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Since Parliamentary wrangling is over my pay grade, below is a recap of some of the new Brexit stories, along with a request to readers to unpack the latest arm-wrestle between the Government and its opponents in the House of Lords. One of the many mysteries of Brexit has been the utter inattentiveness to legal and procedural realities that can’t be finessed…like how exactly is the UK going to redo, what, 40 or so years of laws when no sensible legislature would give them blanket authority (aka Henry VIII powers)? But that is what is front and center today…the so-called Great Withdrawal Bill. How Parliament could have authorized the triggering of Article 50 without nailing down at least a big chunk of the Great Withdrawal Bill issues is beyond me.
I hope readers will correct me if I have the 50,000 foot view wrong. Normally, the House of Lords defers to the Commons, so the fact that the Tories have only 245 of 787 seats. However, the Lords are threatening to attach amendments to the Great Withdrawal Bill that are consistent with a soft Brexit, like having the UK stay in the customs union. In part because the amendments in Lords all have cross-party sponsorship, odds appear to be good that many of those amendments would be approved when the bill returns to the House of Commons late next month unless Theresa May finds a way to offer enough concessions to preserve the deal she has been trying to put together. If she were to fail and the amendments stick, the ultras would be faced with the choice of blowing up the Government to preserve their version of Brexit and risking getting a Labour government or capitulating, which wouldn’t be like them.
In addition to “stay in the customs union,” Bloomberg summarizes the other amendments:
Boost protections for the environment and workers’ rights
Limit the scope of so-called Henry VIII powers that would allow ministers to bypass Parliament in changing laws and regulations
Go beyond a successful rebel amendment in the Commons in December that secured a meaningful vote for lawmakers on May’s final Brexit deal by giving Parliament even more of a say over whether the premier should seek a new deal or leave the EU without one
Protect the peace process in Northern Ireland
Remove the government’s fixed Brexit day of March 19, 2019 to give added flexibility
Facilitate future U.K. cooperation with EU agencies
Another Brexit bit of news was the release of a study by economics professor Jonathan Portes and an accompanying survey by Populus, which found that despite hard core Brexiter cheerleading, most Leave voters aren’t willing to make big sacrifices for Brexit. And while the staunch Brexiters will no doubt try to depict Portes’ analysis as Remoaner scare-mongering, the onus is on them to come up with better figures.
Notice how negative the reactions to this data are.
From the Guardian:
A poll of 2,000 people for Global Future found they overwhelmingly thought all four possible deals – bespoke, remaining in the European Economic Area, a free trade agreement and crashing out onto World Trade Organization terms – were bad.
It also found that 72% of those who voted leave thought that £615m a week would be too high a price to pay for the bespoke deal; while 78% felt it was worse than they had hoped for when casting their vote in the EU referendum.
When forced to choose between the four scenarios described, more than half of all those polled – 51%– opted for the Norway-style deal, which has the least impact on public finances and trade, as well as the fewest additional controls of immigration. Leave voters also narrowly preferred this option – 37% compared with 36% who backed a bespoke deal.
Finally, the EU is preparing “emergency legislation” to help it cope with a crash-out Brexit. It seems puzzling that Brussels is coming to grips with this problem at a relatively late hour, but there was some grumbling on the UK side that preparing for a worst case scenario weakened the UK’s position, and the EU may have thought it was best from a negotiating perspective to enable that line of thinking. The EU putting damage control measures in place ought to serve as a wake up call to the UK, but that assumes there is anyone there alert enough to be paying attention.
Brussels is issuing dozens of legal proposals on Brexit over the next 10 weeks, in a flurry of lawmaking to prepare the EU for an sharp break from the UK — partly by giving emergency powers to the bloc’s institutions.
The European Commission has drafted 30-40 proposals to amend laws and give special powers to regulators so that the union can deal with a no-deal scenario, either on Brexit day in March 2019 or after a transition period…
The push is intended to reduce uncertainty for business by granting more powers to Brussels and other EU authorities so they are better able to cope with sudden complications…
EU officials say most of the amendments are legal housekeeping, which would address anomalies that arise from the exclusion of the UK.
However, the proposals would also give the commission and other EU regulators specific “emergency powers”, for a limited period, to handle the fallout from an abrupt UK exit.
Finally, the Irish government and the EU have felt it necessary to prod the UK on the Irish border issue, reminding the Government that there is not deal otherwise. From the Express:
Mr Tusk said the European Union would walk away from its Brexit transitional and withdrawal deals with the UK an Irish agreement is reached between Westminster and Brussels.
Addressing MEPs after a meeting of the Council, its President made clear to the UK that the EU will not allow any compromise on the issue.
Mr Tusk said: “The UK’s decision on Brexit has caused the problem and the UK will have to help solve it.
“Without a solution, there will be no withdrawal agreement and no transition.”
Of course, the UK press is not the sort of place where you are likely to read that the Irish border question was supposed to be sorted out last December, and EU chief negotiator Michel Barnier allowed May to get away with a short-term finesse that the so-called Joint Agreement made clear had to be resolved. Time on this front, like so many others, is running out.
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I find it very hard to read whats going on, but it seems to me that the entire Parliamentary process could go into meltdown. It is simply not possible to reconcile all the different requirements in the time available if the House of Lords isn’t willing to sign off quickly, and its clear that they are asking much more pointed questions than MP’s.
I think the ‘successful’ agreement in March and the ‘Russia Russia!’ distraction has meant that yet again, things have been fudged and crucial decisions deferred. The markets seem to have decided that the transition period is a done deal (hence the recent rise in sterling).
The Irish government has warned that they need real details by June. My reading of the Irish government situation now is that they are growing a little panicky at what is happening. Its rumoured that Varadkar will go for an election in the autumn and so far his handling of Brexit has been popular, so he will be desperate for things to stay on course until then. So I don’t doubt he could be persuaded to sign off on yet another fudge.
But as to what happens if the Lords refuses to accept any proposals and try to force through a soft Brexit, I really have no idea. Labour have gone quiet again, so the possibility of May forcing through a softer Brexit with Labour support also seems unlikely. The Brexit Ultras have gone suspiciously quiet. I think they are watching the polls to see if collapsing the government could work to their favour (they may think the Tories can cling to power on a wave of anti-Russian hysteria).
Well, for a significant number of ‘ultras’, letting the clock run down with numerous unsolved issues seems to be a plan; it gives them the hardest of Brexits by default. Indeed, for them the perfect result would be a hard chaotic Brexit that they are not seen as being responsible for.
The overall lack of leadership is getting scary now.
Thank you, AD.
I would apply for that Irish passport ASAP.
Thank you Yves, PK
Like you, PK, I find it very hard to read where the UK is going : BINO or Crash-out? To me it could be either way. I am not sure anything else is possible. Today is supposed to be an important day in the Irish Border discussions, so perhaps we will have a better idea tomorrow but I would not bet the bank on it.
I suspect people are still weighing up their options, may wait until the last possible moment (this autumn?) before deciding which way to break?
One way out of the impasse could perhaps be to big up the prospects of a EU-UK trade deal so as to distract attention from the Irish Border back-up plan, which could then drive the UK towards BINO after March 2019.
*Sigh*
We’ve discussed before that BINO Is not happening. The UK has already rejected the Four Freedoms, which means it must leave the Single Market. It is a member of the EFAEFTA but has been utterly ignoring, as Richard North has been wailing, how to use that as a Brexit option. And the EU has made clear it is not going to be accommodating and is prepared to deal with a crash out.
Moreover, when the UK leaves the EU next March, it becomes a third country with respect to the rest of the world. A transition deal doesn’t and can’t address it because none of those third countries are party to the transition deal. That alone makes BINO impossible.
Please stop engaging in this line of talk. I’ve scolded you before on this very issue. You are now engaging in agnotology which is a violation of our written site Policies.
Anyone else remember Theresa May during her last (completely disastrous) election campaign? She was going to provide “Strong and Stable” government and urged voters to imagine what would happen if Jeremy Corbyn were to negotiate Brexit.
God, she is without doubt the worst and most incompetent PM in British history. The second worst was David Cameron, who called for the Brexit referendum as a sop to the UKIP voters. Together they have destroyed the UK economy, may well break up the union, and have created huge opportunity costs in the UK and the EU while the parties attempt to sort out the mess they have made.
The UK might have done better with Prime Minister Jim Hacker.
Or Lord Voldemort. But he was unavailable.
or Lord Buckethead.…
I’ve read (in spanish) that Philip Hammond is still pushing for the dynamic equivalence thingy and wants preferential treatment for financial services. Meanwhile, financial entities are quietly moving activities to Ireland (Barclays) or Brussels (Euroclear).
Its hard to read from the outside, but I think Hammond is isolated within the government, he has very little influence within the cabinet and the party. I assume that in the Treasury Department he gets much better advice on Brexit than other ministers.
There is a slow but steady stream of international companies increasing staff levels outside the UK, but no bit announcements. A new direct ferry service from Ireland to Spain is starting in May this year. Its advertised as a ‘no frills’ service, so I assume they think the most important users will be commercial trucking bypassing the usual route through Britain.
Thank you, PK. Please see my reply to Ignacio.
Thank you, Ignacio, especially for mentioning Barclays, my employer from May 2014 to June 2016.
Soon after the referendum was announced, Barclays revived its dormant Irish legal entity / subsidiary, so that it would have an EU incorporated entity. Activity that had been effected through the Dublin Branch returned to their original home. The Branch, so the UK entity, is staying to back up transactions with the EU / Irish bank / entity. I worked on that project.
What was odd at Barclays was that so many people, including senior managers, did not know that Ireland was not part of the UK AND that the office in Belfast was a UK, not Irish, office.
HSBC, where I worked from 1999 – 2006, did the same with its French subsidiary, formerly Credit Commercial de France. For many years, activity had taken place through the Paris Branch of the UK Bank, more efficient from capital and liquidity perspectives. Both sit in that elegant second empire building on the Champs-Elysees and next to Louis Vuitton.
Both Barclays Ireland and HSBC France (HBFR) are seeing a quiet acceleration in the amount of business migrating from London.
My current employer, the German twin of Barclays, got a new CEO, a German for the first time in many years, last week. The recalcitrants in London, not always British, stalling on its Brexit preparations are being called to order. That will be the next flash point in that dysfunctional organisation’s decline.
It’s not just financial institutions. I spoke to some Scottish and English racehorse owners at Longchamp on 8 April. Their horses won three races. They are considering moving some to France as prize money is superior, but the reversal of free movement is a big logistical issue for their horses.
A French owner, who also had a winner that Sunday and comes from a prominent merchant and shipbuilding family in Le Havre, talked about the EU’s plans for Atlantic ports from Ireland to Portugal. The EU wants to improve their facilities and transport links, so that goods that are / were sent to the UK and transferred to smaller ships or other means of transport can be unloaded at EU27 ports and bypass the UK.
You won’t be surprised to hear that none of the above has been covered by the UK MSM. It’s Russia, Russia and anti-Semitism (smears on socialists).
I forgot to add that Hammond is deluding himself. It’s not just him, but business associations, too. May be Hammond knows the reality, but can’t say so.
I suspect Hammond is preparing the ground for his ‘I did warn everyone, but nobody listened’ post Government career.
Thank you Colonel Smithers and PK!
Nice to have insider info. What you and Plutonium Kun have written on port traffic goes in the same direction. I´ve searched and found that new services are being put in place between the three main ports in northern Spain (Gijón, Santander and Bilbao) and Cork (Ireland). Also, Bilbao Port is strengthening links with Brest (France)
I heard today that following his Grand National triumph Michael O’Leary flew back on the regular Ryanair flight and had the pilot announce that the winning jockey was on board (the horse, sensibly, took the ferry). He announced a free bar for the flight.
You can imagine there was a certain amount of grumbling when it turned out that Michael’s ‘free bar’ turned out to mean ‘one free drink each’.
Thank you, PK.
MO was certainly in good spirits, especially as his rival Rich Ricci’s horses are not firing. RR was one of Bob Diamond’s lieutenants.
Game theory said wat…..
My understanding is that the House of Lords is asking to not revoke the UK law that says that the UK is part of the EU customs union.
But, can the UK unilaterally choose to stay in the customs union? My understanding is that only countries that are part of the EU can be part of the single market, and the UK already triggered article 50.
So suppose that the House of Lords has its way, my understanding is that what happens is that the UK says “ok, we are still in the customs union”, and the EU answers “no, you are not!”, so that the opinion of the House of Lords (and of the UK) in the matter is irrelevant.
Am I wrong?
That’s my understanding too. If May was compelled by Parliament to go back to Barnier and say ‘oh, by the way, forget everything we said before, we really do want to stay in the Customs Union’ and even if the EU was happy with that, there are still numerous technical issues that would have to be agreed, most obviously how you can reconcile this with the UK’s refusal to be bound by the ECJ.
So it could actually make things more, not less complicated.
Its also worth noting that I strongly suspect that many in the UK talking about ‘staying in the Customs Union’ or ‘staying in the Single Market’, don’t actually understand the distinction between them.
You’re missing the real problem here: Remaining in the customs unions does nothing to solve the problems that arise from quitting the Single Market. The Customs Union is not the same as the Single Market.
Remaining in the Customs Unions will NOT prevent border controls. Border controls will be the unavoidable result from leaving the Single Market, i.e. the EU’s regulatory regime and the common trade policy. The Customs Union, while being a central building block of the Single Market, only deals with tariffs and quotas.
So the question of wheter the UK can remain in the Customs Union if they want is pretty much irrelevant to the Irish problem. Being in a Customs Union doesn’t get rid of border controls, as everyone can see at the Kapıkule border crossing point between Turkey and Bulgaria.
Meanwhile Macron is pushing in Germany his neoliberal plan: creating the European Monetary Fund to improve financial stability in the eurozone at the expense of the usual suspects (citizens in general). I would think this is a good reason for brexit except that the UK is not in the eurozone. For once, I am with german conservatives that reject this plan. Apparently they fear vote losses to populist anti-EU parties.
The nub of this is that whatever the House of Lords does, the UK Parliament can whack it on the head by invoking the Parliament Act (which allows the House of Commons to veto anything the Lords does by way of trouble making amendments).
So, no problem then? Ah, anything but.
The Parliament Act requires a vote in the Commons. Which is of course “hung” with the DUP in Northern Ireland holding the balance of power. Time doesn’t permit me to list exhaustively all the fun and games which will be necessary to get a government majory to pass the Parliament Act. Soft Leave Tories, Labour Leave’ers, mad Tory Brexit Ultras, DUP blackmail (blackmail is such an ugly word, but here I am saying it), SNP-Labour Remain alliances — oh my!
I’ve seen less messy car crashes.
Clive, thanks for clarifying how messy can it be. Is there any chance that the Parliament could pass HoL amendments?
My understanding is that the Parliament Act route requires a piece of legislation to have been presented in two successive Queen’s Speeches before it can be used. Theresa May has already said that there will be no Queen’s Speech in 2018. If so, then the Parliament Act cannot be used before Brexit Day.
That’s a convention (and I think the tradition is that if the legislation is to implement a commitment which was in a party’s election manifesto — which then gets messed around with by the Lords — then it’s acceptable to invoke the Parliament Act; I never thought I’d ever be doing this and I strongly advise plucky readers to throw Holy water on their screens after reading, but the Conservative Party Manifesto gives them enough wriggle room to get away with this) because of course we don’t have a pesky written constitution.
So I doubt that is a deal-breaker to using the Act.
Having had a quick look, it seems to me that it’s not a convention, but part of the Parliament Act (1949) itself. The Bill must be twice presented to and twice rejected by the Lords in two successive sessions, a reduction from the three of the 1911 Act.
The Parliament Act is of course (erm..!) an Act of Parliament but the usage of it carries no written limitations. When it can be invoked — or not — is just a convention.
From the published description of the aforementioned Salisbury Convention there isn’t anything I can find stipulating that the Lords’ dissent must span two sessions. But there must be at least two readings.
Ah, fair enough.
People say that have a written constitution instead of an unwritten one would great especially as it would get rid of ambiguity. That is such a nice idea. It just ain’t so.
As an American, I have to mention that having a written constitution is not a guarantee that the interpretation will be not tweaked, but mutilated instead when it is inconvenient, especially to the powerful. Just because what is written, and has been accepted, sometimes for centuries, does not mean it will be followed. Just look at the 4th, 5th, and 6th Amendments and the current state to the right of privacy, the supposed need of a warrant for searches, asset forfeitures without even being charged with crime, property seizures for purely commercial purposes, and the (non)right to a speedy trial.
My favorite is 100 mile border zone inside the United States where the Border Patrol can, and does, have checks points at which the 4th Amendment does not really apply. They can effectively stop, search, and question you and your stuff, even take it because they feel like it. No warrant needed.
Most people would look at the written words, and until the last thirty years roughly, the courts did too, and come to different conclusions than the Supreme Court. Further, even when the definitions do not change the standards can be twisted until even if the meanings of the words are the same, the interpretations of the law is not.
My understanding of British and EU law and politics is just about completely nonexistent, but whatever written laws might exist, their interpretations, and use, might radically change. This is more true when something that affects a lot of powerful people with their money and power. Legally of course, but changed to mean something very different that what you, and people in the past, would see.
I was being slightly sarcastic there! I used to think that a written constitution was A Good Idea but I now have some serious doubts. Not least is that any constitutional arrangement which can end up concluding that corporations are people has some major deficiencies.
My understanding of the UK governments handling of Brexit, and that of most of our Parliamentarians, is currently they have zero concerns given that the UK Elite, Tories and a large swathe of the Parliamentary Labour Party are more concerned with destroying Jeremy Corbyn than in dealing seriously with Brexit.
Colonel Smithers has already stated that the UK Elite fear a Leftwing Labour Party more than the ill effects of a badly handled Brexit withdrawal and we have witnessed this fact over the past two months, culminating in Yesterday’s Parliamentary debate concerning alleged rampant anti-semitism within the Labour Party.
I really could not make up what has happened these past two months, but am totally shocked that a hardcore Blairite faction within the LP would even countenance WWIII if it would result in the removal of Corbyn and his Leftwing supporters from the Labour Movement – this is how demented our Elites have become I’m afraid.
You are quite right – ‘demented’ is the only reasonable word for people who would raise the risk of nuclear war for domestic political purposes.
It seems pretty obvious that there is an absolute determination among the elites to ensure Corbyn never becomes PM. Its to his credit that he has held his nerve over the attacks, although looking at the polls its unquestionable I think that he is being damaged. I suspect that lots of people think another election this year is inevitable, hence the timing.
Thank you, CDR and PK.
It is demented and depressing.
Many former servicemen, including my dad and godfather, are disgusted about the playing with fire.
The current and former servicemen and women of immigrant background, like dad and my godfather, are also disgusted with the Windrush scandal, a scandal that began under Theresa May, although her role is not reported or understated.
Not according to the data. See here:
The facts suggest Britain is not as reliant on the EU as the Remain camp claims
http://bilbo.economicoutlook.net/blog/?p=39114
But it’s not just the EU that Britain has to contend with. Remember that pretty much all trade agreements Britain has with non-EU countries are not as Britain but as an EU member state. So Brexit means those all get wiped clean and, despite Brexiter fantasies of WTO rules, there’s no day-1 replacements they can invoke. Do you think Britain’s going to get a good deal with America, when Mr. America First, our current trade deals are a raw deal for America is in the oval office?
Mitchell has again and again proven his take on Brexit economics is waaaay off. For one, he has repeatedly shown he has no clue how trade works in practice, and what is the impact of the frictions and/or finding new markets.
Reality is, if in a 11 months time there’s no deal, and EU does not take any emergency measures, UK trade stops overnight – because no-one will have any permits to export to the EU, given that no-one expect to need them atm.
That’s because the 40 odd percent of trade with EU will have also impact on the non-EU trade, as people on the borders will in effect get so swamped that they will not be able to process anything. If there’s a 5 mile unmoving lorry queue, the queue doesn’t care where whether the lorry waiting on M2/M20 is with EU or non-EU cargo.
Yes, Mitchell is one of those writers who are excellent in their core area, but way off the mark when they vary outside it. That posting is pretty clueless – not least because he attempts to argue that there has been no impact on the economy of Brexit without apparently realising that Brexit doesn’t actually happen until next year. All those stats prove is that the psychological impact is less than originally intended, and thats more to do with the cluelessness of the business community than anything else. Its like being happy that you can read your book in a dark tunnel, now that the light of an incoming train has illuminated you.
I like your metaphor :)
…and you guy’s are experts.
Actually, if you follow the Brexit debate on these pages you will see that many of the regular posters indeed are experts in many aspects of the topic.
You may be right, but over my lifetime (post WWII) the “experts” haven’t had a good track record.
And really, the Brexit debate has been fairly one-sided from where I sit. Bill Mitchell’s commentary has been valuable in that respect. Only time will tell who was right.
Still, when all parties involved in the Brexit negotiations have an agenda that doesn’t include the welfare of their own citizens, but rather, markets, it’s hard to view any outcome as legitimate.
As we are seeing here in the US, failure of government is a feature, not a bug.
So, if it’s your expert (Mitchell) it’s a good expert, if it’s not, its “so you’re experts”.
Well, I’m not an expert – either on technicalities of trade, nor economics. But one Mr. North of eureferendum.com is, on trade. And he’s leaver, and campaigned for leave years before it become in. And HE’s aghast with what the government is doing.
To my knowledge, Mitchell never ever explained how he believes his graphs would actually work post trade disruption predicted by people like North (again, leavers, and experts in their field) – not right now, when the UK is for all terms and purposes still in single market.
All he has are theories. North has hard facts – how things WILL work out legally – unless EU relents.
You continue to miss the point.
First of all I linked to a post with data. You linked to diddly. What we got was your (and other’s) personal opinion.
Second, being aghast about what the government is doing re Brexit is unrelated to Bill Mitchell’s theories of the effect of EU membership on investment.
No theory can predict the damage done by incompetent leadership. Mitchell hasn’t tried, it’s not his fight. He’s promoting a path forward for alternative leadership. I doubt anyone will listen. TINA.
No, you didn’t link to a post with data, you linked to a blog post from an Australian economist who is not a specialist in trade and who’s work and comments have been discussed here before, with the consensus that he doesn’t really understand how trade in Europe operates, in particular the intense intertanglements in supply chains. For one thing (and this is something he shares with many UK left wing Brexiters), he repeatedly confuses the operations of the EU Single Market and the Eurozone and has an unfortunate tendency to repeat as fact memes which arise from right wing anti-EU campaigners.
There are far better sources than Bill Mitchell for Brexit/EU matters (I do respect his work and he is very good on other issues, in particular MMT, and he is also broadly correct on most of his criticisms of the Euro) so there is no point here in wasting time on counter arguments against a weak source.
Mitchell misses the point by a mile, so any data in his post are irrelevant – because Brexit hasn’t happened.
That means he has to make assumptions about the future (which is what he writes about). That includes what the trade situation will be – hard drop out brexit, FTA, staying in Single Market or whatever? Otherwise he’s just handwaving. At the moment, as PK was saying, he’s looking at it as if Brexit happened when in fact it didn’t yet – the UK is still in Single Market. Which is why his data is irrelevant, and linking to it is no argument.
Becaue the situation after Brexit will entirely depend on how the UK trade looks, any predictions on the future HAVE to take into account the incompetency of the government, as it raises the probability of the no-deal brexit for example – that is unless you assume a best scenario, and then talk about it. But even economists are trained to state such assumptions upfront (not that they do..)
Mitchell ignoring the options shows he’s living in lala land, or that he has a result he wants and conveniently ignores the facts that go against it.
He’s also strawmanning.
It’s now irrelevant whether the EU helped or not so far. What is relevant is what impact disruptive leaving of EU will have short and medium term (in long term we’re all dead).
In Iraq, few were living happily under Saddam. Yet the war made situation worse yet – and quite a few would happily return to status quo ante-bellum.
Leavign EU is not a war, but 40 years of legislation and trade links cannot be ripped out w/o massive disruption – not even in a year or two, not to mention overnigh. Any analysis that ignores this point is fluff.
Mitchell maybe thinks that the first fear post exit is high unemployment, and that gov can put any number to work doing what is long needed with infra and NIH.
That doesnt fix the coming shortages, and Brit has trade deficit meaning they’ve been living beyond means for some time. So reduction in living standard even if all employed.
But they can feed themselves even if they run short of tea.
Biggest hit will be to London, hardly alarming most leavers.
Russia may be natural trading partner. Somebody will step up, maybe or maybe not us, too big a market to ignore.
I’ve learned the hard way on this blog that it is best to keep my comments to myself unless I am an expert on a topic. I’ve also learned that I learn a lot more that way.
Strawmen. Mitchell suggests an austerity bias is the root of UK’s economic problems. Brexit hasn’t happened yet, and as he demonstrates, a case can be made that being in the EU hasn’t helped Britain in the aggregate anyway.
‘a case can be made that being in the EU hasn’t helped Britain in the aggregate anyway.’
Well, yes. but a case can also be made that it has.
Anecdote may not be data and proving a counter-factual is always a challenge. However there are clear and important instances of non-UK firms investing in the UK in order to produce and sell goods and services from inside the EU single market. Nissan is the best known instance. Now, you can argue that without these investors the UK would have produced something else and sold it somewhere else and perhaps it would. But on the other hand perhaps it would only have been able to do so by accepting a lower level of wages and therefore living standards. The course of the pound since June 2016 suggests that this is how the market sees the situation.
Are you implying that globalism has been a net benefit to developed economies for the majority of citizens?
No one has any idea what might have happened in the absence of globalism (and neoliberalism). but things have gotten progressively worse for most of us since around 1980 so the case for the ism’s has a lot of explaining to do.
Leaving aside the mendacity of the English newspapers, I attribute the UK’s current problems above all to a failure to redistribute a reasonable proportion of the gains of the ‘winners’ of recent decades to everyone else.
The Lawson cut in the higher rate of tax to 40% in 1988 was IMO an important moment in a redistribution of post-tax income and wealth to the rich from everyone else.
As for the fate of the majority of citizens in the developed economies, that is a question I regret I do not consider myself equipped to tackle. It is beyond my very limited expertise.
Lets put it this way, the future looks a lot more like Elysium than Star Trek.
I think that Bill MitchelI considers brexit secondary to the election of an anti-austerity PM (Corbyn). That’s why he downplays the risks of Brexit, I think. Then if you read Christopher’s comment above, you will see that the rest of the political class would prefer a hard brexit or even WWIII before this occurs. Corbyn chances are fading and this is a pity.
If you think Brexit will reduce the UK’s austerity bias, you are smoking something very strong. The UK is ground zero of neoliberalism and has gone further with it than anyone on the Continent save the countries like Latvia that went into austerity overdrive post crisis.
The UK is the country that is doing more to squeeze its health care service than any other large EU member al on its little own. The underlying article, from the supposedly liberal Guardian, is based on a balanced budget premise: fall in tax revenue means bad stuff, presumably social services spending cuts. And did you miss that UK politics and more important economic policy-making and punditry is dominated by the City, which likes interest rates low and therefore hates deficit spending, since they too think that the government = a household?
Brexit among other things will lead to a weaker pound. When the pound last fell (during the crisis), the trade balance got worse, see here for details:
https://www.nakedcapitalism.com/2016/06/the-sterling-depreciation-of-2007-2008-and-its-implications-for-brexit.html
Yea it all depends on who’s in government. Bill Mitchell says that there were restrictions on the uk for government spending when in the eu. When they are out and in case they have a Corbyn government they could be in a better position to do government spending. But again that’s a big if. As for ground zero for neoliberalism I don’t think so. I think the USA is worse
From you previous post:
It appears that May has a “remedy” for that dependent behavior. A Brexit pill?
It is hard to understand how the City will survive the Brexit shock, because the “hard exit” appears inevitable.
I’m amused that the UK even considers turning to “The Commonwealth.” The Commonwealth was thrown under the Common Market bus in the ’70s.
City power depends on being in eu, they’re finished post Brexit especially hard. They need trade more than the hinterlands.
Attacks hurting Corbyn now, but recession post Brexit will bring him to power.
And maybe what Mitchell is thinking.
also heard they delayed the flight as Michael was running late, had to collect the prize. So that free drink probably didn’t cut it for some!
Hot off the press: As I type, the Bank of England is hosting a meeting of regulators, institutions and trade bodies to discuss Brexit, a Swiss style accord with the EU, a common front with Switzerland and “Britzerland”, i.e. how the UK can become a big Switzerland. W.T.F!
Did BoE miss that Swiss have no FS agreement with EU? Which is why UBS/CS were incorporated in the UK as well?
Thank you, Vlade.
It does appear to have bypassed many that no such agreement exists and this is why the “two big babies”, to use a phrase from a Swiss regulator, are incorporated in the UK.
It has also bypassed many that both firms are scaling up their German bancassurer entities.
The next meeting of Britzerland stakeholders is in Zurich.
Yes, and that the EU has rejected an equivalence deal for the UK, which is what Switzerland has on a limited basis (for products like commercial loans and insurance) for the City? And is even nixing some additions Switzerland wanted to its list of services that would get equivalence treatment where it seemed likely the EU would say yes because the EU does not want the UK getting ideas?
I think in the Eu the uk has some restrictions on public spending. So in case they are planning to do more of that Brexit might just be favourable for them.
EU limits on member states fiscal deficits have not really bitten significantly on the UK as it is not in the Euro. Hence the ability for the UK to run large deficits after the GFC without Brussels interfering in any way that mattered.
Jaguar Land Rover started its first wave of lay-offs. While a thousand out of 40.000 isn’t really much, the core issues will remain: Brexit, a general drop-off in Diesel sales, and again, a general drop-off in automobile sales in Britain.
I wonder what will happen to the rest of the English automotive industry, seeing it’s mostly owned by foreign companies.
British Leyland v2?
This is on behalf the 1%ers:
Trading insecurities:How US asset management firms can prepare for Brexit
Coming a little late to the discussion (traveling at the moment), I think that the most dangerous consequence of all this incompetence and short-sightedness may be the need for actual clarity and definition about the relative powers of the Lords and Commons. This could, indeed, blow the British political system apart, because for the last hundred years the British have got by on constructive ambiguity, where different opinions (even among lawyers) could be accommodated because difficult questions were never put. Everything, as I recall vividly from my time in government, was left to be sorted out by commons sense, compromise and a recognition that a head-on clash would be in no-one’s interests. This worked as long as there was a broad consensus about procedure, even with sharp policy differences between parties. The Sir Humphrey era of government (effectively over by the end of the 1980s) has been much mocked, but the participants then did have the minimal common understanding that is essential for a political system to function. That’s been less and less true over the last generation, and now there are people who are crazy enough to blow everything up. The problem is that there is no actual “answer” to the questions that are asked here, because over the decades definitive answers have been studiously avoided.
I was amused to hear that the Commission is seeking extra powers to cope with the situation – one day the Commission will respond to a problem by offering to give up powers, and everyone will die of shock.
Yves,
1) you cannot have it both ways. If, like me, you are an MMTer, the tablulated of ‘costs’ of Brexit in debt service is a political distributional choice. I would equitise it….
2) the Commons can overrule the Lords simply by stating that a bill is a Finance Bill. The ping pong procedure only arose from the second time the Lords rejected Commons bills, not from the famous Liberal finance bill of 1908 (?). No court, other than potentially the High Court of Parliament (both houses in joint judicial session) can question the designation. As the common market concerns customs duties, membership is prima facie a Finance matter. The second act giving Commons ping pong override is constitutionally controversial and has never been tested anyway. Salisbury convention is a convention….
@anonymous2,
Weirdly, Lawson was a fiscal progressive and unified capital gains and income tax rates to prevent arbitrage. New Labour undid this as part of the ‘prawn cocktail’ City offensive, resulting in the PE partner who paid a lower rate of tax than his PA on carried gains, thanks to taper relief giving 10% CGT. Lawson’s marginal CGT rate was 40%, highest rate now is 18% on financial and wasting assets, 28% on real estate and relief on disposals of first £10m of trading assets….
Help me. The UK establishment is hostile to MMT. The UK, not being in the Eurozone, could operate on MMT principles now if it wanted to. It doesn’t. The EU has no tools to force the UK to comply with Maastrict budget rules. The UK could also point out that France has regularly broken them and not been disciplined.
Yves I don’t believe the UK establishment has the faintest idea what MMT is. In November 2014 Parliament ( well 30 MP’s ! ) debated Money Creation for the first time in ( wait for it ) 170 years ! I’ve read the Hansard report and very engaging it is, but nothing was going to change as a result because so deep seated is the belief that we ‘ tax and spend ‘ rather than ‘ spend and tax ‘ that any shift in that direction was crying for the moon . However I detect a small, but growing awareness ( which I am seeking to add to shortly on YouTube ) that if approached from a common sense perspective ( e.g. when we wanted to bomb Syria no MP asked ‘ where’s the money going to come from ? ) reality can gain some traction.
@Clive, if its all just an Act of parlament, why not just revoke this one? : “An Act for the better securing the Dependency of His Majesty’s Dominions in America upon the Crown and Parliament of Great Britain”
Yves, you cannot cite constraints you don’t believe in as proof Brexit is unworkable. It is fine to say that, by the Tories own professed beliefs, the costs of Brexit are unfunded and therefore a reason to change course but you are big enough to admit that, by your own beliefs, these costs pose no real constraint!
MacDonald has some idea of MMT but none of the parties is capable of wielding its logic as a sword to cut the Gordian knots of the politics of envy.