EU v UK – the balance of negotiating power

As the Article 50 starts to take shape, the question facing negotiators is who has the stronger position. The question has been addressed by select committees. Let’s take a practical look.

At the same time that debate is in progress, sundry parliamentary select committees are hearing evidence from different sectors. Key among them is Mike Hawes of the Society of Motor Manufacturers and Traders (SMMT). His lobbying has included hearings by two select committees during January alone.

Among Mike Hawes’ assertions are that Britain has a weak negotiating position. The basis for this is a much used argument by the Remain side during the referendum campaign. In short, 43% of Britain’s exports are to the EU. In return, Britain accounts for 7% of EU imports. This argument has been oft repeated, notably this week in the House of Lords debate.

EU position
The EU parliament’s Brexit negotiator, Guy Verhofstadt, has insisted that it is an “illusion” to think Britain could enjoy the economic benefits of the single market without accepting EU budget contributions and “free movement”.

He has also asserted that the EU will not accept any Brexit deal that will leave Britain better off than it was as a full member of the bloc because that could encourage others to follow the country out of the exit door.

EU Commission chief negotiator, Michel Barnier, has also suggested that no progress will be made until a “divorce settlement” is reached, something in the order of £50 billion. Leading EU politicians from the power base of Germany and France have insisted that there will be no deal on access to the SEM without free movement of labour.

Behind them, at least ostensibly, there are 27 nations and a Single European Market of 440 million people. Lined up against a solitary nation of 65 million, one might assume a position of strength for the EU.

That strength might also be a weakness, in that the leading powers that provide the bulk of EU funding have to agree to the same deal as the rest. That includes the South European countries undergoing austerity, the agricultural economies and those East European countries with pools of migrating labour.

British position
Theresa May has outlined a British position. Evolving from her “Brexit means Brexit” slogan, we now know her 12 point plan. We have also heard her assertion that no deal is better than a bad deal for Britain.

By asserting that Britain does not aim to be a member of the SEM, at a stroke she might have appeared to eliminated the EU’s strongest weapon. In real terms, how potent is this?

There is a beautiful simplicity to the British approach. We seek to cooperate with EU members where that is to mutual benefit. We seek to retain our sovereignty, including freedom to protect our borders, manage our own affairs and break free from the ECJ.

Britain would like a free trade deal with our friends. If they don’t want to share the same benefits, we have other friends who do.

Access to the SEM
It is worth pondering what exactly is meant by Single European Market (SEM). It is in fact an arrangement that puts up barriers to those from outside, effectively a protectionist zone that imposes tariffs on cheaper goods from outside.

The SEM will continue to be a collection of 27 countries using 24 languages. Of those countries, 14 use the Euro as a currency, the rest are working towards meeting the criteria for that currency.

The members diverge in many ways; the proportion of their economies involved in different industries, religious diversity, income, wealth and other demographic factors.

Much has been made of the need for the UK to secure access to EU services markets, not least financial services. This can be done by “passporting”, i.e. mutual recognition of regulatory frameworks.

In evidence given to Select Committees, David Davis has identified that the UK has 5,000 passports into the EU. The EU in return has 8,000 passports in the UK.

There are two key points to make about access to the SEM:

1. To be a member, we have to discriminate against those outside the SEM, i.e. the rest of the world, which accounts for 57% of British exports under WTO rules.

2. Membership of the SEM gives those other 27 countries access to the British market where the majority of countries have a trade surplus with us. They need us more than we need them.

Putting into perspective

Some other perspectives might be helpful. Instead of looking solely at exports, a more holistic picture can be seen from the balance of trade:

Overall, Britain operates a trade deficit with the EU. The largest part of that is with Germany, a country that has dominated European markets. This has been significantly helped by monetary union, the value of the Euro being held down by countries with different structures to their economies. This is estimated to give Germany a currency undervaluation, therefore competitive advantage of 15-25% according to the IMF.

Other countries have significant trade surpluses with the UK, notably Spain and France but let us for a moment use Germany as an example to focus the mind. It also helps to realise that Germany is the largest net contributor to EU budgets.

Germany’s car exports account for 12% of their total exports. Roughly 20% of those exports come to Britain. A significant proportion of those components are sourced from former East European countries. Germany and its neighbouring suppliers need to maintain access to the British customer.

No deal is better than a bad deal?
The default position, if no trade deal is concluded, is a reversion to WTO rules. Yes, that means that British produced cars may have tariffs applied when sold into Germany, at a rate of around 10%. That also means tariffs can be imposed on German cars coming into the UK, making them less competitive.

Theresa May also highlighted amongst her 12 point plan that free of the SEM, Britain is free to negotiate bilateral free trade deals around the world. Suddenly, cars built in the USA could gain a price advantage of 10% over those constructed in Germany.

Similar arguments can be applied to other EU trading partners and other industries. Consumers will note the range of agricultural products on supermarket shelves, from a heavily subsidised, labour intensive industry within the EU and with punitive tariffs on the rest of the world.

Red wines from Chile, Australia, the USA and others would have price advantages against those from France, Spain and Italy. The importance of the UK market to EU members, notably those who are net budget contributors, should not be understated.

To add to perspective, yes, the EU may account for 43% of British exports. That means the rest of the world accounts for 57%, under WTO rules. By exports, the USA is the biggest market for UK goods, Germany 2nd, Switzerland 3rd and China 4th. By surplus, Switzerland tops the ranking, followed by USA, UAE and Hong Kong.

In short, despite being the absence of a deal with a protectionist EU, Britain is afforded scope to profit from larger markets globally, both in lower costs of imports and freedom to sell into global markets.

Who wins with no deal?
On a political level, Britain gains democratic accountability. On a trade level, Britain regains the ability to deal with a world that has liberalised considerably over the last 45 years.

On what should theoretically be the mid point of the 2 years article 50 negotiations, in April 2018, the Commonwealth games will be held in Australia, a group of friendly nations accounting for 1/3rd of the world’s population, over 5 times more than the rump of the EU. This could be a timely reminder of the opportunities in countries which have a shared history with Britain.

Britain gains freedom to manage her own affairs, gains from reducing the net budget contribution, gains control over migration, gains from free trade with the growing economies of the rest of the world.

The EU would lose the net contribution, potentially face reciprocal tariffs with one of the biggest export markets for almost every one of the 27 remaining nations.

A corporate view
With much having been made of the car market during debate in Brexit, no apologies are made for staying with this example. Some further analysis shows that Germany is the biggest car market in the EU.

The top non-German brand sold in Germany is the 8th most popular model, the Skoda Octavia which is in fact German owned. The top non-German owned brand is the Ford Focus coming in at 14th. The Focus is also built in Germany.

To once again add perspective, in 2016 the Focus accounted for sales of 47,990 in Germany. There were 70,545 sold in the UK. In order to overcome a loss in demand, it might make sense for companies like Ford to avoid tariffs by investing in relocating assembly back to the UK, at least partially.

The relocation of investment argument might even be accentuated if, as suggested by Chancellor of the Exchequer, Philip Hammond, were to follow through his suggestion of reducing corporation tax. Adding value in a low tax economy as compared to the EU would encourage profit to be taken here.

Another angle is those German car makers with plants in other countries that could supply the UK market should trade deals be struck with, for example, Brazil or South Africa. We can always buy our Mercedes and BMWs from those countries. Better still, Jaguar would have a price advantage, more so if using British steel.

Summary
The EU institutions come from a perspective of self preservation, that of the bureaucracy that thrives on increased control. Member nations of the EU are diverse, with needs that vary. It is in the institutions’ interests to delay as long as possible, ensuring maintained net contribution from the UK.

Central to that self preservation is Germany whose industrial markets are artificially protected to sustain an economic engine for EU survival. The buffer states surrounding Germany depend on the net contributions from the bigger member nations to provide what growth exists in the EU markets. The Southern member states suffer with austerity.

Britain has much to gain from freeing itself from undemocratic bureaucracy. She has the opportunity to return to her national characteristics, based on a maritime history with global trade. We do not seek to protect ourselves from the world, rather embrace it with our friends who share a common language and/or a common history.

Whatever position the EU currently takes can soon change. Frau Merkel faces an election this year, as do the leaders in net contributing countries, France and the Netherlands. As well as negotiating with Britain, the EU has to negotiate with 27 member states, some of who will be asked for greater contributions, others who will be asked to accept less.

EU members need access to British markets to maintain a semblance of growth rather than recession. For Britain, the rest of the world once more provides opportunity. If the EU institutions seek to make Britain suffer, it is EU member states who will suffer, from decline in industrial and agricultural sales to a significant trading partner.

As Theresa May says, “no deal is better than a bad deal for Britain”. No deal would be a bad deal for EU member states. The British market is vital for the EU as a whole to maintain growth. At least one side will need to compromise. The EU has to recognise that its 27 member states will lose more by seeking to put up its own barriers to the British customer.

No deal for Britain would ensure no further contributions, would provide certainty in markets and start the march to trading with a growing world. It is up to the EU to decide whether they wish to adopt the philosophy of lemmings or to cooperate with an innovative country that has a global reach.

House of Lords – an opportunity for reform?

In the wake of the EU referendum, public attention has been aroused by suggestions that the House of Lords could be the forum to block Brexit. Were they to do so, would this make it the right time to reform or even abolish the upper chamber?

HoL1

The House of Lords is currently the second most populous legislative chamber in the world, only behind China. It has the largest head count of any chamber in the democratic world.

To summarise the statistics, the House of Lords is currently made up of almost 700 life peers, those being nominated by the Prime Minister. Additionally, there are up to 92 hereditary peers, those who have inherited ancestral titles. A further 26 are bishops.

Among the group of life peers are sports people who have achieved great things. There are also representatives of the legal profession, trade unionists, business people and other who have contributed to society. There is also a raft of failed and/or retired politicians, among them several expenses cheats.

There have been several half hearted attempts over the years at reforming the House of Lords. The most recent Act was in 2014 which merely created the opportunity to retire from the Lords and for members to be disqualified or removed.

The last major reform was under Tony Blair in 1999, which limited the number of hereditary peers. Following the House of Lords Act that year, the number of active peers was reduced from 1,330 to 669. Since then the number has grown again to 805, up by 15%. Each of the 3 Prime Ministers since and before Theresa May have flooded the ermine clad benches, there being over 850 who are either active or inactive. Cameron alone appointed 263 including his resignation honours.

HoL2

Given those numbers, a perspective might be given of attendances. In the year after Blair’s reforms, the average number of peers attending was 352 per day. At the time of the formation of a coalition government, this was up to 388 per day, a rise of just over 10%. By the time of Cameron’s resignation, the increase was to 497, a further rise of over 28%.

Those statistics generate a number of arguments.

At a time when they civil service and indeed the country have been subject to austerity, the Prime Minister has been able to appoint chums to a life of indulgence. Cameron did nothing to reduce the cost of government, at the same time as reforming state sector pensions, with the exception of parliament. They average cost of an active peer is over £130,000 each year in allowances and expenses.

At 805 members, it is hard to justify why the 21st biggest country by population should have the 2nd largest chamber, over 8 times the size of USA who have 5 times the population. The fact that is has grown so much since 1999 makes it hard to disagree that patronage is the wrong means for allocating seats. Incidentally, there is a maximum seating of 400.

HoL3

Anyone who even casually watches proceedings in the upper chamber will find it hard to believe the average attendance. It would be easier to believe the anecdotal stories of peers turning up to sign in whilst the taxi is left running. £300 per day might corroborate allegations aimed at the former Commons’ expenses cheats. There is rarely, if ever, standing room only.

Clearly, any future reform has to be directed at the number of Lords.

There are some alternate perspectives. No single party has a majority in the Lords. . Currently, it might be argued that the balance of power is held by the 26 bishops, 178 crossbenchers and 30 otherwise non-affiliated members. In the case of the former, the nation is afforded a moral compass, as for the others, they can vote with their conscience and on the quality of potential legislation. Independence of members has some attraction.

It may be a surprise to note how frequently the Lords have sent bills back to the Commons for amendment. In the last session alone, there have been 60 defeats involving 17 bills and other regulations.

Perhaps the most high profile of those was on in work tax credits. On that single issue, it seems reasonable to expect that the majority of the population would support the vote by the Lords. In fact, it is hard to argue that any recent defeats were anything less than appropriate measures to curb the excesses of a rash government with a working majority that could potentially last for 5 years under the fixed term Parliament Act.

On tax credits, the Cameron axis of government attempted to push through something which, if put to a public vote, would undoubtedly be defeated. This was also specifically against the electoral promises made by Cameron and his team.

Further analysis of those defeats suggests that collectively, the Lords have acted to uphold democracy and protect rights. Sundry Lords select committees also exhibit detailed and independent analysis of current events and policies. Not all that the lords do is bad and in fact much is for the greater good.

HoL sleeping

So how can we summarise the House of Lords? Certainly it is overpopulated. It is a retirement home for failed politicians and expenses cheats. It has also become a vehicle for unprincipled leaders to reward back scratching. Most importantly, as a revising chamber, it is a vital component in restricting the power of governments which go too far.

This makes the question of how to reform the House of Lords fraught with potential debate.

Some simple principles might apply. At this point, it should also be acknowledged that the House of Lords is unrepresentative in many ways; the predominance of men over women by a ratio of 3:1, the wealth profile and the age profile to name but three.

Firstly, there needs to be a multi tier peerage profile. Honours can be given to those who have excelled and served the public in many spheres. That does not have to be accompanied by entitlement to legislate. Indeed, not all hereditary peers have the right to sit. Extension of that principle would be no novel act.

There also has to be a time limit on how long those entitlements to legislate can apply. Under the current framework, a government has to submit itself to the electorate for 5 years. A peer is in the Lords potentially for life, regardless of competence.

Allowances should only be paid for all day attendance, clocking in before the start of proceedings and confirmed by attendance at a percentage of all votes, 80% does not seem unreasonable.

clean up the house of lords

Numbers should be reduced to a manageable level. It is hard to justify a figure of more than 400 active members, a comfortable seat each if they are to actually attend debates. On that basis, those attending the least can therefore be moved to the non-voting tier of Lords, to be reduced further as a democratic component is introduced.

That democratic component should number between 50% and 75% (to be agreed) which can be elected in between general elections and on a proportional representation basis, reflecting the democratic profile of the electorate. Such elections would hopefully provide a more reflective demographic profile.

The balance, quite rightly, should reflect the moral compass of the country. Bishops should be retained. £300 is a reasonable fee for legal professionals to scrutinise potential legislation. The balance of power should be held by those without other vested interests.

The need for reform is obvious, the solution can be simple, reducing the cost and abuses whilst retaining the brake on a government which exceeds its powers.

Brexit – some EU perspectives

The march towards Brexit continues. Finally, the Article 50 Bill has been presented to Parliament. What better time to consider perspectives from the EU on what Brexit might mean?

With the Article 50 Bill timescale, in theory at least, Theresa May should be in a position to invoke Article 50 itself during the EU Council meeting on 9th March in Malta. There will certainly be cause for reflection amongst EU ministers.
May blanked

It is worth taking a moment to consider what exactly the EU is. The highest priority from the Remain side is that the EU is a Single European Market (SEM), a free trade area for its member states.

A reverse perspective from outside the EU is that it is a customs union. Barriers to trade may or may not exist among EU members but for the rest of the world, the SEM is a market to which access faces barriers. The customs union also includes countries such as Turkey who have yet to become full EU members.

To many Leave voters and campaigners, the EU is a political union between 28, soon to be 27 countries. Among those, 14 are also involved in currency union with fiscal restraint in order to harmonise their economies and provide currency stability. In practical terms, this benefits some more than others, more of which later.

On 31st January 2017 the President of the European Council, Donald Tusk, has written to ministers. His letter can be seen here. Tusk is one of five EU presidents who collectively produce reports on the direction of travel, the 2016 report can be found here.

In short, these views can be seen a representative of the EU establishment. They are committed to ever deeper union and integration. This amounts to further convergence, fiscally, economically and in strengthening institutions.

To that end, Brexit represents a political threat. Tusk has identified what he calls “xenophobic sentiment” and “national egoism” as challenges within Europe. In short, democracy and the will of the people is secondary to maintaining and deepening the power of the institutions.

On top of the political threat, the EU administration faces a cut in its budget to the extent of a net £8billion (and growing) per year. This figure represents around 14% of net contributions. Brexit means that money will have to be found from elsewhere or that expenditure, with the power that brings, being diluted.

The EU administration is faced with the dilemma of doing a deal that respects democracy at the risk of other members being incentivised to leave or punishes Britain. The question remains, who would be punished more?

The EU is however still a collection of 27 nations, for the time being at least. It is remembered that even though its supporters see the EU as a valuable single market, those 27 states will have different views of what Brexit means. To explore those, let us start with relative trade positions.

trade balance

The above table represents the balance of trade, whether EU members are in surplus or deficit with the UK.

Top of the list is Germany with a surplus in excess of £25 billion annually. Their current strength is in full view of those who use Britain’s roads. Germany is the leading car exporter globally at almost twice the value of second in line, Japan and three times the value of USA in third.

To give more background, the UK accounts for 20% of Germany’s car exports. The car industry accounts for 12% of Germany’s total output.

A new German government would certainly be opposed to any sort of deal that damages her own interests. Failure to strike a deal potentially leads to the fall back position of WTO rules. That means of course that British car exports to Germany may face tariffs, in the order of 10%.

Reciprocally, tariffs might be imposed on one of the German car industry’s key export markets. Whilst the SMMT assert this will increase the price of cars by £1,500, there is also the distinct possibility that British consumers shift their buying patterns to those vehicles produced here. Will company car fleets shift from Mercedes or BMW to Jaguar?

There are further threats to Germany. If bilateral free trade deals are struck between Britain and other partners, Japan and the USA, German competitiveness is further diluted by those exporters into British markets as well as British vehicles into American markets.

There is a solution for the car manufacturing companies. German producers, as well as those owned by external investors such as Ford and General Motors can relocate production elsewhere, even back to the UK.

A summary of Brexit for the German economy is that loss in demand from the UK can mean the difference between modest economic growth and recession. Extra competition in markets where bilateral deals are made and disinvestment can lead to depression.

The same principle can be applied to those other countries with significant trade surpluses with Britain, imported cars coming from 7 of the top 8 EU countries which have a surplus with the UK. The exception is Poland which provides components across Europe. Poland’s main export to the UK is consumer goods, including shoes, a relatively labour intensive industry.

Incidentally, the UK happens to be Poland’s 2nd largest export market accounting for Poland’s largest surplus.

Poland is a prime example of another phenomenon, an estimated 800,000 nationals working in the UK and sending a proportion of that income home. Free movement has a greater proportional impact.

The other major trading partners also rely exporting on labour intensive goods to Britain. Among these are heavily subsidised agriculture products; wine, cheese, fruit and cured or processed meats. Reciprocal tariffs would increase these prices in the UK market by up to 80%. Conversely some of these products will become cheaper from the USA, the Commonwealth and the rest of the world.

Jorge Brotons, President of the Spanish export federation Fepex has already identified a cut of 15% in his members’ revenues from the UK, largely as result of currency movements. This would surely be exaggerated by full Brexit and the imposition of reciprocal tariffs. France and Italy can expect similar.

Although campaigners for prioritising access to the SEM choose to minimise Britain’s importance, it can be seen that a shift in Britain’s trading patterns has the potential to impact significantly at the margins. The SEM is not in fact a single market. Rather it is a collection of 27 markets with one dominant currency and 9 others using 24 different official languages.

Remember all of those countries have to agree to a deal.

Not all of the EU is prosperous as was identified on this site here during the referendum campaign. Intriguingly, those with the highest growth rates are typically those former members of the eastern bloc, still with their own currencies and modernising with western investment.

Those with lower growth rates are typically the more mature EU members, outside the German centred powerhouse and who are struggling to meet austerity conditions. These economies are also susceptible to small changes in investment, either through government policy or a fragile banking system.
5 presidents

This brings us full circle back to the institutions leading the Brexit negotiations on behalf of the EU. For all of the above reasons, it is in their interest to delay Britain’s exit, maintaining free access to British markets, freedom of movement and the net contribution. However, all nations involved must agree, including the UK. It is in our interests to seek bilateral agreements with the rest of the world which provides 90% of our economic growth. The EU can not rely on Britain’s compliance.

Restrictions on budgets, if they are to be overcome, require extra funding to be found from somewhere when EU growth is negligible. With elections this year in Germany,France and Netherlands, how can they strike a deal that maintains Germany’s artificial advantage through a Euro that is too strong for most of the rest of Europe? Will the resolve of members reflect the self interest of bureaucrats or will “national egoism”, what we call democracy, mean that they have to accept a scaling down of the vision?

It would not be surprising to see the bigger players in Europe influence the change of direction in of the EU. What Tusk misinterprets as “xenophobic sentiment” might actually be the embryo of devolution, seeking to bring decision making closer to home. Mr Tusk, the concept is called sovereignty.

The EU itself may well find itself in conflict with its members. Further integration can only work if funds flow from the rich in the EU to those suffering with austerity. Is that acceptable to the rich? Can the EU survive without?

So we can see a different context. The EU institutions and 5 presidents may seek to take a hard line with Britain. Voters across Europe may thwart their political will by replacing members of the Council with more nationalistic representatives. The goal may shift from power maximisation to loss minimisation. The only thing certain in the EU negotiating position is uncertainty.

The changing face of democracy

A week after the referendum result, the political landscape has changed. The United Kingdom now has the opportunity to remodel itself as an outward looking nation, free of the constraints of policies decided at an EU level. It would seem that the only constraint now is our own political system.

The people have decided on a positive future, for whatever reason. Certainly, there are negatives to have escaped from. So called ‘freedom of movement’ has restricted movement between the UK and traditional friends. Commemorations of the Somme are a stark reminder as to how many Commonwealth citizens gave their lives for a free Europe.

What is labelled as the Single European Market has been by some as an area for free trade when in fact it has maintained barriers to free trade from nations around the world, including developing countries where poverty has been perpetuated by the EU.

The British electorate has shunned the shackles of a stagnant, restrictive regime that has led to mass youth unemployment across southern Europe. The message to politicians is one of creating opportunity in a big wide world.

So how has the political system responded to this message of hope?

Those who watched he results come in would have seen Tim Farron revert to Liberal type. He branded the majority of the electorate as “insular”. In fact, he was the one who came across as insular, denying the opportunities that the majority have seen. It remains to be seen if the Liberals will change.

So what of Labour?  The Parliamentary Labour Party (PLP) is in disarray, apparently out of touch with its own party members, 60% of who support a leader who is barely to summon enough PLP support to fill a shadow cabinet. Who knows what will happen; another split, as with the Social Democratic Party in 1981, defections to the Liberal Democrats?

What of UKIP? At the 2015 election, UKIP was the 3rd most popular party with 12.7% of the vote, despite only winning one seat. Put into perspective, the Liberals won 8 seats with 38% fewer votes. Arguably, UKIP’s biggest success may have been to win the Conservative pledge for the referendum. There seems little doubt that there would not have been a conservative majority without that pledge.

By 2020, the UKIP mission should have been accomplished. The United Kingdom should be independent. The party may need rebranding but what remains is a powerful political lobby, ready to hold a government to account and with an infrastructure to make an impression.

The SNP are also in an interesting position. Having lost in the 2014 referendum on independence, the party leader’s overtures towards maintaining EU membership by going it alone have met with an instant body of opposition in Europe.

There is a reason for leaving the Conservative government until last. The majority of the parliamentary Conservative Party supported the Remain camp. Quite rightly, David Cameron announced his resignation as Prime Minister. His party now has to choose a way ahead, perhaps the most critical junction in party history.

At the time of writing, the leading candidate is Theresa May. It is worth dwelling on some highlights of her record, since she asked to be judged on it.

As Home Secretary, she has failed to live up to promises on immigration. She had called to quit from the European Convention on Human Rights, current position is to stay with it. She campaigned half heartedly for Remain. Now she stands for leading us out of the EU. To paraphrase a famous statement from the last female Prime Minister, U turn if you want to, this lady IS for turning.

The Conservative process for choosing a new leader starts with parliamentary members. Of the candidates nominated, May and Crabb were in the Remain camp, Leadsom, Fox and Gove were for Leave. No reminder should be necessary which way the country voted.

Of those MPs to declare their support, the majority have gone for Remain candidates. It may be worth comparing two maps, one of the 2015 general election, the other of the 2016 referendum.

2015 election

2016 referendum

What can be clearly seen is a correlation between a Leave majority and Conservative seats. It would be naïve for politicians to think that the British people will give up democratic power cheaply. Any failure to deliver or any doubt could easily lead to a swing towards a new Conservative Democratic (or similar) party.

The Remain camp has already nurtured deep distrust in themselves. Project Fear was clearly misleading on so many levels. At the time of writing, the FTSE is has had its best week since 2011. Yes, there has been a technical correction in the level of Sterling, the sort which was followed by a decade of growth following ERM withdrawal.

Suspicion lingers over some Remain candidates, one example being Kevin Hollinrake who, when challenged over reports of Remainers planning to delaying the passage of Brexit, said in a Tweet (apparently now deleted) “25 new bills, all complex … simples”. It may be that Tweet deletion amounts to retraction!

The current party of government is faced with some clear choices:

  1. whoever is the leader, to embrace democracy and move ahead towards a successful and speedy management of Brexit
  2. to delay and risk alienating the the people

Any hesitancy can not be guaranteed to stop a genuine Remain core from resigning their party whip. Combined with the legacy of UKIP, a Conservative Democrat party could be a force to be reckoned with, at least given the current parliamentary nepotism that gives Remainers a majority that is not reflected by voters.

Taking a different angle, Labour potentially has until 2020 to renew itself into a party that does reflect public will.

There is of course always a positive solution that could harness the will of the nation behind a party that chooses to reflect democracy. If the Remain candidates were to put ambition for the country above personal ambition, both the party and the country can unite behind a leader, especially one who has little, if any, political baggage.

The Conservative party can save itself from the political wilderness that it suffered with no outright general election win from 1992 to 2015.

Step forward Andrea Leadsom. Here is a candidate who was at the forefront of the Leave campaign. She conducted herself with dignity, integrity and a calm reassurance. Her message was a positive one, of Britain able to take her great place in a growing world of opportunity.

Social media confirms her appeal to the general public. Yes, the established press and broadcasters have their darlings, May being an example of the sort of pantomime character who can be a villain and at least temporarily is their heroine.

In the grand scheme of things, the Conservative Party can seal its own bright future, leading a bright Britain into the world. At the moment, it looks like a simple choice between Cruella de Vil and Cinderella. If the party has any sense, Cinderella Leadsom will go to the ball.

Con leaders

 

When to invoke Article 50 and why

There is a natural impatience in invoke Article 50. Pressure is added by demands from the EU to get on with it. Should we listen?

Article 50 provides for an orderly withdrawal from the EU. That such a withdrawal is carried out in a friendly way, being a neighbouring nation, is subject to Article 8.

The first step in any analysis should always be to question the question.

Debate during the campaigns was focused by the Prime Minister who initiated the referendum, honouring a manifesto commitment to the British people. His chosen battle ground was the economic case and access to the Single European Market (SEM). The question that remains is whether the SEM should in fact be our priority?

To expand on the context, Cameron stressed the current dependency of our export markets on the EU, currently estimated to be 44% of exports.

The next step in analysis is to identify the perspective.

Yes, the 44% figure of our exports seems to be significant. We appear dependent. It is not a figure that should be considered in isolation. Of our export growth, 90% is with the rest of the world. If imports are added into the equation, we currently run a trade deficit with the EU of around £8bn per month.

If we shift the perspective, we can immediately see that the 56% of exports that go to the rest of the world perhaps should be prioritised. We can also go further and see that more jobs in Germany and France are dependent on trade with the UK than are UK jobs on trade with Germany and France.

There are also assumptions made that are open to challenge. Some of these might affect negotiating positions.

For a moment, think back to 1944. Hitler occupied Europe and the allies planned D Day. Would Roosevelt and Churchill have asked Hitler to choose our mode of attack? Would they have agreed to use tickling sticks whilst mounted on unicycles launched from pedalos against Hitler’s choice of artillery and tanks? Of course not!

We are asked by Churchill’s successor to recognise that if we want to have access to the SEM, we have to accept ‘free movement’.

Now, let’s extrapolate some obvious conclusions to real world scenarios.

If no agreement can be reached, the fall back position is World Trade Organisation (WTO) rules for trade with the EU. The position has changed since we joined the EU. The Uruguay Round of what was then the General Agreement of Tariffs and Trade (GATT) gave rise to the change to WTO. Barriers to trade are not what they were.

We know that the EU is actually a customs union, encompassing free trade for countries within the EU. Barriers are put up to countries outside.

The simplest question is; what is access to our market worth?

Against a background of a monthly trade deficit of £8bn with the EU, what is more important for the EU is access to the British market. An estimated 3 million German jobs alone are estimated to be dependent on car sales to the UK. That is before agricultural jobs across France are considered, with cheese and wines.

Should WTO rules come in, tariffs would be applied on German cars of around 10%. EU produced Fords and Vauxhalls become more expensive, putting at risk the EU’s inward investment against British made cars under Japanese ownership.

If we do wish to buy a Mercedes, it does not have to be from Germany. We can negotiate a trade deal with Brazil, another home for Mercedes assembly. It doesn’t matter to us whether German or Brazilian jobs are supported.

The message for the EU is simple. If you want a deal without free movement, fine, we shall listen. Otherwise, we have two years for Mercedes to prepare a right hand drive assembly line. We have that time to negotiate a free trade deal with English speaking biggest value market, NAFTA, with the Commonwealth, a growing market with 1/3rd of global population.

We know where relative growth is. Our priority is to deal with friends. You have a need for our market. Our friends helped liberate Europe twice. We owe them more than we owe you. Drop free movement and we shall listen.

To invoke Article 50 now is to accept that we are weaker than the EU. We accept that we follow their diktat. To start to negotiate on our terms recognises our position of strength as a major economy in the world. We shall talk when we are ready and we have so many better options to explore.

It is an expression of good will not to exclude French, Dutch and Spanish trawlers from British waters. We are a magnanimous people. We have given the EU longer to adapt.

Yes, we can jump now. We can also create pressure. It makes sense to give our negotiators a chance to evaluate the real situation. It may take time to realise quite how strong we are. We will be stronger by taking time to write our own instruction manual rather than leap in and play with our new toy before we understand what it is capable of.

What is more important is to develop a strategy that might be attractive to politicians of all British parties, one that is flexible and one that represents the global interests of the United Kingdom  and the global society. We can help to generate sustainable growth in developing countries, bringing us cheaper goods whilst helping poorer societies by granting them a market.

Ultimately, it is for the government of the day to decide. Never forget that we are in a democracy. Like students who take a gap year before choosing a career, we have time to decide on our best long term options. Let’s have a look at the world as a whole before committing ourselves to an option we may regret.

Why not give the next Prime Minister something to play with?

EUrow 2016 democracy beats Cameron on penalties

The row, or more technically EU referendum debate, has been seeled. The people have had their say. Cameron accepts the red card from Vote Leave. Has he done the right things in the wrong ways?

Despite letters from his Brexit colleagues, Cameron simply had to go following this referendum result. The country needs a way forward. She needs a leader strong enough to stand up in the negotiations that will come over the next couple of years.

The very nature of the Remain campaign, which Cameron fronted, removed all faith in him as Prime Minister. Despite the slogan, ‘stronger, safer, better off in’ the arguments did not stack up to support what should be a positive message.

Instead, the rhetoric was fuelled by negativity. The overwhelming message was of Project Fear. Britain was, according to Cameron, too small to stand in her own. Along with his friend, Obama, he told us that we were too insignificant to secure trade deals on our own. Merkel would never make concessions over ‘free movement’.  We could never make a better deal.

To cap it all, his sidekick from Oxford days, George Osborne, helped to generate some particularly nasty threats. Income tax would have to rise. Pensioners risked poverty. The nation that spawned economic thought through greats such as Adam Smith and John Maynard Keynes would not have the wherewithal to deal with impending economic gloom.

Even the more modern radical economist, Patrick Minford, central to the school of Rational Expectations which defeated the twin threats of unemployment and inflation was misrepresented and ridiculed. (Enthusiasts may wish to revisit Minford’s work on the expectations augmented Phillips Curve.)

The sales technique of Cameron and his team progressed from the positive slogan to ‘displacement’ of his competition on a political level too. His team were unable to cope with the substance of the opposing argument. His own product, reform of the EU, proved to be a useless gadget.

The referendum was billed as on EU membership, not on manifestos. He manufactured his own sound bite “they can’t tell us what ‘out’ looks like”. Hardly surprising since the government which he led could not tell us their vision of what ‘remain’ looks like.

Frankly Cameron and his campaign organisers underestimated a pluralist British people. His citizens value freedom. They stand up for what is right. For a relatively small population with more world boxing champions than any other nation, his team failed to recognise that we punch above our weight.

The battle was set on Cameron’s terms. He knew where he stood. By adopting a ‘government position’ he used public money to support his own ends in the £9.3m publication of propaganda. That propaganda was fed by his sidekick. Osborne used Treasury resources to produce not just one but two dodgy dossiers.

Time will tell if the final nail was driven in by those who he sought to trust. At the last minute, news emerged that Turkey’s accession talks would resume within a week. Juncker denied that any further renegotiation would take place. Trust in Cameron was torpedoed.

Democracy is a powerful weapon. At times Cameron has used it to effect in pursuance of his own personal ambition. He certainly had a grounding in political life.

His first jobs were in research for the Conservative Party, slick in preparing John Major for PMQs, including the transition of the Maastricht Treaty. He went on to work for Norman Lamont in the Treasury, then Michael Howard in the Home Office. He later worked in PR for Carlton Communications, associated with their failure in the digital TV market.

The political grounding continued, coming back to his strength in short termism, coaching Iain Duncan Smith for PMQs. His abstention, against the whip, over vote on same sex couples adopting is credited with destabilising IDS’s leadership.

Party leadership was to become his before too long, using the party democratic structure to secure his own political ambitions. His chameleon-like qualities left us all wondering exactly where he stood on many issues. His pseudo euroscepticism allowed him to appeal to a variety of niches. His style of sound bite politics gave him a positive image.

Democracy and his short term niche marketing, led him to power, in the first instance in coalition with the Liberal Democrats. For his 2nd term, he had to live up to some of his commitments.

Democracy, combined with his personal ambition, led him to promise a referendum on the EU. He also promised reform. The growth of public support for UKIP led him to his pledges. The electorate gave him a majority.

Power brought out a different side to Cameron. Sound bite politics were augmented by 6th form bully boy tactics, sneering at others from a position of strength. His insults stretched from Corbyn’s dress sense to telling those of us who feared for our friends in the RAF over Syria were “terrorist sympathisers”.

Until the day before the referendum, Cameron labelled Brexiteers as “quitters”, paradoxically less than 48 hours before his own tactical retreat from Downing Street.

Democracy has a strange way of winning, even though it takes its time. It is not always manifest in the sort of drama that was seen in the shipyards of Gdansk nor the struggle that Mandela endured. Democracy can also take its time.

The roots of this referendum go back for years, at least 1992 with the Maastricht Treaty. Bill Cash led the Maastricht Referendum Campaign (MaRC), James Goldsmith the Referendum Party, Alan Sked formed UKIP. The voices may have been fragmented but the will has continued to exist and go on to unite.

Whatever we may think of Cameron and his motives, we have a powerful reminder that his legacy has been to restore democracy, giving the British people back the right to govern ourselves. He may have abused the process to his own ends. His downfall was of his own making. His short term policies would inevitably not stand up to the long term scrutiny that is democracy.

There is little sympathy in the media for Cameron, nor should there be. It is hard to find any genuine examples of altruism in what he called “service”. There are however expenses claims that have contributed to his personal property wealth. His status as a former Prime Minister guarantees him directorships and a generous enhanced pension.

The identity of the next Prime Minister is not yet known. He or she will be decided upon by the Conservative Party. MPs will have their say on eliminating candidates. For once, the guiding principle must be that the successor has appeal to those who voted to leave and will represent those interests rather than a close inner circle.

Until October, Cameron will be staying on as cover. Arguably, he was already a lame duck, having declared his intention not to lead the country beyond 2012. Should he go now, stepping aside for an interim?

Cameron can redeem his reputation by providing an umbrella for his successor. We know that we have a bright new future. The summer recess can give a chance for a leader to emerge. The kingmakers can have an opportunity to connect with the electorate and find out the democratic choice.

The leader may change but Britain has been a stable country for decades, even centuries. The country has emerged by evolution, not revolution. The most important message now is that Britain is open for business as usual, there is no panic, we shall do what is right in our own time. British values are worth investing in. The British people have proved we lend power to the PM, not vice versa.

In the meantime, we can reflect that the outgoing PM played a slick game. He may have been ahead but was trapped into his equalising own goal. Ultimately, the referendum became a penalty shoot out. Team UK gave democracy a fine victory with a playing model that might be copied across Europe.

Britain delivers

The people have spoken. We have stood up to Project Fear and shown a desire to forge a way ahead in the world. Britain has a brave new future.

This site was set up to make a small contribution to ensuring an honest debate. If the people of Britain were to choose to Remain, it was our hope that we would do so with eyes open. If the result was to Leave, it is in full knowledge of the challenges ahead too.

In a political environment that is increasingly nepotistic, there has been a huge wake up call for our representatives to reconnect. Amidst threats of delaying, ignoring and acting against the desires of the British public, the public have had our say.

It should not be forgotten, however, that 48% have voted against taking ownership of our own destiny. It is also important for those politicians who have campaigned against the majority act in a way to ensure that we maintain a close, friendly and harmonious relationship with our neighbours.

We are not breaking away from the European Union, we are changing the nature of our relationship. We will still buy EU goods, as long as they do not put up barriers. It is in everybody’s interest to work together for future prosperity across our continent.

There will be time ahead to make a more detailed analysis of the issues. The political landscape has to change in many ways.

The time is right for Britain to remind itself what makes us great. History may be in the past but it has a habit of repeating itself. Britain has given much to the world. She has stood up to dictatorships and, with the help of our Commonwealth, American and global friends, helped keep Europe free, whether from Napoleon, Hitler or the Soviet bloc.

We have been pioneers in world trade, the Industrial Revolution and technology. London 2012 demonstrated in the sporting environment our ability to excel beyond our means. Those Olympics were a cultural celebration too, surrounded by a positive mood of friendliness and optimism.

Britain also has a reputation for the stiff upper lip. We can move ahead, knowing that we have the steely character to proceed in a measured way, not to mention with good humour.

Now that the membership issue has been resolved, let us move ahead with a global perspective. Our friends will still be our friends. We can enjoy better relationships with all of the.

Britain is a positive nation. We have to move ahead in that spirit.

What will Brexit Friday REALLY look like?

The decision should be known early on Friday morning. Of course it could go either way. If the country decides on Brexit, what will the United Kingdom look like?

cameron osborne

There will of course be awkward moments. Cameron and Osborne’s bluff will have been called. After months of spreading doom and gloom, will Putin be jumping for joy? Will World War 3 break out as the mighty Russian fleet storm the Northumberland beaches? Certainly not!

What is more certain is that Cameron will have to give the news conference of his life.

Hindsight, as they say is 2020 vision. 2020 is the scheduled year for the next general election. Cameron has already said that he will not be standing. He may wish to look back at what would have led hi to this situation.

The referendum, before the end of 2017 incidentally, was a pre-election promise, perhaps a short term measure to unite his own party after a term of uneasy coalition. Conservative seats were under threat from UKIP. The promise secured a majority.

Also in the manifesto was a range of promises about what would be secured in his “reformed” EU. These were not achieved yet he called a referendum with undue haste. Do we know why?

We may already have a clue as news emerges that a meeting will take place next week to discuss Turkey’s accession programme towards EU membership. This has surely not been arranged at the last minute? Free travel has already been granted to deal with the migrant crisis. Rules have been relaxed before.

What is equally, if not more pressing, is how the markets could respond to a vote to Leave. Will we face a run on Sterling as we have been told?

dealers

Markets are sensitive creatures. They can respond very quickly. We live in a world of information technology, where billions can change hands in seconds. That same technology provides for predictive models. It also provides for finesse in decision making.

The possibility of a Leave vote winning has already been a 50/50 possibility. Experienced traders will have already incorporated different outcomes into their models. It is likely that any moves will already have been discounted or hedged against.

Markets can also be very powerful. Ironically, 2 former Chancellors who support Leave have very real experiences on how to deal with “fast” markets, Nigel Lawson and Norman Lamont.

lawson-lamont

Lawson was Chancellor for the Stock Market crash of 1987. In a stroke of genius, he undertook to guarantee the share price of the newly floated BP at 70p. This became a safe bet for the Kuwaiti Investment Office (KIO) who led the path to relative stability.

Perhaps a closer match came 5 years later when  Lamont faced a currency crisis which led to withdrawal from the Exchange Rate Mechanism (ERM). Currency speculators around the world sold Sterling, effectively challenging Britian’s ability to support Sterling. After costly intervention, interest rates were raised from 10% to 12% and 15% in order to attract buyers before defeat was conceded.

The currency became free floating. Effectively, the market for Pounds became too depressed, the price became attractive enough to buy back. The market corrected itself, albeit at a lower price.

After the market had stabilised, the following day saw a rise of 8% in share prices. The market had effectively corrected itself at what many would say was a more appropriate level. Britain went on to experience more than a decade of growth.

They key was to keep a cool head. Moments of panic cost the taxpayer significantly. Dealers did what dealers do, make money. Those who sold at the wrong time lost out.

In the heat of the moment, the message should be clear. Markets correct themselves, particularly those markets with a free flow of accurate information. Those who could lose need reminding of the broader picture.

So what should Cameron be saying in the event of a Brexit vote on Friday morning?

He and Osborne are in a difficult position, brought about by their own short term agenda. They have predicted economic collapse. It will obviously be time for a more balanced approach.

Britain will have voted to be a land of opportunity, choosing to be free from the constraints imposed by membership of a customs union that puts up barriers to the flow of goods from around the world. Asset prices may suffer in the very short term but markets will need to be reminded of the longer term prospects. In a moment of uncertainty, the path ahead should be certain.

The process for Brexit is covered by Article 50. This provides for a two year period to negotiate terms of exit. The time to panic is not now but at some stage within 2 years of that process beginning.

That process should not begin immediately. Parliament will have to vote and we should build up to the vote in an orderly way. A cross party committee, similar in structure to a Select Committee, should be assembled to consider priorities and process. The time to give notice under Article 50 will be when that committee has reported, perhaps 6 months from now.

A further provision from the Lisbon Treaty also provides guidance. No apologies are made for presenting Article 8 in full:

1.The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation.

2. For the purposes of paragraph 1, the Union may conclude specific agreements with the countries concerned. These agreements may contain reciprocal rights and obligations as well as the possibility of undertaking activities jointly. Their implementation shall be the subject of periodic consultation.

Investors, dealers and speculators may need reminding of Britain’s strengths. We are next door to the EU. We have a history of diplomacy and working with friends around the world.

Britain would still be a member of G7, have a permanent seat on the UN Security Council, and regain a seat on the WTO. We will still be an advanced economy, leading the way in services and with hi-tech opportunities and a liberal market.

We would have to recognise that alternative opportunities include an EU with uncertainty, particularly around the southern fringes. In the spirit of Atricle 8 we intend to cooperate fully, supporting where we can and determined to negotiate an appropriate free market without “free movement”.

David-Cameron-EU

Cameron would certainly have to remind us that he has already pledged not to continue as Prime Minister beyond 2020 and that he will be standing aside to allow his successor to take the reins for the whole period from when Article 50 negotiations start.

Yes, there may be very short term instability in the market place. If Sterling were to drop, perhaps we could start to look forward to a decade of growth, as we did after 1992.

He need not admit that he got his tactics totally wrong. He can withdraw gracefully, having led Britain to a landmark in her proud and innovative history. The people will have given the British government a mandate to negotiate on their behalf, to be a strong, independent nation, maintaining friendly relations with our neighbours whilst seeking opportunity elsewhere.

Compared with Cameron’s and Osborne’s Doomsday scenario, the reality should, in fact, be a typically British understated signal to a bright new future.

Remain, Leave or undecided, please vote

ballot

With one day left before being able to vote in the referendum this is a plea for you to vote, whatever your position.

We have a choice as to what sort of future we see for our country. A century ago, British, Commonwealth and other European troops were battling in the trenches to give Europe a free future. Just over 2 decades later, the same nations were fighting to free Europe from Hitler’s conquests.

Democracy is a valuable gift, paid for around the world with lives.

Since the Maastricht Treaty, the EU has been a cause of great debate. Bill Cash founded the Maastricht Referendum Campaign (MaRC). Sir James Goldsmith founded the Referendum Party which contested the next general election.

In their own ways, both saw that Maastricht was a turning point in history. What had been labelled as a Common Market became more. Countries across Europe were starting to agree to constrain economic policy. What was an obscure group of paragraphs (article 109 and protocol J) provided not only a path to monetary union in Europe but limitations on how a country could manage itself.

A system was created which expanded influence into foreign policy, military, criminal justice, and judicial cooperation. The middle word was dropped from the title of European Economic Community.

The Referendum Party included candidates and campaigners from all walks of life, all political parties and perhaps most importantly, those who either wanted to stay or leave the new structure. The decision was so big that we believed that the public should have the right to decide our destiny.

Several more integrating treaties and 24 years later, Cameron has given us the opportunity finally to have a referendum. He is asking us to vote to Remain in or Leave a “reformed” EU, before those “reforms” have been ratified.

In order to honour his manifesto pledge, the referendum could have been held any time until next year. Cameron opted to bring this forward with undue haste. His “reforms” amount to mere tinkering around welfare for migrant workers. History will show why he has acted so quickly on “reforms” that do not meet his manifesto pledges.

Did he bring the referendum forward to hide new measures? Did he act quickly to ambush opponents of EU membership? Did he intend to show himself off as a statesman when the United Kingdom hold the presidency of the Council of Ministers in 2017?

In reaching your decision, please remember that this is a vote on whether we see our future on an EU that is committed to ever closer union. This is not a vote on the policies of Cameron/Osborne or Johnson/Gove. It is a vote on whether we wish to share our decision making with the EU or whether you trust our democracy to provide for our future.

Let’s have a look at the arguments:

Vote Remain

We could start at a number of points. Since Cameron made the focus on his “reform” as welfare benefits for EU migrants, this seems somehow appropriate. If you believe Cameron, those reforms will limit immigration. If you believe Corbyn, we have to embark on infrastructure development to cater for uncontrolled migration. You have the best of both worlds.

The main thrust of the argument in favour has been Project Fear. If you believe that uncertainty will lead to reduced public expenditure, increased unemployment, reduced income (or at least not growing as fast as otherwise), inflation and more, then that is a powerful set of fears, if true.

To believe in Project Fear then we would have to believe that by leaving, our neighbours would oppose a trade deal which maintains the status quo. We have to believe that they would not seek to preserve jobs in their own countries, that they wish to put up barriers to selling us wine, cheese, cars and much more besides.

There are many sound motivations. The argument has existed for years that the EU ensures peace in Europe, after all, the roots of the EU come from linking economies to prevent war. It is legitimate to believe that this has more relevance than the United Nations or NATO. 

You may believe that the EU will successfully negotiate trade deals on our behalf and that TTIP will protect the NHS. You may agree that EU regulations are designed for our protection. You may believe that the EU acts as a brake on unprincipled domestic politicians.

On balance, it is your decision to agree that the cost of membership provides enough benefit to ensure that we Remain. You may wish to validate an unreformed EU. Fear is a powerful weapon.

Vote Leave

There are so many reasons to justify your decision. First and foremost, perhaps you believe that, however flawed the British political system may be, it is democratic and transparent. We have the choice in changing the direction of our government.

It may be that you have a global outlook, combined with a faith that an innovative culture will allow us to thrive in a bigger society, that by regaining our seat at the World Trade Organisation, we can break down barriers for developing nations and provide markets and relieve poverty. We can even work with Russia on getting Tim Peake into space.

There is also the possibility that you value links to the voluntary Commonwealth, including respect for the lives of those who contributed to freedom in Europe and elsewhere. Indeed, the Commonwealth account for 1/3rd of the world’s population and 1/6th of the world’s economic activity with potential for growth.

You might be voting to Leave despite political bullying from Cameron and Osborne, showing the sort of fighting spirit that Britain is renowned for, the belief that Chariots of Fire, the medal haul from London 2012 and more represent what makes Britain still great.

You may recognise that as, what one authority rank as the 2nd “global” power, the 5th largest economy, G7 member, WTO member, UN Security Council member, the most widely spoken language, we can lead by example, alongside Europe but with a worldwide reach. We have much to offer.

Whether it is the legacy of all that is represented by the Woolsack, pluralist society, the Industrial Revolution, economic thought of Adam Smith, John Maynard Keynes, Patrick Minford, even home to Engels and Marx, Britain has always provided a stimulating and radical environment.

Whether it is innovative technology, thought or the quest for the perfect Norfolk Black turkey, Britain has potential and passion for excellence that you can set free. You can be proud to seek opportunity.

Undecided  

Your vote is important. The higher the turnout, the more legitimacy the country gives to whatever decision is reached.

You may wish to consider the mechanism of Article 50. In short, when Parliament passes the decision to Leave, there is a provision for a 2 year transitional period to normalise trading and institutional relationships.

It could be that EU members play hard ball, that they insist on freedom of movement as a part of any deal. Our representatives will have a mandate to work on our behalf. We know that job for job, the EU has a more vested interest in our trade deficit than we do.

Project Fear has ramped up the pain factor by saying that this is a one time only vote.

If the EU does reform to become more liberal rather than more centralised, we will have at least 2 years to change our minds. A majority of MPs, who could have a future career in the European Commission, are in favour of remaining. Do we honestly think they would not bring a motion for another referendum if the EU were to offer genuine change?

There is history in Europe. Ireland has voted against measures and achieved reform, Denmark has voted against and achieved reform. France voted against a constitution and achieved a step back.

Britain is far bigger and far more global influence than Denmark or Ireland. We also pay in 14% (plus retrospective budgets) of the net contribution.

There has never been a 2nd vote when an electorate has agreed to an EU proposal.

In conclusion, we live in a fantastic example of democracy, where MPs are approachable, where we can watch government being scrutinised by backbench MPs on select committees, even if that does not happen in the EU. Please support the democratic process for which millions have died. Their lives are important to our vote. Our vote should honour their lives.

It’s your choice, fear or freedom.

 

To explore more of the arguments, please visit euroblog.rexn.uk

EU debate lies and statistics

Following a variety of debate, this piece was originally inspired by the claim from Angela Eagle that the Leave campaign produce questionable statistics. Ironically, the ‘In’ side produced more.

Eagle can be a fantastic Commons performer, frequently running rings around Osborne at Prime Minister’s Questions (PMQs) when Cameron is absent. During the debate, she did not stand up to the scrutiny as when she has 6 pre-prepared questions to ask rather than an audience to answer.

Neither did Cameron’s own figures stand up to scrutiny during his Question Time performance. Being pedantic, I should point out that Cameron’s was a performance rather than a debate. The Prime Minister has shunned any opportunity to go head to head.

£350m per week

This is allegedly the figure that the UK hands over to Brussels. The source is the Office for National Statistics.

Yes, that is the figure notionally handed over. Not all of that leaves the country. Some of that £350m does not leave the UK, it is diverted into EU projects by British civil servants. Most Leave politicians are able to stress the difference between funds allocated to and funds transferred to Brussels.

Of course, there is the famed “rebate”. This takes the figure down to £276m per week that is allocated by the EU. This has to be offset by extra calls for cash, the UK having the most buoyant economy within the EU. This amounted to £1.7bn last year with estimates of £2-2.4bn this year.

Caution has to be used when making arguments. Instead of representing the EU parliament as spending less than a week’s gross contribution on shifting from Brussels to Strasburg and back for 4 days per month, the real cost is more than two weeks of net contribution – subject to later review.

EU is the biggest single market
This is a fun one which depends on how you define a single market and what measure is chosen.

When looking at value there are a number of possible sources. The IMF, amongst other things, rates countries by GDP. By this measure, USA is $1.275 trillion, or around 8% bigger than the EU. There is obviously a single market within a country’s own borders.

Taking the North American model, NAFTA includes both Canada and Mexico. Should NAFTA be expanded to become the North ALTLANTIC Free Trade Area, including the United Kingdom, the EU would be dwarfed.

The EU, however is marginally more populous than NAFTA. When it comes to population, both China and India have populations over 16% bigger than the EU. Both are linked to ASEAN, an Asian free trade area through ACFTA and AIFTA, making each of those bigger.

To qualify the statistic, Remain would have to redefine and say that Fortress Europe is the biggest protectionist customs union, by some criteria at least.

Independent Economic experts
A favourite claim of David Cameron is that all “independent” economic experts predict doom and gloom for Britain in the event of Brexit. The experts he refers to may not be quite as independent as he suggests.

Arguably, the key pieces of propaganda emanate from the Treasury. Notably, when becoming Chancellor, George Osborne set up the Office of Budget Responsibility to avoid temptations by the Treasury to “fiddle the figures”.

The Institute of Fiscal Studies (IFS) are presented as independent. The IFS is headed by Gus O’Donnell, former Treasury Permanent Secretary, later Cabinet Secretary, made a Lord by Cameron. He has also been executive director of the World Bank and IMF. Notably, he can expect to be referred to in the forthcoming Chilcot report.

There is a free flow of staff between the Treasury and IFS. Indeed, on taking up his seat in the Lords, O’Donnell spoke up about Treasury pay scales.

The IMF are headed by Christine Lagarde, supported by George Osborne to gain her position. Lagarde faces charges in France over her part in a €400m pay out to Bernard Tapie. These are some of those experts that Cameron refers to, those who repeat the Treasury dossiers.

Truly independent economists, such as Patrick Minford are ignored. It is clear that Cameron and his team have had time to prepare their case. As the campaign has moved on, other organisations, such as Deutsche Bank have come out to say that Britain would thrive following Brexit

We pool a small amount of sovereignty
How small is small?

The EU’s responsibilities are divided into competences. In some areas, such as fish stocks, trade deals and more, they have “exclusive” competence. Sticking with those 2 examples, Britain can not strike up trade deals independently.

Fishing becomes more interesting. Although Britain has 60% of the EU’s fishing waters, we have an 8.4% say in decisions made on fishing. One Dutch ship has 23% of the fish quotas for our waters. The French have quotas 5 times higher than ours for the Celtic Sea.

In return for pooling sovereignty, or put another way yielding 93.6% control, we do have an 8.4% say in the fishing industries of Luxembourg, Austria, Slovakia, and the Czech Republic, all of which are landlocked.

As Cameron rightly points out, we do have sovereignty in not having to increase VAT rates. However, should a British government wish to cut VAT rates below 15%, for example to stimulate output or reduce inflation, we can not do so.

Where Britain has exclusive competence is a challenge for others. What is obvious, however, is that ceding of sovereignty is smaller in some areas than others.

Rules from the EU 13-60%?
This is another of those fun topics, exactly how much of our own law comes from the EU?

The Remain camp insists that only 13% of our laws come from the EU, Leave say up to 80%. Where do you begin?

The 13% comes from the House of Commons Library, usually an authoritative source. In this instance, the analysis was shown as a percentage of Acts and Statutory Instruments.

The EU can also impose regulations that do not pass through Parliament. Business for Britain took a different approach, including EU regulations. This takes the figure up to 64.7% between 1993 and 2014, including a total of 49,699 EU regulations and 4,532 measures implementing EU directives.

Unfortunately, there is no standard to identify the relative influence of each, so depending on your perspective, you can argue whichever figure you choose.

% of trade
A common argument as to why Britain will suffer doom and gloom is that we do more trade with the EU than the EU does with us. The figure that Cameron and others would have us focus on is that 44% of our exports go to the EU, less than 10% of the EU’s trade is with us.

At first sight, this could be convincing. It is however quite natural that some countries will trade more closely with certain partners. Of the 29 nations, on the East, links still exist with Russia, including gas supplies.

A look at our roads and in our supermarkets tells a different story. We import high value cars, in fact 83% of new cars sold in the UK in 2015 were built in the EU, the vast majority in Western Europe from Germany to Spain.

We can also look at high volume products, such as wine, cheese, pasta and cured meats.

A different way to look at the figures is not by percentage but value. On balance, we currently import £8bn more from the EU per month than we export. The impact on French, German, Spanish manufacturing and farming would be considerable. Their governments have an interest in dealing with us. They have far more to lose.

More can be seen on euroblog.rexn.uk