Wednesday, March 29, 2017

Off down the rabbit hole into a fantasy land

Theresa May has officially kicked off the start to negotiations to extract Britain from the European Union and sent the country down a rabbit hole and into a fantasy land [BBC].

At least this is the view of Ken Clarke, the veteran parliamentarian, who was the only Tory to vote against triggering article 50. He made a passionate pro-Europe speech making him an unlikely hero of the remain left, and likened the Tory PM Theresa May to Alice in Wonderland as she prepared to send Britain into what might end up as a Titanic disaster rather than the Titanic success that Boris Johnson has hailed Brexit will be [Guardian].

Britain could tumble down the rabbit hole "and emerge in a wonderland" where suddenly world leaders are "queuing up" for to strike trade deals with Britain including "nice men like President Trump and [Turkish] President Erdogan," Clarke declared sarcastically.

"I do want the best outcome for the UK from this process," he said. "No doubt somewhere there's a hatter holding a tea party with a dormouse!" he quipped [Channel 4 / Guardian].

"Brexit could be a historic disaster"

Clarke has never minced his words when it comes to Brexit and said it will be a disaster for Britain.

"I don't want to fall into the [trap] of wandering around, positively welcoming gloom and disaster, so as to be able to say: 'I told you so.' But I actually do think it will make us poorer. It could be a historic disaster."

"If it turns out to be at some enormous cost and it brings an end to international investment in quite a lot of sectors of the economy, then of course it could be a disaster." [Guardian]

He is not the only Tory to decry the folly of Brexit. Tory grandee Lord Heseltine has consistently hit out at Brexit campaigners for not having a clear plan. Speaking on BBC's Newsnight only days after the referendum result Lord Heseltine said voters were "sold a pup"

He told Evan Davis that British people were misled by Brexit campaigners, and that - regardless of whether Boris Johnson became prime minister - he should be put in charge of negotiations with the EU because "he got us into this mess". He also argued there should either be either a second referendum or a general election to make sure the "will of the people" is met [YouTube].

But his battle against Brexit has earned him no support from much of the Tory party. Indeed soon after he voted against the government's Brexit legislation he was sacked as a government adviser [BBC].

Former PM John Major has also spoken out calling Brexit an "historic mistake" [Independent].

Remainers vilified

But anyone bold enough to stand up to the so-called "will of the people" has been vilified in the media. Tony Blair, Peter Mandelson, Ken Clarke, Lord Heseltine, Nick Clegg, Tim Farron, Gina Miller and High Court Judges have all found themselves at the sharp end of the sword as the right wing press tear into them.

Judges have been labelled the "Enemies of the People" while others have been attacked in social media and even received death threats.

Gina Miller has been singled out by many hardcore Leave campaigners for her High Court action which sought to clarify that only parliament could vote on whether Article 50 could be triggered rather than the PM unilaterally invoking a Royal Prerogative [FT].

Gina Miller has said she never expected the levels of abuse she received [New Statesman]. She says she doesn't "know Britain any more," and has even talked of leaving the country altogether as the vitriol and threats have become so severe.

Quitting the UK

Miller is not the only one thinking of leaving. Indeed many people have already left whilst there is also a decline in some people coming in.

The numbers of those leaving the UK because of Brexit are difficult to determine. But there are some notable examples.

The director of the V&A Martin Roth quit over his disillusion with Brexit [Guardian / Independent]. Tristram Hunt then quit as Labour MP of Stoke on Trent to become V&A director and in so doing prompted a by-election [Guardian / BBC]. Labour retained the seat and saw UKIP's leader Paul Nuttall flounder [Guardian].

Since the Brexit vote there has been some indication as to how unwelcome many Europeans now feel. The number of nurses coming to the UK from the EU since the Brexit vote has fallen by 90% [Telegraph].

And the hospitality trade has expressed concerns as much of it relies on EU migrant workers.

Yet should anyone make and public comment or raise such concerns one is immediately booed down as was one woman on a recent broadcast of BBC Question Time [Huffington Post].

Whilst some argue that Brits could easily fill rolls currently taken by EU citizens, the fact is many British people don't even apply to do such work. Indeed in the last week Pret A Manger said only around 1 in 50 applicants were British. It has even began to dawn on the ardent Leave campaigner Tim Martin, owner of the Wetherspoons pub chain that EU citizens were much needed in Britain.

Britain could not afford to put the brake on immigration, Martin said whilst calling for a special deal for EU workers which took advantage of its proximity compared with countries such as India and China.

"For the UK to be a successful country and economy in the next 20, 30, 50 years, we need a gradually rising population and that will need some type of reasonably controlled immigration. If we don't get it I think the economy will tend to go backwards," he said.

His comments were criticised by Remainers who pointed out that being a member of EU already gave such advantages [Guardian].

Growing racism and xenophobia

Several months after the referendum the fallout for race relations has improved little. One A Polish woman was booed by audience members on BBC1's Question Time when she said she no longer feels welcome by 52% of British voters who backed Brexit. The woman says she's lived in the England for 23 years and was never discriminated against before the Brexit vote [Independent / Guardian].

Post-Brexit racism soared 40% according to Home Office figures figures and one Polish man was even killed after an attacked which police described as a "hate crime" [Independent].

And more recent figures appear to show there is no slowing of such crime. Indded all the sign appear to indicate an increase in xenophobia and hate crime [Independent].

UKIP have been blamed for much of the anti-immigrant stance that dominated the Leave campaign. But many Tories were also guilty of stirring the pot which has emboldened the far-right.

And in parliament Ken Clarke, who has long stopped caring about what anyone in the Tory party thinks about him, poured scorn on some of his own colleagues. Enoch Powell would not feel out of place among the current crop of "mildly anti-immigrant" Tories, Clarke said in his 20 minute address to parliament last month.

Trade and weak pound

The racism and xenophobia was arguably always there. Brexit has just helped in emboldening the racists and given an anti-immigrant stance an air of respectability.

Britain faces more that infighting and thuggery however. In the coming years it needs negotiate a divorce from the EU, to establish trade deals with the EU as a whole and sign new deals with other countries post-Brexit.

And, as has been iterated many times, this is by no means an easy task.

May has all but said she'll tear up all trade ties with the EU and start over, essentially taking Britain back to WTO rules. What is little talked about is that by doing so means Britain with have no signed trade deals after leaving the EU and will have to thrash out deals with other blocks independently. Such a process could take years and under WTO rules have to be ratified by all 164 WTO members.

Contrary to popular perceptions, Article 50 inaugurates a withdrawal process, not a trade agreement. It will involve negotiating essentially technical issues, though important ones – such as the rights of British citizens in the EU and of EU citizens in the UK – and can be achieved within the two-year limit. Article 50 does allow for a shadow negotiation on trade matters. Indeed whilst May wants to negotiate a trade deal in tandem Michel Barnier, the EU chief negotiator, has all but ruled this out.

Complicated negotiations

And thus it gets very complicated. The UK cannot simply 'cut and paste' the terms of its current WTO membership - as part of the EU - and carry those terms over. Depending on the terms of Brexit, at least some of these schedules will need to be rewritten, because leaving the EU will affect the EU's own commitments to other WTO members. Agreeing the UK's new schedules will involve negotiations between the UK, the EU and other WTO members to resolve sensitive issue such as limits on agricultural subsidies and the size of tariff quotas - where certain quantities of imports are charged lower tariffs. There will also be questions about how existing EU-wide quotas – of which there are currently almost 100, mostly on agricultural products – are divided up between the UK and the EU post-Brexit [Institute for Government / Guardian / Economist].  


The Remain campaign was labelled as project fear for its predictions of chaos following a Brexit vote. However, many predictions are likely to come true as time passes. There was no immediate departure of banks and manufacturing. But as these business sectors see Brexit as impeding their operations they will shift. Indeed there has already been signs that some firms are shifting operations.

This will undoubtedly affect jobs and further burden government expenditure as regards welfare benefits at a time when austerity is still an issue.

Recently the French presidential favourite Emmanuel Macron suggested UK talent move to France [Sky News / Independent]. While the language barrier might prove difficult such offers may only serve to increase the brain drain. There are a great many Remain voters that will remain in the UK, but there is a large proportion looking to escape Brexit Britain [Guardian].

Only time will tell, but it seems clear already that there will be less industry, a smaller financial sector and less opportunities unless one wants to pick strawberries or work in Pret A Manger.

But given the falling value of sterling and the rise in the cost of living, any job will be probably much appreciated.

Brexit is built on fanciful dreams of an open Britain which will trade freely with the world. But quite is Britain offering to trade with the world it isn't already selling? And how would any future trade deal be any better than the trade deals Britain already has in place with those countries? As for buying things, Britain already buys from countries all around the world, and there is no reason to indicate that Britain would buy any more than it already does. Indeed buying products from halfway round the world will be more expensive not only on potential WTO tariffs, which would apply to all countries the UK might import from, but also due to transportation costs. So in respect to the belief that Brexit will conjure up a Wonderland, Clarke is right. But unlike Alice's adventure there won't be the relief of waking up when the stack of cards come crashing down. In fact a leaked report has already indicated Britain is in for an "economic shock" should it leave the EU without a deal [Independent].

No clear plan

It seems clear that there is still no clear plan. Theresa May suggests no deal will be better than a bad deal and some in her party have embraced this. Indeed even amongst many Brexiteers the WTO option is seen as a kamikaze Brexit. The Daily Mail this weekend warned that Andrea Leadsom and her ultras would steer the UK not towards a soft Brexit or a hard Brexit, but a Kamikaze Brexit.

Yet it has emerged that there are no contingency plans for Britain falling back onto WTO rules. In fact it has emerged that the government has not carried out a full assessment of the potential economic impact of Britain leaving the EU without a trade deal, after the Brexit secretary told a committee of MPs, whilst saying that modelling the repercussions of a default to World Trade Organisation [WTO] arrangements were impossible [Guardian / Mirror]. 

However he later contradicted this when on BBC Question Time the Secretary for Exiting the European Union said the government had a "huge contingency plan" for the UK leaving the EU without a deal [BBC].

During the programme Davis also said the UK would abide by its obligations when it comes to settling outstanding liabilities with the EU, but played down claims these could amount to £50bn. However the EU has already threatened to take the UK to the International Court should it not pay up the full amount [Business Insider].

Meanwhile, former Lib Dem leader Nick Clegg said the EU was "simply going to ask us to settle the tab before we leave", and Labour Brexit spokesman Sir Keir Starmer said the UK had to honour its debts "otherwise no country is going to want to deal with us" in future trade negotiations.

Rabbit holes & elephant traps

Today's triggering of Article 50 marks a milestone on a long road. But the path down which it leads is treacherous and full of potholes. Ken Clarke has likened it to heading down a rabbit hole to a fantasy land. Newspaper pundits, such as the Telegraph's Christopher Booker, suggests Davis is heading into an elephant trap.

"As for the fond belief that, without any deal, we could continue to trade with the EU just 'under WTO rules', those still suggesting this are clearly unaware that not a single developed country relies just on 'WTO rules' to trade. The EU treaty database shows that it alone has no fewer than 880 bilateral trading arrangements with almost every country in the world, including 20 with the US and 67 with China; all of which we would drop out of by leaving the EU."

There are other traps too as the "electronic, light-touch customs checks" that allow 10,000 British trucks a day to move goods anywhere in the EU without border controls.

"[Davis] still doesn't seem have grasped is that the moment we leave the EU [and the European Economic Area] to become a 'third country', we are automatically excluded from this electronic system: to be faced with all the need for paper documentation and inspection procedures which could soon have lorries backing up from Dover to London and beyond."

"The horrifying fact is that our politicians are heading for these negotiations without any real idea of what a mighty elephant trap awaits them." [Telegraph]

There are a good many that believe Brexit will be a disaster for Britain. Former UKIP Nigel Farage is not one who subscribes to this view, but has said he would leave Britain should Brexit fail. "If Brexit is a disaster I will go and live abroad. I will go and live somewhere else." [Business Insider]

That will surely bring great comfort to countless Briton's left without jobs as car plants relocate, or British housewives struggling with increasing shopping bills and as those with jobs face higher taxes to make up shortfalls as the City shifts to Europe.

No-one really knows where the road to Brexit will lead. Indeed to only thing certain is the uncertainty. And business hates uncertainty.

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