We’ve seen how state changes play out in finance. Pump too much energy into a system and the structure comes apart. Ice melts into water. Water turns into steam. The 2008 version was financial markets going chaotic, with all sorts of previously uncorrelated markets moving together and with a velocity that had previously seemed inconceivable.
It is over my pay grade to know what the analogue might look like in British politics. But the surface spectacle of Groundhog Day every day, as the Tories refuse to abandon their utterly unworkable Brexit fantasies, has persisted even as more and more energy has been building up in the system. The Ultras issue what has become bi-monthly threats to turf out Theresa May, yet always retreat because they can’t defenestrate her, plus they have no credible leadership candidate. Various members of Government make ridiculous Brexit pronouncements, which EU officials point out, sometimes not bothering to feign politeness, have already been rejected.
But the clock keeps ticking. Brexit Day is barely over 13 months away, and the UK is as unclear about what it wants and unable to deal with the consequences as it was the day after the referendum. You’d think that business leaders would be demanding heads over the lack of preparation.
So one would think that Jeremy Corbyn opening up the Brexit debate by giving a speech about a customs union rather than a hard Brexit would be a sign that reality is finally dawning in the UK, and that the many parties that would like to avoid a train wreck would jump on the bandwagon. And in one sense, they have. In a historical marriage of convenience, the biggest UK business lobbying group, the Confederation for British Industry, is stumping for Corbyn’s scheme, along with manufacturing group EEF and the technology organization TechUK.
So what’s not to like?
The wee problem is that the debate opening up does not look like a step towards progress and resolution. It looks instead like another flavor of incomprehension about how the EU and trade regimes work, and yet another set of incoherent and unworkable plans. Nicola Sturgeon nailed it:
I welcome any Labour movement in right direction but, tbh, it still sounds very similar to the ‘have cake and eat it’ approach of PM. Why Labour doesn’t just embrace a single market/CU outcome in full is beyond me. https://t.co/pzIK24HIIT
— Nicola Sturgeon (@NicolaSturgeon) February 26, 2018
In other words, the system is moving in a chaotic direction.
Mind you, some sort of serious change could not be held off much longer. The EU had allowed Theresa May the remarkable face-save of an unworkable fudge on Ireland. The European Council politely (as in cunningly) said in its December statement that the UK would need to reduce its draft document to a proper legally implementable form by the March round of negotiations. As we said back in November, there is no way to square that circle.
But Corbyn, with his anticipated pro-customs-union speech on Monday, acted before the Ireland impasse came to the fore. But even then, we have incoherence. The Government opposes a customs union because, they claim it would prevent the UK from doing independent deals with third countries Some Tory backbenchers favor the scheme because they think it would remedy the Irish border mess. Both ideas are flat out false. Richard North tears his hair:
Surely to God by now, we should have politicians who are sufficiently knowledgeable about the basics? Surely they must know that a customs union will have no effect on freeing up trade on the Irish border once we leave the EU (and end the transition period).
He [Corbyn] doesn’t understand that customs union doesn’t actually prevent a member doing deals with third countries.
Similarly, even though Norway is a member of one customs union, the EEA, it negotiates its trade deals with third countries through the EFTA
As much as one would sorely wish for Labour, or frankly anyone with a public microphone and some backing in Parliament, to put forward a viable alternative, Corbyn’s wish list isn’t even close. In a bizarre mirror image of the Government’s insistence on a “special, close, bespoke relationship” that is not in the cards, Corbyn has asked for his own “bespoke, negotiated relationship,” meaning all sorts of special goodies that Brussels will never accept. For instance:
The UK could nix provisions of EU trade deals (specifically, related to public services, but the details don’t really matter). This in and of itself is nuttier than anything the Tories have proposed. The UK can’t do that even now as a member of the EU.
The UK would “negotiate protections, clarifications or exemptions…n relation to privatisation and public service competition directives state aid and procurement rules and the posted workers directive.” Politico translates why that is a non-starter:
To the EU, Corbyn’s approach amounts to granting the power for a state subsidized industry in the U.K. to flood the bloc’s market unfairly with cheap goods. Those watching his speech in Brussels will have raised their eyebrows at such requests.
“If there is one thing the Commission has been banging on most uncompromisingly about for the future U.K.-EU relationship, it has been in regards to a level playing field as regards competition policy,” said Allie Renison, head of Europe and trade policy at the Institute of Directors, adding that it represents a “huge cornerstone” of the single market.
In other words, this is still cherry-picking, just different cherries than the Government has chosen. Mind you, my recap is measured compared to Richard North’s.
We mentioned at the outset that the Labour attempt at an intervention was coming just before the Irish border matter looked to be coming to a head. There is probably enough delusion in the UK that the press will buy the bogus Corbyn claim that a customs union is a magical solution.
Recall that we also said that in December, the EU Council had tasked the UK with coming up with a properly codified description of what it was going to do about Ireland. Apparently no UK draft was in the offing. This is remarkable because it amounts to handing control of the situation back to the EU. Recall that one of the rules of negotiating is “he who controls the document controls the deal.”
The Financial Times reported that the EU produced a draft, which happens to embody the best of the choices on offer, an Irish sea border, which is far less politically and economically disruptive than a border between Northern Ireland and the Republic of Ireland. That also happens to be the solution that best suits the EU. In the Financial Times’ write-up, you need to read carefully to discern that the UK’s foot-dragging allowed the EU to put its proposal forward:
The political truce over Northern Ireland’s post-Brexit status threatens to be shattered this week, as the EU publishes a draft withdrawal agreement that leaves out crucial compromise language secured by Theresa May, British prime minister.
The European Commission will on Wednesday reveal its full legal text of Britain’s exit treaty, explicitly outlining a last-resort option for Northern Ireland to remain under the EU’s regulatory regime so a hard border on the island can be avoided.
Significantly the draft to “operationalise” an UK-EU divorce agreement from December omits wording inserted by Britain promising that “no new regulatory barriers” would develop between the UK mainland and Northern Ireland….
To the annoyance of London, alternative options to avoid a border are not elaborated; the EU side said it was waiting for workable UK proposals that negated the need for a “full alignment” fallback plan.
This would all be a nothingburger if the UK had its ducks in a row and could unveil its own text on Ireland this week. Don’t hold your breath.
The bigger issue is what the destabilization of the UK playing board means. As you can infer, yours truly does not see the Labour gambit as progress. Even though the Tories were doing their best to dig in their heels and resist, the clock running meant the EU would be able to propel them to a minimal deal, most importantly, with the extension beyond the formal Brexit date.
The Labour gambit opens up very real odds of chaotic outcomes. For instance, we already had the possibility of destabilization if Tories got a thumping in the local elections in May. With business now behind Corbyn, or more accurately, behind any hope of something other than a hard Brexit, it will take even less in the way of political realignment to undermine the Government. The Tories clearly want to avoid new elections at all costs, and elections would throw a fatal spanner in Brexit talks. Remember, a deal, both for Brexit and the transition, needs to be final by October so as to be approved by the EU27. No agreement means the worst of all possible outcomes, a crash-out. Would a newly elected government, or say a new coalition government that was seeking a different deal than the one May was pursuing be willing to do the only thing it could to stop the clock, which would be to go to the EU and ask for them to allow it to rescind Article 50? The EU is clearly willing to do that up to the very last minute if it were a permanent reversal, but it’s almost inconceivable that they’d allow the UK to back out of Article 50 if they expected them to relaunch in a few months.
No doubt, readers who know the ins and outs of UK politics can game this out better than I can. But I don’t see the odds of unhappy outcomes having fallen.
Thank you, Yves.
Readers may want to read https://www.theguardian.com/news/2018/feb/27/is-the-british-establishment-finally-finished in conjunction. Some light is shed in how the UK has got to this sad state of affairs, perhaps occasion for another thread.
One wonders if Corbyn is ultimately trying to get to the EEA solution, but dare not say so yet. Labour MPs Frank Field and John Mann, both on the right, have been indulged on the airwaves, slating Corbyn’s new stance. The pair and Bitterite Caroline Flint will probably vote with the government on the motion, so they may cancel Tory defectors, who I suspect will be few, if not none, in number if a motion of confidence is attached.
I am writing from Paris. I have been in Madrid and Paris most of this month. I have only heard Brexit mentioned once in the local media. Although EU27 governments are not officially revealing their mercantilist strategy, their financial services regulators certainly are, hence my visits. When I have some time, I meet local headhunters, but the lack of an EU27 passport is the stumbling block, at least outside STEM, and, in any case, demand is more than met by locals and EU27 staff returning from London. I am puzzled by the “insouciance” of British friends and colleagues. Few are contemplating a parachute. When asked, they just say a last minute deal will avoid the cliff. Why? Because they have to. I am not sure.
A friend, an insurance underwriter at Lloyd’s, says that, in addition to credit and political risk insurance business picking up, product liability insurance for sales into the EU27 is catching up.
Ah Colonel, you beat me too it with that link! And I think you are right that Corbyn may be trying to ease the pathway to an EEA type solution, although I doubt that will be available.
One of the problems with parachutes, escape routes, bolt holes — call it what you will — is (and I’ve researched this extensively for my own purposes) is that, as many found to their cost (literally) any right of residency creates potential gotcha’s in terms of liability for tax in your bolthole and difficulties in maintaining your residency status in the hole you’re considering exiting. FATCA bit many who quite liked the idea of having access to the US on the bum. You’d have to be a very brave gambler to imagine that the EU would never even think about introducing its own version of FATCA.
And my sister, who resides permanently overseas, has to be extremely careful about even short visits to the U.K. — HMRC stipulate that you must “sever all ties” to not end up liable for U.K. tax or, almost as bad, have to do the paperwork to prove that you weren’t caught in the U.K. tax obligation net. In theory you can use bilateral arrangements between some countries to qualify for relief based on not being subject to double taxation. But again, doing the paperwork is a huge time stealer if you’re trying to manage it yourself and a costly exercise if you’re paying someone else to manage it for you. If you’re a squillionaire, it’s a trivial concern. If you’re not as a minimum ultra high income or ultra high net worth, it isn’t. My sister is lucky if she earns $50-60,000 (equivalent) so paying $2-3,000 for tax advice is a non-trivial hit to her disposable income. The only way to avoid it is to not make visits home. It’s easier for her as I’m her only family and we never lived in each other’s pockets. Spouses and, especially, children, are something else again.
Being an expat / non-dom isn’t a consequence-free option, unfortunately.
Thank you and well said, Clive.
It’s not just the issues that you have highlighted, but just the vague concept.
After the big defence cuts of the early 1990s, Options For Change, my father and most of his comrades went / had to work overseas.
My Dad, too, when we were kids in the 1970’s. Overall we gained more than we lost, but that’s not to say there weren’t losses (I’m not necessarily thinking financially here — social connections, family, knowledge of recent history which everyone else simply absorbs and so on). We were lucky, it worked out okay. But I became aware just how many fat-tail risks are associated with emigration, even short-term.
Thank you, Clive.
Thanks for that link, Colonel. That is definitely a keeper. It confirms my suspicion that the current elite are simply just not up to the job. Most elites never really get tested unless there is a major war or the like. With Brexit the challenge is there but the response has been a shambles over the past, what, two years?
Definitely the old guard running things were of a totally different sort. Soon after arriving in London back in the early 80s I was on a bus in the city when this guy got aboard. I swear to god that he had on a dark suit, an umbrella (it was a sunny day), glasses and a bowler hat. He could have been an extra in an old Whitehall film.
After all these years I have had to revise my opinion of people like these when I consider some of their achievements such as building the UK’s National Health Service and getting rid of an old empire without a series of ruinous wars. These days it is all contracts of course but there is another older name for contractors – mercenaries – and I wonder at times whether that means that live in a mercenary society.
Actually ever since Cameron fatefully decided on his plebiscite about the brexit; that would therefore be about 5-6 years.
As to the nostalgia about “the old guard running things being of a totally different sort”, I am quite wary of it. One can judge the quality of that elite also by the successors which it selected, groomed and promoted.
I would like to take this opportunity to thank Yves & Brit commentators for presenting articles on Brexit.
If I had to rely solely on US MSM news sources, this yank would barely know that that this important & thorny issue even existed.
If I had to rely solely on US MSM news sources, this yank would barely know that that this important & thorny issue even existed.
Actually, the coverage is even worse in the UK.
Stateside, Bloomberg is (marginally) more on top of its Brexit reporting — after all, London is a global finance center and industry people in NY want to know how it’s all going to work work — than the British media, which are totally in ostrich mode.
As you rightly say, Corbyns proposals are no more realistic than anything the Government have put forward, but thats the privilege of being in opposition. Judging from their public comments, I think Labour only have a marginally tighter grip on reality re: Brexit than the Tories. Even some of their smarter operators have said some pretty stupid things.
Labour are also I suspect just as split as the Tories. Corbyn and his direct advisors are long time Eurosceptics who see the EU as a neoliberal project and genuinely believe they can create a socialist autarky. The Blairites are straight up neoliberals. Many of the Momentum supporters behind Corbyn are very pro-EU as they see socialism as a pan-European project and genuinely appreciate the ability to travel and work throughout the continent. My non-scientific feel for the internal politicking is that the pro-EU Remain section is very strong among Labour activists, less so among Labour base voters who are far more anti-immigrant than the typical Labour activist.
The other calculation for Labour is NI and Scotland. Labour desperately needs the Union to stay for it to maintain its electoral hopes – England is primarily Tory base. Corbyn and many on the left are instinctively pro-Republican in NI and they loath the DUP. My reading of Corbyn is that this makes him a mild Eurosceptic, but not an outright Europhobe. He is instinctively anti-Europe, but recognises the political dangers for the country.
I find it interesting that in his speech he emphasised the need to maintain control to nationalise industries, and that a deal would have to allow the UK to do this. In reality, the Directives which tie national governments hands over this are very weak and widely overlooked, its very hard to see any circumstances whereby Brussels would stop national takeovers in domestic matters (maybe different if it affected foreign owners). I don’t know whether he bought the meme you sometimes find in left wing circles that ‘you can’t have socialism because of EU rules’ or whether this is setting the stage for a climb down if he does win power.
But ultimately, Corbyns speech is a political move. It has very little to do with the realities of Brexit. I don’t actually think Labour have thought much in detail of what they would do if they gained power. Getting power is the first and only priority now, they will deal with the details later. They do perhaps hope that a grateful EU will give a new government a lot more leeway. I’m not so sure about that, especially as the centre right is so dominant in Europe now.
Incidentally, there is a good Long Read today in the Guardian on the British Establishment. It does, I think, go some way to explaining why the collective elite in Britain have been so bad at reigning in the worst instincts of the Tories, and why they have failed to call the government to account. Quite simply, the old style paternalistic establishment elite have been replaced by a much more self centred financial and business elite who lack any sort of long term view or a broader sense of national interest. the old establishment class who would have sorted out the problems over a few whiskeys no longer exists.
Honestly, thats almost the scariest option. It would mean that the momentum (pun intended) behind the Left is squandered in a train wreck. Either they need a better, workable plan or they need to let the Tories own the oncoming disaster. Otherwise they will just loose at both poltics and governance.
Unfortunately, I think you are right. I think if they were genuinely planning for a left wing government they’d have been setting out a detailed stall on Brexit earlier. I’m not suggesting a detailed strategy, as much as arguing carefully on the issues of Scotland and NI, acknowledging the Remainer vote there, setting out the problems as they see it with Europe (mostly, I think, competition policy), and arguing for the longest possible transition period. And most of all, they’d be working on building up network of allies through Europe, especially through the various left wing power groups in the European Parliament. Labour were almost as bad as the Tories for their failure to secure political allies in Europe over the last few decades, mainly because of their aversion to giving any crumbs to the Greens.
Thank you, PK.
Having worked regularly in and with Brussels from 2007 – 16, I agree with you about Labour’s failure to build alliances, but add that it was as much to do with Labour being more neo-liberal and some big egos, on all sides, at play.
Gordon Brown’s son of the manse preaching alienated as much as, if not more than, Blair’s narcissism, evangelical preaching and neo-con’ism.
The continental Greens contain their fair share of neo-liberals and neo-cons, especially the German ones.
Thank you, PK, especially for the summary of that Grauniad article, a rare gem in that neocon and neoliberal rag. The demise of that establishment, or the “wet” types like Ian Gilmour, is certainly to be mourned in the light of what replaced it. One notices it even at the local level, Buckinghamshire in my case.
I began work in the City in the late 1990s. A few of the old family firms and partnerships were around. Most had been sold. There were still some descendants of the old families around the emerging TBTFs. They were, often, a lot easier to work and get on with, none of the hang-ups of careerist and nouveau riche types. One got me into the firm’s horseracing club, a nice gesture for a newcomer, which helped professionally as much as on the leisure side.
On another note, I went to St Germain on Friday and visited the palace where James II resided in exile and, opposite, the church where he is buried. After Latin mass at Notre Dame on Sunday, I walked around the Latin Quarter, including past St Sulpice. All had British and Irish connections, lost largely.
I do like Orwells quote about the English upper classes :
I can’t say I’ve hobnobbed much with either aristocrats or the new nouveau riche elite, but over the years I’ve had one or two encounters professionally. Whatever you say about the older establishment, they did have at least a modicum of decency and some (albeit strictly circumscribed) integrity.
I don’t know Paris well, but I do love that part of the city. We tend to see travel and cosmopolitanism as a modern phenomenon, but its fascinating reading old histories and see that many of our forebears were far better travelled and culturally open minded than is supposedly the norm these days. The connections between Ireland and France run very deep, as you can see by even a quick perusal of the names of many of the finest old wine and brandy houses.
Thank you, PK.
I spent much of late summer in Normandy and around Bordeaux, and came across Irish names not just in wine-making, but in horseracing, too.
It’s interesting to compare how many British ministers before the world wars studied in France and Germany, not that this stopped either war.
You’re right about the upper class rate of attrition in the wars, especially the first. Regardless of what one thinks of monarchy, compare the service of certain princes with the sons of the PM who led the country to the quagmires in Afghanistan and Iraq.
I forgot to add that two former parish priests in Buckinghamshire, both Irish, studied at St Sulpice. Most of the ones who have been deployed to Mauritius, often ending their days there, since the mid-18th century did, too.
In the interwar period there was a huge amount of travel by the English upper classes into Europe (the Bloomsbury set, who were well known artists and poets, the Sitwells, again poets, lived in France and Italy for years at a time) and vice-versa (many London townhouses have European painters and poets “blue plaques” (so-and-so lived here).
Not just Europeans, either. Japanese novelist Sōseki lived in London. And of course Karl Marx died here.
These were not working or even especially middle class people. You needed money or at least a patron. Quite what the European Project has done to annoy the British elite in such large numbers is above my pay grade and social circle. But clearly something has soured. I don’t get the same sense of animosity with the English elites and the rest of the world as I do with their dislike of Europe. Anti-Russian and anti-Chinese sentiment is conspicuous by its absence, all things being considered.
I just can’t work it out…
Thank you, Clive.
Plus “Chiantishire” and further down, Promenade des Anglais, British colonies on the Norman coast and Cote d’Azur.
It is interesting.
Is it the take over of the Tory party by the knights of the suburbs and garage forecourts (second hand), estate agents (instead of estate owners), Old Estonians (instead of Old Etonians) etc?
The sheer intensity of the UK establishment elite’s hatred for the EU has always surprised me. I can understand a general dislike for it on ideological and nationalist grounds, but elites, by their nature, tend to be pragmatists at their core and the EU is very much a pragmatic construction. Its driving force has always been a calculated assessment by German and French elites that they had to abandon some power for broader political and economic aims. Genuine enthusiasm for the EU has tended to be restricted to the elites of smaller countries who saw it as a way to escape domination by their particular overbearing neighbour.
I think the reasons the British (or to be more precise, English) elites never shared this ambition are likely complex – some readings on it suggest that it goes back not so much to loss of empire, but to the abandonment of ‘English’ nationalism in favour of the artificial creation of a British identity. The Scots (and Irish nationalist) enthusiasm for Europe can be traced to their desire for a broader identity beyond Britain. But for the English elites, they have something up for Empire, and when Empire fell apart they had nothing else. And since the EU was seen as the creation of their long time rivals (specifically Germany and France), it was never seen as a viable alternative identity.
Combine this with the traditional English liberal distaste for the more communitarian traditions of the continent and there seems to be a complex brew of resentments which have little basis in economic rationality.
I think it depends which part of the elite you are talking about IMO. The Treasury and FCO have long been in favour of the EU because it makes the UK richer and it can lever up on the EU base to increase its influence. The senior Civil Service is pretty much in line with this thinking, I think. Though I am getting rather out of touch, having retired some years ago, though my colleagues who have only just retired seem to think much the same. Big business (CBI etc) continue to be in favour for business reasons. I think the legal profession likewise (was it Gove who was barracked in the Guildhall shortly after the referendum result?).
The newspapers of course are mostly strongly anti-EU for their own reasons, which are not fully disclosed.
HMQ of course showed her colours (literally) by her choice of clothing at the State Opening of Parliament.
So only some of the establishment are anti-EU
I agree, and of course I simplified.
I think my point is though that in times past you would have expected the ‘pragmatic’ elements of the elites to always maintain control. But what has surprised me so much is that they’ve been so quiet, even accepting of whats happened. Yes, I know a few pipe up every now and again, and there seem to be plenty of behind the scenes concerns expressed, but it seems to me that the ideologues are in complete control of the agenda.
re princes – not to mention having to marry all those pesky commoners and foreigners as circuses to the masses. .
Thank you, Vlade. :-)
“Taking one for the team,” as you called the diversion last November.
First off, the EU can and does (when it’s wheels are suitably greased — although I do understand why for a lot of people the fact that you have to play they EU’s patronage games to get what you want is an issue, but there’s certainly far worse politics I can name) scatter about exemptions like confetti. So even formal, agreed routes are available to give member states a fair amount of autonomy. That’s before the non-enforcement and enforcement evasion opportunities. There, of course, there is an argument that two wrongs don’t make a right, but this is politics we’re talking about so if anyone in a political party starts coming over all holier than thou, it is a bit grating.
And what Corbyn is doing is just political mischief making. He’s putting up a position whereby he’s going to commit to doing action A but making it conditional on event B happening. Knowing full well that event B is not going to be a happening event. In so doing, he hopes to divide the Conservative parliamentary party, cause a fracas with the DUP and appeal to Remainers at the expense of the Liberal Democrat Party which might well end up having a near-death experience at the local and any potential parliamentary election.
All good knockabout political fun, but scarcely what you’d call the actions of a grown up government-in-waiting.
I have officially given up (well, I’m trying to give up but it’s hard to go cold turkey!) opining on Brexit now. It’s all made up of too many moving parts, some of which are rigidly interconnected, some of which only mesh together every now and again. And our fact-set is merely what is in the media, which may or may not bear any resemblance to what the political actors are really thinking and doing. This goes for the EU too — we get a lot of what the Commission is saying but apart from a trope that “the EU27 speaks as one and is totally united” (like when did that ever happen) we get nothing concrete from the member states themselves. The U.K. government is even more opaque, not that there is really a government where Brexit is concerned, just various competing factions.
Most of all, no-one really knows how this is playing out in the country. I’m thinking primarily of the U.K. in that sentence, but even then as noted in other comments, “country” itself needs qualification because England, Scotland and NI have different electoral dynamics with different degrees of leverage over different institutions.
You might as well read a crystal ball.
Agree with all, even the trying-to-go-cold-Turkey on brexit opinig, very hard..
Thank you, Clive.
With regard to EU27 unity, it’s holding up better than expected.
UK hyping up of the threat from the east, to scare the newer members, and appeals to northern European pragmatism / solidarity and German business (e.g. to the CEO of Daimler-Benz on Sky a fortnight ago by Mrs Bone’s MP) are increasingly falling on deaf ears.
Frank Field’s assertion in the Mail or Express, a couple of days ago, that the EU27 needs the UK’s money is frankly laughable, an embarrassment to his countrymen, if not him.
Oh, yes, the U.K. tabloids are their usual unreadable gibberish on this subject. I desperately search for reliable international coverage, hampered by my French which isn’t always up to reading newspapers standards and barely conversational German. By the time I’ve realised that I’m reading the German version of the Daily Mail, it’s too late, I’ve wasted quarter of an hour on translating demented crazy stuff.
One fact though is undeniable. The EU27 is in a €10bn hole. And, if what seems to be unbiased sources are to be believed, the Commission is pushing for more money to spend. Politicians with a bad case of ideological fervour always are, so I give that story credibility. The Commission is living in a Project Europe dreamland to think that is going to be an easy sell to member states and either the Commission has to be put back its box for a few years while the EU27 sorts itself out financially or else there’s going to be a bun fight. Maybe everyone in the EU27 will all make nice to each other, but you would be definitely a glass-half-full type to put money on that happening. Most all member states love the idea of Europe. Just so long as someone else is paying for it.
The reality is that mercantile operators like Germany need to fund far, far more by way of transfers to bolster the cohesion fund. Na gonna happen.
But I’d agree that might all simply end up with the member states narked at the U.K. for spoiling the fun. So in no way is it any guarantee of leverage. Just another amongst dozens of moving parts.
Thank you, Clive.
I reckon that the EU may just get the money. Why? Macron is pushing ahead with reforms, targeting the train drivers this week, and that may be enough to convince Germany, especially with the Schultz Eurolalalanders in the ascendancy after the Jamaica coalition talks broke down, to give the EU / France one more chance.
As you say, lots of moving parts.
I’m not so sure that the Commission won’t get its money. One good thing about the Tories incompetence for them is that they have a handy scapegoat for financial problems and can use it as leverage in seeking greater contributions. They’ll also be helped by the general upsurge in the EU economy.
I’d also agree with the Col., that a grand bargain between the French and Germans might well see greater German contributions, especially the left has more influence in the new coalition government.
Thank you, PK.
Although homelessness in Madrid and Paris is getting as bad as London, the economies seem to be picking up. Also, more jobs seem to be done by locals than by immigrants.
Friends who own and run a toy shop in Deauville say they are sourcing from Italy and Spain rather than cheaper locations in Asia.
Mauritius has seen a surge in European tourists over 2017, as many tourists as there are locals. My family’s holiday home business has been fully booked all summer, largely with French retirees and, for the first time, families from Austria and Turkey.
The above is anecdotal, but points to a pick-up.
In Buckinghamshire, a taxi driver and restaurateur I know well say that they have not known a festive season as relatively quiet as the last.
And with regard to your last point, I keep getting ads from smart London restaurants offering deals for lunch. The last time that happened was after the 2008 crash.
As for the rest, words pretty much fail me. Political ploy by Corbyn of course. It does not have to make sense in the real world because the UK does not currently inhabit the real world.
The reaction to the ‘operationalising’ draft due tomorrow will be interesting.
I can imagine about the restaurants. https://www.theguardian.com/lifeandstyle/2018/feb/16/not-so-fresh-why-jamie-oliver-restaurants-lost-their-bite is interesting.
At work, I keep getting approaches from all sorts of consultancies even though neither the department nor me assign such contracts. Contracts are drying up.
The above plus stresses on the High Street, one can see where the UK, even without Brexit, is heading. The debt fuelled noughties are still playing out.
The restaurant industry tends I think to be a leading indicator for economic stress, especially mid-market restaurants. There are lots of articles in the UK business press indicating that the mid market chains are in all sorts of trouble.
On exemptions: I think it’s one thing for the EU to hand out exemptions to member states but when it comes to a soon-to-be ex who is kicking up a real fuss and refusing to engage with post-break-up matters… I’m not sure the EU would be so keen.
Its wheels would need to be very, very well-greased, I imagine.
The EU IS a neoliberal project, and anybody who’s ever read the accounts of how corporate Europe wrote the fine print of its charter and regulations knows it all too well. And a measure of autarky might even be worth aiming for (see Russian gains in ag and elsewhere owing to US sanctions). But it would have to be something you politicked for, and worked toward, and planned about–that all or most of a country bought into–to stand a snowball’s chance.
Have really wanted to believe that Corbyn was on the ball, but. . . being bright enough to know what you don’t know is the biggest virtue a politician can embody.
In the UK’s case autarky would require that the people all went vegan, I think. And even then there might not be enough food to go round.
That is not what they voted for.
A friend of mine a few years ago spoke at some length with members of the 1922 committee. Before he left he asked them their opinion on the Neolliberal policy position of the then Cameron government – their only answer was downcast looks & shaking heads.
I don’t think Labour need Scotland as much as they need England (this article shows why), which is tricky considering the modern establishment (haven’t read the article yet) is so set against a Corbyn style government.
Anyway, the northern branch is so moribund and pathetic, they should not bet anything they can’t lose on that shower delivering anything.
I think Corbyn will have to be a lot more direct and take a national interest position if he is going to make any headway.
As I wrote before, Corbyn is either as delusional as Tories or playing extremely high-stakes politics, which may turn and bite him VERY VERY quickly.
The latter would be if Corbyn knew what he’s asking is idiotic gibberish, but didn’t care, because his audience doesn’t understand either. It would be solely aimed to post-EU crashout audience, i.e. if the UK heads the current course, crashes out of EU in 13 months, and Corbyn can say “Labour didn’t want this, and here’s evidence. If we were allowed to do CU, it would be all unicorns and butterflies, but those idiotic Tories.. “.
Where it can come and bite him is if he’s actually sucessfull pre-crashout (be it in turfing tories out, or voting with the tory rebels), as in that case requiring/implementing CU only is going to be only marginally better than a straight-out crashout (assuming EU would even go for it, which is quite unlikely)
Thank you, Vlade.
You point about the audience is more accurate than you might think.
David Davis’ speech in Vienna, although addressing the local business community, was more designed with a UK audience in mind, i.e. look how reasonable the UK is and how awful the EU27 are. Why would Stronach, Steyr-Puch et al want to avoid a hard Brexit when, for example, they will be and are getting supply chain business from the German and French car giants? The ski resorts in the west may beg to differ, though, but global warming will soon solve that problem.
Stories are coming out about the Brexit committee summit at Chequers last week. The level of delusion was astounding, even by recent standards, utterances, etc. If anything, Dominic Cummings’ description of David Davis was far too kind. As you have said, the UK is about to learn how the world works.
Yes, I hope Corbyn realises is that the worst possible thing would be to take power just as the train goes over the precipice. He should be aiming to pick up the remains of the crash, not be at the driving seat when its too late to apply the brakes.
If I were to write out an ‘ideal’ scenario if Labour took power within the next 24 months, it would be for Corbyn to set out clearly the dangers of Brexit, emphasising the need to preserve the Union (something that is hard for Brexiters to argue against), while planning for the longest possible transition period in order to minimise direct damage. Ideally, I would say he would need to negotiate some sort of exit, and put it to a referendum, on the basis that an ‘exit anyway’ vote would trigger a Scottish independence vote and maybe chaos in NI. In this way, he could have his cake and eat it – either have the mandate to back out of Brexit, or one to advance, but on his terms. If it meant the breakup of the Union, then he has a mandate for it. And he can then focus on making the best of a bad situation economically, although that will not be an enviable task.
There’s too much hope put on the implementaiton period TBH, and too little understanding that short of getting A50 extension there WILL be disruption – because even if EU agrees to extended implementation period, on exiting EU the UK will exit any non-EU treaties. Given there are no motions to fix that with non-EU parties (as the EU seems to take all of the little intelectual capacity the UK govt has), there will be disruptions, and no-one has any idea how large. Given the ignorance of the issue (because of the magic of implementation period, right?), I expect the disruptions to be non-trivial.
Nicola Sturgeon says “Why Labour doesn’t just embrace a single market/CU outcome in full is beyond me.”
I can’t speak for Jeremy, but the answer is obvious to me: Having the option to restrict the free-movement of capital at the stroke of a pen.
Thank you, AK.
As the Eurozone crisis took off, I sat at a table with Paul Tucker, then deputy governor for financial stability and minding the shop as Merv the Swerve was watching cricket or tennis further west, in Mansion House and he explained how exchange and other capital controls could be implemented to prevent an in-flight, in this case and all under EU rules.
Agree with much of the above. The situation has now become so complicated, practically and politically, that when people ask me what I think will happen I reply “I don’t have the faintest idea.” And in reality nobody else does either. The one thing you can be sure of, I think, is that the final outcome will be one that is effectively invisible to us at the moment.
I wouldn’t be too hard on Corbyn. This is a mess entirely of the Conservative Party’s making, which could have been avoided in the first place not to say much better managed than it has been. The Opposition has no real obligation to make the government’s life any easier, and I think all Corbyn is doing here is signaling, both to the EU and the British people, that the Labour Party is a player and is not simply going to look on passively as May drives the country over a cliff. But I don’t think Corbyn himself knows what he’s going to do, and tying himself too closely to specific plans at the moment would be a mistake.
Slightly contradicting what I said earlier, though, I now cannot see an outcome where the Conservative Party actually survives in anything like its current form. Whilst in the event the suicide weapon may be Europe, I suspect that public anger and disgust is now such that the pitchforks will be out and ready, in case any help is needed. The secret weapon of the Tories, that has kept them in power for so much of the last century, is less the media or the City than the deference of ordinary people, working-class and lower middle-class, to their social “betters”. This was very strong in my parents’ generation, where voting Tory somehow seemed like a duty, as well as being socially aspirational. I think the chaos of the last couple of years has finally put an end to that. Cameron was the last Tory leader who people felt they could just about follow because he had, as was said at the time, “officer quality”. You’d have to work pretty hard to feel inferior to May.
Agree re Tory party. If the UK crashes out horrificaly, the likes of Fox, DD, BH, Moggie etc. will be turfed out and promptly join UKIP or something such.
If the UK doesn’t crash out, the likes of Fox, DD, BH, Moggie etc. will either take over the party (with the Tory remainers leaving the party, as say Soubry already said she would) or leave and promptly join UKIP or something such.
So the measure that was aimed to kill the Tory civil war for good will work in the end – except not at all in the way DaveC thought it would, and likely with massive collateral damage to people who could care less about Tory civil war.
Thank you and well said, David.
Your final paragraph is particularly spot on. Michael Heseltine often recounts how he became a Tory. His mother encouraged him to as the “nice girls” were there, perhaps the same type Clive came across late last summer when he described meeting some Brexiteers. The party was and is a vehicle for social and economic advancement for many. The boyfriend of a former colleague, a Lebanese immigrant, appears to treat it as such. I wonder if his rah rah ing is cynical. The girlfriend, a proper one, not a beard, is just the sort of adornment he needs on blue rinse dominated selection panels. It’s not working, though, as he failed to be selected in 2015 and 2017.
I forgot to add that the Tories do have some “officer quality” types, both former army officers and remainers, waiting in the wings, Tom Tugendhat and Johnny Mercer.
Yet quite a lot of people still voted for the Conservatives in the last election.
The problem is the Conservative base – typically property-owning, aged 50 and over, still mainly informed by the conservative print media. These people have still seen steadily rising house prices, pension increments and general stability – why would they vote for anyone else? Their children may be complaining, but those complaints are easily dismissed/rationalized. The only way that these people will stop voting conservative is if something crashes into their lifestyle – i.e. a big house price collapse, or serious cuts in pension payouts.
There is, of course, the age factor; the ‘comfortable Tory’ generation described above will see fewer and fewer recruits in the coming years, even if nothing drastic happens. But still, most people are simply not politically engaged, so the current mess of a government goes largely unnoticed.
I’d never underestimate the ability of the Tories to survive. I don’t doubt some are plotting to shed the current lot of clowns and promoting a ‘clean skin’ as an alternative to Labour. I’m not wholly convinced that people will entirely blame the Tories for the coming mess. They may succeed in blaming the EU for being so nasty and mean and not negotiating fair, or for that matter, Corbyn and the Scots for stabbing the country in the back.
Just a gut feel, but I don’t think this (Brexit) is going to leave the establishment political landscape unscathed by the time we’re through with it. It’s on the same scale as Repeal of the Corn Laws in its impact, which was the death knell for the Whigs (hoping I’ve remembered my history correctly, there!)
I just can’t see how the existing party structures and strictures can cope with the immediate gyrations of Brexit and, moreover, whatever the future holds for the U.K. — the EU27 isn’t going anywhere but nothing in U.K. politics has a convincing and plausible (as in, likely to get consensus) answer to it.
As a simple-minded American lefty trying to parse any possible 11-dimensional chess moves of Corbyn this tweet from Ben King although perhaps a bit simplistic seems to nail it for me. Is this pie-in-the-sky thinking ala Greece??
“…If you care more about remaining fully in the EU than about implementing a social democratic platform, miss me with that sh*t.
The fallout from not completely reforming the system will *dwarf* the pain, suffering, and economic cost of Brexit.
The EU need to follow Corbyns lead.”
Ahh… if only it were that simple. Not that I blame onlookers for not being able to grasp every last nuance and minutiae. Most here in the U.K. have, at best, a sketchy view of the whole piece — myself included.
The problem with this notion is that is a variant of “the ends justify the means” and “they’ll suffer in the short term but they’ll be grateful in the long run” thought process. Which conveniently glosses over who gains, who comes off worse, for how long decided on what basis.
And it’s not just “the U.K.” in scope here. Scotland thinks entirely differently by a sizeable majority. So you’ve got a whole “splitting up the Union” angle to work through. NI thinks differently again, but then you’ve got a sectarian and territorial dispute complexity to resolve. Even further afield, the U.K. seemingly not giving a stuff about throwing a fair chunk of the Republic (of Ireland)’s economy under a bus willy-nilly hardly puts the U.K. in a good light, threatens a hard-won Good Friday Agreement (which was not a pain-free compromise — Eire had to make a constitutional amendment to make that work) and generally stores up a heap of trouble if not handled properly.
So slash and burn won’t work here, unfortunately.
Thanks Clive. I’ll go back to lurking on Twitter. But I am curious as to the ratio of Momentum/Hard Corbynites in favor of “slash-and-burn-f*ck-the-EU?
In my local Labour Party, it seems about 50/50. But then here in my home county (Hampshire) there was a big Brexit majority, which would skew the proportion of Labour Leavers. Metropolitan London Labour would be the reverse I imagine.
So, as with most Brexit matters, it’s all conclusively inconclusive! But f-the-EU-Labour certainly isn’t an inconsequential teeny tiny marginal force.
Thats really interesting. I’m obviously not in touch now with Labour internal politics but on my last visit I was a little surprised to find that my old friends – mostly what you’d term non-aligned leftie/greenies with a few old ’80’s left wing warriors are almost entirely hard Remainers. Many are now enthusiastic Corbynites, but still hate his ambiguity on Brexit.
The proble is that I have doubts of Corbyn’s ability to implement an SD platform in a Britain that fell off the Brexit cliff – as there will be too many burning pieces to handle and only a limited management capacity.
Labour seems to believe that it would be simply able to ignore the external stuff and focus on delivering the platform, but as I keep saying – UK is, and by its nature will remain, a nation that has to trade. Off-the-cliff Brexit is a warlike hit to the trading abilities, with all that it entails. In fact, it’s worse, as during most of wars, the UK could rely on some allies, but in OTC Brexit the whole world would be wolves waiting to take a bite.
Both Labour and Tories seem to live in the 19th century. Tories assume that they can push Johnny Foreigner around as if they were a superpower, Labour seems to believe they can close their eyes to the world and do what they want to do to the UK internally, while the world will sort itself out. Both is naive, and both sort of implicitly assumes the UK is still a superpower (Labour more implicitly so, as in that only a superpower could afford to mostly ignore rest of the world while it sorts itself out).
One might propose that a certain number of the UK politicians are of the “leave now, no payoffs to the EU” school and have concluded that all they need to do in order to win is to make sure that no agreement is reached. An EU proposal for a customs border inside the UK, on the Irish Sea, iappears to be covertly meant to be sure to fail. Michael Shedlock https://www.themaven.net/mishtalk/economics/brexit-talks-might-fail-there-s-not-enough-cake-Z65xjezWVUqe9GlFgh0OBA quotes a source as saying that Corbyn said that Labor would oppose another leave referendum, and notes suggestions that Corbyn’s speech was related to upcoming local elections.
Excellent discussion so far. Thank you!
North is in contradiction with Wikipedia:
Norway is not part of the EUCU. I would assume, that Corbyn wants the UK to stay part of it. And indeed membership of the EUCU prevents to negotiate individual trade deals according to Wikipedia (see link above):
North’s usual line is that the UK needs to be in the single market to enjoy frictionless trade with its neighbours, so maybe he was a bit rushed in his drafting, would have written ‘a customs union alone…’
People have fun distinguishing between the customs union and a customs union, the single market and the internal market. All good fun for the pernickety among us.
I think his usual readers are well aware of his basic view which is that the UK needs a very soft Brexit by staying in the EEA in order to work out what to do next and take its time, maybe managing to negotiate a change in the architecture of the EU/EEA and their relationships when opportunity arises.
Wikipedia is wrong.
Norway is part of the EU customs union via the EEA. Google EFTA. Norway is part of the EFTA which is in a customs union with the EU via the EEA.
North is an expert on this topic. He has written entire monographs.
Similarly, Turkey has a customs union with the EU yet was not automatically included in EU negotiations with the US, as in the default would be for it to be cut out.
Iceland, a member of the EFTA and thus the EEA, has its own free trade agreement with China.
The EFTA has a whole bunch of its own trade pacts independent of the EEA (hence the EU) even though it is part of the EU customs union via the EEA.
Indeed. In fact, one of the major issues for Turkey was that if EU signed the US treaty, US would be able to send its stuff into Turkey tariff-free, but Turkey would be still hit by the US tariffs. It would have to do its own treaty – where it would be hampered, as the US would have no reason to do anything, since it would have already had access to Turkey markets tariff-free.
I’d just add that there’s a tendency for commentators (even the well-informed ones) to confuse public statements by politicians with what they actually think or intend to do. This is not a charge of hypocrisy, it just means that public statements are one of the tactics used in political disputes and negotiations. They may mark a position, send a coded message, reassure domestic opinion, or just test the waters and see what the reaction is. In other words, there’s no reason to assume that what Corbyn has said represents a firm policy, or even a firm position. It’s just the first move in a long game. I’m inclined to agree with PK that Corbyn’s best bet would be to pick up the pieces afterwards. There will be a lot of them. A Labour government that actually managed to put a sensible deal together after a longer transition period (which would be granted under such circumstances) and then submitted the results to a referendum would do well whatever the outcome of the vote.
I agree it’s hard, conceptually, to imagine the demise of the Tory Party, but stranger things have happened. The most likely scenario is a split of some kind, such as happened in 1981 when the Right broke away from the Labour Party and formed the SDP. Only some bad electoral luck for the SDP and an appalling performance by the Tories enabled Labour to survive as a political party at all. The logic of British politics is implacable, and any significant split in the Tory Party would probably mean its death.
I think what holds the Tories (and Labour) together is the inexorable logic of the FPTP electoral system. Its incredibly difficult for a minority party to survive unless it has a strong geographical concentration. Its quite possible to get 25% or more of the vote without getting a single seat. The fate of the SDP I think is a daily reminder to all MP’s about the danger of schism.
I think the Tories will only disappear if a viable route comes about for more than one right wing party – say a CDU style ‘wet’ centre right party and a more openly neoliberal libertarian style one, or even a more overtly English nationalist party. But the logic of FPTP is that they will be more ‘regional’ in style – say a south of England/London pro-business party, and a more northern/small town based anti-immigrant, nationalist minded populist right wing grouping closer to the type of parties we see in eastern Europe. I think you could also see the Scottish Tories split off.
It’s worth recalling that the outcome of most British elections depends on the performance of the third party (or these days parties). In 1983, for example, the SDP of which we are speaking drained enough votes away from Labour, without winning many seats itself, that the Tories were able to increase their majority massively, whilst losing votes overall. FPTP arithmetic is very unpredictable beyond a certain stage, but it’s not impossible that a combination of UKIP, the SDP, nationalists and just abstention could bring the Tories to the edge of oblivion, although different sets of factors would interact in different ways in virtually every constituency.
After such a result, or conceivably even before it is things get very bad, it’s also possible to imagine a split as different factions of the Tory party launch out in different directions, each convinced that only they can successfully appeal to the people. The days when the Tory party was prepared to make any ideological compromise to stay in power have, I think, now gone, and some at least of the current crop seem convinced not only that they are right, but that the voters will support them.
FPTP is truly god awful. STAR is by far the best solution.
1. An entire country votes to screw both its feet to the floor causing immobilization, pain and bleeding.
2. Despite the pain and festering infection a grand debate ensues as to whether to leave the screws in permanently.
3. Then somebody named Corbyn comes along and says: “I have a screwdriver.” But he does not offer to undo the screws.
Thats pretty good, although I always tend to think of Sideshow Bob and rakes when I think of Brexit.
3. I have a screwdriver. But it’s Phillips, and the screws are pozidriv. And different sizes.
..and why you try your best. you end up with a broken tool and an immovable fastener.
If you do not have the dreary problem of animism,there can be no progress.
Corbyn’s position over the previous couple of months actually did reflect reality. In response to the urgings of greens, libdems, snpers and labor remainers to do this, he pointed out (correctly in my view), that since the customs union was not a membership organization separate from the EU Britain wouldn’t really be able to stay in it without doing something very like remaining in the EU without a vote.
Most of the coverage at the time slid right past the question of factual accuracy and cut straight to comparison shopping among magic ponies.
Custom Union is separate from EU – cf Turkey.
Which is where the distinction comes in, I believe, between a customs union and the customs union?
Some of course prefer to talk of customs partnerships. I am not totally clear what this means.
Everybody needs an editor.
Not sure if stranger bedfellows could be pondered than the EEF and Tech UK in the sack with Corbyn, but it does make me a bit curious as to what level of influence (and impact on their own popularity) the Lib Dems would be exerting into the current debate right about now had they not eviscerated themselves into (likely permanent?) irrelevance via their deal with the devil back in May 2010? Considering referendum 2.0 still seems political castor oil for all concerned, I wonder if Vince would have been able to pragmatically maneuver his lot into advocating for the softest of all Brexits, similar in flavour to the one advocated via Ms. Sturgeon’s tweet? The nearer the cliff edge the UK Routemaster approaches, the more and more such a stance would seem to draw more and more punters to their cause. Oh Nick, whatever were you thinking?
Much as the LibDems deserve their place in the wilderness, I do think British democracy misses an independent centralist voice. A strong LibDem presence would have been able to be the public face of pragmatism, arguing for example to stay in the EEA or EFTA as a staging point, with further referendums to confirm what people want. And of course the electoral system refuses the Greens a significant voice. While the media in the UK must take a lot of the blame for its poor coverage, the political situation has been I think uniquely unfavourable to public debate.
The Lib Dems should be looking at what the DUP has managed with a fraction of the MPs…
The problem really was, a lot of the ‘Orange Book’ Lib Dems decided that they were really Tories in all but name, but forgot to tell their voters about it until they were in government.
There is some sense to Corbyn’s pronouncements. They align with what Simon Wren-Lewis refers to as a triangulation strategy:
A problem for Corbyn and the Labour high command is that anything they say has to get past:
1. The parliamentary Labour party (including its handful of ultras).
2. The Labour party membership (including the left-behind Leave voters)
3. The British mainstream media (incoherent headbanging).
Failing to clear any of these hurdles puts the Labour high command in the crosshairs when the blame cannons fire for the inevitable breakdown in discussions between the UK Government and the EU27.
The Irish border is one of the first topics around which talks will break down Thus, whilst Corbyn’s customs union proposal might be incoherent in and of itself, the customs union proposal has the benefit of appearing superficially understandable to populations 1–3 (and, particularly 2 and 3) mentioned above.
The reason is, common understanding is that “border controls” == “customs”. Anyone under 35 in the UK will remember that Irish border controls resulted in the IRA coming to the UK mainland and attacking UK citizens. No-one wants to see a resumption of that. Thus, Corbyn’s proposal is likely to receive wide support. This is despite it not solving the border problems that Corbyn says it will solve.
To solve the Irish border, Corbyn needs to commit to staying in the single market. However, if Corbyn was to suggest that now, the mainstream media would go berserk. Corbyn could be painted as the villain in an imminent set piece in which a handful of Tory rebels are (for whatever reason) proposing a customs union, and appear as if they’d welcome Labour support. Corbyn would also run into trouble with the parliamentary Labour party, and the Labour membership. In other words, he screws up his relationships 1–3 described above, and squanders an opportunity to vote with Conservative rebels and defeat the government.
If, on the other hand, Corbyn supports a customs union (as he has done), the door remains open to backing the single market later on. This might be just a month or two away, once the March negotiations with the EU27 have broken down, and some Brexit fantasies have been exposed. I didn’t see anything in Corbyn’s speech which specifically ruled out the single market (there’s some vague, cake-y language about retaining the benefits of the single market).
So, once the optics have changed, Corbyn can say something like “unless the Government has more success than it has done in its negotiations to date, the customs union that I have said is vital to solving the Irish border issue will entail continued single market membership”. He appears consistent. And, he dodges many bullets in the short-term.
This may be over-optimistic. But, one of the major Brexit battles is taking place in internal UK politics – indeed, this seems to be where most UK politicians are focussed. It’s shocking that the UK Government is doing so much damage to the UK’s economy and international standing over what is really an internecine conflict in the UK Conservative party.