The Cost/Benefit Analysis of No Deal

Yves here. I anticipate readers will have fun with this No Deal analysis.  And some of the things Murphy lists as costs are benefits in the eyes of businesses,  like reducing worker and consumer safety standards.

And I suspect most UK readers got the news….that Johnson was feted at the Conservative’s annual conference. From Politico:

Boris Johnson faces trouble on every front, but to the Conservative grassroots, he is the hero they’ve been waiting for….

“We have more members than ever before and more young people than ever before coming along, so it’s going to be a really positive, upbeat conference,” said Pamela Hall, the president of the Conservative grassroots board who chairs the conference. “I’ve never known us as united as we are at the moment. Everybody is fully behind the prime minister.”

Andrew Colborne-Baber, who chairs the party board on memberships, announced Sunday morning that the party has 189,000 members, up from around 130,000 in early 2018. He attributed the boost in part to a new database which was more effective at preventing memberships from lapsing and also to Johnson. “There are a lot of people coming on board since the leadership election,” he said.

Polls, too, look largely positive for the prime minister, with an Opinium survey for the Observer reporting the Tories holding a 12-point lead over Labour.

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK

I had a friend who has now decided to become a Brexit Party parliamentary candidate. There are some things friendship cannot survive. But I did try to work out what the advantages of his fervent No Deal enthusiasm might be, since the speech he showed me that he proposes to deliver on the stump only referred to deals we can already do with China and the USA, and what I consider to be some rather nasty racist tropes. So I drew myself a table. This is what I came up with in about fifteen minutes. Please feel free to add suggestions for both columns*.

Costs of No Deal Benefits of No Deal
1.     Trade will be harder, and cost more, so prices will rise 1.     There will be peace in the Conservative Party for a week or so
2.     Holidays will be harder to arrange and will cost more 2.     The Brexit Party may cease to have a purpose
3.     Many skilled people will leave the UK at cost to us all 3.     President Trump will be happy, for a week or so
4.     Millions of EU citizens who have lived in the UK for years will face stress, having their family lives disrupted and the risk of deportation 4.     We can ignore EU law, so long as we do not want to trade with them in any significant way
5.     Many EU citizens will face the risk of significantly increased costs for living here 5.     We can make our own trade deals, so long as they are more favourable to other countries and migration than those the EU offers
6.     Many British citizens living in the EU might lose their jobs or their right to live in the countries where they live, work, have families or have retired 6.     We can be a tax haven, so long as we can face losing the trade deals that this will cause
7.     Multinational companies will leave the UK, most especially in the manufacturing sector, but also in finance 7.     We can promote tax abuse so long as we can face the loss of international cooperation that follows from doing so
8.     The NHS will be short staffed
9.     UK agriculture will be disrupted by staff shortages
10.   Many of our universities will fail because of a shortage of students
11.   We will spend years, and maybe decades, trying to negotiate new trade deals
12.   New trade deals will reduce consumer safety standards
13.   New trade deal will require that we lose control of migration from many countries
14.   Delivering the Green New Deal will be much harder
15.   Worker protection will be reduced
16.   The burden of tax will be shifted from companies onto employees
17.   Inequality will increase
18.   The UK will become a tax haven – making it much harder to do trade deals
19.   In the short term many companies will go bust because of trade disruption that will destroy their cash flows
20.   Unemployment will increase because companies will fail
21.   There’s a real risk to people’s health because drugs may not be available in the UK
22.   Our costs of government administration will increase because we can’t share costs with other EU member states
23.   We will lose the protection of the European Court of Human Rights
24.   We will probably lose our seat at the UN
25.   There is a very good chance that the UK will break up
26.   There is a real risk of renewed strife in Northern Ireland

* My former friend is not invited to comment: those promoting racist views, or who accuse me of racism for supporting Remain (apparently the EU is a white Christian conspiracy to which I subscribe)  for are not welcome on this blog.

I add this in case it is easier to read:

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  1. Michael Quinlan

    I don’t believe they will immediately drop out of the ECHR as it is supra EU. Though with the Tories in power who knows.

    1. Basil Pesto

      Correct, the statement as is is flat-out wrong, the ECHR is completely separate to the EU. Its member countries (including Turkey and Russia) belong to the Council of Europe.

      Nevertheless, it has long been a Tory ambition to withdraw the Human Rights Act (which is the domestic law that codifies the European Convention on Human Rights in the UK) and therefore from the convention and court themselves, presumably relying on their own bill of rights. This has very much hit the backburner since the Brexit campaign and I don’t think it will be a political objective until such time has the country has stabilised after Brexit is reached (whatever that might entail).

      This withdrawl has been a particular personal ambition of Theresa May, who was professionally humiliated by the court when at the Home Office, iirc in the Abu Qatada deportation case.

      1. Colonel Smithers

        Thank you, Gentlemen.

        That ECHR point was glaring, especially from an academic of his stature.

        Also, the point about the UK, or what’s left of it, becoming a tax haven. The UK already is and with its network of colonies, the world’s largest. If one adds the former colonies that still form part of the network, the UK increases its lead over Switzerland, the other country having difficulties with the EU.

      2. PlutoniumKun

        EU members must (under the Treaty of Nice) abide by ECHR principles, so I assume that leaving the EU is seen as the first step by the UK to leaving the ECHR, long a dream of a certain type of Tory. But you are right that it shouldn’t really be in that list.

  2. PlutoniumKun

    If I was to play devils advocate I would say that the advantage of a no-deal is that it gives an opportunity for radical renewal in a number of sectors (but then again, so does rebuilding after an earthquake or tsunami). There is the potential for completely restructuring UK agriculture in a more sustainable way – abandon the uplands to nature, re-focus on mixed farming on the better quality lands. But given the enormous and outsized political strength of the landowning lobby, even a Corbyn government would struggle with that.

    Some left eurosceptics would undoubtedly argue that there will be opportunities to renationalise major sectors for new investment, although I’ve yet to see a coherent argument as to how membership of the EU stops this happening.

    As a Celt, I would see a major example that at long last, both the Scots and Welsh are waking up to their real status within the UK. In Wales in particular I’ve been struck by how mature and realistic the Welsh nationalists have been about what can be achieved and how they can achieve it. The only question I think is whether the break up of the UK will be gradual and relatively strife free, or the opposite. I think the SNP have been slow to really see how quickly everything has changed, I think they are still struggling to come to terms with having lost the last referendum. I don’t believe they’ve come to terms with the reality that the Brexit process is being driven by English nationalism. They may find that they are overtaken by events. They should look at Irish history and see how quickly ‘moderate’ nationalists were swept away by their lack of comprehension of the forces they released. I do think however that a no-deal is a great opportunity for the fringes of these islands to build new alliances to counter act the gravity pull of London.

    I’m also quite enjoying the sight of embarrassed looking northern Ireland Unionists queuing for their Irish passports.

    1. Larry Taylor

      > The only question I think is whether the break up of the UK
      > will be gradual and relatively strife free, or the opposite.

      Why can’t it be quick and strife free? The Czechs and Slovaks did it. Or maybe you don’t think there would be the requisite good will on one side or the other?

        1. Larry Taylor

          Oh, indeed, I have read, Yves. But I have also found that a little disingenuousness can go a long way. :-)

          I see that I should have quoted more. I was responding specifically in light of PK’s comment about

          > how mature and realistic the Welsh nationalists have been about what can be achieved
          > and how they can achieve it.

          It seems a bit of a stretch to me that burning down the holiday cottages of English weekenders is ‘mature and realistic’ but, then, one man’s terrorist is another man’s freedom fighter. Penny for the Guy?

          1. PlutoniumKun

            The holiday cottage burnings were 40 years ago, its a bit of a stretch to try to pin that on modern Welsh nationalism.

      1. vlade

        I really hate the CZ/SVK split being bandied around as an example. It doesn’t work.

        It doesn’t work for a number of reasons, and I’ll list a few here:
        – neither of those countries were in the EU. This is actually a crucial advantage of the split, as they could have managed their split in any way they liked. For example, they shared a currency (for all of two months). They had special arrangements for each-other’s citizens (unable to do so under the EU law anymore). They had special custom, payments and trading arrangements (again, unable to do so under the EU law)
        – the split was incredibly amicable, and no-one felt that the other side “owed them” (well, most of the involved people, anyways).
        – the institutions were mostly in place (There were national, CZK and SVK parliaments, as well as the federal ones).
        – crucially, given the goodwill of the world (for variety of reasons I won’t go into), everyone was happy to roll any and all treaties etc.
        – both countries were undergoing a massive economic and social upheaval already, so having this on the top of it was really no great disruption (since, as I write above, it managed to maintain a lot of status-quo for quite some time).

        I don’t think that most of those conditions would apply to the parts of the UK (maybe the last one, but the upheaval in former CS had different roots, so wasn’t really geared towards violence).

        1. Larry Taylor

          > It doesn’t work for a number of reasons …
          > – neither of those countries were in the EU. This is actually a crucial advantage of the split,

          OK, point taken.

          > – the split was incredibly amicable, and no-one felt that the other side “owed them”
          > (well, most of the involved people, anyways).

          That’s exactly what I was getting at. And I’m talking about the breakup of the UK here, not some horrible pro-Brexit / anti-Brexit English Civil War.

          Let the Scots (re)join the EU under expedited terms, if that’s what they want. Let the Welsh decide for themselves. And let the Irish as a whole sort out what to do about the occupied six counties.

          1. vlade

            I do not believe that the amicability can be replicated.

            As PK says, it was a pretty much accidental split (the then Slovak govt wanted to use the threat of independence as a lever to get more out of Czech, but the Czech govt said “fine, off you go” – really, because the then Czech PM Klaus saw it as a good career move).

            But there was also quite a strong feeling between the two nations of “brotherhood” (always older and younger, with all that comes from it, but still very close family), and ties of the past. None of this is replicated in the UK. TBH, I can’t think of any other place where it can be reasonably replicated now – maybe Scandis come closest.

            1. Oregoncharles

              If you’re talking about secessions, Canada has done very well by offering to kiss Quebec goodbye – net effect, they chose to Remain.

              GK, below, notes that ” the English may feel a bit more possessive towards Wales and Scotland.” You think? There’ve been some bloody wars on that topic.

          2. Tom Bradford

            “Let the Scots (re)join the EU under expedited terms, if that’s what they want.”

            Um, have you entirely missed the admittedly minor and peripheral problems the need for a border between Ireland (an EU Member) and Northern Ireland (to be outside the EU) are creating?

            Of course I’m sure all the problems the need for such a border between Scotland (becoming an EU member) and England (outside the EU) will be easily resolved.

        2. Colonel Smithers

          Thank you for putting the record straight, Vlade.

          I suspect that the FDI, especially in automotive, that came some time later dissipated any lingering differences, bitterness.

          Speaking to Czechs (more from Moravia rather than Bohemia) and Slovaks in Buckinghamshire and London, one does not detect any “issues” from then. It seems all amicable, long in the past etc.

        3. PlutoniumKun

          Thanks for that – a friend who lived in Prague at the time described it as an ‘accidental’ split. But as you say there were very unique circumstances around then – if there was a perfect time for a country to break in two, that was it.

      2. GK

        Of course, Czechoslovakia was also a relatively new country when it dissolved, having been created only in 1918. While it was dominated by the Czechs, their experiences during WWII and under the Soviets plus the conflict in Yugoslavia likely made them wary of trying to hold on to Slovakia against its will. The UK has been around a lot longer, and the English may feel a bit more possessive towards Wales and Scotland.

        1. vlade

          There was never, ever any will or wish (irrelevant of Yugoslavia etc.) to hold Slovaks in against their will.

          But, as I wrote above, the dissolution was very much a political move by a then Czech PM Vaclav Klaus.

          The longer story is that Klaus was (and is) always extremely ambitious, and was at the time leader of ODS (a nominally right-wing party, another long story), who won the CZ elections and federal elections but no Slovak ones. While it was the unopposed force in the Czech parliament, it could not put together a good government in the Federal one, and Federal (parliament and government) had way more power than the devoluted ones.

          So, basically, when Meciar (the Slovak PM) came around trying to blackmail the Czechs into more concessions (“do this or we’ll leave”), Klaus saw an opening on how to get the top power as a Czech PM – dissolve the federation while getting the benefit of being able to blame it on Slovaks. So he told Meciar “you want it, so it’s yours” – and Meciar had a bad case of “be careful what you wish for lest you get it” (I’m pretty sure it came as a big surprise to him).

          I believe that should there be a referendum in Slovakia (what some people were calling for), remain would have won there.

    2. Colonel Smithers

      Thank you, PK.

      I have come across them here, too, sometimes Ascendancy descendants with cut glass accents.

      “They should look at Irish history and see how quickly ‘moderate’ nationalists were swept away by their lack of comprehension of the forces they released.” That is something my parents and I talk and worry about. We have never had any problems, even in rural Buckinghamshire, but think that Remainers belittling Leave voters are playing with fire equally.

      1. Eustache de Saint Pierre

        ” Remainers belittling Leave voters are playing with fire equally “.

        Right from the start when the result of the vote was revealed the complacent threw a hissy fit & started to use stereotypical generalisations to smear those who they considered as being inferior to themselves. The oh so intelligent not bothering to consider where this might lead & the fact that if you want to persuade someone to change their stance, it is generally wise not to insult them first while also perhaps considering their grievances & the why of them.

        If the vote had gone the other way & the same sort of insults & ridicule had come from the other direction, they would have no doubt considered it as proof that all Brexiters were inferior to them. I think that identity politics is a part of this in the sense of a bunch of sheep all attempting to congregate in the same pen in which they can feel all so smug & good about themselves while receiving lots of FB likes as they are so clever & not racist & stupid like that other lot.

        A pox on both of their houses for the fundamentalists as far as I am concerned, but the sad thing is I believe that there is a quiet majority who will suffer from the above spite & division which will make trying to build something better all the harder whichever way it goes.

    3. Schmoe

      Does the UK have a nascent tech sector? I was surprised by one commentator (Harald Malmgren) who said he expects Liverpool to become a focus of tech investment post Brexit. A co-worker recommended I follow his twitter feed, and so far I am thoroughly unimpressed with his commentary (it sounds like it was written like history stopped in 1997). That said, I am still curious but the UK’s tech sector’s prospects.

      1. thene

        I am British, I live in the US and I work in a field adjacent to tech venture. I am very sceptical on the UK tech sector’s prospects, especially post-Brexit. This comment will be mostly anecdotal – I talk to a lot of people in the sector and this is a summary of what I’ve been hearing.

        I have heard from British VCs that currency devaluation & uncertainty has already been challenging for them – it’s made fundraising hard, and that’s going to have a knock-on effect for new startups (especially as in Europe, so much of VC investment in new tech companies is local).

        Via Horizon 2020 and other investments, the EU itself has done a lot to promote research & new discoveries that can lead to new tech and life science startups, so kiss goodbye to that. Also, some Europe-based VCs have the EU itself as an LP via various funds, and that capital comes with a restriction on how much they can invest outside the EU. At present, those VCs typically focus their limited non-EU quota on Switzerland and possibly Israel and the US. That’s likely to affect how much attention such funds can pay to an interesting new technology startup in the UK – they would have to cram the UK into that already crowded bucket. Apart from that, a lot of internal VC funding in the UK revolves around tax breaks for investing in new companies that qualify as EIS/SEIS – tax breaks that could be at risk in a time of financial stress.

        If Brexit happens & sterling drops further, the situation would be ripe for foreign investors to take over British tech firms – I don’t know a huge amount about trade deals but it strikes me as possible that unfavourable trade deals could play into this as well, eg by making it harder for the government to block foreign acquisitions. On a personal note, most of the British techies I know are trying to emigrate or have already done so. Between these two factors I find it hard to see a good future for tech employment or new startups in the UK.

      2. ChrisPacific

        I would be surprised if Brexit makes it any easier to operate a tech business in the UK, and in some ways it may make it harder. The main change operationally is that the UK will immediately become an external country for the purpose of EU rules around privacy, data protection, sovereignty etc. How big a deal this will be depends on the extent to which UK companies operate out of data centres in the UK or in the remainder of the EU. This article from August discusses some of the issues.

        The British Chambers of Commerce have a guide on what businesses need to do in the event of a No Deal Brexit to comply with data protection rules. It seems moderately detailed, but it’s a fairly significant amount of work, and may be difficult for small businesses especially if they aren’t all that IT savvy. I am also unsure how complete an accounting it provides and whether there unknown unknowns remaining, given that No Deal is uncharted territory and there are still a lot of things up in the air.

        I am not sure if being outside the EU would offer any particular advantages. Generally when the EU makes a rule on something like data privacy, everyone needs to comply with it if they don’t want to cut themselves off from the EU market (even the likes of Google and Facebook generally fall in line if the EU is willing to apply enough pressure).

  3. The Rev Kev

    I think that for more and more people, rationality of actions is going out the window. The other day I was watching one of the Three Blokes in a Pub videos ( when they brought up something unreal. They mentioned a Brexiteer with diabetes that was saying he would rather leave the EU than have insulin which is really extreme. He was saying that with a no-deal Brexit, he does not care if he gets his insulin or not as in yes, I will die a horrible death. Had to go looking for the original story and found one version here-

    1. Gordon

      An instance of what I think of as ‘Red Mist syndrome’ where, as you say, rationality has gone completely out of the window, to be replaced by primal rage. My first experience of this was speaking to an old friend who said, “The EU is evil, evil, EVIL” – and yes, he really didn’t finish on a shout. Yet when I asked him why he thought that he was initially stumped. After a long pause he came up with the “awful and hostile CJEU” or words to that effect. When I asked for specifics he was completely stumped saying only that he wished his MP (a Tory he knows reasonably well) was around as he would be able to answer.

      1. Titus

        Don’t know about evil, I ask are the Borg are evil? They wouldn’t think so. My point is EU’s very own Tusk said in a speech at the UN and I paraphrase, nationalism, in any form, including love of country is pernicious and – my take leads to bad guys like Hilter, Stalin, Mao, etc.,. And wars and much misery. It is only through globalization that the world can prosper and fulfill its destiny. I beg to differ. In the future we are going to use a lot less energy. There will be a lot less people (changes to birth and max life spans). You could call it ‘contracting’. Socio/politically it means things get more local. What else can they get?

        He was specifically attacking Trump, which is problematic- I’d rather we do the attacking of that guy. The EU meddles enough.

        1. Anonymous 2

          You misquote Tusk. Here are his words as reported:

          The patriotism of the 21st century must also have a global dimension, if it is not to become, as has many times been the case, a common national egoism. The history of our nations shows how easy it is to transform the love of one’s homeland into a hatred towards one’s neighbors. How easy it is to transform the pride for one’s own culture into a contempt for the culture of strangers. How easy it is to use the slogans of one’s own sovereignty against the sovereignty of others.

          1. Eustache de Saint Pierre

            I don’t think it is easy to achieve his stated transformations as it actually takes quite a lot of effort as history has shown. Perhaps 40 years of Neo / ordoliberalism, resulting in off-shoring, the decline in real wages, free movement of labour & the other effects of which I am sure that you are well aware – all of which of course have mainly fallen on to the heads of those at the bottom.

            Germany had a head start of course in terms of Nationalism & Weimar likely only functioned properly for about 5 years until the 1929 crash. There was a tipping point somewhere between just before the Crash when Hitler’s vote was at around 2.6%, leaving them languishing at the bottom of about 8 parties & the high point of 36% prior to the final Weimar election when they dropped to I think 32%. It appears that it was either the crash & or the austerity measures imposed by Bruning’s Centrist coalition as in cutting employment benefit & raising taxes mainly as has become the traditional practice towards those at the sharp end.

            The UK & the EU are of course not like the Weimar Republic which was full of resentment towards the Versailles treaty & full of mainly unemployed ex soldiers who formed up into militias which all of the parties possessed, as did of course the Nazis. Most also had youth organisations similar to the Hitler Youth – particularly the Communists. I suppose that the state that Germany was then in it was hardly surprising the worst form of Nationalism appeared relatively quickly with of course the worst kind of identity politics.

            It is as if Tusk somehow believes that Nationalism appears out of nothing, with perhaps large groups of people suddenly deciding on a whim to wave national flags or to don brown or black shirts. My worry about Brexit is that I believe that whichever way we head now it is extremely likely that the wounds won’t heal, but will continue to fester perhaps one day resulting in another tipping point. For the deplorables I think things will likely worsen either way because I don’t think Corbyn will be elected but rather a Centrist construction of some sort which I hope I am incorrect in stating, will not see much reason to bother much with the welfare of those who are perceived as either being the cause of Brexit or it’s near miss. The other possibility is I expect some form of the Right who will manipulate the masses in time honoured fashion.

            I hope that I am being alarmist but the word from the street from my old industrial relic of a home town is not good. This is coming from some family members & old friends who appear to be part of a general feeling that they have become members of a discarded underclass. Others I know & am related to who are doing better or very much better for the most part don’t share this feeling & there has developed a kind of civil war between some of these 2 factions.

            If the shite does eventually hit the fan history will for the most part feature only the monstrous growths & their crimes, with the likes of those who sowed those bad seeds being largely forgotten in the background.

      1. Colonel Smithers

        Thank you, dcrane and Yves.

        I wonder if the (real) numbers are in decline. From observations in mid-Buckinghamshire, many migrants from the Czech Republic, Poland and Slovakia have returned home in the past couple of years, but there’s an increase from Romania and Bulgaria. A Czech contractor friend reckons that the migration home is not entirely due to Brexit. He reckons that many migrants from the V(isegrad)4 intended to be away for no more than a decade or so and Brexit was a coincidence, although that may have concentrated some minds about when to return.

        Numbers are being (more than?) made up with migrants from India, Sri Lanka, the Philippines, Nigeria and Zimbabwe. The Catholic schools in the area have seen high turnover of pupils. The new Catholic secondary school is oversubscribed.

        What are the (local) sectors suffering from a shortage of labour, skilled and unskilled? Health and social care, construction and agriculture. Teaching is also suffering, but the foreign teachers tend to be from Canada and New Zealand, not from the EU.

        What are some employers doing about it? Construction projects are taking longer to get going and getting more expensive. Farmers are pooling resources, staff and machinery, and automating more and sometimes putting staff out of lodgings. Big / aristocratic landowners are terminating tenancies (and the lodgings that go with them) and taking land back “in hand”. Rural homelessness is rising. One Oxfordshire poultry farmer has closed two of his three sites. Operations and routine appointments are taking longer to fix. Hospitals are pooling / centralising units. In horse racing, many stable lads are being recruited from the sub-continent and Middle East.

        Horse racing enthusiasts watching the Prix de l’Arc de Triomphe and other big races at Longchamp, which I refuse to call ParisLongchamp, this week-end will notice how many British raiders have lads of Indian origin, including Arc favourite Enable.

        1. rtah100

          Colonel, a very minor quibble. Landowners have been taking tenancies back in hand since the 80’s for a stew of reasons:
          – The disastrous 1976 (?) Labour lease reforms (converting all farm tenancies, even short term or fixed term, into “three lives” leases): If you could get out, you stayed out!
          – Inheritance tax relief on agricultural property being 100% with vacant possession in 12 months of death but only 50% if tenanted (and it being impossible to grant a lease for life without it being deemed a trust with adverse tax implications)
          – incentives to scale up: Get big or get out, EU subsidies only available to occupier etc.

          It is definitely not Brexit driving it!

    1. vlade

      May was totally, utterly, unable to control non-EU migration well before Brexit. Why there would be any indication they could do it any better now?

      Additionally, India has already made it pretty clear that the price of any FTA with the UK will be more working visas for Indians (the UK saying no to that was what scuppered the India-EU FTA in the first place). China is (I vaguely remember) making similar noises.

      I’d add one pro to no-deal Brexit – the Brexiters will find out that there’s no free lunch even for them (and, in fact, that given the history no-one really likes the UK that much), and hopefully the Imperial memories will be once and for all sent to the dustbin of the history.

      1. Colonel Smithers

        Thank you, Vlade.

        I agree with you about the Home Office’s incompetence, but wonder if that was intentional.

        A factoid for context: The UK has just three patrol boats for such matters. May seemed uninterested in the minutiae of border security, but more than happy to grandstand and create a “hostile environment”. It suited her not to ask for funding for such matters as the spotlight would have been on her. She was content to be left alone by the public school boys in charge. They were equally content to let her get on with it and not to bother them. Privately, the “quad” (Cameron, Osborne, Clegg and Alexander) thought May was an odd character, but the government needed women in senior posts.

      2. PlutoniumKun

        I think one of the ironies of Brexit is that the UK will have even less control over immigration, especially if they refuse to seal the border in Ireland (no doubt the French are already planning on encouraging refugees determined to go to the UK to take the Ireland route).

        The UK education system is highly dependent on foreign students, and they simply won’t come if there isn’t the prospect of longer term work/living visas after studying. And with the exception of the US, every single other country will insist on immigration rights for their citizens as a condition for any trade deal.

        1. Briny

          I seriously doubt the French will have to encourage anyone. If it’s one thing I’ve noticed, here in California, is that immigrants, no matter from where in the world they come from, are endlessly innovative in getting to their destination. And I consider that a good thing as I’m pro-immigration. This state needs it to function, at all levels.

  4. Freddo

    If Boris breaks the law and refuses to seek an extension from the EU, will the Queen step in and dismiss him! Will she assume the power, as head of state to seek the extension? I know she’s supposed to be a figurehead, but there has never been a situation before where a Prime Minister has flouted the law. Surely, in that unprecedented situation, Betty has to take the gloves off. That would really spike the guns of the Monarch loving Brexit voters.

    1. Anonymous 2

      There have been reports that the Palace has investigated the possibility of the monarch sacking the Prime Minister. I do not know if these are accurate but it shows others are thinking along the same lines as you.

      It is also reported that Johnson has been given a ‘dressing-down’ by the Palace – not by the Queen herself who presumably is above such things but by one of her entourage.

      1. Freddo

        She surely must be very conscious of her duty to protect the supremacy of parliament. How could she have confidence in a PM who did not obey the law. How could she let him continue as HER chief minister. Every time he basically suggests he won’t follow the law, she must cringe. It’s gonna be interesting.

        1. PlutoniumKun

          The impression I get is that the Supreme Court has pretty much usurped the Queen in the role as final arbiter of difficult constitutional matters. Its hard to avoid the conclusion that the Palace felt the sting when the Court essentially (not in so many words) said that the prorogation was illegal and so implicitly should not have been agreed to by the Queen.

          Whether they are happy with this, or will see it as a threat to the concept of the monarchy, only time will tell.

          1. rtah100

            Plutoniumkun, the Supreme Court judgment explicitly notes that it does not address the question of whether the Queen is obliged to act on the advice of the PM. Either a courtesy fig leaf or a real curtsey before power, you decide, but the last parliamentary select committee on the royal prerogatives found them all alive, I think. I imagine the court is hoping they may come jn handy – but then who knows what either Brenda thinks!

      2. Colonel Smithers

        Thank you.

        Presumably, Johnson will be blackballed from certain clubs, shoots, hunts etc. If one can’t behave like an officer and a gentleman and all that… Perhaps, one ought to have had doubts about someone whose real name is certainly not English… What can one expect of the post-Thatcher Tory party? If Churchill could be dismissed as a rat and a half-breed, one wonders what is said about Johnson?

        I need to e-mail Yves something about this and will ask her to copy David, Harry and you into the reply as all of you are former civil servants and may have additional insights.

        1. Oregoncharles

          (Because I can’t resist)
          ” someone whose real name is certainly not English”
          You mean like William of Orange?

          1. rtah100

            You joke but plenty of the English county set consider the Windsors arrivistes. And the Scots consider them usurpers. There is a handful of families dating back before the Normans….

      3. Tom Bradford

        The Office of Prime Minister has, as far as I know, no constitutional definition – there being no express constitution to begin with. By convention the Prime Minister has been the leader of the Party able to command a majority in the House of Commons either on its own or in coalition.

        I would have thought it obvious that Johnson cannot claim to be able to command a majority in the House which makes his claim to the Prime Ministership shaky. By convention this would be put to the test by a vote of No Confidence, but as Johnson himself has thrown convention out of the window a vacuum exists.

        I would suggest that the Queen could refuse to acknowledge Johnson as PM unless he establishes the claim via a vote of No Confidence in himself.
        This would, of course, chrystalise the present shambles and force the opposition to step up or forfeit the right to resist Johnson. However it would enable the Queen to take action to resolve the impasse without taking a specific stance herself. She would simply be re-establishing the ‘convention’ that the PM is the person with majority support in the House.

    2. Oregoncharles

      @ Freddo,
      No majority, so he’s still P.M. only because of rather bizarre maneuvering in Parliament. So it shouldn’t be a big deal to remove him.

      But I don’t pretend to understand how he British government works, except that it doesn’t.

      Not that Americans have anything to crow about.

  5. PlutoniumKun

    I should add one more ‘positive’. A strongly Remainer friend, who has small holiday business, mostly catering to domestic weekenders, has said that he is doing quite well out of it so far, and anticipates doing even better after a no-deal as so many people won’t be able to afford foreign holidays so will go for short local breaks instead. He recognises the irony that as a remainer he’ll possibly do quite well while all his Brexit voting farmer neighbours might well be wiped out.

  6. Mickey Hickey

    There are two issues that a stand alone Britain should be concerned about. One is food self sufficiency, Britain imports 40% of its food. What will a declining British pound do to the cost and availability of food post Brexit. Immigration, Britain has a long history of exporting skilled labour and importing low cost labour. I fully expect that the Eastern Europeans will be replaced by people from Pakistan, India, Bangladesh and other low wage countries. Any deal with the US will include unfettered exports of US farm products to Britain. What will this do to the incomes of the landed gentry in Britain. South and Central America has fast become a Chinese dominated market. I remember around 2006 being in Salta Argentina and reading in Clarin that Argentina as a country would default on loans from the US next day. The following day the announcement was that China had lent 4 billion USD with future delivery of Soy Beans as collateral. That was the first indication I had that US domination of South America was coming to a fast end. I expect that Brexiters have no idea that conditions have changed markedly in third world markets in the twenty first century which will be known as the century when China reclaimed its rightful place in the world.

  7. Gordon

    If it’s No Deal, one early and obvious cost will be a major loss of control, perversely exactly the reason many Brexiteers want to leave.

    For instance, there will be early ‘manoeuvres’ around the Irish border issue. My guess is that neither side will want to take responsibility for creating a hard border and breaking the GFA but, absent a deal, hard border or Irish sea border it must be. So, what gives?

    Boris & Co would probably be happy to let it drift (how many of them understand the issue even now?) but the EU27 won’t/can’t and will therefore seek to force the UK to enact a solution they are happy with and that presumably means creating a sea border as the one most easily and quickly implemented that’s consistent with the GFA.

    The ‘Original Sin’ – or rather original fallacy – of Brexit was that the UK had a strong negotiating position because of the UK’s monster deficit. The view of a strong hand has never really changed but the grounds for it have. One friend told me just last week that the EU27 would have to fold at the last minute because they simply couldn’t survive without the UK’s budget contribution – but this seems to be the last line of defence and his body language as he said it had an air of desperation as if he believed it only because he had to believe it.

    I fear No Deal would set up a rather brutal introduction to reality and that the Brexit Ultras will then blame Remainers for sabotaging the popular vote. It could get nasty.

    1. Winston S

      I agree with this. Although I would add, I think that the calamity that will ensue from a no-deal scenario is under-appreciated, as they generally always are by desktop engineers and economists. Speaking as a Norwegian, I doubt we have appreciated the full extent of the ripple effects of a no-deal. I fear we all will experience worse consequences than the parliament lets out, and that it will last longer than anyone expects. Needless to say perhaps, it will hurt the people that needs it the least, the most. Including those who were mislead and voted for. Oh well. It is quite obvious that the ones in charge doesn’t really care. Makes you wonder, why is that and who does?

  8. Gordon

    One big downside of No Deal will emerge only when trade negotiations belatedly start in earnest, namely that, as a third-party country by then, ALL member states must agree before any trade deal is done. That will open up a Pandora’s Box of problems as many 27 EU countries leverage the (by then) growing economic panic in the UK for their advantage.

    For example, France might insist that rights for its fishermen to work in UK waters remain unchanged – but aren’t reciprocated. Although locally important, fishing isn’t a big industry in the UK (IIRC only circa 0.1% of GDP) so a desperate government would likely surrender this point – just as they are alleged to have done in similar circumstances when the Heath government negotiated joining originally.

    And what might Spain demand. My guess is Gibraltar.

    And the other EU27?

  9. Pavel

    [UPDATE — this was meant to be in response to Schmoe above at 8:43am; apologies]

    There is in fact a bustling software development community in London and there are claims of special FinTech and medical IT expertise. How many of these startups and projects will end up as actual profitable companies is another question, of course. There is nothing like the amount of VC money floating around Silicon Valley. And in any case if there is a hard split with the EU any deals will be that much harder to arrange, I suspect. And they may lose a lot of non-UK coders.

  10. Susan the other`

    Reading RM’s list of costs and benefits, the seriousness of the entire situation is frightening. There actually are no benefits. Only costs. The only thing left to wonder, if Bojo prevails, is how quickly the UK will disintegrate and how long the Tories will be able to wave their own flag. There are some 80 million potential refugees waiting to embark for new worlds.

    1. Schmoe

      Thanks (and those to Thene and ChrisPacific who responded above). My question was something I have never seen commentary on and thought it was an interesting topic.

  11. Oregoncharles

    “8. The NHS will be short staffed”

    This one puzzles me, and has for some time. The UK actually isn’t training enough medical personnel? That’s strange, a good example of managerial incompetence on someone’s part. Was this a decision that it was cheaper to let other countries train them, then deal with the language and culture mis-matches? And whose failure was it?

    1. Yves Smith Post author

      Yes, we have noted that 5% of NHS doctors and 10% of nurses are from the EU. There’s already trouble now due to staff returning to the EU in anticipation of Brexit and/or due to increased hostility towards foreigners.

    2. Gordon

      Lack of adequate training is a pervasive problem and not just for medical personnel.

      In part that’s because skills training in the UK outside of the traditional professions (medicine, accountancy, law etc.) has always been neglected. In part it’s because the Westminster establishment across all parties is dominated by ‘courtiers’ who know only how to manage the optics but not how to build or manage anything.

      So, for example, the House of Commons Education Select Committee, in their 2019 report, Value for Money in Higher Education, found that:
      This country is facing a serious skills deficit. Two thirds of businesses… said that skills gaps are a threat to the UK’s global competitiveness. Over half of businesses…were “not confident there will be enough people available in the future with the necessary skills to fill their high-skilled jobs”…[A]lmost threequarters (72%) of manufacturers are concerned with finding the skills they need for their business…[and] the majority of hard-to-fill vacancies (67%) are caused, at least in part, by a lack of skills, qualifications and experience among applicants.

      Separately, contacts in small businesses say that they find those who went through the education system before roughly the late 1980s are more capable than those who came later. Something went terribly wrong about then. I suspect the introduction of top-down targets. The easiest way to hit them is to surreptitiously dumb down education with everyone involved, government included, welcoming the fake optics over substance.

  12. Mirdif

    The UK is suffering from a state crisis and trying to understand no deal in economic terms alone leads to incorrect conclusions that everything else will remain (heh) the same. More than likely that no deal will break the union but not only in the way of Scotland leaving rather I mean separatist movements in England taking hold, London and the South-East is the prime candidate to lead the way to splitting England.

    In such a scenario, further separatist movements are likely to take hold in Cornwall and possibly Yorkshire which are perhaps the two most advanced regions where there is a strong regional identity.

    My reasoning is based on the lack of skill in the political class; Alex the Great, Saj, Sweaty Raab, Gav, and Steve Barclay have all been promoted far above their natural level of incompetence. Spivs, conmen and morons the lot. They will not be able to deal with the fallout and keep the country together in any form. I should add, when a country splits it is rarely non-violent especially as the analogy I feel most fits is Yugoslavia 1990.

    Just my alarmist 2p for today. Oh and if it does transpire like I have outlined above: then all these new countries will apply to join the EU.

    PS. my unpalatable theory on immigration is that it mirrors the numbers of people who are unemployable every year due to drink and drugs,

  13. Tom Bradford

    Interesting counter to the claim from the one-eyed Tory loyalists quoted above as to the “burgeoning support” from the people via climbing membership – especially the young. From Polly Toynbee in the Guardian:

    “Long-term demographics may sink the party, with no decent victory since 1987. The flight of the young was spelled out brutally by David Willetts, chair of the Resolution Foundation. He found that only 8% of women under 35 would vote Tory. The age at which people vote Tory is rising fast – over 49s in 2017, now only a majority of those over 51. Age has outstripped class in determining voting habits. “How to win back younger voters?” they were asking. You can’t, was the conclusion.”

  14. Yves Smith Post author

    Your comment is so removed from reality that I don’t know where to begin.

    You start by straw manning our position on Brexit. You reject what even Brexiteer Richard North and every informed party acknowledges, that Brexit will impose huge costs on ordinary citizens. The idea that anyone but selectively placed people will do better is a fantasy. It would take the UK five to ten years to restructure its economy to deal with the rest of the world on a free trade agreement basis. We pointed out that it could have been possible for Brexit not to be so damaging, but it would have take war level mobilization and the Tories are allergic to state intervention. And even that assumes that the Government could have executed, which given how the civil service has been hollowed out, is dubious.

    The EU is totalitarian? Really? Point me to the gulags for dissidents, press censorship, and Stasi. It does have what is politely called a democratic deficit, but the UK is hardly one to point fingers after the current PM was installed by a mere 100,000 Tory Party members and he still is in No. 10 after losing on every major action he has put before Parliament.

    And it is unhinged to compare the UK to Greece. The UK has its own currency. The UK didn’t get a massive bailout from member states (and the IMF, the chief austerity enforcer). Nor did it have its banks completely on ECB life support though was supposed to be an emergency-use-only facility, the ELA.

    The fact that you see the EU as evil and won’t tag the same label on the austerity-loving Tories and their Blairite fellow travelers is telling. The UK bears significant responsibility for the EU’s embrace of austerity policies, and it most assuredly would have imposed them on its own.

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