Philippa Stroud: The Legatum Prosperity Index. The UK is in a strong position, but there are the first signs of deterioration.

16 Nov

Baroness Philippa Stroud is CEO of the Legatum Institute.

The UK is facing two major challenges. The ongoing pandemic, and national efforts to contain it, are impacting not just our health but also our jobs, our children’s education, and our relationships with each other and with the state. At the same time, we are approaching the end of the Brexit transition period and will soon be re-defining our place in the world and re-establishing our relationships with other countries outside of the European Union.

There are clear challenges for the UK to overcome, but also opportunities to grasp. The choices we make now will create the foundations and form the character of the nation we will be in the future; we need to decide carefully.

The good news is that the 2020 Legatum Prosperity Index shows the UK is in a strong position to emerge more prosperous from this time. Prior to the pandemic, the UK was the 13th most prosperous country in the world. On average, the British public enjoyed among the best living conditions globally, with access to quality healthcare and world-leading higher education institutions, and our economy was one of the most dynamic and enterprising in the world.

However, the last few years have seen the first signs of the deterioration of our prosperity, showing we must not take it for granted. This is not an irreversible trend, but it is a warning signal.

We must beware the trap of falling into a mindset of an overdeveloped society, vulnerable to entitlement and complacency. If we lose sight of our values and heritage, if we sacrifice innovation, purpose, and meaning out of a desire to avoid change and risk, we will create a window through which the hard-won prosperity of our forebears will evaporate.

The Prosperity Index reminds us of the multi-dimensional nature of true prosperity. Implicit in the Index is the danger of prioritising only one aspect above others, and at a time of crisis shows us what we need to protect.

Prosperous nations build healthy institutions, strong economies, and strong social wellbeing simultaneously. They do not trade freedom or the economy off against health or education.

The pandemic is testing the UK’s institutional, economic, and social resilience. One of the most deeply felt effects has been the change in how we interact with others – family, friends, neighbours, colleagues, and strangers. Over the last 10 years, the strength of personal and family relationships in the UK has deteriorated, and the strength of wider social networks has increased less than in other nations.

In addition, public confidence in national government is among the lowest levels seen across the world. This is not a reflection on any individual administration – levels of public confidence have fluctuated significantly over the last 15 years – but is perhaps a result of the testing times we have been through over the last few years, including the Brexit referendum and a number of general elections and leadership changes.

While our governance systems are still relatively strong, the UK has also experienced a decline in government effectiveness – of the 20 countries currently ranked highest for this, the UK has deteriorated most since 2017. This is deeply worrying, as good governance and decisive and effective leadership will be crucial to guide the UK through the pandemic and create a more prosperous society in the future.

As we go through this moment of change, we need to take a holistic approach to protecting prosperity. We need to protect the public from the harms of Covid, but also from the harms of restrictions. We need to suppress the virus without suppressing our freedoms or the potential for economic growth.

The UK’s current Covid response may be saving lives from the virus itself but it is putting them at risk in a variety of other ways. The cost of lockdown is high, in terms of deaths from cancer, heart disease and other illnesses, mental health challenges, loneliness, reduced economic growth, financial struggles, and educational decline, and it is being paid by the most vulnerable in society.

China was the first country to be impacted by Covid, and its response framed the context for the UK and much of the rest of the world. Its approach was one that moved to restrict the freedoms of its people and lock down its economic engine. Such actions are consistent with China’s ranking of 90th in the Index for governance and 159th for personal freedom but they are not the actions that build prosperity, they are ones that weaken it.

As a democratic nation built on the principles of good governance and personal freedom, the UK needs to be finding ways through this crisis that speak to the power and strength of who we are and the values of our democracy.

This is a time for mature citizenry, a moment for the UK Government to trust its people, and for people to respond by taking responsibility for their actions. Decisions should be made in a transparent way, sharing the evidence and explaining the rationale.

The public needs to be let into the decision-making process as much as possible, through reliable, accurate and timely information. We should be trusted to understand the conflicting demands placed on leaders and to reflect sensibly on the likely consequences of different approaches, not just presented with a few selected indicators.

This moment, as we battle with Covid and the transition period comes to an end, is an opportunity to re-establish a clear, bold vision for the country’s future and its character. For developed nations like the UK there are no well-worn paths for the journey ahead – we need to create them. But the Prosperity Index shows us what we need to protect and develop in order to build well for the future.

We must work together to continue building an inclusive society, with a strong social contract that protects the fundamental liberties and security of every individual. We must innovate together to continue developing an open economy, that harnesses ideas and talent to create sustainable pathways out of poverty. And we must all play our part to continue creating an enabling environment, so the contributions of each person can increase the quality of life and standard of living for everyone.

Although the world has changed, how prosperity is generated and perpetuated in a nation has not. The UK has overcome significant challenges in the past, and by working together and focusing on the core principles that build prosperity, we can be confident that we can do it again.

Stephen Booth: The Brexit trade talks, the romance and realities of fishing, and its crucial importance for Scotland

29 Oct

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

UK and EU negotiators are now targeting a mid-November deadline to reach a trade agreement. This would give the European Parliament enough time to consider the treaty and hold a vote on it in the last session of the year, due in the week of December 14 – only two weeks before the Brexit transition period ends.

A fortnight ago, a public row erupted due to the apparent suggestion from EU leaders that further compromises all had to come from the UK side and that this was a precondition for “intensified” negotiations. After Downing Street declared the talks “over”, some on the EU side, including Angela Merkel, the German Chancellor, and Mark Rutte, Dutch Prime Minister, sought to immediately defuse the situation, saying the bloc was also willing to make concessions. Ultimately, it took Michel Barnier’s speech to the European Parliament, in which he said it was his intention to “seek the necessary compromises on both sides”, to get the UK to confirm that talks were back on track.

After these theatrics, the EU does appear to have dropped its insistence that the most difficult areas must be settled before progress can be made on lower hanging fruit. The Financial Times reports that much of the talks this week have been engaged with the technical process of agreeing common legal text in areas where there is already considerable agreement, including many of the rules for trade in goods and services, with a mixture of EU and UK drafts being used to reach a consolidated text.

The fact that very little has leaked out of this week’s round of talks is a positive sign that these negotiations are now serious and, indeed, “intensive”. Simon Coveney, the Irish Foreign Minister, this week stated optimistically that: “We’re likely to get a deal, but it won’t be easy.” Charles Michel, the EU Council President, was more equivocal, noting that the two sides have yet to overcome their differences on “level playing field” guarantees, fishing, and the deal’s enforcement.

As I noted in my previous column, the differences over subsidies seem to be narrowing and fishing is increasingly emerging as the major sticking point.

Fishing’s political symbolism is outsized compared to its economic importance to either side. The industry is not significant across the UK – it makes up only around 0.1 per cent of gross value added. The economic contribution is similar in Spain, Denmark and France, which together account for over half the total EU catch.

On the UK side, we know that the Common Fisheries Policy was long viewed as one of the major inequities of British membership and fishing communities were among the most vocal supporters of Leave in the EU referendum. In 2017, around 35 per cent of fish landed by EU vessels from the north Atlantic came from UK waters. By contrast, only 13 per cent of fish landed by UK vessels came from EU waters.

There is a certain romance that an island nation attaches to the sea-faring industry. But cold, hard political realities also explain the significance of fishing in this negotiation. Although not a major national employer, the industry is of course very important to particular communities – often remote, such as along the west coast of Scotland, in Wales and Northern Ireland, with limited other employment opportunities – and, ultimately, the negotiation is a zero-sum game for both sides. More fishing quota for the UK means less for the EU.

For a Conservative Government with increasing reason to be concerned about the state of the Union, there is obvious political benefit to ensuring a better settlement. According to the Government’s statistics, the UK’s largest and most valuable fish landings are in the north-east of Scotland, where larger trawlers tend to operate. 40 per cent of fishers working on UK boats are on Scottish boats. Should the UK gain extra quota, this region is likely to benefit the most. A Brexit dividend for Scotland would be an important win.

The EU knows that the UK has leverage when it comes to fishing access. A failure to reach a deal would mean the UK was under no obligation to provide access to foreign boats at all. Brussels had therefore wanted a deal on fishing rights settled in July, well before the final horse-trading of end-game negotiations.

Nevertheless, a wider trade deal – if it includes a better quota share – is also in the interests of the UK fishing industry. The UK imports most of the fish British consumers want to eat but exports most of the fish UK vessels catch. The EU is by far the biggest market for UK exports. It should also be noted that the wider fish processing industry is a larger, although less vocal, employer than the catch sector. Failure to reach a trade deal would increase costs for UK exports and the processing industry via new trade barriers.

Brussels’ starting position – described as “maximalist” by Barnier – was essentially that its fishing rights in UK waters should not change after the transition period. The EU has so far turned down the UK’s request to move to a new regime of annual quota negotiations – a model the UK recently agreed with Norway.

A possible compromise is likely to rest on establishing a process under which EU fleets’ catch would be phased down over a number of years. The UK would regain a much greater share of future catch opportunities but EU fishing communities would be assured of their rights over the medium-term. How the 100 or so stocks that are up for discussion might be apportioned could also present opportunities to ensure certain political constituencies are prioritised.

So far, Emmanuel Macron, the French President, has been steadfast in his belief that the EU should stand firm on fishing access, vowing to scupper any Brexit deal that “sacrifices” French fishermen. He is aware of a potential political backlash in coastal and rural areas.

However, despite the rhetoric, reports suggest that in private, at least, the French government is preparing the industry for a compromise. It should be noted that Macron is also effectively negotiating with the rest of the EU about how much of the residual quota France will get in the future.

Given the wider economic and political issues at stake, it still seems unlikely that fishing will be the deal-breaker. Macron is likely to come under increasing pressure from member states most exposed to no deal – Ireland, Belgium, the Netherlands and Germany – to moderate his position. However, it is clear that the political choreography of reaching a deal on this issue is vitally important on both sides of the table.

Jason Reed: Taiwan, Britain and the UN. It’s time to rethink the One-China Policy.

25 Sep

Jason Reed is External Communications Officer at the British Conservation Alliance.

The World Health Organisation (WHO), which is an arm of the UN, has come under a great deal of scrutiny this year as a result of its disastrous leadership throughout the pandemic, the most troubling aspect of which is its close links with China.

When the Coronavirus first emerged, transparency of information in government was suddenly more pivotal than ever before. But little to no information sharing occurred between countries at that crucial time, thanks to the combination of the WHO being at Beijing’s behest and the Chinese Communist Party’s aversion to openness of any kind. The cost of that failure was tens of thousands of lives.

The CCP’s tentacles extend far beyond the WHO, of course. The Chinese government has spent the last several decades worming its way into every corner of the UN. Perhaps the most obvious manifestation of that is the UN’s persistent refusal to recognise Taiwan as anything other than Chinese territory.

Imperialism is alive and well in the twenty-first century. China, a modern colonial power, still claims sovereignty over Taiwan, despite the fact that Taiwan has been an independent country for over 70 years, and its government was democratically elected by its population of 24 million.

Taiwan’s exclusion from the UN has nothing to do with Taiwan itself. It’s not as if the UN considered Taiwan’s request to join and rejected it on merit. Even North Korea is a member, after all. The UN simply refuses to acknowledge Taiwan’s existence. It is so beholden to the will of the Chinese government that it does not dare contradict anything that comes out of Beijing. What is the point of an international peace project if it reliably does the bidding of a communist dictatorship?

If there was ever a time to put our foot down and begin to roll back China’s power on the world stage, it is now. “De-Sinoficiation” will define international relations in the coming decades. The Coronavirus coverup, along with flagrant assaults on democracy in Hong Kong and the appalling genocide of the Uyghur Muslims in Xinjiang, mean that the world has no choice but to begin to distance itself from the CCP.

This will be an almighty task. For at least forty years, our politics and our economies have gradually become more and more intimately connected with those of China. Disentangling ourselves from that relationship will be a lengthy and arduous process. Finally deciding to exclude Huawei from our 5G network was the first step on a very long road.

But it is a journey we must make. De-Sinoficiation is a necessary task. The entire western world has effectively turned a blind eye to China’s wrongdoing for far too long. The watershed moment has now passed – there is no going back. In order to preserve any semblance of a liberal, globalised world order, China must be knocked off its omnipotent pedestal and held accountable for its actions.

Taiwan’s right to exist as an independent nation seems a good place to start. The right and wrong of the issue is clear-cut and it has always been a touchy area for the CCP, whose greatest fear is its sweeping authority being undermined.

In the Economist’s democracy index, Taiwan ranks third in Asia and 31st in the world (higher than Italy and Belgium). Meanwhile, China languishes among the fifteen least democratic countries, making it more authoritarian than Cuba and Iran. While Taiwan was legalising same-sex marriage, making it the first country in Asia to do so, China was writing ‘Xi Jinping Thought’ into its constitution.

Taiwan stands ready and able to become a fully-fledged member of the international community. There ought to be no question about its validity as an independent country. You might even argue that the island nation, which calls itself the Republic of China, has a much stronger claim to be the Chinese government than Beijing.

On top of everything else, Taiwan is a trailblazing Covid success story. Its total death count from the pandemic to date is seven. The Taiwanese government is also going above and beyond any reasonable expectations in order to build friendships with other democracies around the world, including the UK.

Despite the western world unfairly shunning it in favour of China’s economic might, Taiwan continues to behave courteously towards its would-be allies. For instance, the Taiwanese government donated over a million face masks to the NHS at the height of the British coronavirus outbreak.

Since then, Taiwan has – politely – asked to join the UN and be recognised as an independent nation, calmly pointing out the enormous body of evidence and precedents in its favour. Those calls have gone unheard. Some bridge-building is going on – such as through UK Export Finance investing in a Taiwanese renewable energy project – but it will never go far enough while China is still in the picture.

The British left is beginning to stake its flag in Beijing apologia. Now is the time for Conservatives to demonstrate what post-Brexit Global Britain could look like by standing up for freedom on the world stage. The first step ought to be reconsidering the long-outdated One-China Policy, which would surely cause a ripple of similar actions across the west and – potentially – force the UN to reconsider its close relationship with China.

The Government has an opportunity to lead the world on de-Sinofication and create a valuable new ally for Britain in the process. Let’s not waste any more time.

What is the current status of Europe’s situation with Covid-19?

20 Aug

Yesterday, ConservativeHome updated readers on the current status of the UK’s situation with Coronavirus (today there are 1,182 new cases and six deaths recorded within 28 days of a positive test). The next question is, of course, how this compares to Europe.

There are a number of different sources offering information on European rates, some of which contradict each other, due to when the data was collected and uploaded onto sites. For the purpose of consistency, we have gone with John Hopkins University of Medicine’s Coronavirus Resource Centre, and have chosen a selection of countries that are often compared to the UK.

Belgium

There have been 582 new cases and 10 new deaths in the past day; the record high being 2,454 on April 15 and 496 on April 10, respectively.

France

France’s data hasn’t been uploaded yet, but over the past week it has had 12,446 new cases and 59 new deaths.

Germany

1,586 new cases and eight new deaths in the past day; the record high being 6,933 on March 27 and 510 on April 15, respectively.

Greece

212 new cases and three new deaths in the past day; the record high being 251 on August 14 and 10 on April 3, respectively.

Italy

642 new cases and seven new deaths in the past day; the record high being 6,557 on March 21 and 919 on March 27, respectively.

Spain

6,671 new cases and 127 new deaths in the past day; the record high being 16,269 on August 17 and and 1,179 on June 19, respectively.

Sweden

192 new cases and 12 new deaths in the past day; the record high being 2,530 on June 29 and 185 on April 21, respectively.

United Kingdom

When measured in the same timeframe, it has 831 new cases and 17 new deaths; the record high being 5,505 on April 22 and 1,224 on April 21.

Some conclusions

Looking at these statistics, it’s clear that trying to compare countries in terms of their fight against Covid-19 is far more complicated than it seems.

While there has been concern about about rising cases in the UK, it is by no means the worst affected in this respect (take Spain). Also it is interesting that Sweden, having received huge criticism for its approach, now only has 192 new cases, and a rapidly declining death rate. The fact that it has “flattened the curve” without enforcing a full lockdown raises many questions about how much of Covid-19’s decline can be attributed to the intervention (versus a natural decline).

Another interesting pattern to observe is that having a high number of cases, relative to other countries, cannot be taken alone as measure of how successfully it has fought Covid-19. Germany, for instance, has much more new cases than Sweden, but it has less deaths, indicating that – as has been remarked on before – its healthcare system is much better equipped than others’.

It’s also worth looking at some of the curves for different countries, which can be seen on Google (if you search for a country’s name and “Covid cases/deaths”).

In terms of deaths, most countries display the same pattern – one peak and then a gradual decline – albeit on different timelines. Even Greece, which has one of the lowest death rates, has a noticeable peak in April (nine deaths).

Perhaps the biggest outlier in terms of the curve, both for deaths and cases, is Spain. It has a clear peak in deaths in March (929 deaths) then another higher one in June (997) – although it does seem to have trailed off. Cases have recently been on the rise again, hence why politicians have been concerned about the possibility of a second wave in the country. But it’s worth remembering that the detection of cases is also a paradox of improvements in testing regimes.

As another thesis, it may be the case that countries that went into lockdown fastest will see harsher spikes as the economy reopens again, as opposed to Sweden which lived with the virus. It has been hypothesised that Covid-19 has a u-shaped curve, regardless of intervention, but if an intervention is applied, it may distort the pattern of Covid-19 on a graph. There will be spikes and the appearance of the second wave (when it may be the first one still coming through). In Greece, which was one of the fastest to lockdown, this could potentially happen.

Overall, while there has been concern about cases across the continent – with France planning to make masks compulsory across all workplaces – it’s clear that deaths have fallen rapidly. When making sense of these figures, politicians and journalists should use as many as possible in conjunction to assess the situation with Coronavirus. They should look at the big differences between cases and deaths per day, compared to what they were at the peak.

By all indications, there is reason to be optimistic that the most dangerous statistics are coming under control.

Stephen Booth: Why Stilton matters to the Japanese trade deal – and how talks can bring the UK closer to the CPTPP.

20 Aug

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

Global trade is the result of billions of individual decisions taken by businesses and consumers, but trade negotiations and agreements are inherently political. They not only require politicians and policymakers to haggle, in painstaking detail, over tariffs, quotas, rules and regulations; trade deals are also tools of foreign policy and in an increasingly unsettled, competitive and multi-polar world they can signify alliances between nations or groups of nations. Outside the EU, the UK’s trade agreements must therefore simultaneously address narrow economic and wider geopolitical interests.

Last week, we learnt that the UK-Japan trade talks had hit a roadblock over UK demands for greater market access for exports of Stilton cheese. The talks still seem likely to conclude successfully but the episode illustrates how seemingly small issues can play a disproportionate role in trade negotiations.

This would be a significant agreement for the UK. Japan is the third largest economy in the world and an increasingly important strategic ally for the UK post-Brexit. A UK-Japan trade deal is also an important step towards the UK’s accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Total UK exports to Japan are already worth around £14 billion, just over half of which are in services, so increasing the market for UK blue cheese exports, which is currently worth around £100,000 in Japan, might appear a strange issue to potentially derail the talks. However, the UK’s demands on Stilton have not simply come out of the blue.

Growth in cheese exports is a recent UK success story, with the Department for International Trade (DIT) noting that the UK made it into the top ten cheese exporters worldwide in 2018, selling £665 million worth, almost half of which was cheddar. Growth in Asian markets in particular has been strong, with demand in China rising from £67,000 in 2013 to £6.5 million in 2018, so it is not unreasonable for the UK to seek greater opportunities for these products in Japan.

More significantly, the UK-Japan deal will replace the EU-Japan deal, which will cease to apply to the UK when the Brexit transition period ends on January 1, 2021. The goal, largely on the insistence of Japan, has been to seek a new agreement, rather than simply copy and paste the existing EU-Japan deal. Inevitably, however, with time tight, these talks have not departed significantly from the EU-Japan precedent with regard to trade in goods (services and data are likely to be the more innovative aspects of a UK-Japan deal).

“Automotive for agriculture” was a major feature of the EU-Japan negotiations and, in this case, Japan has been targeting an immediate removal of UK car tariffs, whereas the EU-Japan agreement only provides for phased reductions over several years. The UK has understandably countered that it cannot make the concession for nothing in return.

Under the EU-Japan deal, Japanese tariffs on hard cheeses such as cheddar would be phased out by 2033. But for blue cheeses, such as Stilton, there will only be duty-free access on an agreed quota. Reportedly, the UK has also targeted a faster reduction to Japanese tariffs on pork. If the UK is successful in increasing the quota or removing tariffs faster, it will have achieved concessions the EU did not, which would have obvious symbolic significance for Brexiteers.

We don’t yet know the full details of the eventual UK-Japan deal but the likely compromise is that neither side will get as much as they would like on cars or agriculture. Ultimately, this kind of tussle is part of the theatre of end-game trade negotiations, where both sides need to be seen by domestic audiences to be fighting hard over every inch. Indeed, given the importance of getting the agricultural lobby onboard in various UK trade negotiations to come, going into bat for British agriculture now is not a bad PR move for the Government.

Some commentators have questioned whether spending political capital on trade agreements is worth the candle since the estimated macroeconomic gains from them are relatively small. DIT estimates the increase to UK GDP from a Japan deal will be 0.07 per cent over the long run, while a deal with the United States would provide up to a 0.16 per cent boost.

Putting aside a valid debate about how accurately existing models capture all the facets of comprehensive modern trade agreements, these types of numbers are not unique to UK FTAs. The EU-Japan deal (the biggest ever completed by the EU) was estimated to boost EU GDP by 0.14 per cent, a figure regarded by independent researchers as “plausible, though at the high end of the range of past estimates”.

Ultimately, for advanced and open economies, trade agreements are rarely macroeconomically significant. They are opportunities to address microeconomic issues and require trade-offs to be made between them. These decisions can be hugely important for individual sectors, which is why they can be politically controversial.

Beyond any quantifiable economic benefits, closer economic and political cooperation via trade agreements presents an opportunity to build coalitions to help shape the course of regional or global developments. Successful conclusion of the Japan agreement and accession to the CPTPP will boost the economic and political relevance of the UK in the Indo-Pacific region, which is likely to host most of the world’s economic growth in the years ahead.

Similarly, Japan’s enthusiasm to reach a deal with the UK is not only about commerce. Foreign Minister Toshimitsu Motegi’s recent trip to London also provided a chance to discuss bilateral co-operation on security and defence, including the UK’s stronger stance towards China on issues such as Huawei and Hong Kong. A trade deal is another way to strengthen strategic bonds.

It is worth keeping this mind as another round of UK-EU talks – in this case to loosen ties – get underway this week. The Remain campaign had wanted the Brexit debate to be about trade above all else, but it was always primarily about politics. All trade agreements are political, but the level of economic and legal integration in the EU means it is as much, if not more, about politics than trade. Remain lost because it was unable, or unwilling, to make the intrinsic case for political union, or at least that it should be tolerated.

Indeed, the most significant macroeconomic consequences of Brexit – leaving the customs union and the single market – flow from the political desire to “take back control” of trade and regulatory policy. Continued dependence on Brussels in these fields without a vote in the EU’s political institutions was always likely to be untenable for the UK in the long-term.

Equally, sovereignty is never absolute. The more integration the UK seeks from trade agreements with the likes of the US and the CPTPP in the future, the more the UK will face difficult political trade-offs over its approaches to various issues from agricultural liberalisation to the regulation of data. Existing trade flows and geographical proximity to the EU will inevitably play some role in how the UK takes these decisions over the long-term.

However, it shouldn’t be a surprise that Brexit means treating the EU much more like any other trade partner. It’s the politics, stupid!

Stephen Booth: Why Stilton matters to the Japanese trade deal – and how talks can bring the UK closer to the CPTPP.

20 Aug

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

Global trade is the result of billions of individual decisions taken by businesses and consumers, but trade negotiations and agreements are inherently political. They not only require politicians and policymakers to haggle, in painstaking detail, over tariffs, quotas, rules and regulations; trade deals are also tools of foreign policy and in an increasingly unsettled, competitive and multi-polar world they can signify alliances between nations or groups of nations. Outside the EU, the UK’s trade agreements must therefore simultaneously address narrow economic and wider geopolitical interests.

Last week, we learnt that the UK-Japan trade talks had hit a roadblock over UK demands for greater market access for exports of Stilton cheese. The talks still seem likely to conclude successfully but the episode illustrates how seemingly small issues can play a disproportionate role in trade negotiations.

This would be a significant agreement for the UK. Japan is the third largest economy in the world and an increasingly important strategic ally for the UK post-Brexit. A UK-Japan trade deal is also an important step towards the UK’s accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Total UK exports to Japan are already worth around £14 billion, just over half of which are in services, so increasing the market for UK blue cheese exports, which is currently worth around £100,000 in Japan, might appear a strange issue to potentially derail the talks. However, the UK’s demands on Stilton have not simply come out of the blue.

Growth in cheese exports is a recent UK success story, with the Department for International Trade (DIT) noting that the UK made it into the top ten cheese exporters worldwide in 2018, selling £665 million worth, almost half of which was cheddar. Growth in Asian markets in particular has been strong, with demand in China rising from £67,000 in 2013 to £6.5 million in 2018, so it is not unreasonable for the UK to seek greater opportunities for these products in Japan.

More significantly, the UK-Japan deal will replace the EU-Japan deal, which will cease to apply to the UK when the Brexit transition period ends on January 1, 2021. The goal, largely on the insistence of Japan, has been to seek a new agreement, rather than simply copy and paste the existing EU-Japan deal. Inevitably, however, with time tight, these talks have not departed significantly from the EU-Japan precedent with regard to trade in goods (services and data are likely to be the more innovative aspects of a UK-Japan deal).

“Automotive for agriculture” was a major feature of the EU-Japan negotiations and, in this case, Japan has been targeting an immediate removal of UK car tariffs, whereas the EU-Japan agreement only provides for phased reductions over several years. The UK has understandably countered that it cannot make the concession for nothing in return.

Under the EU-Japan deal, Japanese tariffs on hard cheeses such as cheddar would be phased out by 2033. But for blue cheeses, such as Stilton, there will only be duty-free access on an agreed quota. Reportedly, the UK has also targeted a faster reduction to Japanese tariffs on pork. If the UK is successful in increasing the quota or removing tariffs faster, it will have achieved concessions the EU did not, which would have obvious symbolic significance for Brexiteers.

We don’t yet know the full details of the eventual UK-Japan deal but the likely compromise is that neither side will get as much as they would like on cars or agriculture. Ultimately, this kind of tussle is part of the theatre of end-game trade negotiations, where both sides need to be seen by domestic audiences to be fighting hard over every inch. Indeed, given the importance of getting the agricultural lobby onboard in various UK trade negotiations to come, going into bat for British agriculture now is not a bad PR move for the Government.

Some commentators have questioned whether spending political capital on trade agreements is worth the candle since the estimated macroeconomic gains from them are relatively small. DIT estimates the increase to UK GDP from a Japan deal will be 0.07 per cent over the long run, while a deal with the United States would provide up to a 0.16 per cent boost.

Putting aside a valid debate about how accurately existing models capture all the facets of comprehensive modern trade agreements, these types of numbers are not unique to UK FTAs. The EU-Japan deal (the biggest ever completed by the EU) was estimated to boost EU GDP by 0.14 per cent, a figure regarded by independent researchers as “plausible, though at the high end of the range of past estimates”.

Ultimately, for advanced and open economies, trade agreements are rarely macroeconomically significant. They are opportunities to address microeconomic issues and require trade-offs to be made between them. These decisions can be hugely important for individual sectors, which is why they can be politically controversial.

Beyond any quantifiable economic benefits, closer economic and political cooperation via trade agreements presents an opportunity to build coalitions to help shape the course of regional or global developments. Successful conclusion of the Japan agreement and accession to the CPTPP will boost the economic and political relevance of the UK in the Indo-Pacific region, which is likely to host most of the world’s economic growth in the years ahead.

Similarly, Japan’s enthusiasm to reach a deal with the UK is not only about commerce. Foreign Minister Toshimitsu Motegi’s recent trip to London also provided a chance to discuss bilateral co-operation on security and defence, including the UK’s stronger stance towards China on issues such as Huawei and Hong Kong. A trade deal is another way to strengthen strategic bonds.

It is worth keeping this mind as another round of UK-EU talks – in this case to loosen ties – get underway this week. The Remain campaign had wanted the Brexit debate to be about trade above all else, but it was always primarily about politics. All trade agreements are political, but the level of economic and legal integration in the EU means it is as much, if not more, about politics than trade. Remain lost because it was unable, or unwilling, to make the intrinsic case for political union, or at least that it should be tolerated.

Indeed, the most significant macroeconomic consequences of Brexit – leaving the customs union and the single market – flow from the political desire to “take back control” of trade and regulatory policy. Continued dependence on Brussels in these fields without a vote in the EU’s political institutions was always likely to be untenable for the UK in the long-term.

Equally, sovereignty is never absolute. The more integration the UK seeks from trade agreements with the likes of the US and the CPTPP in the future, the more the UK will face difficult political trade-offs over its approaches to various issues from agricultural liberalisation to the regulation of data. Existing trade flows and geographical proximity to the EU will inevitably play some role in how the UK takes these decisions over the long-term.

However, it shouldn’t be a surprise that Brexit means treating the EU much more like any other trade partner. It’s the politics, stupid!

What is the current status of the UK’s situation with Coronavirus?

19 Aug

It’s been around five months since lockdown measures were applied across the UK. Since then, a lot has changed in the Covid-19 landscape, not least the statistics. Without further ado, ConservativeHome looks at the current data – and what the future implications could be.

Cases

In recent weeks, cases have been a particular focus for newspapers and politicians, as Blackburn with Darwen, Preston, Burnley, Rossendale, Pendle and Hyndburn, among other areas, had rises in them, hence why new lockdown rules were imposed by the Government.

While there have been Covid-19 spikes, they are not necessarily evidence of a second wave, or that the pandemic is getting worse (far from it). Today’s Government figures show that the number of people who’ve tested positive for Covid-19 today in the UK is 812 (England experienced 707 daily cases, Northern Ireland – 34, Scotland – 50 and Wales – 21), a long way down from May 1, as one example when there were 6,201 daily cases.

It is worth remembering, too, that testing capacity has gone up by hundreds of thousands, so past figures may underestimate cases. Capacity now stands at 326,086, so we can expect to see more localised spikes. The Telegraph has produced a map that currently shows where the most cases are (measured as cases per million), which includes Blackburn with Darwen (1,697 cases at a rate of 11,393 per million), Bradford (5,784 cases at a rate of 10,767 per million), Oldham (2,660 cases at a rate of 11,289 per million) and Leicester (5,464 cases at a rate of 15,382 cases per million). 

Even though the Government’s graph for daily cases clearly shows a few upticks towards the end (there are 1,077 cases for August 15 versus 630 cases for July 8, for example), the curve is generally going down. Some of the least affected areas include Dumfries and Galloway, North East Lincolnshire, Devon, and the City of London.

Deaths

While cases, though generally lower, fluctuate somewhat, deaths show a huge, consistent drop. The daily number of deaths in the UK (within 28 days of a positive test) is now 16 – with the total being 41,397. On April 21, by comparison, there were 1,224 deaths.

Hospitalisations

Similarly, the graph for hospitalisations shows a dramatic drop from when deaths peaked in April, before trailing off consistently from July.

The daily number of patients admitted is 128, with a total of 133,125 admitted (as of August 5 – the last figures). As of Monday there are 895 patients in hospital and 73 patients on ventilation. It’s worth remembering that 3,483 were admitted in March.

Who’s affected?

The Office for National Statistics has provided one of the most recent breakdowns of the people that have been most affected by Covid-19.

It analysed nose and throat test swab results from study participants between June 8 and August 2, and found that:

  • Asian or Asian British study participants were 4.8 times more likely to test positive than white individuals.
  • One-person households were around 2.1 times more likely to test positive than those for two-person households, although there’s no difference for larger households.

In terms of deaths, the ONS analysed 51,879 registered up to August 7 in England and Wales, and found that:

  • The majority were among people aged 65 years and older (46,351 out of 51,879).
  • There were more deaths among males than females.
  • It also found that care homes, hospitals and other communal establishments recorded fewer deaths than the average for this time of year.

One hopes that with this information on people at increased risk for Covid-19, the Government can better its response. If there is a second wave, for instance, it knows that care homes are one of the most vulnerable places, in need of better protection than the first time round.

What the Government should do next

Given that cases are moving about in certain areas, everyone’s energies have become focussed on this metric, as an indicator of whether the UK is being defeated, or not, by the virus.

It must be said time and time again, though, that cases can look worse as a paradox of a rapidly improved testing regime. The more important question about cases may be to ask who they are affecting – a high risk group needs more emergency measures than a low risk one, for instance.

It also must be said that cases cannot be taken alone, as they are so often done, to understand the extent of this pandemic. They have to be looked at along hospitalisations and deaths, which are – by all indications – coming swiftly down.

Though the virus has not gone, people should be encouraged by the levels to which it has declined. With the Government’s central aim being to protect the NHS at the start of the crisis, it’s now time to take stock of the fact it has done so – and move faster towards an economic recovery.

Virginia Crosbie: The UK is a beacon of hope across the world. We cannot let Coronavirus divide our family of nations.

13 Aug

Virginia Crosbie is the Member of Parliament for Ynys Môn.

The Coronavirus has been used, often cynically, by campaigners to further the cause of the breaking up of the United Kingdom. Each nation of the UK has had full responsibility for health policy for two decades, yet each nation has faced similar challenges. The immense purchasing power of the UK enabled the provision of PPE and ventilators when both were at peak demand on global markets; it now has the most comprehensive testing system globally and, working together, we are leading the world in developing a vaccine and therapeutic treatments for this terrible virus.

The might of the UK Treasury has protected millions of jobs and livelihoods through unprecedented packages of financial support. This has helped to further protect the health systems of each nation, and to save lives, by enabling workers to stay at home. The UK Armed Forces have provided invaluable support in combatting this cruel, yet invisible, enemy. They have built the Nightingale Hospitals, have coordinated the logistics of PPE provision and they have helped to contain local outbreaks, including one in my constituency of Ynys Môn, by supplementing local testing capacity.

Our Armed Forces are among the finest in the world. RAF fast-jet pilots trained at RAF Valley on Anglesey have recently helped to end the genocide of the Yazidi people in Northern Iraq. They protect UK airspace daily from terrorist threats and help to deter an increasingly hostile Russia. RAF Valley is the second largest employer on Anglesey, providing hundreds of high skilled jobs, just as Royal Naval ship construction supports thousands of jobs in Scotland.

With VJ Day approaching, this year marking 75 years since the end of World War II, we should never lose our pride in our shared military history and of our contribution to the vanquishing of tyranny. It was the fighting men of Wales, Scotland, England and Northern Ireland who stood alone against the tyranny of Hitler and Nazi Germany. Together with their allies, they pushed his forces back across Western Europe and ended the greatest manifestation of evil and racism that the world has witnessed.

In the Far East British soldiers, sailors and airmen, many of whom endured the horrors of Japanese imprisonment, helped to roll back the forces of Imperial Japan and to end their brutal conquest of South East Asia.

Our shared economy is the world’s sixth largest economy. Our currency, the world’s fourth most traded, protected the UK from the austerity measures imposed on other countries by the ECB, including on the Republic of Ireland. It gave us the freedom needed to become Europe’s fastest growing economy and fastest jobs creator by 2019. The UK has among the lowest rates of youth unemployment across the G7.

Crucially, the UK has the most ambitious green industrial policies in the world and is the first major economy to enshrine a commitment to net zero carbon emissions by 2050 in legislation. A green recovery is crucial to the rebuilding from the devastation of this pandemic and, working together, the nations of the UK can lead the world in developing the technologies crucial to cutting emissions globally.

The UK is a major power with considerable economic, cultural, military and political influence worldwide. It has a permanent seat at the UN Security Council. If the Union is fragmented, each constituent nation would lose this influence. We have a long-shared history and have a very integrated society. Across the globe the UK is viewed as a beacon of hope, compassion and prosperity. Wales, Scotland and Northern Ireland are equal and cherished partners within a hugely successful political union. Breaking up this family of nations would be a tragedy. It is a family we must fight to protect.

Virginia Crosbie: The UK is a beacon of hope across the world. We cannot let Coronavirus divide our family of nations.

13 Aug

Virginia Crosbie is the Member of Parliament for Ynys Môn.

The Coronavirus has been used, often cynically, by campaigners to further the cause of the breaking up of the United Kingdom. Each nation of the UK has had full responsibility for health policy for two decades, yet each nation has faced similar challenges. The immense purchasing power of the UK enabled the provision of PPE and ventilators when both were at peak demand on global markets; it now has the most comprehensive testing system globally and, working together, we are leading the world in developing a vaccine and therapeutic treatments for this terrible virus.

The might of the UK Treasury has protected millions of jobs and livelihoods through unprecedented packages of financial support. This has helped to further protect the health systems of each nation, and to save lives, by enabling workers to stay at home. The UK Armed Forces have provided invaluable support in combatting this cruel, yet invisible, enemy. They have built the Nightingale Hospitals, have coordinated the logistics of PPE provision and they have helped to contain local outbreaks, including one in my constituency of Ynys Môn, by supplementing local testing capacity.

Our Armed Forces are among the finest in the world. RAF fast-jet pilots trained at RAF Valley on Anglesey have recently helped to end the genocide of the Yazidi people in Northern Iraq. They protect UK airspace daily from terrorist threats and help to deter an increasingly hostile Russia. RAF Valley is the second largest employer on Anglesey, providing hundreds of high skilled jobs, just as Royal Naval ship construction supports thousands of jobs in Scotland.

With VJ Day approaching, this year marking 75 years since the end of World War II, we should never lose our pride in our shared military history and of our contribution to the vanquishing of tyranny. It was the fighting men of Wales, Scotland, England and Northern Ireland who stood alone against the tyranny of Hitler and Nazi Germany. Together with their allies, they pushed his forces back across Western Europe and ended the greatest manifestation of evil and racism that the world has witnessed.

In the Far East British soldiers, sailors and airmen, many of whom endured the horrors of Japanese imprisonment, helped to roll back the forces of Imperial Japan and to end their brutal conquest of South East Asia.

Our shared economy is the world’s sixth largest economy. Our currency, the world’s fourth most traded, protected the UK from the austerity measures imposed on other countries by the ECB, including on the Republic of Ireland. It gave us the freedom needed to become Europe’s fastest growing economy and fastest jobs creator by 2019. The UK has among the lowest rates of youth unemployment across the G7.

Crucially, the UK has the most ambitious green industrial policies in the world and is the first major economy to enshrine a commitment to net zero carbon emissions by 2050 in legislation. A green recovery is crucial to the rebuilding from the devastation of this pandemic and, working together, the nations of the UK can lead the world in developing the technologies crucial to cutting emissions globally.

The UK is a major power with considerable economic, cultural, military and political influence worldwide. It has a permanent seat at the UN Security Council. If the Union is fragmented, each constituent nation would lose this influence. We have a long-shared history and have a very integrated society. Across the globe the UK is viewed as a beacon of hope, compassion and prosperity. Wales, Scotland and Northern Ireland are equal and cherished partners within a hugely successful political union. Breaking up this family of nations would be a tragedy. It is a family we must fight to protect.

James Wild: A security, defence and foreign policy review is underway. Here’s how we can become a truly Global Britain:

14 Jul

James Wild MP for North West Norfolk was Special Adviser to the Secretary of State for Defence 2014-17

“Smallest Army since Napoleonic war. Save the Marines. Protect our surface fleet. Focus on cyber, not boots on the ground.”

Recent press reports underline that a security, defence and foreign policy review is underway, and special interests are making their case.

In 2015, I advised the Defence Secretary on the Strategic Defence and Security Review. This took place against the backdrop an increasingly aggressive Russia and the appalling shooting down of MH17; Daesh having been close to the gates of Baghdad before the UK as part of the Global Coalition acted against them, and increasing state-backed cyber attacks.

After the 2010 review where painful cuts were required, the 2015 review was an opportunity to reinvest. However, there was something of a bidding war between No 10 and No 11 – with regular incoming missives.

No 10’s priority was doubling our drone fleet and Special Forces equipment and the carriers. The Treasury wanted more F35 jets earlier than planned and the deployment of the Queen Elizabeth accelerated. For the MOD, our priorities were restoring the Maritime Patrol Aircraft capability to respond to increased Russian submarine activity; a step change in offensive cyber capability, and investing in innovation and space.

The ambition was right and everyone pretty much got what they wanted. But to fund these enhancements, the MOD was required to agree to ever greater efficiency targets. These were stretching – and in some cases little more than a wedge against a budget line – but performance to deliver them has been disappointing. That has only added to pressure on the budget today.

The current review presents an opportunity to address the challenges in defence and to provide a coherent Global Britain strategy.

It will consider our multilateral partnerships including the proposed new D-10 group of 10 leading democracies (the G-7, plus India, South Korea, and Australia) and how to reinvigorate NATO. Such alliances will be increasingly important in the face of China’s breaking of international norms and hostile actions.

The work will define how to use the new Foreign, Commonwealth and Development Office to promote British interests and values. It can better align military training to take place where it supports our strategic objectives, has a deterrent effect, and is more cost effective.

Given my previous role, it is no surprise that I believe this is not a time to consider cutting the defence budget. The global pandemic we are experiencing could well lead to further instability and increased security and defence risks.

However, we need to be better at making choices. The usual bleeding stumps leaks have begun. These are in my experience partial, misleading, self-serving and will only stop if those responsible are held accountable.

Having said that, it is well documented that the defence budget is stretched. The National Audit Office has repeatedly warned that the MOD equipment and support budget – £180 billion over the next 10 years – is unaffordable. The Mr Micawber approach of hoping that something will turn up, reliance on efficiencies, or the infamous budget “fade” undermines the credibility of the budget.

In the past, decisions have been ducked by delays or deferrals that simply add pressure. Much as we may want to, the UK cannot do everything – the Permanent Secretary has rightly talked about the need to scrap some sacred cows.

It is encouraging that this review will involve a new, younger generation of chiefs. They bring fresh thinking on where the UK can add value, on the size and shape of our forces, and a greater focus on automation, robotics and Artificial Intelligence.

There needs to be a review of the delegated model and the levers to hold front-line commands properly to account for their budgets. In the private sector, constantly over-spending your allocated budget would not be dealt with by a bailout from the finance department but by being shown the door.

The review needs to usher in a new approach to procurement. The MOD has been trying to get procurement right since Samuel Pepys’ time as clerk to the Navy Board.

In March, the National Audit Office found that only five of 32 major projects were probable or highly likely to be delivered on schedule. After joining the MOD, I was constantly told about endless contracts where the taxpayer carried the risk for overruns.

The reforms put in place during that time helped improve results with a move to sharing cost savings or overruns. But we need an agile model where MOD is close to companies that are innovating and designing systems that it can procure at the right time. The old approach of ordering a capability that takes 13 years from business case to full operating capability – such as the Watchkeeper surveillance system – should become a thing of the past.

One element of the budget this review must address head on is the nuclear enterprise. The Public Accounts Committee, which I am a member of, concluded the current funding regime does not work due to uniquely long project timescales and given the impact on the overall defence budget.

Annual budgeting rounds with the Treasury drive additional cost in a long-term programme and the need for in year savings even saw a contractor receiving increased fees when deferred work led to increase costs. There is a strong case for ring-fencing the budget.

An objective of this review must be to create a joint force with a multi-domain model that brings services and agencies together. This will enable what was called “full spectrum effects” and deployed highly effectively in defeating Daesh, and was subsequently rebranded as an apparently new “fusion” doctrine.

It should tackle duplication including: support services such as HR, legal, and admin; the multiple types of helicopters, overlapping ISR capabilities, and other equipment driven by a siloed service approach.

These defence reforms are required to better support the people who serve to keep us safe – everyone in our Armed Forces.

Inevitably speculation is focusing on the size of the regular army. This is the wrong approach – the question for the review is what should the shape and balance be for the challenges we are likely to face?

How can we work better with partners making the most of our respective capabilities? How can we increase the diversity of our Armed Forces with more female and ethnic minority recruits?

Ultimately you can cut your coat to your cloth, or have more cloth. The danger is to avoid making choices and go for an emperor’s new clothes approach.