Brexit Crisis – Scenario Mapping

Theresa May’s Brexit plan is dead. It is not resting. It is not pining for the fjords. It is dead.

May may not think so. But it is. So, what happens next?

There are maybe five plausible scenarios for the Brexit deal/outcome.

  1. Remain
  2. No Deal
  3. Canada ++++++++++++++++++++++++++++++
  4. EEA
  5. May Deal

Remain makes up around 25% of the House of Commons and is only likely to grow if the choice is between that and No Deal. It is currently unclear if the UK can unilaterally revoke A50, I imagine the EU being what it is, they’ll make the law up as they go along and say that of course you can unilaterally revoke A50 but it also removes various UK exemptions from EU policy and the rebate.

No deal probably makes up around 5% of the House of Commons but bleeds into Canada +++++ or whatever it’s called which is probably 15% of the House. No Dealers would be happy with Canada and Canada people could probably live with No Deal.

EEA is currently backed by relatively few but could be backed by a broad swathe of the House if it were put forward as an option.

May’s deal is currently backed by maybe 30% of the House when you take account of the people who just want it done and the payroll vote.

There is almost certain to be a leadership challenge. If May falls then the May deal is either replaced with something else or moves to one of the other four.

If May doesn’t fall, she is safe for a year, she can then use her position to make the deal more Remainy to make it more palatable to Labour, but does this just lose her votes across the aisle in the Tory party? Does it just destroy the Tory party?

I think May survives a leadership challenge. She needs 158 votes of confidence. I reckon there’s a big enough “eugh, just get on with it you tossers” contingent to back her. I then reckon her deal fails to get past the House. Which means we’ve wasted a month in having it rejected by the House, and we’re back to four options. She could resign then, but she’s likely to want to press on. She has to either move on immigration, which opens up the path to Remain (still very unlikely) or EEA. But because she’s an immigration obsessive this is doubtful. She could move on Northern Ireland and go for Canada but this requires abandoning any sense of being a unionist party and would break the party just as much as Remain. So No Deal then becomes the default.

I hope May is ditched. I hope we go for the EEA option. But I think we’re far more likely to end up with a variant on No Deal.

Wisconsin & Defending the Enemies of the People

The vote to leave the EU is currently subject to a judicial review. Or so the Mail and others would have you believe. Votes are to be recounted in Wisconsin to deny Trump the presidency. Or so Twitter would have you believe.

No, the method in which the UK triggering Article 50 is currently under review. Is the case being brought by people with a desire to prevent us ever leaving the EU? Yes. Will the case prevent us leaving the EU? No. Will the protest by the SNP prevent the UK leaving the EU? No. Is it right that the case is brought? Probably. Is it right that the case is able to be brought? Absolutely.

The UK is a representative democracy, not a pure democracy. In this case, our MPs delegated the responsibility for the decision to the people. The people instructed the Government to arrange for us to leave the EU. The manner and end arrangements are up for discussion. The Government has to institute the decision to vote to leave the EU in a legal manner. That means allowing the judicial system and legislative system to work. If laws need to be changed to enable us to leave the EU, that’s a minor stepping stone. It won’t make a difference. The government has a mandate from the people to bring the UK out of the EU (whatever that means in practice).

In the same way, the petition to recount votes in Wisconsin is right. Should it have been brought by Jill Stein? Well, I don’t enjoy the idea of denying anyone – no matter how abhorrent or anti-scientific their views are – access to the legal system. But where there are concerns about the votes, it is right that there should be a recount. It is not likely that this will change the outcome, but it doesn’t matter. Faith in the system is paramount. Even if people disagree with the system, it is vital that the legislative, judicial, and executive branches are all able to operate within the law without undue interference from one another.

I voted to leave the EU. But I am happy to see a case brought against the way the government will trigger A50. If the appeal fails, the government should be happy to push a bill through parliament. If the SNP want to frustrate the efforts of Westminster to withdraw the UK from the EU, Westminster can pass a law making explicit that Holyrood has no competency in this area. Powers that Westminster has devolved, Westminster can un-devolve.

This isn’t complicated. It’s how the system works. Governments should be frustrated by their legislative and judicial systems. Anything else is tyranny.

White Smoke – We Have A PM

Theresa May is all but confirmed as the new PM.

She is by no means my ideal PM.  My ideal PM being me, as benevolent dictator for life. Her record as Home Secretary is largely illiberal. I would far rather DC had remained as PM with a new cabinet.

However, we now have a chance to get a new settlement on the EU as well as crush the Labour party forevermore.

This is a good day. For the economy, with much uncertainty removed. For the party, with the crazy option no longer available.

Theresa May for PM. Until I have a chance to begin my rise to power.

Post-Brexit Racism

I voted to leave.

I am pro-migration. It would not bother me if migration rose after the vote to leave the EU as a result of us being able to attract more people. Migrants tend to have lower unemployment rates, they tend to be younger and so healthier and so use the NHS less than the older ‘natives’. They are a massive net contributor to society and frankly, we need them to pay for the retirement of British people. That isn’t to say there are no issues around integration and so on but that’s a different story. Migrants are a positive contributor to our economy and society. I say that as someone who lived as an expat most of his life.

I was not happy with much of the rhetoric used in the campaign.
I was, and remain, happy with the result.

However, there has been a growing number of stories about the effects of the debate around how we approach racism within the country and the prevalence of racism within the country.

Being a white guy I have zero experience with racism. Possibly some positive racism, I don’t know.

So here’s the statistics on racism from 2011 – 2015.

HateCrimes

Source: gov.uk – Hate Crime Statistics

For some reason there were two different figures for 2013/14, I imagine due to changes in reporting. These are the numbers of hate crimes reported by month in England and Wales. 2011-2014 (under the first set of statistics at least) is largely flat.

One important thing to note is the rise in the number of hate crimes over the summer months. This could be due to more people being out and about, leading to more interactions. It could be due to people literally getting hot and bothered. It could also be due to football related violence around international tournaments. Though looking at it I can’t see a strong link for the 2012/2014 data around the last Euro championship or world cup.

Hate crime numbers have also been trending up over the past few years, this could be due to reporting differences, hence the large jump in the 2013/14 figures between the two datasets and between the 2013/14 and 2014/15 dataset. It could also be due to improved reporting.

However, the single figure I have for 2016 – that blue dot at 6152. That is from two weeks reported hate crime (doubled as it was a two week period). That is not down to heat, increased contact between people, or the woeful performance of the England team at the Euro Championships.

I am not sorry that we have left the EU. I just wish the campaign had focussed relentlessly on the positives for leaving the EU and not the xenophobia that got so much attention because Nigel Farage doesn’t know how to avoid a camera. I think we could have won on the positives alone. Or, rather, on the negatives of the EU as an institution. Not on the migration which has been such a boon to our society.

The Prime Minister and Theresa May (in her capacity as Home Secretary) should come out in support of stricter sentencing guidelines for anyone convicted of a hate crime. If someone can be jailed for six months for stealing water during the London riots, there should be harsh sentences for abusing Poles or Pakistanis or anyone else. We are, by and large, a tolerant nation. We need to promote that idea to the world.

That rise in hate crime is sickening. It needs to be confronted.

Indyref2: Four Country Lock

The SNP, along with various other parties and people insist the EU referendum should have only gone ahead with a four country lock. A way of saying that if Scotland voted to Remain whilst England, Wales and Northern Ireland had voted to Leave the will of the Scottish people should have decided the referendum.

Knowing support for the EU is higher (but only marginally) in Scotland than in the remainder of the UK, barring maybe Northern Ireland, this was a mischievous way for the SNP to attempt to ensure the UK remained in the EU whilst also attempting to drive a further wedge between Scotland and England.

What would this have meant in practice, though?

Constituent Part England (incl. Gib) Scotland Wales Northern Ireland
Population (m) 53.01 5.30 3.06 1.81
Percentage 83.90% 8.40% 4.80% 2.90%
Total Votes Cast 28,455,402 2,679,513 1,626,919 790,149
Leave Vote (m) 15,188,406 1,018,322 854,572 349,442
Leave Vote (%) 53.38% 38.00% 52.53% 44.22%
Value of Vote under 4-Country Lock 1.00 10.00 17.32 29.29
No. Votes Needed to Result in 4-Country Lock for Leave -960,704 321,436 -41,112 45,633

The explicit suggestion from the SNP and others is that a vote in England is worth a tenth of that in Scotland. That a vote in Scotland is worth approximately half that of one in Wales. That a vote in Northern Ireland is worth thirty times as much as one cast in the UK. The value of a changed mind in Northern Ireland is 20x that of one in England. That of one in Scotland 3x as much as an English vote.

Far be it from me to suggest that the SNP enjoy stoking division in their quest to irritate the English into letting Scotland go into a world of 10% deficits, but the explicit suggestion of the SNP is that the votes of the English are worthless. That the votes of one Northern Irishman is worth a thirtieth of that of an Englishman. The SNP may not believe the UK should exist, they’re wrong. But the suggestion that a Scot is ten times as valuable as someone from Cornwall is insulting. Until the SNP can persuade Scotland to vote to leave the UK, the UK votes on a one man, one vote basis.

Brexit: Economic Mythmaking

The UK is likely headed for a mild recession. Mild in terms of GDP but sadly not in terms of unemployment and the human tragedy.

There is a myth being developed that this is down to the Brexit vote or even due to the uncertainty caused by there even being a Brexit vote.

Growth Rates (%) 1960-2014

GrowthRates

Source: World Bank

The average length of an economic expansion in the UK since 1960 is 9.8 years, including the current period. Assuming, as seems likely, GDP expands by a marginal amount over 2016 falling into recession from Q3 onwards the current expansion will have lasted for seven years. Hardly an extraordinary departure from the average over the past 50+ years. The average length of a period of economic growth in the US and EU over the same time periods has been 7.8 and 10 years respectively. There is a cycle to economic expansions as with most other things and to pretend that any contraction in the UK is completely out of character is ridiculous.

OK – of course, there could be a connection to the Brexit vote and to the economic cycle right? Yes.

However, PMI Surveys for the services, manufacturing and construction have all been trending down since Q12016 or earlier. The heat has been going out of the UK economy since the early parts of the year. Employment growth has been similarly slowing since the start of the year (though here it can be at least partially attributed to marginal gains being hard to come by when near full employment.

The National Living Wage came into effect from the beginning of April and was predicted to lead to higher unemployment, accepted as a consequence of increasing pay for the lowest paid. So any upticks in unemployment in the coming months can be attributed more to the NLW than to Brexit.

 

The UK was more than likely due a mild recession. It is likely that the severity of the recession will be increased by the uncertainty around what Brexit means. But the idea that any recession is due to our decision to leave the EU is ridiculous.

 

 

The chancellor has suggested a cut in corporation tax by 5% taking the UK down to 15% by 2020 instead of 17% by 2020. Naturally, I’m all in favour of this but can’t help thinking the economy would be better served by taking a penny off employer’s NICs. Corporation tax cuts have been more than self-funding over the last parliament so maybe even better would be to do both.

Brexit – Rules Are Made to be Broken

We have to accept free movement of labour to get access to the single market.

I don’t know how many times I’ve heard that over the past ten days. I’ve heard it so much that there’s no way it can’t be true. Right?

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EU law, isn’t. It’s a series of guidelines that can, and are, discarded when convenient.

Germany exceeded their deficit limits in the early years of the Euro – illegal? Sure. Any action taken? Against Germany, in the Euro? Come on. Be serious.

Bailouts are specifically forbidden under the Lisbon Treaty. But Greece, Portugal, Ireland, and Spain are all in trouble. Well, damn the law. The Euro is more important than the law.

1. The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. – Article 125, Lisbon Treaty

Politics trumps law every time in the EU. It’s one of the main reasons I voted to leave – because the rule of law, isn’t.

So, will politics – the armed wing of economics – trump the law when it comes to negotiating the UK’s exit from the EU? Most likely.

The EU will need some paper wins to prove they weren’t walked all over. The UK will be made an example of in a very public but very limited way.

The UK is (depending on measure) the country with the highest military spending in the EU. We, along with France, hold a permanent seat on the UN Security Council, we are one of two nuclear powers in the EU. We have one of the two blue water navies in the EU and are (from 2020) able to project power from the Queen Elizabeth Class aircraft carriers. We are Atlanticist in  a way that no other EU country is. The UK anchors the USA in NATO, checking Russian aggression. Is NATO less relevant now than it was 30 years ago? Yes – but Ukraine proves that Russia is still a strategic threat. NATO counters that threat. Poland, Finland, Latvia and Lithuania all share a land border with Russia. Without an economically strong UK, able to fund our NATO commitments, the USA will continue to see Europe as not pulling its weight. Four EU countries, Poland especially, that have a strong incentive to see a deal done for the UK.

The UK has a colossal trade deficit with the EU – primarily with France and Germany. The German CBI went on the record before the referendum saying (correctly) that free trade was in the interest of all parties. The French business lobby is making more noises to the same effect. The EU attempting to punish the City can lead to reciprocal punishments to the French and German car industries. A beggar thy neighbour policy would hurt everyone. So if the EU puts down their gun, the UK puts down its gun.

The EU has a strategic and economic interest in keeping the UK engaged. Keeping the UK engaged on the continent will require a deal that allows both sides to save face but both sides to prosper. The laws… rules… guidelines can, and will, be damned for political expediency.