Tag Archives: Brexit

Brexit and The Ashes

20 Dec

There is a certain awful similarity between the latest cabinet discussions on a trade deal with the UK and our performance in the Ashes down under.

The ‘official readout’ from this week’s Cabinet discussion says: ‘the UK would also be seeking a significantly more ambitious deal than the EU’s agreement with Canada’ – so endorsing David Davis’ ‘Canada +++’ approach, and fulfilling Theresa May’s wish to ‘aim high’

The EU side don’t seem so sure – Michael Barnier has said that a trade deal cannot include financial services, and there have been many warnings from EU leaders that ‘the four freedoms’ – free movement of people, goods, services and capital – are indivisible. So if we want to control EU immigration we can’t expect free trade in goods and services.

Which side will win? The stage 1 negotiations on Brexit don’t offer much hope – instead of ‘whistling’ for their money, we’re offering €40bn. But it’s the cricket analogy that’s really interesting. Here’s what Freddie Flintoff was saying before the Ashes started:

‘I think England will win 3-2…I don’t think we’ll start well [but] we’ll win at the Adelaide and then we will get beat in Perth and then we will win in Melbourne and Sydney – 3-2’

Unfortunately Freddie’s predictive ability isn’t as good as his bowling – we have now played three and lost three, and the Ashes.

Might a similar outcome await Mrs May and the Cabinet?

And guess who published Freddie Flintoff’s confident prediction? Yes, you’ve got it – the Daily Express!

Can Scotland remain in the EU?

14 Mar

‘Up to a point, Lord Copper’, as Evelyn Waugh’s famous journalist might have said.

But let’s start at the beginning. As Parliament clears the way for Article 50 to be triggered, Nicola Sturgeon is requesting a second referendum on Scottish independence – with a promise that, if she wins, she will keep Scotland in the EU.

Is that possible? Wouldn’t an ‘independent Scotland’ have to join the queue of countries lining up to join the EU? Well, the Scottish Government has an alternative solution – just don’t leave the European Economic Area (EEA) in the first place.

Doh…now you’ve pulled a fast one. You’ve switched from talking about the EU to the EEA – what’s the difference? Well, the EEA Treaty signatories are the members of the EU and the members of EFTA, and leaving the EEA is a separate legal process to leaving the EU. It is open to debate whether this would be an option for the UK – see some of my earlier posts – but it could make sense for Scotland, particularly since the EEA Treaty has some provisions for differential treatment of regions within signatory countries. So Nicola Sturgeon and the Scottish Government, if they won a referendum, could say ‘when you give notice of your intention to leave the EEA, please exclude Scotland’.

Now it has to be said the legal eagles think this is impractical – see the LSE blog at http://bit.ly/2no1wwX for example. But it does raise some interesting points. If Scotland can do it, what about other areas that were strongly ‘Remain’ – London, for example, and Northern Ireland?

And for the Scottish Government, it’s beautiful politics and possibly good economics. A Scotland inside the EEA when the rest of the UK is outside could be quite attractive to some businesses south of the border. Financial services, in particular, might well find a base (or an expanded base) in Edinburgh quite appealing.

Triggering Article 50 is beginning to look like opening Pandora’s Box.

 

 

 

Brexit – are there any economists left in favour?

27 May

OECD Brexit Cover

I have just finished reading the OECD’s report on the the economic consequences of Brexit (see http://goo.gl/mezune). It’s a damning piece of work for anyone who believes Brexit won’t damage the economy or who follows the line ‘well, we can just negotiate our own trade deals can’t we?’ Not surprisingly, it chimes in closely with what the head of the World Trade Organisation (WTO) has said about the difficulties of the UK trying to ‘go it alone’ in seeking new trade agreements (see https://goo.gl/YfW21F).

The OCED report also provides a useful summary of other studies done (see Table 5, p36 of the OECD Report). All show big negative effects of Brexit – larger for the UK, but significant also for the remaining EU members.

A key Brexit argument against these studies seems to be that they are just produced by an ‘elite’ group of economists who failed to forecast our last recession. In fact, the main institutions weighing in against Brexit – the IMF, the OECD, the WTO – are the bodies set up after 1945 to ensure we never had to endure again the ‘began my neighbour’ trade wars and competitive devaluations of the 1930s. They have played a major role, whatever their mistakes, in creating the postwar prosperity many of us enjoy.

A more reasoned challenge would be to say that aggregate figures can hide important distributional impacts. If we vote to remain, as I hope, we need to look more carefully at this, and the impact of net EU migration on specific communities. If there are gains from remaining in the EU, the gainers can afford to compensate the losers, and should so so.

So to return to the title – have we any economists left who favour Brexit?