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Newsletter 7 Dec 2020

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Exciting news this week, as Britain approved the Pfizer vaccine – becoming the first Western country to do so. It is a powerful example of the benefits of relying on our own processes and institutions, rather than following along in the EU herd.

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­Dear Subscribers,

Exciting news this week, as Britain approved the Pfizer vaccine – becoming the first Western country to do so. It is a powerful example of the benefits of relying on our own processes and institutions, rather than following along in the EU herd.

Meanwhile, we have reached the ‘final throw of the dice’ for the UK-EU Brexit negotiations. By next week, we should know whether Britain will leave with or without a deal.

Macron continues to push for a harder line against Britain, and his efforts may leave the UK government with no choice but to refuse a deal. Ireland and Germany, on the other hand, are attempting to close the gap between the EU and UK positions. The good news is that the Cabinet are reported to be entirely behind Boris Johnson, and ready to support his decision even if that ends up being no deal.

Britain is ready for Brexit, deal or no deal. It would be a major error to accept any deal which leaves us tied into conformity with EU regulations indefinitely. We will only be able to reap the benefits of Brexit if we are free to control our own legislative destiny.

The pressure on the EU, and especially the Irish, is mounting due to two bills due in the Commons this week. On Monday the Government plans to replace the two controversial clauses in the Internal Market Bill which were removed by the Lords. These restore UK control over west-east customs checks and State Aids rules for Northern Ireland. This will be followed on Wednesday by a Taxation Bill including even more controversial rules governing VAT and east-west trade into Northern Ireland. As a finance bill this cannot be turned in the Lords. The expectation is that passing these laws will kill any possibility of an EU-UK trade agreement. We will see if the EU moves smartly to remove the need for such drastic action.

As the Telegraph reports this week, almost a fifth of British businesses have already shifted their trade away from the EU, instead seeking out opportunities elsewhere across the globe. This is the future Britain can look forward to once we push through these last few weeks of EU membership.

On the website this week

Blogs

The UK’s Fiscal Recovery Has Begun, by Robert Lee

The Chancellor’s Spending Review – eye-watering headline numbers and apocalyptic media coverage notwithstanding – marks the start of the UK’s return to fiscal sustainability. Controversial hard choices were made, but self-defeating “austerity” avoided. High deficits and debt can be sensibly reduced over time through restraint on current government spending, productive public sector investment and fiscal reform. This is the path we are now on.

The historical context shows that our current fiscal problems, although serious, are hardly insurmountable.”

What Norway can teach the EU about sovereignty, by Anna Bailey

The fishing issue in the UK-EU negotiations is in essence one of sovereignty. While the EU continues to make insulting offers predicated on neo-colonialism, the UK has already signed its first post-Brexit fisheries agreement – with Norway. This shows exactly how fisheries agreements between sovereign states should operate.

Michel Barnier may have paid lip service to respecting the UK’s sovereignty, but his proposals on fisheries tell a different story entirely.”

The Plan to Get German Taxpayers to Pay for European Political Union, by David Blake

Christine Lagarde and Emmanuel Macron plan to use the Covid-19 crisis to get German taxpayers to pay for European political union under French leadership using the Target2 cross-border payments system.

“It is apparent that Macron and Lagarde are using the cloak of Covid-19 to force the mutualisation of member state national debts by the back door – with German tax payers paying for this.

Unconquerable and pacific: a new security and defence policy for Britain, by Philip Cunliffe

Philip Cunliffe argues against the idea of a global Britain in a post-Brexit world. Instead, he advocates a less global future in which Britain focusses on its own defence with a revitalised nuclear deterrent and ceases to intervene in the wider world as an ‘armed wing of Oxfam’.

“Of the many slanders levelled by Remainers against Brexit voters, the notion that Brexit was driven by imperial nostalgia was among the most laughable and egregious.”

When the advisers decide, what should we do? By David Landsman

When experts have such effective power as today, the old system of political accountability through ministers breaks down. Something needs to be done to redress the imbalance between influence and accountability. At a minimum, we – through our elected representatives – should have the opportunity to challenge those who increasingly in practice take the decisions that affect our lives.

If you’re willing to take the initiative in public you should be open to public scrutiny first.”

Key points this week

Fishing’s Plaice in Negotiations

Recent news reports have suggested that fishing, a totemic Brexit issue, will suffer more from no deal than keeping the status quo, as they rely on European markets to sell their catches.  Though there may be signs of compromise from both sides, European negotiators are certainly pushing hard for their fishermen to retain their existing rights to fish in UK waters – which, as will be familiar to readers of this website, source large proportions of continental catches.

Yet Britain should resist the urge to compromise too far.  The simple fact is that, either measured in terms of territorial waters or ‘zonal attachment’ (where fish actually live), the UK is a massive net contributor to EU fishing stocks.  For one thing, fishing is one of the areas where Scotland most obviously loses out from EU membership (Peterhead, Fraserborough, Scabster and Lerwick land the largest quantities of fish in the UK by tonnage).  Any suggestion that Westminster sold out Scottish fishermen in the interests of a poor deal will fatally damage the Unionist position.

Suggestions that fishermen will be unable to sell their catches in the EU, as we’ve argued before, are similarly misplaced.  Barriers to entry represented by EU tariffs and safety regulation are relatively light, vitiating the notion that fishermen will be unable to take advantage of new fishing grounds.  Non-EU markets already account for almost 40% of British fish exports, and could easily take more.  (Compare the more general diversion of UK exports from the EU already underway).  Pace the view that UK tastes are for ‘mostly imported’ fish, one of the reasons that Britain imports cod and haddock from France (for instance) is that French fishermen land catches from British waters which are then exported back to the UK.  For the UK fishing industry, as we’ve suggested before, no deal is thus decidedly better than a bad one.

Assuming the Worst

In an article in Spectator Coffee House (1 December) Kate Andrews, the Spectator’s Economics Correspondent, uncritically reported on the latest OECD global forecasts. She did not note that the OECD – in line with all major international forecasting bodies – has been consistently too pessimistic about the UK economy since the Brexit referendum. These bodies assume Brexit to be a significant negative for the UK.

In contrast, we see Brexit as providing a medium to long-term boost to the UK. UK policies can be designed to suit our structure and needs instead of straitjacketed by anti-innovation EU regulations and bad EU policies such as the Common Fisheries Policy and the Common Agricultural Policy. We will suffer some friction in our trade with the slowest growing 15% of the global economy but exchange that for greater integration with the fast growing 85%. The OECD also seems blind to the grave structural problems engulfing the EU project.

Ms Andrews also seems unaware that much of the apparent underperformance of the UK in 2020 is the result of a statistical quirk. The ONS calculates health and education output differently from other countries. This had the effect of suppressing UK real GDP while our schools were empty and hospitals/GP’s treating fewer patients. This effect will reverse from Q3 onwards. In contrast to real GDP, UK nominal GDP has fallen pretty much in line with other major economies. It is true that as a services-dominated economy the UK was particularly vulnerable to a pandemic, but this also has the implication that as we return to “normal” the UK will rebound faster. The UK’s underperformance has thus itself been greatly overstated.

This is part of a wider point that the 2020 recession, which has been estimated to be twice as deep as the banking crisis of 2008/9, has seen relatively less hardship. Many people were happy to take a furlough with a 100% cut in work hours but only a 20% cut in wages, and saving further on travel costs. Reduced physical shopping impacted consumption only slightly, and even then might be merely considered delayed consuming. Unemployment has thus far risen little, and much less that the OBR projected last March. It is thus an unusually painless recession.

Though economic problems may of course get worse, Sunak’s record thus far has been flexible reaction to emerging problems and we can hope that he continues in this vein.  Suggesting that any persistent issues are the result of the government’s mishandling is thus substantially premature – and in our view likely to be proved incorrect.

Key Points is compiled by a Cambridge PhD student.

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

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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