Brexit: Chaos Visible

Rather late in the game, some high profile corporate players have cleared their throats to say that Something Must Be Done about Brexit. The Society of Motor Manufacturers and Traders warned that Brexit uncertainty was putting 860,000 auto industry jobs at risk and was responsible for investment dropping by 50% in 2018 compared to the same period last year. This followed a bleat from Airbus that if they didn’t know pretty soon what UK was up to with Brexit, it was going to have to hunker down, which would be very bad for its 15,000 jobs at 25 plants in the UK. BMW then piped up, saying that if customs got to be a mess, it would have to close production sites in the UK, which could imperil 8,000 jobs.

The Government roused itself, scheduling a meeting with Airbus and one next week between May and her ministers to try to sort out the UK’s position on trade as part of a white paper set to be published on July 9.

Yet bad news keeps coming in. Yesterday, Politico wrote that the European Commission warned the EU27 to prepare airports for a crash-out Brexit. This is a scenario that most have deemed to be so cataclysmic that they’ve assumed it can’t happen. As with so many other possibilities, the unthinkable is now looking decidedly possible. From Politico:

If the U.K. leaves the EU without an aviation agreement, flights would immediately cease between the islands and the EU27 since EU-issued operating aviation licenses would no longer be valid, and British airlines would no longer have the right to fly to EU countries. The U.K. would also cease being a member of the European Aviation Safety Agency (EASA), which issues the certification and licenses EU aircraft require.

The Commission told officials and diplomats at the briefing about the problems that additional customs checks on cargo would impose on airports under a no-deal Brexit.

Currently, a lot of air cargo from third countries first arrives at the U.K. and is then shipped on to other EU countries, where it doesn’t need to be processed by local customs. But in the event of no deal, those shipments would either fly directly into other EU airports or from the U.K., but in either case it would have to be cleared by customs, something that may entail a large increase in staff and infrastructure.

Richard North gives a high level overview of the aviation agreements and concludes:

Putting the fragmented areas together, it is very hard to see how, in the context of a “no deal” Brexit, aviation agreements with the EU can survive…

That would almost certainly bring international traffic at Heathrow (and all other UK airports) to a complete halt.

Getting the airport back in operation though would not be that simple. There is not one agreement to deal with, but a host of issues, including the highly technical safety issues, which require formal procedures to resolve. One would see pressure for emergency action but, if the EU stands its ground, it could be several months before full functionality is restored.

After such a break in operations, and the certainty that UK businesses will be looking elsewhere, it would be unwise to expect traffic volumes be automatically restored. Reduced trade volumes will affect freight and business travellers, while uncertainty over visas and freedom of movement will undoubtedly affect tourism.

The fact that the press is finally discussing the formerly taboo topic of what a clusterfuck a crash-out, or even a mere hard Brext, would be might explain an oddly sunny, as in seemingly unhinged, article in the Financial Times over the weekend. It argued that Theresa May was on her way to deliver the softest Brexit possible. The story claims that May made a commitment to Phillip Hammond that in return for him delivering the “Brexit dividend” of more funding for the NHS, she would come down firmly for a soft Brexit at the upcoming “Chequers summit” in early July to finalize the famed white paper. From the article:

Mr Hammond, confronted with a stubborn deficit in spite of almost a decade of growth and near full employment, will tell cabinet colleagues at Chequers that the NHS funding boost has left his coffers empty: if they want more money for other public services, Britain’s economy will have to grow faster — and that means a smooth Brexit.

The chancellor is weaponising Britain’s fiscal weakness, pointing out that the country’s slide close to the bottom of the G7 growth league since the Leave vote has left the public finances badly exposed, just at the time when health, housing, schools and defence are crying out for money. Mr Johnson knows the potency of this argument. In his taped private remarks, he took aim at Mr Hammond’s “mumbo jumbo”, adding: “The fear of short-term disruption has become so huge in people’s minds that they’ve turned into a quivering wreck.”…

The evidence suggests Mrs May wants to keep Britain in a tight customs relationship with the EU and something that looks suspiciously like a single market for industrial goods; services and financial services would be covered by looser agreements

The fact that the pink paper is publishing this sort of thing uncritically says it’s gotten an overdose of court gossip. First, it isn’t clear that the hard Brexiters will be deterred by Hammond’s budget warnings. Second, a mere customs union, even if the UK could achieve that, does not solve the UK’s need for low friction trade. The UK needs to be in the single market to get that. The entire EU leadership from Merkel on down has explained from the very morning after the Brexit vote, the UK needs to accept the four freedoms to have access to the single market. That includes accepting the movement of people, ie, immigration.

The article contains more recycled lunacy:

Meanwhile Mrs May, in her Mansion House speech in March, noted that as part of a “comprehensive system of mutual recognition” parliament might choose to pass identical laws in the goods field to the ones adopted by the EU. Although she insisted Britain was leaving the single market and that any mutual recognition deal would have to be policed by an independent body, Eurosceptics fear that some of these caveats would be lost in future negotiations on trade with Brussels.

Ahem, the EU already said no to mutual recognition repeatedly. This idea is going nowhere too.

The Financial Times also indicated that Remainers in the Cabinet were on board with Theresa May presenting yet again a technology solution for the Irish Border, on the assumption that ti would never get done or get nixed by the EU again so the UK would have to accept the backstop of a sea border.

However, the Financial Times appears to be reading the tea leaves incorrectly, pre this important find by Clive, that even the most pro-Remain Tory won’t give Theresa May any air cover on an Irish border fudge, even if the EU were suddenly to reverse its stance.

The Conservative MP Dominic Grieve, on a visit to Northern Ireland, said that he and his colleagues would not tolerate an internal UK border.

“A border down the Irish Sea is completely unacceptable and I think it’s abundantly clear that the government will never accept it,” the MP for Beaconsfield told the News Letter.

The remarks are significant because strongly pro-Remain politicians such as Mr Grieve are thought to be the most likely parliamentary supporters of an arrangement such as Northern Ireland staying in the customs union and single market unlike the rest of the UK, which would necessitate an Irish Sea frontier.

So the lack of progress on Ireland means the odds of a crash out Brexit are still uncomfortably high.

And to add to that:

The notion that May is prepared to pump for a soft Brexit is questionable. May has consistently wanted irreconcilable things, and the FT story seems to be cherry-picking only part of her demands. May is famously rigid and close-mouthed about her thinking. She has been set on limiting immigration and it’s hard to find a basis for her relenting on that red line.

Even if the Government manages to agree on a viable-looking trade scheme in July, it’s already too late. Airbus effectively said they need certainty now. That would have meant having the UK’s pitch ready for the EU Council meeting of June 28 and 29, which was what the EU has set as the deadline for sorting the “future relationship” out. That means the earliest there could be an agreement in principle would be at the October EU Council meeting. That further implies the EU pushing back its timetable for negotiating the text to be approved by the EU27 (experts think this effort could go into early January at the latest). In other words, even assuming the Tories start marching in one direction, there’s still so much ground to cover, and enough potential for mishap, that from the business perspective, a reduction in uncertainty can’t be treated as the same as certainty.

The Government is bizarrely acting as if the City will somehow be unscathed. From the Financial Times:

While Mr Hammond insists Britain could secure a trade deal covering financial services, the Bank of England believes the City could flourish outside the EU’s regulatory orbit.

As we’ve noted from time to time, the EU has rejected every clever UK idea for protecting its banking sector, such as passporting and mutual recognition. The EU has also flatly rejected Hammond’s claim that the EU needs to keep London healthy for its own benefit. The Financial Times comment section similarly contained updates on various firms moving staff out of the City, such as BB pointing out, “JPM will move 600 bankers to Luxemburg, 600 to Dublin and 1100 to Frankfurt.” These are certain to be mainly senior jobs, and law firms and accounting firms will similarly shift some staffers to service the business they do.

Even a transition deal does not solve all that much. As of Brexit day, the UK becomes a third country with respect to all the trade deals it has with countries other that the EU27. Not only does the UK not appear to be on a footing to do what it needs to do about that, as the Independent described in May, no large economies are in any hurry either. Canada, Mexico, and South Korea are prepared to move forward, but they up about cinching a deal quickly with just want to preserve the status quo, and the commentary that applies to Canada holds for Mexico and South Korea::

The first is that even if this goes well, there would be no gain for Britain – it would merely be replicating an existing trade deal that the UK already benefits from as an EU member.

The second is that it may not be as simple as it sounds: little progress has been reported so far on issues such as what share of the EU’s quotas belongs to Britain. The third is that Canada is not a huge economy, equal to one of the larger 28 EU member states – its GDP sits roughly between Italy and Spain.

Mecosur is also more eager because they want to sell beef to the UK. That suggests the mutual benefit would be limited.

Even more important, the eighteen months the UK would get in a transition deal isn’t enough for the UK to complete a new trade agreement with the EU, raising the question of what happens in December 2020? The EU has been hostile to the idea of extending the transition further, since among other things, it would mess up the EU’s seven year budget cycle.

It was odd to see Sir Ivan Rogers, the UK’s former chief trade negotiator (among other things) offer some hope for the UK, when he has been quite clear that the UK is not going to be able to complete a new trade agreement with the EU before the early-mid 2020s. From the Financial Times:

Mr Barnier has also said that splitting up the single market and the “four freedoms” — free movement of goods, services, capital and labour — is unacceptable. He also points out that nowadays goods and services are inextricably bound: car sales, for example, often come with finance packages.

But Sir Ivan claims that in the trade talks which will only really start after Brexit next March, Brussels might show more flexibility if Mrs May proposed a deal focusing more on goods than services. “Candidly, it’s a bloody good deal for the other side of the table,” he says. The EU has a surplus with the UK in goods but not in services, “so they get massive continuity in trade on the goods sectors and from their perspective they screw us over on the services sector”.

Given the rumblings from Italy, as well as intransigence in Poland, the EU has even less reason than usual to be nice to the UK. As we’ve said repeatedly, the EU has already accepted that it will take losses from the EU. Per the whinging from Airbus and BMW, they probably perceive that the equation for them is more like the one the UK fancied for itself: a short-term hit, but longer term gains as multinationals move much of their UK production to the Continent. And the EU for political and practical reasons is not going to relent and set up a special huge new regulatory and supervisory apparatus for a special arrangement with the UK, and I can’t see the UK continuing to accept the jurisdiction of the ECJ and wholesale adoption of EU laws with respect to goods.

So as I keep saying, it would be better if I were wrong, but as a friend put it: “Things look darkest before they go completely black.”

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  1. PlutoniumKun

    If you asked me a few weeks ago the most likely final scenario, I would have guessed that May would accept the ‘backstop’ of an Irish Sea border, and do a deal with the Lib Dems or SNP to shore up the loss of the DUP. Business would be so desperate for the 18 months transition that no Tories would dare support a no-confidence motion for fear of a Corbyn victory and the spin doctors would finess the Northern Ireland issue with the party and the Tory supporting newspapers.

    But for this to work (and I honestly can’t see any other possible deal that can be done based on all the available public statements), there would have to be some sort of groundwork laid – at least internally in her party. I see no evidence for this whatever. Its possible of course that by Autumn there will be such panic among the Tories business supporters that they will accept any deal, no matter how humiliating. But I think that the chance of a crash out Brexit is now significantly greater than 50%.

    1. Neil T

      Short of offering the snp a border near Carlisle and the ability to stay in the eu, you can forget them.
      As for the lib dems, I think they remember the last time they climbed into bed with the tories and got a massive dose of the electoral clap.
      The only advice I offer is buy popcorn, sit back and watch the fireworks. This is going to be one massive explosion.

    2. c_heale

      I think May is partial to a hard Brexit. None of the things she has done have been conducive to a soft Brexit, and she has shown through her time at the Home Office that she is completely and stupidly intransigent. I fear for my country.

  2. The Rev Kev

    Days to go till Brexit: 276

    I was just imagining what would happen after Brexit if all aircraft, truck, etc movements stopped and the chaos that would happen. More to the point, I was wondering how the UK’s poodle press would handle it in their first headline when suddenly the headline wrote itself:

    “Brexit starts from today. Europe isolated from the UK!”

    1. Colonel Smithers

      Thank you, Kev.

      This is the BBC’s line, especially yesterday.

      That 45 – 1 I got on Sajid Javid becoming PM is looking good, just like when I got the same odds on Nashwan for the 1989 2000 Guineas and Derby at Newbury in August 1988. I just hope the dirt on Javid does not come out until after I cash in.

      1. Mirdif

        Rumours abound Rees-Mogg has something on him. One wonders if it is related to his employment at Deutsche or something more salacious.

        Also, he was rather conveniently mugged. A mind more cynical than mine might disbelieve that story.

        1. Mirdif

          Further to this comment, Gavin Williamson was very conveniently destroyed on TV last month and more than likely with a producer directing Madeley’s questions and attitude.

          No way Richard Madeley is clever enough to ask pointed questions and demand answers in the aggressive manner in which he did. Madeley many years ago was accused of shoplifting – walking out of a supermarket with some wine bottles without paying. His defence was that he forgot to pay. In my mind this does not not look good in either case, he was either dishonest or utterly oblivious if I am to be kind. He was found not guilty or perhaps the charges were dropped.

  3. Christopher Dale Rogers

    No surprises here, basically we have a right royal “clusterfuck”, one built on the hubris of the Tory Party, a party who’s only reason for its own existence is its own existence alone, the rest of the nation can just bugger off – we are nothing.

    However, and moving ahead of Brexit, we have two significant developments within the UK, east of which summarises what the Tories actually are, liars, and what they stand for, namely maintaining London and the South East’s economy at any cost, this is witnessed by the farce over the third Heathrow Airport runway expansion vote – its now authorised by Parliament, with the usual Labour PLP members voting with the Tories, and the abandonment of the Swansea tidal lagoons to generate sustainable electricity – bugger Wales, bugger the rest of the nation and bugger the environment.

    And, if we think Brexit is a Tory “clusterfuck”, God knows what will happen when the Thames rises as a result of global warming, a warming further enabled by fracking, which the Tories seem to adore – still, lets not worry as the Tories own all this crap and hopefully, and finally the electorate will finally understand that the Tories don’t give a toss, well apart from their own wealth and wealthy supporters wealth – the rest of us can just die off!

    What a nation, what a Party and what a mess.

  4. Harry

    Ah Brexit. Britains attempt to replicate the “Jackass” movies but in the sphere of international relations and trade.

  5. Christopher Dale Rogers

    Well, I’ve commented, alas, seems a word I’ve used has put me in Moderation – hope this don’t last long?

  6. David

    I think if you had to design a problem from hell for the British and European political class, this is what you would choose. Fiendishly difficult technical issues, complex political ramifications nobody had thought of, unexpected linkages everywhere, with a divided country, a divided parliament, a divided government without a majority, and a leadership that is divided about whether it even wants Brexit and if so of what type. All this with a broken and demoralised civil service and a pygmy-level political class which has little experience of bilateral negotiations of this sort. We may have arrived at the point where the problem goes from being extremely difficult to solve to impossible to solve, not least because a solution in one area can create insoluble problems elsewhere. It seems as if it can’t get any worse.
    But it can. Seen from Europe, the EU doesn’t look like a monolithic block regarding the UK with pity, but rather a bitterly divided and unstable group of squabbling nations. The big themes are Italy in general, and the problem of migration in particular, with a subsidiary helping of Trump’s trade sanctions; More thoughtful observers are starting to think that the EU itself may be at risk of coming apart, and that Brexit and its many consequences that we can’t necessarily foresee yet, could be just stage one. In any event, the current European political class is so useless that this interlinked set of crises is almost certainly beyond their ability to cope with.

    1. Quanka

      +1 — “it can get worse”
      This has the feeling of being right. Why would our expectations be correct — even if we are assuming a hard flame out. The EU is in a tight spot – they need to give the UK tough love but they can’t risk precipitating a boomerang crisis that comes back around to the EU. What if it just can’t be done? Do we really trust the EU figure out the right choice in this complex maze? I’ve been dropping my respect level for the EU elites with the way they are letting Trump push them around. They ought to be embarassed – but they aren’t, and they can’t seem to agree on a script either. Does that bode well for the post UK EU?

    2. fajensen

      I don’t think the political class are all* useless; There is a possibility that Brexit and the economic mess after, will be used as the excuse to boost the “social dimension” of the EU that was replaced by “Markets” sometime back in the 1990’s, to rethink the EUR and its many rules, to “run out of funds” for the perpetual inclusion of new EU countries that simply cannot be integrated at the same pace** and to put down the foot on migration.

      In “private business”, I’d expect people to be positioning themselves in such a way that the last decade or so of reckless lending and poor investments can be written off “Because Brexit, nobody’s fault Guv”. With all of the skeletons outed and written off, businesses can “beat expectations” for maybe 20 quarters.

      The EU recently came out with 2 months of paternity leave for men, Denmark is no longer allowed to prevent temporary workers from taking the full benefits that they earned back home.

      This is happening to the tunes of much enjoyable wailing about “The Holy Danish Model” from the Social Democrats who have been undermining the workers part of that deal already since the 1980’s.

      I see these as trial balloons, Bruxelles is flexing it’s underdeveloped muscles in the direction of a proper federation and measuring how it goes.

      Of course I am biased by the idea that the EU, IMO, *has to* manage this crisis and come out better at the end. It is clear to me that if the EU fails to improve and assume the role of a responsible government, we will soon have fascists governing all over the place once again. That’s what a failed EU will look like.

      *) I’d say that the local governments – except for Germany, France and perhaps Sweden – are generally useless 3’rd raters who should not be trusted organising a lemonade stand at a church charity event.

      **) I’d put that down to a combination of rabid neoliberalism with some grieving efforts added from someone like the UK or the US who wants to derail the entire project as much as possible.

      1. Colonel Smithers

        Thank you.

        Further to Brussels flexing its federalist muscles, I get the impression that the people behind Macron / LREM would like that as neo-liberalism and its imperialist tendencies may be easier to impose from supra-national level. There appear to be enough people smitten with Macron outside France, so the proposals may not be hard to sell.

    3. liam

      The problem I have with this is the old adage, if it didn’t exist it would have to be created.

      With migration, that egg has been well and truly scrambled. Breaking the EU apart won’t solve that problem. In truth the French and Brits should be made take all the migrants coming from North Africa and Syria, considering the mess they’ve made of both Libya, and Syria. But in typical fashion the Brits use it as an excuse to leave, and the French pretend that the Italians bear the moral responsibility. Merkel is right. Once those nations were broken a mass of people was going to move. A European response was/is required.

      Regarding Trump’s tarrifs and the general roll-back of globalisation: this makes an organisation such as the EU invaluable. Alone Ireland has a market of 5 million, the Netherlands 17m, France 60m. The EU is 500+ million. Ditching a free market area of that size and wealth in an era of retrenchment is …. .

      Brexit confuses things somewhat, for a couple of reasons. 1. It’s such a dumb idea, (most especially as it’s being implemented), that it makes me wonder if the rational basis for the EU is sufficient to maintain it. And 2. the unknowns regarding any subsequent financial crisis.

      I do however, think it is for many Britains the one big hope; that having made such a reckless gamble to proceed in the manner that they are, they will prove to be the first out of the door before the building crumbles. Some hope!

      1. JTMcPhee

        Speaking of current waves of migration, and historical precedents, for whatever they are worth, my old recall of the late stages of the Roman Empire (is that Empire of Europe the model the EU Bruxellians are working toward?) brought up this word, “Volkerwanderung,” which Wiki renders as “the Migration Period.” The motion arrows on the map accompanying the entry seem somewhat familiar… Different but same?

        Be a shame if the European Empire collapsed before it even got started, thanks to all the chaos-generating forces at play. Of course the 0.1% who foment and feed off so much of that chaos are and will be singularly unaffected.

        1. RBHoughton

          Volkerwanderung appears repeatedly in Toynbee’s ‘Study of History’ – examining the course of the 20+ civilisations that preceded our own. It occurs when a society is collapsing.

      2. Lambert Strether

        > With migration, that egg has been well and truly scrambled.

        I was toying with a similar maxim:

        “You can’t eat an omelette without eating an omelette.”

        1. ChrisPacific

          The UK has no problem with eating the omelette! They just don’t want there to be any eggs in it, or for it to require any cooking. And they can’t decide whether it should be the tastiest omelette in the world or the tastiest in all recorded history.

      3. Summer

        “In truth the French and Brits should be made take all the migrants coming from North Africa and Syria, considering the mess they’ve made of both Libya, and Syria…”

        Call it Sykes-Picot II and let the North Africans draw the borders :)

    4. Marlin

      I think you are strongly overestimating the size of the problems in the EU. If Brexit is not a great success, there is zero chance, that the EU will come apart. In France, even people who considered voting for Le Pen reconsidered, when the FN indicated, that they wanted to leave the Euro. Are you regularly in the continental European states? Or are you informed about Europe via the bizarre picture of Europe mostly presented by the English writing press?

      1. PlutoniumKun

        The EU is unquestionably very popular in Europe, especially in the smaller countries, you are right to suggest that the UK has always been an outlier. The problem is that even successful and popular international structures can fall apart when dominos start to fall. The maldesign of the Euro in particular has created many unwanted pressures – its very hard to see how the Euro can be reformed with the current lot in charge, but it is also an inherently unstable design. If and when it starts to fall apart there is a real risk of it pulling Europe apart with it.

        1. David

          Agreed. It’s not a question of popularity as such, but of incompatible, centrifugal dynamics. The French media, for example, covers this question quite extensively, and seem to be more worried about it than they are about Brexit. Again, that’s partly because, unlike in Britain, the French media and political elites are completely inside the Brussels bubble.

    5. animalogic

      You raise an interesting question about complexity. That is perhaps we are close a stage where we simply can’t deal effectively with any kind of major systemic, internationally interlinked problem. This is not to defend the Tories: merely to assert that the internal contradictions of the last 40 years are simply beyond any measured, controlled solution.
      Brexit is of the Tories making, but it is symptomatic of tectonic imbalances beginning to shift, grind & break.

    1. Colonel Smithers

      Thank you, Doug.

      I live in Buckinghamshire, so near many of the teams and Silverstone, and know some people who work for Force India, Mercedes, Red Bull and Renault. It appears that some activities will move to the continent as getting people and equipment through customs will be too much aggravation. In addition, many staff are from the EU27 and further afield, so the lack of certainty regarding their immigration status is worrying them and their employers. This affects recruitment as well as retention.

      It’s the same for horseracing, one of my passions, and other agricultural sectors and care homes.

      The local MPs, all Tories, either don’t care (e.g. Steve Baker) or no longer care (e.g. Dominic Grieve and, mine, David Liddington and Cheryl Gillan). All they care about is positioning after hard Brexit.

    2. Anonymous2

      if the airplanes stop flying in March then I guess they leave the country before then?

  7. UnhingedBecauseLucid

    [“If the U.K. leaves the EU without an aviation agreement, flights would immediately cease between the islands and the EU27 since EU-issued operating aviation licenses would no longer be valid, and British airlines would no longer have the right to fly to EU countries. The U.K. would also cease being a member of the European Aviation Safety Agency (EASA), which issues the certification and licenses EU aircraft require.”]

    They’re going to play hardball, and GB won’t be given an inch….but I don’t think any of them is going to sink to flinging feces with formalities.

    Politico shouldn’t let 25 years old write articles…

    1. d

      The real problem UK airlines will have is going any where out side of the UK, consider they are operating under EU licenses that are recognized else where, now they would have to get UK ones, and others would have to recognize them, which requires negotiations with hundreds of countries, all knowing they dont have agree . so short of UK airlines moving their aircraft to the EU, and only leaving short haul assets in the UK, they will not be flying much next year. is there a similar issue with ships?

  8. BillK

    So the best suggestion seems to be ‘Forget democracy and just let the corporations decide what to tell Parliament to do’?
    One of the reasons that the majority voted for Brexit was a dislike of how much the UK was already becoming a corporate state in the pocket of big business.
    Yes, the country needs successful businesses, but when it only means that the rich get richer, then a protest movement will be created.

  9. Adrian Kent

    It’s to have the option to shut off the Freedom of Movement of Capital that’s why we need to leave the EU. We need an arrangement that’s as ‘frictionless’ as possible without surrending this.

    1. vlade

      This naivety is part of the current problem. quitting the EU will not stop free capital movement, unless the uk wishes to try to become an autarky. it has zero leverage over its trading partners and all of them will want it, especially the us.

      1. Mirdif

        Britain will never undertake actions to stop free movement of capital. The City is in the premier league of offshore financial centres and it is at the heart of a network that works with the crown dependencies in the Caribbean.

  10. Mael Colium

    I may be cynical, but Airlines from all parts of the world fly into and out of EU airports on a daily basis, and to my knowledge, as long as they follow the IATA procedures and rules then they can operate accordingly. So why does this make post Brexit airline travel from the UK any different? Is it that the EU are just trying to make life difficult for the UK because their underwear is in a bunch at the Brits and they want to make an example to deter any other potential exiters? I read tonight that 12 EU members (including Ireland would you believe) are refusing to adopt the Franco-German EU budget because the monetary union is such a straight jacket that they fear a fiscal union will be a disaster – following on the heels of the PIGS disarray. Getting back to the airlines, will the UK suddenly decide post Brexit that no EU flights will be permitted to land at Heathrow? Doubt it.
    Consider the motor industry in the same vein. I worked in the industry prior to the closure of Australian manufacturers, and what the doomsayers said would be an absolute disaster has morphed into a business as usual situation where the parts are still produced all over the world but assembly happens in countries other than Australia. The reality is that around 80% of components were manufactured external to Australia anyway and the rest of the world, including the EU is no different. The motor industry we picture of as the Ford production line hasn’t existed for forty years or more. JIT has car parts made all over the world and this includes countries other than the UK delivering into the EU assembly lines, so again, why is the UK supply chain going to fall apart post Brexit? The EU assemblers will still need parts. The idea that production could have been re-established within the Brexit time frame was never going to happen. The time line is a decade to get the a line reorganised, so all this shrieking from the big corporates about job losses, sounds a bit like dog whistling to see what gets shaken out of the scrub. Consider all the catastrophic predictions of financial collapse in the UK moving towards Brexit which have never materialised. I recall similar arguments when Hong Kong was returned, and the crickets are still chirping over there. The City might get reshaped, but so what, they add very little to the UK GDP where it counts anyway. In fact, the only reason the UK is in economic doldrums currently is because of the heavy austerity bias by the conservatives chasing a ridiculous surplus.
    From all the intractable discussions with the EU over Brexit, the BOE must be breathing a sigh of relief that they never proceeded with monetary union – can you imagine (think Greece and now Italy) the log jams that would have been thrown in the path by the Eurocrats in that little shite storm. Seriously, while a great many processes and procedures need to be put in place pre Brexit and both sides are piddling around and looking incompetent, cool heads will prevail to find a way through. Let’s be honest. In no way will the Corporates do anything that would carve up their bottom line so while it may be uncomfortable, it will work out.
    Many intelligent commentators on here are showing rightful concern and it will be disruptive process with a few mini disasters in play, but I doubt the doomsday scenarios will eventuate. Brexit is about democracy and the EU is about Corporatocracy so there was always going to be some niggling going on, but we need to take an overall perspective and not be overly alarmed about the background noise. The politicians may be a bunch of twits, but the bureaucratic arms of Government are not stupid. It will happen and the UK will be the better for it, notwithstanding a few issues along the way. Sorry this is so long winded, but I’ve been watching the commentary for a few months and just wanted to put an alternative view into the mix. Thanks if you’ve read this far.
    Be kind but constructive.

    1. Anonymous2

      Have you read the ADS/GAMA letter to Barnier? That sets out the main problems with air travel that will arise if there is no agreement on Brexit between the EU and UK. The nub of the issue is that, ceteris paribus, in the event of a crash-out Brexit, the UK falls out of the existing regulatory framework and thus, for example, Heathrow ceases to be recognised as an authorised airport for international flights. You may think that is absurd (which it is) but something needs to be done at a regulatory level to stop that situation arising. If that requires the EU’s cooperation to achieve (probably?) then of course they are going to use it as a negotiating lever to drive the UK to the table. Would not you in the same situation? The EU wants the UK to sign up to a Withdrawal Agreement which addresses the issues of the UK meeting its financial commitments, its commitments under the Good Friday Agreement and gives the EU a minimum level of reassurance about the UK’s treatment of EU citizens who settled in the UK in good faith when relations between the two were more amicable and they were exercising their rights to freedom of movement within the EU. I am sure they will use every sensible means they can to get the UK to sign an agreement which gives the EU what it wants.

      You say Brexit is about democracy and that the UK will be better for it. I am sorry, I disagree. Democracy requires a properly informed electorate. The English newspaper readers have been fed lies about the EU for 30 years with the result that they have a completely false idea about it. A vote by a misinformed electorate is not a functioning democracy.

      As for the UK being better, the referendum has divided the country as never before, inter alia between the young and the old (who voted to deprive the young of the future they wanted), That is no recipe for a happy country in the long term, especially as the economy is likely going to struggle for the next ten to fifteen years as the Boomers age.

      1. Christopher Dale Rogers


        You seem to be under the illusion that the UK Electorate as a whole is pig ignorant, namely, that the Electorate had zero idea of what they were voting for in 2016. You back this up by stating that the UK print media has spread lies and disinformation about the EEC/EU for more than 30 years.

        I can give some credence to the UK print media continually offering BS to the UK electorate – see its coverage of Jeremy Corbyn as an example of this. However, and with the advent of the Internet, its not so easy to deceive nowadays.

        I can concede 100% that the actual debate during the run-up to the Brexit vote, in my humble opinion, was an utter disgrace, with pure propaganda utilised by both camps. Here’s the rub though, no positive case was ever given by the Remain camp for the UK remaining within the confines of the EU – maybe because, and with all the Euro travails since 2010 it was actually difficult to present a positive case, so, and as with the previous Scottish Independence Campaign, we had ‘Operation Fear’, which, funnily enough achieved its aim in Scotland by scarring the pants off the elderly, this ploy did not work with Brexit though, namely because those areas that voted overwhelmingly to leave did so knowing they had bugger all to lose – just visit South Wales to understand this fact.

        Further, and here I do get confused, in both the USA and UK the young, namely those under 30, have actually rallied to the Left of the political spectrum and actually have some understanding of neoliberalism, their economic position today and permanent austerity courtesy of neoliberal economic prescriptions pushed by our elites, be they in DC, London or Brussels – so, I’m at a loss why working class youth would be pro-EU? Actually, has anyone asked them, or do the Pollsters just concentrate on University students and those young persons holding a degree at a minimum – please remember not all UK youth attend University, and of those that do, most are now left with huge debts – don’t see the EU doing much about this by the way. hence, I think many Polls of our youth voters are done via respondents wearing rose tinted glasses, i.e., its probably the Glastonbury set, which ain’t working class anymore I can assure you.

        I can go on, but take issue with your claims of ignorance, if only based on the fact that anyone visiting Naked Capitalism since 2008 would not have a positive opinion on the EU, particularly if they actually cared about Europe’s youth, which has suffered greatly in places such as Ireland, Portugal, Spain & Greece.

        Further, and equipped with what we know now, i can assure you many who actually voted ‘Remain’ and are actually of the Left are sick and tired of the neoliberal infused Remain antics engaged in since the Brexit vote – Kinnock, Blair et al hardly being poster boys, whilst the EU itself has not handled itself in a manner that may have helped avoid Brexit in its totality – not helped of course by the worst government I’ve ever experienced in the UK. And I’m going back to Harold Wilson timeline here.

        Now, and equipped with what we know, its fair to say Brexit was never going to be simple and it goes without saying many Brexit voters were aware the UK would be punished by the EU as an example to other member states.

        You discuss democracy, my input is based on both academic qualifications at a Post-Grad level and personal experience and is never influenced by the UK MSM – I don’t read UK newspapers anymore and don’t watch UK current events programmes. Alas, I admit I’m an outlier, but many outliers exist in the UK – this has applied for a very long time, but don’t think for an instance I’m ignorant and don’t keep asserting many of the electorate who voted Leave are ignorant – they are not, but some can be easily led – one unifier is evident, they despise an out of touch elite, be it in London, the Welsh Assembly or Brussels – hence, the result to some was no surprise and, if we had another vote I think we’d have a similar result as in 2016, this despite what the Polls say because the Pollsters seem to avoid many of those not enamoured by the EU or not wearing rose tinted glasses thinking how great it is to travel to EU member states for a backpacking vacation.

        I could go on, but when you discuss Democracy, you actually sound like the Remain brigade led by the likes of Tony Blair, which don’t cut ice with folks like myself I’m afraid.

        1. Jeff

          All good points. You sound (this is meant neither as an insult nor a compliment) like Jeremy Corbyn. While I can agree that it is hard to make a point that justifies remaining in the liberal-infested EU, it is easy to make the point that leaving it short term is nearly impossible.
          The UK cannot gain anything from leaving the biggest market this side of the ocean, and the unpreparedness of Brexit will be a real disaster for most Britons.
          One can indeed make the argument that that wouldn’t be a big change for many. And the Tories don’t care, but that is also nothing new. But the country will fall through many international cracks, and things that worked (Heathrow, NHS) will stop working, whatever Boris and Theresa say.

          1. Christopher Dale Rogers


            Unlike others I made an informed decision as to what my sentiment was towards the EU, which, and lest anyone forget, is both a hotbed of neoliberalism – much of it imported from Blighty, and wanton warmongering – see the new EU/European intervention force detailed in today’s news, so hardly I attest an Institution I can give any support too presently.

            As for my other suggestion that we had no serious dialogue whatsoever during the entire campaign, here I just usually tell people to go and watch the Oxford Union Debates on EEC membership undertaken during the last referendum on Europe under Harold Wilson, which, and as a youngster, I actually watched Live on BBC2 – hence always a soft spot for Barbara Castle and Peter Shore, so, I’m on the traditional Left of the Labour Party as far as Europe goes.

            Further, and despite nearly 50 years of EEC/EU membership, the UK has actually been here before, namely in July/August 1914, which marked the end of Globalisation Mark 1 under the Edwardian’s – that came at a very high cost too, both financially and in lives.

            Just one more caveat to add, Craig Murray was staunchly pro-EU right up to the beginning of this year and accused all who voted Leave of being racists – he changed his tune after events in Catalonia and now he’s pro-Scottish independence but anti-EU, seeing it now for what it is, namely a very undemocratic Institution that pushes neoliberalism down the throats of all member states, which certainly is not what the UK public voted for in 1975, and, in my humble opinion, is exactly what many voted against in 2016, even if they don’t have a firm grasp on what neoliberalism is – they just have to look around their own locality, which in many instances are de-industrialised places with huge socio-economic issues, issues that EU stick plaster grants failed to redress, that’s what Westminster is for.

            1. Jabawocky

              ‘The west’ is a hotbed of neoliberalism. Leaving the EU will not change that. The neoliberalism of the EU is just a minor symptom of the above, not an emergent property of the EU itself. There will be nothing less neoliberal about the U.K. after it leaves the EU. If that’s what you want, I fear you’re in for a great disappointment.

              Yours, from a young working class remain voter, who did nevertheless go to university.

        2. vlade

          my first hand experience with a number of mid/low earner leave voters was that they bought the leave lies (nhs funding one reso ated in particular, i heard an argument which claimed eu immigrants cost nhs few bullions and only when i pointed it was more than the whole nhs budget and showed it, was it accepted) line, hook and sinker. a number of varoius polls showed the same.

          1. Clive

            True, all of it. But there was nothing to stop Remain hiring a bus. What, though, could they have written on it which would have resonated with voters? The sad fact is that Remain ran a rubbishey campaign.

            Whether that was because they had lousy arguments and flimsy, unconvincing rebuttals (which is difficult or impossible to fix) or they just had the wrong marketing team (which could have been fixed), I can’t really make my mind up about.

            1. vlade

              agree on both poitns – but still the original point of misinformed electorate (although equally by both sides) stands

              the more valid point imo would be that ‘stay’ could be interpreted in one way only while ‘leave’ in many ways, most of which are likely to be dissapointed in some way. so the ‘will of the people’ or ‘respect democracy’ is a distraction at best.

        3. Clive

          Usual caveats about opinion polling (especially from slightly suspect think-tank’ery) but lots of interesting data here about public views on the EU:

          All gloriously consistently inconsistent.

          A few takeaways: 1) the older/younger split is seen in most member states (apart from really pro-EU ones where you’re either very keen on the EU or super-duper keen on the EU). And 2) there’s a lot of support for referenda. Which does give the hint that, like the U.K. was, everyone professes to quite like the EU… but kind-a wants to know if everyone really believes what they say they think and would they, given a choice, genuinely vote Remain. A continent-wide game of “I’ll show you mine if you show me yours”.

          And those “EU handling of economics/immigration” results do seem to show there’s trouble at’t’mill in store for the EU unless they get a grip of these issues.

        4. Yves Smith Post author

          I suggest you read this post by Chris Grey, where he sets forth in great detail the lies told by the Leave campaign, v. what Remain said, which was relying on economic models.

          For instance:

          It has become fashionable to say that both campaigns were equally dishonest, but that simply is not so. Leave mainlined on what even they admitted was a lie about the EU budget contribution and NHS funding, and another lie about impending Turkish membership of the EU.

          And these were just the headline lies. Beneath them were a myriad of others, such as that future terms could be sorted out informally before Article 50 was even triggered so there was no danger of a cliff-edge fallout; that the Irish border would be unaffected; or that a good, quick exit deal was assured because ‘German car makers’ would insist on it as endlessly claimed by Brexiters, including businessman Peter Hargreaves who paid for a leaflet to be sent to every UK household at the start of the campaign urging a leave vote.

          No one has ever been held to account for these and all the other lies told during the campaign. Since then, we’ve also learned enough about the conduct of the Leave campaign and possible Russian interference to, at the very least, place a cloud over the legitimacy of the result.

          By contrast, Remain was certainly pedestrian and passionless, but its projections (based on assumptions and models, of course, but not lies) of the consequences were not ‘Project Fear’, as repetitively and routinely alleged, but attempts to counter the vague and unsubstantiated claims of Leave that all would be well, or even rosy, if we left. It’s notable that such claims have since been repudiated by many Brexiters, most recently Nigel Farage.

          He has links supporting his claims.

          Leave did lie, flagrantly. I don”t see how you can contest that.

        5. Anonymous2

          Thanks for your comments. I am afraid I don’t have time to reply in full.

          On the views of the younger voters it is not just pollsters who have found strong support for EU membership. Several statistical analyses of the actual vote broken down by ward and using census data have shown that the wards with mostly younger voters voted Remain while those with older voters voted Leave.

          I do not accuse you of ignorance. However, having spent 20 years of my career either dealing directly with EU institutions (including 4 years negotiating EU legislation on behalf of HMG ) or indirect involvement I can assure you that a very large proportion of the UK population have no real understanding of the EU or how the UK relates to it. I read the English newspapers throughout my time dealing with Brussels and can assure you that they were full of lies. Yes you are quite right that one can use the Internet as an alternative source of information which as an intelligent person you obviously do. But sadly many still believe their newspapers.

          I must sign off there but will conclude that this is not the way to run a democracy. The UK to my mind now is much closer to a managed democracy like Russia than a genuine one.

  11. beachcomber

    I particularly savoured the bitter irony encapsulated in this quote:- “Mr Hammond, confronted with a stubborn deficit in spite of almost a decade of growth and near full employment, will tell cabinet colleagues at Chequers that the NHS funding boost has left his coffers empty: if they want more money for other public services, Britain’s economy will have to grow faster — and that means a smooth Brexit.

    The chancellor is weaponising Britain’s fiscal weakness, pointing out that the country’s slide close to the bottom of the G7 growth league since the Leave vote has left the public finances badly exposed, just at the time when health, housing, schools and defence are crying out for money”.

    Anyone with only a passing familiarity with MMT (like mine) will be aware that the pathetic, self-serving plea “we’ve run out of money” coming from a fiat-currency-issuing government is sheer unadulterated BS. As I’ve remarked before, Hammond is so clueless he doesn’t seem to have realised yet that Britain went off the gold-standard in 1933 (and off the Bretton Woods gold-exchange standard in 1972 – if not 2 years earlier effectively).

    And who, pray, is to blame for Britain’s finances being (according to his own weird beliefs) in a bad way? None other than the Tory government with first Osborne and then himself (already under Osborne up to his neck in it, as First Secretary to the Treasury and a deficit-hawk of more than usual idiocy) instigating and relentlessly maintaining neoliberal-mandated draconian pro-cyclical austerity. Despite that catastrophic record, incredibly he’s *still* banging-on about “one day” achieving a balanced budget! He has learned nothing and forgotten nothing.

    A glance at the charts here:- remove this_ tells all one needs to know, plus the supporting argument.

    1. Mirdif

      The NHS funding boost is a pack of lies. There is no money and no boost. JDD discussed this a while back over on North’s site that the NHS is prone to being taken to DSM at the WTO on the basis of it being an STE and thus it violates SCM rules. I have to agree that the danger is definitely there and I fear it will succeed if the Tories haven’t privatized it all before then in the aftermath of of a crash out.

      Trump is opposing new appointments of WTO judges. At some point he’s going to press home the advantage and say I expect these rulings to go my way and then I will allow new appointments.

      As an aside, the WTO is the purest manifestation of the neo-liberal agenda IMO.

      WTO = World Trade Organization
      DSM = Dispute Settlement Mechanism
      STE = State Trading Enterprise
      SCM = Subsidies and Countervailing Measures

      1. larry

        Mirdif, unfortunately you are wrong about the money. Any state with its own sovereign currency has as much money at its disposal as it needs, at least for domestic purposes. Any shortages are the consequence of political decisions, not economic ones.

        1. Mirdif

          I’m not really interested in debating MMT and other such theories. I am stating a fact about a reality that there is no money under the current circumstances of budget balancing. That these circumstances could be changed so that a different reality presents itself is neither here nor there especially as nobody who is going to come in to government in the near future will ever adhere to MMT.

          Furthermore, my statement of no money relates to May lying about her making money available. There is no intention of this and it was cynical politics at best.

          The NHS faces great dangers once Britain falls on to WTO rules.

          1. larry

            Your qualirication is fine, but you didn’t make that clear. You will never get a different set of policies if no one argues for one.

    2. beachcomber

      Me:- “Britain went off the gold-standard in 1933 (and off the Bretton Woods gold-exchange standard in 1972”

      Correction: Should have been “1931” and “1971” respectively.

    3. RBHoughton

      There is a valid and persuasive policy that UK could adopt to preserve the country and grow its economy but it requires sacrificing the investment bankers and downgrading the high street banks. Its Richard Werner’s recipe which he outlines here to Irish students a couple of years ago:

      Basically he calls for the licensing of community banks with money-issuing powers in their area. Its a re-run of the policy behind the Birmingham Municipal Bank that the Chamberlains, father and son, got approved.

  12. beachcomber

    “The Financial Times comment section similarly contained updates on various firms moving staff out of the City, such as BB pointing out, “JPM will move 600 bankers to Luxemburg, 600 to Dublin and 1100 to Frankfurt.” These are certain to be mainly senior jobs, and law firms and accounting firms will similarly shift some staffers to service the business they do”.

    So far as the vast majority of the population outside the City are concerned, they can hardly wait to see them leave. The City (and Wall Street) as currently constituted are almost entirely parasitic in their modus operandi. If Brexit does nothing more than cut the City, and the grossly distorted (and distorting) over-inflated share of the national economy it has come to comprise down to size, that will be seen by most Brits as a “price” well worth paying (in fact not a price at all in societal terms)

    1. vlade

      be careful what you wish for. cutting city down is good. doing it vittually overnight is a disaster – loss of of 50k plus high paying loss will have significant economic impact- not just in london, but across all of the uk. especially with a govt that things books have to be balanced.

      1. beachcomber

        Yes but that govt will be changed one day. Granted the alternative one is at present pretending to have the same idiotic budget-balancing goal, but has carefully hedged that “commitment” around with get-out clauses. Once they’re in they’ll find reasons to ditch it.

        If your reference to “50K plus” is a reference to the upper 10%’s contribution to the tax-take, there are ways of making-up for that (and the consensus of informed opinion as I’ve understood it is that its significance has been significantly exaggerated – not hard to guess who’s been exaggerating it or why).

        1. Mirdif

          This kind of blase attitude terrifies me. It isn’t a case of if the City is cut down something else will take it’s place. Indeed, hard Brexit will mean a loss of manufacturing which the likes of Minford stated clearly before the referendum, the end of agriculture as farmers go to the wall after they are unable to export and the price collapses at home when they oversupply the home market and it would only be compounded it by getting rid of the City or reducing it as well.

          Where exactly is the tax take going to come from? I fear attitudes like this play in to the hands of those who do not have the interests of those outside the City at heart . It is also, because of attitudes like this why I think a crash out is the only thing that will work and anything less will never convince people that Brexit is a bad idea.

          Brexit is very definitely possible as it is a human action and human actions are always possible. However, it is at least 20 year project and better 30 years. The first part of which must be to rebalance the economy with a new industrial strategy. This impatient lurch over the past two years can only end very badly.

          1. beachcomber

            Mirdif:- “Where exactly is the tax take going to come from?”

            If the state of the economy is only half as bad post-Brexit as some are predicting, far from there being any need for taxes to be maintained at an unchanged level the economy will instead be in need of a very substantial fiscal stimulus – such as by means of a net tax-cut (in aggregate, setting aside how it’s distributed) – if a very severe recession is to be averted. Other counter-deflationary measures would be necessary too, not least running a sizable budget deficit. And doubtless the £ sterling will depreciate as well, which will improve the terms of trade.

            ” it is at least 20 year project and better 30 years. The first part of which must be to rebalance the economy with a new industrial strategy. This impatient lurch over the past two years can only end very badly”.

            Agreed, but the “impatient lurch” isn’t a foregone conclusion (yet) – not unless and until there’s a no-deal exit, and that doesn’t depend only on Britain’s actions.


  13. California Bob

    Anybody got a guess as to why the British pound seems to be holding up fairly well against the US dollar? I bought some car parts from an English company a couple years ago, when Brexit first passed, at $1.24/£ and today it’s at $1.32/£. I’d like to buy some more parts but I’m waiting for the £ to fall (for a couple thousand dollars’ worth of parts it can make a difference).

    FWIW, I suspect the FAA will find a way to accommodate flights to/from Britain (esp. if the Brits give the POTUS a nice bribe; a permit for a Trump Tower in London, perhaps?).

  14. Alex Cox

    “The EU has also flatly rejected Hammond’s claim that the EU needs to keep London healthy for its own benefit…”

    The UK’s decline as a manufacturing nation is in considerable part due to Thatcher, New Labour, and the current lot putting all their eggs in the City of London basket and ignoring the old business culture which used to make things. The City produces nothing of actual value (unless imbecile millionaires and empty skyscrapers are considered valuable), and its collapse, while another crash-out, is surely to be welcomed.

    As for the closure of the airports and the end of car manufacturing, from a climate change perspective are these not highly desirable outcomes? As long as we manage to keep food on the table (another serious problem since so much is imported from the EU), maybe we Brits will indeed muddle through — greatly impoverished, forced to abandon Trident, the Euro Army, and our other imperial pretensions, as we struggle to recreate a useful industrial base (perhaps we can learn to build buses and trains again), and feed ourselves.

    1. Christopher Dale Rogers


      Being one of the first to Comment on this particular piece, my comment was moderated, alas, I raised exactly the many valid points you have, but based my analysis on two decisions taken by the lamentable Tory government and parliament on Monday, namely the decision to push ahead with Heathrow’s Third Runway, this despite many now voting for it were allegedly opposed to it, and the decision not to proceed with the Tidal Lagoons in Swansea Bay – add this to decisions on fracking and HS2 and we areas outside of the M25 get a clear picture of where priorities lie, not only with the Tories, but with many of the neoliberals inhabiting the PLP, namely London.

      Of course, the Tories are supposed to look after the manufacturing class, alas, given most of the Party funds now come from the financial services-side, and worse, hedge funds side basically its only the City of London and Tax havens they actually care about, the rest of us can just dropped dead, regardless of being within the EU or outside the EU I’m afraid.

    2. Roger Boyd

      A big part of the deindustrialization was also the very high value of the Pound once the North Sea oil started to flow in the early 1980’s, which was exacerbated by the interest rate shock at the same time that was used to tame the unions through mass unemployment (covered up with lots of bullshit about monetarism, which was the same MO as the US Fed). Unfortunately Thatcher and the Tories were saved by the Argentinian leaders stupidly invading the Falklands. Otherwise, history may have been quite a bit different.

  15. Glen

    Is it just me, or why does it seem as if Bexit is being played by the political elite of GB and the EU to inflict maximum pain on the people of GB?

    It would seem that the clear message is don’t anybody else try to upset the apple cart with insane ideas about tossing aside the neoliberal system. It is opening the door for the far right.

  16. Jon Dhoe

    It seems rather odd to me that the big excuse for not leaving the inherently corrupt EU (Hudson, Varoufakis) is that it would destroy business. This is the excuse Liberals and Conservatives use to keep themselves trapped in an organization controled by foreign entities meant to bleed them dry?

    1. vlade

      it will destroy small and medium businesses. it will be an iconcenience to the large ones, which may hit profits but unlikely to destroy. the cost to large businesses will be mostly felt by their mid to low level uk employees

    2. Yves Smith Post author

      No, it is that it will hurt employment and job levels.

      And Varofakis is still a defender of the EU. He wants it reformed.

      Plus you are kidding yourself if you think the UK is less corrupt. UKIP and the hard Brexit Tories want out of the EU to escape its labor and environmental regs….which a lot of Leave voters actually support when the issue is explained to them.

      The bad part about the EU is its neoliberalism, and the plan for a post Brexit UK is to become more neoliberal.

      1. Roger Boyd

        Currently reading Varoufakis (Adults in the Room). He comes across as a naive reformer who doesn’t understand that the EU and Euro were built for the financiers and the rich to discipline the others away from democratic oversight. It is not reformable. After his experiences with the EU powers that be I am stunned that he is not much more for nationally-managed free trade and nationally-controlled currencies without “independent” (of democratic control) central banks.

        Any country giving up monetary control to a supranational body is giving up their sovereignty. The sad part is that the UK elites are at the front of the neoliberal charge, so any exit will not be used to implement any alternatives.

  17. Frenchguy

    Borrell [Spain’s foreign minister] said: “Germany will say no, France will say no, Spain will say no.”

    Well, it took only 2 days to kill that idea. Eagerly awaiting for the next cunning plan.

    Ps: for the fans of Yes Minister, Ivan Rogers gave us a very nice gift in one his latest intervention in Parliament when he described the customs partnership idea as (from memory): “as Sir Humphrey would say, it’s a brave idea”.

  18. Nigel Goddard

    As someone living in the UK, the two things I find most fascinating about the Brexit process are the unprecedented but unforced breakdown in elite rule, and the fact that the conversation is completely internally focussed. They can’t even agree what they want, and their compromises are all with each other rather than with the EU. This has been going on so long now that it’s clear that this internal dialogue is the point, not a pathology: Brexit is just a stage in that conversation.

    Here in Scotland though things are different. There is clear preference to be close to if not in the EU, and regrowing desire to be done with the Union with England that doesn’t seem to be doing either of us any good now. In fact I suspect England needs to be free of us and free of imagined external restrictions for it to be able to rejuvenate its society, democracy and economy.

    In the end I expect the EU will lose patience and give the UK two or three non-negotiable options (stay in, border in Irish Sea, or crash out), and then I expect the UK choice will be to crash out because no dominant coalition can be put together for either of the others; although there is a small chance one could arise in the turmoil. In case of crash out, both NI and Scotland will not stay long in the Union.

  19. rtah100

    Calm down dears! The aviation points being made lack perspective. As Richard North covers (either in his blog or in the comments), the withdrawal of certification for UK parts not certified by the final assembler would have effect *globally*. Every Airbus would have to stop flying. If anything, this is leverage for the UK (more EU Airbuses than UK Airbuses). Suicidal for both parties but it is better to be in a Mexican standoff with a rocket launcher than a pistol. Ergo, both sides will find a solution, urged on by third countries who don’t want their Airbuses grounded.

    1. Yves Smith Post author

      That is about manufacture. There are tons of ongoing certifications for the planes that are flying.

      If you think an airline is gonna fly planes when they don’t have all the approvals and certifications, you are smoking something strong.

  20. R W

    My impression from friends in the UK is that may is, despite being an awful Tory, a technocrat who ultimately didn’t want to brexit.

    My (perhaps self interested British passport holding) hope is that May is posturing… trying to look like she is doing everything she can for a ‘real brexit’, but ultimately ready to cave in some sort of non brexit brexit after she has ‘done all she can’.

    This would basically make Britain a non voting vassal State of the EU which does seem unpalatable – but short of cancelling brexit do they have a better option?

  21. rtah100

    Yves, you dismissed my comment and make the same point I was making in “refutation”!

    You wrote: “That is about manufacture. There are tons of ongoing certifications for the planes that are flying. If you think an airline is gonna fly planes when they don’t have all the approvals and certifications, you are smoking something strong.”

    The point I made is exactly the opposite of the one you attribute to me. I agree with you: if the EU and UK do not find a constructive new arrangement for certification, existing aircraft will cease to be legally airworthy. The EU has no leverage here, any ransom tactics are merely shooting themselves in the foot – and powerful innocent bystanders. There are some industries that are sufficiently concentrated and global (large civil aircraft) that *everybody* loses. The headlines being made around the Airbus statements are on a par with “Russia stole my Presidency/EU Referendum”.

    I’d be grateful if you would re-read what you wrote and I wrote and acknowledge the truth in this. This is one area where, in your vivid phrase, the Project Fear has got out over its game-theory skis.

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