Brexit – the mood at grassroots level eight weeks on

Away from the debate between politicians, businessmen and campaigners  about the best exit route, eight weeks after the memorable result of June’s referendum, life for ordinary people has settled down remarkably quickly.

In fact, it soon became apparent within a matter of days after June 23rd that life was carrying on as normal for much of the country. I recall a trip to London during the final week of June.  Walking down the south bank of the Thames, it struck me how little effect the referendum result  was having on day to day life. A long queue of people of all nationalities were waiting to buy tickets to the London Eye and the restaurants were full – in fact, my train home was even fuller! In short, you wouldn’t have thought we had just taken a major political decision only a few days ago.

Initial statistics suggest that life did indeed carry on much as normal during the first full month after the Brexit vote.  The number of people claiming unemployment related benefits fell by 8,600 in July. It had been expected to rise by around 9,000. The fall was the first since February this year. Other data showed that the employment rate in the UK reached a record high of 74.5% between April and June this year. Retail sales also grew by 1.4% during the month. The vote to leave the EU has not deterred people from spending money.  Furthermore, for all the uncertainly generated by David Cameron’s decision to call the referendum, London attracted more venture capital for start-ups than other major European cities. According to an article in Frankfurter Allgemeine Zeitung, it attracted €1.5bn in the first half of the year, well ahead of its nearest rivals Stockholm (€1bn), Paris (€674m), and Berlin (€520m).

Significantly. although the rate of UK consumer price inflation jumped to 0.6% in the year to July followin the Brexit vote, it was only slightly up on the 0.5% recorded in March and still well below the 1% threshold which triggers a letter from the governor of the Bank of England to the Chancellor explaining why inflation is so far below the 2% target!

BBC Radio 4 broadcast an interesting programme on Wednesday Evening where two groups of people from the most pro-leave and the most pro-remain areas of the UK met in separate rooms to discuss their feelings following the Brexit vote. Two Rooms, hosted by Fi Glover,  was another fascinating insight into how quickly life has settled down. The leavers, from Boston, Lincolnshire, were the more optimistic of the two groups, expressing great hopes especially for the UK’s trade prospects. The remainers, from Brixton in South London, talked of their shock when the result was announced. They were concerned about possible loss of access to the single market and expected an economic downturn.

Both groups,  however, accepted the result. Indeed, one person used the phrase “now we’ve left”, even though we haven’t even invoked Article 50 let alone come out the other end! Interestingly, both groups saw Brexit as a long overdue opportunity to re-boot our democracy and to decentralise power to a local level. For all the initial horror of some Brixtonian remainers, there were no calls for a second referendum. They may not have wanted a leave vote, but Brexit as far as they were concrned means Brexit.

Such attitudes at the grassroots level should not come as a shock. For four month’s David Cameron’s decison to call the referendum  thrust the issue of EU membership into a prominence it had never previously enjoyed.  A year ago, just before the General election, a survey by YouGov placed “Europe” as far down as 7th in its list of voters’ priority issues, well behind housing, welfare and health. Anyone who has ever stood as a UKIP candidate will have known the frustration that in general elections, the EU was never widely viewed as the most important factor in determining how people would vote.  After its moment in the spotlight, it is therefore unsurpisingly again receding into the background.

But not totally. News that over a million Eastern European migrants are now working in the UK will have served as a reminder to some people why they voted to leave, while the Daily Express has unearthed another story which will raise plenty of hackles:- a German-based agency called medaltracker.eu whose data is used by offical EU websites, has published a chart showing that the greatest number of medals in the Rio Olympics has been won by the EU! Nowhere is the UK to  be seen, which is  particularly galling considering the tremendous performances by Team GB. It seems that the Brexit vote has done nothing to change the mindset of the EU élite who opened a museum four years ago costing £44 million and called the “House of European History” which calls the Second World War a “civil war“, in spite of quite a bit of the action taking place in North Africa and the Far East

While it seems impossible to change this very selective and bizarre interpretation of history, hopefully, if our government and Civil Service can get their act together, by the time the 2020 Olympics begin in Tokyo, “now we’ve left” really will mean “now we’ve left” and the likes of Medaltracker will not be able to repeat their insult to our heroic athletes.

 

 

Brexit – media muddle and rubbish galore

At first glance, headlines in a number of papers proclaiming “No Brexit until late 2019” sound thoroughly depressing. Has some new hold-up to triggering Article 50 suddenly appeared on the horizon? Not at all. In spite of a spat between Boris Johnson and Liam Fox over whether the Department for International Trade or the Foreign & Commonwealth Office will head up UK foreign policy, Theresa May has insisted that  it is full steam ahead in the preparation for invoking Article 50 early next year and has told the two men to “stop playing games.”

If her plans go according to schedule, the two-year negotiation period would take us to early 2019. Factor in even a short delay in preparing the ground or a mutually-agreed extension to the negotiations and we will find ourselves in the second half of 2019 without having gone through the Brexit door.  With France and Germany both holding major elections in 2017,  it is quite likely that there will need need to be an extension even before the complexities of negotiating a succesful divorce are taken into account. A change of incumbent or government could result in previously-agreed changes having to be revisited if the leadership in either of those countries change – a distinct possibility in France, where President Hollande’s popularity ratings are very low.

Is business going to suffer as a result of June 23rd’s vote?  Well before the referendum, we predicted a short-term blip in the event of a Brexit vote, particularly a drop in the value of sterling. We pointed out that the economic gains were fore the longer term. House prices have fallen in the wake of Brexit, dropping by 2.6% in London and 2% in the South East. Is this a calamity? Ask any first-time buyer about the absurd prices they are having to pay to get onto the housing ladder and you will not hear any sadness on their part.  Another report claimed that businesses had become “pessimistic” as a result of the Brexit vote. Read the article in full, however, and it states that 36%  of companies are planning to increase staffing levels now compared with 40% before the referendum. A slight fall in optimism, but hardly evidence of widespread business gloom.

It is frustrating that some remainers still seem unable to accept that we voted to leave – and with good reason. Avinash Persaud, writing in the Economic and Political Weekly highlights the supposed correlation between voting to leave and lower educational qualification. Those of us with degrees who voted to leave are becoming utterly sick of being characterised as ignoramuses. If anything, the number of graduates who voted for remain is an indication of the woeful inadequacy of our educational system as opposed to any correlation between intelligence and support for the EU.

Mr Persaud, like many other commentators, also links support for Brexit to disenchantment with free trade and the reforms that began under Margaret Thatcher. This again is simplistic twaddle. During the course of the Brexit campaign, one of the most frequently repeated advantages of Brexit was the prospect of beginning to take control of our own trade and escaping the protectionism of the EU. I  for one was accused in one debate by my pro-EU opponent of advocating “Singapore on steroids”.

While the Brexit vote was strong in white working classes areas, the wonderful result on June 23rd was achieved by their alliance with frustrated small businessmen, some trade unionists, a few Labour MPs, a few more Tory MPs and a selection of educated professional types unhappy with the loss of our sovereignty, control of our trade and the top-down nature of the EU.

Of these unlikely bedfellows, the most uniquely British component is the strongly Eurosceptic centre right – one of the legacies of Thatcherism.  Peter Mandelson’s claim that Jeremy Corbyn somehow sabotaged the remain vote  just does not stand up to scrutiny.  Undecided centre-right voters were never going to be  won over by a Labour politician, whether Blairite of Corbynite. Somehow, Mandelson and his ilk still seem unable to come to terms with the fact that plenty of highly educated intelligent people studied the arguments on both sides of the debate and decided that we would be better off out.

Nor, sadly, are they giving up in their attempts to overrule the will  of the people. The European Movement, which was a recipient of substantial CIA funding in the past, is organising a  “March for Europe” on 3rd September. “We need to send a message that 16 million people voted to remain” says their propaganda. Well, we have a message for the European Movement:- over 17 million people voted to leave and we won. That’s called democracy.

Lord Stoddart, a patron and former Chairman of CIB,  recently issued a stark warning to Lord Mandelson and other  Europhile members of the Upper Chamber:-

“My colleagues in the Lords would do well to remember that the Brexit vote was the largest vote for anything in the history of our nation.  According to a study by the University of East Anglia, had Vote Leave been a political party, it would have won a huge landslide of 421 Parliamentary seats.  That would equate to 65% of all seats and 73% of seats in England and Wales.  Mess with this massive mandate at your peril!”

Photo by Brian Smithson (Old Geordie)

UK gives up EU presidency as IMF rows back on recession fears

Prime Minister Theresa May has  made it clear that she will not be rushing to invoke Article 50 of the Lisbon Treaty and begin the process of taking the UK out of the EU. “I do not under-estimate the challenge of negotiating our exit from the European Union and I firmly believe that being able to talk frankly and openly about the issues we face will be an important part of a successful negotiation”, she said last week.

However, one small step has been made. She has decided that the UK will give up its rotating presidency of the European Union, which was due to begin in July 2017. Mrs May told Donald Tusk, the European Council President, Tusk that it was “the right thing to do given we will be very busy with negotiations to leave the EU”. So it looks like Article 50 will be implement early next year.

The uncertainties about both the timing of Article 50 and the details of the exit strategy have been the main reasons for the widely-reported claims of an economic slowdown. However, according to a piece in the Daily Mail, the  Bank of England said that it has not found “clear evidence” that a sharp slowdown was underway in Britain’s economy after the June 23rd vote to leave the European Union, though around a third of firms it spoke to plan to curb hiring and investment.

The Bank claimed that business uncertainty “had risen markedly” but there was little evidence that consumers were spending less either. “A majority of firms spoken with did not expect a near-term impact from the result on their investment or staff hiring plans. But around a third of contacts thought there would be some negative impact on those plans over the next 12 months,” However, the Bank was adamant: “As yet, there was no clear evidence of a sharp general slowing in activity.”

Nonetheless, the Interational Monetary Fund has downgraded its projections for global growth, citing Brexit as one of the reasons. For this year, glolbal GDP would grow by 3.1% instead of 3.2% and 2017’s figures were downgraded from 3.5% to 3.4%.

This is based on an assumption that trade talks go well. A piece published by Bloomberg suggests that the IMF would expect to see global growth drop as low as 2.8% in the event of a messy divorce looming. It is hard to believe that our country’s economy is of such importance that an impasse on trade talks really would knock 0.6% off the entire world’s GDP growth.  It is worth remembering that the IMF has not always been terribly  accurate in its forecasts in the past. In 2013, the institution did own up to being totally wrong over the scale of Greece’s financial woes and some commentators have asked the question as to whether the IMF ever gets anything right.

However, one prediction worthy of comment is that the IMF still reckons we will not only escape recession but record a faster rate of growth this year than the Eurozone.  Certainly, the UK’s economic fundamentals appeared to be pretty sound in the immediate run-up to the referendum and although the pound has fallen in value since June 23rd, the Bank of England’s failure to find any evidence of a serious economic downturn is unsurprising. No stimulatory measures were taken at last month’s Monetary Policy Committee and  it is possible that nothing much will happen next month either.

There are plenty of stories doing the rounds about optimism falling in some UK businesses, but if Brexit is managed successfully – and the delay in invoking Article 50 suggests that a detailed strategy will be developed before this takes place – we believe that Brexit will be economically neutral in the short to medium term and a benefit rather than a disaster for the UK economy in the longer term.

Wth the referendum now behind us and the summer recess just beginning, news is likely to be rather thin on the ground until the beginning of September. We do, however, intend to send out our usual weekly e-mail throughout this period as there will always be a few things to report.

Before signing off for this week, one further article by our friend Joris Luyendijk deserves a mention. This Dutch author and chat-show host is such an enthusiastic supporter of the EU’s federalist agenda that he makes  Jean-Claude Juncker seem like a eurosceptic. The Guardian occasionally gives him a slot and his latest offering is even more full of bile against our country than usual. The man opposes giving us a reasonable deal and says that the EU must inflict “Project Pain” on us to ensure we face economic disaster. He fears that if it doesn’t, other countries may follow us out of the door.

Two points in response. Firstly, he mentions all the distortions told by the leave campaign which he fears could be used as a template in other countries. While we in CIB were uncomfortable about the way the issue of our contribution to the EU was handled, for example, this is nothing compared to the nonsense put out by remainers. At a debate in which I participated, one of my opponents said that we would not be allowed to re-join EFTA.  This is pure hogwash. On a different occasion, a former cabinet minister insisted to my surprise that David Cameron would trigger Article 50 on June 24th if Leave won. Instead, he resigned as Prime Minister.

Secondly, while Mr Luyendijk’s  determination that no other country will leave the EU is shared by most, if not all, of the leaders of the 27 remaining member states, some of them at least are much more pragmatic, including Germany’s Angela Merkel. Trade has to continue and punishing us for voting to leave is in no one’s interests. Furthermore,  Luyendijk’s extremism calls into question the whole purpose of Article 50. If the other countries feel it will be made into essentially a dead letter and that they will be irrevocably locked into something that they may decide at a later date they want to escape from, the EU may well end up facing a violent implosion a some point in the future.

Luyendijk is all aggression and spite when it somces to our country, but this is to hide the weakness of his position. In another piece for the Guardian, he admits that in his own country, support for the EU is plummeting. Ambrose Evans-Pritchard made the point over two years ago that “superstate rmonatics are on the back foot almost everythere.”  Of course, if the EU project isn’t about federalism, what is it about? If it is holding together simply through inertia, with the federalist idealism confined to a few people like Luyendijk, it is in grave danger indeed. The arch-federalist former MEP Andrew Duff has lamented that the EU may be destined to remain an association of states committed to “never closer union.” If he is correct, Brexit may well turn out to be a blessing. Our example may enable it to dismantle itself peaceably country by country rather than leaving an ugly mess behind like the Soviet Union or Yugoslavia on its demise.

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General Electric, China and an erstwhile remainer with regrets

On 1st July, barely a week after the Brexit vote, the FTSE-1oo index of leading shares touched its highest point in over six months.

The pound may still be down by 10% against the US dollar and some banks are suspending lending to buyers of commercial properties in London, but not everyone is gloomy. John Mills, a CIB Committee member, has long argued that the pound is overvalued and that UK exporters have been struggling in consequence. Furthermore Arcadis, a construction consltant, predicts that the London property market will actually boom once the dust has settled.

Furthermore, following on from noises from Australia and New Zealand about improving trade links with  a newly-independent Britain, Chinese officials, frustrated with their lack of progress in getting the EU round the table, have apparently been discussing the possibility of lauching trade talks with our country too.

As for those job losses with which we were threatened, Mark Elborne, the head of the American manufacturing giant General Electric, reaffirmed his belief that the UK will remain an attractive country for investors.

General Electric employs some 22,000 staff in the UK and Mr Elborne recently praised “the UK’s ‘strong export mindset’ and attractive domestic market”, described Britain as “a good place to do business” and “a good place to run a business from”. Interestingly, these comments come from a man who backed  “remain” during the referendum period.

Another “remainer” who has made some interesting comments is Mark Piggott. Writing in The Spectator, Mr Pigott says that he now wished he had voted leave.  It has been the attitude of remainers to losing the referendum which has prompted the re-think:- “As the week progressed, and demonstrators with radical piercings marched on Parliament in solidarity with EasyJet and George Osborne, I found my mood change. As one Guardian commentator after another dismissed the opinion of the poor, the old, the white, the uneducated, I began to wonder if the Leavers hadn’t been right all along. Perhaps the Remain side were out of touch with what much of Britain thought.”

More appalling than the predictable racist claim has been the dismissal of older voters as reactionaries, wreckers of our children’s future“, he continues. “As if ‘older’ people, who’ve worked, paid taxes, brought up children in far tougher times, shouldn’t have a say and that the young, many of whom couldn’t be bothered to vote, should have their non-votes registered.

Then came the petitions. Remainers calling for the referendum to be ignored, or worse, re-run, revealed themselves to be the enemies of democracy. How many of them would tolerate similar calls from the Leave camp if the vote was reversed?

Actually, I think we’d win a re-run.  While I came across a few young zealots wearing their “In” t-shirts, I recall being quite shocked to observe that in one debate in which I took part, the handful of self-identifying “remain” people handing out literature were all older than me unless, that is, their support for the EU has caused them to age prematurely!

Leavers showed passion and commitment. They worked their socks off and would do so again. Would all the Generation Snowflake students who have been demonstrating about the vote during these last two Saturdays be willing to dig in for the long haul of a gruelling campaign stretching out several months? I’m not so sure.

Furthermore, whoever the next Prime Minister is, he or she would not be using the full weight of government machinery to support remain and the Leave side would surely not be so foolish as to enter a second campaign without a decent exit strategy.

Nonetheless, in view of the widespread publicity given to some leave voters who now regret their decision, the candour of Mr Piggott has been refereshing. In view of the positive prospects for the UK economy and the length of time needed to call a further referendum, however, the likelihood of a second ballot looks remote, especially as one of its leading advocates, the former Prime Minister Tony Blair, has had his last shred of credibility ripped apart by the publication of the Chilcot report.

Photo by JefferyTurner

Our Chairman’s letter to the Derby Telegraph in the aftermath of the referendum

Sir,

I am astonished at the downbeat response from many industries about the decision to leave the EU.

They appear to have been deliberately misinformed by the government – and to have swallowed it!

Around three quarters of EU legislation is geared to nudging us ever nearer to the Single European State – a country called Europe. That is the main purpose of the EU – “Ever Closer Union”.

The remaining 25% relates to trade regulation of the European Single Market, the only part of the EU project in which industry is interested. Arrangements already exist for non EU member countries to be in the Single Market without being in the EU political project. It is called the EEA – European Economic Area – the “Common Market” part of the project.

You can Google the detailed plan for continued participation in the Single Market. It is called “ FLEXCIT” . There are two versions – a forty eight page pamphlet and the full policy which extends to some 420 pages.

One objection to this policy is that the EEA involves the acceptance of the principle free movement of people. But, under Article 112 of the agreement, EEA member states can unilaterally impose restrictions when they experience excessive immigration. They do not have to ask anybody’s permission.

Another development which the government failed to mention is that most new business regulation is now global and comes from bodies like UNECE (United Nations Economic Commission for Europe) which, for instance, sets the standards for motor vehicles. Whilst there is an EU Directive about this, it was not made in Brussels but merely transcribed from what UNECE agreed in Geneva.

As an EU member Britain has no voice at the real “top table” in Geneva. As an independent country, it will be able to influence matters there.

So there is every reason to look forward to a period of greater British influence in the way world trade is regulated.

Yours faithfully

Edward Spalton

The UK’s liabilities to the financial mechanisms of the European Union

Independent research, commissioned by the Bruges Group from acknowledged expert in this field Bob Lyddon, shows that the true extent of the UK’s potential exposure to the European Investment Bank (EIB), European Central Bank (ECB) and EFSM (European Financial Stabilisation Mechanism) is over £80 billion. If the crisis in the Eurozone continues this already high figure could increase massively. Far from Brexit being an economic disaster, as Mr Osborne has claimed, it could be hugely beneficial, extracting us from a large potential black hole.

The UK carries huge financial liabilities as an EU Member State, liabilities that could translate into calls for cash far higher than our annual Member cash contribution. These are created through various funds and facilities of the EU itself, and through shareholdings in the European Investment Bank and the European Central Bank. Each of these bodies engages in financial dealings on a large scale, with the Member States acting as guarantors for sums borrowed. The main recipients of funds are the Eurozone periphery states: Italy, Spain, Greece, Portugal and Ireland.

The UK, being one of the largest and most creditworthy of the Member States, is looked at as one of the guarantors most able to stump up extra cash as and when demanded, demanded, that is, by a Qualified Majority of Member States with no unilateral right of refusal. Such calls can be expected if another crisis blows up in the Eurozone.

The UK’s leaving the EU would relieve us of these considerable risks and liabilities. This independent research shows that Britain should leave the European Union. To download it, please click here.