LEADING THE WAY OUT OF THE EU

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Friday 30 November 2018 

This week saw the return of Project Fear as both the government and the Bank of England published propaganda to remind us small-minded Leavers we’re going to be ever so poor outside the EU, but we have Theresa May’s deal to rescue us from outright destitution.

On Wednesday – marked down as “economy day” in May’s infamous PR programme – the government released projected figures for the next fifteen years, slapping a 7.6% penalty on UK GDP in the event of a no deal. The paper released by the Department for Exiting the EU explored all sorts of doomsday scenarios. In the event of a chronic shortage of labour, the economy would be more than 10% smaller.

Hammering the point home was the Bank of England, which on the same day predicted a 10% hit over just five years. Both teams of economists (or rather propagandists) behind the data anticipated a much gentler adjustment under the terms of trade Mrs May is lining up with the EU: a 3.9% gap over fifteen years according to the BoE, equal to the worst case scenario under the government’s forecasts, although Whitehall believes it’s more likely to be around 2.1%, which would still lop off £50bn in output. The message was loud and clear, even with May’s deal, Brexit is a bad idea.

To put all of this into context, the financial crisis brought about a 6.25% cut to GDP and that was in the real world, with real constraints on capital and confidence. The fears being stoked in Westminster and the City have much more in common with the previous iteration of Project Fear, when Governor of the Bank of England Mark Carney anticipated a recession. His comments backed up George Osborne’s outlandish claims a Leave vote would trigger an “immediate and profound” shock to the economy leading to the loss of almost a million jobs within two years. Twenty-nine months later, employment is the highest since the early nineteen-seventies. Osborne is gone and Carney has been thoroughly found out.

“I don’t think he’s greatly respected and he’s been deeply politicised to the damage of the Bank of England’s reputation,” sighed Jacob Rees-Mogg who led the charge against Project Fear 2.0. Former member of the Bank of England’s Monetary Policy Committee, Andrew Sentance questioned the Bank’s independence after it gave “such prominence to these extreme scenarios and forecasts.” Even the anti-Brexit, Nobel-prize winning economist Paul Krugman took aim at the Bank, claiming its forecast scenario was “pretty far out on a limb” and that its assumptions “do not follow from basic trade theory.”

Like Osborne, May’s political survival depends on convincing the public she is right and we are wrong in believing Britain will make the best of it as a sovereign trading nation.

This week she began a tour of the country to rally support behind her withdrawal agreement, the idea being that a surge of popularity in the counties will frighten elected representatives in Westminster. A planned televised debate between May and Jeremy Corbyn, both Remain campaigners is designed to have a similar effect with Tory association chairmen. Neither objective looks likely to be fulfilled. According to a recent poll, 52% of voters prefer a no deal over Remain. The proposal on offer looks a lot more like Remaining in the EU.

Meanwhile, resistance to the deal in Parliament grows by the day. MPs’ public objections have now risen to a hundred. Earlier in the week, the Sun predicted a losing margin of 200 at the meaningful vote scheduled for 11 December with a minister citing a “bandwagon” effect.

A naval analogy would have been more appropriate. No-one wants their political career to drown aboard this sinking ship. Government whips are now working feverishly to get the gap down to 100. Under that threshold, Downing Street thinks a second vote is still winnable. Ambitious in the extreme, there won’t be a second vote if more than 400 MPs vote against the government.

As discussed in last week’s newsletter, there’s a hive of speculation surrounding the opposition’s movements once May’s plans are defeated. The options are narrowing. Shadow Chancellor John McDonnell has admitted it would be “very difficult” to force the general election he and Jeremy Corbyn so desperately want after May loses the meaningful vote.

“If that’s not possible, we’ll be calling upon the government then to join us in a public vote,” he added. Thankfully, the Tories remain steadfast in ruling out such a disgraceful affront to the electorate. Unsurprisingly, Brussels is doing its bit, mooting an extension to article 50.

An extension could fulfil one of two Remain objectives. The extra time would transform a second referendum from a fantasy to a possibility, it could also help facilitate an unacceptable Norway-Turkey hybrid of the Single Market and the Customs Union. Brussels won’t change the deal unless it is on those terms, unfortunately, many MPs would gladly do so.

Last night, Hillary Benn tabled an amendment to the meaningful vote intended to rule out a no deal Brexit while also laying the groundwork for the Commons to circumvent the government by effectively enforcing its own Brexit policy – you can find out more in today’s Brexit Brunch.

This is where the “EFTA option” looms menacingly large. For a start, it is scandalously misrepresented by parliamentarians like Nick Boles as a potential route out of the EU and into an alternative trading arrangement. Boles has been heading up this campaign for several months now and appears to be gaining traction, particularly with the commentariat who don’t see any way out for May but will not consider a clean departure from the EU. This is why a Swiss or Norway-style arrangement is incorrectly presented in the media. When was the last time you heard it mentioned it would entail free movement?

The relationship EFTA countries have with the EU is defined by controlled customs borders. Because of the Irish backstop and Labour’s obsessions with “a” customs union, any arrangement negotiated by the Commons will go way beyond EFTA.

EFTA member states can negotiate their own trade deals, Britain will not because the EU has the upper hand and will also insist on us staying in the CU.

It is too early to say what Benn’s atrocious amendment will evolve into. Labour look set to back it. Dominic Grieve a Tory traitor has signed it, the omens are bad.Last night, Hillary Benn tabled an amendment to the meaningful vote intended to rule out a no deal Brexit while also laying the groundwork for the Commons to circumvent the government by effectively enforcing its own Brexit policy – you can find out more in today’s Brexit Brunch.

This is where the “EFTA option” looms menacingly large. For a start, it is scandalously misrepresented by parliamentarians like Nick Boles as a potential route out of the EU and into an alternative trading arrangement. Boles has been heading up this campaign for several months now and appears to be gaining traction, particularly with the commentariat who don’t see any way out for May but will not consider a clean departure from the EU. This is why a Swiss or Norway-style arrangement is incorrectly presented in the media. When was the last time you heard it mentioned it would entail free movement?

The relationship EFTA countries have with the EU is defined by controlled customs borders. Because of the Irish backstop and Labour’s obsessions with “a” customs union, any arrangement negotiated by the Commons will go way beyond EFTA.

EFTA member states can negotiate their own trade deals, Britain will not because the EU has the upper hand and will also insist on us staying in the CU.

It is too early to say what Benn’s atrocious amendment will evolve into. Labour look set to back it. Dominic Grieve a Tory traitor has signed it, the omens are bad.

Looking across the Irish Sea and beyond the Atlantic, a picture of what could have been – and if we’re feeling optimistic, what could yet be – emerges. The WTO were in Dublin this week to obliterate the nonsense over the Irish border that has led to the ruinous backstop.

“There is nothing in WTO rules that forces anyone to put up border posts,” said Keith Rockwell who went on to explain the WTO works on a litigation basis. It does not send agents out into the field. If the UK implements a customs system that does not provoke complaints from other members there’s nothing to worry about.

Invisible customs controls are actionable in the present, that has been proven and if the UK were to go with no deal, the EU wouldn’t lodge a case in Geneva. Brussels has said that in the event of Britain withdrawing without terms it would not force the Irish Republic to implement controls at the border.

It is deeply unfortunate Mr Rockwell didn’t cross over to Britain and expose the folly of the blasted backstop, although we did have President Trump make a vital intervention.

“Sounds like a great deal for the EU,” he told the media, adding: “Right now as the deal stands, they may not be able to trade with the US. And I don’t think they want that at all, that would be a very big negative for the deal.” Cabinet members were dispatched to provide assurances, but what could they do?

Based on what we know from the withdrawal agreement and the political declaration there is little to no scope for an independent trade policy. You can’t argue with the facts, and you can’t argue with the Donald.

As it happens, with May in Argentina to meet G20 leaders for the next 48 hours, her PR machine is today pushing the near non-existent trade benefits of her deal. This morning’s statement from Downing Street only focused on commerce in the Continent, if she wanted to talk about trade with nations beyond Europe’s borders – where all the growth and opportunities lie – she would have nothing to say.

Marshalled onto the airwaves this morning Trade Secretary Liam Fox did an even worse job, admitting Britain would remain aligned with EU goods regulations, a pre-condition for remaining in the Customs Union.

But for every minion of Mrs May, sent out to disingenuously portray her deal as the only plausible one, there’s a Trump, a Rockwell, and a Rees-Mogg, along with 99 other Tory MPs, the whole of the DUP and the wider independence movement to expose the nonsense. Whatever happens, we are far from a minority in insisting we deserve better.