Monday, October 17, 2016

Will UK be the sick man of Europe again?

Brexit supporters have, since the EU referendum, maintained that all the fear-mongering by the Remain camp was exaggerated and point to the rise in the FTSE as proof Britain is still doing well.

The 16% fall in the pound since the EU referendum, now worth only $1.21 (16/10/16), is also dismissed by Brexit supporters. Some advocates of Brexit say the currency was overvalued anyway while suggesting that Britain will be able to take advantage of more competitively priced exports.

But both the high FTSE and low pound are being misread by Brexiteers. Most are ignoring the economic repercussions since the Brexit vote and insist the UK government should follow through with plans to pull Britain out of the EU. But doing so could have disastrous effects on the UK economy and might return Britain to becoming the poor man of Europe once again.

FTSE is not a barometer

The FTSE 100 is not a barometer of the UK economy as many might think. Britain's blue chip stock market index is dominated by international groups that have chosen to list their shares in London, but who carry out the vast bulk of their business abroad.

This means they earn their money in other currencies such as dollars and euros. Indeed more than two thirds of all earning by FTSE 100 companies come from overseas.

Thus their sterling-denominated shares have at least kept their price and, in many cases, have risen.

This includes Unilever which were, in the last week, involved in a very public spat with the supermarket chain Tesco over price hikes [Guardian]. The Anglo-Dutch company is the third biggest company in the FTSE 100. Its 11% share price rise since the referendum has been a significant part of that rise in the FTSE which Brexiteers are so keen to boast about.

Repercussions of a weak pound

But now Unilever has acted to try to maintain the value of its income from the UK as the pound is falling. And the Brexiteers are crying foul while ignoring the fact that a weak pound is likely affecting Unilever's operating costs.

Its UK factories are undoubtedly facing higher costs as result of the falling pound. But even if they were not, the fact remains that every pound it earns in the UK is now worth less.

Brexiteers cannot hail the rise in the FTSE driven by companies with earnings in dollars and euros and, at the same time, attack Unilever for trying to maintain the euro value of its profits in the face of a falling pound.

Unilever is not alone and nor has it acted entirely unreasonably. Overseas suppliers who provide the international products Britons all buy in huge quantities will all be looking for price rises.

That is the reality of business and is one of the many plain facts which Brexiteers chose to ignore throughout the whole referendum campaign.

A further issue many seem to be blissfully ignorant of is the fact that exports might not be more competitively priced when one takes into account the fact that many items 'manufactured' in Britain are simply assembled with a great many components coming from abroad.

Should those components come from Europe, only the weak pound will be taken into account since - while still a member of the EU - there are no additional tariffs. However, for items coming from outside the EU there are extra tariffs to take into account.
There are many manufacturers that still work in Britain. But typically they assemble components made elsewhere. That is true of Britain's car industry, and it is true of JCB, the company David Cameron used to love touting in India and China. In 1979, 96% of a JCB digger was made in the UK. By 2010, that had dropped to 36%.

The picture is similar for other car manufacturers, many of which are foreign owned. According to a 2012 study, about 40% of the components [by value] in a British-made car are sourced domestically.

The British car industry employs nearly 130,000 people and generates more than £10bn a year for the economy. And this is all at risk if firms close up shop and move their manufacturing base to mainland Europe. Japanese firms in particular have already warned they shift operations if tariff free access to the European single market is curbed.

A so-called hard Brexit may not prevent access to the European single market, after all other nations outside the EU freely access the single market. However all these countries are affected by, sometimes punitive, tariffs. Not having tariff free access will make British exports far less competitive than is claimed by Brexiteers. Furthermore, foreign markets, both inside and outside Europe will reassess whether British made products are still worth buying.

Higher prices

For Britons at home there will be a growing and stark reality that things will become more expensive. Domestically produced items reliant on imports are certain to rise if the pound remains low and tariffs are put in place. Foreign goods will also rise for the same reasons. But even domestic products not reliant on imports could suffer. In a report published today, it says £11 billion worth of agricultural products the UK sells to the EU each year would be hit with an average tariff of 22.3% [Bloomberg]. This would undoubtedly affect Britain's domestically produced fruit and vegetables, if it can even pick them!

Several British farmers have warned of the effect that curbs on free movement could have on food production. One leading farmer has warned that British vegetables will disappear from supermarket shelves if post-Brexit immigration controls prevent thousands of Eastern Europeans from working in the UK [Sky News]. Others have raised similar concerns saying that the humble British strawberry could be in short supply without migrant workers [BBC].

It is not a new story either. Two years before the referendum farmers were saying they needed more migrant workers to pick crops because Britons did not have the "work ethic" to do it [BBC].

While some suggest the influx of EU, and other, migrants affects the job market figures do not bear this out [Bloomberg].

Further uncertainty to come

With little if any clarity on what sort of Brexit Theresa May wants, uncertainty will continue. Uncertainty will further stifle foreign investment and may dissuade companies from establishing a business in the UK. Others may make plans to up sticks and leave while others may not wait for UK plans to be unveiled and leave before the ship goes down.

The Russian bank VTB has already announced it will shift to mainland Europe and is now running through a decision over whether Paris, Frankfurt or Vienna offers the best options [FT / Independent / Telegraph].

VTB is not the only move. The Swiss stock exchange was last month reportedly eyeing Germany as a new location for its European operation [SWI].

The Chinese owned car maker MG also announced its almost complete pullout from the UK for economic reasons, widely seen as being due to a weak pound as well as concerns of a so-called hard Brexit [BBC]. Nissan, meanwhile has called for compensation from the UK should Brexit affect investments in the UK [Guardian].

Hard Brexit fears

It is a hard Brexit that is most feared by big business. A weak pound combined with increased tariffs into Europe is not at all appealing to manufacturers looking to trade with the EU.

Given Europe remains adamant that there will be no cherry picking and that tariff free access to the single market means accepting free movement, a hard Brexit is seemingly inevitable unless Brexit is abandoned altogether.

Whether one voted for Remain or Leave, one should be pragmatic and realistic. It is painfully clear to anyone who reads the financial press that Brexit will only bring much economic pain. Call it fearmongering but the writing on the wall is clear. Europe has made it clear that there will be no 'a la carte' deal, whilst several members have implicitly stated they would veto any deal that doesn't leave the four freedoms intact. This has prompted Brexiteers to suggest that the only route is for a hard Brexit. 

However, WTO chief Roberto Azevêdo has pointed out any post-Brexit trade talks must start from scratch and only after a complete divorce from the EU. Pascal Lamy former WTO Director General has said it would be a long and bumpy ride. Why? Essentially there are some 162 countries with which the UK would need to renegotiate, which could take up to a decade, if not longer. 

Bear in mind all the UK's current trade deals have been done through the EU and as such the UK has few seasoned negotiators. Of course Britain can reemploy some, but they can do little more than talk unofficially until the divorce papers are signed with the EU. It could thus leave Britain in limbo as many countries would not wish to break internationally agreed rules by breaking WTO agreements and trade with the UK without trade deals having been signed.

A WTO route

Can the UK just go ahead and trade under WTO terms as soon as it leaves the EU? As an article in the FT last June pointed out the UK would have to detach itself from the EU and regularise its position within the WTO before it could sign its own trade agreements, including with the EU. As Roberto Azevêdo, the WTO's director-general, said, there is no precedent for a WTO member extricating itself from an economic union while inside the organisation. The process would not be easy and would likely take years before the UK's WTO position was settled, not least because all other member states would have to agree.

Chief economics commentator at the Financial Times Martin Wolf has suggested the government should be prepared to overturn the referendum. "Nothing has changed my view that the UK is making a huge economic and strategic blunder," Wolf states. "The country is going to be meaner and poorer" and "David Cameron will go down as one of the worst prime ministers in UK history." [FT]

May and the UK government should abandon the folly of Brexit and sell it to the electorate by way of explanation that it is not in the country's best interests. Putting arguments concerning democracy aside, there are fundamental truths that Brexiteers refuse to accept. Thus far many have ignored the experts, and pointed to the fact that the calamities predicted have not happened while failing to acknowledge there has only been a vote thus far.

The pound remains at an all time low and there are already signs that financial companies are not going to take the risk over the loss of passporting. And as a lead article in the FT in September pointed out, there is a 'Significant' Brexit risk for 5,500 UK groups using EU passporting [Guardian].

The cost of all of this could run in billions of pounds. Indeed one leaked government report suggests Brexit could cost up to £66 billion a year [Guardian].

Brexit means Brexit

Brexit means Brexit which means economic suicide. Ignore the experts fine. Go the WTO route. But when the UK is floundering in a decade's time after Japanese industry has dwindled, much of London's services industry has relocated, the NHS struggles with staff shortages and the pound is worth less than a euro it will all be too late. It will even too late to rejoin the EU since Britain's financial standing would probably fall below what is required of a new member state. And even if Britain were to meet the criteria to rejoin, many EU states would probably veto the membership bid - and who would blame them.

Of course, anyone that proclaims that Britain should abandon the folly that is Brexit risks being labelled unpatriotic, undemocratic or worse. Remainers have been labelled Remoaners and this week one Tory MP Christian Holliday suggested an amendment to the Treason Felony Act to include post-Brexit support for EU membership [Guardian]. The suggestion might have been tongue in cheek, but it feeds into the growing abuse Remain voters have been subject to especially in the tabloid press [Daily MailGuardian]. The hate and anger has become violent too. One incident saw one man die after a Remain voter fought with a Leave voter [Daily Mail].

Britain was arguably divided in terms of class and wealth gaps, exacerbated by fears of immigration [Telegraph]. Some have suggested Leave and Remain voters can be differentiated by their brand choice [BBC]. There are also suggestions Leave voters were more likely to be in favour of the death penalty [BBC]. Some differences are far more insulting. But whatever factors came into play the Brexit vote has created further divisions and even split families and friends.

At the end of the day it won't matter which way one voted. Everyone will be suffering the same fate as Britain once again becomes the sick man in Europe. Others have described it rather more colourfully; What Brexit really means is: "We're f***ed."

tvnewswatch, London

Monday, September 12, 2016

Surge in racist attacks since Brexit continues

There has been a surge in racist attacks and what police often refer to as hate crimes since the EU referendum which saw some 52% of those who voted opting to leave the European Union.

There are certainly some who would say the attacks are nothing to do with Brexit. Indeed this week Daniel Hannan, a Conservative MEP and a leading Leave campaigner, accused the media of "jumping on" cases of people who have been attacked or abused which had nothing to do with Brexit [Independent].

However, given the nature of some of the attacks and some of the language used by the perpetrators, it appears clear that at least some attacks have been committed by people emboldened by the Brexit vote and who feel the vote to leave the EU justifies their racial bigotry [Guardian].

'Hostile environment'

A month after the referendum the Prime Minister was accused of helping create the 'hostile environment' that paved the way for 'Fuck off to Poland' messages, excrement being posted through letter boxes, and racist abuse from children as young as ten.

The Independent newspaper reported that there were some 500 racist incidents compiled in a database in just four weeks following the EU referendum [Independent].

There were even comparisons made with 1930s Nazi Germany as a crowd strode through a London street chanting, "First we'll get the Poles out, then the gays!"

Only one day after the result was announced there were calls to radio stations by victims of racist abuse [Independent]. And over the weekend a man was photographed wearing a T-shirt emblazoned with the message "Yes, we won! Now send them back".

While he was later dismissed as a lone 'nutter' and an 'idiot', even by his family, the image of such an individual strolling through an east-London street appeared to epitomise the feeling of a significant minority [Mirror / Sun]. 

Spike in hate crime

Several police forces reported a spike in hate crimes in the week after the vote. But whilst the reporting of such incidents faded from the news the attacks have continued.

While racists have targeted a wide range of groups, Poles in particular have been singled out. Racist graffiti was found on the front entrance of the Polish Social and Cultural Association (POSK) in Hammersmith, west London, on the Sunday after the referendum. Meanwhile former Conservative chairwoman Baroness Warsi told Sky News that race hate crime organisations had reported some "disturbing early results" and blamed the "divisive and xenophobic" Leave campaigning during the EU referendum [Sky News].


While politicians on both sides of the House condemned the attacks, they continued unabated. Then on 27th August, almost exactly 2 months after the Brexit vote, 40-year-old Arkadiusz Jóźwik died after he was beaten by teenagers in Harlow, about 30 miles north of London. Even in the days that followed other Poles were attacked in the area, and there have been reports of further incidents across Britain.

Speaking at a silent vigil a week later the newly appointed Polish Ambassador to the UK, Arkady Rzegocki, spoke of a disturbing rise of hate crimes directed to the Polish community and called for peace and solidarity between the British and Polish communities.

The local MP Robert Halfon said he believed that "the vast majority of people who voted to leave the EU, did so for noble reasons" and that the attacks on the Polish community were committed "by a minority who come from the sewers, who want to exploit division and have their own racist agenda."

Attacks "on a daily basis"

However, Eric Hind, one of the organisers behind a silent march and vigil, said Poles had been quiet for too long.

"Brexit kind of gave the British people a kind of green light to be racist. My family and friends have all been abused. It happens on a daily basis," he told the Guardian newspaper. "We have kept our mouths closed too long. ... This time it is the Polish people, but it could be Muslims, it could be any different group. We need to fight racism everywhere, every day."

At a public meeting in the town some said were were seriously thinking of leaving the town and even Britain because of the rise in racism [BBC].

Mira Gustmajdzimski, who was at the meeting, said Polish people no longer felt part of the community in Harlow, and "many people were scared to come to this meeting".

Albanian Mimoza Matoshi, who works for Integration Support Services in Harlow, said there had been a dramatic rise in racist attacks since Brexit and that some Polish people were considering leaving the town.

Miroslawa Majdzinska from Poland said she had been repeatedly targeted in racist incidents. "Many people were abused, my friends were told not to speak the Polish language at work, kids are not allowed to speak Polish in school," she said.

On Friday [9th September] Prime Minister Theresa May expressed her "deep regret" over attacks on Polish citizens living in the UK and told the Polish PM Beata Szydlo that "hate crime has no place in UK society".

Such words will mean little to the family of Arkadiusz Jóźwik, or the growing number of victims of racial hatred.

Divisive campaign

The Leave campaign and particularly that run by UKIP has been criticised for focusing heavily on immigration and scapegoated European migrants for many of Britain's social problems. Towards the close of the campaign, UKIP leader Nigel Farage was widely criticised for unveiling a poster with pictures of Syrian refugees alongside the caption the "breaking point".

Following the vote it seemed clear that there was some correlation between those areas leaning towards Brexit and a rise in racist attacks. Many areas that voted strongly for Leave posted even higher increases, police figures obtained by The Independent showed.

While some will dispute any connection between Brexit and a rise in hate crime statistics and the feelings amongst migrants appears to indicate otherwise. What is not so clear is whether the heat will gradually dissipate.

tvnewswatch, London

Saturday, September 10, 2016

Hard Brexit likely if there's no U-turn

The UK is likely heading for a so-called hard Brexit if a U-turn isn't made. And while a U-turn may seem unlikely given it would prove to be political suicide and cause 'outrage' amongst those who voted for Brexit, it would be the least destructrive course, economically, for the country.

Mixed messages and confusion

The possibility still exists that Brexit may not happen at all. Wishful thinking, many Brexiteers may say. However, there are already strong divisions growing in parliament and even amongst Tory ranks [Guardian].

There are mixed messages coming from May's own cabinet. David Davis's claim that staying a part of the single market would be "improbable" was quickly slapped down as being "his own view" and "not government policy" by Downing Street [Bloomberg].

Frosty reception at G20

Returning from her first G20 summit - where May received a less than enthusiastic welcome from Japan, the US and China in the wake of the Brexit vote - the new PM continued to insist that Brexit meant Brexit. However demands for what the government plans were concerning this she retorted that she would not give a "running commentary" on developments.

This has in the minds of some reinforced the opinion that some two months since the vote the new May government is just as clueless and still without a plan as to how they might deliver Brexit, let alone "make a success of it"

No clear plan

There are some politicians and many lawyers who say that the European Communities Act 1972 has to be repealed even before Article 50 is invoked [Independent]. This could also pave the way for an erosion of workers' rights [Labourlist]. The issue surrounding the European Communities Act 1972 will be decided in a High Court hearing later this year and it be judged to be the case that a repeal is necessary, parliament may be forced to vote on the matter. This in itself could at the very least see a delay in May being allowed to legally invoke Article 50 unilaterally. And given the workings of parliament, and the possibility the House of Lords could also slow down procedure, that delay could be anything up to a year.

Even with Article 50 invoked and Britain's negotiating position put before EU negotiators, there then remains a long waiting game which could drag on for two years. The mulling over of Britain's position indeed could be just sat on until that two year deadline expires before being handed back with a rejection and an offer on what the EU will accept. This might leave Britain with little choice as to either accept the offer or go for a so-called hard Brexit.

Hard Brexit

Aside of some hardline Brexiteers, few would want a hard Brexit. This is in essence a reversion to a WTO trading position in which the UK would be an independent country making its own trade deals. This to many Brexiteers sounds fine on the surface, but it would essentially mean Britain would have to renegotiate a trade deal with every country in the world and this could take years [FT].

Known as World Trade Organisation access, under this model the UK would rely on its membership of the WTO for access to European markets and as a first step towards full-blown free trade agreements with other blocs and countries — including the EU.

But the process would not be an easy one. The UK would first have to detach itself from the EU and regularise its position within the WTO before it could sign its own trade agreements, including with the EU. As Roberto Azevêdo, the WTO's director-general, said recently, there is no precedent for a WTO member extricating itself from an economic union while inside the organisation [FT]. The process would not be easy and would likely take years before the UK's WTO position was settled, not least because all other member states would have to agree. And while the task might not be impossible it could take many years to agree the schedules during which time the UK's legal status as a trading nation will be undetermined, with all that implies for uncertainty and business decisions.

Damaged economy

Such a position would not only diminish Britain's position on the global stage when it comes to trade it could seriously affect the country's economic position. Confidence might already be lost and some companies may already have uprooted base to shift to mainland Europe. Such noises have already come from the Japanese and most recently Ryanair who feel Britain's position in Europe will be weakened by Brexit and labelled UK politicians 'headless chickens' [Sky News].

Forex trading has already diminished since the Brexit vote with reports in the FT saying that it was unlikely Britain could recoup. And passporting is likely to disappear too if the sounds coming from various parts of the EU are to be believed.  

Top Czech negotiator Tomas Prouza said in an interview last Wednesday that there was a very low chance for British financial institutions and other companies to keep unhindered access to the free-trade zone. The state secretary for EU affairs in Prague said the UK's current proposals for a post-Brexit agreement with the European Union were "completely unrealistic" adding that Britain must grant access to workers, contribute to the bloc's budget and submit to legislative oversight in order to keep single-market access.

Talking to CNN's Richard Quest this week Claudio Costamagna, the Chairman of Cassa Depositi e Prestiti (CDP), said Britain should not be allowed to keep its passporting rights in any form of Brexit. Like all members, each will be able to veto a Brexit deal if they are unhappy with the proposals put forward. And there is growing that the likes of the Czech republic, Poland and Hungary would do just that if the UK does not accept the so-called four freedoms, that being the free movement of goods, capital, services, and people. This was a "red line", especially for the Poles, Czechs, Hungarians, Prouza said

Growing hostility from Europe

Some of the EU's negotiators may also be hostile to Britain in other regards. The Express described the appointment of Guy Verhofstadt as one of three EU Brexit negotiators as a 'stitchup' given his pro-European stance [BBC / Deredactie].

To sum up, it all comes down to cherry picking, something the EU has wholeheartedly rejected. It sums up a growing hostility that has been growing in mainland Europe for many years.

As Michel Rocard, a member of the Socialist Party in France and served as prime minister under François Mitterrand from 1988 to 1991, wrote in a piece in Le Monde some two years ago, Britain had attempted to dumb down many aspects of the EU whilst the EU had continually bent-over backwards to accommodate Britain [Guardian].

Any weakening on this position would risk others within the EU thinking about their own referendum in an attempt to renegotiate their position. And it would also weaken Europe's hardline position on Switzerland which voted to limit the rights of freedom of movement of people following a referendum but which resulted in swift retaliation from Brussels.

While it might be read, by Brexiteers especially, that Brussels is essentially dictating the rules, the club - that being the European Union - has to have rules to work. One cannot have some members only following one set of rules while others are obliged to follow another set of rules.

Voices of optimism

There are those that say Britain will 'eventually' flourish after Brexit, though the time scale might well outlive many of those that voted for it. There are those with the opinion that the European idea is dead and Brexit is just the first domino to fall.

Far more likely is that, given Britain follows through with Brexit, its economy will flounder for decades to come while Europe strengthens without a partner that has impeded its development on so many levels.

The likes of Wetherspoon's Tim Martin dismiss such scaremongering and points to the fact that since the Brexit vote little has happened other than a drop in the value of the pound [Guardian]. However, what he fails to point out is that Britain has not yet left the EU.

Looking back to an Imperialist past

Many Brexiteers have insisted Britain can trade with the Europe outside the single market and should build trading relationships with former commonwealth countries.

These are Australia, New Zealand, Canada, Jamaica, Antigua and Barbuda, Belize, Papua New Guinea, St Christopher and Nevis, St Vincent and the Grenadines, Tuvalu, Barbados, Grenada, Solomon Islands, St Lucia and The Bahamas.

Remainers however point to the fact that Britain already trades with many of these countries albeit through agreements made through the EU. Furthermore despite a recent fanfare by some Brexiteers that Australia was willing to sign up to post-Brexit trade deals, there are also voices coming from Australia that somewhat dampens the mood.

News that the two countries would start scoping a deal made headlines in the UK, with suggestions the country could become awash with cheap Australian wine and beer. Politicians described it as a "win-win" for two historically aligned countries both looking for a "friendly face" [BBC / Telegraph].

But only days after returning from the G20 Australia's trade minister Steven Cobio said any special relationship with the UK was in the past. In addition Ciobo said Australia would prioritise talks with the EU and that no formal talks could happen until the UK had actually left the European Union [Independent

Even with any new trade deals it is hard to see how Britain might benefit. Commonwealth trade is worth an estimated nine per cent of British imports and exports according to UK government figures.

And while Australia's exports are significant in themselves, labour cost and transportation would likely make many such exports expensive for Britain, especially should WTO tariffs be applied [] .

Australia has seen a slowdown in its own economy. And with some 70% of Australia's economy being services based, it is a country much like the UK where manufacturing is of lesser importance. In particular financial services and healthcare were two of the leading contributors to growth in 2014 [UKgov].

'Europe needs us' mantra

Those in favour of Brexit have continually claimed that Europe needs the UK and would not cut its nose off to spite its face by forcing the UK out of the single market should it not sign up to the four freedoms.

But the "they need us more than we need them" argument simply does not reflect the facts.

The UK currently relies on the EU as a whole for a significant import/export drive. 45% of all UK exports go to the EU. Meanwhile 53% of Britain's imports into the UK came from other countries in the EU in 2015 but accounts for less than 16% of the EU's whole export trade [research briefings].

Building more walls

There is now talk that Europe might introduce visas for counties outside the 26 Schengen member signatories which would leave Britain even more isolated [Guardian / Independent / Telegraph].

And there is also talk of a UK funded Calais wall to keep out migrants [BBC]. This comes as at least one senior French minister said his country could ditch the Le Touquet agreement if Britain quits the EU which would force Britain to withdraw customs and immigration checks from France and could see a greater influx of people seeking to enter Britain with the risk that a Jungle style refugee encampment could spring up in Kent.

In the end it is down to the politicians, even if the British voter has expressed an opinion - albeit with a slim margin leaning towards Brexit.

But there appears to be no scenario, looking forward, that is without pain for Britain and its economy at least in the near to mid term [IIEA - PDF]

tvnewswatch, London

Monday, September 05, 2016

Brexit challenges for UK as PM arrives at G20

Theresa May has insisted that she'll follow through with with a plan to extricate Britain from the EU under the banner of Brexit Means Brexit and that she'll make a success of it.

But despite the jargon and soundbites, the task may be a lot tougher than she, or even the most ardent Brexiteers had anticipated. And the challenges she faces are becoming all the more clear as she faced negative feedback from world leaders at the G20 in China.

No clear plan

Following her first cabinet meeting since the EU referendum May insisted there would be no re-entering the the EU by the back door, no second referendum and that she alone would make the decision to invoke Article 50 rather than putting it to a parliamentary vote.

But aside of the bold statements of intent, no clear plan was put forward and few clues as to what Britain's negotiating position would be.

Indeed, Britain's future is no less certain than it was the day after the EU referendum result was announced.

Economy 'strong'

Pro-Brexit supporters have drawn solace from positive economic news over the last month and suggested the fear mongering of the Remain camp was unfounded.

However, while the stock market has stabilized, the pound remains low against the dollar and euro, as well as many other currencies around the world.

Some have argued this is a good thing in that Britain's exports will prove to be cheaper and that British tourism will benefit. This is undoubtedly true. But it doesn't reveal the whole truth of the issue.

British tourism has benefited. But figures have yet to be revealed as to what extent any increase in tourism has resulted from a drop in the pound.

Weak Sterling

And while a low pound has most certainly increased some exports, this may well prove to be a double edged sword. Increased and disproportionate foreign purchases may drive up prices for the British consumer simply due to a supply and demand effect. There have already been reports that pork prices may increase after the Chinese took advantage of the weak pound and bought up huge stocks of Britain's pork supplies [Guardian].

Sterling's low value has also prompted an increase in property purchases by foreign buyers [BBC]. And some of the cream of Britain's manufacturing industry is also being snapped up by foreign companies. In the last week ARM, a leading chipset maker, was bought by the Japanese company Softbank [BBC / Guardian].

The Cambridge-based firm designs microchips used in most smartphones, including Apple's and Samsung's. ARM, which was founded in 1990, employs more than 3,000 people.

On the face of it, this might sound like good news. More foreign investment in UK based industry would not be a bad thing after all. However, as the new PM Theresa May touched down in Hangzhou for the G20, the Japanese have revealed that any UK based assets may likely move to continental Europe should the current status quo - specifically with relation free movement and open access to the free market.

Threats to trade

Japan had raised its concerns prior to the EU referendum, but in a clear and unambiguous document published by the Japanese government it stated that "Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to Continental Europe if EU laws cease to be applicable in the UK after its withdrawal." [BBC]

Japanese firms employ an estimated 140,000 workers in the UK, with Nomura bank, manufacturing giant Hitachi and carmakers Honda, Nissan and Toyota all having major bases in the country. It's not only a direct effect on these UK based operations. Any shift to continental Europe will have a knock-on effect for any businesses dealing directly and indirectly with these firms.

But it's not just the Japanese that have raised the stakes. President Obama has also reiterated his leaning towards a united Europe when it comes to trade rather than a detached Britain when it comes to trade.

There are those that consider Japan's 'threats' as somewhat fanciful [Guardian]. But Japan may be just the first of many shots fired across Britain's bow. And such shots may not be easy to ignore [Guardian].

Of course, Theresa May could call their bluff and continue forth with her plan to drag Britain out of the EU, curb immigration and block freedom of movement "whatever the cost", but those costs could be very high indeed.

Business losses

If Britain did lose these manufacturing bases it would likely be permanent. Even if there were a reversal of policy by May or any future government confidence in Britain may already be lost. In fact Britain has already lost some of its stand in its financial sector. The FT this week reported that London had lost its grip on Forex as the Chinese RMB strengthened and that it would be unlikely to recoup lost ground because of Brexit and the weakening pound [FT]. Others have already expressed the opinion that the pound will further diminish [FT].

Meanwhile the British government cannot possibly accede to Japan's demands if May's mantra that Brexit means Brexit is to mean anything. Yet the Japanese requests – set out in a 15-page memo – are likely to become the benchmark by which many countries with strong economic ties to the UK will judge the outcome of the talks. Thus she and her government will increasingly find itself between a rock and a hard place.

May has insisted that the UK can prosper outside the EU and become a "global leader in free trade". But from the rhetoric coming from the top economies it feels that they can do quite well without the UK and continue their relationship with the EU quite happily as Britain flounders.

US threats

While President Obama maintained that the US would still have a "special relationship" with Britain he reasserted his opinion, which he aired during the EU referendum debate, that the US would prioritise trade negotiations with the EU and Pacific nations over a UK deal [BBC].

Brexiteers will no doubt point to the fact that Obama is soon to leave office and that Britain will soon be dealing with a new US president. However, neither of the two contenders will be plain sailing for Brexit Britain. Trump leans towards a more protectionist and self-sufficient America while Clinton is more likely to follow in Obama's footsteps and strengthen trade deals with Europe through the much lauded TTIP and NAFTA.

TTIP talks have run into problems with Europe and there has been some talk that the US might try to kick Europe into action by attempting to seek stronger bilateral ties with the UK [Guardian].

No time scale

However, the UK cannot formally sign any trade deals with other countries or trading blocs until it has left the EU. This issue will also prove to be a headache for May. While DExEU, the Department to Exit the EU, may be conducting unofficial talks with the prospect of signing future trade deals, nothing can be signed until any Brexit negotiations are finalised.

And no-one is clear when that will be. Indeed no-one it seems is clear on anything when it comes to May's planned Brexit. And May is hardly clear about what she means with her Brexit means Brexit slogan [BBC]. Indeed it's more like some advertising slogan from a popular brand of baked beans - Beans Means Heinz. Indeed just as Heinz is known for its 57 varieties, Brexit could have any number of possible outcomes.

As Chris Patten points out in an article published in the Gulf News last week 'Brexit Means Brexit' could mean anything. "Imagine if someone told you, 'Breakfast means breakfast,' and then headed off to prepare your meal. You would have little idea what you were actually going to eat. A Northern Irish 'Ulster fry-up' — eggs, bacon, sausage, black pudding, potato and soda bread and a fried tomato — with a cup of tea? Coffee and a pastry? Depending on your circumstances and preferences, you would probably feel very differently about the various possibilities."

"The same goes for Brexit. Some are concerned primarily with stopping EU labour from entering the United Kingdom. Others are focused on maintaining access to the single market. But, unlike a breakfast, Britain can't just demand everything on the menu." [Gulf News].

And Europe has already made it clear that Britain cannot have an à la carte menu when deciding what it wants [Guardian]. And the block itself has also expressed it is also becoming impatient over the UK's prevarication and lack of clarity [BBC / Standard].

Tough times ahead

Prior to arriving in China for her fraught conversations with the G20 leaders, Theresa May said there would be "difficult times" ahead as she implemented Brexit [BBC / Guardian / Reuters].

This is clearly an understatement. With continuing protests seen in London this weekend, planned legal challenges, calls for a second Scottish referendum, concerns in Northern Ireland and Stormont as well as possible political fights in parliament, May will certainly see difficult times [Telegraph / BBC]. There are still many amongst the Remain camp that want to turn the boat around and have a second referendum, some citing UKIP's Nigel Farage who suggested that a 48/52% in favour of Remain would be unfinished business [Metro]. As discussions begin proper and plans emerge the Brexit fallout will undoubtedly make things all the more difficult for the May government especially if trade suffers adversely and some of the concerns raised by the Remain campaign become a reality.

As well as the economic, financial and political fallout, there is also the concern over the rise in racism and attacks that have increased significantly following the Brexit vote [Guardian]. While much of the media has shied away from drawing a direct connection between Brexit and such attacks it is clear that there is a significant number of racists that have been emboldened by the vote and taken to attacking foreigners both verbally and physically.

Rising racism

In Harlow a Polish man was attacked by a gang of young teenagers as he and a friend sat to eat a pizza on a bench in the town. Two days later he died from his injuries leaving the community in shock. A week on hundreds gathered to pay their respects while the Polish ambassador to the UK Arkady Rzegocki spoke of his concern over the rise in attacks against the Polish community since the Brexit vote [BBC / Independent].

Only hours after the vigil and a silent march through the town two more Polish men were attacked in the same town in what police say was a likely 'hate crime' [BBC / EssexLive].

Bleak outlook

From which ever way one looks at it Britain's future outside the EU looks very bleak indeed. The biggest tragedy of all perhaps is the fact that many of those who voted for Brexit will suffer the most as they lose their jobs, pay more tax, or lose even their pensions [Gulf News / Independent]. Currently there is seemingly a sense that many people are positive about Britain's post-Brexit future with one poll conducted by BBC Radio 5 Live showing 62% of some 1,032 people expressing this view. However, the poll also indicated a possible brain drain and a weakening workforce as 26% of those spoken to considering leaving the UK and moving elsewhere. Amongst 18-34 year olds the figure was even higher with some 43% considering emigration. There has already been one definite move as the V&A's director Martin Roth resigned and prepared to return to his native Germany, a decision fuelled by his disillusionment at the Brexit vote [Guardian / Deutsche Welle].  in an interview with German radio broadcaster Deutschlandfunk that "the time for nice exhibitions is over. The anti-European stance is growing daily here."

There will also be a growing disappointment amongst Leave supporters as all the lies are exposed and the growing realisation that many of the warnings from "project fear" become true. The voters were told that they would "get their country back". They may well not like what it turns out to be.

tvnewswatch, London

Saturday, July 09, 2016

Pro-European paper launches on back of Brexit

A new newspaper has launched in the UK aimed at the 48% of Britons who voted unsuccessfully to stay in the European Union.

The tabloid sized paper hit news stand on Friday [8th July] exactly a fortnight after Britain learnt the so-called Brexit campaign had victored over the Remain camp.

The New European paper says it aims to cater for what it called a sense of dismay and anger amongst Remain voters. Although with a cover price of £2 [currently equivalent to $2.60 or €2.34] some potential customers might themselves recoil with dismay given most newspapers sell for a pound or less.

However, The New European will appear weekly for the next three Fridays, mostly in areas that voted to stay in the EU in June's referendum such as London, Liverpool and Manchester.

The New European is said to be the quickest newspaper launch in British history but its future will however depend on sales. Essentially "every week's sale will be a referendum on the next" according to the publishers Archant who have run off 200,000 copies - a quarter of which which went to Manchester alone.
The first edition featured a brightly coloured front page carrying trailers for the paper's contributors alongside a large cartoon depicting a dog thinking to itself why people would vote for uncertainty, instability, isolation and beleaguerment.

Inside the first issue editor Matt Kelly writes of the shock he says many pro-EU voters felt at the referendum result.

"Walking in London the day after the vote was like walking through the world's biggest funeral parlour," he said in an introductory leader. "Everywhere the sense of bereavement was palpable."

The paper features articles from journalists across Europe including Tanit Koch, editor of Germany's Bild, and Wolfgang Blau, former journalist for the Guardian and Germany's weekly Die Zeit.

While it's difficult to judge sales after only a day on the newsstands, there were some indications the price was putting some people off.

One retail worker Catherine Dash, 20, told Reuters she liked the paper's style and colours but said, "I don't think it's worth two pounds."

The New European's launch comes at a difficult time for the newspaper print industry which has been in decline in recent years. In March this year the Independent newspaper went online-only after nearly 30 years in print, and publisher Trinity Mirror closed its "New Day" title in May just two months after it was launched.

More reports: MetroNewsweekHuffington PostThe DrumReuters

tvnewswatch, London

Friday, July 01, 2016

Anarchy in the UK - Brexit vote brings chaos & uncertainty

If it were not so tragic, the fallout from Britain's EU referendum result could be seen as some sort of political farce or Greek tragedy [Guardian].  

But it's a very English tragedy and one that's very real, very dangerous and may completely destroy the country altogether both politically and economically.

Cameron's unnecessary gamble

In a vain attempt to quell the Eurosceptics in his party and stop defections to UKIP, Prime Minister David Cameron last year promised a referendum on whether Britain should remain a part of the European Union. The promise may have won him an election, but his gamble has cost him, his party and the country dear.

Perhaps he thought it would be a slam dunk, a sure bet, a no brainer. After all Britain benefits hugely from the EU - though Eurosceptics would doubtlessly argue to the contrary.

But rising immigration and the emotive issue concerning sovereignty and the feeling that British laws were made by so-called 'unelected bureaucrats' swayed many to the Leave camp.

Perhaps Cameron should have made clear that the referendum was not legally binding or suggested that a pull-out would only be implemented upon a decisive majority - say two thirds of the vote, or that it should even be compulsory to vote. Indeed he could have decided not to call a referendum in the first place and not made it an election promise. Neither Labour or the Lib Dems would ever have called a referendum and UKIP would never win under the first-past-the-post electoral system.

But Cameron did none of these things and the result - after months of wasted electioneering - was a 52% to 48% split in favour of leaving the EU. With a 72% turnout it means that only 38% of the electorate actually voted to leave. But Cameron was adamant that the people should be heard and plans should be made to extricate Britain from the European Union [BBC].

Anger and buyer's remorse

However, that decision has in itself left many people, potentially up to 16 million of them who voted to remain, extremely angry [New Statesman]. The anger is compounded particularly by the lies and half truths used in the Brexit campaign [New Statesman]. There is also a sense, especially amongst the young, of being betrayed by the older generation who tended to vote to leave. There is also a sense of buyer's remorse with many people - amongst them Kelvin McKenzie of The Sun [Independent / Guardian]. And America is watching closely on this one too [Vox].

Resignations and party splits

After the vote came one tragedy after another. Cameron announced he was to step down as leader of the Conservative party. The stock markets went into a spin and the pound crashed to a 30 year low. Then there were calls for opposition leader Jeremy Corbyn to quits as party members saw him as being partly responsible for the result having not made clear Labour's stance or forcefully put the case for remaining a part of the EU.

"I know the honourable gentleman says he put his back into it. All I'd say, I'd hate to see him when he's not trying," Cameron said as he scolded Corbyn during PMQs before telling him to step down. "For heaven's sake, man, go!" Cameron hollered across the chamber [Guardian].

Labour certainly have their own issues [Newsweek]. But for Cameron he is likely to leave behind a legacy that he triggered the disintegration of the UK. Scotland will almost certainly leave - or at least try - should the British government follow through and actually leave the EU. There are even rumblings that Northern Ireland and the Republic of Ireland in the south could unite to join EU — which would certainly be ironic, given their history.

Gibraltar, a British Overseas Territory, voted overwhelmingly to Remain, as did Scotland.

And Gibraltar's First Minister Fabian Picardo said on the Monday following the referendum that he's been in talks with Scottish First Minister Nicola Sturgeon to find a way for them to unite in some fashion to stay in the EU.

Boris leaves the battlefield

A week after the Britain's went to the polls the front contender for the next Tory leader Boris Johnson decided he was not the right person to take the party forward [BBC]. Only a week before he had spoken of rebuilding Britain and bridges but now he was quite chapfallen [BBC]. It is often said in Tory ranks that "He who wields the dagger never wears the crown" and this appears to have come true for Boris.

It was almost as if he'd gambled by playing the part of a Eurosceptic in order to take over the party and lead it through the next election with a populist following. In other words he'd hedged his bets on Remain winning before launching a coup against Cameron. But despite the upbeat comments from Boris Johnson and others in the Leave camp, things have not gone quite as planned. Whatever his intentions, the aftermath is being felt far and wide.

The dismay expressed concerning Boris Johnson's announcement was almost immediate. "So Cameron destroyed, Johnson destroyed, just a shame the country is also heading that way" the Guardian's Jonathan Hayes wrote on Twitter.

"So Boris smashed up the whole place for nothing. For nothing." wrote Philip Collins a writer and contributor to the The Times and chair of trustees of Demos.

But it wasn't just the columnists. Former Deputy PM Michael Heseltine waded in calling Boris Johnson a disgrace. Lord Heseltine said Boris had "ripped the (Conservative) party apart, he's created the greatest constitutional crisis of modern times he's knocked billions off the value of the nation's savings. He's like a general, that led his army to the sound of guns, and at the sight of the battlefield abandoned the field."

"I have never seen so an irresponsible and contemptible situation," Lord Heseltine added [BBC / BBC]

Tory leadership battles

Meanwhile other Conservatives had already thrown their hats in the ring. One major contender, and the only one who originally came out to remain in the EU is the Home Secretary Theresa May.

However in her leadership announcement launch, May seemed resolute and claimed she was the right choice to, "Bring together the country and a sensible organised departure from the EU".

But her statement "Brexit means Brexit" will hardly bring about confidence in the City where there was a feeling Article 50 might never be invoked. Indeed her assertion that there will be "no rejoining the EU by the back door" gives no wiggle room.

There appears to be strong backing for May within the party. "The UK needs strong and proven leadership" Michael Ellis MP told the BBC echoing the words of another May supporter Chris Grayling MP.

She certainly has some support but there'll be few making bets quite yet given the series of unpredicted events that neither the bookies, political pundits nor polls got right.

The bookies and many polls seemed to hinge upon the Remain camp having seized the day. But by 1 a.m in the morning on Friday 24th June it appeared clear that the vote had swung the other way.

Repercussions of Brexit vote

The repercussions were almost immediately felt as the markets crashed around the world. More than $2 trillion were wiped off the value of shares globally and Sterling sank to a 30 year low against the US dollar.

While there was some recovery the following week, the pound still remained low. Meanwhile three major ratings agencies all downgraded Britain's credit rating removing its AAA status [BBC]. And less than a week after the vote had been declared others were declaring UK banks a bad bet.

RBS and Barclays, which had seen up to 10% wiped off their share value in the days after the EU referendum, were declared as "uninvestable for months" according to investment management and research group Bernstein [Reuters].

Of course Leave campaigners insist that the downturn would only be short-lived and that confidence would return.

Those in the City are less optimistic with some commentators predicting a recession. Martin Wolf, associate editor and chief economics commentator at the Financial Times, has described the fallout of the Brexit vote as probably "the most disastrous single event in British history since the second world war" and says he would not be surprised if Britain fell into recession [Yahoo - Video].

Wolf was one of several who had aired the possible outcome of Brexit being abandoned .

"Prime Minister Johnson might, to paraphrase Emperor Hirohito's remarks at the end of the second world war, declare that, given the "unexpected" economic damage and the risk of a break up of the UK, the situation "had developed not necessarily to the UK's advantage". He might forget the whole thing or, alternatively, call another referendum, merely to make sure the people remained as determined." [FT]

Little hope of a U-turn

A U-turn on Brexit seems unlikely with hardline Tory candidates such as Andrea Leadman and Michael Gove. Even former Remain campaigner Theresa May has left few options open after declaring "Brexit means Brexit".

On the other side of the house, Labour remains in disarray with its own leadership battles as Jeremy Corbyn clings onto his position despite countless votes of no confidence.

No Future?

So what's the future for Britain? Simply put everything's gone tits up. Bank stocks are down with the outlook negative. Ratings are down from AAA to AA with an outlook of negative. Vodafone is mulling over the possibility of leaving the UK while some tech start-ups have already left as uncertainty of the next two years takes hold [Business Insider / Register]. Ryanair has also hinted at shifting focus as have other firms in the City [BBC / Guardian / Sky News].

There is an irony that London this year 'celebrates' the 40th anniversary of punk. The Sex Pistols anthems Anarchy in the UK and the lines 'No future in England's Dreaming' taken from God Save the Queen seem particularly apt at this time.

It's easy to fall back on metaphors, but as regards Britain's future there is little to fall back on. Certainly one should not fall on one's laurels.

In the last week there have been headlines such as "Britain sailing into uncharted waters" or "Heading into a storm without a captain" or "The only thing certain is uncertainty" [Economist].

"The futility of it all"

And for what? Politicians continue to maintain Britain will recover and build by trading with other countries. This may be true, in the medium to long term. But all the signs point to uncertainty and an unwillingness to invest in the UK.

The weak pound may encourage some tourists to Britain's shores. But equally the rise in xenophobic and racist attacks on Muslims, Poles, Romanians and even an American of mixed race, could deter people from wanting to visit [Express & Star / Al Jazeera / Guardian]. More than 300 hate crime incidents had been reported to a national online portal in the week since the referendum - compared to a weekly average of 63. While the numbers are small in the great scheme of things such incidents are still disturbing.

How long before people become impatient with politicians as wages freeze or even diminish as Mark Carney, the Bank of England governor, indicated might happen in the third and fourth quarter of 2016 [BBC / City Wire].

It is all very well for the Leave camp to say people should not talk Britain down, but what else can one do? To take another metaphor one should call a spade a spade. If the market is unstable, if the pound is at its lowest for 30 years and there is political and economic uncertainty and chaos, one can only call it what it is; utter chaos. The front page of one Australian paper perhaps had it right when is headlined with the slogan "Anarchy in the UK" above the word Brexit as the results became clear last week.

With the experts, that said that Brexit would be a disaster, being proved right it is hard to be anything other than pessimistic [Bloomberg / Independent].

Many economists have argued that the longer the uncertainty drags on, the more investments will be delayed, or even scrapped altogether. A fall in investment, especially from abroad, poses a significant threat to the UK economy, although there is varying opinion on how bad it is [ZeroHedge].

Some have been somewhat flippant almost to the point of showing signs of Schadenfreude. "You have to admire Leave Brits. They were so worried about immigrants ruining their economy than they preempted it by doing it themselves," wrote one Twitter user soon after the result was announced. Many papers around the globe were also rather bemused or even ridiculed of Britain's decision [New Statesman].


But how long is the uncertainty going to drag on? In short no-one knows - or at least no-one's prepared to say.

Without implementing Article 50 Britain remains in the EU. However, while there is an element of status quo before that happens, no company is going to set up shop in the UK before it's clear whether the UK is actually going to follow through. Indeed miracles can happen. An election could be called and a party promising to reverse the decision could be elected! The Lib Dems have already promised such a move, although the odds of them winning would be slim.

Even with Article 50 implemented there can be up to two years of negotiations before Britain is actually outside the EU. And currently there is a stalemate with the EU which states there will be no cherry picking and that Britain will have to accept free movement if it wants to remain in the single market. There may even be difficulties should Britain try to secure the so-called Norway or Switzerland options as even they are currently borderless and within the Schengen zone, something which Britain has previously rejected [Independent]. There are five proposed models Britain could follow, although pro-Remain campaigners would argue that none are as good as what Britain already had [BBC].

Few choices

To quote an oft used American phrase, Britain is now caught between a rock and a hard place with few options on the table.

The government could turn around and make excuses to the electorate and say without remaining a part of the EU the economy is sunk, but promise to keep fighting for further reforms. There is some commentary suggesting a Brexit may never happen [France 24].

However following this route does rather lead to Britain forever being remembered as someone who said "I'm so sorry I made a mistake".

But perhaps that's better than flushing the country down the toilet.

The futility of it all

Today, 1st July, marks 100 years since the Battle of the Somme began and saw more than a million men were wounded or killed in the 141-day battle, the most devastating encounter of World War One.

And 100 years on Britain is now set to tear apart a union of nations which came together to end such battles and wars.

One might end with this line in which one soldier talks of the first day of battle. "At noon I went to Brigade to report the futility of it all." One hundred years on many might be feeling the Brexit battle was just as futile. Indeed what has it achieved other than create divisions, uncertainty in Britain's economy, precipitated the murder of MP Jo Cox [BBC] and encouraged racist attacks.

Brexit may not lead to war, but it may lead to deep depression and a prolonged recession which will be just as futile and unnecessary.

tvnewswatch, London

Wednesday, June 22, 2016

Britain heads into uncharted territory

After months of debates, accusations of racism and vitriolic attacks, voters are finally going to the polls to decide whether Britain remains a part of the European Union.

Every vote counts and turnout is all the more important. But at the eleventh hour, despite persuasive arguments from both sides of the campaign, torrential rain sweeping across Britain was feared to impact on the historic vote.

Polls failed to show any clear lead for either side. Indeed even if rain doesn't keep voters away from the polling station the result is expected to be extremely close.

The focus of the campaigns have hinged on several issues. Democracy has featured strongly amongst those promoting the Leave argument, claiming that 'unelected bureaucrats' in Brussels take away Britain's rights and impose unjust laws upon the country. Immigration has also been a major issue and become extremely divisive. There have been accusations of some parts of the Leave campaign exploiting people's fears over immigration to the point of racism. The vitriol boiled over when a pro-Remain MP, Jo Cox, was murdered by an individual, who while obviously mentally disturbed, had likely been influenced by some of the almost racist rhetoric coming from some parts of the Brexit camp.

The Remain side has not been entirely squeaky clean. Indeed many on the opposite side have dubbed their campaign as 'Project Fear' after countless claims that a Brexit will bring about recession, economic collapse and years of uncertainty.

The papers have varied in their support. Some have shamelessly supported the Brexit campaign amongst them the Sun, Daily Mail and Telegraph.

The Times, Guardian and Daily Mirror have tended to lean towards Remain with the Independent mainly sitting on the fence. The Financial Times has not been as vocal although their warning about the financial risks following a Brexit could be interpreted as its having a pro-Remain position.

The broadcasters have not sided with one camp or the other, although it could be argued that some campaigns and certain campaigners have been given more oxygen of publicity that they deserved.

And there has been endless TV, Radio and online debates. Perhaps the most enthralling was the Big Debate held in Wembley and broadcast by the BBC. Channel 4's The Last Debate hosted by the veteran broadcaster Jeremy Paxman was also engaging. CNN's UK Decides debate hosted by Christiane Amanpour had been pulled from its intended broadcast slot one week before the referendum after the murder of Jo Cox MP. However when it finally went to air a week later it was rather a disappointment.

But today the voters in the UK will decide. But whichever way the vote goes it will be a leap into the unknown as neither side can predict exactly what might happen.

tvnewswatch, London, UK