“If we can’t agree by [15 October], then I do not see that there will be a free trade agreement between us, and we should both accept that and move on,”
– Boris Johnson, 7 September 2020.
“There are huge opportunities for a sovereign independent UK to cut free trade deals very quickly with Canada, Australia, New Zealand, the USA, people who are not going to be demanding that they have a say over how we legislate in our parliament and the laws and regulations we have to bring in and that those will more than compensates for the benefits of being able to trade in the single market.”
– Andrew Bridgen MP, 15 October.
“With high hearts and with complete confidence we will prepare to embrace the alternative and we will prosper mightily as an independent free trading nation controlling our own borders, our fisheries and setting our own laws.”
– Boris Johnson 16 October.
“Businesses are doing what they can to prepare for Brexit. But firms face a hat-trick of unprecedented challenges: rebuilding from the first wave of COVID-19, dealing with the second and uncertainty over the UK’s trading relationship with the EU. That’s why more than three quarters of UK firms say they need a deal, quickly. With each day that passes, business resilience is chipped away. A swift deal is the single most effective way to support recovery in communities across Europe. After four years of debate, there must be a resolution. 2021 can then be a year to rebuild, rather than regret.”
– Joint statement from CBI and 71 Trade Associations representing 7 million employees, 18 Oct
When a major crime is committed in plain sight, it is a very British thing to walk past with a “nothing to see here, let’s move along” look on the face. We simply don’t want to get involved.
What this government is doing at the moment is a serious crime against the British people and the economy. They know it but they lie through their teeth about it, and hope that because of the pandemic we will either not notice or we will give them the benefit of the doubt because “we must pull together” and, they will tell us, at the end of the day it is the will of the people, not the government’s fault, that the country should be made poor and cut itself off culturally and economically from all its nearest neighbours.
Of course, without exception, all Tory MPs feel bound to collude in this, ranging from rabid and unthinking ERG members like Andrew Bridgen to some former moderate one-nation Tories closer to home here in Oxfordshire. Why? Firstly, because a condition of standing in the December election was committing to support Johnson’s Brexit policy.
Secondly, because having voted for the manifestly illegal Internal Market Bill and the economically damaging Agriculture Bill, they have dipped their fingers in the blood and frankly anything after that would seem mild in comparison (or maybe not?, Who knows what is still to come?). So now, of course, if they want to survive at all in politics, they must wake up every morning and repeat to themselves a big lie: For those who voted remain that the referendum result is more important than their own conscience. For those who voted leave everything that happens proves how malicious the EU is and that we must part company with it.
And, this being so, it does not matter how intense the howls of pain are from industry, farmers or the healthcare sector. All of this is just called “project fear” and it must be resisted on principle. If asked for specifics, these MPs would mutter something about solidarity with our 12,000 fishermen and women, rather than focus on saving the automotive sector, aerospace, agriculture and services, which are worth together well over 300 times as much as fishing. The new term ‘Pescismo’ hits the nail on the head.
British Industries’ Dire Warnings
So, in the spirit of looking the other way, much of British industry has spent the last few months hoping against hope that the government would see sense at the last minute and agree a deal that would at least potentially stand in the way of annihilation for manufacturing and the service sector. What is striking is not that they have now come together and made a clear statement on the danger of no deal, but that it has taken them this long to do so. It really is now the 11th hour and beyond.
This week’s statement comes from the full spectrum of British business, including automotive, building, haulage and agriculture. It could not be clearer about the harm that will follow if January 1st is allowed to pass without a deal. And it is no good saying that a deal will come later. That may well happen, but business has to make hard choices in the meantime and cannot proceed on the assumption that anything would be agreed soon.
Most new trade deals, eg EU/Canada, which Johnson never tires of referencing, take many years to negotiate. In circumstances where both parties are starting from a position of mutual distrust, it can only be worse. And business cannot give the government the benefit of the doubt. It will have to start disinvesting on the worst-case assumption.
Even the skeleton of a deal at this point, on the other hand, will be an indication of goodwill and a sign that momentum has not been lost. It will not stop non-tariff barriers, or the need to employ 50,000 new customs officers, the need for 200 million new forms to be completed per annum or the likelihood of 7,000 lorries queuing to cross at Dover (Michael Gove’s own admission). But it may at least mean that the door is open to better things. But by common consent it must happen in the next 2 weeks or it will be too late. Brinkmanship can lead to tears.
How can the country possibly have dug this appalling hole for itself? And why? The classic Brexiter answer to that question is “because people voted for it”. And yet even the most deluded and bone-headed member of the ERG must every now and again have a niggle of doubt whether people really voted to cause chaos and make themselves this much poorer. At any event, even if we accept that the government has an obligation to carry out the referendum mandate, that really was limited to “UK leaving the EU”. That has now happened. The mandate is executed and is history.
We need to consider that chapter closed and begin anew, planning for the future and taking account what is best for the country. At no point, for example, did people vote to leave the single market and customs union, that was an inference made by May and Johnson in the total absence of evidence. The referendum did not state what should happen after 1st January, not even how long the UK should stay outside the European Union.
This mantra of the People’s Will seems to have supplanted in some people’s minds the notion of “Open Britain”. Today there seems to be something ironic and indeed sleazy about the kind of thing that Johnson and Bridgen say above. They’re telling us that somehow Britain can thrive after cutting its links with the world’s largest economic union, where currently about half its exports go, and replacing that with markets outside Europe, all by definition far away.
The Real Balance of Trade!
The facts are these: Of the G7 economies, i.e. the most economically powerful countries, three are in the EU and three, excluding Britain, are outside it. Excluding the black market, global GDP is £67.4 trillion, i.e. £67,400,000,000,000, according to the World Bank (2019 figures). The EU (without UK) makes up about £11 trillion, i.e. 17% of the total. Of the remainder over 60% is made up of 4 countries, USA (24.6% of global GDP), China (16.4%), Japan (5.9%) and India (3.3%). Note that the top 4 do not include any of the much vaunted ‘white commonwealth’ countries of whom people like Bridgen seem so keen.
Presumably, then, it is fundamental to the Brexiteers’ dream to have an increased ability (above and beyond that which we had already as EU members) to trade with those 4 countries. So is that realistic? Can a pig fly?
Whoever wins the American presidency, any trade deal with the USA will not get past Congress unless it protects the Good Friday Agreement. The Internal Market Bill has made it clear that HMG is not committed to this, and if it is put into effect it will almost certainly make a US trade deal impossible. We will continue to trade with the USA on the same terms as before, which will be considerably inferior to those which are currently being negotiated between the USA and EU. And, of course, if Biden wins, which I’m sure every reader of this blog sincerely hopes, Johnson’s gamble will not have paid off and the administration, as well as Congress, will take a punitive view of any attempt to throw Ireland under the bus.
In the case of China, I need only remind you of Huawei. We may well approach China with the begging bowl in our hands and still get a slap in the face because the Chinese are in a position to insist that trade takes place on their terms, and they can almost certainly afford to be more demanding with a weakened Britain than they will with the EU. There is a serious risk of the relationship between the China and the UK being like that between a dog and a lamp post, and we are not the dog.
As for Japan, the new PM, Mr Suga, will take a long time to forgive the UK for its treatment of the Japanese car industry, after Nissan, Toyota, Honda and others had invested massively in the UK as a base for exports to the EU, and been badly burned by the barriers to trade wantonly erected by the UK government. The government may argue that it has agreed a trade deal with Japan, but it is really no better than the EU/Japan deal, and incorporates concessions on state aid, something which the UK has declined to offer the EU.
In the case of India, which has now displaced the UK as the world’s 5th largest economy thanks to Brexit, Mr Modi has already made clear that there will be conditions attached to any favourable trade deal, in the form of free movement of people, which, we will all remember, was one of the Brexiteers’ red lines.
|GDP £Trillion||% of global GDP|
|Rest of the world||18.6||27.6%|
Trade with the EU, USA, China, Japan and India is therefore in various ways problematic. What about the rest of the world? This is 29.7% of global trade, spread across 158 relatively small economies, mainly at considerable distance. They range from Brazil (2.1% of global trade and 5,000 miles away) to Tuvalu (0.0001% of global trade and do you really care how far away?). Do we really want to use our scarce resources tediously to negotiate trade deals with them one by one? The government may well tell you that it has achieved trade deals with the Faroe Islands and Switzerland, but the fact that they even bother to tell you this smacks of desperation and pathos.
To those who think that trading on World Trade Organisation (WTO) terms, i.e. almost uniquely having no bespoke trading agreements with any other country, will be a walk in the park, I would challenge them to identify one single current or former director-general of the WTO who sees it as anything other than disastrous. In short, our Prime Minister has just told us he is walking away from negotiations which might have mitigated the disaster of Brexit, so he is by common consent throwing British industry and agriculture under the bus, all for the dream of creating a “global Britain” which is based on nothing but fantasy. We must speak out and do all we can to make sure thbis never happens.