Post October EU Summit

I must confess to a growing admiration for Theresa May because however desirable and irresistible to a politician the“Top Job” may be, to have it under the circumstances she has to shoulder must be a less than a stellar experience for her and her husband, they both must have some steel in them.

Typical of the problems she has to face is illustrated by a rather sneering article in The Economist:

Petty and Sneering

The Economist like the FT and all those who feel that because of their superior intellect, “know better” than anybody else, have yet to get over the referendum result it seems. The above was a nasty sneering article which was confused. On the one hand walking away and declaring “No Deal” is not acceptable and yet if Mrs May hangs in there and tries her best to deliver a deal, her efforts are greeted as “Leaves Brussels with nothing -ha, ha” or “They threw her a bone ha ha”.

However I did agree with one thing concerning future trade negotiations. As the objective of Brussels is to extract as much cash as possible from the UK whilst through a “trade deal” effectively crippling Britain’s scope for free trade post Brexit by any means because they don’t want the UK to become too powerful or successful through free trade operating outside the EU. The Economist article postulated that trying to negotiate a trade deal would be infinitely more difficult than these first phases of the negotiations have been. To my mind if trying to negotiate a trade deal might be nigh impossible which it well might, therefore the simplest solution might well be for the UK to declare No Deal right now and then look for a deal that suits both sides which can be negotiated and assembled from the ground up.

Bearing in mind that it is not tariffs that are the main problem in trading with other countries, it is mainly the ‘compliance regime’ that operates within that market that is the stumbling block but the UK is totally compliant with the EU on these as things currently stand. Mrs May might maintain her Florence offer but little else unless offered something she can sell at home. Unlike her predecessor in Office, I don’t think Mrs May is daft enough to repeat his mistake of extracting nothing from Brussels, but claiming something had been achieved and therefore getting punished in the referendum when he should have just walked away from his “renegotiation” and returned to it at a later time such as now post German elections.

So Tactics or Truth ?

The truth is that all ‘establishment’ figures in politics and the media and regardless of whether they are Remainers or Leavers, are shit scared of it all going wrong and them because of their known public views being seen as on the “wrong side” of history. It therefore follows that the accepted wisdom on all sides is that it is imperative for us to cut a deal with the EU on trade but is this true, let alone desirable ?

The complaint from the EU has been that the UK has not given sufficient information about what it wants but it is equally true that the EU doesn’t have any idea of what it wants apart from wishing Brexit wasn’t happening. One could argue that by now the EU would have, could have formulated a number of outline proposals for the future shape of relations between the UK or indeed any other ‘Leaver’ country that it could put forward as the basis for negotiations. It is not all on the UK’s shoulders this one, if it appears shambolic one suspects that is because nobody ever thought it would happen when drafting the Lisbon Treaty.

If we accept that neither side was fully prepared for these negotiations, how can one assess the current state of play within them ? Has the EU finally woken up to the fact that this is serious for them too and it is time to stop playing games ? I doubt it frankly and the better mood music though no positive actions to accompany it are most likely down to trying to keep Mrs May in play rather than having to face say Boris Johnson in full cry.

Also one might wonder just how choreographed, Boris Johnson’s forays ‘off the reservation’ were as a tactic to get the EU to focus their minds on the real issues, if so it seems to have worked to some degree though not I suspect enough. I must say that I wonder what exactly the “Transition Period” following Brexit and mooted as up to two years in length is meant to achieve. From what I can work out it is nothing changes except we keep paying in but no longer have a seat at the table, two years of being Norway – that’s nonsense surely ?

We Don’t Speak the Same Language

The main problem with the Brexit negotiations is quite simple and just illustrates why there has always been tensions in the UK’s relationship with the EU over many years, we just don’t fit into the “EU thought process” our approach is totally different. This is neither a good thing nor a bad thing, neither “right” nor “wrong” it is just the way it is and of itself, splitting is better for both parties because being part of the EU is a kind or marriage whereas just being friends is what will suit the UK and the EU best.

It therefore can be of no surprise that these negotiations are similarly fraught and riven with mutual misunderstanding. To the EU, Britain is a “heartless bastard” who has left the family home and abandoned the children, to us Brits it is more a case of “Well that doesn’t work for us, lets reforge it and start again”. The lunacy is that not getting a deal will hurt both parties economically but as a sovereign entity and not shackled by the ‘slowest ship in the convoy’ as the EU will be, the UK will most likely recover faster than the EU will from a pure no deal.

In her Florence speech, Mrs May tried to reset the language but there are limits to what she can achieve and this isn’t because she is in a “weak position” politically within her own party, it is because to the wider British public both Remainers as well as Leavers, there has to be some logic that they can grasp in this process. She has flown a £20 billion kite and that has not elicited a sensible response from the EU except “we want more money !” The UK reply “Okay, how much more and what do we get in return ?”

This is the real sticking point not Tory divisions because as far as the UK is concerned, we cannot sign up to any deal that means we pay out taxpayers money without being able to show them that they are getting something of value in return, it is that simple. This complete lack of understanding and acceptance by the EU is why the only practical option in order to break the logjam might be to declare NO DEAL right now and then, build a trade deal sector by sector over the next couple of years with the EU and the carrot for them ? Well we can keep Mrs May’s promise to continue paying into the EU budget after Brexit to complete the 7 year budget cycle but no more unless more is also forthcoming from the EU.

The End Game

The habit of Remainers and those who seek a second referendum on the EU is dismiss the original vote as a “After a marginal result…” But it is not as marginal as they think. You need to look at the swing, on paper the result in Scotland which was over 60/40 for Remain was the worst UK wide possibility considering that UKIP didn’t manage 4 million votes nation wide in the 2015 election. The EU may be worth poking fun at by the tabloid press and also electing UKIP who can’t buy a seat at home as MEPs for a laugh but it has never been a burning issue with the electorate so the margin should not be viewed as “just 4%” but rather a minimum 24% swing from British indifference to a positive “Let’s Leave”. When cooler heads prevail and time has passed, that referendum result will still stand as a remarkable one, whether you agree with the outcome or not.

Brexit for the UK will turn out well however the exit process goes. I agree that there is likely to be a very big shake out in the process that will impact us all but that was always inevitable. Inside or outside of the EU, sooner rather than later we need to switch from a full employment, low wages to a more productive, high wage, higher productivity economy which will inevitably include higher unemployment. Our economy and indeed those of most economies, need to reshape themselves away from over consumption in all its aspects if global peace and prosperity are to continue in the decades ahead.

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