CAP explained to Brexit fools

If you don’t mind I share with you snippets of a discussion on a Facebook page about, well EU politics of course…..

As a large chunk of the EU budget is spent on agricultural support the conversation drifted to talking mainly about the EU’s Common Agricultural Policy (CAP).

Sometimes I get the impression the thing that upsets Leavers most, is that French Farmers receive more money than UK farmers. French farmers are painted as small and inefficient producers, while UK farmers are naturally efficient and could well survive without.

The copied conversation is reproduced where it starts getting interesting:

Wrong wrong and wrong again. The early versions of CAP were indeed wasteful and produced food we didn’t need. Exporting that surplus food indeed risks distorting markets in places like Africa.

What folk don’t understand is that CAP’s goal was creating food security, food self sufficiency in a post war world were food was rationed.

So how to ensure food security without subsidised food production? Well that’s why ‘set aside’ was invented. Because if through ecological disasters the flow of food from other continents to EU is halted somehow, we can replough those wild flower fields and grow wheat, maize, carrots and haricots again and you folk won’t starve.

The sad fact that in U.K. millions of this money ends up in the pockets of rich City Bankers and Newspaper Editors with hunting estates is an entirely different matter, nothing to do with EU. All to do with Tory policy of looking after their own while screwing little farmers.

Later someone said EU was incapable of reform…..

Of course reform happens in EU. Take CAP and CFP. These policies currently bear no resemblance to what they once were. We had butter mountains and wine lakes. But while we sold packets of butter surplus to requirement for 10 cts a pack to Russia, Brits insisted on importing much more expensive butter from their cousins in New Zealand. It still makes my blood boil. British fishing waters were much depleted even before they joined EU. So British trawlers went further afield and started a Cod War with Iceland. When fish stocks recovered thanks to a common effort in EU, it was the UK government who decided to sell the larger part of the UK’s catch quota to big business. One Dutch trawler the Cornelis Vrolijk, was allocated 24% of the entire permitted catch by London (not by ‘Brussels’)

But hey blame the EU! Meanwhile Leaver Supreme Nigel Farage showed his face in just one of 42 EU fisheries committee meetings during the three years he was paid to attend. The hypocrisy of the Leave camp is astonishing, disgusting even.

Some more discussion on how all this EU money just ends up in the wrong pockets…

Me: “The distribution of CAP agricultural subsidies is a responsibility of national parliaments. Why are you laying this problem at the door of the EU? Before answering, can you please read this article?” https://www.theguardian.com/commentisfree/2013/jul/01/farm-subsidies-blatant-transfer-of-cash-to-rich

Later I was asked the following:

“How can you justify the EU spending 40% of its budget on agricultural subsidies, when it can only account for around 1.5% of the EU GDP? You may think it’s good value for money, but the rest of us reject it. Subsidising specific sectors is difficult to justify, and might not not be so bad if it was done fairly across the EU. But it’s not – certain member states like France take a huge chunk of that subsidy.

Sorry, but it is a protectionist racket. It protects a small number of producers, and penalises hundreds of millions of consumers. it’s not fair that EU tax payers pay towards such subsidy, where the beneficiaries are wealthy land owners.”

I was sent the following link and asked to comment

http://capreform.eu/does-capping-direct-payments-make-sense/

My Response:

I’ve read the article. I find the logic somewhat perverse. “Were not implementing capping of the biggest landowners because it’s not proven that it helps the smaller farmers who really need the payments to survive”. Well I have a farm and I have no CAP subsidies on it. For that I thank the brilliant idea of the British to decouple the subsidy rights from the land it was originally assigned to. In doing that the Conservatives ensured their beloved City of London had something else to trade in. It also enabled rich newspaper owners to buy up these subsidy rights. All they had to do is buy a few hundred of acres of Scottish wilderness, turn it into a hunting estate and reapply the subsidy to land that will never produce food other than a few grouse to shoot.

Plus it gives the same newspaper owners some new novel ammunition to fire at the EU besides the shooting game on their estate. Brilliant! Only in Great Britain could Leave simpletons think this is a great outcome.

maslow-s-pyramid-vector
Some Leave voters say the EU’s emphasis on Agricultural is crazy because only 2% of the EU workforce works in that sector. My quick fire response is why they are so obsessed about UK fisheries which only accounts for 0.3% of the UK economy. My response:

“In this case I think it’s about a much more basic need for people to eat and not worry about going hungry. I think of it in terms of Maslow’s hierarchy of needs. [Food] Security is at the base of the Maslow pyramid. It may very well involve only 2% of workers, which to me only underlines what a bargain EU is. Difference between you and me, I am talking about keeping the bottom secure. You seem to be at the top of the pyramid talking about self actualisation.
That’s What sovrinty is all about init?

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10 reasons to feel positive after Brexit?

This morning on Twitter Brexit voter Neutopia told me to educate myself about ten positive outcome of the EU Referendum:

He sent me a newspaper article (link) by Sean O’Grady  from the Independent Newspaper  from just three days after the referendum titled

10 reasons to feel positive after Brexit

“Some poorer communities that were sacrificed for the good of the EU could become prosperous again; we probably would have been forced to join the euro eventually; and savings on the EU budget contribution are real”.

Oh yes Unicorns roaming the sunlit uplands of Brexit and pigs will fly!!!

I thought it might make a nice blog item to examine just how well these ten reasons have stood up against the test of time passed after the Vote Leave’s marginal win in the EU Referendum. The UK public at large actually did not, does not and will not want a Brexit in the foreseeable future.

  1. Remember the fundamental facts:

    Although a plural ‘facts’ is used, actually only one statement is presented:

    The only way to have lots of jobs and higher wages is to have a competitive economy.”

    While in essence I have no problem with that statement, there follow a number of non-sequiturs. The tired example of Greece in EU is used to illustrate ‘uncompetitive’ and the example of not-in-EU Korea for ‘competitive’. That’s like saying a cow gives milk and a goat gives milk. You don’t have to be a cow to give milk, while ignoring that being of the Bovine Genus, you tend to make a lot more milk than being in the goat club.

    Anyway, Korea is as we know a manufacturing nation like Germany, while 80% of the UK is instead involved in ‘Services’. Neither Greece nor Korea are comparable economies to UK.

    Hence reason 1 quoted is a ‘red herring’ if I ever saw one.

  2. We can build a competitive economy outside the EU.

    While again this is true as an ambition, the statement, ‘We can build a competitive economy inside the EU’ is just as true. After all Germany is one of the top exporters globally and they are firmly in the EU.

    Reason 2 is another complete ‘red herring’.

  3. We live in a stable, venerable democracy.

    A pompous statement at best. Is the UK democracy any more stable than let’s say the one in the Netherlands, who also have a Monarch and a first and second chamber? The model of democracy the UK has, is pretty much universal. The only thing the UK lacks that other democracies tend to have, is a written constitution. That makes it inferior rather than superior, in my honest opinion. Plus the adversarial system in Parliament combined with the antiquated ‘First past da post’ election system, often means progress is made by taking two steps back before every three steps forward at every change of government. Give me the steady consensual progress of continental coalition governments any day!

  4. We have the pound!

    Well there’s a sore a contentious point! In the weeks after the EU Referendum the pound lost 20% of its value against the Euro and the Dollar The Euro is the currency of the trading block we do most business with. This devaluation was not an example of ‘being in control’. It’s an example of being at the mercy of speculators in the market. The rule of thumb is here, that the smaller your economy, the more volatile and susceptible to manipulation your currency is. The Eurozone is about ten times the size of the UK economy and the European Central bank has ample means to protect itself against speculators. Unlike the UK, where one single speculator called George Soros, brought the currency virtually to its knees on what we now refer to as ‘black Monday’.

    I would go even further to say Britain would have fared a lot better if it had decided to join the Eurozone in 1999, when it had the chance. Not only would this have benefited the United Kingdom economy, the whole Eurozone economy would have recovered faster from the 2008 financial crisis. My arguments are pretty much the same as those set out by Martin Sandbu in the Financial Times.

  5. We can buy what we wish, where we wish

    Total bollocks statement. The argument put forward is that outside the EU and its Common Agricultural Policy the UK could buy cheaper food. Statisticians from ONS have calculated that on average EU tariffs on agricultural products was roughly 11% in 2016, compared to about 4% for other products. So it is clear to see that with the 20% devaluation of Sterling, that supposed benefit of Brexit has been more than wiped out. People also forget that tariffs are levied on prices of goods as they enter the country. On wholesale prices in other words. By the time these products reach supermarket shelves, the influence of often quoted EU tariffs is much reduced if not negligible. Hence the SUN and people like Rees-Mogg had to retract similar statements as the one made here.

    People also forget that there is a price to pay for taking advantage of surpluses and low cost producers from across the planet. Our own farming community would not be able to compete. They’d go bust in huge numbers  in no time! Also, what is the impact on UK food security, when there are global crop failures? You cannot bring farmers back out of retirement when their tractors have been sold off to Africa. Who’d look after our countryside, when the EU set aside scheme is set aside? This is the reason why the UK farming community, while voting for Brexit initially, is now among the biggest group of converted remainers.

  6. The savings on the EU budget contribution are real.

    Remember the £350 m. promise on the red Vote Leave bus? The savings on the EU budget may well be real, but offset this against the calculated costs of Brexit, and it leaves the UK with a net loss and no extra money for the NHS. British households are today already more than £900 worse off after the vote to leave the EU, according to Mark Carney , the governor of the Bank of England. If the UK leaves the Single Market and Customs Union and reverts to trading under WTO rules, businesses will face extra customs paperwork costs of 20 billion. That’s more than twice the UK’s net contribution to the EU budget. The Return of Investment for Brexit stinks to high heaven! When you point this out to Leavers, the discussion is quickly steered to priceless sovereignty. But we remember how people like David Davis said, “There are no downsides to Brexit, only considerable upsides”

  7. We can still have immigration.

    Well yes, the UK might be able to stem the flow of workers from the EU, but what will they be replaced with. Nearly every major economy Brexit International trade secretary started exploratory trade talks with has indicated that freedom of movement will be part of the package. I can just hear the cries of joy from Tommy Robinson followers that instead of Dutch and French nurses we will have more from India and Pakistan. Instead of Catholic Polish builders from EU, we’re now ‘free’ to recruit Muslim ones from non-EU Albania. the English Defence League will be delighted!

  8. Trade deals with other countries may be easier to win.

    Well the fact that the sentence starts with ‘may’ turns it into a joke right away. Anyone that has ever been involved in trade talks keep telling us that in trade negotiations size really does matter!
    UK will be at the back of the queue for a trade deal in both EU and USA. The only chance to escape that place in the queue is, if Britain pretty much dropped any pretence that it wants to get anything favourable out of those deals that they didn’t already have through the 80 odd EU trade deals they currently benefit from and Brexit throws away. Leading Leave politicians also are fond of hailing the Commonwealth as natural trading parties to turn to after Brexit. But recently it was reported, Australia and New Zealand decided to launch trade talks with the EU instead. A bitter blow for International Trade Secretary Dr. Liam Fox.

  9. We could get some industries back.

    Obviously, there’s more to an economy than fish writes the author of the original article. You’re damned right there is. In fact turns out that Fisheries contributes less than 0.5% to the UK economy, so why does this industry constantly gets pushed to the forefront of discussions and pro-brexit manifestations? It’s because it’s easy to pull at the heartstrings of simple minded gullible Leave voters by prancing about on a little fishing boat throwing a few fish in the Thames as Farage did. When you dive deeper into the matter it turns out that most of the fish we eat in the UK actually is caught off the Coast of Iceland, while what remains of our fishing fleet, their catch is mainly sold to EU customers. So it’s all a big Leave con. We also learned during our investigations that it was the UK government that decided to hand over a quarter of the UK’s fishing quota to just one Dutch factory ship. A single Dutch vessel, the Cornelis Vrolijk, accounts for almost a quarter of the entire English catch and about 6 per cent of the total UK quota. Not an EU decision, but a decision of our Conservative government to favour big business.

  10. And, finally, remember the fundamental facts (chorus)

    Remember, Brexit diehards don’t do facts. It’s a believe system for them. More like a religion. Each underlined word in this blog is a hyperlink to a learned paper or a respectable newspaper article. You can ask Leavers to supply you with links like these till the cows come home. They just don’t do facts. If you disagree and have any to shar, please feel welcome to reproduce them in the comments section below.

 

Posted in #brexit, #CAP, #CFP | Tagged , , , | Leave a comment

How did one little #brexit tweet touch nearly 300 K. Brits ?

As regular readers of this blog know, I am a bit of a keyboard warrior on Twitter active mainly on the #Brexit hashtag. My twitter handle is @lasancmt should you want to check it out.

Of the thousands of tweets I have sent into the ether, every now and then I seem to touch the nerves or souls of either Remainers or Leavers in Twittersphere and it’s highly satisfying for one’s ego to see the number of engagements (Likes, Retweets and Comments) climb and climb by the minute before settling down like a mini dust storm at the end of the day.

Up to this weekend I was very happy with 20-30 k impressions, a few hundred ‘Likes’ and retweets. I would pat myself on the back and convince myself it was time well spent for a good cause: Stop Brexit!

A recent trend on Twitter is to ‘thread’ tweets. Each individual Tweet still has to be punchy with the ability to be liked or Retweeted, but as a thread they tell a mini story, where the sum of the parts ideally is bigger than the same number of single tweets. Think of it as a round fired by a semi automatic weapon where the words are sharper than the sword.

Nothing could have prepared me for the enormous response I got when having a lie in on Friday morning with a cup of Yorkshire tea I threaded 16 tweets together, straight from the heart, in a moment of mad inspiration and despair about Brexit.

You know you’re on a winner when Twitter can’t keep up with the number of alerts:
“You have 20+ notifications! And 5 minutes later again and again. At the end of the morning I was up to 50 k. impressions. By midnight it was 100 k. By Saturday night is was 200 k. impressions and new retweets fanned on my little thread like a bush fire.

At the point of writing my initial tweet has had 274,544 impressions, 3409 likes and 1332 retweets. (update May 7th 309,942 Impressions!)

For the life of me I do not know why this particular tweet caught the mood of the nation. To all intents and purposes it was a fluke. It led me to think about the evolving scandal of stolen FaceBook personal data and how Cambridge Analytica, for a considerable amount of illegally coordinated spending by the Leave campaigns, managed to swing an election, managed to swing the Leave vote in the UK’s EU referendum and brought about Brexit.

What if, what I consider a lucky fluke of a tweet, they managed to turn into an art form?

What if they found a way to dish out Goldilock’s porridge just right every time for the group they targetted? Not too hot, Not too cold, not too salty, but ‘just right’ every fucking time? What a powerful political weapon. The Excocet rocket of political campaigning. Laser guided individualised messages.  Scary stuff!!

Anyway here is the content of my lucky tweet as unrolled by the Thread reader App.

https://threadreaderapp.com/embed/982513852108722178.js

Below follows the text with a few annoying spelling and autocorrect mistakes removed

*************************************************************************************

As a Dutchman, having lived, worked and raised a family in UK,
what best describes my current #brexit emotions is as follows:Come on U.K., I love you and respect you, but also be aware, there’s nothing special about you as a country that means you deserve ‘special treatment’ from EU.

 

In the past the U.K. has had the fortune of having had clever diplomats that have secured some opt outs and special consideration when you joined us in our union.
But make no mistake, when the UK did eventually join the EU, we in the rest of Europe were mainly feeling sorry for you and yes, we owed you some WWII favours.
Since then you have done your usual thing of being the loudest person in the room. You’re like the slightly embarrassing uncle at every wedding, with a few good jokes. We’ve listened to you and laughed, mainly to be polite.
We’ve given you the best seat at the table, but it’s never enough is it?
Like when we adopted the single currency to accompany our fledgling ‘single market’.
We felt we had something promising to rival the powerful petrol dollar of the USA.

But you felt you already had a respected ‘Reserve Currency’ in your precious Pound Sterling and didn’t feel the need to join in.Now the € is the second most held reserve currency in the world and the pound is nowhere to be seen. It lingers somewhere in sixth place.

 

Your volatile Pound  goes up and down like a yo-yo in the markets, an easy target for speculators. How is that bringing back control?
In 2004 you felt France-Germany as a political axis in the EU, were getting just a bit too cosy. You thought it a clever idea to expand EU eastward with the ex- communist countries. This would dilute things a bit. Part of your divide and rule strategy in EU.
The rest of us were a bit more cautious but you, under Blair and Brown,
pressed ahead regardless. It seemed such a good idea at the time.
Now you’re complaining about Polish immigration but did not bother to use your brakes.
Brakes that other EU countries asked for and prudently applied as EU rules permitted.
I could go on and on like this but the main point is you, UK,
never really engaged with us in Europe.It’s been like one foot in the EU and the other in your old Empire.But that other foot really was in some sort of grave, wallowing in Imperial nostalgia.

We’d love to have you back on board, when you shed your backwardness and delusions of grandeur; of being a cut above the rest.

 

We had such a perfect place for you in mind within our EU.  We all speak English as a second language.  You could have been, could still be the ‘Services Capital’ of the EU as well as for the rest of the world. Services, financial and others, this is something you’re good at. Other countries don’t even know the meaning of the word and what customer friendly is.

 

But beware, if you don’t want to play ball with the rest of us in EU, we’ll freeze you out.
We’ll just keep using your language and call it Euro-English.

That’s not a punishment for daring to go it your own way. We’ve just had enough of you being outside the tent pissing in. We’ve had enough of you wanting to have your cake and eat it. We’ve had enough of your cherry picking.

And also as a Dutchman, don’t give me that bullshit that the UK is bankrolling the EU and that when you pull the plug the EU will go tits up.

For starters with a population a third of the UK, The Netherlands almost pays as much in the EU coffers as you British.

 

But unlike the UK, Dutch really are a nation of traders and we know which side of our bread is buttered. So instead of complaining we grab opportunities of the Single Market and border-less trading with both hands and get our rewards that way.

A brilliant return of investment! That’s how we see our EU contributions.

 

And when we go on holiday in Spain or go skiing in the Italian Dolomites and see a shiny new E designated motorway or a new EU funded ski lift, we’re proud we paid for bits of that and glad we can enjoy it with the natives. We don’t begrudge pulling Mediterranean countries up to our level of prosperity. It means we can have great shopping and good food on our holidays there.

After all, when all European nations have the same levels of prosperity, the same employment levels and the same protection under the umbrella of the European Courts, then why would we be jealous, why start wars with our neighbours?

I can hear you bleating already NATO kept the peace, not EU.

NATO is a fighting machine, not a peace corps.

One thing I remember from my flower power seventies hippy days:

“Fighting for peace is like screwing for virginity”

The biggest threat and ‘black swan event’ that’s heading our way threatening all our jobs in EU and creating discord in all our EU societies is not 3rd world immigrants propping up our diminishing population numbers and feeble birthrates.

We need immigrants to do the jobs our kids shy away from. We need nurses to wipe the bottoms of our incontinent parents in care homes. We need fruit pickers and meat packers.

The treat that will hit many of our jobs soon all over the EU, without taking prisoners, will be Robotics and Artificial Intelligence.

It won’t be the likes of @johnredwood & @Jacob_Rees_Mogg that will ensure we all get a fair share of the new wealth and economic growth this will create at the same time.

They’re already busy carving up the rich spoils for their friends in the City of London.

Whereas in EU parliament they’re starting to think about how to handle this in a EU wide context. They’ve even started worrying about robot rights FFS!

I for one know who’s protection I’d rather be under….@conservatives and @Nigel_Farage and his mate @realDonaldTrump would be the last I’d trust after #brexit

I’d rather sell my soul to @JunckerEU and @guyverhofstadt
overseen by a strong EU Parliament any day!!

/ENDS

End note.

I have received amazingly positive feedback from Twitter followers and hardly any abuse from the usual Brexit shouting trolls on Twitter.  I will cut and paste a few below later as comments, but it’s hard to find them back and individually reply to.

So for all your encouragement, likes and Retweets.

THANK YOU VERY MUCH!

Posted in #brexit, EU, EURO, Europe, Eurozone, Twitter | Tagged , , | Leave a comment

Trade after Brexit: Better to sell where 90% of growth is or 90% of purchasing power is? Crisps anyone?

The last few days of February are proving to cause a bit of a meltdown in the fragile ranks of the brexiteers in my adopted homeland Great Britain.

First we had the spectacle of Theresa May having an away day with her entire Cabinet, 614 days after the Referendum and 335 days after invoking Art.50, to finally thrash out once and for all, what they actually jointly want out of Brexit; what kind of relationship they as the acting UK Government envisage the UK should have after the UK leaves on 29/03/2019.

Yes, that’s only 395 days away! Yes they should have sorted this out before triggering Art. 50!

True to the adversarial form of British Politics, at the same time the Labour Shadow Cabinet had their own Brexit huddle in boring Westminster and yesterday we saw a long awaited speech by Leader Jeremy Corbyn, finally putting a glimmer of clear blue water between the Government’s Brexit position and what the Labour opposition hopes to get out of it all.

What the Labour and Conservatives official position have in common is that both profess to want to respect and implement ‘The will of the People’ and leave the European Union. Notably for Labour this means drawing a red line somewhere short of the UK leaving the EU Customs Union.  Note that Labour is at pains to point out they do not want to remain in “The Customs Union”, but rather in “A Customs Union”.  The difference between “The” and “A” Customs Union for the moment is anyone’s guess. That, explains Mr. Corbyn, is a question for “negotiation”.

Listening dispassionately to Mr. Corbyn, 90% of his long awaited Brexit speech seemed to be a passionate pro-EU speech outlining all the advantages Great Britain derives from its membership. He mentioned the value to UK of membership of EU institutions like the  EU Medicines Agency(EMA), Chemicals Agency (ECHA) and Euratom. He mentioned workers’ rights and protections aspired to by Labour, but implemented by EU. He mentioned the Environment and Carbon Trading schemes. All areas where European nations are more effective and efficient collaborating rather than competing.

Today I am shamelessly exploiting the appearance of a crack that is appearing in the UK public’s perception of the Customs Union, with an amendmend on continued participation due to be voted on in Parliament this week. Theresa May’s Government’s majority is wafer thin on the subject. I read that only six Conservatives need to side with Jeremy Corbyn on continued membership of the Customs Union, to cause the UK Prime Minister a major head ache. The issue is of course intricately linked to the Northern Ireland border issue.

Meanwhile Theresa May seems to have thrashed out some sort of compromise between the ‘Soft’ and ‘Hard’ brexiteers, fighting each other tooth and nail in her Cabinet. This week the main adversaries will each take turns sharing their newfound shared insights with the British public.

Today was Liam Fox’s turn to take the limelight with a speech in which no doubt he will take aim at Labour’s sudden conversion to the benefits of retaining “a Customs Union” with the EU after Brexit. Indeed he called it “a betrayal of Brexit voters”. Never mind that in an earlier life he himself called it “the best way forward”.

With the customary leaks to the press of the contents of his speech, the main arguments Fox will put forward can be roughly summarised as follows:

  • Being part of “the” or “a” Customs Union will restrict the UK’s capability to strike its own Global Free Trade Deals by removing an incentive for future trade partners;
  • 90% of growth in the world economy will take place outside of the EU and Brexit Britain needs to be able to focus its trade on those economies rather than the slow growing EU Single Market.

Both points are pure Brexit bullshit of course. Like all propaganda, there is a grain of truth in them. Yes staying in the Customs Union means the UK would have to set the same tariffs as the EU. The UK could as an example not set a zero import tariff on Oranges from Morocco a fruit we don’t grow, but Spain in EU does. We could also get closer in trade to our cherished Anglosphere brethren in New Zealand by removing all restrictions on importing New Zealand lamb and Anchor butter.

I see Brexiteers nodding their head and smacking their lips in anticipation, but the truth is that upon joining the then Common Market the UK government has already negotiated generous tariff free EU export quotas for New Zealand lamb. Export quotas that New Zealand hasn’t fulfilled in years, because to them it’s more profitable to export to nearby China and other emerging markets. The oranges example also falls flat on closer inspection. It seems only during the height of the Spanish Orange harvest the EU puts some restrictions on Oranges from Africa. Most of the year Africa can export Oranges and clementines tariff free to its hearts content, so we are never without them!

Every time I ask a leaver for examples how the EU is denying poor African farmers a living by raising punitive tariffs, I find that the truth is that that country can already export to EU tariff free in huge quantities. Not just oranges, but same with processed coffee, which is another favourite myth peddled as a restrictive EU trade practice hurting developing countries.

Coming to the second bullet point for debunking, in another blog post I already pointed out that this fixation on where global ‘growth’ takes place is a very stupid myopian trade strategy. Leave zealots haven’t got a clue what it is that the UK economy actually produces for export and what these emerging economies are actually buying.

The truth is that the huge majority of the population in these markets haven’t got a penny to rub together to buy the things we in the UK produce en mass and  successfully export by the truck load on a daily basis to our EU neighbours. A key indicator for spotting this trade myopia is a country’s GDP Per Capita. This indicator of purchasing power is what you get when you divide a country’s fast growing GDP by their even faster growing population.

Who can afford the innovative jams and 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!

The reality is that what developing countries are ‘bulk buying’ is building materials, plant and machinery. They need this to house their exploding population and to build and equip the factories and sweat shops where these people will slave away to produce our cheap T-shirts, jeans and flip-flops. No wonder that Germany, who produces a lot of manufacturing equipment, is doing so well selling into these fast growing economies, while we export but a value fraction to those same countries. The fact that a UK company like JCB does well in those developing economies therefor should not surprise us. It rather confirms the point I’m making rather than disputes it! Let me tell you kippers, brexit ain’t gonna fix our trade deficit with the World in a hurry!

Coming back to Foxy fox and his doomed Brexit trade speech, he has this morning been savaged on BBCRadio4 by one of his own top-aides who used to run his International Trade department.

“Sir Martin Donnelly, who was the permanent secretary at Liam Fox’s Department of International Trade until last year, told Radio 4’s Today programme that attempting to replace the UK’s current trading relationship with the EU with new free trade deals elsewhere was like “giving up a three-course meal now for the promise of a packet of crisps in the future.”

Leave EU three course meal for the promise of a packet of crisps in the future

Politicians like Liam Fox do not enable trade

I’d like to leave you with another point to ponder. I made this point before in this blog post.

“Politicians do not enable trade to start flowing simply by signing a trade deal with a lot of pomp and ceremony. If there were deals to be signed in 1973, Heath did this to protect trade with Europe that already existed. Certainly more so than wishful thinking EU trade would take off overnight! When Queen Victoria opened the Grand Union Canal between London and Liverpool, it was safe to assume trade would start flowing on it the very next day. If today a UK Prime Minister signs a piece of paper purporting to be some new Free Trade Agreement (FTA) with another country, you can bet your sweet bottom dollar he is already way behind the times. Nothing much will happen the next day. He’s just mopping up glory after the prior hard graft of private sector entrepreneurs who negotiated the deals in the first place. The ones who saw a new market opportunity abroad and jumped on it.”

The case of our beloved (or disgraced) International Trade Secretary flying around the world to line up all these incredible trade deals for budding UK entrepreneurs to take advantage off, is a case in point of the delusion he likes to foist upon us all. Take the case of this press photo I stumbled across of Dr. Liam witnessing the signing of a new Maggie & Rose business venture during his trade visit to China in January this year. The actual deal was already signed in November and I know for a fact Maggie Bolger has been working flat out on this deal long before Fox stuck his oar in. But Flying her in at her Majesty’s expense for another photo opportunity (to put DR. Liam Fox in the picture), is that good use of our tax-payers’ money?

Posted in #brexit, Trade Deals | Tagged | Leave a comment

Brexit economic news you will not read in the Daily Express UK or Daily Mail!

EU Brexit headlines you will find in UK tabloids (Telegraph included)

Regular readers of this blog and followers on Twitter know that I am always very sceptical about tabloid headlines suggesting that Brexit Britain enjoys some sort of economic boom since the disastrous referendum vote in June 2016 to leave the European Union, the largest free trading block in the world and right on the UK’s doorstep, not the other end of the world!

A quick read of such articles quickly reveal that what they really mean is that the economy has not collapsed to the extent to what they sneeringly call ‘Project Fear’ predicted. If one cares to read beyond the inflated headlines even the Express usually admits somewhere towards the end of the article, that actually in the years leading up to the referendum the UK growth figures were much more impressive!

In Great Britain the government department charged with monitoring the UK economy is the ‘Office for National Statistics’, ONS for short.

In the western world economic prowess is usually expressed as a yearly growth percentage of ‘Gross Domestic Product’ (GDP).

GDP growth is also the main indicator of economic performance quoted by the UK’s Government. This is then briefed and picked up by newspapers and blogs and reported upwards to supra-national organisations for aggregation at regional level like EU, OECD, IMF etc.

In their quarterly reports ONS further breaks GDP down to sectors like ‘Services’, ‘Manufacturing’, ‘Mining’ and ‘Agriculture’ to name a few.

How well the UK is doing financially out of all this economic activity is generally reported just once a year when ONS publishes the UK’s national accounts in a publication referred to as ‘The Pink Book’. Here you can find if Britain PLC runs a trade deficit or surplus with its main trading partners at country level. For brexit watchers like myself they also neatly split all this in EU-trade and trade with the non-EU rest of the World (ROW for short).

Brexit joy at UK GDP boost thanks to Q3 manufacturing convulsion

Let us dissect one recent headline that Brexit Britain is experiencing some sort of post Brexit Manufacturing Boom. Note that more often than not the anti EU press will be quoting something called the ‘Purchasing Managers Index (PMI)’. Note you can usually discount this index for reasons explained here. It’s based on small surveys that are usually out of touch with reality.  This is then picked up by pro-brexit Twitter accounts (some of them Russian bots) as follows:

The Brexit vote in the UK didn’t happen all that long ago. A quick look at the five quarters that ONS reported on since June 2016 and picking out the ‘manufacturing’ part of each reported ‘Production’ quartal GDP figure leaves us with the following aggregate UK manufacturing growth since the referendum.

-1.0 % – 0.0% +0.3% – 0.4% + 1.0% = – 0.1%

This means UK manufacturing since Brexit down by one tenth of a percent Dohhh! Not Booming and not Massive! A small 3 months 1% surge after a 15 months 1.1% drop!

OK that’s the post Brexit manufacturing boom dismantled. Let us now turn our attention to the first full set of UK national accounts since the brexit vote. Remember the 2016 pink book had two quarters before the referendum in it. The 2017 edition is the first full year reported where we can really say that the brexit decision ( if not the real thing yet) was fully factored into the UK’s national accounts.

We need to remind ourselves that part of the Leave narrative peddled by the likes of Dan Hannan MEP and others is that the EU’s share of Global GDP is “in decline” and anyway the UK now trades more, and more profitably with the non-EU ROW. So it would be a bit of a tabloid headline shocker if they had the guts to report that:

Brexit Shock Horror:
UK goods exports to EU grew at a slightly faster rate than exports to non-EU!

“Although the value of UK exports of goods to non-EU countries exceeded goods exports to the EU (by £11.1 billion) in 2016, UK goods exports to the EU grew at a slightly faster rate than exports to non-EU countries – at 4.8% and 4.5% respectively in 2016.”

Now for our next brexit headline shocker……

Brexit Shock Horror:
Deficit with non-EU areas widened to the largest recorded in the series history!

“Meanwhile, the primary income balance deficit with non-EU areas widened to the largest recorded in the series history, which started in 1999 (1.6% of nominal GDP). This was driven primarily by a rise in investment income”paid by the UK, which rose to 5.6% of nominal GDP and a slight reduction in UK investment income earned.
abroad to 3.9% of nominal GDP.”

UK’s Primary income balance deficit with non-EU areas widened to the largest recorded in the series history

Do we really need to Brexit:
Primary income deficit with the EU narrowed to 0.9% of nominal GDP, the lowest in seven years!

“The primary income deficit with the EU narrowed to the lowest level in seven years (0.9% of nominal gross domestic product (GDP)). This was a result of income earned on UK investments in the EU increasing to 3% of nominal GDP, the highest in three years and income earned on EU investments in the UK remaining broadly stable.”

UK’sprimary income deficit with the EU narrowed to the lowest level in seven years!

 

More Brexit shockers:
UK’s goods deficit with non-EU countries widened in 2016 for the first time since 2011!

“UK’s goods deficit with non-EU countries widened in 2016 for the first time since 2011, as a result of a larger increase in imports in relation to exports – 7.7% increase in imports compared with 4.5% increase in exports. The UK’s goods balance deficit with non-EU countries widened by £7.3 billion to £38.9 billion in 2016. This might suggest that the extent of overseas demand for UK products may have been limited by prevailing global economic conditions”

I might add that poor Dr. Liam Fox may have his job cut out for him replacing growing EU exports with equivalent ROW exports after brexit.

I sincerely hope that I haven’t shattered accidentally visiting Leave voters’ high hopes for a rapid brexit trade bonanza with the non-EU rest of the world with ONS reported reality.

You can draw comfort that Donald Tusk, President of the EU Council of Ministers repeatedly assured UK negotiators and press that Article 50 can be revoked.

Posted in #brexit, EURO, Europe, Eurozone | Tagged , , , , | 1 Comment

Remain means Remain, but Brexit doesn’t mean Brexit by a long shot!

What a dire depressive week it’s been in British politics. Before delving into the ‘Great Repeal’ bill going through Parliament and having a dig at Boris Johnson regurgitating the same old £350 M. to the NHS lie, let me explain with a random brexit tweet scraped from Twitter to illustrate what I mean with my headline that there is not one Brexit people voted for. For what is currently on the EU-UK negotiating table, there’s even less support than all the flavours of Brexit put together.

leaveSM

Hannan_SM

Brexit does not mean brexit apparently

One thing is sure, us remainers  are united we do not want to lose our EU citizen’s rights

I think it’s pretty fair to say that the 48% of voters pretty much agree on one thing and that is Remain means remaining in the EU. Not Hard remain, not soft remain. None of this one foot in and one foot out or ‘have your cake and eat it nonsense.  Sure there are real Europhiles who’d join the Eurozone given half a chance and there are remain voters who only voted remain because there is not a single viable alternative.

We all more or less agree brexit will end in tears and that we have more of a chance achieving our common goals by remaining influential EU members who try to steer the EU apparatus from within. We are also united in that we enjoy the additional rights EU citizenship confers on us and we do not want to lose those rights. Our own Freedom of Movement (FOM) is right up there, although unlimited for others raises some eyebrows.

The mixed basket case of serious Leave EU voters and outright nationalist and racist Brexit nutters

Then in contrast we have the leave camp, who managed to scrape together 52% of the voters that could be bothered to get out of bed that morning and partake in one of the most important democratic decisions in three generations. Note that they together represent 26% of the UK population. That’s far short of representing “the will of the people“!

Leave Alliance

First we have the ‘Leave alliance’ who tend to gravitate around the monographs of it’s major thought leader Dr. Richard North and a well thought out plan called Flexcit. You can say about the man what you like. His blog posts are terribly verbose. He tends to ramble on a bit. But he speaks with conviction of vision and all his blog posts are well researched with references like you would expect in respected economic journals. His loyal band of followers are no dummies either. They make short shrift with uneducated racist or nationalistic claptrap from kippers. They just about tolerate differing views of remoaners like me if you keep the discussion civil and back your alternative look at facts up with similar thorough research.

But leaving the leave alliance in search of other brexit camps you pretty quickly end up in some lalaland of imperial nostalgia or outright nationalism or even rampant racism.

I am not even going to discuss UKIP and Farage as a serious political party here. To me they are a spent force since the EU referendum and their leaders either has-beens, fantasists or nobodies. At Westminster, UKIP has no Members of Parliament (MPs).
Bereft of a political Home Nigel Farage these days loiters in hotel lobbies of Trump Hotels hoping that the big conman himself takes pity on him and asks the waiter to lay an extra plate on the table for useful fool Nigel. Always good for a few laughs after a pint or two, Farage is.

Free trade alliance

So my second group of leavers I will dub the “Free trade alliance”.  Here also we seem to have a single person, Professor Patrick Minford from the university of Cardiff, who acts as some sort of mouthpiece for the group. Because there are so precious few academics in the leave camp, Minford can be  relied upon to provide what the BBC thinks is ‘balanced reporting’ when it comes to the economics of  Brexit. He is rolled out tirelessly. like once Farage was.

So when almost the entire body of academic economic researchers predicts that we’ll all be much worse off after Brexit, Minford is allowed to trot out his discredited economic model in which there is ‘a possibility’ of a 135 billion economic upturn to Brexit sometime in a distant future. The same muddled thinking has the BBC interviewing Lord Lawson in prime time television as some sort of climate change specialist after showing us the real spectacle of the world’s receding polar glaciers and increasing tropical hurricanes fuelled by warming oceans. It’s not balance, it’s BBC mischief making!

This Brexit-supporting economist is on record admitting leaving the EU in combination with his favourited  ‘Free trade’ with the rest of the world would “mostly eliminate [UK] manufacturing”.  That’s alright he says, because things will be cheaper for UK consumers in the shops, while our kids should study for jobs “mainly” with industries such as design and marketing. What unlimited free trade would do to our UK farming community is unimaginable.

The Commonwealth rebirth Alliance

This third group consists mainly of aging disillusioned pensioners who have problems understanding what globalisation means and how to best protect the UK and their pensions. They just about get the fact that China’s steel dumping practices are a threat to British workers in Factories long ago sold to Indian steel mogul Tata (like the ones in Port Talbot). They wrongly blame the EU for its and other UK industries demise, because they know that within the single market the UK governments cannot in any way subsidise or favour local producers over European competitors. But that works both ways and on the continent favours UK with a level playing field. What these same people fail to realise is that the EU Commission can and has stood up for European Industries in the face of global unfair competition. That it was in fact their own UK delegation to the EU Council of Ministers that time and time objected to the EU standing up to their new found Chinese friends and vital UK inward investors. I have blogged about that here in more detail. The same delusions exist when it comes to the EU’s Agricultural and Fisheries policies. Brexit voting Brits just don’t realise who is screwing them, so EU is the easy scapegoat.

The third group of of Brexit voters can best be identified by their enormous sense of entitlement. This is expressed in tweets like “We didn’t win two wars for nothing, only to be ruled by Germany’s despotic EU creation” and “Britain was once ruling an Empire, on which the sun never set”.  My quick come-back “That’s because God didn’t trust the Brits in the dark” does not go down well with these people. Even when I back my assertion up with the woes of Chinese Opium Wars and Bengal Famine inflicted by the UK on India for profit. So if you want to hear the same assertion from a less biased source, why not click on this link and read what your ‘bestests of friends’ and ‘Special Relationship’ United States of America has to say about these British ‘delusions of Empire‘?

So here we have it. I could go on to identify other groups on the basis of pure racism or blatant UK nationalism.  They are out in force on twitter, but in numbers their ranks probably remain relatively low in number. That doesn’t mean that they weren’t much emboldened by the other three groups, who for the first time gave their appalling behaviour legitimacy. And with UKIP of course for the first time giving racists a political home and vote. Their existence in the brexit camp mainly serves to embarrass the other three groups by the company they must keep to safeguard their slender 2% majority.

Three Brexit groups whose vote cancel each other out

My Conclusion is that when it comes to a democratic mandate these three groups mainly cancel each other out. The leave alliance hate simple kippers and ridicules both the free traders, the WTO traders and those nostalgic imperialists that think they can just crash out of the European Economic Area without a trade deal.  The ‘Global Britain’ nostalgic Tories and the odd demented Labour die hard MP dreaming of Empire could never contemplate being on the receiving end of a fax-democracy, with which they dismiss the sensible Leave Alliance ideas. They still think Britain is a world power in it’s own right, not empowered by its leading role in EU, but somehow held back to revive those UK glory days of old.

Hence, since this EU referendum was only ‘advisory’ it is only right and proper that we lay the whole Brexit conundrum back in the hands of the UK’s parliamentary representatives.

There is no mandate for Theresa May’s Government to align itself with one particular flavour of #brexit and the associated emergency Henry VIII power graw they say they need to implement this particular flavour.

It’s either that or a new Referendum on the negotiated end results, now the British electorate is in a better position to separate the EU truth and Brexit realities from the fantasies of Free Traders, Nostalgic Imperialists and outright racist Nazi sympathisers.

Now let’s all unite in making fun of Boris.

Posted in #brexit, Europe | 2 Comments

Honey, I shrunk the economy!

minfordBBC

I was shocked how on my favourite news app this morning the BBC could give a report by the discredited group ‘Economists for Brexit’ the following misleading headline.

‘Hard’ Brexit offers ‘£135bn annual boost’ to economy

Of course what is offered is just an opinion based on research which has been extensively debunked by peers :

 “Minford uses a 1970s style trade model in which all firms in an industry everywhere in the world produce the same goods and competition is perfect. There is no product differentiation – a German-made car is identical to a Chinese-made car. Importantly, trade does not follow the gravity equation – everyone simply buys from the lowest cost producer.

As a consequence, after Brexit, the UK does not care about the tariff barriers exporters face in accessing the EU Single Market as they can sell as much as they like anywhere in the world. The fact that France is closer than Fiji essentially makes no difference in the Minford world: there is just one fictional world market into which all goods can be effortlessly sold.

If this sounds crazy, that’s because it is crazy. In reality, the UK will still continue to trade extensively with the EU as our closest geographical neighbours. It’s just that the higher trade barriers mean that we will do less of it.”

What makes academics like Minford stick so hard to their free trade dogmas and their over simplistic trade models?  Some say just follow the money, but I fear it’s just personal vanity.  There are precious few economists that have anything positive to say about #brexit. The inverse follows that if you can lay claim to some academic qualifications and a few TV interviews the vote leave brigade kiss the ground people like Patrick Minford and Ruth Lea walk on and the BBC is delighted to be able to fulfill that part of their mission statement, that says they’re supposed to be balanced in their reporting, by giving people like that airtime. But that doesn’t justify the page header! You might as well print lies like that on a big fat bus! Too many people just get the headline, which just confirms their prejudices.

My personal take on this is not very scientific. Just look at the guy’s face. He’s absolutely terrified he’s going to get the blame when it all starts going tits up with Brexit.

Let’s not forget that UK GDP growth, which held up remarkably well the first two quarters after the referendum is now vying for the lowest place in Europe while neighbouring Netherlands, within the much maligned protectionist EU, grew at about six times the UK rate over the same period.  These are hard facts as measured by the the economists paid by our government to keep track of what really happens and not the wishful thinking of one or two ukip economists basing their projection on dodgy economic models from the seventies.

“All models simplify. But when the simplifications imply that the EU has created no new trade, despite the abundance of evidence to the contrary (e.g. Magee, 2008; HM Treasury, 2016), it is the theory that must go back to the drawing board, not the data”

 

Posted in #brexit, EU, EURO, Uncategorized | 1 Comment