Brexit Radicals

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The UK is in an odd period of stasis as the Brexit storm looms, a seeming dim echo of the summer of 1914. From HistoryJournal:

The summer before the war, the summer of 1914, was memorable for its picnic-perfect weather. During these warm summer months, Europe (especially Britain, which hadn’t really seen war for a hundred years) breathed the air of chivalry, romanticism, and boundless self-confidence for the last time. The shock of the war to come contrasted so sharply with the idyllic season before it (Fussell describes at length in the first chapter how this dichotomy created a sharp and enduring impression of the irony of life on the Western psyche), that “the summer of 1914” would for many decades become synonymous with astonishing naiveness.

The Great War wasn’t simply a conflagration that killed millions of combatants and civilians including many young British and continental aristocrat who had enlisted to get bragging rights for taking part in what they expected to be a short conflict. It was also the end of an era.

If the Tories move Brexit from indeterminism to consummation, it will represent the end of an era for the UK and may have much broader ramifications. But the repercussions likely depend on choices yet to be made.

Absent a remarkable turn of fortune, Boris Johnson will become Tory party leader. Both Johnson and his fellow candidate Jeremy Hunt have sworn fealty to delivering Brexit on October 31 or at the very worst, a short period of time thereafter.

As we’ll discuss, plenty of influential parties, including some Tory MPs, oppose a crash-out (which is the only type of Brexit that can happen on a tight timetable, given the antipathy to the Withdrawal Agreement that is the only deal with the EU on offer). But as May’s astonishingly long survival showed, a Prime Minister wields considerable power, most importantly over the Parliamentary timetable. It is hard to see how pro-Remain and less rabid Brexiteers could wrest the steering wheel from the new Prime Minister to change the current trajectory.

Hunt, who had been trying to sound more reasonable and better prepared than Johnson (a low bar), has now become sanguinary:

This is consistent with the UK being on a path to a crashout; the only open question seems to be the timing.

Ian Dunt’s assessment of Hunt at is too delicious not to pass along:

Hunt simply has no qualities to recommend him. Presentationally he is extremely drab, a politician in the form of a brown carpet. He always looks slightly frightened. No-one has ever been inspired, or amused, or even outraged by him.

His politics, if indeed he has any, are all over the place. He seems like a fairly pleasant nice-but-dim figure, and tries to overcompensate for this by aiming too fiercely for what he presumes is a Tory comfort zone.

Admittedly, Johnson is so famously devoid of scruples that he could conceivably make a wild reversal once he becomes Prime Minister. But he has been a vociferous Euroskeptic for so long, and the Conservative party members are on the whole such fervent believers in the Brexit cause that it is hard to see how he could make a dramatic course change.

On top of that, the Tories feel the hot breath of the Brexit Party on their necks. One school of thought is that Johnson would call a general election both to take advantage of Labour’s current weakness and buy some time with Brexit. But it’s not hard to see that during the campaign, Farage would charge Tory leaders with putting party interests over their promise to deliver Brexit. Readers have argued that Johnson could offer Farage some seats (by having the Tories not contest them) in return for being a coalition partner.

But be careful what you wish for; look at how the DUP flexed its newly-found muscles. Farage, who has been salivating to play on a bigger political stage, would be even more keen to be seen as shaping the course of events. There’s been an uproar at the Brexit Party’s adoption of fascist imagery in a rally in Birmingham a few days ago. From the Mirror’s Internet flummoxed by ‘Nigel Farage’ rave at Brexit Party rally:

Nigel Farage held a Brexit Party ‘rave’ complete with glow sticks and air raid sirens….

Those in the hall seemed to be having a great time but the response from those looking on was one of confusion.

Many made comparisons with World War Two and some even compared the mass rally to Fascists.

Dave Saul tweeted: “A Blitz themed club night for pensioners born after the war, DJ’d by an Oswald Moseley pastiche.”

Tom Scott, a Green Party candidate for the European Elections, tweeted: “Ever wondered what a cross between a Barry Manilow gig & a Nuremberg rally might look like? Well, you need wonder no longer, thanks to Nigel Farage and the Brexit Party.”

Oswald Mosley led the British Union of Fascists.

But May greatly overestimated the strength of her position when she called a general election; despite having a loyal fanbase, Johnson is also loathed, particularly by other MPs.

So another school of thought has been that a handful of Tory rebels would stage a vote of no confidence in Johnson and succeed in fomenting a general election. But this approach is looking less likely as various “Parliament taking back control” gambits are failing. From Reuters:

A group of pro-European Union lawmakers failed on Monday in their latest bid to prevent Britain leaving the bloc without an exit deal, after parliament’s speaker did not choose their proposal to be put to a vote….

Former Conservative Attorney General Dominic Grieve and former Labour Foreign Secretary Margaret Beckett had tabled an amendment to routine finance legislation, dubbed estimates, aimed at cutting off some of the government’s funding if May’s successor pursued a no-deal Brexit against parliament’s will….

It was the latest attempt by lawmakers to try to prevent Britain leaving the EU without a deal. Last month lawmakers defeated an attempt by Labour to try to seize control of the parliamentary agenda from the government in order to introduce legislation aimed at blocking a no deal exit.

This failure does not augur well for Brexit foes:

Nevertheless, because the Tory party member radicalism is unrepresentative of the UK public generally, more study is being given to how to derail an incoming PM’s course to a no deal. Frankly, I am more persuaded by the Institute of Government’s May article, A new prime minister intent on no deal Brexit can’t be stopped by MPs, than I am by a new piece by The Constitution Unit, Six constitutional questions raised by the election of the new Conservative leader. Perhaps it is the result of seeing too many wildly divergent interpretations of constitutional law in the US when we have a written constitution.

Nevertheless, this analysis includes a discussion of whether the new Tory party leader could be prevented from becoming Prime Minister as a result of doubt over his commanding a majority in Commons:

If there is serious doubt about the new Prime Minister commanding parliamentary confidence the Queen might make a provisional appointment, conditional on the new PM demonstrating confidence. Alternatively, Theresa May could remain in place and facilitate a process in parliament to demonstrate that the winning candidate – or indeed an alternative candidate – can win a confidence vote, before recommending that person to the Queen.

Now it is easy for me as a Yank, not understanding the subtleties of UK power dynamics at critical junctures, to pooh pooh the idea of the Queen playing an influential role. The precedent they cite of the Queen intervening is from 1963. The Crown is much respected and influential now. For instance, the Fixed Term Parliaments Act reduced the role of the sovereign, and the Sovereign Grant Act 2011 consolidated the main sources of income to the crown and increased transparency. Per Wikipedia: “Funding to the Royal Household is treated similarly to funding for other government departments, unlike previous Civil List payments.”

The Constitution Unit piece does lay out how little working time there is between the announcement of a new Tory party leader and the October 31 date:

The House recently agreed a government motion that it should rise on Thursday 25 July and return for the September sittings on 3 September. The deadline for postal votes in the Conservative leadership election is Monday 22 July, with the result expected on Tuesday 23 July. It has been suggested that Theresa May might face her last PMQs on Wednesday 24 July, before resigning as Prime Minister. That would leave just one day for the new Prime Minister to meet the Commons and establish whether he can command its confidence. Should questions about confidence among Conservative MPs precipitate the kind of delay suggested above, parliamentary time for this test would soon run out….

The expected route to a vote of no confidence would be a formal motion tabled by the Leader of the Opposition, which by convention is guaranteed parliamentary time – usually there is a two-day debate before the vote. If instead the new government wished to positively demonstrate that it could command confidence, it would need time to set out its new Brexit strategy in detail to the House of Commons, before the summer break. A demonstration of MPs’ support for that strategy would clearly be valuable before re-entering negotiations with the EU. Without time for one or another of these processes to take place before parliament disperses for the summer there could be loud claims (however unfounded) that the new PM does not in fact command parliamentary confidence, and that parliament has been silenced.

The authors opine that Commons would therefore remain in session after July 25. That looks optimistic. The article sets forth other timing options:

Conservative MPs desperate to go away on holiday may well give the new Prime Minister the benefit of the doubt in July, and prove reluctant to precipitate an early crisis. But if by September it becomes clear that the new PM is heading for an October ‘no deal’ exit, MPs have few procedural devices to prevent that from happening. Some Conservatives have clearly indicated that they would be willing to vote down the government in this case. But the timing would be very tight – which again points to likely requests for a summer recall.

Parliament is currently due to return for a fortnight on 3 September, and then expected to adjourn again for the party conferences until around 9 October. The September sitting would no doubt hear a statement from the new PM about his progress in renegotiating Brexit, and the likelihood of reaching a deal. It could be difficult for MPs to vote down the government so long as a renegotiated deal appears realistic.

Um, anyone who has been paying attention knows a “renegotiated deal” as in Withdrawal Agreement, isn’t happening, save at most at the margins, like changing the dates of the transition period. But a new Prime Minister will bray that a new deal is nigh, particularly before and during certain-to-be-futile meetings with key EU figures when the UK press will be all too willing to amplify that message.

And on top of that, it doesn’t appear that the anti-Brexit (or at least anti-Tory) forces are willing to play nicely with each other in the event of a General Election:

Finally, what about Ireland, which is likely to become road kill in the event of a crash out? It should have occurred to me that the EU anticipates that while the Republic may suffer considerable short-term disruption, and it and the EU will be sorely taxed to come up with emergency measures to keep Northern Ireland from acting as point of entry for all sorts of non-EU compliant goods, the EU officialdom may have gamed out that the UK will swallow the backstop in less than a year and thus the damage to the Republic will be limited.

Why? As Richard North has discussed at length, the various crash out “everything will be fine” claims, invoking magic talismans like “trading on WTO rules” or “relying onexisting legal frameworks” are non-starters. Chris Grey recaps how many experts have slayed another unicorn, GATT Article XXIV.

So in the event of a no-deal Brexit, the UK will soon be plagued with disorder, shortages, plant stoppages, and the prospect of large scale business failures and job losses. Finding a way to normalize trading with the EU will be of paramount importance. The EU has already committed to making the Irish backstop a core condition of any arrangement. We’ve reported on this before but we’ll turn the mike over to Grey:

Jean-Claude Juncker has said that the EU would not open trade talks with the UK after a no-deal Brexit unless the UK signed up to the main elements of the WA.

Michel Barnier has said the same thing in unequivocal terms: “if … the UK were to leave without a deal, let me be very, very clear. We would not discuss anything with the UK until there is an agreement for Ireland, for Northern Ireland, as well as for citizens’ rights and the financial settlement” (£). So has EU Trade Commissioner Cecilia Malmstrom….

So while Ireland will be hard hit in a no-deal Brexit, key EU leaders may be betting on the idea that its pain will be time-limited, which is more than one should assume for the UK.

In other words, it might be wise to assume the brace position come the fall.

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  1. PlutoniumKun

    Excellent summation. It really has gone eerily quiet, which I put down to the nice weather. The comparison with the summer of 1914 is very apt.

    I would just add that Johnson is not quite the shoe-in everyone assumed – he seems determined to throw it away, his campaign so far has been horrible and even many of his grassroots fans seem to be having a few doubts. But Hunt isn’t really competing seriously, he obviously just wants to do well enough to be rewarded with a cabinet position. Johnsons people were very smart in engineering Hunts win over Gove for second place.

    Hunt would be a disaster, an even weaker version of May. He would be incapable of engineering any kind of deal whatever.

    There is, I think, one slight door open for a Johnson premiership – he could possibly engineer passing the WA, arguing that he’s delivering Brexit, everyone just has to wait a bit for the final details. I think only he could do it, and I suspect many of the people behind him expect or hope him to do it, but its pointless speculating. I think its conceivable that the votes could be there in the event of an October panic. But I certainly wouldn’t bet on it.

    I’ve been a strong advocate of the idea that Johnsons plan is the quickest possible election so he can dump the DUP and destroy Corbyn. But given his weakness so far, I’m wavering on this, I’m not sure he has a real strategy or the organisation to push the motion through Parliament (the DUP will fight this). It is possible that it could happen by default if a few Tory rebels manage to engineer a no-confidence motion. But the timing is incredibly difficult. Its possible I suppose that the EU could give an extension until January on the basis of a new government, but even this doesn’t seem all that likely.

    I don’t know how aware Johnson is for this, but an obvious ‘out’ for a deal is to go back to the original EU offer of the backstop applying to Northern Ireland only. The DUP stopped this, but Johnson cares not a fig for NI (or Scotland for that matter) and might see if he could do a deal to dump them and go back to this. It would be a triumph for him if he could do it, and only he I think has the ruthlessness to do it.

    The LibDems have also shown their hands politically – they’ve always been a sort of cosy mix of old style economic liberals with a lot of lefty/green types who for one reason or another didn’t feel comfortable in the Labour Party. Its clear now that since they went into coalition with Cameron the lefty/green types are either gone or vanquished – they are an economically right wing party, far more in tune with moderate Conservatives. There is no potential deal there with Labour and probably not with Greens or Scottish Nationalists either. They will focus on collecting Labour and Conservative defectors to build up their position as potential king-makers after the next election.

    The Irish government is still frantically working hard to keep the EU onside, although they are distracted at the moment by other things, most notably a campaign for a UN Security Council Seat (many of the Brexit team are currently in South America, lobbying various leaders). They have no worries about the backstop – the EU is united on this – but they do worry about a lack of financial/logistical support in the event of a no-deal. A massive reorganisation of supply chains is going on, but there are terrible bottlenecks likely – there are discussions going on for example that heavy trucks will be allowed to drive through the centre of Dublin to keep Dublin Port moving (this is related to the change to direct shipping to the EU). It seems that the closer they look into it, the more complex it all becomes.

    1. fajensen

      I would just add that Johnson is not quite the shoe-in everyone assumed – he seems determined to throw it away, his campaign so far has been horrible and even many of his grassroots fans seem to be having a few doubt

      Is it possible that Boris Johnson has sussed out that, while popular with many, he is still unpopular enough within the Tory Party to be seen as the perfect person to be holding the unpinned grande that is Brexit?

      After Boris Johnson flubs Brexit (Crash-out or whatever he eventually does, I don’t think he knows it either), the real leadership would come forward. To “make a new beginning”, “unite the kingdom”, and such.

      Based on the level of chaos, and Boris is very good a creating Chaos, they might get away with assuming Emergency Powers under the Civil Contingencies Act 2004 (CCA 2004) thus keeping DUP+Farage+Corbyn out, Brexit online, and generally continuing the authoritarian direction that the UK has been on for many years.

    2. Ataraxite

      I agree that Johnson is the only candidate shameless enough to be able to try a huge turnaround on Brexit, but I also am beginning to feel that the time has passed, and no no-one can turn the oil tanker. It seems like No-deal Brexit has become such a firm article of irrational faith for a politically significant bloc of the UK electorate that they can now threaten the existence of the Tory party itself.

      The main hope against no-deal Brexit lays in the fact that Johnson is lazy and detail-phobic. He will surely come to realise (and I think he already has, hence the poor campaigning almost amounting to self-sabotage) that No-Deal Brexit is going to be a massive crisis, requiring a massive government response. Churchill may have only slept a few hours a day during WWII, but he was on top of a lot of details and coordination, and this is not Johnson’s style at all. He’s a comedian, a showman, a glib bluffer who’s allergic to hard work, and No-Deal Brexit is going to be some really hard work.

      1. PlutoniumKun

        I’d agree with this. The most dangerous driver behind a no-deal now I think is that for many people (and I include Remainers in this) it seems easier ‘to get it all over and done with’. People are sick of the uncertainty. I don’t think people have quite got their heads around the idea that post no-deal will be like the Withdrawal Agreement circus, but on amphetamines. I really don’t know if Johnson and the people around him realise this.

        One slight wild card I think is that one person who actually doesn’t want a no-deal is Nigel Farage. The exit that isn’t an exit yet is his meal ticket. After a no-deal he becomes an irrelevancy, and there is nothing he fears more than a lack of attention.

    3. Ignacio

      I consider the liberals as the most dangerous political option nowadays. They so radically push the “free markets” ideal that even conservatives realise that that is too much dystopian. Macron for instance is a weird political amalgam of ideas that go from hard neoliberal to… neoliberal with some environmental concern. Another instance is being “green” and at the same time “liberal”, what the hell is that? The political landscape is messy everywhere, not only in the UK. It is just that brexit has become the touchstone that demonstrates the lack of authenticity of every political option.

  2. Clive

    The wee snag-ette with a theory that the Irish Protocol (as the backstop is more formally known as in the Withdrawal Agreement) can be resurrected and enacted post a No Deal Brexit is that the Protocol is based on picking up from a position where the U.K. has left the EU with no resumption, legally-speaking, back to national U.K. law having reasserted superiority.

    There would, under the Withdrawal Agreement, simply be a carry-over of EU law in so far as its jurisprudence in NI was concerned. With no time gap, there is no “de-accession” of NI, inherited, as it would inevitably be, by the U.K. leaving the EU.

    But this is not the scenario under a No Deal Brexit. In this eventuality, versions of EU-assumed competencies would be replicated in U.K. law (to aim for, in the short or even medium term — or even permanently, should the U.K. wish to maintain theses — a replication of how U.K. law works post-Brexit based on the state of play on Exit Day itself). This is what the hundreds of Statutory Instruments wending their way through the U.K. Parliamentary system are doing. These pieces of statue would, on Exit Day in a No Deal situation become the law in NI. The U.K. would leave and, stating the obvious, take NI with it.

    In order to have jurisdiction in NI, a brand-new Irish Protocol will need to be agreed between the U.K. and the EU27 which not only gave jurisdiction back to the EU where the competencies required to facilitate the Irish Protocol so requires, but also re-established all the EU rights to acquire those competencies which disappeared like Cinderella’s coach turned back into a pumpkin when the clock struck the appointed hour on Exit Day.

    This is why the Withdrawal Agreement *had* to be passed before Exit Day. Not after. It wouldn’t work, as drafted, after-the-fact of Exit Day.

    So not only do you need U.K. primary legislation which enacted the Irish Protocol, which will be difficult enough to get through intact after all the necessary committee stages (but at least has been agreed and drafted), but you will also need a new legal settlement for NI (that must facilitate its jurisprudential carving off from the U.K. so that changes in U.K. law aren’t automatically inherited by NI where the Irish Protocol must be made superior). And all this must happen in a way which is Good Friday (Belfast) Agreement-compliant. Without a sitting devolved legislature in NI.

    Nothing that can’t be done, of course. But to say that this complex, currently undrafted and obviously highly contentious legislation can make its way through the U.K. Parliament in a year or so is, ah-hem, somewhat optimistic. And also assumes that there’s no legal challenges (an obvious one being that, in a No Deal Brexit, the U.K. has, again, stating the obvious, left the EU so how can the EU, lawfully, just as if by magic pick up a chunk of sovereign non-EU territory without going through the mandated EU Accession process?; otherwise, the EU Council could just decide that, say, Turkey could accede tomorrow, just ‘cos it felt like it and that it was politically expedient to not have to bother with all that bothersome and time-consuming pre-accession stuff)

    If that’s what the EU is counting on, it too seems to have discovered a belief in unicorns.

    1. Donn

      Your comments are always so insightful and thought-provoking, Clive, and this is no exception. The scenario you’ve sketched out in some detail suggests what many have already intuitively sensed – that if the UK crashes out, events will likely outpace legislation and the machinery of government as a whole. And not just that of the UK.

      The deluge of Brexit has the potential to change everything, and when it subsides, even the dreary steeples of Fermanagh and Tyrone may no longer remain standing. I fear the work of many a legislative chamber on these islands and elsewhere in Europe will be focused on dealing with the aftermath of facts on the ground, and reconciling these with whatever has been left standing.

    2. Ignacio

      NI/Ireland will almost certainly develop into a cyst unless there is an internal agreement between both jurisdictions. I believe the solution cannot be provided by the EU, neither the UK.

      1. PlutoniumKun

        I would not underestimate the ruthlessness of Dublin if it came down to a choice. Irish politicians desperately want to keep the peace, but economically the Republic is in a vastly better place than Northern Ireland and if there is a choice, Dublin will always choose its own economy over border/NI issues.

        Dublin will not compromise or fudge on any deal if it has the potential to destroy the Irish beef and dairy industry – it will completely cut off any cross-border flow south in order to stay firmly within the aegis of EU trade and rules. And the core economy of Dublin and the more prosperous parts of the country have little need for NI trade (at least not for anything that can’t be replaced easily enough). Dublin will double down on EU links, it will extract all the aid it can get, but domestically it will do everything it can to seal the economy off from what you might call ‘border issues’.

        This is something that neither UK politicians, or for that matter the DUP, truly understand.

        1. Ignacio

          Thank you PK, it is good to have a direct idea on the political background in Ireland before the very likely no deal brexit.

    3. vlade

      And? Either the UK would want a deal with the EU, which would likely involve quite a bit of legislatin that would have been easier with WA ratified before, or the UK would not want the deal. Unless you’re arguing that the EU needs the UK more than vice versa.

      There will not be EU headlines ‘Ireland has to be sacrificed for greater good’.

      1. Clive

        Yes, and as Barnier himself said, it would be in the form of an “Agreement for Northern Ireland”. He chose his words carefully.

        He presumably realised that, in the event of No Deal, you can’t simply pick up the Irish Protocol like a discarded sweet wrapper.

        It’ll need either a revised agreement, which won’t be the backstop, done in the interests of damage limitation, that can be implemented quickly and relatively easily — without much argument from the U.K. or the EU27. It’s hard to not envisage that Barnier was referring to Cross Border Cooperation like the EU already has in place with multiple third countries. If he’d meant the backstop, why not come out and say it? He knows enough to know what can be done, in what timescales, and what can’t.

        Or, the EU27 can hold out for the full-fat backstop, but that will be neither quick nor easy (a multi-year process as the U.K. would need to seek as a minimum associate EU membership, from a starting point of being a third country), because as the Irishman said, you can’t get there from here — nor even with any guarantee that it’ll ever happen.

        But “the backstop in a year” (as a solution to EU forbearance being the only other option) is a delusion.

        1. vlade

          I’d agree to that – unless the hit to the UK economy is truly catastrophic (but then it may be lampposts for Tories, Nigel and a few Labour MPs, and possibly fast re-application to the EU).

          Where Johnson has one card which no-one dared to play yet is to link the backstop to a reunification referendum. I believe that would be acceptable to the EU, Ireland would hardly be able to say anything, and in the UK it would be acceptable to all but the DUP. But, if Johnson told them – your choice is new election or abstention on this?

          1. Yves Smith Post author

            Rejoining the EU would take many years. The EU says it would not get to jump the queue and go ahead of earlier applicants. Not only would the UK lose the Thatcher rebate, but it may even have to adopt the Euro down the road. Even if that does not happen, the EU is on a path to greater integration and the UK would have much less ability to undermine that given how its leadership has shown the UK bureaucracies and political apparatus to be incompetent top to bottom.

            See here for details:


            1. vlade

              that’s why I wrote “re-application”, not “re-admission”.

              Re the other stuff – sure (ex the Euro, unless the EU creates an actual enforcement mechanism). But at least some of the current Brexit stuff is based on the misinterpretation of the UK’s history. Give the UK 10+% unemployment, 20+% young unemployment, weak pound and semi-permanent recession for a few years, and people will remember the EU as the golden times and forget everything else.

              Even a number of ardent leavers will claim that they would have had changed their minds and voted remain in the second referendum. That’s just human nature, unfortunately.

  3. Ataraxite

    I was chatting a little while ago to a Tory mate of mine, someone who has been quite horrified by Brexit. And he’s now changed his tune too: Just get it over with, deal, no deal whatever. To me, this is quite shocking, and deeply worrying if, as seems to be the case, this sort of Brexit fatigue is spreading.

    UK elections are held on Thursdays, which means that the last possible date for an election is Thursday, October 24. Counting back 5 weeks, this means an election would have to be called before September 26. Or if the No-confidence provisions of the FTPA were to be used to trigger an election, the motion of no-confidence would have to be passed 14 days before this – so September 12.

    MPs return from recess on September 3, if everything goes as planned (which I think is likely). So there will be a period of 9 days where MPs can actually exercise their power to prevent No-Deal. Once things move beyond September 12, MPs could only move a vote of no confidence, and then *hope* that the EU will grant an extension for an election.

    Things are dangerously quiet, but that will change come September. Brace, brace!

    1. disillusionized

      There is some confusion about the 14 day period of the FTPA, it’s unclear if its only the sitting government that might regain confidence, or if a new goverment might take its place.

  4. Colonel Smithers

    Thank you, Yves and the NC community. Splendid insight as always and a refuge from the insanity.

    Colleagues, former and current, in banking and asset management, and I working on such matters are struggling to get our firms ready for a crash out or transition out. I am working on client assets and foreign exchange at the London Branch of an EU27 TBTF. We reckon that our firms won’t be ready until well into 2021. UK regulators recognise this and are hinting at a year’s grace from a crash out or 6 months, now shortened from 12 months, from the beginning of the transition. Continental regulators seem more interested in a longer period, so that more than just the business which requires an EU passport can migrate from the City to the EU. We joke about how we can squeeze such complexity into a single tweet or screaming red top headline.

    The ATL references to WW1 and Mosley are interesting.

    Many times last year, serious historians, not jokers like Sasha Kemal Johnson and Rees-Mogg, complained about the lack of attention paid / coverage given to the WW1 anniversaries and lessons learnt, a missed opportunity.

    Hunt is related to Oswald Mosley and his son Max, the biggest donor to and bundler for Labour deputy leader Tom Watson. He inherited his seat from his cousin Virginia Bottomley and when first elected faced, from the opposition benches, his cousins Harriet Harman and Kitty Usher, then Labour ministers.

    Hunt is the son of an admiral and former UK and NATO commander, so well-connected to the securocrats who coordinated last week-end’s media attacks on Corbyn, vide articles by Simon Kuper in the FT and Rachel Sylvester in the Times. He made his fortune with Hot Courses, an online education provider that was given the monopoly by the British Council. Who was a leading light at the British Council at the time? None other than Stephen Kinnock, Labour MP and husband to the woman called Gucci Helle in Denmark and Grace Mugabe at Save The Children.

    I wonder whether we would be better off with Sasha Kemal Johnson as PM.

    1. PlutoniumKun

      Thanks CS. In Ireland, the move to strengthen regulations to attract more City business has hit a roadbump in that they’ve found the new Central Bank Governor had some ‘issues’ in his past career in New Zealand. It will be sorted out, but they don’t really need this sort of headache now. There is also a huge issue with staffing.

      One major developer is engaged in a very intensive campaign to raise building height allowances in the Docklands area of Dublin, the main area of interest for incoming banks (who obviously don’t believe in climate change, this is all on reclaimed land only marginally above sea level). So some are very bullish about attracting industry. Although I think there is a big of a clash between business, which is hoping to attract big name banks, and the government agencies charged with bringing in work, which is more interested in attracting small but fast growing start-ups. The latter strategy was a huge success for Ireland with IT in the 1970’s to 1990’s (Apple, Microsoft, etc., moved to Ireland well before they were so dominant) and they hope to repeat it with Fintech.

      I suspect that constraints with office space and staffing will make major banks reluctant to shift to Dublin, there is far more flexibility and capacity in Amsterdam, Frankfurt and Paris. I suspect the Irish Central Bank and other regulators are not unhappy with this.

      1. Colonel Smithers

        Thank you, PK.

        It would be less difficult to book business in Frankfurt, especially as EU27 rules are often less prescriptive, but many clients, often for tax reasons, do not want to book their transactions there.

        1. PlutniumKun

          So far as I’m aware, the Central Bank in Ireland is resisting any attempts to use Dublin as a ‘notional’ HQ for tax reasons unless there is a firm commitment to a genuine move – they don’t want a repeat of 2008 when they found the buck ended in Dublin, even for crappy German regional banks. They’ve given a surprising number of applications a firm ‘no’.

          Ultimately, Dublin is in the happy position that it can afford to be choosy about who to welcome – Dublin is too small to be able to absorb a large number of new HQ’s, so they can afford to insist on only the better ones. The former Governor was strong on this, the jury is still out on the new guy.

          1. Colonel Smithers

            Thank you, PK.

            That is good thinking by Irish regulators.

            I reckon that we’ll see more of the test of substance applied, but to bring work, not avoid tax, in other jurisdictions.

            I have come across former Irish regulators Matthew Elderfield, Stefan Gerlach and Cyril Roux. It made some sense to bring in outsiders for a while and break that cosy club of government officials and businessmen.

            1. Greg

              NZ treasury dept is the noble bastion of neoliberal economics and right-thinking which poses the biggest threat to any labour governments attempts to correct the havoc prior economic advice has caused, if that makes sense.
              Not sure that the man in question has the same ideas or was just put in charge for a while, but the “hack” debacle was ridiculous and typical of the mba-style machinations that go on over there.
              Hopefully Ireland thinks better of helping him fail upwards.

        1. Synoia

          The IPCC estimates appear to be based on straight line extrapolation, not a growth curve. Their estimates thus have a great deal optimism included.

      2. larry

        Thanks, Col, PK. Bill Mitchell has found that a number of fintech orgs are asking for him to give them a talk on MMT in Australia, Europe, and the UK. His US colleagues are doing the same. They are apparently not buying the kind of hysterical dissing of MMT that the mainstream is producing. On the other hand, Bill has found politicians strongly resistant to taking on board any information that contradicts what they already think they know.

        There is a hypothesis making the rounds that purports to explain this. It is that the brightest go into fintech while their compatriots go into politics. Whether this is true or not, what seems to be the case is that those in fintech are realizing that understanding how the monetary system works may enable them to survive or even survive well the inevitable next downturn, or not if they don’t. Survival is preferable to potential immolation, I would have thought. Perhaps politicians are insulated against such shocks and are, therefore, unmotivated to engage with this paradigm. But their constituents wouldn’t be so insulated. So, where is their care for their constituents?

        1. larry

          I neglected to mention that they are all looking at Brexit, each for their own reasons.

        2. Mark

          Maybe the common denominator between fintechs and MMT is the interest in new and untested stuff while politicians are more concerned with how things are and have worked in the past ;).

      3. ChrisPacific

        This is the best article I’ve seen on the Treasury data breach:

        It will blow over. Yes, Makhlouf got it wrong and he should have taken accountability for the security fault on Treasury’s part, but it’s not like they left the front door wide open, in spite of what the media has been saying. If I was his new employer I would make a mental note to get him a good CISO and make damn sure he consulted them before making any public statements on security breaches, but if I’d concluded he was otherwise well qualified for the job then I don’t think it would be enough to change that opinion.

    2. Ignacio

      Last sunday I watched a movie filmed in Mauritius on TV. The movie was an awful german drama –because of the protocol for excessive deficit, the spanish public TV started to buy these cheap german products instead of decent films– but the landscapes were wonderful. Many scenes filmed in Port Louis. Such a nice island Colonel!

      1. Colonel Smithers

        Thank you, Ignacio.

        The island is beautiful, but suffering from environmental damage due global warming (coastal erosion and drought) and negligence (locals who don’t care about the quality of life and perhaps aesthetics).

        Port-Louis has lost many, if not most of its colonial buildings, especially from the 18th century. It was a bigger version of New Orleans’ Vieux Carre and built at the same time, including by gentlemen Jonathan Holland Becnel will know, La Fayette and Pontchartrain.

        You should visit us.

    3. Tim Smyth

      Your statement about continental regulators willing to continue to give a grace period for banks actually leads me to believe that on the EU side they may see it in their interest to give the UK one last 6 to 8 month extension without really any conditions(Leading up to just before the EU’s next MFF vote in 2020). On the UK side Hunt and Johnson are in a bit of bind at the moment. Given the limited time left until October 31st they need Parliament to sit almost every week to have any hope of getting the necessary no deal prep legislation passed into law and even if the get a new unicorn withdrawal agreement they are still going to need an extension past October 31st to get it passed into UK law.

      On the other hand of course the more Parliament is in session the more opportunities for it to try to revoke or force some type of extension. So once the leadership election is done their is something to be said for both sides to agree to another final extension without Johnson or Hunt seemingly being forced to by Parliament. Hunt’s plan for a no deal budget again would seem to open up vulnerability. If Parliament votes down a no deal budget then how does the government go ahead with no deal.

      So my final point speaking as someone without a lot of expertise compared to some of the others here. Once the leadership election is finished what are the medium term downsides for the Tory’s in going for a no deal next year instead of this other than in the mean time Parliament could try to revoke or overrule? Is their Tory base going to vote for Farage in 2021 instead of the Tories because the Tories went no deal in 2020 instead of 2019. Again don’t take my views too seriously but tying back to my original point it would seem to make the EU27 look worse domestically to be given grace periods after a no deal Brexit instead of granting another extension. Others I think I have better knowledge of this. Just curious though.

      1. Yves Smith Post author

        The UK has to ask for an extension. The EU can’t grant one without having been asked.

        And my sense is despite Macron being inept, there are some EU leaders (in addition to the two that backed him in April in opposing an extension) that regard his call in April as correct. In other words, I suspect the divisions on what to do regarding the UK are widening. If that is true, it makes it more plausible that a small bloc will nix an extension. And if that is a credible threat, the most that would be granted as a compromise would be a short one, like to the end of the year.

  5. Redlife2017

    My lefty friends are tearing themselves apart over support for a second referendum. It is like looking at conversations that monks had in the middle ages: “How many angels can sit on the head of a pin?” They can’t interact with the fact that Brexit is very much a done deal and Labour has been [family-blog]ed for some time on this.

    The LibDems would never have helped Corbyn – everyone (even parts of the PLP!) is allergic to the FDR-style socialism that we had post WWII. Why anyone thought they would help??

    An as noted by Ataraxite, yes, Tories and even LibDems I know who are not on the “crazy” right are just like “GET ON WITH IT”. “It won’t be the worst thing.” The hard-core remainers and lefties are not interacting with that reality. The reality is a poorly managed no-deal with a lazy spoilt brat in charge. See, that’s something to start planning around and deal with. We should be nailing that constantly. Instead we worry about a 2nd ref that only some people want (that wouldn’t include all options, by the way), that would split the country even more, that Will. Not. Happen. Like the laws of physics state this can’t happen because the Tory party doesn’t want it. And it’s not beyond the wit of man to think that the rules (ah the norms fairy visits again) won’t be thrown out because they aren’t written down. The PM can do what he wants. The right wants this and doesn’t care about the economy and damn well has never cared about democracy. These are all aristocrats for the gods sakes! AHHHHHH!!

    Sorry. Need to vent. Too much stupid is in the air right now.

    As it’s been a while since I’ve quoted the good Dr. Thompson, I will give two quotes that seem appropriate:
    “A man who procrastinates in his choosing will inevitably have his choice made for him by circumstance.” Letter to Hume Logan in 1958

    “A man who has blown all his options can’t afford the luxury of changing his ways. He has to capitalize on whatever he has left, and he can’t afford to admit — no matter how often he’s reminded of it — that every day of his life takes him farther and farther down a blind alley… ” Hell’s Angels: The Strange and Terrible Saga of the Outlaw Motorcycle Gangs (1966)

    That last one feels like a combo of Johnson, the Conservatives and the UK…

    1. PlutonumKun

      You are quite right. Historians of the period will no doubt be wondering how Remainers, for all their resources and supposed intellectual superiority, put up such a terribly weak fight at all levels. I assume it comes down to personalities that there is absolutely no obvious strategy. As you say, bar some very strange twist in the tale another referendum just will not happen and almost certainly would not solve anything if it did.

      1. flora

        Historians of the period will no doubt be wondering how Remainers, for all their resources and supposed intellectual superiority, put up such a terribly weak fight at all levels.

        US reader here. My distant opinion is Thatcher’s TINA neoliberal economics having failed, Brexit was offered as a substitute or diversion from grappling with the hard questions about the economic way forward out of neoliberalism. Both major parties seem in agreement that ‘something has gone wrong’ but have no new ideas and offer only modifications around the edges of failed neoliberal economic policies. “Remain” is offered with no new economic ideas; “Brexit” is offered with no new economic ideas beyond ‘not in the EU’. Neither party seems to offer any analysis of how and why the neoliberal experiment failed , or even accept that neoliberalism has failed.

        1. Joe Well

          Or it was just an extremely dangerous attempt by Conservative Party leaders at defeating one faction of the party, because said leaders really just are an unprecedented combination of stupid, selfish, and shameless, beyond what might have previously been believed possible.

    2. Monty

      Let them have the no deal Brexit they are clamouring for. The harder, and sooner, the better. Then, when the dust settles, and the liars have been exposed, freeze their personal assets and prosecute them for high treason.

    3. ChrisPacific

      ‘Referendum’ is one of those slippery words. Even Corbyn, when he talks about a referendum, just means a ‘confirmatory referendum’ which means the public gets to have a final vote on any agreed Brexit deal before it goes live (because if there is one thing that would fix the Brexit process, it’s giving the UK even more ways to say no).

      Nobody, other than apparently the Lib Dems who are making political hay from it, is advocating a second referendum on the actual decision to leave. I have the impression that this has not stopped Remainers from reading a whole lot more into it than is actually there – a unicorn for Remainers, if you will.

  6. Disturbed Voter

    “Success has many fathers, but failure is an orphan” … the perpetual reality of craven internal and external politics.

    I would rather see “Do what is right, even if you have to fall on your sword”. Regardless as to whether Remainers or Leavers are right.

  7. Paul Handover

    I have long followed the writings of Naked Capitalism but rarely left a comment. I’m a Brit (born 1944 in London) who is living very happily in Southern Oregon (long story). But despite being a naturalized US citizen I still feel English and listen to BBC Radio 4, etc.

    I can’t remember ever a time before where Britain has so deeply descended into a mess that doesn’t have an obvious way out. And both Tory Party contenders are preaching a message that says vote for me and I will heal the country. Ha!

    Britain is going to remain desperately divided for a long time irrespective of the actual outcome. It’s a very sad period!

      1. Greg

        Remainers as the roundheads, perhaps pointy heads in this case; the brexiteers are plenty cavalier.

    1. Yves Smith Post author

      I agree. Even though the posts discuss the negotiations and probable political moves clinically, it is very distressing to see the leadership of a country (including its press) behave in such a reckless and incompetent manner. I am sad for what it means to friends and readers in the UK.

      There would have been a way to leave the EU which would have still cost the UK but the disruption could have been greatly reduced. But it would have taken realism and close to war-level mobilization. The consequences of a crash out will be terrible, and not just for the UK and Ireland.

    2. Clive

      I’ve, in the manner of Darth Vader to Luke Skywalker (with the U.K. in a not too dissimilar predicament than they were in when he said it) searched my feelings time and time again on this matter.

      With a heart that is so heavy it weighs a tonne, I’d — faced with both a choice as presented in the referendum in 2016 and also in any rerun of the referendum now — vote Leave again.

      You gotta live somewhere. You’ve got to be happy living there. That country can’t contort itself into someone else’s idea of happiness. Disquiet over the EU has been fermenting for over 30 years and our abysmal elites have spent that time trying to pretend its a non-issue. Blowback was inevitable.

      And it’s not like the EU is getting any better. Twitter is currently in full-on meltdown over Christine Lagarde’s nomination as ECB head. Lots more (see replies) where that came from here, too. And rightly so.

      The (related) appointment of unelected (outside of Germany) of Ursula von der Leyen as President of the Commission is similarly incendiary. As Ireland’s Leo Varadkar (who must have had his tongue firmly in his cheek) put it:

      The Taoiseach said the so-called Spitzenkandidat, or lead candidate, idea would have to be reviewed following the rejection of the two main lead candidates, Manfred Weber from the EPP, and Frans Timmermans from the Socialists and Democrats.

      “would have to be reviewed” ??! After the Council just completely tore up the TFEU — an international treaty which called for the EU Council to have “full regard” for the results of the European Parliament election? Instead, they parachuted in their pet selection who is not even a member of the Parliament ? Let alone the leader of any group or party in the Parliament. You guys got, rightly, hot under the collar with the prospect of a DNC stitch-up and a brokered convention for the Democratic presidential candidate. And that was just for a candidate. Not the appointment of a President.

      Ursula sounds to be a real peach, too, in some of her views.

      But what, we’re just supposed to take this authoritarian liberalism that just gets worse and worse and lie back and think of England? Or “Remain and reform” in an institution that simply lies and scams us with reform kabuki like the TFEU turned out to be?

      Eventually, too many people simply say: up with this, we will not put.

      If there’s some other option I’m not seeing here, after we’ve thrashed all the angles to this one out over the past three years — three years — I’m happy to consider it. But only if it addressed all the issues in play. Partial solutions, handwaves, or coulda-woulda-shoulda, that I’ve had more than enough of.

      1. Tim Smyth

        For a long time I have been in the camp of if Britain can’t be happy as a member of the EU it needs to leave. The problem is I am increasingly coming to conclusion that many Britons even those who voted to leave(not necessarily Clive) will never be happy outside of the EU either and will continue to be in constant conflict with the EU(and in particular France). What Clive calls “authoritarian liberalism” or what I call Guallist authoritarian Liberalism will continue to drive the UK population up the wall even from the outside. Does anyone think that even after Brexit a large portion of the British population is going to stop following EU affairs(in particular French politics) even those who for all these intensely disliked the EU.

        I guess from an Anglo American perspective one problem is Guallist authoritarian Liberalism kind of actually works when push comes to shove Anglo Liberalism hasn’t lately. Compare DeGaulle doubting the loyalities of the “official” police and army during the Algerian War creating his own underworld security service to go after the far right racist Pied Noirs and the OAS. Can anyone imagine the Democratic Party doing this against what is obviously a far right fascist clique in ICE and the Border Patrol that is making death threats against AOC and Ilhan Omar?

        Actually the most prominent example of an authoritarian Liberal in the Anglo context was Lincoln(in suspending habeus corpus) and particular his secretary of state Seward who had an off the books spying and paramilitary organization to go after Confederate sympathizers during the US Civil War.

        1. flora

          I guess from an Anglo American perspective one problem is Guallist authoritarian Liberalism kind of actually works when push comes to shove Anglo Liberalism hasn’t lately.

          I guess that depends on what the meaning of “works” is. DeGaul’s authoritanisn Liberalism “worked” for what, toward what end? Saying it “worked” in the Algerian War is sort of, you know, saying undemocratic and strongman tactics “work”. Not, I hope, the goal of democratic countries.

          Dragging Lincoln into this for his actions during a Civil War seems a stretch. Wartime actions would brand Lincoln, FDR, Churchill, etc authoritarians. Surely we don’t use a country’s extremis situations as normal and referential for their reason for being.

      2. flora

        The EU, begun with the best intentions, has devolved into something wholly undemocratic.
        Brexit may well be the narrow gate.

      3. disillusionized

        You gotta live somewhere. You’ve got to be happy living there. That country can’t contort itself into someone else’s idea of happiness. Disquiet over the EU has been fermenting for over 30 years and our abysmal elites have spent that time trying to pretend its a non-issue. Blowback was inevitable.

        It’s the UK’s weird economical system that’s the problem –
        Is worth a read.

        After the Council just completely tore up the TFEU — an international treaty which called for the EU Council to have “full regard” for the results of the European Parliament election?

        As much as i liked the spitzenkandidat it wasn’t at all clear that’s what the treaty meant.
        they parachuted in their pet selection who is not even a member of the Parliament ? Let alone the leader of any group or party in the Parliament.

        there is no requirement that the UK PM be a member of parliament either.

        And that was just for a candidate. Not the appointment of a President.

        she is also a candidate – the Meps can refuse to confirm if they like.

        Eventually, too many people simply say: up with this, we will not put.

        bring on no deal – i thoroughly done with this.

  8. Synoia

    Europe (especially Britain, which hadn’t really seen war for a hundred years)

    True for European wars. Not for wars of Empire (Afghanistan, Crimea, South Africa) and probably others.

    Bertrand Russel (Author of Principa Mathmatica I believe), wrote in his autobiography that war was inevitable after Britain entered the Triple Entante (Britain France and Russia), and changed its post Napoleonic War policy of “No Entangling European Alliances.”

  9. Andy Raushner

    Farage really wants to liquidate UK financial markets. I mean, he wants it bad. He clearly is ready to bail from the island and move to another area of the world for his buyers.

    I am worried that progressives beaten and bruised give in to the Social Nationalists at some point who will have no problem exterminating the conservatives. Lets be clear, this is what triggered the rise of the Nazi’s in Germany, who themselves broke off the SDP. Capitalism is the creation by the banking elite that developed in the middle ages and the aristocracy. There was no revolution. Many a European was heavily subs by the bankers, compared to other peoples.This debt expansion gave Europe and its red headed stepchild who the de Rothschild family didn’t like, the United States big comparative advantage over the rest of the world. But all debt has a cost.

    Conservatism is basically house slave mentality. A disease. If progressives can’t tell the truth, social nationalism will. I bet non-white’s in the US particularly would support it if they plan what they plan(segregation of the family, unity in commerce).

    British contards are just mad because the EU isn’t running hard neoliberalism like they wanted 50 years ago. Or even 25+ when Farage left the EU. They have their buyers and they don’t necessarily represent British interests. But if this liquidates, the UK itself may not survive. Italy is next. A panzer division committing mass genocide in northern Italy would not surprise me. Capitalism requires market integration to work, when it doesn’t, down down markets go. Food shortages start as the ponzi-scheme unravels faster than Bernie Madoff’s little one did. Angry tribal warfare start taking over.

    1. Monty

      Some climate scientists are predicting an abrupt collapse of most ecosystems followed swiftly by human extinction around 2026. So, luckily, we won’t have to worry about it for much longer!

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