82508fde_bIf Dr Fox thinks that UK based automobile manufacturers such as Nissan, Ford or Honda would be at all interested in remaining in the UK on those terms, his department might consider refurbishing the former Cherry Knowle asylum in Sunderland as a care home for delusional Brexiteers.  It’s more that a little dilapidated – but that is true of much of the North East  – and much more so if Nissan is forced to relocate to obtain continued tariff free access to the EU market.  Sunderland was one of the most pro-Brexit cities in the UK.  But the shipbuilding and mining on which the North East depended were wrecked by previous Tory governments – so that was no surprise.

One piece of good news was reported in the Guardian: “Philip Hammond told to extend UK guarantees on EU grants – Treasury is expected to continue funding for all investment fund projects if they are agreed before autumn statement“.  There are any number of important projects which rely on EU funding and this may assist in preserving some of them.

All in all, the teething troubles affecting the Brexit ministries show how unprepared Whitehall was for the Referendum outcome and how difficult it will be to give effect to the Referendum result without wrecking the economy.

Brexit will damage our wealth

Teresa May’s Agenda 

With the BBC, the Press, and the public focusing their attention on the the UK’s performance in the Olympics in Rio de Janiero, and with much of the nation (including parliamentarians) away on their summer holidays, it is not easy to discern how Teresa May’s government is engaging with the consequences of the EU Referendum.

TeresaMayIn theory, Teresa May’s government is committed to the same manifesto as the Cameron government, but in practice it is becoming clear that many policies and commitments of the Cameron government are now under review. The Financial Times has this:  “Theresa May sets a new policy direction – UK prime minister begins ditching key parts of David Cameron’s and George Osborne’s agenda”.

NickTimElsewhere, the same paper has this useful suggestion:  “Clues to Theresa May’s policy lie in chief of staff’s essays – Nick Timothy supports access to EU single market and enlarged welfare state”.  The suggestion is that perusal of Nick Timothy’s posts on the Conservative Home Site indicate the advice Timothy gives to the Prime Minister:  see Conservative Home – Nick Timothy.

However, not only is Mrs May very much more of a “one nation” Conservative than many may think, but she also has a mind of her own.  Certainly she will listen to advice, but the decisions will be hers.   Her background and upbringing testify to her “one nation” ethos  and  this article in The Guardian made clear, that was very much the basis of her leadership campaign: “Theresa May sets out ‘one-nation Conservative’ pitch for leadership”.

Hard Brexit

While Mrs May, has made much of the phrase “Brexit means Brexit” and while she has appointed three Vote Leave supporters to ministerial posts, this is not to be taken as support for the “Hard Brexit” approach advocated in the Financial Times by Bernard Jenkin MP, the Conservative Chairman of the Public Administration and  Constitutional Affairs Committee -see the post of 5th August “Single Market Access Needed“.   There are, of course, numbers of other rabid Brexiteers within the Conservative Party.  One such is that nasty little twerp, the (soon to be ex) MEP Daniel Hannan  who  has now written an article in the Spectator: “Brexit means that Britain will be boss again – All we have to do to regain total sovereignty is repeal Sections 2 and 3 of the 1972 European Communities Act”.

The Financial Times has this: “Brexit Briefing: No sovereign is an island – Some UK politicians are arguing that Britain can step out of the EU without following protocol“.  It is comforting that this article also refers to the compelling case made by Dominic Grieve QC MP in the Times Supplement – The Brief:  “Brexiteers are proposing an illegal EU exit – Dominic Grieve, QC“.   One rather thinks that the argument of Mr Grieve will easily prevail over any number of little twerps like Daniel Hannan.

Soft Brexit

The Guardian has this: “UK membership of European single market worth 4% more in GDP“.  The full text of the Institute of Fiscal Studies report referred to in the article is downloadable: “The EU Single Market: The Value of Membership versus Access to the UK” and it is well worth reading.

In essence, the IFS  concludes the UK economy would do best were the UK to remain in the EU.  Were the UK ultimately to decide to leave the EU, the second best option would be to seek to remain in the Single Market – but there would be a risk inherent in no longer having a role in the formulation/modification of the legislation governing the single market.

As the IFS summarises:

  • UK service exports are especially important. They accounted for 31% of all exports in 1999 and 44% of exports in 2015. The UK runs a significant trade surplus in services and the EU is the UK’s largest service export destination, accounting for 40% of service exports whereas emerging economies such as Brazil, Russia, India and China together account for less than 5%.
  • Single Market Membership is particularly important for financial services.So-called ‘passporting rights’ mean that UK-based financial firms can service EU businesses and customers directly. To maintain these rights would likely require membership of the European Economic Area (EEA). But that would come at the potentially considerable cost of submitting to future regulations designed in the EU without input from the UK. The UK may have to make some very difficult choices between the benefits from passporting and the costs of submitting to external imposed regulation.
  • New trade deals unlikely to compensate fully for EU trade. The EU accounts for 44% of our exports and 39% of our service exports. If the UK we are able to access the European Free Trade Association’s existing deals they would cover over 10% of UK exports which is more than the EU’s current third-country deals. Countries such as China and India together account for 4.6% of all exports, and 2.6% on services. Even small proportionate losses in trade (or lost growth in trade) with the EU would require quite dramatic – and probably implausible –increases in trade with such countries.

In short, whatever form Brexit might take, the cost to the nation is very unlikely to be made up from new trade deals with other parts of the world.  We will simply be worse off.

Single Market Access Needed

Hard or Soft Brexit or Remain ?

On 31st July 2016, this blog reported that Bernard Jenkins MP, the Chairman of the  Public Administration and Constitutional Affairs Select Committee, had written  in The Financial Times: “There is no such thing as hard or soft Brexit – Britain should look to leave the EU as swiftly and simply as possible”.

It is reassuring to note that Dominic Grieve, QC,  the Conservative MP for Beaconsfield and HM  Attorney-General (2010 to 2014) thinks otherwise.  This is some of what the former law officer wrote in the Times Legal Brief on 17 June 2016.

Brexiteers are proposing an illegal EU exit

 Those supporting a vote to leave the EU tell us they envisage it as a process that will be carried out outside the rules laid down in article 50 of the Lisbon Treaty. Instead of invoking it, we should inform our European partners of our desire to negotiate a different relationship. In the meantime parliament would be made to legislate rapidly to amend those parts of the EU treaties applied through the European Communities Act, which the Brexiteers dislike. Examples given include aspects of freedom of movement, data protection, VAT and the jurisdiction of the European Court of Justice. Eventually, they claim, a relationship will emerge and the UK could move seamlessly forward outside of the EU having avoided the risks of a formalised negotiation process.

But this suggested route is unlawful in international law and likely to do our country great harm…..

Implementing this idea would be controversial domestically. At present, the government’s own code of conduct means that civil servants would properly refuse to help draft legislation in breach of international law.  No attorney-general could sanction it.   While parliament would feel bound to implement a referendum decision to leave, it is another thing entirely to ask it to violate international law. There may well be no majority to do it in either the Commons or the Lords.

What this issue most tellingly illustrates is the political mire into which the Brexiteers are driving themselves.  As advocates of profound change, the duty is on them to show the national interest in leaving.   That requires a rigorous cost-benefit analysis. But they cannot do this. Instead we are getting ever wilder blueprints that should be rejected for the folly and self-deception they are.

Thus far we have had nothing from the Brexiteers on the economic consequences of leaving the EU.  Lots of pie in the sky, lots of gas about possible trade deals with other countries.  Lots of fear mongering about the impact of migration on the UK.

Cost of Brexit

The London School of Economics – Centre for Economic Performance has published a short article which is worth a read: “The question is not whether Brexit will cost the UK in economic terms but how much”.  The article concludes that Brexit will reduce  household incomes.  On an optimistic basis the reduction will be £850 pa but on a pessimistic basis the reduction will be £1,700 pa.

The Guardian has an important article on the impact of Brexit for British Agriculture: “Brexit could herald end to British fruit and veg sales, producers warn”.

The report points out that “About 90% of British fruit, vegetables and salads are picked, graded and packed by 60,000 to 70,000 workers from overseas, mostly from eastern Europe. Many of these work in areas which voted very strongly to leave the EU: the largely agricultural borough of Boston in Lincolnshire had the highest vote for leaving the EU in the whole country, at 75%.”  The employers there say that if they cannot have the workers in – then production will have to move overseas.

 On 2nd August 2016 the Financial Times published this:  “BoE should throw kitchen sink at Brexit economy – BAML” in which the US Bank’s economists called for:-

a three pronged attack from bank governor Mark Carney: a 25 basis point interest rate cut, a £50bn resumption in quantitative easing (including corporate bonds), and further credit easing measures.”

On 3rd August 2016 the Guardian reported: “UK ‘has 50% chance of slipping into recession within 18 months”.  The Financial Times had this:   “UK services industry contracted sharply after Brexit vote“.

Unsurprisingly therefore,  the Bank of England Monetary Policy Committee met and its decisions were announced on  4th August 2016, to wit: “a 25 basis point cut in Bank Rate to 0.25%; a new Term Funding Scheme to reinforce the pass-through of the cut in Bank Rate; the purchase of up to £10 billion of UK corporate bonds; and an expansion of the asset purchase scheme for UK government bonds of £60 billion, taking the total stock of these asset purchases to £435 billion.”   The last three elements were to be financed by the issuance of central bank reserves (i.e. by printing money electronically).  The Monetary Policy Committee Summary was published (PDF).

The Financial Times opined:-

The Bank of England has delivered – now for a fiscal response – Monetary stimulus can only cushion the adjustment to a new reality” which concludes with this opinion:-

“More to the point, while the BoE can offset a shock to confidence and smooth the UK’s adjustment to a “new reality”, as Mr Carney terms it, there is little it can do to alter that reality.  Brexit represents a huge supply-side shock that will suppress investment for years. The UK’s long-term prosperity will depend on the evolution of its trading relations and on its ability to improve on dismal productivity. So while the BoE’s burst of monetary stimulus may have bought politicians time, the onus is now on government to deliver a well-targeted fiscal boost, while it decides on the form that Brexit should take and begins negotiations.” 

So, in effect, it is now up to the Government to deliver.  An essential part of the solution will be proposals for continued access to the European single market for goods and services.

 

Brexit Progress

Brexit means Brexit, or does it ?

The Guardian’s weekly Brexit briefing has this headline: “Brexit weekly briefing: Theresa May’s EU tour fails to bring clarity – UK has not worked out what the questions are, let alone found potential answers to how it will leave the EU, critics say”.

The article, which is a useful summary of where we are at, contains links to other sources – some of which were posted here yesterday.

The Financial Times has an interesting piece: “Three Brexit ministers jostle for position – The house-share at Chevening is a metaphor for overlapping responsibilities”.

The reality may be that that the house share at Chevening is the Prime Minister’s metaphor for a silo in which the three Brexiteers are to be confined.  It is pretty clear the Mrs May  intends to be fully in charge of the Brexit agenda and these ministers are only to be let out for such specific roles as she may consider appropriate.

One of the points the FT article makes is that times have changed since David Davis was last involved in EU negotiations (when John Major was PM).  These days, the Heads of Government do not take their Foreign or Europe ministers to their meetings. They rely on “Sherpas” – the trade name for the seasoned UK and EU civil servants who do the preparatory work and sniff out the possible pitfalls.

The article points out that the Prime Minister has been taking advice on EU matters from Sir Brian Rogers KCMG, presently the UK Permanent Representative to the EU.

[At the end of January 2016, the Financial Times published an article on the “Sherpas” for the UK and the Commission who worked on the deal obtained by Mrs May’s predecessor, poor David Cameron:  “Brexit: the sherpas who plotted a path to the EU summit – Seven officials who have worked backstage on Britain’s revised terms of EU membership”].

Whether Sir Brian will be the “lead Sherpa” or whether the PM will be assisted by others remains to be seen, but it is very clear that that the PM is going to be very much in charge of how the UK side of any negotiations will proceed.

Consequences of Brexit

The Torygraph Telegraph has  this: “EU demands Britain pays pensions of 1,730 Eurocrats in wake of Brexit vote” and this: “More than half a million EU nationals will be forced to leave Britain after Brexit, think tank warns” and also this: “Theresa May’s repulsive threat to EU citizens could make the Tories toxic again”.

The first story does not specify where and how the EU demand was made (or even whether it has yet been made).   It is certainly likely that pension costs will figure in the Brexit negotiations.

The second story is based on a briefing paper issued by the Social Market Foundation: “Here to stay? Residency and EU migrants after the referendum.”  As will be seen, the briefing paper seeks to estimate which EU national will have acquired permanent residence under EU law on the date Brexit might come into force.  It concludes that that the vast majority of EU nationals in the UK will have acquired permanent residence by the time Brexit actually comes into force:  On an assumed date of 2019: ” Over 1.2 million – or over 80% – of EU14 migrants would have these rights. Nearly 90% of EU8 migrants would have permanent residence. And a majority of EU2 migrants also would.“.

The issue is what happens to the minority.    Fraser Nelson is the Editor of the Spectator and a regular columnist for the Telegraph. He is much read in Conservative circles.  His complaint about Mrs May’s refusal to unilaterally declare that all EU citizens presently lawfully in the UK will be able to remain on Brexit is one which has some significance.

One suspects that the final sentence of his piece “It would be tragic if the woman who invented the phrase “nasty party” were to end up hanging it around Conservative necks once more” will be noticed by the PM’s advisers.