As the ruling party of the United Kingdom slumps to just 10% by the measure of some recent European election polls, a colourful spectrum in varying levels of self-reflection descends across its parliamentary representatives. A stark, immediate and pressing question of political direction faces the Conservative Party.
Currently, its MPs are reaching different conclusions as to the phenomenon taking place in British politics; Steve Baker, Lucy Allan and Andrea Jenkyns recognise the threat Nigel Farage and his ilk pose and the necessity for renewal. His success is only explained by Conservative failure in handling Brexit, whether it be in complete reluctance to leave on WTO terms, a capitulating negotiation strategy or (as some Tory MPs would profess) an inability to pass Theresa May’s Withdrawal Agreement through the Commons.
What is for certain, however, is that Farage’s no-deal Brexit proposals are rallying support quickly, most of it from the Tory base – and at an unprecedented rate. If polls are to be believed, in a matter of a few weeks, the Brexit Party has managed to consume half of the Conservative vote. This would put the possibility of the Conservatives remaining in government close to zero. Forecasts have furthermore predicted that Secretary of Defence, Penny Mordaunt, Tory chairman, Brandon Lewis and countless more would be among some 150 Tory MPs to be unseated at a general election.
Whereas some of the more resilient European Research Group MPs have considered the looming electoral threat appropriately, the likes of James Cleverly, Brandon Lewis, Steve Barclay and Theresa May herself apparently believe the phenomenon at hand can be put to rest by ‘delivering’ Brexit with the Withdrawal Agreement. Others accept the need for a fresh face as leader but believe that another corporate centrist May 2.0 candidate such as Amber Rudd or Rory Stewart (who espouse continued close affiliation with the European Union) would save the party.
For the latter two, political reality seems to have escaped. A naive misreading of the situation has led them to overlook the hyperpoliticisiation that has taken place recently among the voting public. This is evident in Change UK’s rapid collapse into obscurity and irrelevance, despite mainstream outlets largely hailing support behind them. Gone are the days when good spin could determine public opinion.
It is the same for public rejection of May’s Withdrawal Agreement, which is unlikely to budge. The deal is an objectively poor position for our country to be in, a customs union would prevent us from pursuing self-deterministic free trade away from the European Union while still being beholden to its laws. The public appear to clearly recognise this. Additionally, after the BBC’s airing of Brexit: Behind Closed Doors (a fly-on-the-wall documentary from the European side covering the negotiations that led to the Agreement) revealingly depicted EU negotiators celebrating and declaring that the UK had been turned into ‘a colony’, there is little spin that is likely to convince an ever-observant public otherwise.
Most of the parliamentary Conservative Party remain committed to the deal, yet in a pragmatic sense their doing so seems totally irrational. A clear majority of Conservative Party members prefer a no-deal Brexit, despite loud and conceited fear-mongering in political discourse consistently describing the option as a ‘cliff edge’. This suggests the electorate and Tory base is engaged and is analysing for themselves, not apathetically settling for the orthodoxy. No matter how many fabricated, wishfully-thinking polls Rory Stewart cites, the parliamentary party’s passion for the deal is highly unlikely to ever be matched by voters or the grassroots any time soon.
This disconnect, alongside the continued appraisal of deeply unpopular Brexit agreement, is the reason for the haemorrhaging of support to the Brexit Party. A party abandoning a majority of its base represents unquestionable political stupidity. The political narrative from Remainers used to cite the possibility of a no-deal Brexit as a financial catastrophe and cliff edge – yet it is in fact the Tories who have come to find themselves staring over the edge of an increasingly volatile cliff. Perhaps this repeated prophecy was not meant for Britain in the eventuality of a WTO Brexit, but for its ruling party without one. The near 200-year-old party is enduring, but it is becoming quickly apparent that it is certainly not invincible.
Factional infighting, especially over the topic of Europe, has long been the bane of the Conservatives. Yet this time it is different. The oldest party in British politics may not be facing potential electoral oblivion yet but the Brexit Party is already polling considerably higher than UKIP ever did – and there is a feeling we have not yet seen it peak to its full potential. Further polling has suggested Nigel Farage’s new party has risen to become Britain’s most popular party for the European elections and could well attain second place at the national level.
As academic Matthew Goodwin puts it, the Tories have themselves to blame. It is their ineptitude to address adequately issues such as democracy, sovereignty and demand for free trade whilst in government that has far from quelled populism in the United Kingdom – it has put it on steroids. Farage has tapped into where the Tories, by all measures, should be – into long-deprived mainstream centre-right opinion. Patriotism and ambition is something that has long seemed vacant since the current Prime Minister took office.
The party’s own cliff edge situation now means that without embracing No Deal – the most popular Brexit option – what we have seen so far suggests they could be democratically replaced by the new right-of-centre party on the block. Currently, the Conservatives seemingly hold no ideological foundations. Under May the party has sold itself purely on pragmatism and competency. Its ineptitude in office suggests neither and ideologically inspires none, which is a dangerous position in which to be.
Trends in Europe show that traditional right-of-centre parties are susceptible to collapse and crash from their position in mainstream politics: France’s Les Républicains did in 2017, Italy’s Forza Italia did a year later, whilst Germany’s CDU and Spain’s Partido Popular are also currently looking like they are on their way out. First past the post has been often stated to be Britain’s structural defence of the two-party system; the public are well aware that without their tactically voting for their left-right preference they could well end up with their ideological opposition in government. This, then, is likely a sign that patience is wearing thin.
What’s more dangerous than Nigel Farage saying the things Conservative voters think, is that the Brexit Party’s strong polling means they are fast becoming a viable political option for the vast number of those the Tories neglect to represent.
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This week on the BrexitCentral Podcast I spoke to Euro candidate Dan Hannan MEP, who is standing as a Conservative for the South East region. He says Brexiteers shouldn’t use the elections as an opportunity to send a message:
“Who else is going to deliver withdrawal from the European Union in an orderly, timely, and cordial way? I refuse to believe that every Brexiteer is an angry sort of Trumpian who just wants to register a point of view.
“There’s no need to send a message here, the message was sent on the 23rd of June 2016.
“More people voted to leave than have ever voted for anything, so we don’t need to kind of peer into the entrails to discern what the British people really think. We know that, it’s not that we didn’t get the message, the problem is we didn’t get the votes.”
He also argues that without a common allegiance, the EU can never be democratic:
“Democracy isn’t just a periodic right to put a cross on a bit of paper.
Democracy also depends on a certain relationship between government and governed… you have a pretence that there was some kind of pan-European democratic process, but honestly, hand on heart can you imagine anybody saying, ‘well you know I was gonna vote for Weber but I reckon Verhofstadt edged it in the second debate’ – I mean it’s just a nonsense.”
The post Dan Hannan: Don’t use Euro elections to ‘send a message’ appeared first on BrexitCentral.
It has been over one thousand days since the EU referendum: over one thousand days since the biggest mandate at a referendum in UK history; over one thousand days since a staggering 17.4 million Brits put a cross next to the Leave option on the ballot paper. Yet over one thousand days later, the United Kingdom is still a member of the European Union and we are still having the Remain/Leave discussion.
It should no longer be a question of Remain or Leave. That debate was settled on 23rd June 2016. It should now be about respecting the result of a democratic process. Democracy is at the heart of British values and to hold another referendum would be a brutal blow to such an important principle and an insult to the people of Britain.
Political apathy is already a problem in the UK: nearly one in three did not cast a vote at the 2017 General Election and if the result of the referendum were ignored, I fear the democratic deficit would only worsen.
I think it is a common misconception by Remainers that Brexiteers fear a second referendum. We are definitely not scared. We just think it would be wrong. In fact, if the referendum was not a big enough mandate for Brexit, let’s not forget that over 80% of current MPs were elected on manifestos saying they “respect the referendum result”.
Of course, the biggest elephant in the room is how on earth we secure Brexit after Theresa May’s Withdrawal Agreement was voted down three times. However, the truth is that this wasn’t Brexit at all. There were too many unnecessary strings attached — most obviously the backstop issue and that staggering £39 billion divorce bill.
Nearly every Brexiteer is united around the belief that “no deal is better than a bad deal”. However, at this point I don’t think any deal will get through Parliament — partly due to that Remain majority in the Commons of around 300. What did get through Parliament, however, was Article 50. Article 50 clearly stated that we would be leaving the European Union on 29th March 2019, two years after it was triggered — irrespective of whether we got a deal or not. Therefore, the United Kingdom should have left the EU on 29th March. But we didn’t.
The Conservative Party has let me down. I have been a loyal member since I was sixteen, spending many an evening canvassing for my local elections. Theresa May promised she would deliver on Brexit; however, allowing “No Deal” to be taken off the table, any chance of a respectable deal was gone. There seems to be no room for negotiation left. Why on earth would the EU budge on anything once they knew Parliament would not accept No Deal? Regrettably, it has come to the point where it seems to be a choice between Remaining or Leaving with No Deal – and the latter is definitely the better option.
This betrayal has led me to make the drastic decision to vote against my own party at the European election. I will be voting for the Brexit Party. I encourage other Conservative Party members, Labour Party members, people who were on the Remain side of the argument and indeed anyone else who truly believes in democracy to do the same. If the Brexit Party succeed in these elections, the likes of Change UK will be left with no line of argument — after all the only thing they seem to determined to change is the result of the referendum!
Wake up parliamentarians! The British people are strong and resolute. I urge you to join me in voting for the Brexit Party on 29th March. Democracy must prevail.
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Last Wednesday and Thursday evening, BBC4 screened two episodes of an absolutely extraordinary documentary, Storyville – Brexit: Behind Closed Doors. This “fly on the wall” programme, involved a camera team spending over two years following Guy Verhofstadt MEP, the European Parliament’s Brexit Co-ordinator, during the twists and turns of Brexit, from the aftermath of the moving of Article 50 by the House of Commons through to the so called “Meaningful Vote 3” (MV3) of a few weeks ago.
This really was a “warts and all” documentary, which has now gone viral on the internet and some of the footage, to British eyes at least, is absolutely shocking.
Throughout the programme, EU politicians – led by Verhofstadt and his team of staffers – were seen repeatedly swearing at the television when watching events in the UK, including calling the Prime Minister “insane” and generally abusing any British politician who sought to question the EU’s version of how Brexit should take place.
In one particularly telling passage, my parliamentary colleague and fellow Eurosceptic, Andrew Rosindell, was filmed attempting to explain to Mr Verhofstadt and his staff why Britain had voted to Leave the EU. Once he had gone, his Irish Chief of Staff said, on camera:
“You really f****d him over. I love it when you f**k over a Tory!”
How can it be, that our so called ‘EU partners’ can treat our elected representatives – and by inference the British people – with such utter contempt?
Perhaps I can help offer an explanation, based on my experience as the Conservative Party’s Shadow Europe Minister between 2007 and 2010. In those three years, reporting to the then Shadow Foreign Secretary, William Hague, I spent a considerable amount of time travelling around the EU and interacting with those in the European institutions, such as the European Commission and the European Parliament. This taught me a number of things but, more than anything, it brought home to me that the desire to form a federal European state – often referred to by its advocates as “the Project” – is almost an act of religious faith among some politicians on the continent, such that absolutely nothing and no-one may be allowed to stand in its way.
For these people, such as President Macron of France but other European leaders too (and certainly the political elites in their countries), what the British did in voting to leave the European Union in 2016, was, therefore, simply unforgivable. We rejected “the Project” and thus committed an utterly heretical act. This was apostasy – and as such, in their view – we deserve everything we get.
This was absolutely plain for all to see from the sheer derision with which the British were treated throughout the two hours of footage. On one occasion – incredibly, bearing in mind he was on camera – one of Verhofstadt’s staffers, exclaimed on hearing that we had agreed to the 585-page so-called “Withdrawal Agreement”, that “We have made them a colony!”. The sheer joy that was evidenced on the faces of the European negotiators when it became apparent that we had acceded to the “Withdrawal Agreement” tells you everything you need to know about why they regarded it as a clear victory over Britain.
Again and again throughout the documentary, the UK’s negotiating tactics are derided by their interlocutors, including the EU’s Chief Negotiator, Michel Barnier. The Prime Minister and her team are repeatedly disrespected and only on one occasion – when Dominic Raab took over as the Brexit Secretary – did any of the Europeans appear to believe that we had started to resist. Tellingly, Mr Barnier is quoted when describing Mr Raab to his colleagues as saying:
“He comes every week. This may cause, and I am saying this cautiously, coordination problems with the British negotiating team, where clearly they were in the habit of doing things differently.”
Simply translated, I take this to mean “This guy is not malleable, unlike all the others.”
This also highlights how badly the British side negotiated and how willing we were to give in to the EU’s demands. At one point Guy Verhofstadt even jokes of Olly Robbins, the unelected senior civil servant and UK chief negotiator (and close confidant of Theresa May):
“Olly has said that when all of this is over he may need to apply for a Belgian passport!”
From my own point of view, I would be more than happy to write to Belgium’s Interior Minister at any time to ask him to facilitate Mr Robbins’ application as fast as possible – such an utter disaster has he been in attempting to represent the British national interest.
Verhofstadt and his highly self-satisfied team are then filmed watching the result of the first Meaningful Vote in Parliament in January 2019. When the “Withdrawal Agreement” was defeated by 230 votes (the largest defeat in parliamentary history as it turns out), their disappointment is palpable. The pattern is repeated for MV2 and MV3 – by which time Verhofstadt cannot bear to watch, as he has clearly realised what is going to happen.
I have never doubted that I was right to vote against the “Withdrawal Agreement”, but this dramatic insight only confirmed my deep conviction that we were fighting a surrender to the European Union all along. Indeed, Martin Selmayr, the Secretary General of the European Commission said some time ago (although not in the programme) that “Losing Northern Ireland was the price the UK would pay for Brexit”. It seems on reflection the House of Commons was not prepared to pay this price – and rightly so.
One other thing struck me when I watched the programme – as a patriotic Brit – which was that I could not help but be angered by the sheer arrogance of the people on camera and the utter disdain that they had for our country and its people. I was discussing this only yesterday with a TV producer who is a self-declared Remainer but who told me, in her own words:
“I have always been pro-EU and I gladly voted Remain, but when I saw that documentary all I could think was – how dare you talk about us like that, f**k you!”
As a media expert, she also volunteered that these people were not in any way self-conscious about being filmed – because they clearly thought that they were doing nothing wrong.
Perhaps the best quote from the EU side, although admittedly it did not feature in the programme, was when the EU’s Chief Negotiator Michel Barnier said some months ago:
“I’ll have done my job if, in the end, the deal is so tough on the British that they would prefer to stay in the EU.”
In summary, for all our sakes, I would urge every MP and indeed everyone who is thinking of casting a vote in the European Elections on 23rd May (which I hope will be as many people as possible) to watch this programme before deciding how to cast their ballot.
The European elite have completely given themselves away – on camera – and proven once and for all via this programme that 17.4 million people were right all along.
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This week I spoke to Lance Forman, a salmon smokehouse owner in London’s East End, who told me why he’s standing for the Brexit Party.
He also explained how his experience in business and being offered a bad deal by Ken Livingstone during the Olympics persuaded him not to support Theresa May’s Withdrawal Agreement.
The post Lance Forman: Why I’m standing for the Brexit Party appeared first on BrexitCentral.
The decision by Theresa May to invite Jeremy Corbyn for talks in order to find a Brexit deal that would command a majority in the House of Commons was a brave one to take, reflecting her determination to deliver on the referendum result before she leaves office. It attracted vocal opposition from many of her MPs as well as members of her own party.
For the public at large, there was a huge sigh of relief; ‘Just get on with it’ has been the overwhelming response – as it has been throughout the tortuous parliamentary process. On the Labour side, some thought it fit to warn Corbyn of a trap as if he were a political novice. He accepted the Prime Minister’s invitation without any fuss and for that he’ll be generously rewarded in any forthcoming election.
But having committed to compromise to save Brexit, May and Corbyn must now deliver. Neither will be forgiven by the electorate if they fail.
It has always been the case that Brexit could only be delivered with support from Labour. Invoking Article 50, rejecting membership of the Single Market and the Customs Union and thwarting a second referendum were all realised either through formal Labour support, formal Labour abstention or by a number of Labour MPs defying the whip. Jeremy Corbyn, through clever tactical manoeuvres, has been able to keep Labour from reneging on its promise to respect the outcome of the EU referendum.
Of late, however, Corbyn has been finding it exceedingly difficult to hold back the clamour by Remainers in his shadow cabinet and parliamentary party to sabotage Brexit through a second referendum which they now call a confirmatory vote.
In that sense, the offer of talks by Theresa May is as much a lifeline for Corbyn as it is for her. It is most fitting that Corbyn, the arch eurosceptic, should be instrumental in delivering Brexit.
The argument that having voted to Leave, the people should be consulted again through a second referendum on whether they wish to change their minds now they know what Brexit actually means, has as much validity as the losing side in a general election demanding a public vote on the first budget of a newly-elected government to find out if the electorate, now they know what the new government means to do, wish to change their mind. The confirmatory vote is the desperate tactic of those who, having lost a democratic vote, wish to have another go.
The argument that nothing but a clean break with the EU is acceptable exaggerates the EU’s importance and strength and diminishes those of the UK and its people; if anything, the EU is what the Chinese, before they started building some themselves, used to call a paper tiger, riddled as it is with irreconcilable internal contradictions.
The choice facing Parliament is not a Brexit with a deal or a Brexit without a deal; but a Brexit with a deal or no Brexit at all.
Apart from leaving with no deal, a Withdrawal Agreement remains the only viable mechanism to enable Brexit to take place. But Parliament is intent on blocking a no-deal Brexit. Hopes that, being the default state, it will automatically materialise once time runs out and all other options are exhausted are infantile; Parliament has shown its determination to take any step necessary to stop a no-deal departure – even if that means revoking Article 50.
Labour has no particular objection to the Withdrawal Agreement. Keir Starmer made that clear in a reply to an intervention in Parliament: the reason why Labour was voting against the Withdrawal Agreement was because it was being taken separately from the Political Declaration which the Government insisted were inseparable. The differences between Labour and the Government thus hinge around the Political Declaration, which is not legally binding; at most it is an indication of the type of relationship we would have with the EU once we’ve left.
Regardless of its shortcomings, the Withdrawal Agreement does bring to an end our membership of the EU and restores our sovereignty; once sovereign, the balance of forces will tilt in our favour and we can take any path we wish that serves the interest of the country, its economy and its people.
Jeremy Corbyn has always been clear, Labour must respect the result of the referendum and the UK must leave the EU. Now is his chance to deliver.
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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.
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.
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.
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.
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 self-satisfied, smug smiles of those who arrogantly proclaimed that tearing up the Standing Orders of the House of Commons and creating a dangerous constitutional precedent would produce a way forward in the current Brexit impasse, turned into angry scowls when, for the second time, Parliament was unable to come up with a solution which commands a majority last week.
Without the least sense of irony, those who quite rightly pilloried the Prime Minister for bringing her failed deal back for a third vote believe that they should be allowed a third attempt to get their preferred option adopted. Even if they were to get a majority for one of the Remainer options (which are the only ones the Speaker has allowed the House of Commons to consider), there is absolutely no reason why the Government should run with it and every reason why it should refuse to promote something which would tear up its own manifesto and split its own party. To recap on the four options rejected in the last week’s indicative votes:
- Kenneth Clarke’s customs union proposal would remove any ability for the UK to have control over its trade policy, would result in us having to pay huge amounts into the EU and not deal with the United Kingdom-splitting backstop.
- Nick Boles’ “Common Market 2.0” proposal keeps us in the Customs Union, the Single Market, requires us to keep open borders and pay for the privilege, while having little say over the rules which the EU would impose on us. It is not even clear after having conceded all that whether the backstop imposition would be fully removed.
- Peter Kyle’s confirmatory vote is no choice at all since it would give a referendum where the public could choose between remaining in the EU or accepting a Remain Parliament’s version of Brexit which would keep us so involved with the EU that we may as well be full members. It’s a real Hobson’s choice dressed up as a democratic exercise.
- Joanna Cherry’s Article 50 revocation proposal is simply a call to abandon the result of the 2016 referendum.
It is hard to see any basis on which the Government could adopt any of those options unless it was prepared to ignore the views of the majority of its own party and drive through the policy or policies of its opponents. Surely even this dysfunctional Government would baulk at that?
It’s easy to shoot down others’ proposals but that is no substitute for a strategy to break the impasse. This is caused by the backstop in the Withdrawal Agreement and the impact it would have on the unity of the UK and the restrictions it would place on the ability to negotiate our future relationship with the EU which would not be detrimental to our economic and legislative freedoms and which would not have us prisoners of the EU until we agreed whatever deal suited its objectives. That is why the backstop has to be dealt with.
Impossible, say some, because the EU have said they will not reopen the Withdrawal Agreement. Yet it is clear that the argument on which the backstop is based – i.e. the unacceptability of a hard border between Northern Ireland and the Republic of Ireland – is no longer a credible threat since the EU and the Irish Government have demonstrated in their plans for a no-deal Brexit that it can and will be avoided.
The Government may have weakened its hand by its own pathetic negotiations, but it still has arguments which could be used to have the toxic backstop removed instead of either becoming the advocate for the policies of the Labour Party, the SNP and the Lib Dems or continuing to hope that it can get the Withdrawal Agreement accepted by wearing down the opposition to it.
Neither can succeed and both run the risk of destroying what credibility the Government has with its own frustrated and angry supporters. There is still time to put the heat on the EU.
The post The backstop remains the reason for the parliamentary Brexit impasse and must be addressed appeared first on BrexitCentral.
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