Robert Colvile: Here’s what the Chancellor should do if there’s No Deal

There is room in the Budget to allow Hammond a fair amount of leeway to act. Here’s our plan.

Robert Colvile is Director of the Centre for Policy Studies.

Over the past few months, we’ve been bombarded with predictions about the consequences of “No Deal” – most ranging from the alarming to the apocalyptic.

Yet most of these analyses have focused either on the very short term or the very long: on the immediate potential for disruption at Calais and Dover, or the impact on GDP in a decade’s time.

There has, by contrast, been much less analysis of what the Government can and should do in the immediate wake of No Deal to stabilise, and ultimately strengthen, the wider economy – to maintain consumer confidence, safeguard business investment, and prevent the supply shock of No Deal turning into a demand shock, with far more debilitating consequences.

It’s true that MPs may well vote on Wednesday to “take No Deal off the table”. But they will in practice be doing no such thing. Until a deal is actually signed and sealed, No Deal will remain a possibility – unless we decide to abandon Brexit altogether, with all the calamitous consequences for our democracy, self-respect and standing in the world that would entail.

Even if Parliament delays our departure, it is unlikely the EU will permit endless extensions of Article 50 while the British political class reaches consensus among itself.

So it would be positively negligent not to think about, and prepare for, No Deal. Hence our new Centre for Policy Studies report – A Budget for No Deal. It sets out the decisions that we believe should be taken by the Chancellor, in the wake of a no-deal departure, to safeguard the economy and promote growth.

Safeguarding the economy

In that scenario, there will obviously be a major role to play for monetary policy.

What most people miss about the most apocalyptic No Deal forecasts is that they assume that the Bank of England will not respond. The ultra-pessimistic “disorderly” exit scenario devised by the Bank to stress-test the financial sector – which featured GDP plummeting by 8 per cent, unemployment rising to 7.5 per cent, and inflation hitting 6.5 per cent – actually involved tightening rather than loosening monetary policy: an act of kamikaze economics.

Given that the Bank acted to stabilise the economy in the wake of the original vote to Leave, it is safe to assume it would do the same after No Deall. But the Chancellor will also need to take decisive action in terms of fiscal policy, to maintain confidence and create the most attractive possible economic environment.

So what should he do?

In our view, the key task after No Deal is to limit the impact of any supply shock – the sudden change in how we trade and with whom – and in particular to prevent it from turning into a demand shock, in which a falling pound drives up prices and inflation, and confidence among consumers and businesses falls alongside their willingness to spend. That means coming up with ways to blunt the impact of the most widely predicted economic dangers.

Thanks to the Government’s focus on bringing down the deficit, the public finances are in remarkably good order. We suggest that this leaves room for a stimulus of £44 billion, amounting to an extra 2 per cent of GDP, to keep the economy moving without moving the deficit back into the danger zone. (Our own proposals only come to £35 billion, leaving significant cash to deploy towards a further stimulus, or other post-no-deal firefighting.)

But where should the money go?

We argue that there should be three priorities. First, supporting consumer spending – making sure voters feel they have money in their pockets even if prices rise. Second, incentivising business investment – making sure companies, and especially small and family firms, feel like they’ve got a reason to hire and invest. Third, keeping Britain open – cutting tariffs and attracting talent and trade.

Supporting consumer spending

To ensure voters have a buffer against rising prices, and feel able to keep spending, we would urge the Government to give every worker a £465 tax cut by implementing the Universal Working Income. Our head of tax, Tom Clougherty, explained the idea on ConservativeHome back in November – raising the National Insurance threshold to match the income tax allowance. This would not only compensate for any rise in prices, but act as an incentive to everyone to work.

We also need to help those who aren’t working – it would be callous, and politically disastrous, to do otherwise. That’s why we suggest ending the benefits freeze a year early, topping up the state pension, and freezing council tax. (We also argue that a temporary VAT cut, deployed in the wake of the financial crisis, would be a worse and more expensive solution – not least since many of the products most vulnerable to any post-Brexit price rises are VAT-exempt.)

Incentivising business

Britain’s economy has defied many of the gloomy pre-Brexit predictions. But the slowdown in business investment has certainly been a drag on growth. After No Deal, we need to make sure we do everything we can to keep firms here and attract new ones – and make it as easy as possible to hire and invest.

The most obvious move is to bring forward the scheduled cut in corporation tax to 17 per cent. A more lasting change would be to adopt “full expensing” – effectively, to allow companies to write off all investment in plant and machinery against tax. All the evidence is that this would have a galvanising effect on growth.

Small and family businesses, especially exporters, are the most vulnerable to No Deal shocks – but also the most important as an engine of job creation. So we suggest a temporary 25 per cent cut in both business rates, that perennial bugbear, and employers’ National Insurance Contributions.

But it’s not just about money. We need to make it clear to businesses that the business environment will be as friendly as possible. That means imposing an 18-month moratorium on any new regulations that increase the business burden – and pausing “Making Tax Digital”, the latest headache imposed on small firms by HMRC.

It also means an urgent review of existing regulation, especially that imposed by Europe, and listening to businesses large and small about what is causing the most problems. The think tank Open Europe has outlined “politically feasible” deregulation that could save firms nearly £13 billion a year post-Brexit, or 0.6 per cent of GDP.

The Government should also bring forward cost-effective infrastructure projects – those small-scale, easily deliverable projects that offer maximum bang for its buck – and support housebuilding and construction, not least because we desperately need the homes anyway.

Keeping Britain open

The early reports on the Government’s customs plans in the event of No Deal are along exactly the right lines – a bold ambition to reduce or eliminate tariffs in order that consumers feel the benefits. Of course, there will be sectors and regions, such as agriculture, where immediate unilateral reduction would cause significant damage – so they need to be supported as we move towards a zero-tariff norm.

To keep things moving at the border, we should wave through low-risk imports from the EU. But we should also invest in developing the most efficient customs infrastructure in the world, and establish systems to help our firms export (especially SMEs).

We should also rapidly establish a new generation of free ports – a brilliant post-Brexit project first outlined by Rishi Sunak MP for the CPS.

We should make it far easier for the highest-skilled workers to come to the UK. And we should copy the Netherlands by offering the best workers, and the best firms, significant tax breaks if they relocate to the UK.

Making the best of Brexit

In a recent ComRes survey, the public agreed by 65 per cent to 13 per cent that “After Brexit, the UK should position itself as the lowest-tax, business-friendliest country in Europe, focused on building strong international trade links”. This was backed not just by Leave voters but by Remain voters, Labour voters, and across all age groups, regions, and class statuses.

The ideas outlined here fit that brief – and there are plenty more in the paper itself. Many of them, we believe, are good things to do whatever the eventual form of Brexit.

Yes, our report is a plan for No Deal. But it is one that involves doubling down on the best and most entrepreneurial aspects of the British economy. Whatever the nature of the final Brexit outcome, it is the extent to which we embrace those values that will determine whether we succeed or fail.

In two decades, EU Customs Union membership has not delivered clear benefits for any major UK sector

There’s a difference between what the Customs Union was supposed to achieve in theory and what it’s actually achieved in practice. Thanks to historical trade data published by the UK Office for National Statistics (ONS) in September 2018, we now know the difference is huge. By making multiple comparisons in UK, EU and non-EU trade […]

The post In two decades, EU Customs Union membership has not delivered clear benefits for any major UK sector appeared first on BrexitCentral.

There’s a difference between what the Customs Union was supposed to achieve in theory and what it’s actually achieved in practice. Thanks to historical trade data published by the UK Office for National Statistics (ONS) in September 2018, we now know the difference is huge. By making multiple comparisons in UK, EU and non-EU trade since 1998, it’s possible to judge the UK’s record inside the Customs Union over the past 20 years, and assess the value of seamless, tariff-free trade with the EU in terms of what it’s actually achieved.

All my data is sourced from ONS September 2018 release unless otherwise stated and compiled in two spreadsheets: UK’s Top Ten Sectors, which analyses each principal UK traded sector in turn, from motor vehicles to beverages; and UK Trade in Goods & Services which directly compares UK’s trade in goods and services. Both cover the period 1998 to 2017 and I would encourage readers to download are inspect them.

Export Growth: 1998 to 2017

For a first-pass assessment of UK’s trade record in the Customs Union, divide all UK exports into four, roughly equal parts: exports of goods to the EU (worth £164 billion in 2017); exports of services to the EU (£117 billion); exports of goods to non-EU countries (£175 billion); and exports of services to non-EU countries (£162 billion). Now, using the historical trade data published by the ONS in September 2018, calculate the average yearly growth rate for each of these four categories from 1998 (or 1999 for the services data) to 2017 (the method used is to take a three-year average at the start and end of the time period, and then adjust for inflation using the ONS’ own import/export deflator).

The results are perverse. The UK’s slowest-growing export trade since 1998 is goods exports to the EU, which have grown by just 0.2% per year since 1998, or 3.7% over 20 years. Yet this is precisely the sector that is supposed to benefit from tariff-free trade within the Customs Union. And even 0.2% is misleading. Most growth occurred pre-2007; adjusting for inflation, average annual exports in 2008‒2017 were actually lower than 1998‒2007 (See Tab 3 in UK Trade in Goods & Services, Section 2, line 77. £144.7 bn as opposed to £145.6 bn in 2015 prices).

Conversely, the UK’s fastest growing exports are services exports outside the EU, unimpacted by either the Customs Union or Single Market regulation. At 5.6% per year over 20 years, these exports have grown so fast in the last 20 years, they are now worth almost as much as UK’s entire goods exports inside the Customs Union.

Next fastest is UK’s services exports to the EU, growing an impressive 5.2% per year. This sector is marginally impacted by the Single Market. A portion of financial services are impacted by EU regulation, although financial services exports contribute just under one-third, or 31% of UK services exports to EU. (Overall, just 11% of UK services exports are financial services exports to the EU – for a breakdown of UK’s services trade see Tab 2, UK Trade in Goods & Services).

Meanwhile UK’s goods exports to countries outside the EU countries – and outside the Customs Union – have grown at a crisp 3.3% per year since 1998. This sector is heavily influenced by the Single Market, whose rules apply to most goods made in UK, but they are conducted outside the Customs Union. And thanks to the trade-database research of Michael Burrage, It’s Quite OK to Walk Away, we can approximately calculate the proportion of UK’s non-EU exports that has been conducted on World Trade Organisation (WTO) terms.

Taking the year 2015, Burrage estimates that 6% of UK’s exports went countries with whom UK enjoys an EU-negotiated free trade agreement (FTA). Another 8% went to European Free Trade Agreement markets. This means, approximately 73% of UK’s exports to non-EU countries was conducted on WTO terms. Much of the rest (principally Switzerland) is with countries that impose near-negligible tariffs on non-food imports.

Consequently, the 3.3% per year growth rate achieved by UK’s non-EU goods exports is a strong and accurate reflection of UK companies’ ability to trade on WTO terms. Since 1998, UK businesses have proved more adept at growing markets outside the Customs Union than in it, despite the tariff and customs barriers they confront in most non-EU trade. Meanwhile, UK businesses have failed to grow markets inside the Customs Union, despite the fact that this trade with the EU is tariff free.

What’s to blame for this discrepancy – or more accurately, what’s not to blame – will be analysed in Part 3 of this analysis, when UK’s export growth is compared to Euro-area growth, intra-EU trade, UK productivity, and EU–US trade over the same period. But in a straightforward assessment of the value of the Customs Union to UK, the data are unforgiving: that part of UK exports that is governed by the Customs Union is easily UK’s worst performing.

The Customs Union: Qui Bono?

Not so with EU imports, however. Back in 1998, UK’s EU goods trade was roughly in balance, -£5.6 bn in current prices). But since then, imports from the EU have grown at a strapping 3.4% per year. The import sectors displaying the fastest growth are motor vehicles, (with imports growing 3.6% p.a., to reach £47.7 bn in 2017), food products (5.3% p.a., to £23.2 bn) and pharmaceuticals (7.3%p.a., to £22 bn), with this last import category showing especially rapid growth since 2011.

So, since 1998, the track record of the Customs Union has been to take a trade relationship that was trim and balanced and turn it into a £95 billion deficit, which is larger – per head – than the US trade deficit with China.

Here again, the ONS November-release trade data helps because we can see to what extent UK’s services trade with the EU will ever balance this equation out. And the answer is: it won’t.

Services exports to EU may be growing nicely (5.2% p.a., as opposed to services imports growth of 3.0% p.a.) but the £36 bn surplus it generates pays for just one-third of UK’s deficit in trade in goods. And since the difference between UK’s goods export‒import growth rate (3%) is wider than the difference in the UK’s services export‒import growth rate (2.2%) it never will – so long as UK maintains its current terms of trade with the EU.

The perverseness of UK’s EU-trade outcomes extends to the deficits UK incurs on those individual trade sectors most impacted by the Customs Union (See Tabs 2-11 of UK’s Top Ten Sectors. Data for each sector is presented in turn, in order of the total value of UK exports. Together, these top ten sectors contribute 80.9% of UK manufacturing exports, or 71.1% of UK goods exports). The UK’s two biggest two-way trade sectors with EU are motor vehicles (worth a combined £67.3 in 2017) and food & agriculture (£39.8 bn). These are also the two sectors where the EU’s common external tariff (CET) exerts the biggest impact on UK trade, and theoretically provides the greatest ‘protection’. Yet these are simultaneously the sectors where UK incurs its biggest deficits (See Tab 1, UK’s Top Ten Sectors. ‘Manufacturing’).

Both of these deficits have increased dramatically since 1998: by £19.2 bn (current prices) for motor vehicles, and £14.1 bn for food & agriculture. These deficits reflect a surge in imports from fellow Customs Union member states, for which no commensurate reciprocal gain or trade-off can be found in any other sector of UK’s goods trade. In other words, there is no trade-off within the Customs Union.

At this point in the analysis, it’s worth stepping through the 20-year trajectories of each of UK’s top ten goods-trade sectors to try to map supposed tariff-free advantage with actual outcome. What you find is either a sizeable and growing deficit: food products (-£14.4bn ); and beverages (-£2bn ); or stagnant growth plus a sizeable deficit: motor vehicles (0.4% p.a., -£28.bn); machinery (-0.1% p.a., -£7.2bn); chemicals (0.7% p.a., -£3.5 bn); computers and electronics (-5.8% p.a., -£11.3 bn); basic metals ( 1.% p.a., -£3.4 bn ); and electrical goods (-0.9% p.a., -£4.4 bn). Since we have now compassed 72% of UK’s goods exports, the obvious verdict is hard to swerve.

Damningly, the only two of UK’s top-ten EU traded sectors that have performed strongly since 1998 derive next-to-zero commercial advantage from the Customs Union. The UK’s second biggest export sector – transport equipment, which is 92% aerospace related (and therefore trades tariff-free) – has climbed a decent 2.7% per year. And UK’s pharmaceuticals exports (up 6.3% p.a. to EU, since 1998) gain minimal competitive advantage because major developed economies abolished tariffs on end-user pharmaceuticals during the Uruguay Round, which concluded in 1993.

So, on the basis of the UK’s own 20-year trade data, there is not one, single major sector of trade in which the Customs Union has delivered clear, demonstrable benefit to UK since 1998. Shown in aggregate, across all UK trade, the failure is stark. What’s troubling – for UK consumers, at least – is that the Customs Union appears to be turning the UK into a series of tightly controlled captive markets for EU producers. To see how, I shall in due course take a detailed look at the 20-year history of UK’s two biggest EU traded sectors — motor vehicles and food.

The post In two decades, EU Customs Union membership has not delivered clear benefits for any major UK sector appeared first on BrexitCentral.

Stephen Booth: Brexit and the economy. There are ups, there are downs. But whatever happens, our fundamentals remain strong.

A flexible labour market, a well-regarded legal system, and comparatively favourable demographics relative to the major European economies are all valuable assets.

Stephen Booth is Director of Policy and Research at Open Europe.

As the ongoing Brexit saga continues to drag towards the 29th March without resolution, every announcement or scrap of economic news is greeted by hard-line Remainers or Brexiters as proof positive of their arguments. Nuance is no use to either extreme in this debate. In reality, since the referendum, there have been positives and negatives but, overall, the economy has held up relatively well compared with the political wreckage that Brexit has been causing in Westminster.

After retail sales figures outstripped forecasts in January, the consultancy Oliver Wyman suggested the reason for this pleasant surprise was that consumers might be stockpiling for a No Deal Brexit. This might have tallied had the boost been attributed to a spike in the purchase of tinned baked beans, but Office of National Statistics figures illustrated that sales of discounted clothing were the biggest driver. Are we really stockpiling jumpers?

Japanese carmaker Honda’s decision last week to close its Swindon plant provided the latest opportunity to confirm our prejudices. Some rushed to cite Brexit as the cause, before Takahiro Hachigo, Honda’s chief executive, stated that “Brexit was not taken into account” in the decision. Moves towards emissions-free vehicles, over capacity at the Swindon plant and the removal of tariffs under a new EU-Japan trade deal seem to be the prime reasons for the closure. After all, Honda is not closing its UK plant in favour of another location inside the EU market, or another European country with more certain access to it. Indeed, it is also closing its plant in Turkey, which has a customs union with the EU.

However, Brexiters should not take comfort from this episode. Rightly or wrongly, many outside the UK see Brexit as damaging to “Brand Britain”. Equally, it is very hard for companies like Honda to “blame” Brexit because they risk a consumer backlash. Blithely dismissing businesses’ legitimate concerns about uncertainty or the impact of a No Deal Brexit as a rerun of “Project Fear” does nothing to dispel this instinct. Even if only a minor contributing factor, Brexit uncertainty was a very useful excuse, at the very least, for Honda to pull the plug in Britain. To reiterate the degree of uncertainty facing businesses, we are just five weeks away from a potential No Deal Brexit and we are still eagerly awaiting an announcement of what tariffs the government intends to levy on imports from all over the world.

Ultimately, each isolated case is complicated and can only tell us so much. The wider reality is that, in 2016 and 2017, UK growth was sluggish in comparison to the global upswing. But in its January forecast, the IMF forecasts that, following an orderly Brexit, the UK growth rate will converge with France and Germany at around 1.5 per cent in 2019 and 2020. The European Commission expects the UK to marginally outpace Germany in 2019.

According to Gertjan Vlieghe, an External Member of the Bank’s Monetary Policy Committee, the reason for the UK’s comparative underperformance is that while business investment has grown strongly across the G7, it has stalled in Britain. Given the seismic nature of the Brexit vote and the political fallout it would be surprising if many businesses weren’t hesitant to invest. Getting a deal through which provides for an orderly Brexit might unlock some pent-up investment. However, it is difficult to see how a No Deal Brexit or Article 50 extension in the hope of a second referendum would provide businesses with the confidence they crave.

On the other hand, despite a weakening of the pound, consumer spending has on the whole remained buoyant and reflects the UK’s strong labour market performance. Employment is at record high levels, and wages are rising faster than inflation. The Government recently posted its largest January revenue surplus since records began in 1993.

Looking to the longer term, the UK’s economic fundamentals remain strong. A flexible labour market, a well-regarded legal system, and comparatively favourable demographics relative to the major European economies are all valuable assets. In and of itself, Brexit will not be a life or death matter for the economy. As consumers and supply chains adjust to whatever new trade barriers arise on both sides of the Channel, there will be winners and losers. This is the inevitable reality of altering years of deep economic integration.

However, onlookers and potential foreign investors might wonder whether the fundamentals of our politics are as sound. Parliament has so far been found desperately wanting in what is only the first stage of Brexit. Many MPs on either side are still intent on debating Brexit as a matter of principle rather than pragmatism, two-and-a-half years after the referendum campaign. There must be major doubts about their ability to wrestle with the real-world challenges and decisions required to reshape Britain for the big, wide world outside the EU.

Here is the tariff policy the Government should announce for 29th March

More attention is needed to be given the tariff policy Britain must adopt on leaving the EU on 29th March. It now looks likely that this will have to be without a withdrawal agreement. However, this has the advantage that Britain can shape its tariff policy from day one. This is a responsibility that British […]

The post Here is the tariff policy the Government should announce for 29th March appeared first on BrexitCentral.

More attention is needed to be given the tariff policy Britain must adopt on leaving the EU on 29th March. It now looks likely that this will have to be without a withdrawal agreement. However, this has the advantage that Britain can shape its tariff policy from day one.

This is a responsibility that British governments have been able to avoid during the period of EU membership. Now they are regaining that responsibility, they must seize it promptly.

Before the end of March, the Government should publish a White Paper explaining that:

  1. It has sought to negotiate a withdrawal agreement, but unfortunately no acceptable agreement could be reached, so while the UK remains open to agreement, European leaders have ruled out further negotiation. This means the European Treaties cease to apply to the United Kingdom on 29th March 2019. Britain’s trade with the EU will then be governed by the World Trade Organisation agreements, which govern most of Britain’s trade already.
  2. The WTO agreements are international law and Britain will honour them in full. It expects the EU to do likewise.
  3. The EU will now be obliged to apply its Common External Tariff (CET) to British exports, treating the UK on equal terms with other third countries, on a Most Favoured Nation (MFN) basis. Tariffs must be accepted as a disadvantage, but it has now become a very minor one: on industrial exports from the UK to the EU, the CET averages about 3%.
  4. As far as British imports are concerned, Britain will not be obliged to charge import duties; but where it does so, it must charge a rate which treats all WTO members equally. Absent a withdrawal agreement the EU must be treated on the same basis as other WTO members. Britain will inherit tariff bindings,  as a result of which its import duties cannot exceed those of the European CET.
  5. Importantly, however, Britain will be free after 29th March to reduce or eliminate import duties whenever it sees fit (see below).
  6. Apart from tariffs, the rule of the WTO for all other aspects of trade is non-discrimination. Non-Tariff Barriers are prohibited by the WTO so far as they afford protection to domestic production (GATT Art. III.1). So far as they arise out of the operation of internal laws (industrial safety etc.), all such laws must be applied equally: they must accord imports treatment “no less favourable” than that accorded to products of national origin (GATT Art. III.4). They cannot discriminate against imports from other WTO members.

The White Paper will explain the application of these rules carefully, emphasising that they are tried and tested by many years of practice worldwide. It will emphasise three key facts:

(a) that most of the UK’s trade is already conducted outside Europe, most of it under the WTO rules;
(b) that Britain trades more successfully outside Europe than within it; and
(c) that most of the EU’s trading partners worldwide trade with it under the WTO rules, and do so with success.

FIRST PHASE OF TARIFF POLICY: KEEPING TRADE FLOWING

After 29th March, the immediate priority will be to keep trade flowing in an initially uncertain environment. During this phase, the Government should suspend all import duties from all sources. The WTO rules allow this, provided the suspension is on an MFN basis.

This will mean that no inbound consignments are interrupted for tariff reasons.

SECOND PHASE OF TARIFF POLICY: ELIMINATING HARMFUL IMPORT DUTIES

Then, as it becomes clear that trade is flowing smoothly, import duties would be selectively reinstated, selectively reduced and selectively eliminated. This is the stage at which Britain’s trade policy will begin to take shape. It is important to emphasise that Britain will have no freedom to raise tariffs above their CET level. It will be tied by WTO bindings not to do so. Trade policy will take the form of selective reductions and eliminations of import duty, below their present CET levels – cuts which Britain can now make (and has hitherto been prevented from making) include the following:

  1. Foodstuffs will be imported free of all duties. Note that this is one of the principal benefits of Brexit. The present CAP duties are very high, often above 50%. Eliminating them would bring major reductions in food prices, to the benefit of families. It would restore the traditional British policy of leaving food untaxed. Many countries in the world are exporters of food. The return of Britain as a buyer of food in world markets will be seen as a major advance towards freer trade from the EU’s protectionism.
  2. Clothing and footwear. Duties should be cut to a maximum of 5%. Under the EU’s CET, these currently attract duties up to 20%. Again, the UK is a substantial net importer of these items and eliminating duties on them will bring major reductions in prices, to the benefit of families.
  3. Automotive components, parts and sub-assemblies. Duties should be removed. These currently attract duties of around 5%. Eliminating them will help UK assembly plants relying on supplies from Europe and Japan on a “just-in-time” basis.
  4. Semiconductors. These attract CET duties of 12%-15%. These should be removed. British IT industries are substantial net importers of semiconductors and are currently burdened by duties intended to protect continental suppliers.
  5. Other industrial intermediates, materials, components, sub-assemblies etc. Duties should be removed wherever the UK is a substantial net importer.
  6. Other products of any kind not made in the UK. Duties should be removed.

THIRD PHASE OF TARIFF POLICY: PREPARING FOR FREE TRADE AGREEMENTS

While it is making these unilateral tariff cuts, the UK should also announce its willingness to conclude free trade agreements with any willing partner on a basis of reciprocity, eliminating all import duties in both directions. This should apply to all the UK’s trading partners worldwide, not excluding the EU.

The detail of each negotiation will of course take time to tie down. However, the WTO Agreement allows GATT (Art. XXIV) the formation of interim agreements which can be brought into provisional application, and thus given early effect. In this way, tariffs can be eliminated in advance.

Negotiating priority should be given to:

a) suppliers of products which the UK needs to buy, where the European CET is high and where the British aim is to secure more affordable prices (e.g. foodstuffs from Argentina, New Zealand, clothing and footwear from China and India); and 

b) promising markets where import duties against British exports are still high (as with India and China). One may note in passing that the EU comes into neither of these categories: EU duties against British industrial exports will be low (average 3%). A free trade agreement eliminating these will be of modest value and not worth paying too high a negotiating price to obtain. Meanwhile, Britain will have no need for expensive European food once supplies are available duty-free from other more reasonable suppliers.

CONCLUSION

Thus Britain will make important tariff cuts unilaterally, and others will follow free trade negotiations. Together they will add up to a significant liberalisation and a clear declaration that Britain, on regaining the right to direct its own trade policy, intends to drive it strongly in a liberalising direction. These tariff cuts would establish Britain as once again a beacon of freer trade, to its own benefit and to the benefit of its trading partners worldwide. It is important to send this signal immediately on Britain gaining the freedom to do so.

The post Here is the tariff policy the Government should announce for 29th March appeared first on BrexitCentral.

The supposed ‘cliff edge’ of leaving the EU on WTO terms is another Millennium Bug

The below is an extract from Economists for Free Trade’s new report, No Deal is the Best Deal for Britain It has become clear that Remainers have a big problem: they can find little positive to say for either why we should remain in the EU or for Theresa May’s Withdrawal Agreement. Their total argument […]

The post The supposed ‘cliff edge’ of leaving the EU on WTO terms is another Millennium Bug appeared first on BrexitCentral.

The below is an extract from Economists for Free Trade’s new report, No Deal is the Best Deal for Britain

It has become clear that Remainers have a big problem: they can find little positive to say for either why we should remain in the EU or for Theresa May’s Withdrawal Agreement. Their total argument has been and continues to be based on ‘fear’. Nowhere has this been more apparent than their invectives about No Deal – i.e. a World Trade Deal where the UK leaves the EU on 29th March without a trade deal under WTO rules.

The Government, together with Establishment figures and the commentariat, have fallen over themselves warning of short-term perils – first, chaos at our ports and second, claims that somehow a host of existing rules and regulations will become inoperative as of 11.01 pm on 29th March. Day-to-day life, as we know it, will cease to exist with regard to travel, business contracts, citizens’ rights and even the ability of performing artists to perform.

This alleged short-term disruption is deemed to be so apocalyptic that it is considered not even worth thinking about if there might be a long-term upside. Thus, the cacophony about the short-term has shouted down any fundamental thought about the inherent benefits of No Deal.

What is the reality?

Disruption in the Ports: What Disruption?

It is claimed that on 30th March UK ports will have seized up due to delays required to process customs declarations. Furthermore, since UK goods will no longer comply with EU standards, onerous inspections will be required – adding to the bedlam.

These claims should not be taken seriously. They do not reflect what actually takes place at ports today and they fail to take into account the legal and competitive environment within which ports operate.

1. Post-Brexit port procedures will not be materially different from those of today and the required changes mainly are in hand. The image of customs officials with clipboards crawling over trucks and stamping approvals on customs forms has not been valid for decades. Today, all customs declarations are computerised and prepared at the facility of the importer/exporter or their designated customs broker. Shipments are pre-cleared by computers talking to computers so that trucks rolling into the ferry terminal essentially are waived through automatically. This is how the many UK ports that deal with shipments from non-EU countries under WTO rules operate today.

To accommodate Brexit, HMRC has adopted a ‘belt and braces’ strategy by which the existing Customs Handling of Import and Export (CHIEF) system has been doubled in capacity to accommodate the increased volume of EU-UK customs declarations. In addition, a new EU-wide customs declaration system (CDS) – which was already in the development pipeline before the referendum – will be run in parallel. HMRC has repeatedly stated before select committees and in its own publications that CHIEF and CDS are already operational and will be ready to deal with EU shipments on 29th March.

A potential issue is that some businesses may not have their software interfaces with CHIEF/CDS operational by March. The service industry of customs brokers should have the necessary systems and expertise to support such businesses (mainly small) that may not have the required internal capability. However, it may be the case that not all customs brokers will be sufficiently up to speed and have the required capacity to fill the gap completely.

To alleviate this risk, there are simplifications to existing procedures that HMRC can authorise and HMRC has already announced that for the 60 per cent of EU trade that is imports, it will ‘prioritise flow over compliance’ – i.e. it will wave vehicles through to avoid queues, even if customs declarations have not been properly completed. As shipments are pre-approved, normally, if a trader has not completed the required declarations, the shipment will not be authorised. The shipment may be delayed but it will not contribute to congestion at the port.

2. Inspection regimes will not change. What about the much ballyhooed inspections that Remainers claim will create delays and miles of parked trucks along the M20? In fact, as HMRC has repeatedly emphasised, there is no reason for much to change. Under WTO rules, inspections are intelligence-led, based on computerised risk assessments and generally have little to do with customs issues. Security, drugs and illegal migration are much greater concerns.

Since there is no reason why these risk factors should change after Brexit, HMRC intends to maintain the existing inspection regime post-Brexit, which currently results in only about 1 per cent of (even non-EU) goods being inspected.

The claim that new onerous inspections at the border will be required after Brexit because UK goods will somehow no longer meet EU standards is hypothetical fancy. After over 40 years with identical product standards and regulations – and contrary to what many doomsayers may wish the public to believe – UK goods will not suddenly become hazardous to the health and safety of EU consumers the day after Brexit. Last week the President of the Boulogne and Calais Ports made clear that the Port of Calais plans no additional inspections relative to what they do today.

So, it is clear there is no practical reason why disruption should suddenly occur in the ports following Brexit.

3. EU recalcitration and discrimination would be illegal. The WTO Trade Facilitation Agreement, the WTO Technical Barriers to Trade Agreement and the Kyoto Convention of the World Customs Organisation commit the EU and all 187 WTO countries to making border processing activities as streamlined as possible. These measures are enforced by WTO Panels and the WTO Appellate Body that are backed by the international legal system.

The WTO Trade Facilitation Agreement mandates a seamless (computerised, pre-cleared) border enabling trade to continue passing through ports with minimal checks, pre-cleared by computer, with all relevant information pre-entered at low cost straight from the loading logs. The EU’s own Customs Code requires customs declarations to be done online and allows these to be entered with as little as one hour’s notice.

There is no WTO requirement for border checks and, where physical inspections are necessary, the Agreements require that they be intelligence-led and not be more trade-restrictive than necessary – i.e. they should conform to the current regime applying to both the EU and the UK where only about 1 per cent of goods arriving from non-EU countries are physically inspected. The WTO’s Agreement on the Application of Sanitary and Phytosanitary (SPS) measures does allow for border checks to ensure the safety of imported food but stipulates that such checks should not be used as a surreptitious means of inhibiting cross-border trade or “arbitrarily or unjustifiably discriminate between WTO members where identical or similar conditions prevail… SPS measures shall not be applied in a manner that would constitute a disguised restriction on international trade”.

With regard to standards, WTO rules on non-discrimination on standards mandate that, once the EU or any other WTO member has announced their proposed domestic standards, these must apply without exception to all foreign exporters.

So, if the EU were to ignore the practical, common-sense reasons for continuing to process EU-UK trade as efficiently as they do today, they would be acting illegally and could face lawsuits. The WTO dispute process is far from toothless, enjoying an excellent compliance record among its many hundred rulings over decades of practice.

4. Competition will keep the EU in check. Even if common business sense fails and the EU is tempted to flout international law, competitive pressures will rein them in. Dover-Calais is the major concern in this regard because it has roll on/roll-off (RoRo) facilities accounting for about 30 per cent of EU-UK trade – and Calais is in the only EU country where political leaders have signalled possible uncooperative post-Brexit actions.

Fortunately, numerous other freight ferry routes – with RoRo capabilities – already exist between several UK and continental ports. Dutch and Belgian port operators have already made it clear that if an EU port – say Calais – were to attempt to complicate border procedures artificially to inhibit UK exports, ports such as Rotterdam, Zeebrugge and Antwerp (amongst others) would be keen to grab the business and quickly fill the gap.

It is estimated that sufficient capacity exists to handle 30 to 40 percent of Dover-Calais freight shipments. The Dutch sensibly have built up their customs facilities, hiring more inspectors and setting aside land at their ports for the limited additional inspections that may be required, primarily for agricultural products.

In practice, it is very unlikely to come to this, as pragmatic local French authorities and port operators have offered assurances for continued cooperation on numerous occasions, aware that they will lose out to their European neighbours if they attempt to frustrate Brexit maliciously. The latest such assurance was on the Today programme on 9th January when the President of the Boulogne and Calais Ports confounded his BBC interviewer by making clear that Calais will be ready for UK business by 29th March and he explained that they plan no additional inspections relative to what they do today and detailed a long list of specific investments and actions they have taken over the past year to avoid any possible congestion or delay.

Brexit will not lead to a blockade in the English Channel, as strangely many wish us to believe.

Life will continue after 29th March

Much of the drummed-up anxiety regarding “crashing out” of the EU has begun to abate as the UK Government, along with its EU counterparts, has ramped up preparations for a No Deal Brexit in light of the impasse in EU-UK negotiations. Despite the tireless efforts of the media and the status quo Establishment which still insist that the UK will collapse into recession and experience a severe supply shock and civil unrest, it is slowly emerging that trading with the EU under WTO terms will be manageable, albeit with some possible ‘bumps in the road’ in the early days.

Thus, work seems to be at last under way, and it should now be stepped up with enthusiasm – remembering that many problems can be lubricated by a £39 billion saving.

For example, an increasing number of the crucial non-WTO “side deals” that commentators gleefully warned were essential to avoid the devastation of post-EU isolation are now materialising. Aeroplane landing rights, drivers’ licences, euro clearing and derivative contract issues are now settled.

Many EU citizens living in the UK are already following the straightforward process for obtaining permanent residency. In recent days, the Dutch, German, Italian and Belgian governments have already announced post-Brexit citizens’ rights for UK nationals living in their countries. And the Spanish are establishing procedures for healthcare to be delivered to UK citizens when in Spain. We also have promises from the EU and Ireland that there will be no hard border, as one isn’t really needed and never was.

Furthermore, Lord Lilley and Brendan Chilton’s excellent report, 30 Truths about Leaving on WTO Terms, has detailed a long list of agreements that have emerged in recent weeks between the UK, the EU and EU member states affecting day-to-day life. These cover a wide range of areas including, for example, ‘micro’ trade agreements, medicines, clean water, air travel, aircraft manufacturing, haulage, agricultural and animal products, mobile telephones, auto type approvals and VAT rules. And – never fear – even British opera singers, musicians and other performers will still be able to tour the EU.

It is becoming ever more evident that civil servants – in spite of their public comments being constrained by ministers – have been working quietly behind the scenes to ensure minimal post-Brexit disruption.

Thus, it appears the closer we get to the alleged ‘cliff edge’, the more countries on both sides of the Channel are facing up to their responsibilities. The ‘cliff’ now appears to be turning into a grassy slope.

Remember the Millennium Bug? Perhaps we have been here before.

The post The supposed ‘cliff edge’ of leaving the EU on WTO terms is another Millennium Bug appeared first on BrexitCentral.

UK to spend over £100M on ferries in case of no-deal Brexit

Contracts given to British and European companies.

The U.K. will spend more than £107 million on ferries to ease congestion at ports in case of a no-deal Brexit.

The Department of Transport has awarded contracts to French, Danish and British companies to develop additional lorry capacity at the ports of Poole, Portsmouth, Plymouth, Immingham and Felixstowe.

Increased checks after Brexit could “cause delivery of critical goods to be delayed” and significantly disrupt the road network around the port of Dover, the BBC reported, citing documents outlining the agreements.

Liberal Democrat leader Vince Cable described the move as “complete madness” as the government has the power to stop a no-deal Brexit at any time.

“The fact that this money is predominantly going to European companies is nothing short of ironic,” Cable told the BBC.

The Danish company DFDS was awarded a contract worth £47.3 million and British firm Seaborne a £13.8 million deal. France’s Brittany Ferries’ contract is worth £46.6 million.

The additional crossings would amount to about 10 percent of existing traffic across the Strait of Dover and provide up to half a million tonnes a month in extra capacity.

The documents state that an “unforeseeable” situation of “extreme urgency” meant there was no time for the contracts to be put out to tender.

According to the BBC, however, a number of firms were considered and there was a private negotiation process.


Read this next: Theresa May accused of ‘desperate’ move by knighting Brexiteer

A plea to the PM from a Leave-supporting businessperson: Stop the scare stories and embrace a Sovereign Brexit

What follows is an open letter to the Prime Minister written by a businessperson who backed Leave at the referendum but who for professional reasons is currently unable to enter the political fray. Dear Prime Minister, I have watched with a sense of appalled inevitability your recent unsuccessful visit to Brussels, characterised as it was […]

The post A plea to the PM from a Leave-supporting businessperson: Stop the scare stories and embrace a Sovereign Brexit appeared first on BrexitCentral.

What follows is an open letter to the Prime Minister written by a businessperson who backed Leave at the referendum but who for professional reasons is currently unable to enter the political fray.

Dear Prime Minister,

I have watched with a sense of appalled inevitability your recent unsuccessful visit to Brussels, characterised as it was by a lack of ideas, an absence of combativeness and a reckless and relentless desire to cling on to every rotten element of the vassal state deal that you and your small Remainer clique of advisers in Downing Street have concocted with the EU. Harsh words? Perhaps, but they are words that are endorsed – sometimes in more polite phrases, sometimes in less polite phrases – by the vast majority in our country and even of our Parliament.

Why are you so recklessly clinging to every suspect element of this ‘Brexit in name only’ deal? Many believe the problem all began with your still-secret promises made to Nissan, the car manufacturer in Sunderland, shortly after you took power in 2016. You have never published those promises. Many of us guess that it was partly as a result of those promises that in your talks with the EU you then gave away – whether in ignorance or because you never truly meant to leave the Customs Union – every possible negotiating element that would allow the United Kingdom to pursue its own independent economic and trade policies. Was that so? Can you not come clean with the electorate and tell us what those Nissan promises were, how much they are now constraining you and how much your desire to cling to your secret agreement with one company, Nissan, has led you to all this foolishness? Because if that is the case, then the honourable thing for you to do would be to resign and let someone else – someone not burdened by that promise – create a way forward for our country that is not shackled by that apparently all-constraining Nissan cursed promise.

If there was no such promise, then I am puzzled by your insistence that a WTO-terms deal – what is most truthfully termed a ‘Sovereign Brexit’, the thing that 17.4 million people actually voted for – must be ruled out by you. Your Remainer friends who dominate the media have managed to spin non-facts into a general belief that a Sovereign Deal would be catastrophic. Your grid in Downing Street has, month after month, delivered to a credulous press and public a remorseless stream of doom-laden statements by those rent-seeking members of the business community on whom you have chosen to rely to spin your message. Yet neither you, nor the spinners, nor your business allies, actually ever credibly articulated what the specific negatives of such a deal would be (the contemptible catastrophe forecasts by your discredited Treasury modellers, and by your apparently politically motivated Governor of the Bank of England, are no longer believed by anyone – as I am sure you must know).

What could go wrong, and what would go right, in a Sovereign Brexit? The claims of your Remain-loving enablers as to what might go wrong are economic. They relate first to exports from the EU into this country and second to exports from the United Kingdom into the EU. Once even the briefest analysis is conducted, both sets of claims are quickly seen as hogwash.

Exports from the EU into the UK – no disruption threat there

There have been the most extraordinary and juvenile claims of potential (albeit very short-term) shortages in this country after 29th March 2019. Even you, lamentably, mentioned your diabetes and your desire for being sure of your supply of insulin. Who persuaded you to say that? Did you give the slightest thought to how ridiculous that scare story was? Insulin is sold under a wonderful system we call private enterprise, from one company to another. In the UK’s case, it’s mostly a Danish company selling insulin to companies in Britain. The insulin is put on a plane or a boat and comes over to our country. What, do you assert, would prevent this from happening after a Sovereign Brexit? Come on, what? Are you saying that the EU would somehow seek to prevent insulin being placed on a ship or a boat and exported to us? You aren’t saying that, are you? Such an action would be illegal. Or, OK: let’s even say that, however unlikely, the EU indeed decided on 29th March to start acting entirely illegally (again: for a short period of time only, which is all they could possibly ever do). Then the UK would get its insulin from the US, or the Danish company would sell the insulin to Norway, or some other non-EU country, which would then export it on to the UK. Businesses successfully deal with complications of this sort all the time. All that the EU’s (highly, highly unlikely) illegality would result in is the Danish company losing money, one way or another. But you and I know that the EU wouldn’t shoot itself in the foot like that.

So, were you claiming instead that Britain would somehow put up barriers against Danish insulin coming into the country after 29th March? We wouldn’t, would we? Come on, you know that, don’t you? So why did you raise a false scare story, that would have had tens or hundreds of thousands of diabetics worried that their supply of insulin was suddenly going to dry up, when you know it’s hogwash? Isn’t that the sort of rabble-rousing nonsense that we try not to do in the Conservative Party?

Insulin is just an example of any other product that comes into the UK from the EU. We would not prevent any product from arriving; the EU would have no legal locus (or indeed any physical ability) to prevent any product from being sent; can you please just stop being silly and admit that there would be no supply shortages in the UK? (And please, can we in particular try to keep our Conservative ministers from making fools of themselves, in their eagerness to support you, by escalating the level of ludicrousness of such scare stories from a possibility of momentary disruption of a day or two, through to six-week problems, through to six-month problems? The more outlandish their claims get, the less anyone believes them – though some Remainers tactically pretend to. We will actually need to have a set of ministers who are seen as competent by the UK electorate after all this settles down, if the Conservatives wish to remain in power.)

The UK’s exports to the EU – not credible to assert any long-term or even short-term disruption

Let’s turn to the second set of scare stories running against a Sovereign Brexit. We keep being warned about “lorry parks in Kent”. The idea is that Calais will somehow impose restrictions on us, so that we won’t be able to get our goods speedily into France and through to the rest of the EU. Of course, we send just 6% of the UK’s exports through Calais, and those exports can swiftly be diverted to go through other ports, were Calais were to seek to prevent the easy flow of UK goods into Europe. But we needn’t particularly worry about anything like that happening, because every local official from Calais, and the Pas de Calais region, has said that this will not happen. It would take an edict from President Macron – an edict that would be entirely illegal, whether in EU law or in the WTO agreement – to impose such a blockade (Indeed: if you really were to believe – and I for one don’t think you do – that Macron would truly seek to impose an illegal blockade, then it would be utterly abject of you, and unworthy of the Prime Minister of our sovereign nation, to bow to a perception of a threat of this sort).

In any event, let us assume that the worst happens and that Macron does indeed seek some way of blocking British exports into the EU. The French did that once before, when they for a while diverted Japanese VCRs to Poitiers, so that EU manufacturers could win in the VCR market. They were very swiftly brought to court by the WTO and made to stop. Japanese VCRs continued to dominate the world (and the EU) market. France have never tried that trick again. And what would be the result for the French, were they to try it on us? Well, within a couple of weeks, as their just-in-time-systems were affected, thousands of French and German auto workers – possibly tens of thousands, in the unlikely event that the French were successful for more than a few days – would be thrown out of work, as French and German car manufacturing plants had to shut down. Do you really think, Prime Minister, that this would be allowed to happen? Or is your assertion, that somehow the EU would inflict such a monstrous act of self-harm upon itself, just a stance that you are pretending to believe in, so as to insist on this foolish deal that you and the EU are trying to impose upon the British people?

In either case – exports or imports – the very wildest claims are of a possible disruption that would last for, even your wildest claims allege, only a few months. Why, then, should this be the dispositive consideration, when we are talking about Britain’s future for many decades to come? Why would you shackle the country permanently to a lordly EU, in order to avoid a very temporary (and, if you read my above arguments, not going to happen anyway) disruption? Why would you abandon even the threat of a WTO terms deal – and in so abandoning it, allow us to become the hapless prey of what everyone now knows are entirely ruthless EU negotiators?

The Irish Border and the Backstop – a Hoax

On the Backstop, and its claimed urgency and importance, the trick is to look at your language, where one finds your people always using the passive mood – a classic giveaway. You say you are worried about a hard border “being imposed” (passive mood). You do not offer a noun in front of the verb, to show who it is, exactly, that is predicted to be going to do this “imposing”. That’s because, in fact, nobody wants to, nor do they intend to, impose such a border. You have said that Britain will never impose a hard border. The EU has said that it will never impose a hard border. The Irish have said that they will never impose a hard border. The Revenue of the UK has said that imposing a hard border will in all circumstances be entirely unnecessary. Talk of a hard border is nonsense, and you know it. Plan after plan has been published showing how the Irish border question can easily be dealt with, away from the border. To assert that this issue might bring back the IRA, that there will be one disaster or another if we don’t have the Backstop, is irresponsible. Which brings us back to what many aver, that the Backstop is just a cover for implementing some promise you made to the auto industry in 2016, that we would be in some form of Customs Union with the EU – precisely the thing that 17.4 million people voted against.

(And by the way, could you please get your people to stop briefing the credulous media as to how the EU don’t like the Backstop? To believe that – if indeed you do – would be a colossal, monumental piece of self-delusion. The EU love this Backstop, created as it is without an exit clause, with the EU entirely in control as to when – if ever – the backstop is removed. And Leo Varadkar is of course – and rightly – terrified of a Sovereign Brexit because the Irish economy would, unlike the UK’s economy, drastically contract as soon as we stopped buying Irish agricultural products and started buying cheaper, alternative produce from New Zealand and Argentina, were the EU to fail immediately to agree a free trade deal with the UK.)

As constituted in your proposed deal, the Backstop turns Britain into a permanent, shackled vassal state of the EU, subject to all its laws, on which we’d have no say; gradually reduced to a pathetic vestigial outcropping of the EU, with German goods and French produce increasingly defined under EU laws as the only sources that we will be allowed to accept. If the EU wishes – and why should they not? – that Backstop would be for good. Our manufacturing, already half destroyed by our membership of the EU, would continue to shrink, and our farmers and fishers would continue to be at a disadvantage – forever.

The positives of a Sovereign Brexit

So much for the specious arguments that a Sovereign Brexit would be problematic, and that your surrender deal is therefore necessary. But what about the positives for a Sovereign Brexit? I sometimes wonder what Downing Street’s grasp of numbers is like. Do you have any true feel for what £39 billion, so insouciantly promised to the EU in return for illusory favours, could do for this country were we to spend it on ourselves, as we could if we opted for a Sovereign Brexit, rather than giving it away?

For a start, were there any sector (including your much-loved auto sector), but let us say, for example, the agricultural or the fisheries sector, that indeed for some (unlikely) reason suffered during any years of further negotiations, then just a small fraction of this £39bn would be enough to keep those industries whole, for the (in the scheme of things) short period it took to get a free trade deal with the EU. We do not owe this £39bn to the EU. It’s possible that the EU could make an argument for us paying over a small fraction of that amount as one or another obligation, that we might eventually agree, but we certainly wouldn’t pay it any time soon, were the EU to keep on playing the sort of hardball with us that they have adopted so far as their negotiating posture; it would take them years, possibly decades, to establish legally that we owed the money.

Regardless, there is no way that the UK would ever have to pay anything but a small fraction of the full sum. Don’t you think, Prime Minister, that the EU are rather keen to have that money? Do you not see that by ruling out a Sovereign Brexit, and by promising to pay the money before you have agreed a trade deal with the EU, you have taken two enormous bargaining chips off the table? Wouldn’t keeping that money in a Sovereign Brexit scenario make a huge positive impact for the UK?

So, for a start, we’ll have that £39 billion (a sum that in your deal, as we pay it to the EU, will massively and worryingly increase this country’s debt – for no clear return). But a Sovereign Brexit will give us so much more than just that money; we’ll retain our ability to do free trade deals with that part of the global economy from which 90% of future global growth will be coming (you may know this as the ‘not the EU’ world. I hope you sometimes think about it?); we’ll keep our ability to unshackle our entrepreneurs from EU regulation (so that, as just one random example, we can regain the 12% of the global clinical trials industry that we used to have, until EU regulations in 2002 suddenly collapsed our share to around 2%); and above all, the clothing, food and other essentials that the people of the United Kingdom buy in the future being far cheaper as we move outside the protectionist barriers of the EU’s Customs Union and Internal Market.

You know very well, Prime Minister, how all of your allegedly neutral and objective advisers have ostentatiously ignored all of these benefits. You know they have failed to seriously review the many analyses that show that far from a Sovereign Brexit being negative for the British economy, it is likely instead to have a significant positive effect. You know that the insistence of your Treasury officials on publishing neither their models, nor the assumptions they put into those models, make an absolute nonsense of the credibility of those models and a mockery of the alleged impartiality of those officials. Please, Prime Minister: you are juggling with the future of this country. At the very least, you should be honest with the people of this country – both in acknowledging the above points, and in forcing your officials to own up to the way they have jammed their thumb onto one side of the scales of public opinion.

Prime Minister, you are offering us a deal where you propose to break up the Union and hand Northern Ireland over to the EU. You intend to hand over money ahead of any trade deal, thus assuring that whatever is agreed in that deal will be even more horrendous than what you have come up with so far – Gibraltar threatened, our fisheries destroyed, our people deprived of their chance for the benefits of free trade and subjected to semi-permanent, quite likely perpetual, enshacklement to the EU. You have gone back on every single promise you made when the Conservative Party made you their leader, when you gave your Lancaster House speech, when you said “Brexit means Brexit”.

The sorry band around you are desperate for your deal to go through because if we went for a Sovereign Brexit instead, they, and their enablers in the media and big businesses, would be exposed as the complete charlatans that they are, when a WTO terms Leave is implemented (the Leave that those 17.4 million voters expected to happen). This is why your myrmidons are fighting so hard, because all of them – your advisers, the civil servants involved, the Treasury forecasters, your small clique of Remain ministers, The Economist, the FT, the BBC, and on and on – would have no choice but permanently to disappear from public life once we implemented a Sovereign Brexit and all their egregious negative spinning and outrageous scare stories were proved as false as their original 2016 Project Fear was.

You, however, Prime Minister, have a glorious chance to escape their fate, by doing one thing: you can still, now, and energised by Juncker’s utterly disrespectful behaviour to you in this past week, turn around to the European Union and say, finally:

“Fine. I understand you don’t want to do a deal. We’re now going to go full bore for a Sovereign-terms Brexit. Let’s sort out some administrative things like us allowing you to fly your planes over the UK, but other than that, let’s see each other in Geneva at the WTO. Do come back to us if you want to discuss some kind of Canada-plus deal, but otherwise, let’s all spend our time constructively in the next three months preparing for Britain’s Sovereign Exit from the EU.”

For the sake of our country Prime Minister, please take this chance. Now.

The post A plea to the PM from a Leave-supporting businessperson: Stop the scare stories and embrace a Sovereign Brexit appeared first on BrexitCentral.

WATCH: What is Fox’s medical verdict on May’s deal? “It’s recovering.”

“They’re not going to renegotiate the withdrawal agreement…but how do you operate it in a way that’s acceptable to both sides?”

The UK’s unnoticed export boom underlines why a no-deal Brexit is nothing to fear

A true economic miracle is happening. An extraordinary leap in the UK’s global export trade has occurred – a complete reverse of the ‘Doomsday’ predictions of the Treasury, Bank of England and Department for Business in London both before after the Brexit vote. According to figures published by the UK Office of National Statistics in […]

The post The UK’s unnoticed export boom underlines why a no-deal Brexit is nothing to fear appeared first on BrexitCentral.

A true economic miracle is happening. An extraordinary leap in the UK’s global export trade has occurred – a complete reverse of the ‘Doomsday’ predictions of the Treasury, Bank of England and Department for Business in London both before after the Brexit vote.

According to figures published by the UK Office of National Statistics in November – in the second calendar year following the EU referendum – exports to non-EU countries were £342 billion while exports to EU countries were £274 billion.

In the same period, the growth in exports continued to outstrip the growth in imports, almost halving the UK’s trade deficit from £23.4 billion to £15.8 billion. Most exceptionally, since the referendum, exports have increased by £111 billion to £610 billion.

Doubters will say it is a temporary blip caused by the falling pound. Not true. The boom is in new markets, and largely in new products and services, too. UK exports not just increased but doubled in hitherto obscure countries such as Oman and Macedonia. Exports to distant Kazakhstan climbed to $2 billion, only slightly less than the UK’s exports to Austria, worth $2.43 billion in 2017, which like many EU nations buys very little from the UK.

In the 12 months to September, the value of UK exports grew by some 4.4%, including strong growth in the manufacturing sector. Indeed, HMRC stated that exports of goods had shown “robust growth in every single region of the UK”. The number of Welsh SMEs which export doubled during the last two years to 52%.

Curiously, none of this has been spotted by any of the UK’s headline media – the BBC, Sky News or the FT. Not a peep from the new editor of the Daily Mail. Even The Economist was asleep on the job. Meanwhile, various government departments are spending much of their time issuing ‘Death in Brexit’ forecasts in a co-ordinated campaign with the Bank of England and other allies – and rarely champion our achievements.

Four years ago I was interviewed by Richard Cockett, The Economist’s UK business editor. I told him the UK was experiencing an unparalleled SME boom. How did I know, he asked? Since leaving the FT as a technology correspondent and columnist in 2003, my small team in central London has maintained a uniquely comprehensive database of more than 70,000 UK smaller companies.

As a result, daily we receive an avalanche of success stories. In the food and drink sector alone, if you want whisky marmalade or beetroot ketchup, or 500 new gin varieties or more than 1,000 new craft beers launched since 2011, our very brave, risk-adoring micro-SMEs will deliver.

If a New York cathedral needs a new, hand-made organ that £3 million contract comes to Britain. We sell sand to Saudi Arabia, china to China, and Turkish delight to Turkey. In the ultra-competitive auto components sector, UK exports are up 20%. Luxury goods, consumer goods, clever instrumentation for NASA and crucial cerebral input into US defence projects are all avidly listed in our dataset.

And yet, in our view the true importance of the export boom is as much political as economic. It proves that a No-Deal exit from the EU – or what I much prefer to call ‘Our Own Deal’ – is by far the best option, and far less damaging and disruptive than the ‘experts’ at the Bank of England, IoD, CBI, OECD and World Bank have forecast.

Far from being the ‘poverty and isolation’ scenario predicted by the chin tremblers who endlessly appear on Radio 4, the UK will be far much dependent on the EU in as little as five years.

Fears about UK-made cars from Japanese firms such as Nissan and Toyota being cut off from Europe are groundless. First, the UK could retaliate against BMW and VW – something no post-Merkel German politician would tolerate. Any anti-Japanese actions by the French would result in the rapid diminution of the £4 billion annual exports of French cosmetics to Japan. And the French know it, no matter what Macron might bluster.

But the export explosion is not the only piece of recent great news for the UK – there is more. First, in October 2018 Japan’s Prime Minister, Shinzo Abe, invited the UK to become part of the Pacific free trade pact – although this is dependent on the UK leaving the EU’s Customs Union. It would make the UK the sole geographically-distant member of the grouping, helping the country to rebuild trading links around the Pacific Ocean that stretch back more than two centuries.

Next, BP’s huge Claire Ridge oilfield, west of the Shetlands, just came on stream, providing no less than £42 billion in revenues over the next 25 years. It is a development much envied across energy-starved Europe – and there are more oilfields to come.

At this critical moment in the Brexit saga, it is vital the UK now wakes up to the much brighter future it has outside of the EU, and vital that Mrs May copies the bravery of our SME exporters. The so-called ‘No-Deal’, a term that needlessly frightens ordinary citizens, should indeed be re-named ‘Our Own Deal’, in which we invite all nations to trade with us on fair trade, low or no tariff, basis.

The UK economy will soon be in a solidly secure position to refuse any damaging ‘deal’ from the European Commission. Perhaps it was always the height of imbecility to think we could ever get a good deal from the Commission.

Finally, the tide of history is in our favour, even in Europe. The current, sub-optimal generation of European politicians – Cameron, Merkel, Juncker – will soon ‘be history’. Merkel goes next year – and every EU Commissioner will be replaced, too.

As Brexit talks limp from one embarrassment to the next, a No-Deal option will not be the doomsday Theresa May, the financial and property elites, and the heads of the UK’s top organisations and PLCs have long predicted. In fact the UK should never have negotiated with the Commission – from whom no fair deal was ever possible. The UK should introduce its own deal, ‘Our Deal Now’, in which we offer all nations fair trade agreements with no or low tariffs.
For hundreds of thousands of small UK companies, a complete split from the EU can’t come soon enough.

The post The UK’s unnoticed export boom underlines why a no-deal Brexit is nothing to fear appeared first on BrexitCentral.

Parliament endorses Brussels’ plan to split quotas after Brexit

The European Parliament’s trade committee today backed a draft law to grant the European Commission special powers to reduce EU food import quotas after Brexit. The law would allow Brussels to unilaterally carve out Britain’s share from EU food import quotas, if it fails to reach an agreement with World Trade Organization countries in time […]

The European Parliament’s trade committee today backed a draft law to grant the European Commission special powers to reduce EU food import quotas after Brexit.

The law would allow Brussels to unilaterally carve out Britain’s share from EU food import quotas, if it fails to reach an agreement with World Trade Organization countries in time for Britain’s exit from the EU customs union.

Parliamentarians only slightly amended the Commission’s original proposal and will now enter into negotiations with the Commission and EU countries on the final text of the law.

In the amendments, Parliament tried to ensure that the Commission would cut the EU’s tariff-free food import quotas by an amount equal to Britain’s average share, and would not go for a smaller reduction — which farmers fear would result in lower food prices, as the imported beef, milk, sugar and other foodstuffs are spread among a smaller market after Brexit.

The new amendments call for “ensuring that the market access into the Union as composed after the withdrawal of the United Kingdom does not exceed that which is reflected in the share of trade flows during a representative period.”

Another amendment automatically extends the Commission’s powers to do these adjustments from the original four years to perpetuity, should Britain remain in the EU customs union for longer than expected.