Blain’s Morning Porridge – 28th November 2018
“Now that we’re inside we can make a complete pig’s breakfast of the whole thing: set the Germans against the French, the French against the Italians, the Italians against the Dutch… The Foreign Office is terribly pleased; it’s just like old times..”
For links to market headlines go to: www.morningporridge.com
I’m really sorry, but I’m going to write about Brexit. I apologise – but I promise not to whine about remain vs leave, demand a new referendum or the execution of remainers for treason. The British problem is Brexit is all about politics – but in a form utterly unfamiliar to UK electors. We always thought “politics” was about Labour or the Conservatives squabbling about tiny tweaks to the tax rate or how much more to spend on the NHS, with a convenient safety value in the form of a protest vote for these nice chaps from the Liberal party..
Welcome to the horrible reality of the real world… 52% of the country wants to go postal on the other 48% because we can’t decide whether to stay or leave a rather dull party? Nobody will ever invest in the UK again. Really? Brexit boils down to some very simple and resolvable points.
One of my oldest market chums emailed me from Zurich yesterday. We worked together back in the early 90s. Despite being born with the disadvantage of being Swiss rather than Scots, he’s done tolerably well for himself close to the top of a major Swiss bank. His heartfelt email asked, as a neutral, why the UK has made such an absolute mess of this Brexit thing?
Fair question.
Politically, it’s looks like an embarrassing mess… self-serving populist ineptitude of the highest order, exacerbated by the fact we never understood what we’d joined back in 1973. (Silly UK! We though we joined a free trade customs union, but we’d actually signed up for a European political superstate!). We never understood what we voted to leave… (A proto European superstate that desperately needed the credibility of countries staying in..! Why else did the EU insist the Irish kept voting till they got it right on the Maastricht referendums?)
It’s no wonder Politics have become so messy… The Brexiteers got it utterly wrong. As have the Remainers.
My Swiss chum wonders why the UK never seemed to realise divorce from Europe was always going to be binary: either a Hard Brexit and conflict with Europe, or accept a Soft Brexit that will eternally subordinate ourselves as unrepresented beggars at the Brussels feast.
I take issue with that – why can’t Europe and the UK agree to a Mutually Beneficial Brexit – one where the UK exits the political aspects of closer European Union – the main driver of our objections – but remain a favoured trading partner to everyone’s good? Oh, because Europe doesn’t want that to be the message – they want the British electorate to regret the exit vote, so they’ve encouraged us to believe it’s a non-binary “heads they win, tails we lose” argument.
It doesn’t have to be that way. As long as the UK obeys the rules for trading goods into and out of Europe, and doesn’t turn itself into an offshore tax-advantaged free-loader on the back of the European polity, what’s wrong with countries agreeing to rules by which both sides trade? Should be simple and an economic plus for both sides.
Unfortunately, that’s not what the great British public is hearing. Again, its binary: Agreeing to the trading rules is perpetual economic enslavement say the Brexiteers. Agreeing these rules puts us at a permanent disadvantage at zero gain say the Remainers. They are both equally wrong – trade rules are trade rules. Get over it.
If we can exit with a decent preamble to a trade deal – effectively what is on the table… Well and good.
The next issue is the split across the UK – my Swiss chum asked how it we’ve got ourselves into the impossible situation of 48% of the country hating the other 52%, while everyone outside the UK now thinks we’re a bunch of racist idiots, intent on closing our borders, and therefore not cool, trustworthy, or anything else anymore.
Wow.. a totally divided country. Hardly unusual – ask the French. We’ll get over it.
The real issue is economic. At the moment the UK looks as cheap as chips – economic activity is flolloping due to Brexit uncertainty, sterling is less popular than Ebola, and there isn’t a single thing to like about Uncool Britannia!
The UK is currently languishing in the mid-table of the G20 league – posting 1.5% growth (currently in line with France). Its $2.44 trillion economy is 40% smaller than Germany at $3.4 trillion. In just about every metric, the UK languishes behind Germany. About the only area we do better is the number of Nobel Prize laureates – where the UK leads Germany by about 20%, is second on the table after the US, and comes pretty high in per-capital prizes. (We get beaten by Iceland.. Haldor Laxness’ win for “Independent People” propels them to the top…)
This is excellent. It’s what we call a buying opportunity! Our centre is collapsing, our left wing is retreating, time to attack! This is exactly the kind of “Backs to the Wall, Huns at the Door” situation the UK positively thrives upon. Every damned European fool who has ever written us off has been consistently wrong. From the Spaniards, the French (many times), The Dutch, the Scandies, and the Germans. (Incidentally, I do think Switzerland is one of about 5 countries on the planet Britain hasn’t actually invaded or declared war upon.)
Enough hyperbole..
The bottom line is simple – post Brexit the UK will pick itself up. History teaches us we’re likely to continue making a mess of our relationships with the rest of Europe, but we aren’t going bust any time soon.
For the record and for full disclosure: I believe in a soft Brexit. I want a trade agreement with Europe, but I don’t accept the concept of a united European polity. It’s just too big, too diverse, and too different to form a single effective polity. I want to celebrate my uniqueness as a Scot and a Brit alongside my chums who are French, German, Dutch, Italian, etc. We should celebrate our diversity of customs, languages and currencies!
The question the Brexiteers should have posed Remainers is complex: do you want to remain within and support closer European Political Union; accept closer integration and political union, adoption of the Euro, and take on board the presently undefined liabilities the Union will eventually have to accept across the Union? In other words, are you prepared to write unlimited cheques to facilitate regional policies and politics, pay Danegeld for crisis such as immigration, and effectively assume the costs of dis-functional populist politics in places like Italy, Eastern Europe, Greece, and dare I say it.. France..
Well??? Do you?
Toodle-Pip till tomorrow!