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Newsletter 26 July 2020

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Sir Ian Botham continues to fight the good fight for global Britain this week, as Britain and the West Indies continuing their battle for the Richards-Botham Trophy.

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Dear Subscribers,

Sir Ian Botham continues to fight the good fight for global Britain this week, as Britain and the West Indies continuing their battle for the Richards-Botham Trophy. A fitting cricketing reminder of our longstanding ties beyond the confines of the EU.

The biggest news of the last week is the EU’s unprecedented €750billion coronavirus rescue fund, agreed after a long and difficult summit, which brought divisions between southern and northern member states to the fore. Thanks to Angela Merkel’s decisive intervention, the EU will take steps to support countries like Italy and Spain, answering critics who wondered what the point of the Union was if it wouldn’t help its weakest members in a crisis.

The amounts may not be huge but will be useful for southern Europe. Only half is in the form of grants and spread over four years amounts to around 1% of EU GDP. Much will go to Eastern Europe where Covid deaths have been low and attempts to coerce the Poles and Hungarians by adding conditions have failed.

The longer-term significance is that for the first time, the EU will take on shared debt to finance the package– a major step towards integration. Mark Rutte of the Netherlands who opposed a deal says this is a one-off, but best of luck with that. The power of the EU Commission creeps on. An annex to the agreement announces new taxes to fund the Commission. New plastics and digital taxes will come in next year. There is also the possibility of a financial transactions tax. Guess who would have paid most of this if the UK had stayed in the EU.

The agreement may well be a good decision for the EU, helping weaker economies to weather the coronavirus storm, but ‘more Europe’ is the logical outcome as it always is after any crisis. Another step has been taken towards a United States of Europe, a reminder that the UK has long been on a very different path to the rest of the bloc. We can offer friendship and support to an integrated Eurozone from the outside. We would not want to be part of it, giving up on our own institutions and self-government.

With the Covid deal done, all eyes are back on the Brexit negotiations. David Frost has agreed to work towards the EU’s preferred goal of working towards one overarching deal, rather than the series of mini-deals preferred by the UK. Michel Barnier, however, has put out another statement calling for a ‘level playing field’, suggesting that a deal which both sides can agree to is still a long way off. The Daily Mail reports that DF has briefed Tory MPs that we will get 60% of our objectives. This leaves a question of what the 40% remainder will include.

A new section of the newsletter

From this week, you can enjoy a new section later on in this newsletter. This ‘Key points’ feature will highlight (and rebut) some of the most notable Brexit myths in the media this week. Our team of BfB contributors are working hard in these crucial last few months of negotiations to combat misinformation about Brexit, and the newsletter is a good place to share this work with our subscribers.

On the website this week

Blogs

Treasury austerity plans must be ditched: We need tax reform not tax rises, by Robert Lee

Internal UK Treasury plans to raise taxes to reduce Covid-19 related debt levels have recently received influential support. These proposals must be resisted. The country instead needs to reduce future debt burdens over time by raising productivity and the sustainable economic growth rate. Such ‘austerity’ tax increases, would achieve the opposite. The country needs radical tax reforms to boost the supply side of the economy, not counter-productive tax rises.

The additional deficits and debt caused by the Covid-19 recession could then be brought under control without tax rises or spending cuts. In the longer term tax cuts would become possible. How about it Chancellor?”

Rebooting the World Economy, by Edward Archer

Retired banker Edward Archer argues in favour of a coordinated programme of quantitative easing by the world’s largest economies in order to allow the global economy to grow post-Brexit without a damaging debt overhang.

“The Covid-19 crisis has affected the world’s economies in a different way to all previous crises. Economies have been shut down for a reason that was not precipitated by financial or economic events. The world can justify an unprecedented response.”

Reports

Why do so many economists get Brexit wrong? By Graham Gudgin and Harry Western

The economics profession continues to try to prove that Brexit has already had negative consequences. Two new articles use a flawed technique in an attempt to demonstrate that the Brexit vote has caused UK growth to lag behind comparator economies since the 2016 referendum. We argue that this is a natural business cycle largely unrelated to Brexit.

These economists asked too few questions of their results and did not consider alternative hypotheses… This is how bad science is done.”

Key points this week

For whom the Bill Tolls

There have been several attempts to calculate the cost of customs post-Brexit by HMRC, subsequently seized on by critics to trumpet the expenses of leaving the EU.  As we suggest on our website, these are problematic. “HMRC first reported the cost to companies of customs declarations at £20 billion. Then it was £13 billion. This week’s figure is £7 billion which we still view as greatly exaggerated.” High figures like this are misleading because they fail to allow for processes that enable costs to be substantially reduced for a large number of claims, as Shanker Singham relates. “These include trusted trader schemes such as AEO [Authorised Economic Operator] for larger traders, the use of periodic declarations, self-assessment processes and other mechanisms which will bring this number down significantly.”

Russia and the Referendum

A number of media outlets have covered the release of the select committee report on Russian attempts to meddle in the 2016 referendum.  The committee darkly insinuates Russian interference – without having any specific evidence.  The focus on the spectre of Russia and its supposed ‘influence on our democracy’ may seem to offer Remainers a way to get out of the result of the referendum and undermine democracy themselves in the bargain.  But whatever Russia did or did not try to do it can hardly have been more than small fry compared with the spending by British organisations – £31.9 million according to the Electoral Commission, a substantial majority of that on the Remain side.  This scare-mongering simply forms part of a broader story of refusing to accept the referendum result, whether in futile attempts at impugning the Referendum’s legality or the Electoral Commission’s hounding of Leave campaigners for minor clerical errors or technical breaches which the Commission had itself explicitly approved.

The Ongoing Food Saga

As we’ve detailed before, many people attribute the lower price of US meat to lower standards in animal welfare and food safety.  In a series of recent articles for BfB, however, Catherine McBride has detailed how these views are misleading.  Indeed, persistent scandals across the EU despite police raids highlights that regulations mean nothing unless actually enforced, as a 2018 report by Foodwatch makes clear.  Furthermore, a 2017 study from the University of Wageningen suggests that differences in food safety, animal welfare and environmental standards only accounted for 6.1% of poultry production costs.  This suggests that alarmism over standards really masks concerns about more severe issues of competitiveness, rather than consumer protection.

As Boris Johnson said in in his post-election address, it is also time for unity and reconciliation. Keep reading our posts and share links to our quality content to help others understand how leaving the EU will be good for the UK economy and for our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.

Twitter 

(@Briefings­_Brit)

We are also on Twitter, posting articles and retweeting the daily events that bring Brexit to the fore in the national news.

Facebook 

Discussion also continues over on Facebook.

How you can help

There is much about Brexit still to be decided. Our MPs listen to their constituents. Do continue to send them links to our articles, especially on matters relevant to your constituency – for example, in rural areas, articles on the threat to British agriculture. Alternatively, make an appointment to speak to them at their next surgery. Let them know what you want post-Brexit Britain to look like.

As Boris Johnson said in in his post-election address, it is also time for unity and reconciliation. Keep reading our posts and share links to our quality content to help others understand how leaving the EU will be good for the UK economy and for our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.

You can follow us on Facebook and Twitter.

Yours Sincerely, 

Newsletter Editor

An Oxbridge PhD Student

Dr Graham Gudgin 
Economist, Centre for Business Research, Judge Business School University of Cambridge

Professor Robert Tombs
Emeritus Professor of French History, University of Cambridge

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Briefings For Britain