In or out?

[Nick]

Latest post of the previous page:

BTW, I do find that checking different information sources does provide conflicting information over, eg, how much food comes from the EU vis-a-vis the rest of the world

Perhaps you might like to consult your "different information sources" for any evidence of an impending 80% tariff on meat and dairy! And no, I don't think Dunt can be taken as a relable source of much at all. ;)

BTW, did you catch up with the MV=PT thread?

[Alan H]

May heads for autumn showdown as countdown to Brexit begins

The fragile Tory truce on Europe is also partly founded on the fact that local elections are looming on May 3, when the party is expected to be trounced in London, a Remain bastion where hundreds of thousands of EU citizens are entitled to vote.

Pro-Remain Tories do not want to be blamed for the expected electoral disaster but will argue after the event that voters were punishing Mrs May for flirting with a hard Brexit. “It’s a case we will make”, says one. Another adds: “We are waiting to be trashed.”

But most Conservative MPs are willing to let Mrs May negotiate through the summer and early autumn: the key moment would come when she returns with an agreement, possibly after the EU summit on October 19.

[Alan H]

11 Brexit promises the government quietly dropped

Leaving aside the £350m for the NHS, Brexit has promised quick and easy trade deals with the EU and the rest of the world, an end to ECJ jurisdiction and free movement, and British control of North Sea fishing. None of this has come to pass. Here are 11 key abandoned claims

With the £350 million a week for the NHS promise, that makes 12 big fat juicy Brexit lies...

[Alan H]

A year into Article 50, unreality permeates Brexit

A year ago I wrote about the bleak and bitter day for our country when the Article 50 process was initiated. A year on, most of what I wrote in that post still holds true but of course there have also been some momentous developments including the bizarre Brexit election that didn’t discuss Brexit and its outcome, the phase 1 agreement and, most recently, the draft transition agreement. Now, half-way through the Article 50 period, we might expect the story to be one of Brexit becoming ever more real. Instead, a strange air of unreality predominates.

As to what will happen in the next year, who would care to predict? In a previous post I suggested that the agreement of a transition period makes it more likely that we drift to Brexit with no political or economic crisis until it becomes a fait accompli and we have left, albeit on unknown terms. I am not so sure of that since the new allegations about the Vote Leave campaign. There is probably not quite enough, yet, to decisively shift events but it won’t take many more revelations to do so. What happens then is difficult to anticipate, but the momentum to Brexit is egg-shell thin and the slightest crack could be enough to embolden our still cowed parliamentarians and to transform public opinion.

Ironically, the most encouraging event as this first year of Article 50 ends was a speech by Jacob Rees-Mogg (these are not words I ever expected to write), in which he expressed his outrage at the possibility that Brexit might not happen. That Rees-Mogg is outraged is not of any great note (the ‘man bites dog’ story would be if he were ever to be anything else). What is remarkable is that, half-way through the Brexit process, he recognizes that it may yet be abandoned. His fears are, for those of us who are opposed to Brexit, our hopes. But he is right to say that if they are realised there will be an almighty political car crash, and if it happens the outcome won’t be a return to the day before the Referendum or before the Article 50 letter. Whatever happens now none of us, whether leaver or remainer, is going to ‘get our country back’.

[animist]

BTW, I do find that checking different information sources does provide conflicting information over, eg, how much food comes from the EU vis-a-vis the rest of the world

Perhaps you might like to consult your "different information sources" for any evidence of an impending 80% tariff on meat and dairy! And no, I don't think Dunt can be taken as a relable source of much at all. ;)

BTW, did you catch up with the MV=PT thread?

if you read what I said, I don't think any tariff increase is "impending" but might be possible if there is no deal with the EU. Have you actually accepted or considered that? You give the impression of not understanding much about the WTO and its rules - which is not surprising, as I doubt that many on both sides of the debate do either - very worrying, given the way the extreme Brexiters bandy the WTO rules about as though it were some easy option. But you really should read Dunt on this vitally important topic before dismissing him

As for the MV+PT thing, checking on WIki reminded me that it is a theory, the Quantity Theory of Money, which is not universally accepted as true. I might reply on that thread

[Alan H]

This Brexit thingy is all going tickety-boo, isn't it? Here are the banks moving thousands of U.K. jobs because of Brexit

[Alan H]

This Brexit thingy is all going tickety-boo, isn't it? Why Trump's 'predatory' plan to exploit Brexit makes a US-UK trade deal almost impossible

Experts say Trump's global trade war makes a UK-US Brexit trade deal almost impossible.

"[The US] believes the UK needs free trade deals and so is in a weak position. The US is maximising its leverage to exploit that weakness," said Dr Tom Wright, director of the Center on the United States and Europe.

Britain's ability to forge a trade deal with the US is seen as a crucial test for Brexit, and for the country's capacity to forge its future as an independent trading powerhouse.

[animist]

Straw man

not a straw man because not an argument, just an introductory comment!

He's making a specific claim, which is untrue, and then attacking it. Classic straw man tactics.

what claim? (Actually your definition of a straw man is a bit odd - surely you mean "irrelevant" not "untrue")

Nope. What he has said is that tariffs on those items, on imports from outside the EU are of that order. (I seem to remember him saying 20%, but ho hum...)

and the difference is?

That JRM (and others) were not saying tht 21% would be saved from imports from the EU, but only from outside.

you have lost me here. We don't pay tariffs on EU goods, so presumably all the tariffs are on those from outside??

... because they are addressing a differeso nt question.

which is? Are you arguing with the IFS or with Dunt? Let us get this out of the way first, can we? Dunt may not be an economist in your eyes, but the IFS is very much a respected organisation

I am saying that the IFS is being misrepresented by Dunt. ISTM he doesn't see the difference.

have you read the IFS paper? What is the difference between it and Ian Dunt? I have not read it myself but looked at the summary, which seemed to saying what Dunt was saying

This is largely because of uncertainty, not fundamentals. Furthermore, in the light of our continuing, and rather serious balance of payments deficit, this may well be a jolly good thing! It way well boost employment, import substitution and exports.

yes maybe, but that is not the issue here is it? We are talking about prices facing UK consumers, are we not?

We are talking about whether it is a good or bad thing overall. If a balance of payments crisis harms Britons, then that is a lot worse than a one off fall in sterling, which may in future be reversed. Just ask the Greeks (whom you, as a good Remaner) seem determined to blot out of your memory! )

but surely it is falls in sterling which avoid the sorts of BOP crises we suffered under fixed exchange rates. I doubt whether sterling will recover - obviously, since I think that the future will be one of continuing uncertainty

So what is a "good" echange rate? There's no such thing, in and of itself. Only in terms of what benefits the UK citizens. And there is a huge difference between general everyday variations and sudden uncertainties caused by shock

I don't know exactly what a good rate is, but a seriously falling exchange rate, which I feel is the future post-Brexit, is NOT good, surely. Exports have increased since the referendum, but are they seriously closing the BOP gap?

no indeed, but it may not be worth the costs to employment and so on.

So why would a cut in tariffs lead to higher unemployment?

it wouldn't, but what I meant was that this idyllic future that you propose will have been obtained via Brexit and loss of the access to the Single Market which we currently enjoy, and THAT is likely to lead to higher unemployment

You constantly point out the threats which immigration pose to society despite its economic benefit, but the costs of free trade seem a lot more obvious - a very strange sort of doublethink and special pleading

What costs of free trade? And how is it comparable with the arbitrary change in asset prices caused by immigration which hit the poor so very very hard. Never mind a couple of percentage points, we are talking tens of percentage points!

but - and I assume that you mean house prices - this is a matter which government could and should tackle by increasing housing supply. Government can deal with housing shortages, but it cannot easily increase the number of economically active members of the UK population, and that is a demographic problem affecting not just Britain but much of the rich world. Yes, population growth, whether from immigration or not, is obviously going to increase pressure on housing prices, but then, the consensus is that we need immigation because we are an ageing population with too many oldies - like me, and your good self in good time!

This flies in the face of 200 years of economic thought. There's a Nobel prize awaiting if he can make that one stick!

I really don't know whether all costs are passed on, but can you justify what you say?

As Alan has said so often, its not for me to justify, it's for Dunt. He doesn't. But at its simplest, if a reduction in tariffs wouldn't reduce prices by a corresponding amount, why don't the suppliers increase their prices now, since by doing so, they would increase their marginal revenue, even if sales fell by volume. It's all to do with the slope of the curves. So! Evidence please!

I cannot provide proper evidence, but I remember that soon after the referendum, supermarkets were attempting to shield consumers from the fall in the pound by taking the shock themselves. God, Nick, you really believe this stuff about curves, don't you?

So if it's "plenty", this shows that the impact of tariffs is, in fact, substantial, the opposite of what you were asserting a moment ago.

surely he is talking about two different things: the impact of tariff removal on import prices, and the impact on employment

...which are linked.

in some way no doubt, but it does not follow that a significant adverse effect on employment needs a significant fall in import prices - simply because we live in an economy which is in a sense competitive and in which marginal changes in prices can have substantial effects on decision making. If domestic producers are believed to be unable to compete with foreign ones on a continuing basis, then decisions may well be made which will affect investment in those industries, and hence employment.

Secondly, it makes no allowance for their ability to afford more of our imports, which would create employment

maybe, but how much of this dividend would come to us?

Certainly exports need to be wn, but a sure way of losing exports is to protect your own market, thus stifling competition and innovation, which is what tariffs do.

cloud-cuckoo-land thinking. Look, I read enough of Paul Samuelson all those years ago to be convinced that in cloud-cuckoo-land we would all be better off without tariffs. I happen to think that Ian Dunt's argument, in his book rather than the article, has some merit - this is to the effect that for Britain to unilaterally drop all tariffs is equivalent to a duellist dropping his gun and then challenging his opponent to fire!

Thirdly, if our producers are only sustained by tariffs, that demonstrates that they should, in fact, be doing something else anyway. Tariffs destroy jobs overall, they don't create them. We learnt this when we abolished the Corn Laws.

did we?

Yes, yes, yes!!!

good in every way. But it is a very very old lesson. I am amazed that you have delved so far back, but well done, and I do not dispute that reducing tariffs increase employment and income OVERALL

BTW, I don't have any personal attachment to tariffs, I just doubt that Brexit is the way to remove them -

How can we remove tariffs imposed by the EU without leaving? We've suffered their tariffs for decades, and haven't been able to shift them. Cameron demonstrated they remain fundamentally deaf to reform.

I dunno about the EU and tariffs. I think that they are bothered about them, but tariffs are less important than other impediments to trade, and the EU have gone far in this direction. They have also concluded many deals with other countries, and given some concessions to poorer producers. Not enough, I'm sure. But look, you here seem to move towards a very unpatriotic concern about poorer countries. As I have said on TH many times, Britain will not be thinking about benefiting poor countries when and if we leave the EU. Can you not see the limitations of economics? All sorts of interests will come to the fore to protect their interests (we already see the disappointed fishing industry doing this, and Brexit is nowhere near yet even happening!). It will be chaos, with social and political strife due to the disappointed hopes of those millions who, we are constantly reminded, voted to leave in the largest number ever to vote in a British political contest, and the last people to benefit from this chaos will be the poor producers. The EU, in contrast, is rich enough to survive an inconvenience like Brexit.

Please read the latest Brexit Blog, which discusses something I have already mentioned on TH: the strange bedfellows among the Leave votership of Little Englanders who want their jobs protected and the Hannan-type extreme globalists.

No more than the strange bedfellows on the left. Have you taken a good look at your fellow travellers...?

just so irrelevant - and anyway, this is not a left-right matter. Look, it really does not matter if rich bankers voted Remain. A vote to stay in the EU was kind of a non-vote because it simply said, no change - a bit like if I decide NOT to spend any money I have on some expensive holiday or a golden gambling craze. The vote to leave, in contrast, has already opened huge cans of worms, whether economic, political, or social. Are you blinded with your pet topic of economic theory?

This is just plain ridiculous! We import huge amounts of stuff we also produce ourselves! One obvious example: cars. Drivel!

well, surely this depends on what one calls a product. "Cars" is rather a large general term for items which are very much different branded products

Of course, but there is substitution between them, isn't there? Dunt seems to think there isn't!

I do not think that is the case, and if you read his book you'll see that he recognises that expensive car brands will still be bought by those who want them and can afford them, despite tariff increases due to Brexit

Completely ignoring the benefits of an increase in trade!

because these are unknowable

Imprecise, yes, and individually yes, but collectively, and pari passu, they are knowable. Just look at the growth (and recent stalling) of international trade. Practice backs up the theory.

What theory and practice? I think you mean "undisputable" rather than "knowable". Of course there will be some benefit, but how can we know what a unilateral abolition/reduction of tariffs will produce? Dunt's book makes the point that unilterally doing this free trade thing is like throwing down your gun and demanding that the other side surrender! Surely the experience so far is that it is multilateral concessions on trade (as with nuclear weaponry) that produces results

You have got the wrong end of the stick here - Dunt has mentioned certain things as politically unlikely (ie substantial tariff reductions on goods we produce), which makes the possible savings from the remainder rather small - not hard to grasp. Obviously the savings are greater if Britain does sacrifice certain industries than if it does not.

Dunt is saying things in order to suit his narrative, not because of evidence. The government is gung-ho for tariff reduction and trade deals with everyone. Of course, the EU seem to be threatening us, in ce we might succeed, but that's just an illustration of their nasty bullying tactics, with which I have no desire to be associated with!! Nor are we "sacrificing" industries! To believe that is to misunderstand comparative advantage and promote the ossification of the economy which has hurt French employment so hard, and put crippling barriers in the way of the developing world.

I cannot be bothered to get into another spat about the EU. Really does not matter how gung-ho the Government is about deals outside the EU since it takes two to make a deal. You continually misunderstand me because of your narrow obsession with economics: when I talk about "sacrifice" I was talking about the fishing industry, which because of its smallness may well be sacrificed in a deal with the EU in order to save other industries - absolutely nothing to with comparative advantage, it is all politics and not economics

I agree that Trump is a loon, but the trend is still clear; that's what all the trade rounds (Doha, etc., ) are all about. As for The Donald, a) he can't last for ever, b) the tariffs haven't been imposed yet (but are causing uncertainty, see above) and c) are (at least I hope so!!) aimed at trying to get China to play fair (which it isn't up until now). A high risk strategy, not one that I would recommend at all, but.... you never know!

omigod, how can you be so naive and complacent? Trump will be there for at least the Brexit transition period, and his ideas seem to have awakened a certain nativism in US public opinion, so his approach may well survive him. When the US goes against the "trend" is there any great "trend" left?

[Nick]

That's a long and detailed reply! TVM!

not a straw man because not an argument, just an introductory comment!

He's making a specific claim, which is untrue, and then attacking it. Classic straw man tactics.

what claim? (Actually your definition of a straw man is a bit odd - surely you mean "irrelevant" not "untrue")

Straw man does depend on irrelevance. In this case, he is set up a claim, which was untrue, and then tried to demolish it. Since it was untrue, then any such argument is irrelevant. If you'd prefer to call it something else, then I'm cool with that. (The claim was "For the last few weeks, senior Brexiters have had a very specific script")

and the difference is?

That JRM (and others) were not saying tht 21% would be saved from imports from the EU, but only from outside.

you have lost me here. We don't pay tariffs on EU goods, so presumably all the tariffs are on those from outside??

Indeed, but ISTM, that is what Dunt was claiming JRM believed.

which is? Are you arguing with the IFS or with Dunt? Let us get this out of the way first, can we? Dunt may not be an economist in your eyes, but the IFS is very much a respected organisation

I am saying that the IFS is being misrepresented by Dunt. ISTM he doesn't see the difference.

have you read the IFS paper? What is the difference between it and Ian Dunt? I have not read it myself but looked at the summary, which seemed to saying what Dunt was saying

Haven't read the paper itself, but ISTM Dunt is taking the overall effect (as cited by the IFS) and claimed that is the marginal effect of the changes.

yes maybe, but that is not the issue here is it? We are talking about prices facing UK consumers, are we not?

We are talking about whether it is a good or bad thing overall. If a balance of payments crisis harms Britons, then that is a lot worse than a one off fall in sterling, which may in future be reversed. Just ask the Greeks (whom you, as a good Remainer) seem determined to blot out of your memory! )

but surely it is falls in sterling which avoid the sorts of BOP crises we suffered under fixed exchange rates. I doubt whether sterling will recover - obviously, since I think that the future will be one of continuing uncertainty

We disagree. We'll just have to wait and see. Of course, what neither of us will know is what would have happened under any alternative scenario.

So what is a "good" echange rate? There's no such thing, in and of itself. Only in terms of what benefits the UK citizens. And there is a huge difference between general everyday variations and sudden uncertainties caused by shock

I don't know exactly what a good rate is, but a seriously falling exchange rate, which I feel is the future post-Brexit, is NOT good, surely. Exports have increased since the referendum, but are they seriously closing the BOP gap?

Yes, together with import substitution, that is indeed what's happening. And I see no reason why the exchange rate should necessarily continue to fall, just because of Brexit. If that were true, then we would see the Euro continuing to strengthen against all other countries, which clearly isn't the case. And note, the recent strengthening in the Euro is as much the result of their appalling past performance as any current strength.

no indeed, but it may not be worth the costs to employment and so on.

So why would a cut in tariffs lead to higher unemployment?

it wouldn't, but what I meant was that this idyllic future that you propose will have been obtained via Brexit and loss of the access to the Single Market which we currently enjoy, and THAT is likely to lead to higher unemployment

...except that the supply of labour will not be as bountious as before.

You constantly point out the threats which immigration pose to society despite its economic benefit, but the costs of free trade seem a lot more obvious - a very strange sort of doublethink and special pleading

What costs of free trade? And how is it comparable with the arbitrary change in asset prices caused by immigration which hit the poor so very very hard. Never mind a couple of percentage points, we are talking tens of percentage points!

but - and I assume that you mean house prices - this is a matter which government could and should tackle by increasing housing supply.

Yes, I did mean house prices. Unfortunately, people rather dislike that suggestion overall. NIMBYism is a real thing.

Government can deal with housing shortages,

...but haven't...

but it cannot easily increase the number of economically active members of the UK population, and that is a demographic problem affecting not just Britain but much of the rich world.

It's done so in recent years, perhaps at the expense of growth, so there's some scope for improvement. But can we in all honesty continue by depriving the rest of the world? When all it does is to kick the can down the road for a generation?

Yes, population growth, whether from immigration or not, is obviously going to increase pressure on housing prices, but then, the consensus is that we need immigation because we are an ageing population with too many oldies - like me, and your good self in good time!

We can choose to allow carers in if we want to, but it doesn't resolve the problem in the end, does it?

I really don't know whether all costs are passed on, but can you justify what you say?

As Alan has said so often, its not for me to justify, it's for Dunt. He doesn't. But at its simplest, if a reduction in tariffs wouldn't reduce prices by a corresponding amount, why don't the suppliers increase their prices now, since by doing so, they would increase their marginal revenue, even if sales fell by volume. It's all to do with the slope of the curves. So! Evidence please!

I cannot provide proper evidence, but I remember that soon after the referendum, supermarkets were attempting to shield consumers from the fall in the pound by taking the shock themselves. God, Nick, you really believe this stuff about curves, don't you?

Yes Short term loss leaders by supermarkets, eh? Doesn't last.

surely he is talking about two different things: the impact of tariff removal on import prices, and the impact on employment

...which are linked.

in some way no doubt, but it does not follow that a significant adverse effect on employment needs a significant fall in import prices - simply because we live in an economy which is in a sense competitive and in which marginal changes in prices can have substantial effects on decision making. If domestic producers are believed to be unable to compete with foreign ones on a continuing basis, then decisions may well be made which will affect investment in those industries, and hence employment.

Certainly, in the short term but that is how economies grow, by getting people to move to other economic areas where they are needed. Or should we have protected the jobs of telephonists, say? If technology had remained at 1945 levels, BT would have to employ every single school-leaver! Great for employment, but....!

maybe, but how much of this dividend would come to us?

Certainly exports need to be won, but a sure way of losing exports is to protect your own market, thus stifling competition and innovation, which is what tariffs do.

cloud-cuckoo-land thinking. Look, I read enough of Paul Samuelson all those years ago to be convinced that in cloud-cuckoo-land we would all be better off without tariffs. I happen to think that Ian Dunt's argument, in his book rather than the article, has some merit - this is to the effect that for Britain to unilaterally drop all tariffs is equivalent to a duellist dropping his gun and then challenging his opponent to fire!

ISTM that Dunt is defending tariffs as a suitable policy in the long term, without seeking to make trade freer. Not good.

did we?

Yes, yes, yes!!!

good in every way. But it is a very very old lesson. I am amazed that you have delved so far back, but well done, and I do not dispute that reducing tariffs increase employment and income OVERALL

I went that far back, not to demonstrate my knowledge, but because it is such a good, and such an early example. It's an old lesson!

BTW, I don't have any personal attachment to tariffs, I just doubt that Brexit is the way to remove them -

How can we remove tariffs imposed by the EU without leaving? We've suffered their tariffs for decades, and haven't been able to shift them. Cameron demonstrated they remain fundamentally deaf to reform.

I dunno about the EU and tariffs. I think that they are bothered about them, but tariffs are less important than other impediments to trade, and the EU have gone far in this direction.

Not nearly far enough! Not only have they failed to achieve free trade within the EU in services, but their ever increasing regulations continue to throttle trade, besides their anti-free trade practices (French passports for example).

They have also concluded many deals with other countries, and given some concessions to poorer producers. Not enough, I'm sure. But look, you here seem to move towards a very unpatriotic concern about poorer countries.

So concern for my fellow human is "unpatriotic" is it? You little Englander, you! Besides which, it should be a benefit for both; it's not a zero sum game.

As I have said on TH many times, Britain will not be thinking about benefiting poor countries when and if we leave the EU.

We'll see, won't we? Would you vote to cut our UN level overseas development budget? (Which precious few of the EU manage).

Can you not see the limitations of economics?

Certainly! That's one reason I am pro-Brexit!

All sorts of interests will come to the fore to protect their interests

...and should be resisted!

(we already see the disappointed fishing industry doing this, and Brexit is nowhere near yet even happening!).

Rather rich, when you think of how effective they have been in protecting their intrests in the last 45 years! (More to say, but elsewhere, maybe...)

It will be chaos, with social and political strife due to the disappointed hopes of those millions who, we are constantly reminded, voted to leave in the largest number ever to vote in a British political contest, and the last people to benefit from this chaos will be the poor producers.

So where is the social and political strife at the moment? In the UK or on the continent?

The EU, in contrast, is rich enough to survive an inconvenience like Brexit.

They haven't decided how to replace the UK's contribution yet, have they...?

Please read the latest Brexit Blog, which discusses something I have already mentioned on TH: the strange bedfellows among the Leave votership of Little Englanders who want their jobs protected and the Hannan-type extreme globalists.

No more than the strange bedfellows on the left. Have you taken a good look at your fellow travellers...?

just so irrelevant - and anyway, this is not a left-right matter. Look, it really does not matter if rich bankers voted Remain. A vote to stay in the EU was kind of a non-vote because it simply said, no change - a bit like if I decide NOT to spend any money I have on some expensive holiday or a golden gambling craze. The vote to leave, in contrast, has already opened huge cans of worms, whether economic, political, or social. Are you blinded with your pet topic of economic theory?

It amuses me how Remainers on the left play the economics card, right up until it means that they will have to abandon some of their economic principles! Still, it's nice they are now caring about bankers in the City! ut in the fina analysis, I voted for Brexit because I beieve the structure of the EU is fundamentally flawed, is incapable of reform, and will end badly, not because the UK will profit in the shoort term. But economic theory is nevertheless important in evaluating what is likely to happen.

well, surely this depends on what one calls a product. "Cars" is rather a large general term for items which are very much different branded products

Of course, but there is substitution between them, isn't there? Dunt seems to think there isn't!

I do not think that is the case, and if you read his book you'll see that he recognises that expensive car brands will still be bought by those who want them and can afford them, despite tariff increases due to Brexit

Then he's a clot! No-one says no cars will be bought, but fewer! Fewer people will want them, both because of worsening affordability, and because other alternatives will be relatively cheaper.

because these are unknowable

Imprecise, yes, and individually yes, but collectively, and pari passu, they are knowable. Just look at the growth (and recent stalling) of international trade. Practice backs up the theory.

What theory and practice?

That increases in world trade yields higher growth.

I think you mean "undisputable" rather than "knowable".

No. What I was driving at was that it is in practice unknowble if person A will respond in a particular way (income & substitution effects, for example) but we can make reasonable guesses in aggregate.

Of course there will be some benefit, but how can we know what a unilateral abolition/reduction of tariffs will produce?

There are some who go for a unilateral abolition of tariffs, but most Brexiteers think it is more that a desire for tariff-free trade is a good thing, whereas much of the EU (not least large sections of France) profoundly disagree. And remember too, that an abolition of a tariff directly benefits the buyer.

Dunt's book makes the point that unilterally doing this free trade thing is like throwing down your gun and demanding that the other side surrender! Surely the experience so far is that it is multilateral concessions on trade (as with nuclear weaponry) that produces results

Except that such an approach has produced no overall trade deals between the EU and the USA, India or China, and many others too.

I cannot be bothered to get into another spat about the EU. Really does not matter how gung-ho the Government is about deals outside the EU since it takes two to make a deal.

At least it will now be two, instead of 29! I think there will be a spate fo new deals where none have existed before. We'll just have to see....

You continually misunderstand me because of your narrow obsession with economics: when I talk about "sacrifice" I was talking about the fishing industry, which because of its smallness may well be sacrificed in a deal with the EU in order to save other industries - absolutely nothing to with comparative advantage, it is all politics and not economics

What bother me, is when decisions are made for political reasons based on bad economics!! The anti-austerity rhetoric of UnCut, for example.

As for the fishing industry, here's my prediction: there will be international agreements on fishing quotas (fish move across international boundaries), but UK fishing fleets will be protected, subject to negotiated exchanges of quotas between nations.

I agree that Trump is a loon, but the trend is still clear; that's what all the trade rounds (Doha, etc., ) are all about. As for The Donald, a) he can't last for ever, b) the tariffs haven't been imposed yet (but are causing uncertainty, see above) and c) are (at least I hope so!!) aimed at trying to get China to play fair (which it isn't up until now). A high risk strategy, not one that I would recommend at all, but.... you never know!

omigod, how can you be so naive and complacent? Trump will be there for at least the Brexit transition period, and his ideas seem to have awakened a certain nativism in US public opinion, so his approach may well survive him. When the US goes against the "trend" is there any great "trend" left?

You say naive, I say optimistic. We'll just have to see.

[Alan H]

We have six months to foil Brexit. And here’s how we can do it

Defeat would probably look something like this: by hook or by crook, by nudge and by fudge, the British and EU negotiators reach a form of words this autumn. Seemingly unbridgeable differences like those over the Irish frontier are somehow finessed, by a combination of genuine compromise, complex solutions and verbal ambiguity. The “framework for the future” is vaguer than an Anglican prayer, with lashings of Brussels fudge and the deafening clang of cans being kicked down the road.

Our EU partners finally agree to this, in the wee hours of a European council meeting scheduled for 18-19 October, because that is the EU’s characteristic culture of compromise, because they just want to get the whole damned thing out of the way so they can concentrate on all the other pressing issues facing the EU, and – let’s be clear – because they know that once Britain is legally out, its negotiating position will be even weaker than it is today.

Theresa May’s internally divided government goes with this messy deal, because its task is to “deliver Brexit”, and because it knows the Conservative party could fall apart otherwise. Most Tory MPs then vote for it, many of them with a heavy heart and a bad conscience, because the whips have gripped them by the most sensitive parts of their anatomies, because they fear deselection in their constituencies and character assassination in the Daily Mail, because “the people have spoken” and because they’re told the alternative is Jeremy Brezhnev. A few brave Tory rebels, the true Churchills of our time facing off against pseudo-Churchills like Boris Johnson, are just not enough. And thus Britain scrapes and crawls its way to the exit.

This, or something like it, remains the most likely outcome, and it would be disastrous. As a former Conservative minister in the Department for Exiting the EU memorably put it, we would be walking off a gangplank into thin air. Britain would then spend years actually negotiating what Brexit means, from an even weaker position, with the negative consequences gradually becoming apparent through the 2020s. National decline by a thousand small steps.

[Alan H]

Britain underestimates Brexit’s damage to Northern Ireland

After two decades of peace, Northern Ireland is at once transformed and unchanged (see Briefing). Violence has dried up to the point where the crime rate is lower than the British average. Hotspots where armoured cars used to rumble now receive convoys of tourists. Yet beneath the bandage of the Good Friday Agreement, the healing has been slow. Protestants and Catholics still lead segregated lives. Just 5.8% of children are in formally integrated primary schools. Stormont is gridlocked and has been suspended for over a year.

In London some say that this shows the Good Friday deal has failed. That is to misunderstand its purpose. Peace agreements stop conflicts; reconciliation and integration are generational tasks. Chivvied along by the British and Irish governments, Northern Ireland’s parties had until recently kept faith. Society is changing too slowly, but it is inching forward.

Brexit now threatens this. Britain and Ireland are too distracted to give enough attention to Belfast, which looks like the child in an acrimonious divorce. Britain squandered its standing as a neutral referee when the Conservatives formed a governing alliance with Northern Ireland’s main unionist party and the Labour opposition voted in a vocal republican as its leader. The Irish government has aggravated tensions by reviving talk of unification, something it previously tiptoed around. Both prime ministers must now go out of their way to show they are committed to getting Stormont up and running.

Above all, Brexit has revived nagging questions of identity. The Good Friday Agreement and both countries’ membership of the EU allowed people to forget about whether they felt Irish or British. Their option of dual citizenship, the invisible border and growing north-south co-operation, on everything from electricity markets to health care, blunted the distinction. Brexit sharpens it again.

This is clearest at the border. Britain says it will leave the EU’s single market and customs union, and that new technology will let it do this without any new infrastructure or inspections at the Irish frontier. The EU (and plenty of others) doubt that this is possible. The EU argues that such technology does not yet exist and says that if Britain cannot come up with a more convincing plan, Northern Ireland must maintain customs and regulatory alignment with the EU. In effect, that would create a border between it and Britain.

[Alan H]

We had to submit one question for Theresa May in advance of her Wales visit and this is what happened

A Wales Office official rang him to see if he’d field questions on that topic, but he wasn’t up for it. I could only talk to him about the report on S4C published this week or about the significance of the Prime Minister’s Brexit tour.

The S4C report and reaction to it had been widely covered, so I opted for the latter.

Mr Andrew, the MP for Pudsey in West Yorkshire, did Mrs May proud, saying there were excellent reasons for believing we would get a bespoke Brexit deal that gives both us and the EU what we want.

And I’m a bent banana.

[Alan H]

Brexit and the Great Prize:

1/ Brexit and the Great Prize
2/ Increasingly leading Brexiters keep saying don’t worry about the process of leaving or any transition period, the UK should keep its eyes on the Great Prize
3/ But what is the Great Prize?
4/ The Great Prize is not greater geopolitical influence or security
5/ The Great Prize is not a stronger economy
6/ The Great Prize is not £350m a week to the NHS
7/ The Great Prize is not better trade deals than we have now
8/ The Great Prize is not a veto over the EU expanding by taking in new Members like Turkey
9/ The Great Prize is not control of our borders as we already have that
10/ The Great Prize is not secure access to nuclear energy because we are leaving Euratom
11/ The Great Prize is not easier movement for UK citizens to work, live or study in Europe
12/ The Great Prize is not improving and maintaining the Good Friday Agreement
13/ The Great Prize is not sending a message of welcome to foreigners to build their lives in the UK
14/ The Great Prize is not stopping sending money to the EU
15/ The Great Prize is not stopping my annual council tax by increasing by more than inflation or my season ticket by increasing by more than what it costs me per day in contributions to the EU
16/ The Great Prize is not better medicine regulation
17/ The Great Prize is not better European supply chain integration
18/ The Great Prize is not more control for the UK parliament
19/ The Great Prize is not solving our existing domestic problems
20/ The Great Prize is not a transition where you accept EU laws with no representation and no certainty on future terms
21/ The Great Prize is not caring about foreign state interference in our elections
22/ The Great Prize is not caring about potential illegal behaviour in relation to our elections
23/ The Great Prize is not sovereignty as we never lost that
24/ The Great Prize is not stronger environmental or other laws as nothing stops us having stricter laws now
25/ The Great Prize is not regulatory divergence
26/ The Great Prize is not continuing to have MEPs like @CharlesTannock @catherinemep @MollyMEP proactively representing the UK internationally
27/ The Great Prize is not providing a leading role in the shape of Europe
28/ The Great Prize is not less immigration
29/ The Great Prize is not telling my children we are building a brighter future for them
30/ The Great Prize is a pot of gold at the end of rainbow guarded by unicorn

[Alan H]

But are they also planning for the unicorns and rainbows?Industry planning jobs cull to offset Brexit

More than half of manufacturing companies (58%) said they planned to increase prices to offset Brexit, according to the survey of about 200 supply chain managers; 46% said they had already increased costs to customers in the wake of the Brexit vote. Some manufacturers are said to be trying to find suppliers in Britain to replace lost contracts overseas, known as “inshoring”. However, John Glen, a CIPS economist, said that it may not be a simple task and companies slow to act may not survive.

[Nick]

But are they also planning for the unicorns and rainbows?Industry planning jobs cull to offset Brexit

More than half of manufacturing companies (58%) said they planned to increase prices to offset Brexit, according to the survey of about 200 supply chain managers; 46% said they had already increased costs to customers in the wake of the Brexit vote. Some manufacturers are said to be trying to find suppliers in Britain to replace lost contracts overseas, known as “inshoring”. However, John Glen, a CIPS economist, said that it may not be a simple task and companies slow to act may not survive.

A fine example of the Grauniad's grasp of economics!

[Alan H]

From The Times, Saturday 31 March 2018:

2018-04-01_00h43_08.png (1.13 MiB) Viewed 3539 times

[Alan H]

One in 7 EU companies moves supply chain out of UK

One in seven European companies with UK suppliers had moved part or all of their business out of Britain, according to the Chartered Institute of Procurement and Supply, which added that prices have risen since the Brexit vote and are likely to continue to rise.

As Britain and the EU27 agreed a transition deal to keep trading relationships within Europe unchanged until the end of 2020, a survey of more than 2,000 supply chain managers by Cips showed that these commercial links are already being disrupted.

As well as the decision by EU companies to relocate their supply chains, a third of UK suppliers were found to have raised prices because of a weaker pound. Another 41 per cent plan future price rises to offset Brexit-related issues, such as diverging regulations and border costs.

There was also an increasingly negative attitude to UK suppliers among EU companies, the survey found, with 42 per cent of EU27 companies saying they did not think British products stood out from the crowd.

John Glen, an economist at Cips, said: “Businesses have little choice but to pass on some of their rising costs to consumers in order to protect their profit margins and stay in business.”

Despite the transition agreement struck in Brussels, he added that “a hard Brexit is currently the only scenario that companies can adequately prepare for due to a continuing lack of clarity around the future trading environment”.

Mats Persson, head of policy and trade at the consultancy EY, said the point of no return for many companies to get ready for Brexit had already passed.

“While this week’s transition period is a hugely welcome step, the question now is whether industry, particularly smaller suppliers, will be ready in time even with a 21 months transition, or whether January 1, 2021 is the new cliff edge,” he said.

One of the sectors most under pressure from the reshoring of activities is food and drink, where UK producers rely on products from the EU and the rest of the world.

Even assuming Britain signs a free-trade agreement with the EU27 to come into force in 2021, similar deals such as the EU agreement with Canada would not exempt UK processed food from EU tariffs because the ingredients would contain too much non-UK material to qualify.

Food-processing industries contribute 50 per cent more to the UK economy than the automotive sector and 70 per cent of its exports go to the EU, the industry said, warning of a threat to Britain’s food and national security.

Without much looser rules of origin than in existing EU free-trade agreements, Alex Waugh, director-general of the National Association of British and Irish Flour Millers, warned that food manufacturers still faced a “hidden hard Brexit” because not enough UK ingredients are produced domestically throughout the year.

“Producers may find themselves shut out of preferential trade between the EU and the UK” if Britain did not stay inside the EU customs union, said Mr Waugh.

In a separate report on Tuesday, the Institute for Fiscal Studies said leaving the customs union would enable Britain to lower tariffs and prices should fall, but noted that the gains from such action would be small.

Because the common EU tariff is already low, averaging 4.8 per cent before the EU’s trade agreements are taken into account, consumers were unlikely to see many gains in lower prices. Applying a zero-tariff assumption would see prices fall a maximum of 1.2 per cent, the IFS said, because only a quarter of spending is on imports.

Peter Levell, a senior research economist at IFS, said the potential gain “is not large when compared with the estimated 2 per cent increase in prices due to the sterling depreciation that followed the referendum result”.

[Alan H]

[Alan H]

[Alan H]

Think Brexit is bad for Britain? Don’t settle for just improving terms of our departure

Hollow promises of Leave campaign

So with less than one year before our exit from the European Union, it remains hard to discern the final shape of future relationships. Pledges made before the vote by leading Leave campaigners have largely dissolved. Conservative MEP Daniel Hannan and other Leave campaigners promised during the referedum run-up that we wouldn’t leave the Single Market. So why are they saying there’s a mandate now? (Getty) To take one example among many, Tory MEP Daniel Hannan insisted ‘absolutely nobody is talking about threatening our place in the single market.’ Now listen to Theresa May earlier this month: ‘We are leaving the single market,’ she said. ‘Life is going to be different.’

Indeed it is. Britain is carrying out an act of gratuitous self-harm that weakens our economy and global standing.

[Alan H]

What was it his boss said about bringing the country together? Remain supporters are "cave dwellers", says Jacob Rees-Mogg

Asked at his speech in central London how he would have responded if Leave had lost the campaign, the bookmakers' favourite to succeed Theresa May as Conservative leader said: "I had looked up that there was a Trappist monastery in Leicestershire.

"It was my intention to see if they would accept a visit from me, not on a permanent basis but at least an interim basis because I thought, that line of Attlee to one of his ministers 'a period of silence on your part would be welcome' would be something the winners would have been entitled to expect."