Brexit: Even More Noise in the Signal

Figuring out what if anything is happening with Brexit is becoming even more difficult due to the decay in the caliber of reporting, which wasn’t so hot to begin with. I hope to post on some structural issues that the press has ignored later this week, but a bit of catch-up first seemed to be in order.

One has to wonder if the frequency of bogus stories about Brexit progress and breakthroughs are simply intended to keep the pound aloft. Recall we had a blizzard of optimistic stories before the October summit, when the push to reach closure came to naught. Then we had the flurry on a UK-EU financial services deal, which was much less connected to reality.

The idea that the press might be manipulated to support the currency would be particularly unfortunate since as vlade and other readers have said, one thing that might jolt even the fabulously rigid Theresa May into reconsidering some of her red lines. However, time now getting so limited she is boxed in by that as well.

The headfake of the weekend was a cover story in the Sunday Times about “May’s secret Brexit deal.” And in particularly misguided reporting, the writers weren’t even working off rumors of a deal. The connected the dots between different snippets they had heard and concocted a deal from it.

No. 10 quickly denied the story, but the major UK press outlets were oddly slow to pick up on that. We saw it only in Reuters:

Asked about the Sunday Times report, a spokesman at May’s office said:

“This is all speculation. The prime minister has been clear that we are making good progress on the future relationship and 95 percent of the withdrawal agreement is now settled and negotiations are ongoing.”

Moreover, if you read the Sunday Times story, it made no sense. For instance, it claimed that the EU had agreed to let the UK make customs checks (which in context meant regulatory compliance checks) at farms and factories. Huh? That means accepting EU regulations, and it’s hard to see the EU not insisting on the jurisdiction of the ECJ (there’s not enough time to agree on how a joint supervisory apparatus would work even if the EU were game). As Richard North wrote:

… it looks unlikely that this “plan” has been formally presented to the EU. More likely, Mrs May is hoping that, if she can get it past the cabinet, the EU might be prepared to accept it as the basis for a formal UK offer which can then, with the blessing of Michel Barnier, be presented to the European Council later this month.

May has a Cabinet meeting on Tuesday and Dominic Raab would meet with Barnier later in the week if there is something to meet about, and that meeting being a success is a precondition for holding a special EU summit on November 21. But the Telegraph has a sighting that if anything suggests that things are getting worse:

Dominic Raab has privately demanded the right to pull Britain out of the EU’s Irish backstop after just three months, the Telegraph has learned, setting back the prospect of clinching a Brexit divorce deal this week.

The hardline pitch by the Brexit Secretary to the Irish government early last week is understood to have “stunned” Irish officials and exposed the continued deep divisions in Cabinet over how to prosecute the Brexit talks.

The Guardian isn’t too cheery either:

The chances of Theresa May striking a deal with Brussels on the Irish border that she can sell to the cabinet and parliament are said by EU officials to be “50-50” as the fraught talks enter their final stretch.

The British negotiating team and the European commission’s taskforce, led by Michel Barnier, are to enter a secretive phase known as the “tunnel” this week, but senior EU figures involved in the talks warned the competing redlines remain “incompatible” in key areas.

And PlutoniumKun pointed out that fishing rights may prove to be a new sticking point. Again from the Guardian:

Theresa May is facing fresh opposition from EU countries that have large fishing communities to her demands for an agreement before Brexit day on a temporary customs union to solve the Irish border problem.

A number of key member states are expected to oppose a commitment to an all-UK customs deal on the basis that negotiations are yet to start on what access European fishing boats will have to British waters after Brexit.

The EU has repeatedly said it will only allow British seafood exporters tariff- and quota-free access to the European market in return for an agreement that its fishing fleets can continue to operate around the UK.

Agreeing to a customs union in the withdrawal agreement would mean the EU had ceded its leverage by providing tariff-free trade on seafood into the internal market without reciprocal guarantees on access to British waters.

PlutoniumKun added by e-mail:

Fishing communities in countries like Spain and Portugal have a very disproportionate level of political clout. If someone gets it into their head that a deal will impact on, say, some north Spanish fishing towns, then expect lots of hand waving and threats from the Spanish government. But this is a ‘known unknown’ so to speak, I doubt if it’s something the EU delegation won’t have addressed to some degree.

Finally, the Financial Times describes how the Hauts-de-France region has asked for special breaks from France and the EU to cope with a crash out Brexit:

“It is not only the north of France that would be impacted by a no-deal but rather all of France and all of Europe,” Mr [Xavier] Bertrand told the Financial Times in an interview. “The trucks, companies and factories that will be blocked will be those of the north of France, the whole of France and Germany.”…

The Hauts-de-France region includes Calais, Boulogne-sur-Mer and Dunkirk, respectively France’s largest passenger port, its biggest fishing port and number three cargo hub.

“If we have two minutes of extra customs controls for trucks, it will mean 27 kms of traffic jams on both sides and this will result in complete paralysis,” Mr Bertrand said. “This is one of the busiest commercial arteries in the world . . . We must do everything to avoid chaos.”…

Mr Bertrand argued that, with no certainty about what the repercussions of a no-deal would be, “we therefore need as much flexibility as possible at all levels to cope with the difficulties.”

He added: “For example, we could ask for exemptions from the European Commission to reduce customs and regulatory controls based on risk analysis.”…

But he cautioned that his call for flexibility on UK-French border checks did not extend to sanitary controls. “We cannot compromise with food security,” he added.

Instead, Mr Bertrand called for more help from the French central government on this and other issues, even as he acknowledged a move by Paris to recruit 700 new customs officers.

“What about the recruitment of veterinarians and agricultural experts for sanitary and phytosanitary controls?” Mr Bertrand. “What about help to businesses to deal with cash flow problems that will inevitably arise? What about the risks to the security of property and people, if we have tens of kilometres of traffic jams? The government must respond quickly to these very concrete questions, there is very little time, there is urgency!”

Too bad not very many people on the other side of the Channel seem to feel the same way

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  1. Schofield

    British politicians are so fond of lying because the media largely lets them get away with it it’s impossible to know what is happening with Brexit. It intrigues me that Theresa May has not denied that when she was Home Secretary in 2016 she blocked a British secret service request to investigate Arron Banks on the grounds he may have illegally obtained funds from the Russian fascist Putin for the Leave campaign he headed up. It seems safer to assume, unless proven otherwise, that it always has been the intent of Theresa May as prime-minister to leave the EU with No-Deal. In other words she’s been a closet fascist from the get-go.

    1. JW

      A lot of dot-connecting in that comment. The reality is that she can’t get a deal because she is boxed in by competing interests within her party, Labour, the DUP, and her own incompetence in calling early elections and losing badly and also angering the EU side.

    2. rosemerry

      “funds from the Russian fascist Putin for the Leave campaign ” Really?? You many be in the wrong continent-Bolsonaro is the only genuine fascist!!

  2. The Rev Kev

    It would be interesting to do a survey among the British and ask the question that if all the EU trade and most of the rules could stay, which one thing should the UK get back control of – EU immigration or more control over local laws. Lots of people say that the Brits are racists and would confirm that they want the former but I tend to think that they would tend to choose the later. I sometimes wonder at times if the Brits suspected that Merkel would have insisted that the UK take tens of thousands of ‘Syrian’ refugees as part of their ‘fair’ share if they were staying in.

    1. Alex Cox

      Not everyone who voted for Brexit is a racist.

      Leaving the EU means that Britain will no longer be bound by EU rules regarding privatization and state aid. If Britain remained in the EU, the renationalization of the railways could not occur; and government support for manufacturing would be forbidden, as the neoliberals’ nightmare is “state aid.”

      This is not to say that the railways will be renationalized, or that the government will start to favour industry over the financial sector. But there is a chance, if Labour win the next election, that they will keep their word this time.

      1. Yves Smith Post author

        The bit about nationalization is false. Nationalizing industry has long been part of Labour’s platform. This long discussion at the FT doesn’t mention anything of the sort.

        This was debunked longer form in comments a while back. I believe one of the sources of this false claim is Bill Mitchell, who is good on MMT but so hates the EU that he runs a lot of urban legends like this one.

        1. vlade

          Yes, I forgot how many times I debunked this. In addition to that, state aid restrictions are at WTO/treaty levels, so leaving EU has much smaller impact than Labour would like to believe. This is the problem of the UK politicians, that while they have grasp of Westminster minutiae going back hundreds of years, they have, often, little understanding of the world outside of the UK.

          1. larry

            Dieter Helm has a paper on nationalization in February of this year entitled Water Boarding. There he argues that the 1970s and the present day are so different that to compare nationalizations in the two periods is meaningless. A nationalization of today is completely distinct from a nationalzation of yesteryear. Therefore, it is meaningless to dredge up an argument for, or critique of, nationalzation from the 1970s and apply it to present circumstances. But this is what is often done.

        2. larry

          I believe you may be right about Bill on the EU. His cririque of the EU elites is spot on, but this critique applies also the the UK elites. It is even possible that the UK ones are worse, assuming there is more than one.

          1. vlade

            I’m pretty sure that UK/US elites are worse than the EU’s. For example, the EU actually does pass, now and then, regulation that genuinely helps the little people.

            An example – food east of the former Iron Curtain is often of considerably lower quality and higher priced than stuff that has exactly the same packaging as its West counterpart (well, except the small print, but how many people read the small print in supermarkets?). EU has been actually trying to solve this now for some time –, against predictable opposition from producers.

            The EU is a faulty institution, but if you call the EU bad, then I’d argue there’s no good one around, and plenty of worse. Doesn’t mean we’d put up with the bad stuff in the EU (and there’s plenty), but dumping it all w/o offering a realistic replacement is IMO dumb.

            To me, the main question is not whether EU should be reformed, but whether it _can_ be reformed. And if not, what does it tell us about human endeavours.

            1. larry

              Bill Mitchell takes the view that reform of the EU is impossible. For me, that would mean that the EU had hit what I call its 1933 moment. In Nazi Germany, until 1933 it was not irrational to believe that Germany might be reformable, but after 1933, this expectation became fundamentally unrealistic. It then became dangerous for those who were vulnerable to stay. But many never left. Bruno Bettleheim was thrown into a concentration camp for two years. After he got out, he tried to persuade his friends that it might be time to leave. Invariably, he was told that his incarceration was an error and that he was mistaken about what was going on.

              Personally, I see no reason to think that Europe has reached its 1933 moment, faulty as it is, when leaving might be the only rational option. As for whether the EU can be reformed, vlade, I think the jury may be out on this question.

              1. vlade

                I’d agree that the jury is still out on the EU. But, as I say, if it can’t be reformed, it means IMO something fundamental for us as humans. Not just EU, or even wider Europe, it would have much further implications.

                It would, for example, mean that we have few but Machiavellian options – especially the smaller states. US was for a time given as an example of “The Union”, but that sort of ignores ACW, and that the massive differences in the States are still very much papered over and ignored (I’d say that on a number of levels an Italian might have more in common with a French than a Californian urbanite with someone from rural Alabama)

  3. larry

    Almost a year ago today, Chris Grey posted a comment on his Brexit blog about the Brexiteers to the effect that they were acting as if they were being pushed out of the EU rather than them pushing the UK to leave the EU — Brexiters behave as if Britain was being forced to leave the EU. Their behavior has been and continues to be gobsmacking.

    1. Colonel Smithers

      Thank you, Larry, and well said.

      A Tory activist who goes out with a friend / former colleague often says that. He often reverse engineers that to events well before the referendum, making out that it was a dastardly plot by perfidious continentals to hound the UK out.

      The activist is Lebanese by birth and origin, works for an affiliate of Cambridge Analytica and seeking a(n ideally safe) seat to contest. He did not get an interview in 2017, even with a Celtic beauty on his arm to charm the Tory Blue Rinse. One wonders if his trying to outdo native varieties of Tories backfired.

    2. DaveH

      Apropros of nothing, Chris Grey is an excellent commentator. One of the very best writers around on this shambles.

      1. DaveH

        I guess it’s one of the benefits of a completely unchanging situation – old writing can be re-produced and recycled multiple times and still be just as relevant today as it was a year ago.

        “Q: Why do people say about Brexit that the clock is ticking? A: Because it goes round and round in circles and tells you exactly the same information that it told you yesterday”

        c/o Alice Fraser

  4. Harry

    I wondered the same thing about the pound. Its almost like the cost of uk banks having to put up a bunch of extra collateral is motivating a steady stream of bullshit supportive stories.

    I cant explain it but neither can i rule it out.

  5. Darthbobber

    A lot of this seems to come from the simple fact that everything that can be seen on the surface is visibly, for want of a better word, insane in terms of any rational calculation of Britain’s interests and what the EU might even conceivably accept. So the desperate assumption gets made that there “must” be some cunning plan happening out of sight, and anything is grasped at in an effort to infer one.

    Similar to what one sometimes sees among the workers at a company that’s obviously circling the drain. Those with better options see the handwriting and exit. Those without go to great lengths to find or invent reasons for hope.

  6. JW

    Well, Yves Smith, it looks like you’ve been thoroughly refuted.

    From Tom Kibasi, director of the Institute for Public Policy Research and founder of the IPPR Commission on Economic Justice in today’s Guardian:

    Since the summer, Downing Street’s political strategy has been clear. It has systematically talked up the prospect of no deal in the hope that any deal will be judged a success in comparison. That’s why the government has published a steady flow of technical papers on Britain’s preparedness…

    Yet no deal has always been the least likely outcome. Setting aside the consequences for the UK, a no-deal Brexit would mean that pan-European overnight bank clearing could not take place, causing the global financial system to crash for the second time in a decade. With 48% of European aviation insured through London, half the continent’s planes would be grounded…

    In the 21st century, no British prime minister is going to let one of the world’s most advanced nations struggle for food and medicine. And even if Theresa May were prepared to follow through on her threat, parliament – where perhaps 600 of 650 members oppose no deal – would never allow her to do so…

    Would the consequences for the EU really be that bad?

    1. Yves Smith Post author

      I hate sounding cranky, but the article is crap. And the moderators were going to trash your comment for your condescending opening, which was out of line in general and in particular given the poor basis for your ‘tude.

      For starters, it’s completely wrong about bank clearing. It’s wrong on aviation too. The UK and EU have both offered solutions in the event of a crash out. IATA has cleared its throat because it doesn’t like not knowing now which version or one in between will be settled upon, but something would be stitched up. It’s also wrong about the government’s actions on no deal. It has been extremely late in acknowledging this as a risk, has been dismissive when concerns have been raised (see Raab on food in August) and then has published very thin planning papers (but then again all of their Brexit documents have been amateurish). May has consistently been messaging that a deal is near.

      May was a disaster at the Home Office. She’s been promoted over her level of incompetence. She thinks she can muscle her ideas through, that the EU will blink. This has been the UK’s delusion from the outset. The UK political classes and the press keep showing they don’t comprehend what being in the Single Market entails from an operational and legal standpoint and keep proposing solutions that are non-starters or don’t solve the problem the UK thinks they will solve (like a “customs union”).

      One uninformed opinion is hardly a debunking. Richard North writes daily about how virtually everything in the UK press about Brexit is so out to lunch as to be wrong or at best badly misleading. And he as we do think the odds considerably favor a crash out. Another Guardian article which we quoted in the text, from official sources in the EU reading UK odds (as this is them, not the Government) put the odds of her selling her deal to the Cabinet as only 50/50. Barnier has consistently been making optimistic noises, so the EU saying the odds are only 50/50 is grim indeed.

      Plus if you have any familiarity with statistics, the odds of something happening is a cumulative probability of all the needed events happening. Not understanding that is why people launch business that fail. If 7 things need to happen and the odds of each is 90%, the cumulative probability is less than 50%. Here we already have one critical event having only 50% odds. I suggest you make a decision/event tree and do some math yourself.

      1. flora

        2 things:

        What’s the word? Bam? BAM!
        Does May have ideas? Or does she, like so many others her age on both sides of the Atlantic, simply repeat received formulations with no clue about the real implications or meaning of the words they recite?

        And as I’m her age this is not an ageist comment. It is a comment about those who fought for nothing and won nothing in world politics but took for granted the strength of past gains as unquestionably vital in future dealings; thinking it’s all just a matter of clever language to maintain the dominance of past relations. I think it’s called “resting on laurels”. (Politicians are only mouthpieces for dominant interests and attitudes of their country, imo. So my comment about May or US pols is also a comment about those who inherited a fine position and husbanded that postition by taking too much for granted.)

        1. Yves Smith Post author

          Even though May is older, I think a lot of it is the entire leadership class in the UK either has known only the Single Market or whatever memories they had of life before it are too faded, in terms of the legal and other issues, to be useful. They keep acting like they don’t know what they don’t know, and I don”t think this is posturing.

          1. vlade

            It’s what, 45 years since the UK (or 43 since that other time, when people’s will was made manifest, aka the “join or not” referendum). Most of the current crop of pols could be about 20 years old at the best. May was less than 20 years old. In other words, the world they call for is something they have no idea of – most of the people in the UK don’t, except for immigrants.

            1. The Rev Kev

              That is true that though I would add that the UK joined up to the European Common Market at the time. The European Union is a construct from the early 1990s which is a different beast again. I would not be surprised that because of this, that a lot of older voters said they this was something that they did not sign up for and made their feelings known during the Brexit vote.

      2. JW

        Nooooo! I’m so sorry. The opening was sarcastic. I had written sarcasm tags < around the opening part but it looks like WordPress comments eats them? And then the comment disappeared as soon as I hit submit so I could not check the formatting.

        That piece is just such a particularly awful example of magical thinking I thought it was worth sharing. Also the predictions about harm to the EU were so far out there I wondered if there could be any basis in fact and if these views are common.

        Thank you for everything you do.

    2. vlade

      This comes into the “this would be so bad, that no-one is going to do this” camp. Which human history shows is amongst the worst arguments for something not happening. Ignoring the fact that he has more than a few things wrong. like he has no idea what the clearing everyone talks about is. Hint. It’s not about interbank payments.

    3. ChrisPacific

      This article demonstrates a common fallacy among the Brexit commenters: the idea that no deal could only happen if Parliament voted for it. There was some belated realization in October that that wasn’t the case (I remember seeing a couple of articles on it) but plenty of them keep coming back to it.

      At the risk of descending into tautology, no deal Brexit is what happens in the absence of a deal. The way to avoid it is to make a deal. What deal, and how do you get a parliamentary majority for it? Answer that question and you avert no deal. Kibasi has nothing to offer on that front.

      1. Anders K

        Another issue is that, AFAIK, a deal only happens if a) the UK Government proposes one for Parliament to vote on, b) Parliament votes for that deal and c) the EU Parliament also votes for that deal.

        Now, what some people do claim (with quite a bit of justification, but this is far from conclusive) is that the UK Government could revoke its article 50 invocation unilaterally. The EU is likely to agree, though there will be consequences and renegotiations of the article 50 in the future if this happens to avoid countries threatening to withdraw and revoking it at the last minute.

        However, as far as I can determine, it is the UK Government that decides whether to initiate either of these paths – not the UK Parliament, not Barnier, not the EU Parliament (nor the European Council). If she wishes to go for a no-deal, May is entirely capable of making that happen by running down the clock, making the right noises and then just not following through. In a not so distant future, not even a re-election will be possible to prevent no-deal (granted, that seems to be 17 working days or 7th of March 2019, so there’s still some time for that to happen).

        1. vlade

          Since A50 invocation was Parliamentary business, technically A50 revocation would be likely recognised as a parliamentary business too. That said, the only majority in the current Parliament is AGAINST everything, not FOR anything. So cobbling together A50 revocation is highly unlikely.

  7. RBHoughton

    The sole reassuring sentence is that Reuters is the only straightforward news wholesaler left standing in UK.

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