In the below article, Patrick Minford writes in a personal capacity.  

In the latest discussions on the Brexit Withdrawal Agreement and Political Declaration (WAPD), two views have emerged about the UK’s future choices. One, which I will call the lawyer view, is that once signed, the WAPD binds the UK indefinitely; this view is held by many of my friends and Brexit allies who are largely lawyers and as such tend to believe that the letter of the law will prevail. The other, which I will call the realist view, is that it can be ‘evolved’, to use a word popular with some politicians, in line with the mutually evolving interests of the two sovereign parties, the EU and the UK. The latter view is the one generally adopted in the economic analysis of international treaties, as the following quotation from a recent paper in a leading economic journal makes very clear.

At the national level, such conflicts [over payment for/usage of public goods] between individual and collective rationality can be resolved by the intervention of the government (Demsetz, 1967). At the international scale, however, there is no supranational authority that could coerce states into adopting efficient policies if they run counter to national interests. Filling the void are international agreements. Under the terms of the Vienna Convention on the Law of Treaties, a state that ratifies a multilateral treaty chooses partially to surrender its sovereignty and to subject its policies in a specific domain to the rules and prescriptions of the treaty. In so doing, sovereign states agree to coordinate their policies in mutually beneficial ways. By the very nature of sovereignty, however, the agreement is fundamentally non-binding and states can always withdraw from it. Therefore, the fact that public good provision is implemented through an international agreement should not change a country’s incentives to contribute per se — unless the treaty alters the country’s incentives to cooperate in other ways. (Wagner, 2016)

The point of economic analysis of treaties therefore is that a sovereign state only continues as a party to any treaty if it remains in its interests to do so. Therefore one must analyse treaty development over time with reference to how these sovereign interests evolve; and how at any time the sovereigns reach an accommodation based on their mutual interests. The basic reason, as explained in the quotation, is that there is no supranational power that enforces treaties in the way that a national state, with a monopoly of force, enforces domestic law.

The realist view is therefore asserting that once the UK is out of the EU, how it deals with the WAPD is a matter of subsequent choice and negotiation with the EU, which also has freedom of the same sort. Anyone supporting the lawyer view must therefore demonstrate that the WAPD remains an agreement that it is in the interests of both sides to maintain in the same form. It is not sufficient to say that because it has been signed it is indefinitely binding; this would only be sufficient if there was a supranational power that could enforce this, and I shall assume it as obvious that indeed there is no such power. In a recent posting on the Lawyers for Britain website my old friend and longtime Brexit ally, Martin Howe, argues that the Treaty of Utrecht binding Spain into Gibraltar’s status illustrates that treaties bind long-term. However, in fact this well illustrates the point about self-interest. Spain, like the UK, has had a strong interest in Gibraltar not accidentally becoming a casus belli, much as the Falklands, with a population similarly determined to remain British, became, at great expense to both the UK and Argentina. Ceaseless ongoing diplomacy on both sides to accommodate mutual complaints has found the Treaty a useful figleaf.

In the rest of this piece I will discuss what the interests of the UK and EU are and how, if at all, they might evolve, and with them the UK/EU future Treaty relationship. This type of analysis is a branch of game theory, which can involve highly complicated mathematics, as in the paper cited, but fortunately not in this case here.

Current UK and EU interests and the Withdrawal Agreement

Based on economic analysis within a rather standard World Trade model and other models described in Should Britain leave the EU? An economic analysis of a troubled relationship by Minford et al (2015) I suggest the following broad interests of the EU and the UK:

The EU: for the EU the status quo is optimal. The UK contributes 10% of the EU budget. Its food and manufacturing industries sell to UK consumers at 20% above world prices because the Customs Union places trade barriers of this tariff-equivalent value against products from the rest of the world. EU regulations prevent UK practices that would reduce UK costs and so undercut EU competition, driving down margins. Unskilled EU workers can be exported to the UK labour market where their wage is supplemented by the UK taxpayer by about  20%.

The UK: for the UK the optimal policy is abolition of protection against the non-EU; this ‘free trade’ policy eliminates the 20% premium paid to EU producers of food and manufactures and it also lowers consumer prices, pushing up productivity via trade competition. At the same time the UK would want to sign a Free Trade Agreement with the EU that keeps the current free access with zero tariffs between them; nevertheless it turns out that any tariffs or equivalent that are imposed will benefit the UK and be paid by EU traders, because UK prices of both imports and exports are set by world prices, so UK tariffs must be absorbed by EU exporters while EU tariffs must similarly be absorbed by EU importers. It follows that although the UK would be willing on the ‘good neighbour’ principle to sign an EU-UK FTA, it would strictly speaking be better off under WTO rules with no deal.

These descriptions of economic interests take no account of current political pressures. A natural question is: given its interests why on earth did the UK Government sign up to the WAPD? This effectively makes the status quo the most achievable agreement, given that the backstop endows the EU with effective veto power over anything it dislikes; under the backstop the UK effectively stays in the EU as now until the EU deems there to be an agreement.

The only way to account for this is in terms of the votes in Parliament. With a part of the Tory party led by Philip Hammond having a Remainer view of UK interests – that is wanting protection for reasons of preserving current jobs (notice not gaining the most jobs in the long term as would occur under free trade etc), following vested interests like the CBI – the Government of Mrs. May seems to have assumed that only the ‘soft Brexit’ WAPD could get through Parliament. Similarly, it assumed that Parliament would not support No Deal, because this too would sacrifice some current jobs to a free trade strategy under WTO rules; as a result the Government did not prepare for No Deal and so lost its only bargaining counter with the EU so that the WAPD failed to favour UK interests. As a result, the WAPD too cannot get through Parliament because the ERG Conservatives and DUP votes oppose it.

Now Mrs May is trying to get Labour votes to push through some even ‘softer’ WA, with a PD promising EU customs union in some shape or form. Hence the EU have not had any difficulty achieving a WAPD that favours its interests, because of parliamentary politics. Add to this that the EU was in any case determined – due to its own politics – to show that exiting countries get a bad deal, to discourage others. It is clear that the politics of the divorce situation was bound to produce a bad deal from the UK viewpoint. One does not need to go further and accuse Mrs May of being a closet Remainer, which she may well be, to account for what has been agreed.

The Economic Analysis puzzle

How those Remainer ideas took hold in the face of strong economic arguments to the opposite effect, as set out above, for the long-run gains of Brexit, is rather baffling. As I explained in a recent paper in World Economy, Remainers and their economist allies (e.g. Breinlich et al, 2016) used ‘gravity theory’ to argue that leaving the EU would be damaging to the UK and that gains from free trade with the rest of the world would be small. However, the ‘gravity models’ they used did not obey the canons of good general equilibrium modelling, in which all causal factors are simultaneously analysed for the effect of a major policy change like Brexit. All the gravity models were ‘partial equilibrium relationships’ in which trade, GDP, FDI and productivity were separately related without any overall inter-linking.

This approach was originally – in 2016 – also adopted by the Treasury; but at the end of 2017 the Treasury for this reason finally abandoned it, in favour of a full general equilibrium model, the GTAP model, bought in from the Purdue University Trade Modelling Project. This was used to reevaluate Brexit in the Cross-Whitehall Civil Service Report of that time. Given the strong Whitehall bias against Brexit the new model was given assumptions that produced similar negative results to the previous ones. These consisted of a) few and limited FTAs with the non-EU world; and b) large border barriers, even with an EU FTA, between the UK and the EU.

However, plausible alternative assumptions reverse the Brexit effect on GDP under a WTO No Deal for example from highly negative (-7%) to firmly positive (+3%).These assumptions are that the UK uses FTAs with the non-EU to eliminate all trade barriers on goods against them while also gaining wide market access; and that it signs an FTA with the EU that prevents any new barriers, or if it goes to WTO rules then only tariffs spring up at the border, other interferences being illegal under WTO obligations.

As this debate has unfolded between our critique and the Treasury, academic economists espousing the previous gravity methods have stayed strangely quiet while the Treasury dropped their methodology. Meanwhile we published another paper in which we tested a full ‘Computable General Equilibrium’ (CGE) model with gravity mechanisms against a plain Classical CGE trade model without them, to see how well each matched the UK trade facts. Using an elaborate and thorough Indirect Inference test we found that the gravity version was strongly rejected while the Classical one fitted the facts. Furthermore when we did the Brexit policies on the Gravity version the effects were much the same as with the Classical, our main tool; this was because Brexit gives gains with the rest of the world while not much disturbing our relations with the EU and so stirring up the negative gravity effects. Therefore it is clear that the anti-Brexit claims based on the gravity approach are invalid.

Unfortunately in the present fevered atmosphere, calm academic debate cannot take place; it is reminiscent of wars of religion where each entrenched side only wants to hear confirmation of its prejudices. One of the side benefits of Brexit occurring is that people may move on to normal technical discussions about optimal UK policies.

The way forward in Parliament

There are now three main parliamentary scenarios. In two of them, one or another WAPD – Mrs May’s or some even softer one agreed with Labour – gets through Parliament. The UK then leaves the EU in these two scenarios, initially for the transition period, as soon as either gets through.

In the third, there is no WAPD agreed and the possibility strengthens of a second referendum with Remain on the ballot paper, leading to either no Brexit or a renewed demand for Brexit. This third scenario is one in which Brexit uncertainty continues for a year or more, with unknown political consequences, given that the Leave voters in the first referendum would feel betrayed. This third scenario will only be welcomed by Remainers determined to reverse the democratic referendum decision. From a Brexit viewpoint, the only hopeful outcome would be a new Conservative leader and government determined to change the WAPD and get it through Parliament before exit. But how could this be achieved without an election to change Parliament’s composition? Also, what would be the odds on the Conservatives winning such an election, given the fury of the populace with the Conservatives for failing to deliver Brexit? Such hopes look forlorn.

Scenarios 1 and 2, if Brexit occurs: What of UK and EU interests post-Brexit?

In this section I ask what, given we have a WAPD as described, opposed widely by Brexiteers, is likely to occur if, as seems probable, Mrs. May steps down and is succeeded by a Brexiteer Conservative leader? Such a leader is likely to agree with my account above of UK interests. If so, what can such a leader do, if saddled with the WAPD?

Under the realist view espoused by economic analysis, this leader’s government moves to re-open bargaining with the EU. This would be done via normal diplomatic processes, in which the EU would face a possible general lack of UK political cooperation in a wide array of areas, including key ones like security and military matters; also the WTO option would be reactivated as a ‘walk away’ trade strategy, should the EU be unwilling to move away from its status quo aims.

The UK having left the EU after resolving basic administrative issues such as citizens’ rights, aviation/transport/visa agreements, there would probably be little appetite to revisit these issues; and the focus should be on the trade relationship quite narrowly. Nevertheless were it to be widened, the new government would make active preparations for a breakdown in these areas.

At the same time the UK would proceed to negotiate FTAs with non-EU countries, informing them of their aims on EU relations. These would be widely welcomed, as we already know.

How would the EU/UK bargaining go from here? We can think of the ‘game’ now as a series of proposals and counter-proposals. Start from the opening WAPD ‘proposal’ for the status quo. This violates UK interests radically, breaching its basic ‘red lines’. The UK counter-proposal is to walk away to WTO rules and No Deal. This UK counter-proposal damages EU interests radically, as we have seen: they face world prices in the UK market and tariffs in both directions are paid by EU traders. In order to counter this the EU now offers an FTA: Canada+ which consists not just of zero barriers on goods (Canada) but also the plus of mutual recognition in services where EU interests are served by free trade, given a wide reliance on UK service industries. The UK wants either Canada or Canada+ more or less indifferently as its service industries are all highly competitive around the world. As noted earlier, while No Deal gives strictly better gains, the UK is likely to agree to this proposal for the sake of neighbourly relations.

The bargaining round, which may well take a few years to play out, is therefore likely to be resolved by Canada+. We can essentially rule out any other resolution because all other alternatives leave one side unacceptably badly off –  beyond its red lines – or can be improved on by one side without making the other worse off.

What I mean by ‘unacceptably’ is literally that it will not accept it in the long run, when by walking away or co-operating it can avoid it. The EU can avoid No Deal by co-operating. The UK can avoid the status quo by walking away.

All this is illustrated in the following diagram: the top line shows how the UK ranks all options, with No Deal the best; the second line shows the EU rankings, with the status quo the best. Each side’s red lines of unacceptability are marked out on each side. Any resolution must be inside these. Canada+ within these is better than Canada for the EU and an equals with it for the UK. So Canada+ gets chosen.

Conservative party

Notice that all this diplomacy is carried out between ‘consenting sovereigns’. Neither will bring in outsiders because no outside power has jurisdiction or indeed wants it. In so far as third parties have preferences, they tend to favour the UK as they typically want to agree FTAs with the UK. As for the WTO, it allows states to negotiate FTAs freely; and in general favours all agreements that in net terms reduce trade barriers, just as will occur under the EU-UK renegotiation.

The need for a new Conservative leader and government

In order for this new diplomacy based on the UK’s true economic interests, not sandbagged by Remainers within the tent like Hammond and Co., there plainly needs to be a new Conservative leader and government, fully seized of the Brexit case for free trade and so on. The current leadership/government has proved that it has neither the understanding nor the will to pursue the UK’s true interests. Without it changing no progress along the lines discussed here is possible.

It is now very likely that the Conservative Party will change its leadership, if only for reasons of pure survival. With the agreed extension, the Conservatives face carnage in the local elections and if the European elections take place, annihilation in those. This will inform the party of how unpopular its failure to deliver Brexit has made it. Its best hope then is for Mrs. May to go and for a new leader to chart a new direction, while making it clear that the new government rejects and regrets the old government’s failed Brexit agenda.

What are the implications of the realist view for parliamentary votes?

MPs now have some time for reflection during their Easter recess. They need to ponder the effects of their votes. Any MP that wants to avoid the chance of that third scenario of possibly No Brexit needs to consider voting for one or other WAPD. With either of them, Brexit occurs and the renegotiation can be launched under a new Prime Minister.

An ERG Brexiteer will prefer Mrs May’s original WAPD since it does not contain extra ‘soft’ commitments put in to satisfy Labour. These become yet another element to be renegotiated. In principle that too will be jettisoned; but it adds complication.

A DUP Brexiteer will remain nervous about the backstop in Mrs May’s WAPD; and could be less nervous with a softer one including a customs union because with that the backstop does not come into play. Nevertheless a DUP MP should reflect that none of these will survive renegotiation and should not therefore be unduly concerned. What it really needs from Mrs May and her potential successors is a guarantee that whatever is renegotiated it will never include differential treatment for Northern Ireland, or indeed any other devolved part of the Union. But they should feel confident on this: the Conservatives have been robustly and consistently a unionist party.

It should be noted by both these groups that in opposing any WAPD they are playing the role of ‘useful idiots’ to Remainers who want no Brexit, leading to a second referendum.

When one turns to Labour MPs and Mrs May, both involved in negotiations over a softer WAPD, they should reflect that their new WAPD causes both sides difficulties – Mrs May because it infuriates most Conservatives, Labour because it will infuriate the substantial Labour group that wants a second referendum rather than any sort of Brexit; but at the same time achieves no extra long-term ‘softness’ in the outcome, as the added-on soft elements will simply be the first to go in the inevitable renegotiation.

Reflection on all sides should therefore have the effect of terminating the May-Labour negotiation while logically inducing ERG and DUP Brexiteers to push the May WAPD over the line.

Conclusions

The realist view of post-Brexit affairs clearly implies that the UK, once it is out of the EU will behave like any other sovereign power and see that its foreign relationships evolve to suit its interests. So far, these have been stitched up in talks with the EU due to a Remainer group of Tories who have opposed the Government’s Brexit policies in favour of industrial vested interests, in alliance with Labour opponents, and undermined its bargaining position vis-à-vis the EU which was in any case politically determined not to agree a good trade deal. No sovereign state could put up with this sort of stitch-up in the long term. This piece has described how a new government, fully seized of the UK interest in free trade and domestically set regulation, besides control of borders and the ending of budget transfers to the EU, will have both the incentive and the scope to achieve a logical renegotiation that reaches an EU agreement tolerable to both sides.

Under this view the key aim for Brexiteers should be to get the WAPD in some form – it does not much matter what form – over the line, so that Brexit definitely happens as demanded in the referendum. Policy in the future will then evolve to meet UK interests.

The post A bad Withdrawal Agreement can be renegotiated in the context of post-Brexit realism and international law appeared first on BrexitCentral.

Now that we know there will be a Conservative Party leadership election this year – and possibly sooner rather than later – various potential contenders have begun setting out their stalls in articles, speeches and at events, under the guise of visions for the future, a new approach to Brexit and the changes needed to win the next general election.

The most likely names profiled by political journalists are those of senior members of the Government who clearly see themselves as well-placed to take over the top job: they have the experience, they are ready to hit the ground running and they know the current challenges inside out. In normal times, that all might make sense.

But, we are in anything but normal times. The usual ways of thinking from the old hands have fundamentally failed and have left us in a national crisis as a result. The Conservative Party has a huge amount of latent talent on the backbenches and, much like the selection of David Cameron in 2005, this is a time when we need a fresh and different approach.

Depending on when the leadership election is called, the new leader will either have to complete the process of taking the country out of the EU, or prepare us for trade talks in the second phase of the negotiations. With the Conservative Party having been in government for nine years and, as things stand, facing a radical leader of the Labour Party at the next general election, a new “steady as she goes” leader will doom the Conservative Party to defeat and the nation to a Marxist-led government.

The new leader therefore needs to possess a number of qualities.

They need to be respected by fellow MPs from across the party. The Brexit process has proven hugely acrimonious and driven a wedge down the middle of the parliamentary party. In order to move things forward in any meaningful sense, the new leader will need to be able to command the respect of their colleagues and be able to defend their record on Brexit over the past three years.

They will have to be a Leaver. Much of the current malaise can be attributed to the fact that a significant number of Cabinet members have viewed Brexit as a damage-limitation exercise from the start. This mindset has crept into all aspects of our negotiating approach and appetite for risk. The new leader needs to be someone who has always been at ease with the prospect of the UK leaving the EU and who will seek out every opportunity to make our exit a boon for the country.

They must be able to communicate honestly and clearly. One reason (out of many) for the near complete breakdown in trust in politicians is the perceived inability for them to be straight with the British people. Our new leader must be straight-talking and speak in language that most people recognise, not the strange politico-speak that most politicians adopted from the Blair era onward (“Let me be clear…”).

They need to be able to unify. The country is now riven by division, and not just over Brexit, but also between town and country; young and old; graduate and non-graduate. A new leader must reject identity politics, which only seeks to define people by their grievances, and must seek to unite people around a positive post-Brexit vision for the country.

If Conservative Party MPs narrow down the field of candidates and give party members only two current Cabinet members from which to choose, they will have failed. The party’s membership is up in arms over how the Brexit process has been run and is crying out for a new approach. I hope MPs look beyond the obvious big names to those candidates who are waiting in the wings and are ready to lead our party out of the EU and out of this terrible mess.

The post The next Tory leader needs to be a Brexiteer from outside the current Cabinet appeared first on BrexitCentral.

The Prime Minister’s plan to drive her EU withdrawal deal through the Commons after Easter by bribing Jeremy Corbyn with an EU customs union will probably go down with voters like a lead balloon. It will also hasten her own exit. Even before Liam Fox, the International Trade Secretary, warned MPs that a customs union would give the EU power over the UK to clobber our economy, the scheme was unlikely to win over voters.

In fact, on each attempt to keep the country under the EU by the back door of the economy, voters were already ahead of the curve. They declared against Chequers by two to one, and followed that with a thumbs down to the Withdrawal Agreement and its backstop customs union for the whole UK. These compromises, seen by the Government as the only way forward, have no appeal to the voters, whether they are Remainers or Leavers. Amongst Leavers, on both the left and the right, the antipathy to them goes far, far further back. It is a battle, not as the media claims in a ‘Tory’ war over Europe, but a chapter in an older struggle about the authority on which this country is ruled: that of the governing faction and its interest groups, or the people?

The customs union is the latest episode in the story of the people’s determination to have a say in the laws under which they are governed, and thereby protect themselves and their country from arbitrary or bad rule. They showed this determination at the hustings, and at popular meetings, or through marches, movements, flysheets and ballads, even before many of them had the right to vote. Whatever the subject of the hour, great battles to enforce that principle – over tax, or for radical change to end the Corn Laws, to extend the franchise, home rule for Ireland, the 1910 budget, the House of Lords veto – and the accommodation of the popular will have brought long-term stability and security to the country. This has allowed orderly – often dramatic – change to happen, economic growth, prosperity and for people to have a real stake in how they are governed. In fact, in this country’s political system the struggles over how it is governed are in reality about who governs and about where sovereignty lies.

The battle over leaving the EU has been another such battle. Having waited the best part of three years and seen the date for Brexit come and go, Leave voters trust neither the Prime Minister to Leave, nor the Labour Opposition to force her hand. Indeed as Mrs May and Mr Corbyn schemed to stay in an EU customs union, Labour’s vote in the recent Newport West by-election dropped by almost 13 per cent, the Tories’ by 6 per cent and turnout halved, while UKIP, despite internal collapse, was up by 6 per cent.

In another Newport by-election, almost a century earlier, voters rebelled more dramatically against the stitch-up between the two main parties, Liberal and Conservative, in a coalition government under Lloyd George. Rejecting the government candidate, they elected an independent Conservative. The next day Conservative MPs withdrew their support from the Government, which duly collapsed. It fell to a different Conservative leadership to restore and reshape political life, to respect the reality of the popular will and to accommodate Labour, in place of the Liberals, as as a principal political force.

These changes restored the freedom and stability to inter-war Britain, brought peaceful, stable and free government here by contrast with the often violent, unstable or authoritarian regimes of left and right on a troubled inter-war continent. Baldwin trained two decades of new MPs to the humility that should guide their parliamentary life to remember ‘the people who put you here’ for it was they ‘who will remove you’. Baldwin also reflected the tradition of the founder of the modern Tory party, Sir Robert Peel, who had accepted the will of people flocking to the meeting halls and rooms, across Victorian England to demand the repeal of the protectionist Corn Laws. And he anticipated Churchill who, leading the war to resist German aggression and restore the freedom of conquered nations, described himself as the mouthpiece of the people, ‘the lion’s roar’.

These leaders understood the nature of a tradition, shared in common by people across the parties, about Britain’s constitution and its democracy. That tradition prompted voters across the political divide to decide in 2016 to restore to this country its own way of ordering life, by freeing itself from the EU. Across the country, north, middle and south, YouGov has discovered that 46 per cent of people want to leave the EU without a deal if none is agreed, compared to 44 per cent for Remain, the lead being up to ten per cent in some regions – with only Scotland and London having a Remain majority. A local poll for Nottinghamshire Live found 48 per cent wanted a no-deal Brexit and 28 per cent wanted to Remain – only 2 per cent were for a customs union, and 4 per cent for Mrs May’s deal. People do not want another layer of Europe, its tariffs or laws slapped on with a customs union via Mrs May’s backstop or through a Corbyn-inspired deal.

As both parties pay the price for flouting the democratic decision, a new Conservative leader must be installed now to change course so the UK genuinely leaves the EU on or before 31st  October, with a revised deal from which the backstop is removed or ends by 31st December 2020, or on WTO terms. During the intervening six months the Government should work at full speed to make all ready so that a WTO exit at the end of October will be smooth and, in the current phrase, ‘orderly’ – while at the same the EU can practise its best endeavours to come up with the solution at which the German Chancellor-in-waiting has publicly hinted. For the UK exit should be treated as a matter of sovereignty under international law, not supplicancy to the EU. MPs, given the outrage amongst the majority of their voters, are unlikely to resist in sufficient numbers: the DUP will support and enough Labour MPs will recognise the game is up. But in the end it would be matter of political judgment whether to go to the country for a fresh mandate.

It would not most likely come to an election. For the EU, more brazenly than ever, has laid down the law about when, how and whether indeed the UK’s democratic decision can be executed. In throwing Britain’s democracy (and the world’s fifth largest economy) to the mercy of Messrs Macron, Juncker, Tusk and Mrs Merkel, the Prime Minister has reached the end of her rope. Such humiliating supplication bears testimony to the corrupting nature of the EU. It makes it all the more urgent that we leave and leave quickly.

The post Securing Brexit is the latest chapter in a centuries-old constitutional battle appeared first on BrexitCentral.

It’s gone, the pressure has evaporated. MPs have started their week-long recess and our exit date has been kicked into late autumn. Brexiteers are emerging from Parliament bleary-eyed but undefeated. The surviving Leavers didn’t exactly win the last round, but they didn’t lose. The Withdrawal Agreement hasn’t been ratified and the threat of Parliament taking control of the agenda passed by with little more than a whimper.

But now it’s round two and Remainers see the months ahead as their golden opportunity. Indicative votes will become Bills ready to be turned into legislation rather than meaningless motions. Hostile MPs, with the help of the Speaker, may be allowed to seize the business of the House of Commons for weeks, rather than just days. It would be tempting to focus on each one of these threats as it comes, tackling each argument and facing each challenger in turn.

But instead of being side-tracked, Brexiteer MPs must focus their attention on the person whom many would argue is the great destroyer of Brexit. Theresa May is the captain at the helm, hard-steering our country towards the rocks of destruction whilst shouting at the crew for their lack of support. She cannot blame her MPs for the UK’s failure to leave on time after she herself bottled it. She said over one hundred times that 29th March was our leaving date, she said she would not delay Brexit beyond 30th June and she said we would not hold European elections. And yet here we are.

She holds the power to fire the gloomy Chancellor and the swathe of ministers who haven’t accepted the result of the referendum, but she chooses to let them remain. To avoid Parliament taking over in the final week she could have prorogued it. To avoid a Brexit delay she could have let us leave with no deal. The bear-traps and pitfalls facing Brexiteers came as a result of Theresa May’s premiership and they will only be extinguished when she is gone.

Theresa May seems to despise her ERG colleagues and chooses not to understand their sense of betrayal. Brexiteers should now fight from a position of strength, hitting Theresa May by withholding their votes. They have already been called disloyal by a Government that has trampled over its own manifesto. As long as she remains in place they could abstain on every fourth vote. After a week they could abstain on every third and in a month they might be sitting as non-voting members, only moving to support a confidence motion. This course of action may seem tepid to an enraged public: but to MPs it would seem radical.

Of course they will be under enormous pressure, but they should remember that ultimately comes from the Remain campaign. The pressure of 17.4 million votes should weigh more heavily on their shoulders than anything the Whips can say. Theresa May is busy in the kitchen cooking up more compromise, delay and betrayal whilst all around her the house is on fire. With a suicidal leader and the Brexit Party bearing down on them, can MPs afford not to do something bold? If they need to, they should block the Whip’s number from their phone or avoid the Tea Room, but they shouldn’t ignore the electorate. The same people who voted them in voted for Brexit and we are counting on them to deliver.

The post How Brexiteer MPs can fight back against Theresa May’s betrayal appeared first on BrexitCentral.

Richard Patient imagines two people, called John and Carolyn, who happen to run the CBI.

“Carolyn, when you tell the PM that she can’t go for No Deal, say that you fear that it will hit small businesses hardest. She will have to listen then.”

“But John, the CBI doesn’t have many small businesses as members, not any that I know about anyway, so how can we say that small businesses will be affected?”

“Carolyn, don’t let little details like that get in the way of a good bit of PR. I know all about small businesses after all – many of the suppliers at the supermarket I run in my other job are small. If we tell a small porky about the concerns of small businesses, it will deflect attention away from our real concerns, which is the need to protect our members’ interests, and they want us to stay in the EU to prevent the rise of those pesky disruptor competitors.”

“You mean we actually want EU regulation? Isn’t that crony capitalism?”

“Yes, of course we like regulation – the more the better. Our members have the resources, the time, the money and the compliance officers, whereas any smaller competitor companies will be smothered by the mass of paperwork.”

“But we’re the voice of business, aren’t we? Surely that means all businesses.”

“Er, no. For starters, we dropped that slogan after those two whipper-snappers said we were the voice of Brussels. And we don’t actually represent that many businesses in the grand scheme of things.”

“Oh.”

“Actually, don’t worry, I’m seeing the PM later today, as part of my Brexit advisory role at No. 10.”

“How on earth did you get that job? I thought you told me there was nothing good that could come from Brexit?!”

“I know, it’s hilarious. Still Mark has done a good job, hasn’t he? 10% rise in food prices! She can’t go for No Deal after that bit of scaremongering, oh… I mean that bit of excellent considered analysis.”

“10% rise? But didn’t the British Retail Consortium tell us privately that food bills would actually go down, with things like cheaper veg?”

“Luckily, the BRC are not saying that publicly yet. And who needs to look at the detail of the No Deal tariffs when it’s so much easier just to tell Mark to include a nice round number like 10% in his report. Meat prices will definitely be higher.”

“Yes, but only by a few pence.”

“The great thing is that there will be massive reductions on all that wine we import. Hopefully the population will be too sozzled to notice the price cuts.”

“I’ll drink to that, John. And I think you’ve done a great job giving her the line that it’s Brexiteers that should be blamed for stopping Brexit, when we all know the choice we face now is between Mrs May and Brexit.”

“Thank you. The great thing is that the voters’ memories are so poor that they forget that nearly everyone voted for the two things that make Brexit legal – Article 50 and the Withdrawal Act. A bit of conjuring and the PM has been able to blame Brexiteers for everything, by not backing the indicative votes, when we all know the PM didn’t have to take a blind bit of notice of those votes. If we keep her in power for a bit longer, she’ll probably go the whole way and revoke Article 50. We can blame the Brexiteers for that as well. Mind you, our friend Corbyn has helped us.”

“Maybe we need to take a crate of that cheap booze to Corbyn?”

“Yes, let’s Carolyn. Unlike our united view on staying in the EU, our members are divided on Corbyn, with many being firm Corbyn fans.”

“John, I know. Our next trick will be to make the PM love Corbyn.”

“She’s ahead of you there. She already does.”

The post Imagining the latest anti-Brexit manoeuvres at the CBI appeared first on BrexitCentral.

Here is the text of Theresa May’s statement just delivered at the conclusion of the emergency European Council meeting:

I have just met with Donald Tusk, the President of the European Council, where I agreed an extension to the Brexit process to the end of October at the latest.  I continue to believe we need to leave the EU, with a deal, as soon as possible.

And vitally, the EU have agreed that the extension can be terminated when the Withdrawal Agreement has been ratified — which was my key request of my fellow leaders.

For example, this means that, if we are able to pass a deal in the first three weeks of May, we will not have to take part in European Elections and will officially leave the EU on Saturday, 1st June.

During the course of the extension, the European Council is clear that the UK will continue to hold full membership rights, as well as its obligations. As I said in the room tonight, there is only a single tier of EU membership, with no conditionality attached beyond existing treaty obligations.

Let me conclude by saying this. I know that there is huge frustration from many people that I had to request this extension.  The UK should have left the EU by now and I sincerely regret the fact that I have not yet been able to persuade Parliament to approve a deal which would allow the UK to leave in a smooth and orderly way.

But the choices we now face are stark and the timetable is clear.

So we must now press on at pace with our efforts to reach a consensus on a deal that is in the national interest.  Tomorrow I will be making a statement to the House of Commons.  Further talks will also take place between the Government and the Opposition to seek a way forward.

I do not pretend the next few weeks will be easy or that there is a simple way to break the deadlock in Parliament. But we have a duty as politicians to find a way to fulfil the democratic decision of the Referendum, deliver Brexit and move our country forward.

Nothing is more pressing or more vital.======================

Our summary of what was agreed==========================

The key points of the agreement are as follows:

  • The flexible extension of the Article 50 period can only last until 31st October 2019, although if the Withdrawal Agreement is ratified by the UK and EU before then, Brexit day becomes the first day of the following month.
  • The extension cannot be allowed to undermine “the regular functioning of the Union and its institutions” so if the UK has not ratified the Withdrawal Agreement by 22nd May, it must hold European Parliament elections on 23rd May (and if the UK fails to live up to this obligation, Brexit occurs on 1st June 2019).
  • The Withdrawal Agreement cannot be re-opened and “any unilateral commitment, statement or other act should be compatible with the letter and the spirit of the Withdrawal Agreement and must not hamper its implementation”.
  • If the position of the UK were “to evolve”, then the European Council “is prepared to reconsider the Political Declaration on the future relationship”.
  • During the extension, the UK remains an EU Member State with full rights and obligations, and has a right to revoke its Article 50 notification at any time.
  • The principle of sincere cooperation will continue to apply to the UK and during the extension the UK will “refrain from any measure which could jeopardise the attainment of the Union’s objectives, in particular when participating in the decision-making processes of the Union”.
  • The European Council will review progress at its meeting in June 2019.

The post Theresa May and EU agree flexible extension to Article 50 period until 31st October 2019 appeared first on BrexitCentral.

At Prime Minister’s Questions on 20th March, the Prime Minister stood at the Despatch Box and repeatedly told the Commons the maximum extension to Article 50 that she could countenance. Answering MPs from across the House, she said:

“I am not prepared to delay Brexit any further than 30th June… I could not consider a delay further beyond 30th June… There will be no delay in delivering Brexit beyond 30th June.”

Yet when, in the small hours on Wednesday morning, the EU offered an extension to 31st October – fully four months after her self-imposed cut-off and seven months after we should have left – she accepted. Another promise, made to Parliament and the country, was broken. We should have left at 11pm on 29th March. Even as the Prime Minister arrived in Brussels, the law of the land was that we would leave at 11pm this evening, Friday 12th April. All she had to do to deliver that was nothing.

So for all that the Prime Minister may speciously argue that she has been somehow forced to extend, there is no doubt that she has sought delays of her own volition. Remember that the formal letter requesting an extension was sent before Parliament had approved the change in domestic law.

Just as common law courts once applied the maxim Falsus in uno, falsus in omnibus, this latest broken promise could have been predicted from the previous occasions when what the Prime Minister has said and what she has done have not matched. Throughout her tenure, Mrs May had said that “no deal is better than a bad deal”. The Withdrawal Agreement is evidently a bad deal; the House of Commons has thrice told her so. Logically, she should then have pursued the “no deal” option, but did not. Evidently, she has bought into the ludicrous, apocalyptic predictions of Project Fear, convinced now that any deal would be better than “no deal”.

But the “no deal” which the prophets of doom continue to predict is a complete misnomer. In reality, when we say “no deal” we mean a WTO deal – leaving the EU without the Withdrawal Agreement but with a series of pragmatic, mutually-beneficial mini-deals in its stead.

The former Brexit Minister Chris Heaton-Harris – who resigned in exasperation – confirmed that such preparations are “well advanced” and told the Prime Minister that:

“I truly believe our country would have swiftly overcome any immediate issues of leaving without a deal and gone on to thrive.”

He is right. One by one, the absurd falsehoods peddled about “no deal” have been and are being debunked.

Air travel will continue. The EU confirmed in November that it would continue to allow UK airlines to fly over, land in and return from EU airports even if there is no Withdrawal Agreement, provided the UK reciprocates. Of course, it will. As Transport Minister Baroness Sugg confirmed in March:

“Measures put forward by the UK and the EU will ensure that flights can continue in any scenario; deal or no deal.”

Medical supplies will arrive. Health Secretary Matt Hancock has worked hard to neutralise this issue and, as the President of the Royal College of Paediatrics and Child Health, Professor Russell Viner, said in his message to 19,000 doctors:

“I have been considerably reassured by governments’ preparations relating to medicines supplies…Governments, the Medicines and Healthcare products Regulatory Agency and the NHS have been working hard behind the scenes… and we believe that our medicine supplies are very largely secured.”

Cross-Channel trade will continue. The Chairman of the Port of Calais, Jean-Marc Puissesseau, has robustly refuted the alarmist claims of disruptions to freight. Xavier Bertrand, President of the Hauts-de-France region has dismissed the scare stories with admirable clarity:

“Who could believe such a thing? We have to do everything to guarantee fluidity.”

The UK has been given approval to continue exporting animals and products of animal origin to the EU in the event of a no-deal Brexit. Live animals, including horses, will still be able to travel across borders. Will Lambe, Executive Director of the British Horseracing Authority, was right when he said that:

“This decision on listing from the European Union is extremely welcome and reflects the UK’s high health standards in respect of its animals, and of course the thoroughbred population within this. It provides important clarity for the racing and breeding sector ahead of a potential no-deal departure from the EU.”

Even the fears of a “hard” Northern Ireland border which have so dominated the debate are now subsiding. The Taoiseach, Leo Varadkar, has expressed confidence that arrangements can be implemented to avoid new border checks in the case of “no deal”. These arrangements are the same as our ERG proposals which were once smugly dismissed as “magical thinking”, but Michel Barnier has confirmed that in any scenario the Belfast Agreement will continue to apply and “there will be no hard border” using our alternative arrangements.

This approach would not be “crashing out”, as the fearmongers claim. Sensible measures, adopted in the best interests of both the UK and the EU, can mitigate any disruption and ensure that our relationships with our neighbours remain amicable and prosperous.

Nor is “no deal” an end state. With arrangements worked out for the Northern Ireland border, we can quickly return to the offer which Donald Tusk made in March last year of a wide-ranging, zero-tariff Free Trade Agreement – for the whole of the UK rather than just Great Britain.

In such a scenario, both sides can invoke Article XXIV of the WTO’s General Agreement on Tariffs and Trade. As long as the UK and EU agree to an FTA and notify the WTO of a sufficiently detailed plan and schedule for the FTA as soon as possible, we could maintain our current zero-tariff arrangements while the new deal was being negotiated.

Most importantly, this approach would provide the certainty which everyone craves. It would, finally, allow businesses to know where they stand and release much pent-up, pending investment.

All of this beckons if we leave with “no deal”. The decision from the European Council on Wednesday states that the UK must now, if still a member, hold European Parliament elections on 22nd May. If it “fails to live up to this obligation”, we will leave on 1st June.

This is an important opportunity which the Government must grasp. It is win-win. At a time when the Government is daily faced with the difficult task of balancing discipline on public expenditure with pressing demands for improving schools, roads and hospitals, it would be an act of the most outrageous folly to squander £100 million on unwanted elections when newly-elected British MEPs will immediately stand down in October, never mind the £39 billion which the Withdrawal Agreement would give away.

Yet by avoiding these utterly pointless elections, we can leave in an orderly way on 1st June and use the money on our own priorities. Do that, and the Government will honour the referendum result, its manifesto commitments, and repay the trust of the British people.

Do not, and its betrayal will be complete. If reports last night are correct that the Government has wound up its “no deal” planning at this crucial juncture, that would be stupidity verging on sabotage. The Government will have failed to deliver the single most important policy in a generation, and broken every promise it has made.

The post The mini-deals allowing us to leave without a Withdrawal Agreement are done – let’s embrace a WTO Brexit appeared first on BrexitCentral.

What is the outlook for Europe? This was a key topic at two conferences I spoke at last week: in Korea; and on the shores of Lake Como, featuring the Italian business elite and policy-makers from around the world.

The global economy is slowing. Financial markets are mixed about what lies ahead: equities signal a rebound in growth, bond markets expect recession.

The outcome is likely to be somewhere in between, with global growth weaker than last year but still strong enough to allow unemployment rates to fall. But economies may not have sufficient momentum of their own and will need to be helped by policy stimulus, as central banks reverse or postpone previous plans to tighten and pressure builds across many countries for more government spending or tax cuts. One debate in Italy was not whether central banks need to do more – there was agreement on that – but whether there was scope for greater fiscal activism, given high debt levels across the globe.

It is not just the immediate cyclical outlook that is generating uncertainty; so too is the longer term picture. More of global growth is coming from the Indo-Pacific region, stretching from India to the US. Within this, there is increasing focus on the G2 relationship between the US and China, whether it be the expectation of a resolution to their trade dispute now or how they might handle likely geopolitical tensions in coming years.

In contrast, no-one seriously talks about a G3, as Europe, despite its economic size, has the attributes of a slow-growth region whose share of the world economy continues to shrink gradually. Moreover, with elections to the European Parliament imminent, there is acute awareness of more oxygen being given to eurosceptic parties.

The main focus, though, in any debate about Europe is Brexit and what this means for not just the UK, but the Eurozone area. The image of Brexit from afar is not as good as it could be. Whether on the continent or in Asia, they witness political chaos and ineffective leadership in Westminster. Equally worrying is that the UK Government has not conveyed a positive global vision of what lies ahead. The confidence others have about Britain’s longer term potential is not matched, it seems, at home.

A worrying feature of the last two and a half years in the UK has been the lack of focus on the UK’s future domestic agenda, vital to making Brexit a success. Also lacking has been a focus on the challenges confronting the euro area itself. Its future direction of travel should have strengthened the UK’s negotiating stance. A theme in private discussion was how united the EU has been but how little the UK has tested this, in the face of obvious tensions, both across countries and within them as well.

In Italy, it was noticeable how much of a divide there is between the present government and business; perhaps this is not a surprise as Italy is the only Western economy where income per person is lower in real terms (that is after allowing for inflation) than it was in 2000.

Despite this, the view among delegates was that the European Central Bank (ECB) was doing a good job. This is despite the slowdown in the euro area last year being partially triggered by premature policy tightening by the ECB as it started to withdraw its stimulus as well as by a deceleration in global trade. There is some nervousness about what lies ahead, but the latest data suggests an apparent cyclical recovery in the euro area this year, with modest growth.

It was interesting to hear concern from some about the recent Franco-German summit meeting in Aachen. Also, it was noted how Germany was pushing its candidates for two of the top institutional positions, including head of the increasingly powerful ECB. Notable too is the German push for the euro area to adopt an industrial policy to take on China, based on Germany’s approach.

Problems within the euro area are all too often attributed to national factors and the solution put forward is usually for greater centralisation. One can understand this in the case of capital markets and banking union, which it is felt are being held back at the national level. In terms of the banks, there is little doubt the US and UK are in far better shape than the euro area.

There is a similar debate regarding competitiveness, which is seen as a national competence, with education and innovation two of the key drivers. An effective carbon tax was another example. One can sense that the age-old challenge is whether the centre needs to complement what goes on at a national level, or assume competency for it. The future direction of travel is clear, with increasing transfer of sovereignty from national to EU institutions.

An underlying key issue is how the UK and the euro area can position themselves best in the changing and growing global economy, and an increasing recognition that it will require more radical measures to try and break out of the slow growth phase Europe is in.

The post Reflections on the economic outlook for Europe appeared first on BrexitCentral.

This is the text of the statement Theresa May made to the House of Commons following yesterday’s European Council meeting 

With permission, Mr Speaker, I would like to make a Statement on yesterday’s European Council.

But before I do, I am sure that the whole House will welcome the news this morning that the Metropolitan Police have arrested Julian Assange for breach of bail, after nearly seven years in the Ecuadorian Embassy. He has also been arrested in relation to an extradition request from the United States authorities.

This is now a legal matter before the courts. My Right Honourable Friend the Home Secretary will make a Statement on this later, but I would like to thank the Metropolitan Police for carrying out their duties with great professionalism and to welcome the co-operation of the Ecuadorian government in bringing this matter to a resolution.

Mr Speaker, this goes to show that in the United Kingdom, no one is above the law.

Turning to the Council, my priority is to deliver Brexit – and to do so in an orderly way that does not disrupt people’s lives.

So I continue to believe we need to leave the European Union with a deal as soon as possible.

And of course, this House has voted repeatedly to avoid a No Deal.

Yet despite the efforts of Members on all sides, we have not so far been able to vote for a deal.

So ahead of the Council, I wrote to President Tusk to seek a short extension to the Article 50 period to 30th June.

Critically, I also requested that any extension should be terminable – so that whenever this House agrees a deal and ratifies the Withdrawal Agreement, we can get on and leave.

And I did this not merely to avoid a further delay beyond ratification of the Withdrawal Agreement – but specifically to retain our ability to leave the EU without having to hold European Parliamentary elections on the 23rd May.

Mr Speaker, the discussions at the Council were difficult and unsurprisingly many of our European partners share the deep frustration that I know so many of us feel in this House over the current impasse.

There was a range of views about the length of an extension with a large number of Member States preferring a longer extension to the end of this year or even into the next.

In the end what was agreed by the UK and the EU27 was a compromise – an extension lasting until the end of October.

The Council also agreed that we would update on our progress at the next meeting in June.

Critically – as I requested – the Council agreed that this extension can be terminated when the Withdrawal Agreement has been ratified.

So, for example, if we were to pass a deal by 22nd May, we would not have to take part in European elections. And when the EU has also ratified, we would be able to leave at 11pm on 31st May.

In short, the date of our departure from the EU – and our participation in the European Parliamentary Elections – remains a decision for this House.

As President Tusk said last night: “During this time, the course of action will be entirely in the UK’s hands.”

In agreeing this extension, there was some discussion in the Council about whether stringent conditions should be imposed on the UK for its EU membership during this period.

But I argued against this.

I put the case that there is only a single tier of EU membership, with no conditionality attached beyond existing treaty obligations.

The Council conclusions are clear that during the course of the extension the UK will continue to hold full membership rights.

In turn, I assured my fellow leaders that the UK will continue to be bound by all our ongoing obligations as a Member State, including the duty of sincere co-operation.

The United Kingdom plays a responsible and constructive role on the world stage – and we always will.

That is the kind of country we are.

The choices we face are stark and the timetable is clear.

I believe we must now press on at pace with our efforts to reach a consensus on a deal that is in the national interest.

I welcome the discussions that have taken place with the Opposition in recent days – and the further talks which are resuming today.

This is not the normal way of British politics – and it is uncomfortable for many in both the Government and Opposition parties.

Reaching an agreement will not be easy, because to be successful it will require both sides to make compromises.

But however challenging it may be politically, I profoundly believe that in this unique situation where the House is deadlocked, it is incumbent on both front benches to seek to work together to deliver what the British people voted for. And I think that the British people expect their politicians to do just that when the national interest demands it.

I hope that we can reach an agreement on a single unified approach that we can put to the House for approval.

But if we cannot do so soon, then we will seek to agree a small number of options for the future relationship that we will put to the House in a series of votes to determine which course to pursue.

And as I have made clear before, the Government stands ready to abide by the decision of the House. But to make this process work, the Opposition would need to agree to this too.

With the House’s consent, we could also bring forward the Withdrawal Agreement Bill – which is a necessary element of any deal, whichever course we take.

This Bill will take time to pass through both Houses, so if we want to get on with leaving, we need to start this process soon.

And it could also provide a useful forum to resolve some of the outstanding issues in the future relationship.

Crucially, Mr Speaker, any agreement on the future relationship may involve a number of additions and clarifications to the Political Declaration.

So I am pleased that at this Council, all 27 Member States responded to my update on the ongoing cross-party talks by agreeing that – “the European Council is prepared to reconsider the Political Declaration on the future relationship in accordance with the positions and principles stated in its guidelines and statements.”

The Council also reiterated that the Withdrawal Agreement itself could not be reopened.

Mr Speaker, I know the whole country is intensely frustrated that this process to leave the European Union has not still been completed.

I never wanted to seek this extension – and I deeply regret that we have not yet been able to secure agreement in this House for a deal that would allow us to leave in a smooth and orderly way.

I know too that this whole debate is putting Members on all sides of the House under immense pressure and causing uncertainty across the country.

And we need to resolve this.

So let us use the opportunity of the Recess to reflect on the decisions that will have to be made swiftly on our return after Easter. And let us then resolve to find a way through this impasse.

So that we can leave the European Union with a deal as soon as possible.

So that we can avoid having to hold those European Parliamentary elections.

And above all, so that we can fulfil the democratic decision of the Referendum, deliver Brexit and move our country forward.

This is our national duty as elected members of this House – and nothing today is more pressing or more vital.

And I commend this Statement to the House.

The post Theresa May’s full statement on the European Council & Article 50 extension appeared first on BrexitCentral.

Theresa May updates the House of Commons on the European Council Summit and the new Article 50 extension date…

And Labour Leader Jeremy Corbyn responds…

Then Sir Bill Cash pulls no punches with his question…

 And neither does Nigel Dodds…

Then John Baron makes his contribution…

Followed by Kate Hoey…

And then Steve Baker…

Up next, Peter Bone…

Followed by Mark Francois …

And Sammy Wilson asks his question…

Then recently resigned former Brexit minister Chris Heaton-Harris…

Sir Desmond Swayne follows…

Martin Vickers makes his point…

Then Matt Warman…

And Charles Walker ends the debate on a more light-hearted note…

 

 

 

 

 

 

 

 

The post Highlights from the EU Council Statement Debate appeared first on BrexitCentral.




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