The future of the EU and the UK, post-Brexit

The Parliament voted on non-binding amendments tabled by the MP' today. There was one that was interesting:

Rule out no deal at any possible date – DEFEATED
The SNP and Plaid Cymru tabled an amendment suggesting the UK should not leave without a deal at any time, even if article 50 is extended. It was defeated by 324 to 288.


It does not appear that the UK Parliament supports ruling out leaving with no deal, despite the enormous amount of effort that many in the press have put into convincing people to the contrary.

 

The Yvette Cooper amendment was not important at all. First of all, none of these votes is binding. Second, the reason that it passed by the margin that it did was because PM May already announced that this vote would be scheduled for March 14, if the votes on May's current deal on March 12 and the vote on a no deal Brexit without delay are defeated, which is expected.

I support the extension, by the way. It is a limited, one-time, short term extension for 2-3 months, not past the end of June. This is important, because of the UK wants to delay any longer than that, they will need to participate in the EU parliamentary elections which are scheduled for the end of May 2019. They are not planning on doing this. Nobody is campaigning, no polling places are going to be set up. In any case, the Parliament is poised to approve a one-time, short term extension of 2-3 months. That is it.

As far as a second referendum, that is a pipe dream you are having. It is so far-fetched that I am not going to weary myself arguing with you about it. If you want to talk about the possibility of their being further extensions beyond the one they will be voting on and almost certainly approving on March 14, we can discuss that.

But what seems to me to be the most likely scenario is not another extension after the first, or even a no deal Brexit on schedule on March 29. The most likely scenario is a deal with the EU, with a hard deadline for the backstop, probably agreed to during the 2-3 month extension period. Hands down, this is the most likely conclusion to this, although a no deal Brexit at the end of May or sometime in June cannot be ruled out by any means.

 

Here is one of the reasons why the Tories are likely to see sense when push comes to shove on this. Labour in this recent poll would make massive gains in EU Parliamentary elections, if the EU were to agree to an extension that goes beyond June, which would require them to hold EU Parliamentary elections.

Labour would make MASSIVE gains in any EU elections if Brexit is DELAYED says poll
LABOUR would make massive gains in the upcoming European Parliament elections should the UK be forced to take part because Brexit is delayed, a poll has revealed.

But a poll by Number Cruncher Politics for Politico, which surveyed a representative sample of 1,030 Britons between January 10-17, has revealed the Labour Party could be the biggest winner, should the UK be forced into taking part in the elections.

Labour polled at 37 percent of likely voters - surging by nearly 50 percent from the 25.4 percent who voted for Jeremy Corbyn’s party in the 2014 election. The Conservatives followed closely behind on 36 percent, with an increase of 12 percent from five years ago.

The poll revealed UKIP’s support would plummet from 27 percent in 2010 to 10 percent in May, making it the third largest party in the British delegation to the European Parliament.​

Also, if the Tories go wobbly to such an extent that they start to support more than one extension, which would necessarily extend beyond June 2019, that would surely bring down the Tory government and a snap election would have to be called.

Anyone who believes that supporters of the Tories would be highly motivated to go to the polls to vote for these vacillating buffoons after they just got through botching Brexit in massive fashion, is almost assuredly a political moron. The Tories will be crushed and whatever difficulties there are perceived to be now will only become far worse.

The Tories will be briefed on all of this, surely. If I can perform this analysis, then their top political advisors and experts surely should be able to as well. Their course is such that they must see the UK to a real Brexit, either with or without a deal, by June 2019 at the latest, or this is all going to start to get very, very ugly.

 

It is not done yet, but as I have been predicting as the most likely outcome here, it appears increasingly likely that Theresa May's deal will pass, if it includes changes that provide a lock-tight firm deadline date for the backstop to end. This is the issue on which the March 12 (or earlier) vote currently hinges.

This has been made more likely by the DUP softening their stance, pretty clearly indicating if the backstop limits are included they will support it and also a similar softening by many on the Tory side, with the same requirements.

May handed MAJOR lifeline as DUP ‘SOFTENS stance’ - deal could PASS

Citing two sources, The Times reports that the DUP would wait until the exact wording of any concessions secured by Mrs May are released before making its final decision. But one source said: “They are looking for a ladder to climb down. “And if that happens they will take a lot of Tory Brexiteers with them.” Another said: “There does seem to be a softening. I think at this point they really want a deal.”​

And this:

A Westminster insider has said Theresa May’s withdrawal agreement will pass if the eight-strong team of lawyers - including seven MPs - conclude any assurances Attorney General Geoffrey Cox brings back from Brussels are legally watertight. The source - who is a member of the Eurosceptic European Research Group (ERG) chaired by Jacob Rees-Mogg - predicted if the group gives it the green light, enough erstwhile rebels will be peeled off to get her deal over the line.​

So the talk of a short delay is missing the forest for the trees. The real issue is agreement to a hard date for the backstop to expire, which is of course ultimately the EU agreeing to a hard date for the UK to formally, functionally and finally to leave the EU.

The EU obviously does not want that. But if the EU will not agree to that, then the only way the UK can exit the EU is with no deal, which will be economically extremely costly for the EU. And it is entirely unnecessary.

I could be wrong, but I expect the EU will give in and there will be a deal, probably along with a short delay of 1-3 months. Based on the news quoted above, this appears to be increasingly likely on the UK side. Now it will depend on whether the EU will agree to the only deal that is realistically still on the table. Or, the EU gets no divorce payment, loses lots of jobs, the costs are high and their people are respond badly.

If the EU can become rational just for a brief moment here, this really does not have to be that hard at this point. It is in the self interest of the EU for them to go along with this. Maybe I am just being hopeful, but I expect that they will do it.

 

Leading members of the EU, including Wolfgang Schäuble, president of Germany’s Bundestag are still in denial. He believes that the UK will either not leave the EU at all, or will come back at some point:

But Wolfgang Schäuble, president of Germany’s Bundestag, said this weekend that he was more convinced than ever that Britain would end up as a member of the European Union. “I believe Britain will either not leave the EU at all or come back at some point,” Schäuble told Funke Media Group.

https://www.theguardian.com/politic...cle-50-may-be-only-option-for-a-smooth-brexit​

 

There has been a lot of posturing about Spain muscling in on the UK territory of Gibraltar during the Brexit process. However, it appears that all of that was just a lot of big talk, as the UK and Spain are apparently signing a tax treaty today that ends any dispute between them regarding Gibraltar. And that applies regardless of whether is a deal or no deal agree to between the UK and the EU.

Brexit countdown: Spain to sign Gibraltar deal with UK

It is understood the UK, Spanish and Gibraltan governments have tied up a tax agreement for the disputed British overseas territory which will end attempts by Spain to take control of the Rock. The agreement will apply even in a no-deal Brexit. It comes amid further claims from leading economists that a no-deal will be good for Britain. A source close to Gibraltar's Chief Minister Fabian Picardo said: "The Spanish cabinet is to agree measures to apply in no-deal and sign a tax agreement in relation to Gibraltar. The UK Government is expected sign it on Monday."​

So here is evidence of progress towards an actual Brexit, in any case.

 

A no deal Brexit will not be as bad as first feared, says Bank of England Governor Mark Carney. This is the UK's "Operation fear" ratcheting back the hyperbole as Brexit day gets nearer. As a result, when the UK does far better than these sorts of politically motivated doom-mongers have been prophesying, at least their latest predictions will be closer to reality than their earlier set were.

No Deal Brexit won’t be as bad as first thought, Bank of England governor admits

A NO Deal Brexit won’t be as bad as first thought, according to the Bank of England governor and the boss of German business. Mark Carney said the Government’s accelerated contingency planning had reduced the economic damage that could follow a no deal exit.

In November the Bank of England warned that Britain would be tipped into a recession worse than the financial crisis in a no deal scenario - with GDP falling by 8 per cent. But yesterday Mr Carney told the Lords Economic Affairs committee that “constructive developments in terms of preparedness” meant the economy may be 2 to 3.5 per cent lower than expected.

Meanwhile Dieter Kempf, head of Germany’s biggest industry group the BDI, said delaying Brexit could be even more damaging than no deal. He said: “The Brexit issue hurts us a lot in Germany and the Netherlands. Our economies are hit hard.

“No agreement is the worst solution. Everything is better than a chaotic Brexit. But is procrastination good? No. Uncertainty is bad for the economy. My experience is that the economy can live better with bad conditions than with uncertainty.”​

So, as you can see, even the Germans want the British to get on with it. As much as they fear a "no deal" Brexit, they rightfully fear a prolonged period of decisiveness even more.

In any case, there almost certainly will be some difficulties in the transition over the first year or two. But by the time the UK gets past that, I predict the British public are going to be jeering the "Operation fear" cabal like never before, as the UK economy picks up speed, while watching the EU eat their dust in the rear view mirror.

 

Here is the first few paragraphs of a very insightful and encouraging article about Brexit from Brexit Central:

Deal or no deal, here’s why Brexit cannot be stopped

The UK political commentariat are a lazy bunch. Brexit is one of their biggest topics in decades – a bonanza that any amateur can pitch in on – yet remarkably few have got to grips with the key texts. If they had, they would realise Brexit is at that stage of the chess game where the result is already a foregone conclusion. Brexit is going to happen.

Some more enlightened MPs saw this a while ago. Would Anna Soubry have resigned from the Conservative Party if she thought Remain or BRINO (Brexit In Name Only) were on the cards? Would Jeremy Corbyn offer a second referendum to his diehard Remainers if he thought there was any probability of Remain? You can hear the anguish of opportunists who placed their chips on defending BRINO from space as they realise they will end up on the wrong side of history.

So why should we be so certain that Brexit will triumph?

{More at the link}​

 

According to a German economist, Britain will prosper with a 'hard but smart' Brexit. This means Brexit with no deal, quickly followed by a dramatic slashing of tariffs on products entering the country, which will lower consumer prices and make the British commercial economy more competitive.

Britain will prosper with a 'hard but smart' Brexit say top German economists

Embracing free trade would limit the damage caused by a "no deal" Brexit, give a bounty of cheaper imports to consumers and strengthen Britain’s hand in EU negotiations, according to top German economists.

Slashing all import tariffs after Brexit would cut costs for households and businesses, giving the economy a boost, the Ifo Institute said in a new report, calling this model a “hard but smart” Brexit. At the same time it would rebalance the power around the negotiating table, which is currently based on a "no deal" Brexit harming the UK because it would involve Britain imposing WTO taxes on its own consumers.​

This approach is apparently being actively considered by the UK government.

Brexit: Government to slash up to 90% of trade tariffs if UK leaves EU with no deal

The Department for International Trade (DIT) intends to cut 80-90% of all tariffs imposed on goods imported into Britain, according to Whitehall sources. The cuts, which will be outlined in documents published if the prime minister fails to get parliamentary backing for her EU withdrawal bill next week, represent a bombshell for many manufacturers and farmers in the UK.

Since tariffs are a charge on thousands of types of goods entering the country, they protect domestic producers from overseas competitors. According to government sources the 10-20% of more sensitive items which will retain their protection includes cars, beef, lamb, dairy and some lines of textiles.​

This has not been discussed much, as this approach is somewhat controversial, because the cheaper imported goods would be more competitive with locally sourced goods of the same sort. However, it appears that the approximately 10-20% of sectors that are more sensitive to these lower tariffs would continue to have higher tariffs.

In any case, it appears to be an option that the UK government is considering in the case of an actual no-deal Brexit. And independent economists, such as the one from Germany above, apparently think it is a rather good idea.

 

Three weeks, or if you prefer, 21 days to go until Brexit day.

 

Labour's Emily Thornberry, a frontbench shadow minister, is indicating that Labour will oppose any delay of Brexit that would require the UK to participate in parliamentary elections. This is big news and a very helpful clarification. This means they will not support an extension that lasts past July at the very latest, as any longer delay would require the UK to hold elections for the EU Parliament.

Emily Thornberry says Labour would oppose a long Article 50 delay

Labour will oppose any delay to Brexit that will require Britain to take part in the European parliament elections, Emily Thornberry has said. Theresa May has promised to give MPs the chance to ask Brussels to extend Article 50 if they vote down her agreement on Tuesday. Remaining in the EU beyond July, however, will require the UK to take part in the elections due to be held in May, which the prime minister has said she is determined to avoid. In a rare moment of agreement between the two main parties on Brexit, the shadow foreign secretary said that any extension was likely to be limited to July when the new MEPs take their seats. Most experts say that the date is the latest deadline compatible with EU law. “It would be inappropriate for us to stand for the European parliament,” she said.​

So it appears to down to agreeing to the current, unchanged deal with the unlimited backstop (BRINO - Brexit in name only), the EU changing their mind and agreeing to a deal that the UK can support, or Brexiting with no deal.