Monday, May 6, 2019

BREXIT: Time to cut the cord on May and the EU - Part II. No Deal. Just Do It!

Aside from getting rid of Theresa May, let's look at the impact of No-Deal on the "Four Freedoms" that the EU have as objectives: Capital, Services, People, Goods. But before that, let's start with the Greatest HobGoblin.

Northern Ireland.
As I have pointed out before in The Irish Problem, the border issue is another Remainer fear crafted to try and frighten Brexiters into reversing the 2016 decision. Rules around the movement of Irish and British citizens with The Common Travel Area existed for decades before the EU entry - and it should be noted that even here the Irish government has imposed systematic identity checks on air passengers coming from Britain since 1997. Capital and services are not an issue here so basically we're talking about goods.

The EU, GB and Republic of Ireland have all said they will not impose a hard border, for very obvious reasons to do with The Good Friday Peace Agreement. There has been some comment that if GB has no trade agreement with the EU then it must have a secure border under WTO rules and if not then one would have to be established as soon as possible.

This is entirely typical of the Remainer mindset, which seems to crave having intimate control of themselves (aside from sex and drugs) via state institutions. The WTO is not some sort of EU-type bureaucracy with a pack of inspectors checking rule-breaking on borders. In fact it has no inspectors and does not take any action against its members for breaches of its rules. It is a member-driven organisation: a complaint against one country can only be brought by another member country. So on the slim chance that Russia or Turkey did decide to have a go on the border issue then GB, Ireland and the EU would simply point to Article XXI of the GATT:
‘Nothing in this Agreement shall be construed… to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests… taken in time of war or other emergency in international relations.’ 
WTO rules do apply eventually - look at NZ and Australia's two decade fight over apples - but they're slow moving and allow for compromised suspensions while nations and trading blocks work out their problems, as GB and the EU will. That's the whole idea of the WTO: realpolitick trumps "formal" rules, it's actually "best efforts" and all that. In fact a No-Deal agreement will establish these mutually-agreed rules faster than May's bullshit - including talk of a customs union - that has actually held things up in this area, as in all others.

In terms of public money, there would be no legal obligation for Britain to make any payment to the EU, which would leave a huge hole in the EU budget. But this has already been negotiated to £39 million and while Brexiters aren't happy about it, they figure it's worth the price to escape the EU. Given everything else that's at stake neither the EU nor Britain are going to start a fight over this.

In terms of private money, there were many warnings that London would see its role as one of the leading financial centres of the world diminish greatly. Financial institutions would leave for.....where? Paris? Berlin? Amsterdam? New York? Singapore? Hong Kong? If that was going to happen it would have done so decades ago, starting with the rise of New York as a global financial powerhouse. All this financial trade depends on the networked knowledge, information and contacts of people: telecommunication links are not enough. It's the same reason Silicon Valley has not been re-created anywhere else, despite great efforts by foreign governments to do so for forty years or more.

It was also claimed that investment in GB would be badly hurt. In fact this April 2019 report shows that Britain has just had another record year of inbound investment:
In a survey on corporate deal-making published Monday, consulting and accounting firm EY says Britain is the top investment destination in the world for the first time in the report's 10-year history — overtaking the United States, which has held the top spot since 2014.
And more to the point, vastly more than many EU nations combined. Remainers sniped in 2017 about how this was all just "asset stripping" due to the falling value of the pound, but the investment has continued even as the pound has recovered back into the same range vs the Euro as before the Brexit vote.
Time to repeat the point about bigger factors at work:
Steve Krouskos, global vice chair at EY, notes Britain also remains an "open environment for foreign investors" even in the midst of the Brexit chaos. That culture, he said, is reinforced by the English language, a skilled workforce, and a strong technology base.
Under a 'No Deal' scenario, businesses would lose their passporting rights, which allow them to sell their services across the EU without having to obtain licences in each individual country. But given the amount of paperwork that goes into any contract or deal the added "passporting" doesn't amount to much, especially since it's a one-time effort. Besides, it's a two-way street in that these "restrictions" will apply to EU businesses wanting to trade in the UK as well, so there's incentive there to get such paperwork done and done quickly.

Amusingly it was argued that the financial services industry would be particularly vulnerable to this licencing issue and that this was very scary given that it accounts for a significant slice of the UK economy. The ongoing success of that industry since mid-2016 is yet another example of such petty issues being overwhelmed by larger economic ones.

But the real laughter comes with the concerns raised about GB suddenly ceasing to be a member of dozens of EU regulatory agencies "that govern many aspects of daily life", and how GB would need to replace all of them with agencies of its own, with thousands of new "employees" to be recruited and trained, before the exit. Otherwise, "planes would be grounded temporarily, and drugs could not be imported."

My God, the horror. This is what Remainers are threatening? Once again it simply demonstrates how out of touch they are with ordinary British people. I know the British love standing in queues, but do Remainers really think people will stand for grounded flights and no drug imports because there is not (temporarily) a bureaucrat to give the stamp of approval for products and rules that are the same today as they were yesterday? Just harum scarum nonsense even in the short-term.

In the long-term I suppose some of these EU bodies will have to be replicated in Britain, but frankly starting from scratch on all of them, where people actually think about what they want their government to be doing, would be a great opportunity rather than an imposition.

Labour & citizens
With No-Deal, the entitlement of three million EU citizens to reside in Britain, or of British nationals to reside elsewhere in the EU, could technically disappear overnight. In theory, they could become third country nationals, subject to domestic immigration rules.

The EU has already sensibly said that it's not going to do this for the British nationals living throughout Europe. May, ever the idiot, has dithered on the matter of EU citizens in Britain, apparently thinking to appease those Brexiters who had long complained of such workers "invading" Britain and taking jobs. May, and other Remainers, have misread the protest: the dominant demand was not to boot all these folk back to Europe but to prevent inbound flows from happening as extensively again, and to make sure that Britain, not Brussels, was in charge of it.

Eventually this will mean more controls on immigration between Britain and the EU, but yet again, the fears of "instant" blockades and queues at passport control points have been exaggerated as if both sides want a fight. They don't.

This really is the main area of concern because there are immediately calculable costs due to tariffs. The rules of the World Trade Organisation would apply. Tariffs would be imposed on goods that the UK sends to the EU, and on goods the EU sends to the UK. The EU has them at 2-3% on many industrial products, but on cars they would be 10% and on many agricultural products between 20% and 40%. The fears are many so lets just look at the saner ones.

The price of goods imported in Britain may rise.
Until they're substituted with other products from elsewhere in the world, as happens with normally trading nations. And of course businesses usually absorb costs if they think it will cost them market share or an entire market.

About 130,000 businesses that export to the EU would be dealing with customs for the first time.
Out of more than 4 million, many of which export the world over. This is a pain for this group of 130,000 but there's a lot of expertise out there for what is a fairly standardised process. 

Some products may be rejected by the EU as new authorisation and certification might be required.
May be rejected - and then only in situations where certification rolls over. For obvious reasons such checks have slow turnover and both EU and British bureaucrats will not want to screw over EU and British businesses trading with eachother by changing things immediately.

Manufacturers could move their operations to the EU to avoid delays in components coming across the border.
A variation of the previous point. Here's an example of the threat:
The head of Airbus has said no deal could force the company, which employs more than 14,000 people in the UK with around 110,000 more jobs connected in supply chains, to make “potentially very harmful decisions” about its UK operations.
More harmful than building the A380? A technological wonder and boneheaded business decision which is now being discontinued. How harmful was that decision? How confident are British suppliers being shackled to that?

Geographical supply chains are the arteries of modern industry. They're the classic example of the famous analysis of transaction costs in a firm by Ronald Coase (probably my favourite economist). When the transaction cost of using the external market rises too high, the firm goes internal to get what it needs. It's why firms actually exist.

But again, none of this is instant. If costs are imposed in price and timing or both, the supply chain adjusts but does not break down. No supply chain is ever so lacking in robustness, otherwise JIT manufacturing would never be attempted in the first place. So the Airbus wallahs, and other Euro firms may shift part of their supply chain away from Britain, but not until they've added up all the internal vs. external transaction costs as per Coase, of which a small proportion will be increased by No-Deal and which the system can adjust for, as it's designed to.

It should be pointed out that to keep such systems operating as they are now the British goverment has already done much of the work required for inland customs checking and pre-notification, in hand with the companies concerned.

British agriculture will be screwed
Yeah, it probably will - in its current form. But it's already on life support, using the EU CAP for one thing. Take that away, and see your prices rise on stuff being exported to Europe and it all looks bleak. But here's the thing: New Zealand went through this in the mid-1980's and we did not just survive, we thrived - including most farmers. Any industry that's so fragile that it depends on a single market and still needs subsidising, has to change sooner or later.

Car Manufacturing
Same applies here. British car builders had a revival in the 2000's, but have seen declining production since well before the 2016 Brexit decision. Once again, "uncertainty" with Brexit will be blamed when in fact the drop is due to larger, wider economic issues: drop-off in demand growth in China, falling demand in Europe (cars are bad for the climate, remember?), Japan switching to in-country production, and of course the great diesel switch that's occurring, the result of Europe discovering that diesels aren't great for normal pollution, after years of EU directives encouraging these "lower CO2 emission" vehicles to be built. As with the A380 you'd have to wonder why you'd want to be shackled to this sort of large-scale, long-term incompetence.

A Second Referendum
Finally, mention must be made of a second referendum. One of the arguments made for it is that those who voted for Brexit did not know what they were getting into. Nonsense. In the following YouTube collection Chief Dickhead Cameron made it clear that Brexit meant leaving the EU single market, he did so at least 28 times, and each time he explained how awful leaving would be:
Brexiters knew exactly what they were getting into.


David said...


And why do you care?

Tom Hunter said...

As I said in my first post on this subject, I've taken very little notice of Europe since the end of the Cold War, but it has become much more interesting in the last few years as the EU has revealed itself as an incompetent giant stumbling towards trying to be The European USA.

And I care because a lot of this incompetence has been in the area of technocrats overriding the democratic choices of voters in EU nations. They started as long ago as the Masstricht Treaty when it was rejected by some countries, then repeated the process with the EU Constitution rejections, simply applying a vote repeatedly until they got the answer they wanted. Then there's the basically the civilian coups they pulled in Greece and Italy, with the EU basically telling those governments to boot their selected Prime Ministers and replace them with an EU-approved person. How fucking undemocratic is that?

And now we see most of the same stunts being pulled in respect of Brexit. I see the EU as a profoundly undemocratic place. The EU Commission basically runs it. I care about all this because I care about democracy being an actual representation of the needs and wants of voters, even if they're "ignorant and stupid" and sometimes "make the wrong choice".

Supposedly so do you. Or at least you scream about it enough.

Lord Egbut Nobacon said...

I got as far as Northern Ireland and gave up, all your magnificent effort consists of is irrelevancies and speculation without addressing the problem.

One tiny example, if Brexit happens there will be 35% tariff on beef imports into EU. The first cow to to be stopped crossing the border will have broken the the Good Friday agreement.

If a "blind eye" is turned Brazil will claim "favoured nation" status and undoubtedly win in court and flood the EU and the UK with beef that will be detrimental to farmers in both countries.

At the moment France, Holland, Belgium and Ireland act as border guards for the EU keeping the illegal migrants at a Brexit situation they are not obliged to do so leaving a 500k unguarded border between countries is criminally insane.

I have worked out that I can fit 53 wide screen TV's in my camper van if I take the sink out. On Brexit I can import direct from source at a lower tariff take them into the EU (Ireland) and sell at a good profit....the first police or customs officer to stop me will have broken the Good Friday agreement.

Almost al of your long winded post is irrelevant to the leaving or how to leave.

You cannot operate two different tariff and trading blocs without a it?

You cannot have a border without breaking the Good Friday it?

RosscoWlg said...

Thanks Tom for your work on this.!!

Very good read and really informative. I certainly agree with your economic analysis. There is certainly a lot of "inertia" built into the system as businessmen are generally cautious and wont move unless they see an opportunity or transaction costs of inertia become too high.
I think Britain could boom (even more)
And of course become a model for others
And a graveyard for the Globalists.

Lord Egbut Nobacon said...

EU profoundly undemocratic.....please supply an example.

Donald Tusk was elected by 27 of the 28 countries in the EU...Theresa May voted for him .....ditto Jean-Claude Juncker.

We are about to enter the MEP elections, kindly point out the undemocratic part of that.......there is no law that has been passed in the UK that has not been passed by the British is that undemocratic? The EU is a trading bloc and not a political party and is more democratic than Russia and US combined.


Lord Egbut Nobacon said...

Wiggo/Kimbo/chunter....or whoever......address the border problem.....the rest of the speculation can wait.

Tom Hunter said...

I already addressed "the border problem", in a section here and in an entire article some weeks ago.

But instead of debating and offering counter-arguments you've simply continued to repeat the same stuff you did then.

Unless you have some specific counter-points to make there is nothing to address. We will simply have to agree to disagree.

Tom Hunter said...

EU profoundly undemocratic.....please supply an example.

Worthy of entire article. Thanks for the idea.

Snowflake said...

Well, well, well. This reads like it was written by a cross between an aged and turgid Pollyanna in thrall to the Glad Game and an unkempt version of Boris Johnson albeit without the pomposity birthed from a classical education. It does however contain the falsehoods Johnson is renowned for and the ludicrous optimism bias of someone who has utterly nothing at stake (or like Moggy, stands to gain a fortune). This is particularly evident in the claim that because the axe hasn’t yet fallen it won’t. They haven’t left yet, buddy, give it time. You admit there will be some suffering, but take pains to dishonestly minimise it without analysing remain options and whether it would be better for all involved to validate with the electorate whether they actually believe you or not. What are you afraid of?

The most dishonest part of this interminable piece of mistruth is the claim that Brexiteers knew what they were voting for. No one is saying they weren’t told. They are, however, saying that they were lied to repeatedly by the likes of you and the fantasist Boris Johnson (which even he has admitted). Where’s the 350 million pounds a week for the NHS, I wonder?

You don’t have a clue what the outcome of a hard Brexit would be, but by God you’ve sure Googled the hell out of it in an attempt to find the rosiest analysis you can. Why do you find balance so hard to strive for?

RosscoWlg said...

Flakie go back to writing pieces on the Pike River re-entry, and the engagement of one nobody to another nobody.

Yawn all very emotional but what's your point? "the interminable mistruth" sounds like you are describing our present Govt! "Falsehoods" is that code for Pike River?

Course there will be pain, nothing changes without pain dear boy...surely they taught you that at Penrose High School.

Its a balance of pain, the pain of staying or the pain of going.

What the populace have stated is that the pain of being embraced by the Globalists exceeds that of leaving.

Pop along to the all night chemist and get a few of those pills... it will help you sleep, and don't worry your furry little head...its all going to work out for the better.

Snowflake said...

Shhh little man, the adults are talking. Even if one of them is like Carl Benjamin without the rape jokes.

Lord Egbut Nobacon said...

Still waiting Chunter....please don't go down the Wiggo path and confuse ridicule with argument.

Here is something to go on with please include examples in your next article which I'm sure your fans are excited about....

Now about the border???????

Lord Egbut Nobacon said...

Chunter wrote this... "and it should be noted that even here the Irish government has imposed systematic identity checks on air passengers coming from Britain since 1997. Capital and services are not an issue here so basically we're talking about goods."

what self serving bullshit...identity checks on air passengers are mandatory all over the world....if you are flying within in the shengen zone you can fly on an ID card. Ireland is not in the zone so you need a passport..FROM ANYWHERE.

"Capital and services not an Issue" ye you really believe that. The North has exactly the same problem with insurance, banking, electricity supply (yes there are tariffs)....why do think Rees-Mugg moved his hedge fund from London to Dublin.

I'm losing the will to go on as there is so much spin and misinformation in your post but here is a list of MAJOR companies that have moved even before a decision is made

Barclays. ...
Dyson. ...
Honda. ...
HSBC. ...
Lloyds of London. ...
Moneygram. ...
P&O. ...

Lord Egbut Nobacon said...

........."Under a 'No Deal' scenario, businesses would lose their passporting rights, which allow them to sell their services across the EU without having to obtain licences in each individual country."

What absolute are just inventing stuff, memorising a lot of sound bites and stringing them together....

Passporting refers to the regulation of financial services. If a certain firm is authorised to undertake certain activities by the regulator of one EU member state, it can apply for a 'passport', and it can do business throughout the EU without needing further authorisation. Nothing to do with business's needing to comply with future changes in trading regulations.

Your post is eerily like most of the stuff put out by the Kremlin trolls. It's a free blog but I earnestly suggest you go away and rethink your strategy and stop spinning and propagating lies.

Lord Egbut Nobacon said...

Just in case there are a few simple minded souls like Wiggo who thought it was a "good read" out there who believed your nonsense.

There has always been free movement across the Irish border since 1923, even during the guerilla war euphemistically known as the "troubles". It was highly advisable that you carried a passport because nice gentlemen in uniform would get a bit upset if they could not ID you. It was also highly advisable not to carry a passport if you were travelling back roads as not so nice gentlemen sans uniform would and could shoot you if they thought you were the wrong religion.

The reason for this is that Britain and Eire joined the EU at the same time in the early seventies so people and goods continued to travel freely between the two countries. But now for the first time in their shared history this is in peril.

The bottom line is that if the Good Friday agreement is breached then the British army will be back in Northern Ireland and what went before will seem like a friendly.
The only winner is Russia.

Anonymous said...

As always Egbut you’re full of it. When it comes to spin and misinformation you are a master, or is it you really just don’t know?

Lloyd’s hasn’t “moved [to the EU] even before a decision is made”. They have opened a subsidiary in Brussels with 40 of their 600 staff.

This is just what Tom was describing above. Businesses taking advantage. If this is such a bad thing why were you not up in arms years ago when Lloyd’s set up their US operation?


Lord Egbut Nobacon said...

Lloyds of London has moved all it's tax and EEC business to Brussels.

This is the taxable business of 600 million people as opposed to 60 million...guess who loses out...the chancellor of the exchequer.

2018.....they had a bit of a hurry up...

Hey, Don't get confused with Lloyds bank that bought the NZ National bank.....different Lloyd

Never mind, all is well in LaLa land.

RosscoWlg said...

Eggie I really think you are confusing the Macro economic picture, Tom Hunters article with the Micro economic picture of TV sets on the Irish border.

I don't know you but you sound like the guy who takes a lot of comfort knowing about small stuff, like TV sets on the Irish border, and arcane custom rules.

Yes some businesses maybe moving out of the UK but I suspect given the growth numbers, and the health of the UK economy compared to Europe, a great many undocumented businesses are preparing themselves for opportunity that Brexit will offer by moving to the UK.

Now the UK survived before joining the EU, without having to subsidise the rest of the EU to the tune of 120billion a year they could well flourish.

You never know... the old unintended consequences may well play a hand and Northern Island may boom again... Titantic II may well yet go down the slipway as Irish shipbuilding regenerates?

Anonymous said...

Unlike you Egbut I do know just a little about Lloyd’s, having placed business into that market for over 30 years.

Contrary to your opinion, the EU is not a big market for Lloyd’s. The EU is already well served with European insurers and reinsurers. Lloyds does get the business the Euros don’t want to underwrite. Having a Brussels office may help grow euro use of Lloyd’s, but probably not.

The bigger market Lloyd’s is chasing is Asia, which is why Lloyd’s also opened an office there. I didn’t see you on your soap box about that issue.

Yet again your opinion is just that, your opinion. Reality is something else.


Adolf Fiinkensein said...

Don't worry paranormal. If you don't like Legbut's opinion. he's got plenty more.

Lord Egbut Nobacon said...

What a pair of clowns....running interference for Chunter when he can't answer the easy questions.

Lloyds is not an insurer, it a specialist insurer taking on risks that ordinary companies will not. It has removed its tax base from the UK to the EU in order to comply with EU rules on ownership.

Fifty percent of it's business is done in the US with thirty percent in the EU. The remaining twenty percent covers the UK and the rest of the world.....but you knew that because you have been in the industry for thirty years....yeah whatever.

And another one bites the dust ..hooray for Brexit...

What happened to the guns and registered account Paranormal?

RosscoWlg said...

Egg you're back... I thought Paranormal and Adolf were a bit tough on you, so I thought you would be off licking your wounds.

Good to see you terrier like qualities coming to the forefront when it comes to minor facts, and detail.

But to play your game Lloyds is a "market" of members, or insurance market, Lloyd's itself does not underwrite insurance business, leaving that to its members.

So whatever, your point is still invalid, Lloyds may have moved its tax and EEC business to Brussels BUT that does not demonstrate your point that business is leaving Britain in droves.

You're very like David.... getting hooked up on the small narrative... I have a solar panel on my roof, therefor all SA should have one for the common good" Lloyds as moved part of its business ergo the UK is going to the wall.

Eggie.. Hope this helps with your next post...

Lord Egbut Nobacon said...

Not my small narrative was forced upon me....back to the Irish border of which I was accused of having an opinion on.....I did not.

There are only two options for a successful cut all ties Brexit.....Relinquish Westminsters control of Northern Ireland and let them stay in the customs union with the EU.

Or force a hard and armed border onto a non compliant population for the very first time.

Not an opinion...facts. If I were to speculate on what will happen then it would be venturing an opinion.

A no Brexit beckons perhaps but I am anxious to see what your crystal ball tells you.

Anonymous said...

Well there you go Egbut, opinions are like arseholes, everyone has one.

Thanks RosscoWlg for pointing out the obvious to his lordship. Here’s an interesting fun fact, back in the day New Zealand had the highest proportion of Names per capita in the world. That was before the LMX spiral of course. You might want to do some research on that Egbut, you could learn something.

Egbut you have an opinion that there are only two solutions to Northern Ireland. Again that is only your opinion. You have clearly demonstrated that’s not worth much.


Lord Egbut Nobacon said...

Well obviously you have the answer just like Chunter.....

We are all waiting with bated breath for you to solve the conundrum. I think chunter has retired from the field.

I luv it when those who say nothing for weeks on end and then criticise on behalf of others weigh in with fuck all except ridicule and insult.....what happened to your registered account?

RosscoWlg said...

Eggie ... Paranormal is right there is a range of solutions from do nothing (that's 1 of your two choices right there) to a hard border (that's probably choice 10 of your 2 options)

A quick visual survey of the Interweb indicates that this issue seemed to have died out in the press in late 2018, as there is little mention in 2019.

They could even go back to pre 1973 joining the EEC situation.

But I have my own fun fact for you:

"At the moment only a small number of non-EU goods entering the UK or Ireland are subject to physical customs checks. In the case of the UK, all non-EU goods have to be declared, this is usually done electronically and happens in a matter of seconds."

And a little bit more for you..

"Her Majesty’s Revenue and Customs (HMRC) told a committee of MPs in 2017 that around 4% of declared goods are subject to further checks, most of which are documentary. Irish tax authorities told a committee of Irish parliamentarians that in 2016 “6% of import declarations were checked and less than 2% were physically checked”.

So Eggie I have been nice to you, no ridicule, no nastiness, no insults...just dry boring facts from Parliamentary committees.

Sleep well..I'm off to bed!

Lord Egbut Nobacon said...

Paranormal.......Facebook has deleted 1.5 billion fake accounts in the last six months they are usually Russian, Ukrainian or Chinese based. Google is doing the same with fake, scammer and hate accounts but no figures are available.

Is this why you cannot log on to your Google account???? Miss the revolvers, nice touch.

Wiggo....I fail to see your point as all non EU goods arrive by sea in containers and can be processed in a more leisurely way, they are easily trackable. Still it's a good attempt at debate.

Snowflake said...

Tommy’s hiding under his Mum’s bed, leaving the defence of his turgid piece to Adolt and Wiggo. It’s bordering on abusive to leave the excreted output of a month’s passionate Googling in the hands of such incompetents. They’re killing it.

Adolf Fiinkensein said...

Ledgut, having two bob each way. Se if you can figure out which is which.

"Lloyds is not an insurer, it a specialist insurer...."

Snowflake said...

When Tommy emerges from his hiding place perhaps he can explain why he uses lies and omissions to minimise the impacts of a no-deal. This is particularly evident in his claims about people movement and migration. There are around 1.5m British citizens living in the EU. Who pays their pensions, social security and healthcare costs? Will they have the ongoing right to reside and work where they are? None of this is understood or settled, but it’s highly unlikely that the EU taxpayers will pick up the tab, so how’s the billing going to work? Anyhoo, his glib assurances count for about as much as those of a drunk Nigel Farage.