Yves here. As the recent fall in sterling says, Mr. Market is taking a series of remarks by Theresa May at a Conservative Party conference very seriously. Even though statements made outside London at intra-party events often need to be taken with a fistful of salt, the media, particularly outlets on the Brexit bandwagon, ballyhooed that news, that she was going to embark on what amounted to a “hard Brexit,” as well as her statement that she’d pull the Article 50 trigger by the end of March. Recall that we’d long ago identified March 30 as our guess as to limit for how long May could refuse to act without the pro-Leave media going on attack. It looks as if she made the same reading.
Note that May tried to have it both ways, claiming her stance was neither hard nor soft, but her giving immigration priority as a negotiating priority was widely recognized as tantamount to a hard Brexit. The New York Times’ reaction is on target with the media consensus:
Over all, Mrs. May’s speech suggested that she would emphasize the right to limit immigration even if that meant securing less favorable access to European markets.
David Davis, the minister responsible for negotiating Brexit, underscored the position that trading arrangements were not the only, or even the most important, part of the British equation.
May’s statements, if she really means them, are tantamount to telling the City she’s abandoned the idea of securing passporting rights for them. Perhaps she is pursuing the British version of Obama’s 11th dimensional chess, hoping that the backlash will offer a way to retreat. Some of my contacts were taken aback by the news. One depicted the stance as “unstable, particularly since she has only a 12 seat majority.”
May’s speech, along with actions by ministers that appear consistent with her giving a more restrictive immigration policy the pride of place, are already producing reactions overseas.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Originally posted at MacroBusiness
Yesterday we saw two pieces of news that tell you we’re our politics are headed. The first was the UK slashing its immigration intake:
“There can be no question that recent levels of immigration motivated a large part of the [Brexit] vote,” [Home Secretary Amber Rudd] said.
She vowed to reduce net migration, which was 300,000 in 2016 and well over the government’s target of 100,000, to the “tens of thousands”…
“We have to look at all sources of immigration if we mean business,” she said.
Australian skilled workers and university students are potentially in the firing line with the government to examine whether it should “tighten the test” for companies who recruit from abroad.
“It’s become a tick box exercise, allowing some firms to get away with not training local people. We won’t win in the world if we don’t do more to upskill our own workforce,” she said.
She described as “generous” current rules allowing the families of international students working rights and bemoaned that foreign students studying English language degrees “don’t even have to be proficient in speaking English”.
Second, we saw this from former Prime Minister Tony Abbott:
Tony Abbott has told right-wing allies in Britain that he believes he has a reasonable chance of becoming prime minister again, Fairfax Media has learned.
The revelation confirms the former leader is hoping to emulate Kevin Rudd’s 2013 success in returning to the Lodge after being booted out by his own party in 2010 despite his public assurances that his leadership is “dead, buried and cremated” and that “the Abbott era is over”.
A senior Liberal source close to Mr Abbott said the former prime minister maintained a “good chance” of returning to the job because he is popular with the party membership compared to Malcolm Turnbull.
Mr Turnbull is widely perceived within the party to have failed to live up to expectations, scraped through the election with just a one-seat majority and continues to perform poorly in the polls.
The source said the outcome of the upcoming NSW State Council of the Liberal Party on October 22 was an important opportunity for Mr Abbott to showcase to the Parliamentary Party his strength with the wider membership.
There, his Federal Electorate Conference (FEC) will propose a motion for democratic reform of the party. It is likely to be opposed by the left wing of the party, but has a greater chance of succeeding than ever before.
The change would enable the party membership, which is predominantly right-wing, to have a greater say in pre-selecting candidates.
Other Liberals did not rule out the possibility of an Abbott comeback, saying his prospects had improved as Mr Turnbull had failed to improve. They also said it would be difficult to sell a change to a new leader to the base, meaning if a change were to happen it could only feasibly be a reinstatement of the former prime minister.
There is absolutely no doubt what kind of platform Tony Abbott would lead. His visions of Anglophone purity have proven horribly prescient and to reboot the party’s chances at the next election he would have to differentiate himself from Malcolm Turnbull’s globalism. That point of difference will be the new brand of economics sweeping the Western world: lower immigration, higher protections and a swing back to the US alliance. He will use his recently rekindled relationship with Pauline Hanson as a political outrider.
Moreover, with Labor having recently committed itself to Big Australia for all eternity, the Abbott immigration wedge will be epic, cleaving the Labor caucus in two. What’s more, the low immigration platform will neutralise Labor’s joker in the pack – negative gearing reform proposals – by promising to take pressure off housing demand and to police foreign buying properly. And it does so while protecting the tax lurks of Abbott’s local specufestor base.
It also holds out the prospect that Abbott can take the high ground on the environment, including carbon output, by giving Australia a sustainable population. He could be endorsed by the Australian Conservation Foundation!
I’ve got to tell you that this prospect should not be taken lightly. It’s internally consistent, comes with precisely the right sloganeering and authentically anti-immigration leader, sets a spinnaker before the building anti-globalisation gale sweeping Western politics and vacuums up the population ponzi resistance at home that anyone with a political compass can feel building.
If I were Turnbull or Labor, I would get ahead of this by backing right away from Big Australia. The storm is coming.