Thursday 21 March 2019
With the possibility of Britain leaving the EU on WTO terms still alive, reports and recommendations from think tanks and institutes far and wide all point to the United Kingdom easily heading off any negative economic impact by pushing the usual policy levers: lower tariffs, lower customs controls, more investment – particularly outside London. The government has now taken up that advice. Meanwhile, employment has reached a record high (again) and growth has outpaced expectations. Toyota is expanding production, the art market is thriving, UK business schools are seeing applications soar from abroad and the London Stock Exchange is booming.
Donald Trump’s national security adviser, John Bolton has sought to reassure the British public a trade deal with the United States is on.
“We are ready to go, we are ready to go.” said Bolton, adding that international trade secretary Liam Fox is “welcome” to visit the White House and get talks underway, as is “any member of the government…we can do deals quickly”. Bolton, a long-time supporter of British independence, added that Mr Trump agrees.
“The president has been clear he wants a resolution to this issue that allows the United States and Britain to come to trade deals again.”
Bolton’s intervention comes a week after US Ambassador Woody Johnson made a plea in the Mail on Sunday to the British public to ignore Remainer scaremongering over chlorinated chicken, a major US export banned by the EU, but deemed safe by its food agency. American imports are not shut out because they pose a threat to public health, but to the Continent’s immensely powerful farming lobby.
“It’s just a bogeyman used to scare you out of doing a great trade deal with America that will give your businesses a huge competitive advantage,” wrote Johnson.
Joblessness continues to be at a record low. According to the ONS, employment surged by almost a quarter of a million in the three months to January, twice the expected increase. More Brits are in work than ever, a whopping 32.7m, 473,000 more than at this time last year. 76.1% of all people of working age are employed, another record. Furthermore, the real picture is very different from the zero hours “nightmare” the Left likes to portray. Quality, full-time jobs account for 90% of the increase. Meanwhile, unemployment fell to just below 3.9%, the lowest since 1975.
“Taking it all together it suggests the UK economy is in better shape than many had been believing,” said James Knightly of bank ING.
A historic tie-up between Japanese auto giant Toyota and its lower scale competitor, Suzuki will heavily involve British manufacturing. Suzuki is looking to add larger models to its range and adopt hybrid technologies pioneered by Toyota. In Turn, Toyota has its eye on the lucrative Indian market, where demand for Suzuki’s compact vehicles is high. Toyota will produce versions of its successful RAV4 and Corolla models for Suzuki at its Burnaston plant in Derby. Hybrid engines made for Suzuki will roll off Toyota’s production line at Deeside in North Wales.
Defying expectations, Britain’s economy grew 0.5% in January smashing originally forecast growth of 0.2%.
“There are no signs yet that uncertainty over Brexit has pushed the economy as a whole into recession. If an orderly Brexit can be achieved, then the economy should pick up speed again in the second half of this year,” said John Hawksworth, chief economist at PWC.
All major sectors saw a rise in output, supported by increased retail spending, which jumped 1% in January following yet more pessimistic forecasts. In this case, 0.2%.
Leading contender for governor of the Bank of England Raghuram Rajan thinks Britain will be able to prosper as a sovereign nation.
“The big Brexit debate is, can you, in a short span of time, re-engage with the world on equal terms while getting more sovereign powers?” said Mr Rajan,
“I have no doubt that there is a scenario in which that can happen.”
The former chief economist at the IMF also criticised the EU for its “profoundly undemocratic” centralisation of power.
Britain will enjoy a 7% expansion in long-term economic output, say think tank Economists for Free Trade. Freed from its £10bn a year net payment to Brussels the UK economy would be poised to reap a £140bn windfall over 15 years. British consumers would also benefit from lower retail prices, while UK businesses would ramp up productivity thanks to homegrown regulations – British rules for British businesses – not masses of EU red tape.
“In its attempt to force through its EU Withdrawal Agreement, the Government is painting a No Deal Brexit as some sort of disaster,” the report states.
“It is, in fact, a recipe for economic success – free of the shackles of EU protectionism, budget costs, intrusive regulation and subsidisation of unskilled immigration.”
…Echoing the EFT report, the Sun sets out a compelling economic platform for an independent Britain to thrive, calling on the government to turn industrial areas into free ports and encourage investment in poorer regions. Adoption of new technologies should be incentivised, and business rates slashed.
“Ambition is not a dirty word…”
…In a similar vein, economists at Germany’s influential Ifo institute have outlined a “hard but smart” Brexit formula, which would mitigate the costs of sudden withdrawal from the EU after two years of minimal planning by immediately doing away with customs barriers and lowering tariffs. The outcome would be a 0.5% hit to output, the same as the EU. However, Ireland would suffer a 5% hit. Forecasts up until now have all predicted catastrophic economic decline as a result of government inaction, which is highly unrealistic…
…And for once, it seems, good advice has been taken heed of with the government announcing plans to temporarily bring tariffs down to zero for 87% of goods in the event of a withdrawal from the EU on WTO terms. British agricultural produce, vehicles and certain garments would continue to be protected by a tariff. Customs controls would not apply to EU goods, they would be allowed to enter freely into the country, with checks performed behind the border based on intelligence gather by HMRC.
But what should have been presented as a confident step forward for an independent trading nation has been framed as desperate planning to reduce the impact of certain disaster brought about by No Deal. In its public relations, the government has chosen to label Northern Ireland a smugglers’ paradise in waiting as goods would flow into the province unchecked.
“To spring this on British industry with just two weeks to go before Brexit day is a national disgrace. It is also useless as a tool of negotiating leverage with the EU so late in the day,” writes the Telegraph’s pro-Brexit business columnist, Ambrose Evans Pritchard.
“The sin is that the UK has thrown away a trump card. It could have transformed the global narrative on Brexit by opting for unilateral free trade, becoming the first big developed economy to tear down all tariff barriers – subject to safeguards against hazardous goods, dumping, ecological abuse, or child labour.”
Applications from abroad to Britain’s world-renowned business schools are rocketing on the back of a more competitive pound, brought about by Brexit. The US, home to the world’s top schools – Britain is in second place – suffered a 6.6% fall in applications, while 71% of British institutes reported increases. An MBA at the London Business School costs £50,000. Keep those applications coming.
The London Stock Exchange saw its profits grow by 15% in 2018, leading to a 22% share price jump since December.
The UK art market has enjoyed a record year with revenues rising 8% to £10.6bn overtaking China to second place worldwide. Elsewhere in Europe, sales were down with 4th placed France seeing a 5% drop, down to less than a 3rd of UK revenues, £3.1bn. Similar declines have also been reported in Germany, Italy and Switzerland.