The implications of Macron’s presidency for Brexit

One of the nice things about following the #brexit hashtag on Twitter is that you get pointed to all sorts of interesting pro and anti EU blogs, that you might otherwise not come across. The LSE blog I read today is titled ““Macron’s Presidency will not have a huge impact on Brexit per se, but [will] on the future of the EU”

Alexandre Holroyd knows what he is talking about as he is the En Marche! candidate representing the French living in Northern Europe. One sentence seems to have got kinda lost in translation. He says:

“Macron has developed a measure in his program called a ‘democratic convention’ that will be launched by the end of 2017 in all the Member States. The objective is to grasp what the citizens expect from the EU taking into account the coherence in different countries. It is similar to the way En Marche! program was developed by crowdsourcing in information from hundreds of local committees across the country and followed by experts working with the results to translate them into concrete policy proposals”

If I translate ‘measure’ into the Dutch meaning of ‘maatregel’ the sentence becomes clearer. It seems to be some sort of EU policy proposal to run a vast public enquiry to find out what people really want from the EU, especially when it comes to addressing the heartfelt democratic deficit that many leave voters seem to experience and complain about.

From personal experience living in France I have come across En Marche! researchers at my local Market at ‘Les Herolles’ and even though I pointed out I didn’t have a vote [yet], they courteously heard me out on all my bug bears and grievances with French bureaucracy as an EU immigrant. It was all noted in their little black book. This to me was a total new experience and made me want to vote for Macron and join his mouvement.

Typical En Marche activist gathering citizens opinions in a French Market Town ( borrowed from @ELanderne )

Anyway at the bottom of the blog post there was a comment section. In todays IdentitySpace post I want to share my comments and hope that I get one or two reactions from my growing list of subscribers.

The rest of this post is a straight copy and paste from the blog as commented by me. Why not hone your own comments= skills here here and then cut and paste the result into Alexandre’s blog in return? Who knows Macron will get to read them and act on them.

Now there’s a thought 😉

http://blogs.lse.ac.uk/europpblog/2017/06/13/alexandre-holroyd-macron-presidency-brexit/#comment-876505

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I would like to add as comments my personal view what the EU should do for it’s citizens.

Note I am Dutch from birth, a UK-expat of 30 years and have made full use of my EU freedom of movement by working in several EU countries.

Protectionism
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In my world view there is nothing intrinsically wrong with a bit of EU protectionism if it protects our rights as EU citizens, consumers or workers. Some argue EU market entry rules are to the detriment of developing countries. Especially Africa is often mentioned with huge crocodile tears when discussing the benefits of #brexit, #frexit or #nexit .
I have a deep mistrust of the real motivation driving those save Africa arguments. The same people often lament the fact that EU rules stop protectionism at a National level. It is well documented that the British representatives in the EU council of Ministers were the ones determined to block any EU  measures against Chinese steel dumping practices. After all they were Britain’s new friends financing a new nuclear reactor at Sizewell.

It’s just the fact that we in the EU practice this kind of sensible protectionism at a EU level, rather than a national level, that these Nationalist can’t get their head around. It doesn’t fit in their “them vs. us” narrative.

The very same people that shout we should give poor African Farmers a chance trading freely with them are the people that shout loudest we must do more to buy ‘British’ or ‘French’ etc. in other contexts. The main reason for a common agricultural policy is and always has been to give us food security at an EU level. If we have seasonal shortages in our common market we should use our common EU purchasing power in a responsible way. Not to buy up food stuff in Africa while locals go hungry (by pricing them out of local markets). The principle of the recent EU-Africa partnership deals seems to me exactly the right way to make our purchasing power a force for change for good on that continent. But of course it has to be monitored by ethical committees so it does not end up like modern slavery.

Free Movement of people
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To illustrate my thinking here I would like to recall to you all a program shown recently on UK TV called “brexit wife swap” In it a fervent British white nationalist man takes his pro-EU partner for the week into an ethnic diverse community in East London. The camera zooms in on stall holders of Indian, Pakistani and Bangladeshi origin and then on the white man complaining he feels like a stranger in his ‘own’ country.

Wait a minute, is my reaction, aren’t these all immigrants from UKIP’s favourite ‘Commonwealth’? What on earth does that have to do with EU free movement or brexit? Yes, continues the man’s feeble argument, they all get here via Europe’s borderless Schengen agreement. It’s complete bullshit of course, but that’s how British uneducated minds work. They see brown faces in Calais camps and Farage posters. Next they see brown faces on a london market. Hence they must be the same people. It’s racism pure and simple. The government does not own up to the fact that most of these people fly in by passenger jet from the Asian sub-continent. Some Doctors, some nurses, some for family reunions, all perfectly legal. Nothing to do with EU or Calais refugees.

Later in the program the same ukip voting types are heard complaining that polish plumbers work hard for ten years only to save for a mortgage on a property back home. It seems the money they earned should all be spent in the UK. Don’t us British ex-pats buying our ‘place in the sun’ do exactly the same thing? You can’t complain about UK housing shortages in the same breath as condemning East Europeans returning home!

In conclusion the EU and member states have failed educating their people on the difference between EU protectionism (largely benign) and globalism (experienced as a threat).

The EU is always the easy scapegoat for weak national politicians and dubious tabloids playing on the fear of people.

What better way to present a new unpopular Westminster austerity initiative as something that is handed down by faceless bureaucrats in Brussels?

The only way to counteract this is by increasing the democratic mandate of the EU parliament and by holding our national representatives to the EU council of ministers more to account what they conspire in Brussels. This could be done by asking them to justify this in National Assemblies like Parliament in a special EU question time session once a week.  Now that would make for an interesting EU directive!

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Conservative Peer Edmund Limerick Brexit Resignation speech. Chapeau!

I’d like to share with you a resignation speech from a Tory Peer, who is ‘crossing the floor’ to the Liberal Democrats, shared with his permission. His speech makes so much sense. I dare any of the leave brigade to counter his arguments.

His name…. Edmund Limerick.

Dear David,

Please take this email as notice of my resignation from the ACP [Association of Conservative Peers] and the Conservative Party. I was recently advised that the three qualities required for a prospective Tory peer were experience, hard work and loyalty. A year ago loyalty meant commitment to remaining in the EU. Now it apparently means commitment to leaving the EU Customs Union. I cannot be loyal to this unmandated and suicidal policy. I remain convinced that a hard Brexit is the greatest mistake this country can ever make, and one which will haunt us for generations to come.

We have spent over 40 years building a common market with our EU partners and although the work is far from complete, it has resulted in remarkable economic and political success for the UK and Europe as whole, acting as a magnet first for southern nations such as Spain, Portugal and Greece to transition from dictatorship to democracy, then for the newly liberated countries of eastern Europe to join the club, all of them with strong British encouragement.

The large EU country which has benefited most of all is arguably the UK. Our free trade traditions, English language, natural borders and retention of our own currency have given us all the benefits and few of the costs of membership. Notably we have largely escaped the effects from mass immigration from North Africa which are so afflicting southern Europe at present. It makes our present obsession with immigration look petty and selfish, against a backdrop of real misery and crisis in the Middle East and Africa and along its EU borders.

Economically we have benefited from becoming the international gateway for foreign investment into Europe. Margaret Thatcher made huge efforts to attract the likes of Honda and Nissan to the UK, turning us over 30 years from the sick man of Europe into one of its leading car exporters.

Bankers may not be popular, but the City of London has created great wealth for the south east, and it also contributes at least 11% of the country’s tax income and enables the UK to run a current account deficit and public services it would not otherwise be able to afford.

I acknowledge the result of last year’s referendum but I fundamentally disagree that a 52% protest vote, a vote denied to EU nationals living in the UK, gives the government a mandate to do anything more than to negotiate exit terms with the EU and then report back to Parliament and the country as a whole for a further vote once it becomes clear what Brexit really means.

What will it mean? It is delusional to think that the EU under its reinvigorated Macron-Merkel Franco-German leadership will do anything other than defend the EU’s own interests, foremost of which is a demonstration that leaving the EU is a costly and disastrous mistake. Juncker was right: the EU will act to ensure that the UK is punished. And they’ll gladly pick up our financial services industry and our other exporting industries rendered uneconomic by the risk of future tariffs.

There is simply no way that any possible deal with the EU will be better than the one we have just torn up. The results of hard Brexit or no deal (the most probable outcome considering it took the EU and Canada 8 years to agree a marriage, let alone a divorce and then a new relationship) once the Article 50 two years have expired will include inflation, a rise in the cost of living, collapse of foreign investment, significant job losses not only in the City but across the country, a loss of international influence, and quite likely the secession of Scotland (if the English can ’have their country back’ why should they not too?) and Northern Ireland, which will not be happy about the reimposition of customs and immigration controls along its border with the Republic, which will have better living standards to boot.

The United Kingdom will no longer be united. Great Britain will no longer be great. Little Englanders will have got what they wanted: little england. I predict considerable public anger, especially amongst the young who voted overwhelmingly to remain and whose futures are being so casually squandered.

And what will this new England be like? Our negotiating power will be feeble. A free trade agreement with China which still has political prisoners and slave labour will flood us with cheap imports and do nothing for protection of UK jobs and standards. A free trade agreement with a protectionist USA will flood us with subsidised food products that would also not meet current UK or EU standards. We shall likely see 30 mile queues towards the Channel Ports as the French reimpose customs inspections in Calais. Apart from fishermen (the only Brexiteers whose views I respect) no-one will be better off.

If you have bothered to read this far I thank you humbly for your patience and urge you to use your position within a party that looks set to gain a substantial Commons majority to back the voice of common sense and reason, no matter what the pressure from the Whips. Unless there is a crisis resulting in a new general election it seems that the focus of debate will move to within the Tory party.

As for me I am joining the Lib Dems in the hope that a grand coalition of the sensible, moderate, non Europhobic and non suicidal public might be created out of the hitherto silent ranks of sensible Tories and sensible Labour supporters who are neither hard Brexiteers nor Corbynistas.

We may yet see the creation of a new centre party. For now the Brexit tail is wagging the Tory dog, and I am bowing out.

Sincerely, Edmund Limerick

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10 Brexit myths exploding in Leavers’ faces

Today I felt like demolishing ten brexit myths as pointed out to me by a nut case on Twitter going by the name of @DancerGuard. He proudly points to them from his profile page, along with his funky dance moves.

I’d say that rather than proving to be myths, they are quickly turning to grim daily Brexit realities.

FIRST MYTH: BRITAIN WOULD LOSE THREE MILLION JOBS IF WE LEFT THE EU

First of all it is worth pointing out that the three million job loss figure originates from an official Government answer to an Open Europe ‘Freedom of Information’ request(FOI). The official answer actually said that approximately three million UK jobs were “linked”to trade with the EU. Brexit might put these jobs “at risk” most remainers naturally said, which is of course rather different from claiming they’d disappear ‘overnight’ after after Article 5o was triggered as the Sun and arch leavers like Ian Duncan Smith would have you believe. Cameron actually was very careful with his words, said nothing of the kind. Yet this is how a Brexit myth is created. Apparently we should not take Vote Leave promises of 350 M. extra to the NHS on the side of busses too literally but when it comes to Project Fear’s indirect references to 3 m. jobs being put at risk, we should interpret that as “disappearing overnight” ?

Don’t know about you folks, but from the daily stream of Brexit attributed UK job losses I see, I feel this ‘Project Fear’ prediction is actually already in full swing, even if we are still two years away from leaving.

But this is not my argument with this myth. It’s the use of the word “imposing”. Imposing suggests the use of threat or force. What? Are they suggesting UK sends in the gun boats to demand Free Trade like they did at the time of the ‘Opium Wars‘ with China? Are they planning to block the Suez canal again to get their promised Free Trade Agreements?

Of course in this section they mention their dreaded EU-UK trade deficit again, but I have debunked that particular excuse of a negotiating strength so many times on IdentitySpace I am not going into that here again. Remember buying from abroad is the easy bit. Selling your wares abroad takes more than bleating “We buy more from you, than you buy back from us”. Slapping your closest customers in the face and threatening to sell more to your far away ‘Commonwealth’ friends is a playground argument and doesn’t cut it.

SECOND MYTH: BRITAIN WILL BE EXCLUDED FROM TRADE WITH THE EU BY TARIFF BARRIERS

Actually the main threat to UK jobs from Brexit derives not from new tariffs but non-tariff technical barriers to trade after Brexit. Filling in customs forms for everything we ship to the mainland and customs inspections in Calais are examples of such technical trade barriers. Neither ‘Services’ or complex customs procedures are covered by current so called ‘Free Trade Agreements’. But you can argue this till the cows come home with these Brexit types. They just see lorry queues on the M20 approaching Dover as a new business opportunity to sell waiting drivers cups of tea, coffee and bacon sandwiches.

-The EU has free trade agreements with over 50 countries to overcome such tariffs, and is currently negotiating a number of other agreements. Brexit Britain just doesn’t have the manpower, the required number of trade negotiators to replace the EU agreements it currently benefits from.

True, the EU now exempts  many goods from duties anyway using a quota system. So as a whole customs duties might average out to 1.76% on non-EU imports. This does not mean that the EU Common Market is basically redundant as a customs union with tariff walls. On specific goods that UK exports rely on for foreign revenue and UK jobs the percentage is much higher. So UK Nissans attracting an extra 10% could well kill that trade and 50% on Scotch Whiskey would also put a huge damper on sales of that popular aperitif in France and Italy. Welsh lamb would attract an extra 67% according to an NFU document I recently read.

THIRD MYTH: BRITAIN CANNOT SURVIVE ECONOMICALLY OUTSIDE THE EU IN A WORLD OF TRADING BLOCS

Regional trading blocks are actually all the rage according to the WTO.  With Brexit Britain is going against the flow. More than 250 RTAs notified to the WTO are in force today, and around 30 new trade agreements are under negotiation. With the exception of Mongolia, all WTO Members have notified participation in one or more RTAs. Brexit UK is about to leave one of the most successful ones! I can’t figure out how this benefits UK, unless it wants to be more like Mongolia.

FOURTH MYTH: THE EU IS MOVING TOWARDS THE UK’S POSITION ON CUTTING REGULATION AND BUREAUCRACY

The main argument here is that over 70% of the UK’s GDP is generated within the UK, but still subject to EU law. Leaving the EU would lead to a true ‘bonfire of regulations’. But this simplistic view sort of assumes that consumers in the UK don’t need the same level of protection as our more sophisticated EU neighbours. Tory MP Jacob Rees-Mogg is on record saying “Britain could slash environmental and safety standards ‘a very long way’ after Brexit”. He was exposed to a barrage of ridicule for suggesting we could lower our standards to those in India. What is clear is that for the 30% of our economy that would like to continue exporting to EU markets it would be a nightmare having two set of regulations to comply with. Imagine two production lines for everything? One demanding quality controlled one for EU and one producing seconds shite for dumb local folk?

The whole idea that regulation hinders trade and slows the economy is a false one. International standards are essential so we’re not constantly worrying if things made abroad are safe to use or eat. By representing a powerful economic block the EU has more chance of influencing international standards than UK by its lonesome self.

FIFTH MYTH: IF WE LEAVE, BRITAIN WILL HAVE TO PAY BILLIONS TO THE EU AND IMPLEMENT ALL ITS REGULATIONS WITHOUT HAVING A SAY

I have not heard one serious politician say that Britain should not settle it’s bar bill as it leaves the EU Golf Club. Our credit rating would be slashed to Zimbabwean levels if we took the approach to just walk away. I am sure accountants can work out the exact amount of the bill owed to our neighbours. No need to speculate about how high the bill will be, until they have done their job totting up liabilities and assets.

By the way, in this section ‘Better Of Out’ still propagates the contention that as an independent sovereign nation and the world’s 5th largest economy the UK would have more influence in the world if it wasn’t part of the EU. It seems that it has escaped their attention that the very act of contemplating Brexit already made the UK’s economy drop two places in the World’s GDP league table. The drop in the value of the pound means that both France and India have recently overtaken the UK, so we’re now number 7. In percentage terms that’s just 4% of global GDP. That’s just not as impressive as the EU’s 25%!

It seems  ‘Better Of Out’ supporters are not content that the UK currently has only 8.4% of voting power in the EU. Surely the rules were clear and agreed when they joined? Do they not want to belong to a club unless they are automatically elected ‘Head-Boy’ or ‘Head-Girl’?

The same people that moan about lack of influence vote for UKP MEPs that have some of the lowest attendance rates on record in the EU parliament. And when they vote they always vote ‘no’ as a protest vote, even when it goes against UK interests!

Let’s not forget that the expansion of the EU with the former Communist East-Block was one of Britain’s pet ideas to try and dilute the Franco-German power axis they saw as a threat in the early days of the EU. Now they complain it also dilutes Britain’s vote? Please!

SIXTH MYTH: THE EU HAVE BROUGHT PEACE TO THE EUROPEAN CONTINENT

Here we have the old NATO brought peace in Europe, not EU bug-bear again. Well call me an old hippie, but NATO is a fighting force and ‘fighting for peace’ to me is like ‘fucking for virginity’. NATO is our insurance policy against the outside world. EU keeps the peace inside EU borders because people that trade generally don’t fight.

SEVENTH MYTH: THE EU HAS A POSITIVE IMPACT ON THE BRITISH ECONOMY

‘Better Of Out’ would have us believe that British industries such as fishing, farming, postal services and manufacturing have been devastated by Britain’s membership of the EU. I have in this blog argued that on the contrary, it was Britain’s disastrous decision not to join the Eurozone that was the final nail in the coffin of UK Manufacturing.  Now Brexit threatens our Financial Service industry in pretty much the same disastrous way. How can Vote Leave argue that a low Euro benefitted German Manufacturing in a competitive sense, but that same benefit would have eluded us in the UK? Why do they think the EU will let us keep our profitable London based Euro clearing business after brexit? Keep EU agencies that other member states pay for in the UK? Why do leave voters insist on drawing parallels with Greece’s economy rather than Germany? Are we a poor mediterranean country?

The UK fishing industry was already on it’s last legs due to overfishing and the aftermath of the Icelandic ‘Cod Wars‘.  The EU’s Common Fisheries Policy has been amended and fine tuned so that today we have returned to a sustainability of North Sea fish stocks that benefits all EU fishermen. As an Island Nation the UK in fact has/had one of the highest fishing quotas of the EU. You can’t blame it on the EU that UK fleet owners sold their quotas to the Dutch and the Spanish with full support of the UK Government. Again a case where leave voters simply don’t realise who’s screwing them.

The Common Agricultural Policy presents a similar story. People forget that in the immediate post war years food was rationed. Providing food security was one of the primary objectives of the EU and a complete success story. OK in the past it was sometimes too successful, but butter mountains and wine lakes are now a thing of the past.

The EU’s agricultural subsidies have many benefits. Our food is plentiful and of a high standard, the envy of the world. It doesn’t have to travel expensive air miles from places on the other side of the world to get to our plates. Remember long supply lines are vulnerable supply lines. We know this from WWII food convoys and from the fuel crisis in the seventies.

A second benefit is that farmers are the custodians of the countryside we love to holiday in. Once a farmer packs it in, watch how quickly things deteriorate. The single farm payments allow for land to be set aside for wildlife, while if push came to shove and there was a food shortage, it could quickly be brought back into production. Theresa May has assured UK farmers that these payments would continue after Brexit. Why if they are such a bad idea?

And it’s not true that in the EU we can’t get cheap New Zealand lamb. In fact New Zealand has a sizable tariff free EU export quota, which for years it has not fulfilled.

EIGHTH MYTH: BRITAIN WILL LOSE VITAL FOREIGN INVESTMENT AS A CONSEQUENCE OF LEAVING THE EU

That this is not a myth has been clearly demonstrated by the assurances the UK government had to give to Nissan UK to keep producing in Brexit Britain. Japan has warned UK Government enough times it could move factories to mainland EU countries.

NINTH MYTH: BRITAIN WILL LOSE ALL INFLUENCE IN THE WORLD BY BEING OUTSIDE THE EU

This myth can easily be debunked by pointing out that even within the EU Britain has managed to maintain a substantial ‘portfolio of power’ in its own right, which includes membership of the G20 and G8 Nations, a permanent seat on the UN Security Council (one of only 5 members) and seats on the International Monetary Fund Board of Governors and World Trade Organisation.

-The UK also lies at heart of the Commonwealth of 53 nations. Moreover, London is the financial capital of the world and Britain has the sixth largest economy. The UK is also in the top ten manufacturing nations in the world. Despite being in the EU or because of being in the EU?

-Far from undermining British influence in the world, the EU seems to amplify it!

Looking at the above migration Graph, it is clear to see that up until about 2010 UK migration to EU countries roughly mirrored EU migration into UK. The UK was swapping retired inactive citizens looking for a place in the sun for young economically active EU workers filling in labour shortages in the UK.  It is only since the UK pushed for enlargement of the EU with former Communist countries (without using the migration restrictions that the EU had actually allowed for but UK chose not to use) that this trend seems to have been reversed. But all along migration from outside the EU surpassed that of EU migration!

The Commonwealth is not discriminated against by the EU policy on visas. They simply do not enjoy EU freedom of movement EU citizens because they are not EU member states. The majority of UK immigrants are not from the EU; they are more likely from the UK’s old Commonwealth partners. This has a lot to do with the right to family unification afforded, which is a UN right, not an EU right. I’d go as far as to say that with freedom of movement and cheap air fares in the EU there doesn’t seem to be such a need for family unification. Why bring your Mom and Dad or Mother in Law over when you can buy them a cheap RyanAir ticket to visit you? There is a big chance that many hard working EU immigrants will end up retiring in their country of origin rather than suffering Britain’s inflated real estate prices. Families that settle from Pakistan are more likely to stay.

TENTH MYTH: LEGALLY, BRITAIN CANNOT LEAVE THE EU

Funnily this last myth may actually turn out to be closer to the truth than any of the other nine preceding ones. We’ve had of course the Gina Miller High Court challenge, but that may not be the end of it. Similar challenges are under way in Dublin and in France a lawyer is challenging brexit on the grounds that EU expats were illegally denied a vote in the UK’s EU referendum. I don’t believe the interpretation that Article 50 is revocable is challenged any more. This was confirmed by Barnier, Kerr etc. SO I end with a block quote from Rosie Slowe’s UK human Rights Blog: Article 50 Notice and Implied Conditionality

A general election [now called by Theresa May] or a second referendum is not beyond the realms of possibility, and a difference in public and/or Parliamentary opinion ought not to be ruled out.

The question then arises as to the consequences if the constitutional requirement of Parliament’s express statutory approval is not satisfied upon conclusion of Article 50 negotiations. The Three Knights Opinion contends that, if Parliament is unwilling to consent to the negotiated agreement, or approve of withdrawal without any agreement in place, the notification issued under Article 50(2) would either lapse or could be unilaterally withdrawn. In such circumstances Article 50(3) would not automatically expel the UK as no Member State can be forced to withdraw otherwise than pursuant to a voluntary decision taken in accordance with its own constitutional requirements.”

Why do I write these blogs? Because it’s not too late to reverse Britain’s disastrous Brexit decision. The UK’s EU referendum was deliberately made ‘not binding’ for that very purpose. Sir Humphrey left the emergency exit open. Let’s use it! Vote tactical in the next election and stop this madness. Do what’s best for Britain and click here!

https://bestforbritain.org/

Posted in #brexit, #CAP, #CFP, Article50, EU | Tagged , | 1 Comment

Let’s unite behind Theresa May and make Brexit a success!!

As it’s the first of April and the British Government has been making a fool of itself the entire week leading up to it, I thought I’d be supportive and help Theresa May and her Brexit cabinet make the most of their long awaited Article 50 announcement last Wednesday. It’s time to unite behind her instead of my usual sneering from the side lines.

Time and time again the British government has been told there can be no start to formal EU-UK future trade negotiations until the formal UK-EU divorce arrangements and final EU leaving bill has been agreed. UK Minister for Brexit David Davis doesn’t seem to want to take ‘no’ for an answer and insists these two thorny issues can and will be discussed and decided in parallel. He’s in control you see?

The issue of free trade with EU is important because brexit voters have been told time and time again that Britain buys much more from EU countries than the other way around. So they need us you see?

“They’ll trade, because they need us more than we them” is the usual leave mantra.
Kippers are convinced the EU is for the chop as soon as Bankers in the City of London stop spending their inordinate annual bonuses on prestige German cars and fine French wines. And those lovely folk in the City are just dying to show their solidarity (if they still have a job after brexit of course).

In fact it is true that trade in goods with the EU shows a massive deficit for the UK. This deficit is only partially offset by a positive trade in ‘Services’ as the ONS figures below clearly confirm.

UK looses its shirt wherever they trade. They're just not very good at it?

UK balance of trade in goods and Services 2016

Brexit voters in the UK’s EU referendum last June were told by the Leave campaign that somehow this pernicious UK trade deficit could be blamed on restrictive and protectionist EU trade practices. Somehow ‘they’ refuse to play ball and buy British in return for ‘our’ EU brand loyalties. Kippers were also led to believe that contrary to EU trade, trade with the non-EU Rest of the World (ROW) was not only growing fast and furious, but also showed a healthy surplus. This the above figures published by the UK’s Office of National Statistics clearly exposes as another brexit lie.

What the above figures seem to tell us is that the UK just isn’t very good at trading profitably. The buying from abroad bit comes naturally to Brits who venture abroad. They instinctively believe all foreign sellers of goods and services (like their Greek holiday waiters) are just as much in awe of the precious Pound in their pocket as your average kipper. That the currency markets seem otherwise inclined has not really hit home with brexit voters yet. During the first few months after the brexit vote British consumers were shielded from the negative effects of a devaluing pound because big companies had prudently booked currency deals well in advance of the referendum to cover risks to their outstanding import bills. These currency deals are now slowly running out and inflation from more expensive foreign imports is starting to bite.

Only last week the Guardian reported rising food and fuel prices have hoisted UK inflation rate to 2.3%

So the obvious solution to the UK’s brexit balance of payment deficit conundrum seems to be importing less from a protective and expensive EU and more from all these third world countries we’ll sign ‘Free Trade’ deals with.

‘Buy British’ where possible is also a possible remedy, but this has time and time proven almost impossible to keep up for the discerning British consumer.

#Export4Brexit

So why not start a major global export drive after Britain leaves the largest single market right on its doorstep? New World Trade Organisation (WTO) tariffs will soon offset any price advantage afforded by the UK’s fast depreciating currency, so we urgently have to up our game UK!

Below are my two pennies worth of contributions for Theresa May to make brexit a success in terms of increased global trade and closing that worrying trade deficit for brexit Britain. As someone with a Business degree from the prestigious ‘Rotterdam School of Management’ (RSM) I used a ‘strengths, weaknesses, opportunities, and threats’ (SWOT) analysis, making use of insights gained from thirty years of living and doing business in Great Britain. It all points to one glorious conclusion!

Exploit UK comparative advantage as a modern knowledge based ‘Services’ economy.

According to the Financial Times the so called ‘Services sector’ now represents close to 80% of the UK economy. It would play to the UK’s strength to concentrate brexit negotiating efforts in this area, as it may represent a ‘quick win’ for May. The fact that most of UK’s manufacturing sites on the edge of towns have been turned into John Lewis and Waitrose supermarkets means we can’t quickly ramp up production of physical goods anyway, so let’s sell the world fiction. There seems to be an almost limitless supply of that particular UK resource amongst leave voters.

Here is my own list of best selling services export opportunities:

  1. Ideas above our station.
    Brits excel at thinking they’re better than anyone else. Even though after the brexit vote the UK tumbled two places in the global GDP ranking, we still firmly believe we’re the fifth largest economy in the world.  If and when we join a club, we’re the natural leaders be cause we can speak English slowly and clearly in a loud voice, giving us natural authority. This means we can be Chairman of the Board or Managing Director of any foreign tin pot company or NGO.  The fat salary British executives demand [after Brexit] could be repatriated and taxed by HMRC with a brexit levy supporting our National Health Service! This would make good on another vote.leave promise! UK folk channeling foreign earnings to tax havens in the Cayman Islands or Panama will have to be outlawed of course. Not a problem for a true Tory that has promised brexit would benefit all of us right?
  2. Queueing Services
    One thing Brits are undisputed leaders in the world in is queuing for services.
    They spontaneously form the most orderly and well humoured lines, whether it is at village Post Office counter or inner city Food Banks. Of course after leaving the EU Customs Union queuing could become a whole new economic activity for ONS to report on and boost GDP figures. The M20 will turn into a gigantic lorry park for UK lorries to clear French customs facilities. It would just not be fair to leave lorry drivers in their cabins unwashed and unshaven for days on end. We can train UK youngsters to baby sit parked trucks in between picking fruit at Kent farms. Why not let our most experienced queuers perform this valuable service world wide?
  3. Pomp and Ceremony
    Nobody does pageantry better than the Brits.  Got some minor Royal marrying, giving birth or popping their clogs? Let Brits do the PR for your event, plan the opulent festivities or wake, lay on the music and turn this into a real spectacle for billions of TV viewers worldwide. Remember our recent Olympic Games opening and closing ceremonies were also second to none.
  4. Army for hire
    After the USA, Russia, China, India and France the UK is listed as the sixth Country ranked by Military Strength and fire power. You can discount France anyway, because they are surrender monkeys. The USA will testify we’re always willing to step up to the plate and join in some foreign military adventure. With the UK army in tow, you can call your expedition force a “Peace making coalition”, which sounds much nicer than a “foreign invader” on a pretense mission. In return all we ask is to sign a “Free Trade Agreement” in which you promise to buy lots of weapon systems from BEA Systems in return for something we need like oil.
  5. Distorted world views and popular fiction
    Britain once had an Empire on which the sun never set. Some might cheekily say that God did not trust us in the dark, but that’s blatantly not true. Just look at the genuine warmth with which our Royal Family is greeted by Aboriginals anywhere on the planet.We also learned the following from a leading Leave campaigner Dan Hannan:

    “Far-flung Commonwealth nations would make a far more natural trade bloc than the EU. It never made much sense to abandon a diverse market, which comprised agricultural, industrial and service economies, in favour of a union of similar Western European states.”

Never mind that was only true during the reign of Queen Victoria and the UK’s Industrial Revolution when the UK was the industrial sweatshop of the world. It still sounds good today to kippers even though the rest of us know China took over that global role a long time ago. The bit where Mahatma Gandhi spun his own yarn and wove his own loin cloth was a bit of modern history Hannan obviously never read in Oxford.

I could go on for a while, but was hoping a for a few additional ideas from my growing number of blog subscribers and Twitter followers.

Maybe we could start a new trend with hash tag #Export4Brexit ?

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Selling the family silver (2)

In June 2015 I posted a blog titled “Selling the family silver”.  In it I remarked that the UK’s exports of gold to China (via Switzerland) were boosting the Eurosceptic No voters mistaken believe, that trade with the non-EU ROW was healthy and rising.

I called it selling the family ‘s silver [gold actually!]

chinagold

A recent article in the FT took the lid some more of this dirty little secret of Theresa May’s Tory party.

“The Chinese market uses gold bars in a different size to the ones that are held in London so they import via Switzerland where the bars are recast, said Oliver Harvey, a foreign exchange analyst with Deutsche Bank. In the final three months of 2016, UK goods exports to Switzerland increased by 282 per cent to their highest level ever.”

So it dawned on me that’s maybe how the disastrous Q3 non-EU trade figures ONS reported were suddenly reversed in Q4! See the devil is all in the detail.

So I decided to delve a little deeper into the ONS latest Trade report for December 2016 and sure enough, I found the confirmation all is not what it seems to be with Britain’s healthy Brexit trade figures. The report gives us the long anticipated Q4 figures, the second full quarter after the UK’s disastrous Brexit vote.

Look how “unspecified goods” dominate the so called booming post Brexit exports to non EU countries.

swissgold16q4

The main commodities contributing to this growth, in particular exports to non-EU countries, were unspecified goods (including non-monetary gold)

In conclusion, I remain an arch sceptic when it comes to all this fake news, purporting to show that after the June 24 decision to leave the EU is far from being in economic melt down. It quite literally is!

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Yes I am Marching again on March 25

I think the last time I was angry and motivated enough to join a protest march was at an anti-Vietnam-war Jane Fonda rally in Ann Arbor Michigan in the seventies. I now have RyanAir flights booked to join an anti Brexit March being organised in London for May 25th.

march

A friend of mine on FaceBook responded: “Why can’t people accept the vote was a majority against remaining in the EU? Instead of implying that we are all idiots, we should be pulling together and working to implement the decision that was made by a fair vote.”

A fair vote? More people were excluded from that vote, than voted in favour of leaving the EU.  I  for one was in a disenfranchised “can’t vote” category even though I paid 30 years of UK National Insurance contributions. Yet young Australian backpackers that happened to be in the UK a few weeks could vote for fun. How is that fair? Why do British ex-pats living in another country for more than 15 years lose their vote on something that important that affects them more than anyone else? Why could 16-18 year olds not vote? They have to live with the consequences of Brexit much longer than any of us?

How is it fair that my UK born daughter could in theory be asked to sit a UK citizenship exam after Brexit, when she’s been teaching British kids all her adult life? Just because she renewed her Dutch passport once or twice? An EU passport I foisted on her as a baby and she kept for fun as part of her European identity of which she is proud!

I for one have no problem putting the referendum result aside, just as I think it’s fair to strip an athlete of any medals gained when found to have been cheating to win a race.
Let’s not forget:

  • The leave vote includes many voter types who would have easily cancelled each other out, had this not been made into a fake binary choice to stay or leave EU.
    So we have socialist workers wanting to keep open outdated UK power and steel plants voting to leave EU alongside ‘free trade’ types that openly admit that shutting such outdated clapped out plants down would be the first consequence of opening the UK up to open global competition after Brexit. Note in reality it was the UK government who blocked EU raising punitive tariffs on Chinese steel dumping practices, but it suits those same UK politicians if the blame for not protecting UK jobs can be laid at Brussels doors instead of much closer to home. The UK government is now totally reliant on Chinese investors to keep the UK’s trade books balanced.
  • In the UK we’ve seen 40 years of relentless anti EU propaganda by the likes of Rupert Murdoch who owns the Sun and  the Times. The pornographer Richard Desmond who owns the Express and arch Eurosceptic Paul Dacre who edits the Daily Fail
  • The UK government excels in bypassing parliament by proposing unpopular but necessary rules and regulation in Brussels, getting it passed there by a majority vote. They like this because in this way they can pass the blame on faceless EU technocrats instead of taking flak back home. Nobody in UK parliament holds UK representatives to account, how they actually voted in the EU council of Ministers. Nobody asks them about their shadowy deals, if they stood up for Britain in Brussels. Instead we see a lot of ‘it wasn’t me Guv’ crocodile tears.
  • Then we have the tendency for Whitehall types to gold plate every directive that comes out of Brussels and pride themselves to implement them the very next day. Few realise UK regulators restrict financial institutions more in London than mandated by Brussels. Perhaps because the UK knows how crooked the City is?
    Or in the case of restrictions on free movement for recently joined poor Eastern EU countries, who in the UK knows we could have applied travel restrictions quite legally for years and years!…. But, Oh no we won’t do that. No need for all that. If it all goes pearshaped we’ll just blame Brussels again.

I could go on and on like this. Just read other articles in this blog. And if you get the impression, well actually we have been rather pigheaded and thick as pig shit in Britain in our past EU dealings, well I could’t agree more. My tactful reply in ‘House of cards’ style would be: “You may very well say that, I couldn’t possible comment”.

Point is the referendum was not made legally binding by clever Whitehall design or by shere Tory dimwit negligence. If Jacob Rees Mogg checked his golf club association rules he’d soon discover there a 52% majority can’t set ground rules, like allowing lady players, aside. Usually they need at least 70% of members to agree fundamental changes. He’d argue that kind of protection is built in most club rules for good reason. But something as important as EU membership only requires a simple majority? Think again folk! Over confident arrogance doesn’t even begin to cover it!

Maybe it was Sir Humphrey deliberately not reminding Camoron of that little emergency ‘advisory only’ exit for the shit storm he surely saw coming. After all the UK had a much respected ambassador in Brussels in Sir Ivan Rogers, who kept ringing alarm bells that things were being misrepresented, over simplified. He’s now fired for being ‘unpatriotic’. That’s how far dealing in expert facts get you in Brexit Britain.

Fact is you Brits should count yourselves lucky to have a way out of this Brexit madness. More and more people are waking up to the fact, that rather than pointless asking half of the country to start engaging in collective self harm with a bunch of loony kippers, we need to pull back from the brink. Rather than shooting ourselves in the foot, killing our services sector by restricting the free movement of people our most profitable economic sector requires, we should embrace it for the personal freedom it gives us in return. Freedom to retire to a place in the sun for hundreds of thousands.

Why not come to our collective senses and admit we’ve been had by some very louche types, some clearly racist types, some irresponsible free trade types. People who don’t give a damn about the collective costs of it all.

Let’s stop making ourselves the laughing stock of the free western world sucking up to the likes of Trump. Earning ridicule trying to make up for the loss of our nearest and biggest car and agricultural markets by selling weapons to the the likes of Erdogan in Turkey and Saudi Arabia.

This is not the cool Britannia I know! I’m with chunkymark on this. Watch the video to end this evenings entertainment. https://youtu.be/TqRLL_rvxPw

 

 

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The economics of Brexit

Happy new year brexit voters

Happy new year brexit voters

The #brexit Hashtag I follow religiously on twitter because I am interested in economy and exasperated with this idea that somehow the six months that followed the UK’s disastrous vote to leave the EU somehow proved us brexit doomsayers wrong.

What will 2017 bring? I’d like to think prosperity and happiness, but I am afraid
‘We ain’t seen nothing yet’ in terms of the economic self harm the UK is set to embark on.

It really is incredible that you have to point out to these die hard Brexit now! shouters, that the UK hasn’t left the EU, until Article 50 of the Lisbon treaty is actually invoked.

The UK Prime Minister has predicted  this would take place no later than March 31st 2017. But even then, there are multiple legal and constitutional hurdles to overcome, which will add at least another two years before a brexit will effectively kick in.

Meanwhile any economic good news reported by the Media can just as easily be ascribed to the fact that the UK hasn’t actually left the EU yet, hence is still benefitting from full single market access, EU negotiated trade deals etc. and the market clout of being in the largest integrated economic area in the world.

What is clear to leavers and remainers alike is that the continued uncertainty around what kind of brexit we might actually get is quite accurately reflected in the abysmal performance of the UK Pound Stirling in the exchange markets. The almost cliff edge drop, the day after the vote, is kind of hard to ignore, as is every downward jitter every time a cabinet minister opens his mouth about leaving the Single Market with a ‘Hard Brexit’.
This is followed by a small release of pressure on the pound each time a suggestion is leaked by the ministry of Brexit, that the UK might actually pay to stay in Single Market and EU Customs Union in a kind of Norway or Swiss style EEA membership.

Meanwhile we have had only one meaningful report on the impact of the June leave vote on the UK’s Gross Domestic Product by the UK’s independent Office of National Statistics (ONS). This report was published 27 October 2016 and covers Q3 (July-August-September) with another one due on Q4 mid  January 2017. Any other glowing economic news on the impact of brexit by Eurosceptic papers like the Telegraph or the Daily Express must be taken with a huge pinch of salt.

So while the UK economy seems sofar to have escaped a disastrous impact of the brexit vote, most economists agree that this is most likely just a stay of execution till Article 50 actually triggers an actual leaving of the European Economic Area and associated unfettered Single Market access.

Meanwhile here is an actual block quote from the Q3 2016 ONS GDP report:

“This is the first release of GDP covering a full quarter of data following the EU referendum. The pattern of growth continues to be broadly unaffected following the EU referendum with a strong performance in the services industries offsetting falls in other industrial groups.”

“In Quarter 3 2016, the services industries increased by 0.8%. In contrast, output decreased in the other 3 main industrial groups with construction decreasing by 1.4%, agriculture decreasing by 0.7% and production decreasing by 0.4%, within which manufacturing decreased by 1.0%.”

For me what stands out is the continued decline of the UK Manufacturing sector, while some Brexit shouters cling on to the idea that it is on some sort of 25 year high!

Also the positive impact on UK exports from a devalued pound remains elusive. The UK still trades at a loss with a negative balance of trade in goods balanced by a positive trade in ‘Services’, the sector of the UK economy most under threat by a brexit. And this “we’ll trade globally” nonsense? In October also trade with non-EU countries went into the red. Not a thing you will hear many kippers shout about. Here’s a quote from the latest report from HM Revenue and Customs:

“In Non-EU trade the UK was a net importer this month,
with imports exceeding exports by £4.9 billion.”

They continue with their “They’ll trade’ nonsense regurgitated day in day out by kippers and eurosceptic ‘nice but dim’ Tories in their Closed Ideology Echo Chamber with no-one there seriously challenging them. What is worse, lazy journalists like Andrew Marr often start a TV interview with pro -EU politicians by repeating and hence re-enforcing these EU and UK fake economic ‘good news’ stories, because they are too lazy to check on their veracity.

Meanwhile the Independent warns us that brexit will send UK tumbling down world economic league table with both France and India overtaking Great Britain.

“Covering 188 countries the Cebr’s World League Table forecasts that the UK will have the seventh largest economy between 2017 and 2025, before slipping back to eighth place in 2030.”

The most often repeated brexit good news myth is the continuing rise of the FTSE 100, an index of the UK stock market. Even the Express warns their gullible readers that this is mainly an effect of the falling Pound:

“The rallies have been driven by a fall in the pound, which is sitting at 31-year lows of 1.145 against the dollar, and 1.277 – its lowest level in three years against – the euro, boosting the earning potential of UK-listed firms with overseas earnings.

Sterling’s fall also makes stocks cheaper for overseas investors to buy stocks.”

Very helpfully the ft.com web site allows the reader to view the City of London stock market performance over the six month since the referendum in US dollars.
I am happy to reproduce a screenshot from Jan 2, 2017 here:

ftse_dollar

Note, rather than at an all time high UK FTSE 100 5% down since Brexit vote Happy New Year!

Two years ago I published a blog post on a bunch of  pro-brexit economic mantras that do not stand up to any kind of scrutiny and defy common sense.  Today I have no qualms about literally cutting and pasting the same mantras with one or two new insights.

I think in today’s blog I have dispelled three new (post brexit vote) myths

  • The UK Stockmarket is fully recovered and in fact at an all time high since brexit
    ( it is actually 5% down since Britain voted to leave the EU)
  • UK Manufacturing is at a 25 year high and our exports are benefitting from a devalued Pound Sterling.
    (In fact even with non-EU countries our imports now exceed UK exports)
  • We are such an economic power house countries are queuing up to sign trade deals with UK ( in fact we slipped from fifth to seventh in the world economic rankings)

I repeat my challenge to ‘Leavers’ to debunk anything I say on the UK economy with their own rosy version of what actually is happening after the June referendum vote. I repeat below nine myths already debunked 2 years ago, because they are worth repeating and still stand today:

If you are already familiar with this post I suggest you stop reading at this point.

  • In the EU we are shackled to a moribund corpse in terminal decline
  • EU red tape is holding the UK back. 90% of UK businesess don’t need regulation
  • The percentage of global Gross Domestic Product (GDP) of the EU is shrinking
  • Look at all these developing countries showing 6-8% annual growth, we’re missing out not trading with them
  • After #brexit we will be free to trade with the world
  • We should have never deserted our friends in the Commonwealth
  • Our trade with the EU is massively distorted by the Rotterdam-Antwerp effect
  • If only we could make our own trade deals, sit at the top of the WTO table again
  • The EU will still trade with us after brexit because we buy more from them, than they from us, we are in a position of power.

EU a basket case in terminal decline?
Before working our way through the list of above fallacies let me remind the reader that, whatever its sins, with its 500 million consumers and $18-trillion GDP, the European Union is still the world’s single largest integrated economic area, and it’s right on the UK’s doorstep, not half way around the globe! Even if since the 2008 financial crisis, EU growth has hovered just above freezing point these last few years, 0.4% growth of a $18-trillion GDP is still an awfully big number! If economic genius @RedHotSquirrel, aka ukip’s Robert Kimbell quotes, as he likes to do ad nauseam, yet another random African country with five or six percent growth, so what? Basically it means, that if EU growth remained stagnant  over the same period period, it would take Africa 50 years growing at 5% just to catch up with the EU!

africa

We all know that growth usually happens in spurts, in economic cycles that come and go, taking the economy up and then down again. There are no indicators that the EU economies will actually seriously contract again in the near future. The latest Quantitative Easing measures announced by the ECB might even get the EU’s sluggish economies moving again? It seemed to have done the trick in the USA. In any case, 500 M. consumers in the EU will still eat, go on holidays and replace household goods. Buy things made in Britain! They are not ‘dead’ by any means of ukip’s imagination or wishful thinking!

A mathematical certainty: Global GDP cannot rise above 100%
Incorrigible Eurosceptic Daniel Hannan MEP likes to bang on about the fact that Europe’s percentage of global GDP is in long term decline. He loves to say:

“In the year we joined, western Europe accounted for 38 per cent of world GDP. Today it’s 24 per cent, and in 2020 it will be 15 per cent. Far from joining a prosperous market, we shackled ourselves to a corpse.”

Am I the only person to see the fallacy of this argument? Is this why both Hannan and Kimbell immediately blocked me on twitter, so I can’t prick through their vacuous arguments at will?  Of course it is either terribly misleading or incredibly stupid to make such outrageous propaganda claims. With the best will in the world, all its nations’ GDP percentages always will add up to the same 100%. For most of the last century Europe and North America together have laid claim to about half of the world’s resources and squandered together 50% of its wealth, as commonly expressed in terms of  global GDP. Then emerged, what we like to call the developing economies of the BRIC countries, Brazil, Russia, India and China, which are all at a similar stage of newly advanced economic development. Together they are now good for about 30% of global GDP. Do you think that an intelligent Oxford educated man like Hannan does not know, that it is a mathematical certainty, that as these countries take their share of global resources and output, the percentages representing the USA and EU must necessarily fall? Remember he is not some silly contestant in a TV show promising to give 110% to please, please stay in ‘Britain’s got talent’ or the X-factor. He is a devious #brexit demagogue of the worst kind, because unlike his ukip adulators, you sense he is kinda smart! He knows full well, that if you bandy about economic half truths like that, some of it will stick in the minds of UKIP and Tory Eurosceptic simpletons. The fact of the matter is: Europe can have growth in absolute terms, while declining in relative terms. That is not a bad sign my kipper friends, it’s a good sign of rebalancing global economies and continuing world progress and harmonisation. We in the West have had it our way far too long, while whole continents suffered in poverty to feed our greed. The next time a kipper tells you the EU’s economy is shrinking remind them only Finland and Greece still have that problem. The rest are growing fine,  just not as fast as some developing nations playing catch-up. Spain actually grew faster than the UK in 2015, but kippers prefer to point their little finger at Greece.

We abandoned our friends in the Commonwealth
The next thing your typical ukip brexit activist likes to tweet on and on about is how well the old British Commonwealth is doing, and how we should have never abandoned them in favour of the EU Common Market.  This is another favorite Hannan propaganda line.

Far-flung Commonwealth nations would make a far more natural trade bloc than the EU. It never made much sense to abandon a diverse market, which comprised agricultural, industrial and service economies, in favour of a union of similar Western European states.

That is absolute bollocks Daniel. That line may have made sense for the British Empire, when you could send in the gun boats and enforce such a colonial trade policy. Didn’t you study modern history in Oxford Daniel? Forgotten the image of Gandhi spinning his own yarn as a peaceful protest against UK manufactured goods? Your idea of trade is not how modern nations operate today. I owe you references, but I have been taught in economics that nearby nations of a similar wealth and stage of economic development benefit most from trade. Not trade that exploits their natural resources and dumps unwanted manufactured goods on ex-colonies. We are talking about a ‘mutual beneficial trade’ with the EU, because the consumers in EU countries like the additional choice that such trade offers. An example of consumer choice is a Frenchman ‘sick’ of all the Renaults, Citroens and Peugeots in his street and instead would like to make a statement driving a sporty UK Nissan, a cool Mini or even a ‘posh’ Range Rover. This is a win-win two way kind of trade, not the pillaging of the colonies you Hannan seem to be lusting after. But I am sure that kind of neo-colonial ‘Britannia rules the waves again’ talk goes down a lot better with your ukip followers. One kipper @leslieappleyard  was so desperate to prove your point, that he found a quote for shipping a container to Auckland New Zealand that was two hundred pounds cheaper than sending the same size to Athens. He made a big thing of it on twitter:

auckland

What Leslie and most would be world traders don’t realise is that if you are running a trade deficit with most of the world’s economies, that manifests itself in a lot of empty return containers making their way back to Europe, China, or wherever.  Of course shipping lines will do special deals to ensure some of those containers contain actual goods produced in the UK, rather than remain empty. Just like RyanAir offers you heavily discounted midweek flights to the continent, rather than flying empty planes back and forth. Common sense should tell you that the closer your market, the cheaper your transport costs. But when it comes to brexit, common sense is the first victim in a kipper’s mind. So Auckland must be closer than Athens, and because in Malawi they enjoyed 8% growth from nothing, with their per capita GDP of less than a thousand bucks per year, in some kipper’s eyes they are now candidates to sell all those unsold Sunderland Nissans to after brexit? Who are they fooling in their ukip bubble?

Our Chief has a Range Rover!

Our Chief has a Range Rover!

If you don’t believe me here is an Australian Wayne Cole making the point U.K. trade could face cold reception from former colonies.

“For all the shared history, Britain is a fading presence in its former colonies. Australia’s Prime Minister is an avowed republican. New Zealand is voting on whether to remake its flag without a Union Flag.”

Don’t clutch at the Rotterdam-Antwerp effect my kipper friends
Whenever you tell a kipper that roughly half of the UK’s trade is with its  EU neighbours, the scripted ukip answer is that EU trade figures are just another establishment lie. They’ll have picked up from the Daily-Express or Dan Hannan, that really our trade with the ‘English speaking nations’ of this world is much bigger than official ONS figures for  trade with Europe. (Note that conveniently, in the trade definitions they use, now the Commonwealth and the USA are clubbed together for effect. Even ex-colony Hong Kong and other city states that speak a few word of English are thrown in). The debating line will be that the true size of EU trade is overblown because of so many of UK exports are shipped through the nearby ports of Rotterdam and Antwerp, therefor are classed as EU exports, when in reality their end destination is elsewhere in the rest of the world. You’d think that the few kippers that can count, would find it a tad strange that even with Holland the UK cannot seem to manage a positive trade balance? I  refer of course to all those exports destined for the Commonwealth wrongly attributed to the Netherlands or Belgium and hence to the EU? The problem is that few kippers have properly read, let alone understood the Civitas report that the Express likes to misquote in its many anti-EU propaganda drives. Civitas themselves warn in their conclusions not to “overestimate the Rotterdam-Antwerp effect” and that ” the overall trade distortion of the Rotterdam-Antwerp effect is not great”. Pascal in his excellent “EU-debate” blog demolishes the trade distortion argument even further:

“I can even go further in my proof that it’s nothing to do with EU regulation.  The fact is that the same thing happens whoever we trade with. Therefore in the same way that UK-EU trade is inflated, so is UK-US trade. When we export oil to Canada and that oil stops at a US port before then going on to Canada, can you guess who we say we’ve traded with? Yep, the US.  This is particularly important as the US is our next biggest trading partner and so it is good to ensure the Eurosceptics don’t also use inflated figures when talking about how much we trade with other countries such as the US” .

Most countries of the EU have comparable wealth to the UK. Some actually a lot more! They generally make and buy the same sort of things the UK does. Often we make things together like Airbus, remember them? The great thing about our EU neighbours is, that like us, they appreciate choice in what and from whom they buy. EU industries’ value chains today are more and more interlinked. Much more so than with those in the rest of the world.  This is only possible because it is just a short stretch across the channel, with most EU export destinations in an easy one day’s drive reach for roll on roll off containers (the kind with trucks attached).

Data suggests that UK employment is very closely tied to EU partners via value-chains in a way that non-EU export jobs simply are not. This is no doubt in part driven by the simple fact that EU is so close, but it is also hard to believe that this is not driven by regulatory commonalities in the single market. These interwoven relationships along the value chain are in stark contrast to the kind of ‘ship and forget’ trade that appears more characteristic of non-EU trade”

The interwoven EU value chain rebuke can also be used to argue how many UK jobs are dependent on trade with the EU, although how many exactly is anyone’s guess.

Rather than worrying about signing a Free Trade Deal with the EU after a possible brexit Eurosceptics should do well to worry about the abysmal state of UK manufacturing.

Britain’s manufacturing base is one of the worst performing of the world’s developed countries, a recent shock report revealed. It is not just the handicap of exporting against an over valued pound. Brexit might bring that UK vanity project back to earth soon, in the sense that Sterling is already crashing at the thought of it. It’s more the fact that successive Tory governments don’t seem to have an industrial policy to raise UK’s poor productivity levels e.g. by stimulating innovation in manufacturing. For them it’s just about the City of London, where all their Public School chums work. Same with Farage.

Who can afford the luxury cars the UK manufactures so well (apart from Chinese millionaires, Russian oligarchs and a few tin pot dictators)?

The EU per capita GDP is $35,000 instead of the Commonwealth’s $3,500.  And that $3,500 average becomes a lot lower if we take the two richest Commonwealth nations Canada and Australia away from this figure. Go figure where the biggest market is for Jaguars, Bentleys, Rolls Royce?  But also for more down to earth UK Nissans, Tiptree Marmalade, Cadbury chocolate bars, McVitie’s Hobnobs. Not in some village in rural Africa! Not in the tribe lands of Pakistan. The truth is trade with the Commonwealth was in long term decline long before Britain decided to join the Common Market. There is no marked dip in the graph around  UK’s join date in 1973, just a continuation of a decline that set in shortly after WWII as the following graph clearly shows.

commonwealth2

Out of the EU and into the world, an inconvenient reply
The next kipper argument goes that EU red tape is holding the UK back. Even if their own captain’s of industry actually say time and time that the amount of EU regulation is about right, and in any case a darned sight better than facing 28 sets of red tape and customs declarations as was the case before the Common Market created a customs union. The argument that just because a UK business doesn’t export to the EU it doesn’t need regulating is of course the biggest myth of them all. As if UK consumers don’t need protection. As if they’d put up with shoddy goods just because it has a label “Made in UK not for export to EU”. If anything UK consumers would run a mile from those products. I expanded on that subject in another blog post using Chinese Formula baby milk containing melamine as an example. No, EU standards will do nicely, even if only for consumption in the UK thank you very much Mr. Farage!china_exp

Germany and France face the same EU red tape as Britain yet outperform the UK when it comes to exports to China.

Lets take our place at the WTO top table again, but will we?
So what would happen after a brexit, that miraculously would set the UK free to ‘trade with the world again, according to ukip? First of all I would question the underlying assumption that the trade deals the EU makes for all of us are always skewed against the interests of the UK. We never see any proof when eurosceptics make those claims. Could the truth be far more inconvenient? Could it be that maybe, just maybe, Britain isn’t such a great trading nation in the first place? If I look at EU neighbour The Netherlands, this country earns almost 30% of its income from the export of goods and services. In 2012, the value of exports was 86.7% of the Netherlands’ GDP. The comparable figure for exports of goods and services (% of GDP) in the United Kingdom peaked at 32% in 2011, according to the World Bank. As a UK ex-pat living in France, you only have to try and get something delivered from back home, and you immediately run into a self defeating attitude, where British suppliers steadfastly refuse to deliver orders to the EU mainland, although no customs formalities are involved. The same for UK traders on eBay, they refuse to change their delivery default from ‘UK and Eire only’, as if it’s a chore to buy a few stamps for Europe along with 1st class stamps for UK customers? Yet these same small minded people will vote for UKIP and dream of Britain trading with the world after brexit? They think if they’d only take up their old membership of the World Trade Organisation(WTO) they would straight away sit right next to the EU at the top Table? Or is it more likely they would they sit in the main hall next to Norway, Iceland and Lichtenstein clutching a copy of flexcit  Mr North? Remember these EEA countries follow EU rules, pay for the privilege, don’t vote for any of it.

bridge

If only the UK could make its own trade deals, sit at the top of the WTO table again?

They’d trade if brexit ( or maybe we’ll be the next Greece?)
My final scorn is reserved for @RuthLeaEcon.  Although not sure if she is a kipper or just Eurosceptic, she regularly tweets nonsense under the #brexit hashtag, while as a trained economist, she should know better.  One of her favourite clichés goes as follows: “They’d trade if #Brexit.”  Her reasoning, along with many kippers, seems to be that running a long term structural trade deficit with another country or trade block like the EU somehow makes that country beholden to you. Remember buying from abroad is easy. Getting them to return the favour is the hard bit. The UK should maybe start by making quality goods they actually want abroad, rather than thinking signing a piece of paper will do the trick as kippers suggest.

deficit2

Well having studied a bit of economics myself, I find ‘They’d trade’ a bit hard to swallow. But kippers lap it up like my cat likes his morning milk. Common sense tells us that imports to a nation are like shopping to a family. Exports to a nation are like having an income to pay for the shopping bill. All families sometimes spend more than they make, but we also know that in the end it’s wise to balance our books and not go further and further into debt. At a macroeconomic level a trade deficit can in the short-term sometimes be offset by capital flows, but there is a big big caveat here long term, which every basic book on economics will tell you. And it’s not good news whatever Ruth and her kipper friends try to tell you.  I recently came across another blog from Henning Meyer who makes mince meat from the argument that the EU has so much more to lose. Using data from the MIT Observatory of Economic Complexity he points out “The EU doesn’t exist as one unit as it is a group of 27 countries. So the comparison is 1:27 and 27:1 – not 1:1

Some of those countries hardly sell anything to the UK but still will have a veto in any article 50  negotiations. Negotiations where UK is not at the table when they vote over any post brexit EU-UK trade deal.

“the rest of Europe sells us more stuff than we sell them and therefore they will give us a free trade deal as they don’t want to shoot themselves in the foot”. You can easily debunk this myth in 2-3 steps”

Henning’s arguments are well worth a read. I’ll just stick to my old economy text book:

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A schoolbook text, why running a structural trade deficit for the UK economy is nothing for ukip to brag about, in the long run it will end in tears.

Conclusion
I hope I have debunked a few brexit economic half truths and fallacies. I know I will not get much of a reply here, because swiftly the kipper argument will change to the EU’s democratic deficit and hollow phrases like: “we never ware asked”, “we never got to vote on joining a political union” or “I don’t like it if 70% of our laws are made by nameless bureaucrats in Brussels”. They will throw quotes at you from Winston Churchill, which are totally doctored. Winston Churchill was a founding father of the EU and in his famous Zurich speech in 1946 very clearly said that sovereignty needs to be pooled sometimes, for greater effect. My ultimate answer to a kipper is that if you are that bothered where they make the rules on food labelling for a common market the UK joined after the first referendum in 1973, then maybe you have not got much of a life? Maybe you should get one? The principle of subsidiarity is now well ensconced in the Lisbon treaty and this political union will never happen. We need to take this with a pinch of salt. None of the EU member states want this ‘ever closer union’. None of them like red tape more than the UK. But the UK has to remain and be engaged in the EU decision making process to make sure talk of it doesn’t rear its head again. We now live in a globalised world and the challenges we face are better faced together in a United Europe. Not by scarping from the sidelines, while dreaming of an empire lost a long time ago.

Theresa May should think twice before invoking Article 50 in March. The tide against brexit has turned to such an extent there is no shame in this. The Referendum was made ‘Advisory only’ for a good reason by your trusted civil servant ‘Sir Humphrey’.  He or the powers that be, gave you a way out of this madness that is Brexit and an opportunity for Britain to continue to play a role on the world stage from within a strong EU partnership.

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