Brexit: Can Anyone Take the Wheel From Johnson?

New Prime Minister Boris Johnson is making quite a show of his determination to deliver Brexit on October 31. He’s refusing to visit EU heads of state because they won’t renegotiate the Withdrawal Agreement….when the extension the EU granted barred using the extra time to reopen the Withdrawal Agreement. Johnson’s move is surprising because looking like he was Doing Something in Europe, even though all the principals knew it was destined to go nowhere, could keep Parliament at bay, hopefully until the October EU Council meeting.

But Johnson has a very large ego and likes a gamble. He apparently didn’t want to risk looking like he’d been humiliated. Moreover, he genuinely seems to believe that the EU will fold,1 and if it doesn’t, the UK can muddle through a no deal Brexit.

Instead of getting favorable PR by putting himself in the headlines with European leaders and spinning the Government-friendly media hard, Johnson will gin up his desired spin in a more direct manner: the biggest media blitz since World War II. Glorious Brexit all the time!

Johnson has probably figured out that it will be very hard for Parliament to wrest control from him. It’s already too late, given the mechanics of calling a new election, to have a General Election before Brexit day (hat tip Ataraxite):

The failure of Labour to demand that Parliament cut its summer holiday will go down as a great political blunder.

Richard North argues in today’s post that unless Johnson changes his mind, a crash-out is baked in. The spectacle of the pound falling almost 3% today on his bluster won’t make a difference. Sterling is at January 2017 levels against the dollar. This isn’t a sterling crisis, and it’s not clear how much financial markets distress it would take to move “fuck business” Johnson. And he and his Team Leave stalwarts seem remarkably unconcerned about wee problems like not being even close to where they need to be to re-do UK legislation to untangle it from decades of integration with EU law.

It is hard to see how Parliament could stop Johnson short of a general election. If Parliament does not curtail its three week caucus break, there are perilous few working days before October 31. Can the Government keep Parliament from passing legislation, since MPs might succeed in attaching an amendment which could tie Johnson’s hands? For instance, simply ordering him to obtain an extension might not accomplish much. While the EU has said it won’t be the cause of the UK leaving the EU, meaning it almost certainly would grant an extension request, one that didn’t give any reason to expect a different outcome would likely be met by the EU granting only a short one, say to the year end at the outside.

Even though Johnson’s bounce was smaller than May’s bounce, he appears willing to hazard that Corbyn won’t call a General Election due to the certainty that Labour would lose seats. And even if Labour does, Johnson may believe that waving the betrayal flag would enable him to survive, even if the cost were a Tory-Brexit Party coalition.

If the Government were to lose a no-confidence vote, it’s conceivable that Johnson would even try not asking the EU for an extension, but that’s one of the few cases where it is conceivable that the Queen could intervene (or the EU would fudge, since Article 50 requires adherence to the departing state’s constitutional procedures. Exiting despite a no-confidence vote that would reasonably be read as a repudiation of the Government’s no deal stance would seem out of line with proper process).

During the protracted struggle to turf May out, I was astonished by how mild the moves by the MPs were, in contrast with their brutal Question Time barbs. The motions and even amendments were typically short and still flabby. In keeping, vlade said by e-mail:

I’m more worried that it looks the MPs were way too reliant on their leadership telling them what to do, so only a few (if any) have a clue as to procedurals that could be realistically used. Because the procedurals require both the Parliament and Government, and having run on custom for hundreds of years, no-one has a clue what happens when customs break.

There is a value in written constitution (and a constitutional court), where revolutions are made so much harder than “let’s ignore this custom”.

Anyways, imagine that the parliament actually passes a legislation that says “If no deal is struck on the morning of the Brexit day, the government has to ask for extension. If no extension is granted, it has to revoke A50”, or something to that extent [extremely unlikely, but since we’re speculating anyways..]

But what will happen if the government does NOT ask for either extension or revocation? There’s no lever MPs can use (put Johnson in Big Ben? But he’s still a PM..) , and, if the government does not ask, technically the UK could out of the EU. I say technically, since in this case, there could be actually an argument made that the process was unconstitutional (because it would be clearly illegal), and A50 says “in accordance with its own constitutional requirements”.

Which is actually an interesting point. If Johnson goes against the MPs (as in committing acts found illegal to get there), it could in theory invalidate Brexit :).

Although this particular scenario is remote, the general point is valid. Johnson will defy norms just as May did (recall her refusal to step down after her resounding losses on the Withdrawal Agreement and the censure) if they get in the way of his ends. And the very limited time before a Brexit would make it very difficult to check him via other means.

Update 6:20 AM: Dr. Larry sent a link to a new story: ALASTAIR CAMPBELL: Why I no longer want to be readmitted to Labour. Deadly.

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1 Team Johnson no doubt took some cheer from the CBI deeming the EU to be less well prepared for Brexit than the UK (which I find hard to believe, save perhaps for the financial services industry), but even if true, that’s likely not as scary to the EU as it sounds. The EU is not as exposed to the effects of Brexit as the UK is. For starters, the EU does not depend on the UK for food. So while certain areas and sectors of the EU likely will take serious hits due to inadequate preparation, the impact on the EU as a whole is likely to be more modest.

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104 comments

  1. Ataraxite

    I don’t put any stock in the suggestion from vlade that the EU might somehow fudge an extension if things had broken down so completely by October that the UK had no functioning parliament. The “in accordance with its own constitutional requirements” clause of Article 50(1) only applies to the decision to leave the EU, not the process itself.

    It is vanishing unlikely that the EU will act directly against the Treaty for the Functioning of the European Union.

    No matter what happens, if there is to be an extension, it will be by the letter of the law – at the request of the leaving state, and with the unanimous consent of the remaining 27 member states.

    The EU has clearly expressed that it would prefer Britain to leave with a deal, but it has accepted that no deal is increasingly likely, and has spent the last 6 months preparing. It is not going to back down, it is not going to fudge its own processes and rules, and it’s not going to even expend too much effort to avoid no deal.

    As someone wrote in an article I read but can’t find anymore: why would the 27 leaders of the member states make themselves look stupid in order to make Boris Johnson look clever?

    Reply
    1. vlade

      The first para of A50 can be interpreted in both ways. ” Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”.

      The case for this would have been seen by ECJ (who has the ruling on the treaty), and remember, ECJ decided that A50 can be withdrawn unilaterally.

      The letter of the law, para 3 says acutally says “unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”

      So it’s actually not “the UK has to ask”. It’s “the UK has to agree”. Now, “the UK” is usually meant to be “head of state or head of the government”.

      But if the head of the government refuses to agree to the extension despite the parliament instructing it so (and it would have time to do so, under vote of no confidence, less so if they voted to disband themselves). It’s a gray area, and the EU is very good at doing gray areas.

      Moreover, technically, the government would be required to agree, as under the purdah rules it’s prohibited from doing anything that could affect any policy implementation by a new government (“Decisions on matters of policy, […] on which a new government might be expected to want the opportunity to take a different view from the present government, should be postponed until after the election, provided that such postponement would not be detrimental to the national interest
      or wasteful of public money”). Basically, the requirement is to maintain status-quo (TBH, I’d fully expect Johnson to ignore this, and again, there’s no good mechanism in the UK to deal with the consequences). I can’t think of a more policy-making thing than Brexit short of declaring a major war.

      I believe the above gives the Council enough wiggle room, should it wish to use it, to play a bit of games there. Not for a long time, two weeks at the outside IMO, and assuming unanimous agreement in the Council, which is far from given, and some signals from the UK that can be interpreted as “the UK agrees to the extension”.

      Reply
      1. Clive

        It would be even more “exciting” as it would be an arguable point whether the U.K. had, existentially, left the EU (or not) but that matter would itself be subject to a jurisdictional tussle as to whether the U.K. Supreme Court was superior or whether the CJEU had superiority to hear the case. Oh my!

        Reply
        1. vlade

          Indeed. But I suspect that by the time either ruled on it, the UK would have a new government that would be either Johnson’s no-deal, or we-want-something-else coalition.

          In the first case, legality of a few days extension would be likely immaterial.

          In the second case, I’m not sure what realistically even the UK Supreme Court could do if the EU, UK parliament (majority of) and the government insisted that the UK never left.

          Of course, if it dragged for more than a couple of weeks, all sort of things could happen, and that’s where I suspect the Council would draw a line.

          Reply
  2. Ataraxite

    Just to add, it’s not too late for an election before Brexit day. It is too late for an election via the process of a vote of no confidence, and the 14 day waiting period.

    But, if the parliament decides to vote for its own dissolution (which requires a motion passed by a 2/3 majority per the Fixed Term Parliaments Act, as was done with the previous election) and does so prior to September 19, then it can have an election on or before Thursday October 24. However, this is entirely in the gift of Boris Johnson – if he decides he wants an election, he could use this mechanism, and would probably get the 2/3 majority. But if he doesn’t, I struggle to see enough coordination in the HoC to gather together a 2/3 majority against his wishes.

    I suspect Boris will go for this – if he has an election after Brexit day, he’s screwed. Either the effects of No Deal will be felt, and the Tories will be blamed, or an extension/agreement with May’s deal/revocation will have happened, leading to a revitalised Brexit party.

    For those who like speculating: what might happen if Boris was to ask parliament to dissolve itself for an election which would have to take place after Brexit day?

    Reply
    1. Yves Smith Post author

      Let me play devil’s advocate. This is now the summer holiday in Europe. Parliament is out of session. Parliament is back in session only for one week in September (four House working days) before it goes on its caucus recess.

      More important, Johnson has declared repeatedly, including again this past weekend if I recall correctly, that he won’t call a GE, which presumably means not before Brexit Day.

      He knows the Europeans won’t renegotiate a Withdrawal Agreement and has blown off trying to go through the motions of negotiating with them. So he can’t say he’s had a change of heart due to those nasty Europeans.

      If he calls a GE, he makes it impossible to pass any necessary Brexit legislation to extricate the UK from the EU legally. The Government is also supposed to go into caretaker mode while GE campaigning is on. He could use the approval of the vote of no confidence to claim that the House knew it was putting the Government out of business, meaning among other things rendering it legally incapable of asking for an extension (although I agree with vlade here, I think this is one of the very few cases where the Queen might intercede, but who wants to bet the farm on that?)

      The point of calling a GE would be to win, yet calling a GE so close to Brexit assures it would be a train wreck, even more so than otherwise. It’s totally at odds with his Churchillian “Project Cobra” posturing. And if he asked to an extension to make the process more sensible, it would play into Nigel Farage’s hands.

      Reply
      1. vlade

        I actually found something that makes it much easier for the Queen to go against PM especially if the PM was ignoring instructions by the parliament (i.e. acting illegaly or in the contempt of the Parliament).
        Bolding mine:

        https://publications.parliament.uk/pa/cm200304/cmselect/cmpubadm/422/42204.htm
        It explicitly says “. The Queen’s constitutional prerogatives are the personal discretionary powers which remain in the Sovereign’s hands. They include the rights to advise, encourage and warn Ministers in private; to appoint the Prime Minister and other Ministers; to assent to legislation; to prorogue or to dissolve Parliament; and (in grave constitutional crisis) to act contrary to or without Ministerial advice

        I.e. if the Queen believes there is a constitutional crisis, she is not bound by any advice from Ministers (including PM), and may act as she wishes (mind you, I suspect she has a pretty high threshold for that, Charles would have way lower). That would include agreeing to any extension offer by the EU, replacing the PM in Inert_Bert’s scenario etc.

        In a way, this actually has the Queen (or the monarch in general) as the emergency circuit breaker, although I’d argue that the FPTA taken away a keystone to that (because if the Parliament can’t agree on anything, the role of a circuit breaker is moot).

        Reply
    2. Inert_Bert

      Thank you Ataraxite,

      I think there technically is an easier, intermediate option between immediate dissolution by 2/3rds of parliament on the one hand and a gamble that Johnson will do the right thing in caretaker-mode after a regular motion of no confidence on the other.

      Some Tories could join the opposition parties in not only a motion of no confidence, but in forming a new (interim) government. With proper planning, this could happen within days, and the new government could ask the EU for an extension to hold a referendum or a general election (or both).

      The advantages of this approach are obvious:
      – It would require a smaller commons majority than immediate dissolution of parliament would under the FTPA.
      – It would require less time.
      – It would give the EU something it could agree to (without vlade’s imo viable but legally dubious shenanigans, even).
      – There would be no need to gamble on the outcome of an election before 31 October to stop no deal.

      The point is moot though because it won’t happen for dumb, but equally obvious reasons:

      – Even the most rabid no-no-deal Tories would actually never support the most obvious candidate for PM (Corbyn). Not even as interim PM for a few months. The few usual suspects (a small corner of QC-twitter) who’ve been gaming out this option have been fantasizing about hundreds of rebels from both conservatives and Labour somehow backing a “moderate” PM (instead of the more obvious “a dozen no-no-deal Tories hold their noses and put their money where their mouth is”).
      – Even the most remote possibility of external salvation (purdah-rules being taken seriously by Johnson, the EU/Varadkar caving or of some kind of royal intervention), gives MPs hope they can keep their hands clean, so they absolutely will gamble on a fantasy rather than follow through and take responsibility. This point also applies to a dissolution of parliament before 19 september.

      Also, as all here know, none of this would actually solve the immediate issues but the entire UK establishment would have pretended otherwise until two weeks before the next deadline. We’re still headed for no-deal like we have been since the Joint Report at least, but now Johnson is expediting the process in an alarming fashion.

      Reply
      1. Yves Smith Post author

        Huh? Please read up on the Fixed Term Parliaments Act.

        There are only two ways to get rid of a government, the vote of no confidence, and the dissolution process that Ataraxite described.

        The party that heads the ruling coalition can also depose the PM through its internal processes, as we just saw with the ouster of May.

        There is no process along the lines you describe.

        Reply
        1. Jabbawocky

          Although the details are muddled IB’s main point stands though. If Corbyn were to win a no confidence motion there would be a 14 period to form a unity government which could win a confidence motion. For clarity this would not require dissolution of parliament. Boris does have to worry about this coming to pass as IB says above.

          Reply
        2. Inert_Bert

          I’m sorry I think I’m being unclear because I’m conflating discussions up and down the thread with Ataraxite’s direct question. I AM talking about a vote of no confidence, as an alternative move for anti-no-deal MPs if Johnson goes for dissolution on his own terms.

          The common complaint against a Vote of no-confidence is that it takes too long to get to an election (2 + 5 weeks, from september 3rd) for the outcome of said election to avoid no-deal, as well as that outcome being far from certain. However, I want to point out that parliament can still use such a motion to avoid a crash-out in time by backing a new government (that intends to ask for an extension) in the first two-week period, instead of letting an election be called (section 2 subsection 3b FTPA).

          So I’m distinguishing between three scenarios:
          A: Dissolution, election on Johnson’s terms, either right before or right after exit day (functionally the same, given the likely difficulty of forming a government).
          B: Vote of no confidence, followed by election in seven weeks, after exit-day.
          C: Vote of no confidence, with a new government formed within two weeks, before exit day, that can ask for an extension.

          The theory that in case of election purdah-rules would oblige Johnson to ask the EU for an extension before the election is reasonable, but it would reinvigorate Farage and defeat the point of calling an election for him. So that’s why, in my view, hoping Johnson asks the EU for an extension to fight the general election (against his electoral strategy and in a manner that garners a positive response) is a far bigger risk for anti-no-deal MPs than using that period for its intended purpose and supporting a minority Labour government.

          Anti-no-deal Tories have a huge incentive to avoid an immediate election because that would lead to a situation where they are de facto campaigning for no-deal (especially in scenario A). If a dozen or so Tories really would do anything to stop no deal they should use this period to support a new, temporary government.

          Again, moot point because they’ll screw up like they’ve done a dozen times before, but the window is there for anti-no-deal Tories to make a credible effort to avoid catastrophe (in october).

          Just in case you do disagree about the FTPA (or possibly, quite reasonably, about how hard its provisions are), here’s what I’m going on: flowchart here, note “[If needed] PM resigns; advises Queen who to send for as new PM”.

          From the IfG:

          The second [way of in which parliament’s fixed five-year term can be truncated] is more complicated. If a motion of no confidence is passed or there is a failed vote of confidence, there is a 14-day period in which to pass an act of confidence in a new government. If no such vote is passed, a new election must be held, probably a mere 17 working days later.

          Sure, there are no cast-iron guarantees but the IfG-piece states:

          Of course, all of this depends on whether party leaders use the Act in these ways. The Act has been understood as a means to allow for a new government to be formed and replace the incumbent, and there would be massive political pressures in anyone being seen to abuse its provisions. If used as intended, it would bring in a government led by the former Opposition.

          The twitter-QC’s that were discussing this possibility also seemed to be pretty confident this is how the act works. However in their scenario they would gamble on Johnson to back down and be reasonable and are also bizarrely assuming Labour would/should back Grieve or Stewart. They merely see the two-week period and the possibility of a new government as a cudgel for Johnson. But that’s besides the point. Regarding the way the FTPA operates they too say it allows for an attempt to form a new government. See for example this thread from George Peretz. The salient quotes regarding the Act itself:

          So if there is a VONC, the winning MPs (opposition + Tory rebels) should make it clear that unless Johnson agrees to apply for an extension they will unite round an alternative PM (eg Grieve) to form a temporary government pending an election.
          If that candidate could command a vote of confidence, the Queen would have to send for him/her: if Johnson refused (contrary to his constitutional duty) to advise her to, she would be acting entirely constitutionally to do so without his advice.

          Reply
  3. Biologist

    Thank you for the coverage, excellent as always.

    Just speculating about what Johnson is truly up to, I wondered whether he might not just be bluffing, and his ideal scenario wouldn’t be something like this:
    – He keeps refusing to engage with EU, and keeps refusing to pass withdrawal agreement
    – Parliament tells him to ask for an extension via a motion
    – Johnson either complies (respecting norms, so to say), asks for extension then calls a general election
    – or, Johnson doesn’t comply, Parliament votes against him in vote of no confidence, and an election is called. Somehow the deadline gets extended (EU fudge, or Johnson pretending to be forced to ask for it, or some other way)
    – In general election, Johnson campaigns on a No Deal ticket, screaming betrayal (“I was forced to extend by Remainers in Parliament; Labour and other parties are betraying Brexit; nasty EU forced extension upon us”, etc)
    – He beats Labour and governs for 5 more years, with or without Farage as partner

    The reason I’m thinking along these lines is that despite his acting, I don’t think Johnson is stupid enough to not realise that a No Deal Brexit will crash the economy short term, and there’s a high risk he will be blamed for it. Imagine: his bluff on No Deal is called, UK crashes out, and the weeks and months that follow are truly as bad as many here predict they will be. Do you think Johnson’s propaganda will really succeed in blaming all of this on EU (or immigrants, other politicians, etc) without him taking a large part of the blame? To be fair, the media will do their best to help him.

    The main risk with such a strategy would be of course an accidental crash-out on Oct 31, as there are many points of failure along the way outlined above.

    Reply
    1. Yves Smith Post author

      I suggest you go to Brexit Central and read the output of the last week or so. The Ultras really do believe that Brexit is a great economic opportunity for the UK. He appointed diehards to his Cabinet to lash himself to their mast. I think he may have drunk their Kool Aid.

      I also anticipate that if he does not leave the UK by nine months after a crash out, he will be swinging from a lamppost.

      Reply
      1. Frenchguy

        I’m really afraid too that the Ultras (and Boris) believe that no-deal will be painful but nothing that won’t shake off in a few months.

        My guess is that when they see forecast of -5%/-10% in GDP, they think “well even it turns out that way, -10% on my income would bother me but I would manage”. They don’t realize that -10% GDP means mass unemployment and dramaticaly lower living standards…

        Reply
        1. PlutoniumKun

          -10% GDP in a country with such a high level of private debt means crashing banks, a worthless sterling and street riots. Unlike, say, Ireland in 2007, there isn’t a safety valve in the form of mass emigration options or a strong agricultural base to fall back upon. And it will be one with a shrinking industrial and service base and no obvious means of reversing the shrinkage.

          And if there is no election in the UK, it will be overseen by a government with no real majority anymore and deeply incompetent ministers, but one which will not go to the country for terror of letting Corbyn in. In other words, one with complete administrative paralysis.

          Reply
          1. vlade

            Agree. -10% GDP is rioting, and Tories (+ some Labour, Kate Hoey is good friends with Farage) decorating lamppost and possibly a few extradition requests for treason. It also almost certainly means NI unification referendum and Scotland’s indyref#2 (or possibly, Scotland and NI suggesting to Ireland a creation of Celtic Union, which may allow both NI and Scotland to use Eastern Germany precedent to jump the EU queue)

            It could also mean another worldwide financial crisis, as Lloyds and Barclays become wards of state (RBS stays), but not sure what their non-sterling assets/liabilities are (which may become fun in terms of Scotland’s indyref).

            HSBC and SC are mostly non-UK assets, so they would likely survive somewhat better.

            Reply
            1. Colonel Smithers

              Thank you and well said, Vlade.

              – 10% on the 10th anniversary of the referendum is what was estimated by UK, Canadian and Japanese banks in 2017. I have not heard from the persons / analysts since, buts suspect they have revised to an acceleration.

              Reply
            2. PlutoniumKun

              I suspect its too late for the Celtic Union idea, although it can’t be ruled out that it may raise its head in the event of a post-Brexit government consisting of a minority Labour dependent on nationalist parties. I’ve no idea if its something Brussels would encourage or run away from.

              The problem with any break up is that constitutionally it has to be done by referendum, and London decides if and when a referendum will be held (as with a border poll). Its inconceivable I think that the current government would agree to one or other under any circumstances. I don’t see Corbyn agreeing to an IndyRef2 either, as that’s doom for the Labour party.

              Reply
              1. vlade

                Ah, constitutionality. Do you not think that if Johnson can flout it as a revolutionary, Scotland cannot?

                The UK could send in the police like Spain did on Catalonia. I suspect that the civil disobedience in Scotland would be way stronger, and, in no-deal, the UK may have to deal with NI, Welsh and even domestic (English) riots and civil disobedience.

                Cracking on Scotland, and thus ignoring more pressing domestic (English) issues would be also very unpopular with English voters. The joke is that the Scots should have run the referendum in England and would have had their independence by now.

                Reply
                1. PlutoniumKun

                  Yes, that is true, but the SNP have been very conservative in that way up to now, I think they’d do their best to keep the ‘street violence’ genie in the bottle.

                  I think the big wild card though is not Scottish or Welsh or Irish nationalism, but English nationalism. Its not impossible I think that the core Brexiters would see a ‘free England’ movement as a new goal. As Fintan O’Toole has repeatedly pointed out, Brexit is a very specifically English thing, the likes of the DUP have been just dragged along for the ride.

                  Reply
                  1. vlade

                    Oh, they can do peaceful (or at least look to). Like rolling general strike, ignoring non-scottish courts etc. etc..

                    And, as you say, there’s the English nationalism stuff, which they could use.

                    Reply
        2. Tipster

          -10% in GDP. Is that figure from the school of pick a number out of this air and double it?

          Even the – Office of Budget Responsibility – Fiscal risks report July 2019 – only estimates a 2.1% reduction in GDP. With even in their pessimistic forecast predicting the economy picks up by mid 2021.

          All this talk about people swinging from lamposts is pure hyperbole. We had a similar contraction in the UK economy in the early 90s recession. I don’t remember seeing to many politicians swinging from lampposts then. How far did UK GDP fall at the time of the financial crisis?

          No right thinking person welcomes a 2 percent contraction of the economy but it’s hardly “end of the world” territory either.

          On a separate point. In regard to the break up of the UK.

          Scottish Independence is further away than ever. Are the majority of Scottish people aware of what leaving a union entails? I don’t think so? If an Independent Scotland joined the EU then there would be a hard border separating friends and family. That’s without even looking at the impact of Independence on the Scottish economy

          What we have learned from the Brexit negotiations. Is how difficult it is to break up Unions. The EU isn’t even 40 years old. The Union between Scotland and England & Wales has over 300 years of history/ties to entangle. Any divorce negotiations would twice as difficult & costly as the Brexit ones.

          Even with a no-deal brexit the chances of Scottish people voting for independence seems fairly remote to me.

          Northern Ireland is a different story there will have to be a border poll sooner rather than later and hopefully the people of Northern Ireland will see the sense of uniting the peoples of Ireland.

          Reply
          1. Yves Smith Post author

            In the early 1990s, the UK did not have a banking system that was significantly on life support. Private sector debt levels were not as high then either. It had a deep nasty recession, not an event in which significant parts of the real economy will not operate properly and won’t be restored to normalcy soon if ever. Did the UK in the early 1990s have food shortages? Shortages of medicines? Severe disruption at ports? Inability of manufacturers who are part of just in time supply chains to receive and ship goods on the required tight time schedules, which will lead to work-arounds that mean permanent and significant loss of employment, investment and skills? Brexit is in no way comparable to the early 1990s downturn and you ought to know that.

            On top of that, former UK central banker Willem Buiter described how the UK had all the earmarks of a country that could seize up in a very big way. From his classic How likely is a sterling crisis or: is London really Reykjavik-on-Thames?

            ….there is a non-trivial risk of the UK becoming the next Iceland.

            The risk of a triple crisis – a banking crisis, a currency crisis and a sovereign debt default crisis – is always there for countries that are afflicted with the inconsistent quartet identified by Anne Sibert and myself in our work on Iceland:(1) a small country with (2) a large internationally exposed banking sector, (3) a currency that is not a global reserve currency and (4) limited fiscal capacity.

            None of the mainstream forecasts is contemplating the blowback to the financial system. They are all using conventional trade and/or macro models which don’t even include the financial system (see Steve Keen and many others on this issue). Those models failed to forecast the GFC.

            And having seen what happened in the US financial crisis, and having read Richard North and others who have a grip on the technical issues, 10% is a reasonable estimate. The UK is not prepared and is exposed. It won’t even have passed key legislation the Government needs, or disentangled its legal system from the EU

            Reply
          2. vlade

            A napking figure (I had this post yesterday, but somehow it went into the big bit bucket in the sky…):
            Exports are about 30% of the UK’s GDP (and I’m going to ignore imports, although those are likely hit too). About 50% (46%, but let’s keep the numbers round, it does not matter than much TBH) are to the EU.

            Let’s assume a drop of half (by value), which is not unrealistic, as most of the services will be gone, and car exports (another significant part) will be affected too.

            So you get 30%*50%*50*% = 7.5%.

            Not 10, but between 7 and 8. Or you can look at services (about 210bln/year) + cars *)(about 350bln/year), slightly less than halve it (say 200bln/year), and you have 10% of the GDP hit easily.

            These are depression-like contraction. That’s half as bad as 2008, and three times as bad as early 90s worst number. It’s worse than early 70s and 80s (which did have riots..).

            *) Oh, the car industry said that in the first half of 2019, there was a total net investment of 90mln. That’s in industry that normally invests closer to 3bln/year. So this year, ignoring anything else, car industry already shaved about 0.1% off the UK GDP growth without anything happening yet, just by witholding the investment. It also said, very explicitly, that under no-deal they expect very generous government handouts or will move shop. Basically saying “deal or no deal, we want our profitability to stay”

            Reply
        1. The Rev Kev

          Lampposts are so 18th century. These days it would be more like CCTV camera posts. It’s not like there is a shortage of them.

          Reply
  4. PlutoniumKun

    I think either Johnson is even stupider than we thought, or the strategy is to create chaos and hope that the UK can (somehow) benefit from the results. I wouldn’t put it past some of his backers to have already bet against sterling over the next few months.

    Its hard to exaggerate how bad his first few days have been if he is even half serious about doing some sort of deal. The Irish establishment are furious at his refusal to follow standard protocol and have an informal phone call to Varadkar – its seen as a deliberate snub (and this has been widely reported in Europe – and almost ignored in the UK). He went to Scotland and promptly visited Faslane (the nuclear base), which was seen by the Scottish people as a very pointed message in his priorities. He has made no attempt to soften up EU leaders.

    The only possible explanation for his behaviour has been to either go for an election and go all out to get back Brexit Party votes, or it is to create a situation in which nobody can stop a no-deal exit. If its the latter, I can only assume he has swallowed the Brexiteer groupthink that somehow it is manageable and everyone will emerge the other side stronger (apart from the poor, but they don’t care about that).

    The one calculation in this that he and the hardliners seem to have ignored is that the EU are not passive bystanders. They can make life very difficult both before and after a no-deal. So far, they’ve been markedly passive and neutral about attracting UK businesses to Europe. This will stop. They’ve not been overtly mercantilist in their approach to any future dealings. This will certainly change. They have made no noises about interfering with any negotiations between the UK and other countries – this can and will change too.

    The blunt reality of international relationships is that smaller, weaker countries have to swallow their pride on a daily basis when it comes to their dealings with the wider world. They have to join alliances they don’t like, they have to be nice to unpleasant regimes, they have to go to wars they don’t want, they have to accept harmful rules because they are told to do so. This is one reason why the EU remains very popular in most smaller EU countries – real Euroscepticism is only a strong force in the larger post colonial nations with delusions of grandeur. The UK will soon learn a very harsh lesson in this if Johnson continues as he has started.

    Reply
    1. Yves Smith Post author

      Thanks for mentioning the snub of Varadkar. You had pointed that out via e-mail and I was remiss in not including that.

      Johnson apparently did call at least Merkel, Macron and Juncker, and all gave him the same message re the Withdrawal Agreement. My impression is he didn’t make any calls beyond this three and perhaps one more (not double checking due to the hour, so feel free to correct me), and I suspect he was also obligated to call other EU leaders.

      I also read a story that Macron invited Johnson to France in August, which would be a big deal by virtue of Macron giving up his prized summer holiday. It was supposedly to discuss things other than Brexit. I haven’t seen anything in the UK press to suggest Johnson has taken this up. If he hasn’t, that’s another big raised middle finger.

      Reply
      1. PlutoniumKun

        So far as I’m aware, it was just those three he called (or at least, that’s whats been reported). My understanding is that there is a tradition going back well before EU days that the ‘immediate neighbour’ is the recipient of the first foreign call of a new PM in either London or Dublin.

        Reply
    2. Paul O

      FWIW – no one I know believes the message that there will not be an election. No one believes anything much that he says. He would want to present an election as something which suddenly became necessary – as an emergency.

      I am not entirely convinced about that yet. But this is what I believe many people expect.

      Reply
      1. Yves Smith Post author

        There is a big difference between Johnson calling a snap election v. his opponents trying to oust him. Johnson has said repeatedly he won’t call a snap election. Per my comment above, if he were to do so it means he’d miss the Oct 31 Brexit to which he has loudly committed himself and also packed his Cabinet with the like minded. Were he to call a snap election now he’d risk mass resignations. And generally that move would help Farage and hurt the Tories. One of Johnson’s objectives is to reclaim votes from the Brexit Party.

        Reply
    3. voteforno6

      The blunt reality of international relationships is that smaller, weaker countries have to swallow their pride on a daily basis when it comes to their dealings with the wider world.

      I’m sure that Trump, et. al. will be respectful of the UK, and not try to take advantage of the situation.

      Reply
    4. Watt4Bob

      I wouldn’t put it past some of his backers to have already bet against sterling over the next few months.

      I’d be truly surprised if they haven’t.

      Reply
    5. The Rev Kev

      If Scotland goes to another referendum and it succeeds, what happens with Faslane then? Any British bases in Scotland would be by definition become foreign bases including that submarine base. Is there popular support to either keep the base or to have it removed from Scottish soil? I did find one interesting article on Boris’s visit there-

      https://www.commonspace.scot/articles/14540/analysis-boris-and-bomb-why-faslane-apt-place-new-pms-first-scotland-visit

      Reply
      1. vlade

        IIRC, when this came up in the last indyref, Scots in general didn’t want it, Faslane people did (it’s their livelihood after all). I think the idea was that the rUK would keep the bases for some period of time while building a new one somewhere else.

        Reply
        1. The Rev Kev

          Thanks vlade. I suppose that a newly independent Scotland would need the money from the rental on that base while they get on their feet for the first few years. Not sure how their economy would fare. Direct entry into the EU may not be so simple as I have read that countries like Spain may oppose it as it may encourage break-away regions in their own like Catalonia. And that could put Scotland’s economy into the same boat that Englands would be in.

          Reply
          1. vlade

            This is actually a fairly complex question..

            I believe the EU would look at Scotland post-Brexit differently than Catalonia. The reason being, UK left, so it would be very very clear that Scotland would have to re-apply (which is why the whole Celtic Union stuff comes up, to bypass that via the German-reunification-gambit). So Catalonia’s argument “we can go independent and stay in the EU” would be moot, and Scotland no precedent. In a way, Spain would actually like this, as it would put inb a precedent for Gibraltar (but Ignacio may have a better take on it).

            The real problem for Scotland would come more from the fact that majority of its trade is with the rUK. Neither the UK, nor the EU would be willing to do a soft-border between in-EU Scotland and out-of-EU England (I’ll stop calling it UK now, and start England, as a shortcut for England and Wales. Apologies to all Welsh). Hard border on the English/Scottish border would be a massive problem for Scottish economy.

            It would have to have its own currency, which would be hit badly, almost certainly. It could try to use pound, but that could be just a temporary measure, really. But if it goes to its own currency, what happens to pound debts? I believe that most, if not all, mortgages (for example) are under Scottish law, so could be re-denominated. But not sure about other consumer debt (car, credit cards, personal loans, company loans..).

            Oil – well, it’s going up now, but it’s a question on how that would work longer time. Scotland will not be Norway, that ship sailed some 50 years ago.

            Overall, it would be hard times for Scotland going it on their own. Probably worse than no-deal Brexit, at least short term, unless they got into the EU pronto and started getting some EU support.

            But as long as people are aware of it, they can still see it as worth it.

            TBH, this is the problem with “sovereignty” these days. You are part of massive complex structures, erected over decades. If you drop out of them, it’s hard.

            Say Czechoslovakia. They split, and it took both countries a better part of the decade to get to a reasonable state. And they had an “advantage”, that they weren’t actually part of many complex structures, because the main one they were (Soviet block) just fell apart. So they would have to change the economy and reorient exports anyways, and were already doing so.
            Same thing for former Yugoslavia, except with added (immense) complication of a war.

            Reply
              1. vlade

                Any and all scottish banknotes have to be backed by actual physical BoE pound banknotes on the issuing bank reserve.

                Reply
            1. rd

              The really big questions is what would happen to Balmoral which is where the Queen hangs out in Scotland? Would she need to go through customs and immigration every time she goes on holiday?

              Reply
              1. Tom Bradford

                She could remain the Sovereign of of an independent Scotland just as she is Queen in Australia, New Zealand, Canada etc. Indeed as her sovereignty descends from the amalgamation of the English and Scottish thrones in James (I of England, VI of Scotland) that would IMHO be the initial position anyway.

                Reply
          2. paul

            As most of the population (including me) live in the central belt and would be engulfed in the blast shadow should someone decide to launch an attack, Faslane is pretty unpopular.
            The general idea is that the bases could be leased until england finds somewhere else to site them (good luck with that).
            The Faslane folk would would still have what little economic advantages it brings under these circumstances.
            As for Spain, the 2018 foreign minister expressly stated they did not have a problem with an independent Scotland in or out of the EU

            THE SPANISH Foreign minister Josep Borrell says that the government in Madrid would not stand in the way of independent Scotland joining the EU.

            Speaking to Politico, the politician also said he thought the UK would break up long before Spain ever did.

            I haven’t read anything different since then.

            Reply
            1. cirsium

              The employment issue was discussed during the 2014 Indyref campaign and then, according to the Ministry of Defence, only 520 jobs in Scotland depended on Trident. The idea is for the Scottish Coastguard/Navy to use Faslane as its base so there would be sufficient alternative employment. Regarding the nuclear weapons, it would simply be a matter of them not being returned to Scotland after their annual service in the USA. England in consultation with the US would decide where they could be stored in England.

              Reply
          3. PlutoniumKun

            The Spanish objection to allowing breakaways stay in the EU only applies to countries within the EU. There is no precedent as far as they are concerned when the UK is outside the EU. In fact, they might quite like that precedent as they can apply it to Gibraltar.

            Reply
            1. The Rev Kev

              Thanks PK. I just thought that they might be worried that if Scotland got an easy path into the EU, then places like Catalonia, Wallonia, etc in the EU might be encouraged to think that if they could do a Czechoslovakia, then they too might have an easy path into the EU.

              Reply
              1. Inert_Bert

                Just to add to what PK said: the nature of the Spanish reaction would also depend on the precise manner Scotland would gain its independence.

                Spain is most concerned about regions that declare independence unilaterally (hence their continued refusal to recognize Kosovo for example).

                If the Scots want to regain full EU-membership ASAP, they’ll have to tread lightly and get Westminster to play ball wrt to indyref2 and all the rest so as not to spook Madrid.

                Reply
      2. PlutoniumKun

        From what I understand, there is only one natural harbour considered acceptable in England for a nuclear submarine base – near Portsmouth I think. It would cost billions to make the move.

        Reply
  5. Redlife2017

    Hmmm, archBlarite says this: “The culture you have helped to create has made the party one which I feel no longer truly represents my values, or the hopes I have for Britain.” I certainly hope so. His hopes are to return to the Blair years. Maggie Thatcher was asked what her greatest achievement was in 2002 and she said: ‘Tony Blair and New Labour. We forced our opponents to change their minds.’

    I’m not one to say Corbyn is the almighty and I totally agree about how dumb and own goal it was to not push against a summer holiday (but it’s not like he could have forced it as the government wouldn’t have gone for it). But let us be honest about Alastair Campbell and his time working for Tony Blair. He was a spin doctor who introduced the worst excesses of spin that we live with today. Cameron and May spun the news in the exact same way. An apologist for the Iraq War. If you hate Corbyn, then sure, I guess him saying how horrible everything has been managed holds weight. But if you hated the Blair years, no, it is not deadly. Not in the UK it isn’t.

    Reply
    1. Colonel Smithers

      Thank you and well said, Redlife.

      Luckily, the New European has even fewer readers than its corporate plaything peer the Grauniad. It has become a vehicle to resurrect the careers of war criminals like Campbell, Blair and Straw.

      Campbell talks about values. Should we share the values of a bully, which included hounding the doctor to his death, and co-author of the dodgy dossier, which condemned many to their deaths?

      The remain camp had better wise up if they think Campbell is the person to convince leavers of the error of their ways. In my home county of Buckinghamshire, which voted out in 2016 and is having second thoughts now, the name Campbell is mud. He’s associated with facilitating an illegal war that claimed the lives of some local servicemen and, adding insult to injury, enabled Blair to buy two country estates on the border with Oxfordshire.

      Reply
      1. Clive

        I’ve often wondered if, variously, Blair, Brown, Campbell, Soubry, Umunna, Grieve, Major and others had gone on a three-year long holiday whether Leave would have collapsed under its own divisions and inconsistencies.

        Certainly every time they show their faces in the mainstream media, they reek of liberal intelligentsia ruling order entitlement tyranny. A less convincing group of superannuated has beens would be difficult to find. George Soros inviting himself round for tea to discuss the furtherance of the European Ideal, not bothering to bring a nice bit of Victoria Sandwich with him and dribbling onto the carpet is only a marginally less appealing prospect.

        Talk about doing more harm than good.

        Reply
      2. Redlife2017

        Colonel Smithers – when anyone mentions Dr. David Kelly, my heart always sinks. Campbell may as well have put the gun to that good man’s head. He was RIGHT about there not being WMD in Iraq!!! I had barely been in the UK for a year when Dr. Kelly died. It’s one of the fundamental reasons (Iraq war, Private/Public Partnership, & Dr. Kelly) that I refused to vote Labour until Ed Milliband (and that was with nose held).

        And I think that people outside of the UK don’t realise how hated the Iraq War was across the political spectrum…people have not forgotten what the Blairites did.

        Reply
        1. Colonel Smithers

          Thank you, Redlife.

          Many doctors, including my father, coroners and former police officers have signed a petition and campaigned for that inquest to be reopened.

          Reply
    2. vlade

      Labour should have got rid of Campbell long time ago, on all the charges you raise.

      But, dumping him over voting LD in the EU elections was DUMB. It was beyond dumb.

      It made a martyr of him, because it WAS wrong where clearly rules were applied selectively while being claimed to be applied “automatically”. Worse, it gave the master of the spin ammunition, and limelight, where if he was just ignored, he would have a fraction of that.

      Someone’s personal vengeance got better of the, to the detriment of whole of Labour. And, TBH, that’s the problem I have with Labour, that there’s no strategic thinking.

      Where they should be ruthless (attacking Tories on emotional grounds), they are not.

      Where ignoring the problem would be better, they behave with foolish ruthlessness.

      Reply
      1. PlutoniumKun

        I like your term ‘foolish ruthlessness’, that’s an excellent description of Corbyn’s Labour.

        They are extremely ruthless in things which don’t really matter in the greater sum of things (like settling internal scores), but horribly weak and indecisive in truly important matters like Brexit. Having encountered plenty of Corbyn types in my days in England, this is what I most feared when he became leader – an obsession with internal political battles with a parallel ineptness when it came to thinking strategically about how to beat the right wing.

        The parallel with the revolutionaries of the right is all too plain to see, sadly.

        Reply
        1. Ape

          Phrases I like:

          foolish ruthlessness
          naive cynicism
          mayberry machiavellis

          all falling into varieties of being too smart by half, people who think they’re geniuses, but sadly they’re not.

          Just give us some real evil geniuses! We’d all be better off.

          Reply
      2. Jabbawocky

        Too right. Corbyn’s problem is that many labour supporters backed Lib Dem in the European election because of their Brexit stance. What message does the purging of Campbell give to them? That you are not welcome…

        Reply
  6. robert dudek

    As long as an election is CALLED before October 31st, the EU27 will extend the deadline. Technically, they need to be asked for an extension by the UK, but they will fudge it if they have to, saying “we need to let the UK citizens have a say before anything drastic like a no-deal crash out occurs.”

    Reply
    1. Ataraxite

      No matter how inconvenient it might be, the EU27 can’t rewrite or ignore the Treaty for the Functioning of the European Union on a whim. If there is to be an extension, it must be requested by the UK.

      Reply
      1. vlade

        I have a comment in moderation.

        the A50 on the revant bit (para 3) says “unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period”

        The UK doesn’t have to ask. The UK has to agree. The initiative is on the Council’s side, not the UKs (even in this).

        Technical UK purdah rules require that status quo is maintained. I don’t expect Johnson to try to adhere to those, but the EU could argue that Johnson is acting illegally, and that the agreement is implicit in the purdah rules.

        Reply
        1. Ataraxite

          It’s a stretch, but your scenario is just within the bounds of legality. The associated political and media fireworks would be spectacular, however.

          Reply
          1. vlade

            Indeed, but the remainers would be similarly incensed if Johnson tried to misuse the rules to force the UK out regardless of an election result.

            To all extent and purposes, it would be as close to a coup as the UK got in last few hundreds of years.

            Reply
      2. PlutoniumKun

        Despite his rhetoric, I’m assuming even the hardest of hard liners in the government realises that having an election a couple of weeks after a no-deal is incredibly risky – so I would still bet on Johnson in those circumstances asking for an extension to the 31st December and the hard core around him agreeing to it. Especially if he loses control of the timing which seems highly probable (this is assuming he is planning an election, but I really wonder if anyone, including Johnson, really knows).

        Reply
  7. guilliam

    One interesting dynamic that hasn’t yet been getting much attention is that Johnson’s constituency isn’t a tory stronghold like for example David Cameron’s Berkshire but rather a London constituency with a majority of 5034 (which is very slender for a party leader) and judged to be about 50/50 remain / leave. So if his talking up a hard brexit creates any serious economic damage causing some commuters to lose their jobs, then he’s REALLY going to struggle to get re-elected. And of course, the interesting thing is that he presumably knows this…
    https://en.wikipedia.org/wiki/Uxbridge_and_South_Ruislip_(UK_Parliament_constituency)

    Reply
    1. Colonel Smithers

      Thank you.

      Plus there’s talk of the electoral boundaries commission merging Uxbridge with John MacDonnell’s Hayes and Harlington ( the area around Heathrow airport).

      Reply
    2. vlade

      As a party leader, he can move himself to the bluest of the blue, should it come to that. Of course, it would be seen a cowardly.. But I don’t think that would stop him.

      Reply
      1. Redlife2017

        Ha ha ha! Yes, I don’t think being called a coward would stop him.

        Momentum (one’s mileage may very with them, I am, uh, on the fence) are targeting his Uxbridge and South Ruislip seat. They are already sending hundreds of volunteers there regularly.

        Reply
        1. Colonel Smithers

          Thank you, Vlade and Redlife.

          Soon after Sasha Johnson was selected to fight Uxbridge, Kensington became available. Johnson wanted that, but realised that it was unseemly to withdraw and apply for Kensington, for which he’s likely to have been selected.

          Reply
          1. vlade

            Ha, he can try that.

            I’m sure that LD and Greens would take pleasure in not standing (as here they may not have a much of a chance anyways), asking their voters to vote Labour as a way of not returning Johnson.

            Reply
  8. Ape

    I’m worried that the behavior of Mr. Market in light of Brexit and the Iran crisis is driven by over-liquidity and speed of trade. The big money players can move so fast and with such volume (tiny latency, massive bandwidth) that the market no longer reflects predictions about the future, but merely predictions about the instantaneous values of higher order derivatives (mathematically speaking).

    The big players don’t have to worry about being caught with their pants down in a market reaction. They will wait to the very last instant, knowing that they can move faster than the collection of smaller players, at which point they will move fast amounts of capital. They worry more about the gains to be made this very instant, since they are guaranteed to win on long & short bets, due to trading structure.

    The “equilibrium models”, when the economy begins to be actually structured with “infinite liquidity”, mathematically guarantee a lack of memory and a lack of prediction! They become the exact opposite of a mechanism for economic calculation. They become a Boltzmann entropy source — this is precisely what a true physics equilibrium system looks like, it has no past and no future, and is exquisitely sensitive to higher order derivatives.

    Reply
      1. Ape

        It’s why if you’re rigorously defining an equilibrium state, you need to do perturbation analysis to make sure it’s not a saddle point. And you need to define an entropy and temperature to find out how meta-stable the point is, even if it’s not sensitive to small perturbations.

        If you’re going to do equilibrium/steady-state models seriously, you can’t just find equilibrium points, and why equilibrium models can’t handle dynamics — then you have to do detailed physics.

        If you’re gonna use Boltzmann, you really need to know what you’re doin’, and not just do 19th century thermodynamics.

        Reasons to not take mathematical economics seriously — it’s not that using math is silly, but that not taking the whole maths in is very, very silly. Unjustified certainty — and high-dimensional equilibrium is really very hard.

        Reply
  9. Summer

    “He’s refusing to visit EU heads of state because they won’t renegotiate the Withdrawal Agreement….”

    Does anyone think it was “negotiated” to begin with? It does seem, whether intended or not, that it was more like Britain had the Brexit election and Brussells said “here is the agreement.”…..Was it ever going to be anything other than a stand-off from that point? Did they automatically assume it would be like negotiations with other disgruntled EU and EZ countries?

    Reply
    1. vlade

      The main points (bill, citizen rights, backstop) weren’t. The details of that, to some extent, were. For example, the UK was offered a choice of all-UK backstop or NI backstop. The bill amounts were negotiated, as were the details of citizen rights.

      How much of that is margins, vs real negotiations, I can’t say.

      Reply
    2. Ape

      My memory is that it was quite different. There was the election, and then Theresa May said “here are our redlines”. From that point on, the options on the table were very constrained, particularly given the Irish issue.

      The Irish issue is deep, I think. The “border” is a stand-in for an even more serious issue: that Irish identity goes to the core of defending Irish identity across the island. It’s not a border economic issue, primarily, but about the power of the Irish government to have partial sovereignty over the north part of the island. They can not surrender that without undermining the very basis for Irish sovereignty and identity, solidarity between “Irish” people at the pointy end of the stick.

      In short, it’s a national security issue defined not just by borders, but by Irish identity. And of course, no one can say that openly since talking about it would only lead to conflict. That’s not left/right since it depends on the ideology of nationality.

      That’s my guess about what goes on behind closed door among Irish nationalists in the civil service and military wings.

      Reply
    3. Yves Smith Post author

      Come on.

      First, the negotiations were about to break down in 2017 and Barnier rescued May with the Joint Agreement in December, which included the backstop. Everyone treated it as a huge triumph for May. Then she repudiated the backstop a few months later. That’s negotiating in bad faith.

      Second, a point which is not well appreciated at all and we were hugely remiss in not stressing, the EU bent its own rules massively in the WA. The UK got tons of concessions it had no right to expect, given its red lines. For the UK to play victim after it was massively incompetent, unprofessional, and gratuitously rude is quite a spectacle.

      Reply
    1. vlade

      No, it can’t. It can tell the PM to retract. Which is different. Because the PM can then tell them to go to hell, and they could do nothing at all (well, technically, they could humble address the Queen to do it herself, which would be sort of interesting..).

      The Parliament in the UK cannot choose the PM. The only lever it has is to call the elections, but technically, even then it cannot force the PM out, as *gasp* the new PM is, by custom, recommended to the monarch by the old PM. The only way to break this is if the monarch breaks with the custom though, and ignores any “advice” the old PM can give.

      I could see that happening if the old PM was clearly breaking the customs (say Johnson re-nominating himself), but I would not bet a farm on it.

      All of the above, and the current state, just shows that gentlemen rules work when you have gentlement (and gentlewomen). When you have revolutionaries – for make no mistake, that what ERG are – they go right out of the window no matter how 18th century JRM looks and acts like.

      Reply
  10. Ashok

    When anybody says that UK should leave with a deal ,what do they want in that deal?

    1 A corporate body in Uk said that foremost they want friction-less ( or with minimum friction) trading.
    2 A second corporate wants pass-porting for financial services but migrants from EU not admitted freely,
    3 A third body said that they do not want EU laws to apply;UK should make its own laws.
    4 No hard border in Ireland.

    Why will EU give thees freedom to UK?

    Reply
    1. Yves Smith Post author

      The UK desperately needs a transition period. And it needs one for way longer than it will ever get, but that’s a separate issue. It will take a minimum of five years and probably more like ten to restructure its economy to deal with the rest of the world on a free trade agreement basis.

      Reply
  11. bold'un

    Can anyone take the wheel from Johnson: Yes, the Bond market in combination with the FX market! When the expectation dawns that sterling is going to be weak for a decade, the 10-Year now at 0.7% blows out to 6% and you can bid ‘au-revoir’ to stocks, bonds and real estate, and ‘bonjour’ to inflation and unemployment!

    {PS I’m not saying that this will happen in time for Oct 31st…}

    Reply
  12. Mirdif

    Crash out will not happen and Brexit itself may never happen. Johnson is campaigning in the as yet unannounced general election. When they vote for it they’ll also vote to force the government to request an extension at the same time. Johnson is banking on this happening along with a stitch up with Farage to stop the “Marxists” from getting in.

    All ministers have seen the impact assessments and understand clearly what it means. That’s why they’ll never allow it to happen. Even the £100M campaign is nothing. If they announced a £10Bn injection for no deal preparations then that would mean they were planning for it.

    If they do try to go for it the government will fall via a vote of no confidence and this will have been preceded by a parliament voting to force the government to request an extension.

    In all cases, the lying liar Johnson will say, “Not me, Parliamentary remoaners scuppered my plans.”

    The pity is we need a chaotic crash out to teach stupid people that actions have consequences.

    Reply
    1. Oregoncharles

      I suspect we’re about to find out whether the City and big business really do control the government.

      Reply
    2. Yves Smith Post author

      Look at his actions. Johnson’s loud insistence of “do or die” for an Oct 31 Brexit and packing his cabinet with hard liners is utterly inconsistent with calling a snap election and needing to get an extension. It plays straight into Farage’s hands.

      Reply
      1. Mirdif

        Nope. Their not pledging the money that will be needed if they were serious about no deal. This is just a campaign to portray power to the Brexit Party voters who are lapsed Tories. Once the numbers, polling and more importantly engagement stats on Facebook adverts, indicate enough have moved to the Tories in voting intention they’ll move to a general election. This will be preceded by a vote to extend and then they’ll extend before the election. Also, a deal maybe possible with Farage overall or on a constituency basis. The EU will never turn down an extension.

        With Johnson follow his actions (or lack of) and not his words. His actions do not indicate moves to a crash out.

        Reply
        1. Mirdif

          They’re not their. The edit option was not available as the message posted immediately. In my defence I was talking to my son while writing this.

          Reply
        2. ChrisPacific

          It actually doesn’t matter all that much whether he is serious or not. When it comes to Parliament and voters (if not the EU) it will be perception, rather than reality, that constrains the range of acceptable outcomes.

          For example: If May had taken a position grounded in reality from the outset, and done the proper groundwork, she could probably have got the WA through Parliament. Instead she spent two years saying things like “no deal is better than a bad deal” and promoting a vision of Brexit that had no basis in reality and utterly failed to answer the hard questions. That meant that, when she did finally come to grips with reality and accept that the WA was the best available option, Parliament and voters were not willing to accept it.

          The longer this goes on, the more the same dynamic will come into play with Boris and make it difficult for him to change course. He won’t even have the excuse that May did that the alternatives she had previously promised were unavailable – No Deal Brexit being, of course, all too possible. He can, at any time, say that it was all a bluff, it was important for the negotiations that it look as convincing as possible, but now it’s time to accept that it hasn’t worked and reconsider. But bluffing creates expectations on your side as well if they aren’t in the know, and failing to meet expectations creates consequences. Just ask Farage.

          Reply
          1. Mirdif

            The Telegraph is reporting today that Johnson has said the country could stay in the single market and customs union for two more years. He’s backsliding already and will everyday request an extension.

            Reply
            1. Yves Smith Post author

              He’s trying to talk sterling back up and save face (the latter is probably way more important than the former).

              And this is consistent with what we said he’d try to do, although this is a pretty bizarre way to go about it. We said he’d try to create the impression that there was a deal to be had and he was chasing it and the press would play along.

              But instead of running around Europe and having doors shut in his face, Johnson made a point of acting as if he’d shut them (by snubbing EU leaders) and is now engaging in the negotiation version of masturbation, talking to himself about the deals to be had if anyone would sit down with him.

              The EU won’t do anything of the sort and won’t give him an extension to renegotiate the WA. And he knows that.

              He’s talked too much about Oct 31 do or die to have calling a snap election do anything other than serve to drive Tories to the Brexit Party.

              Like May, Boris’ prime directive is to stay PM as long as possible. He’s created conditions that mean that calling a snap election is likely to lead to big losses for the Tories and at best a coalition with Farage in the driver’s seat.

              And even if the EU were to give an extension due to a new GE, it won’t be long. The only way to prevent a no deal is to approve the WA or revoke Article 50. Please tell me how a GE makes either of those happen.

              Reply
              1. vlade

                “Press” being Torygraph and the like.

                Although I have seen various “analysts” and such saying “if pound drops by 10%, Johnson will stop talking no-deal” etc. etc.

                IMO they all make the same mistake of sticking to their assumption, such as that keeping the UK economy actually matters to Johnson.

                They should know better, as his ‘f-k business’ made clear. Also, they really really should think about the fact that for about 60% of Tory base Brexit is worth destroying UK’s economy, destroying the UK, destroying the Tory party and just about anything else (except getting Corbyn in power, although that’s just short of 50%, so a large part of Tory party is willing to go even that far). 60% is about what Johnson’s vote was.

                10% in Sterling? Who cares? If Johnson doesn’t deliver, they will find pretty quick someone who does, except it won’t be likely in the Tory party anymore (hello Nigel, did a pint fell into your trousers, or are you just glad to see us?)

                Reply
            2. vlade

              I would not believe a word of Johnson says either way. Johnson has a constituency of one, Alexander Boris de Pfeffel Johnson, no-one else (and I’m not sure whether it even includes the future versions of this, definitely not the past ones).

              If he backslides, he may be turfed out way faster than May, and Tory defectors to BP will not come back for anyone. Which could well destroy Tory party (so no tears here) as I would not be surprised then if a number of Tory MPs defected to BP and tried for an election.

              Also, on your comment higher up re pledging the money. You assume you know their goals and judge the rationality of that by your measures. I believe that’s hasty. As an example, if someone (like Raab, who’s dumb even by Tory standards) really believes that no-deal will be sharp-short-shock but nothing really significant, 100m could be way too expensive.

              Overestimating rationality of people led to a number of wars.

              Reply
  13. Brian (another one they call)

    There is much ado over this, yet Boris has figured out the same basic thing Trump fiture out upon gaining high office. They know that their poll numbers allow them to do what ere they might without real fear of anything but a great wind from their emasculated parliament/congress. It would seem that unless the people of the UK stand up and demands something different, the Boris is going to deliver the Brexit that was voted for, for good or ill. And it shows how little Scotland and Ireland mean to him.
    All of this is contingent upon the state of the EU, which has worked to eliminate Brexit by “influencing” a lot of MP’s to protest. These protests fall on deaf ears. Boris knows that he has dropped the potato in the EU’s lap and they now have to make a decision. The idea of using the type of coercion they used on May faded when he refused to deal with them until his demand was met, or not. Sorry, but this is just classic games.
    Britain has to maintain the city of London and the ability to print money. If it means impovershing the people further no matter. No one but the wealthy can tolerate the money lost in inflation every year. It has to be the plan or they would have stopped when they saw the destruction it reeks. Violating customs indeed.

    Reply
    1. arte

      I don’t think there is any appetite at all left within the EU to continue the policy of appeasement – the decision is made. The WA was the “peace in our times” offer to the UK, since then the EU27 are committed to the preparations for a no deal. The extension was just to give some more preparation time to the EU – it is already very clear that the UK is always going to waste all the extension time they are given.

      Reply
  14. Ellery O'Farrell

    Just a thought, for discussion by those more knowledgeable:

    The EU approval of the UK’s request for the last extension (to Oct. 31) explicitly stated “(12)This extension excludes any re-opening of the Withdrawal Agreement. Any unilateral commitment, statement or other act by the United Kingdom should be compatible with the letter and the spirit of the Withdrawal Agreement, and must not hamper its implementation. Such an extension cannot be used to start negotiations on the future relationship.” And the UK’s permanent representative confirmed the UK’s agreement to the extension and the decision. https://www.gov.uk/government/news/confirmation-of-uk-government-agreement-to-extend-article-50

    While creative and sophisticated lawyers could without a doubt argue both sides of the question for a very long time, it seems to this US lawyer with a reasonable amount of experience in international negotiations that:
    – The EU decision and consequently UK acceptance are most probably governed by EU law and subject to the jurisdiction of the appropriate EU court
    – A very reasonable argument can be made that the extension was restricted to the UK obtaining consent *to the Withdrawal Agreement*
    While in ordinary circumstances, such as Johnson going over to the Continent to talk to appropriate leaders about changing some aspects of the WA, this could easily be regarded as aspirational language rather than a real condition, we’re not in ordinary circumstances: Johnson has flatly refused to talk unless the backstop (and who knows what else?) is removed, which in turn opens the door to a full-scale renegotiation of the entire WA. There’s not even a pretense that the UK is trying to approve the WA; to the contrary, Johnson has stated that he will repudiate it, leaving without a deal, if his conditions (entailing a re-opening of the WA) aren’t met.
    I think this raises questions for Johnson to answer:
    1. Does your government accept the letter to the EU triggering Article 50, with its then-deadline of March 29, 2019 for exiting the EU? (The answer will be Yes)
    2. a. Has your government repudiated the extension to Oct. 31?
    b. If so, has the UK already left the EU?
    c. If not, are you prepared to accept the WA without reopening it, as the UK agreed in accepting the extension?
    d. What exactly is your view of the current legal status of the UK?
    Not that I think he’d answer any of these questions, but if he did the answers could be interesting….

    Reply
  15. EoH

    Re Alastair Campbell, anyone who thinks this – “1997-2010, was the only time Labour has won three successive terms, delivering huge change for the better” – is best gone from the Labour party. But that’s what Tony Blair’s former spokesman and communications director at No. 10 would say.

    Tory-Lite New Labour – really, the Party of Tony Blair – had no more in common with the Labour Party than New Democrats had in common with Democrats. He personalized it beyond recognition, which required reinventing itself on Blair’s departure.

    That a few New Labourites remain in the contemporary Labour party is one reason that reinvention remains a work in process.

    Reply
  16. EoH

    BoJo is brighter and more effective than the clown he often plays in public. His private boorishness, however, exceeds the low standards set by the typical Oxford drinking club.

    Apart from his conservatism, his biggest problems are that he rarely prepares; he has the ego, stubbornness, attention span, and self-discipline of Donald Trump; but he has in spades a hedonism that Donald Trump avoids.

    The process hurdles are immense. But the only way the United Kingdom is likely to avoid a hard Brexit, and the probable loss of Scotland and Northern Ireland, is for a general election to turf out the Tories. There’s just the matter of Labour finding someone other than Corbyn to lead the party.

    The oddsmakers are probably selling the UK short.

    Reply
    1. EoH

      The closing observation from the cited NYRB’s article on Boris Johnson, “The Ham of Fate,” by Fintan O’Toole,

      “When things are too serious to be contemplated in sobriety, send in the clown.”

      Reply
    2. EoH

      As for the hedonism, I should have said that Trump avoids the alcohol. Sexual license is something he shares with BoJo, who claims to have so many women because he has so much purity of essence to give them.

      His behavior pattern in that regard one wit described as conquest without the consequence. He and Trump share that, too. BoJo may find, however, that what he does as PM has consequences he’d rather not contemplate, but which he will be unable to avoid like an old fling.

      Reply
  17. DHG

    Whether or not it does or doesnt exit the EU in a no deal is irrelevant, what is very relevant and reality is that the Anglo-American world power goes to its destruction at the hands of the Kingdom of God a FULLY functional entity. If it can still function with no deal then it may happen if not and the end of this system of things is not yet here then it will not happen.

    Reply
  18. vlade

    Now, will Jonson respond to this with “Why aren’t they all called Murphy?” too?

    It appears he’s not messing up (like he seems to think) with a small 5m nation, but in addition to the EU, the 35m or so Irish-Americans seems to think they would have a say if Jonhnson blows the backstop off the water.

    Reply
    1. Redlife2017

      He seems to forget that Americans take their Irish ancestry seriously. It’s like we have a genetic memory of what the British did to our forefathers/mothers. He shouldn’t doubt that domestic politics in the US may require stomping on a trade agreement if a boarder comes up.

      Inflection points always have too many variables to properly model. Ugh.

      Reply

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