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Brexit Day: is the ‘Never-ending Story’ over or is it just the end of the beginning?

‘Procession moves on, the shouting is over,

Praise to the glory of loved ones now gone..’ 1

Almost 4-yrs on from the first article, ‘Brexit, the Never-Ending Story’, we have finally reached the end of our tale.

Or so we thought! The reality is that this is only the end of the beginning, and the government still has to deal with issues such as immigration, regulation for sectors such as financial services, the future of agriculture and fishing, and the place of human rights in post-Brexit Britain, and all by the 31st December.

And, we should not forget the post-Brexit pressures on the UK union itself, most obviously from Northern Ireland and Scotland, but also from Wales and the English regions.

An examples of these problems is trade to and from Northern Ireland and the paperwork required, the very paperwork that Johnson, during the election campaign, misleadingly told us could be thrown in the bin.

Oh well, what’s one more half-truth

This couldn’t have been farther from the truth; post-Brexit, Northern Irish businesses will need to complete a very complex document when sending goods to Great Britain, one that includes 31 data elements, of which 29 are mandatory.

Businesses sending good the other way will have a form containing up to 45 elements, 42 data of which are mandatory.

Oh well, what’s one more half-truth.

And let us not forget Scotland, who, this week published a 94-page paper explaining how the Scottish government could take charge of its own immigration policy and start issuing its own ‘Scottish visa’.

This obviously isn’t an immigration policy paper as that is controlled by Westminster, instead it really represents a devolution policy paper, an entrée to a manifesto for Scottish independence.

 

‘Is this the MPLA
Or is this the UDA
Or is this the IRA
I thought it was the U.K’ 2

 

Now let us return to the Never Ending Story; for those of you that have followed this column, you may remember the first article posed 3-questions.

Firstly, I asked, ‘how easy will it actually to be to leave the EU’?

Well, it took almost 4-yrs, two governments, a prorogation of parliament, the government found in contempt, and endless wrangling and unpleasantness, and its only half-time.

Secondly, I then suggested that there might be benefits we wish to keep. This is still undecided, given that there is less than 12-months to negotiate the exit, I suspect we will be closer to a Hard Brexit than anything else.

it took almost 4-yrs, two governments, a prorogation of parliament, the government found in contempt, and endless wrangling and unpleasantness

Problems will come when we must pick sides, most obviously Europe or the US. For example, the digital services tax, which the chancellor, Sajid Javid, favours.

In addition, the UK will be prioritising a trade deal with EU, where 45% of our current business lies and needs to be protected, as does the 20% we do with the US.

However, pushing ahead with the digital services tax will not find favour with the US. Indeed, US Treasury Secretary Steven Munchin, has been threatening arbitrary trade-tariffs on autos, and has said Trump will simply bypass the Chancellor and go straight to Johnson.

The dichotomy here is that Johnson’s government is based on the rhetoric of taking-back-control rhetoric, therefore it can’t work alongside the EU to achieve an effective regime against the lawless tech companies.

At the same time, Johnson can’t back down on the UK tech tax as that would imply handing control to the Amercians. Dilemmas such as this will be commonplace.

I then asked, ‘will this be the end of the never-ending story’? I don’t believe it will be, Brexit will continue to fester and be the open-sore that divides the country, geographically and demographically.

Brexit will continue to fester and be the open-sore that divides the country, geographically and demographically

It is very easy to make the case that Remain now enjoys a majority, albeit too late to be of value.

In the recent general election opponents of Brexit were in the majority, as the ‘remain’ or second referendum backing parties won more votes than the Tories and Brexit party.

The split is geographical; Norther Ireland and Scotland are in favour of remaining, as are voters in the big cities, especially London.

Demographically, the picture is equally fragmented, the old die-hard ‘we fought a war for you, we are a great country mob want to leave, whilst younger people are in favour of Remain.

It could be said that a selfish bunch of old people, not content with bleeding the old-age pension dry, are foisting their narrowminded bigoted beliefs on the majority. This leaves the young, financially strapped, unable to get on the property ladder and facing a narrow, isolationist future.

 

‘You’ve got your mother in a whirl ’cause she’s
Not sure if you’re a boy or a girl’ 3

 

Finally, I questioned the impact it might have on the political parties.

This is multi-faceted but let me try to simplify it; Labour is out-of-date, as are all centre-left parties in Europe, and Corbyn didn’t wake up to Brexit until it was too late.

leaves the young, financially strapped, unable to get on the property ladder and facing a narrow, isolationist future

As to the Lib Dems, until we reform the electoral system and become a democracy, they are an irrelevance, but one that takes support from the two main protagonists.

And now we turn to the Tories, or more accurately, the party that is Tory in name only.

Guided by the twisted genius that is Dominic Cummings, Boris Johnson romped home in the election with an 80-seat majority, and a promise of ‘let’s get it done’.

Johnson’s success owed everything to this; former Labour voters brainwashed into believing leaving the EU would see them all driving Aston Martins (Rolls and Bentley being owned by the Germans), laughed off every lie and half-truth and marched lemminglike to the cliff edge.

Guided by the twisted genius that is Dominic Cummings, Boris Johnson romped home

And so, all that is left is to examine how Johnson’s new friends in the north will fare once we got it done and take back control…

Fishing is, perhaps the most emotive issue for both sides. The EU have always said fisheries came first – nothing would be agreed until fishing inside our 12-mile limit was agreed. Who will blink first?

Then we will have manufacturing and industry, and that isn’t looking too good.

The chancellors’ announcement that ‘there will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union.’

Yes, ‘there will be an impact on business’, which had to ‘adjust’ to the new reality: companies had had time to prepare, though ‘admittedly they didn’t know the exact terms’.

Not a great start is it, his blithe comment, ‘there will be an impact on business’, has more than a hint of too bad, about it.

Javid’s abrasive words have been described as ‘Self-serving complacency!

To bring in divergent regulation is purely doctrinaire and ideological, as it makes no sense on the ground,’ said Andrew Varga of Seetru, a manufacturer of industrial valves. ‘Europe’s CE kitemark is gold standard and all that’s needed, but they spit on it just because it’s European: they want ‘Great British’ standards.’

The Food and Drink Federation, echoed by other industries, called Javid’s words the ‘death knell’ for frictionless trade, warning of inevitable price rises.

the ‘death knell’ for frictionless trade, warning of inevitable price rises

Ian Wright, the FDF’s chief executive, said: ‘The idea we can prepare is ridiculous. We don’t know the rules. [Javid is] burnishing his credentials to stay chancellor, but it’s a real danger if the UK and EU don’t align their regulations.

If it’s … abandoning EU social and labour regulations, the EU will impose stiff tariffs. This sector has tight margins, only 2-3%, making exports not viable.’

As Wright points out much of this industry is based in the Midlands and north of England, risking good manufacturing jobs in the very places Boris Johnson has pledged to ‘level up’.

Any divergence in any part of each industry threatens companies and jobs.

Their beloved Brexit, the answer to all their problems, could yet become the biggest threat to their jobs. Small wonder then that Theresa May was so reluctant to publish the government’s economic assessment, as the north and Midlands face the greatest threat due to the significance of their trade with Europe.

Brexit, the answer to all their problems, could yet become the biggest threat to their jobs

Worse still, the chancellor’s insistence that Britain will diverge from EU industrial and social standards adds an extra threat that was factored into the original assessments.

For example:

  • The north-east; Sunderland has benefitted from the creation of 30,000 jobs in the supply chain to Nissan, which located there in 1986. The impact assessments found that this region, will take an 11% hit should Johnson pull-off a trade deal, increasing to 16% if there is no deal, and full barriers and tariffs are erected with Europe.
  • The north-west, where Leigh, Burnley and Blackpool South voted for Johnson, faces an 8% economic decline, rising to 12% if there is no trade deal.
  • The damage to the West Midlands, east Midlands, and Yorkshire and Humber is projected to be at least 5%, and up to 13% for the West Midlands if there’s no deal.

And these were the voters Johnson’s new MPs gushed about, people impatient for the Brexit they voted for in 2016.

As the saying goes, be careful what you wish for…

 

‘I am the world’s forgotten boy
The one who searches and destroys
Honey gotta help me please
Somebody gotta save my soul’ 4

 

Turning away from trade and business, what about government spending?

Well, that not looking too good either, as a reallocation of council funding could see these areas loose up to £320m causing yet more cuts to services, whilst the leafy southern shires in the south-east gain up to £300m.

Workington man, will be amongst the losers, as Cumbria county council face cuts of £5m

Much to my amusement Workington, home of the famed Workington man, will be amongst the losers, as Cumbria county council face cuts of £5m, as will Sedgefield due to cuts of £10m for Durham county council.

It is estimated that 37 of the 50 new Tory MPs, or 70% of the gains made by Johnson in the general election, represent areas that are set to lose millions a year. Other notable losers include Stoke-on-Trent, Redcar, West Bromwich, Bishop Auckland, Grimsby and Leigh.

The winners may come as no great surprise as the Tories do what they do best; look after their own:

  • Hampshire gaining £35m a year,
  • Surrey county council gaining£25m. And surprise, surprise, Surrey is home to 11 Conservative MPs including the cabinet members Dominic Raab and Michael Gove
  • Tory-run Northamptonshire county council, which declared effective bankruptcy in 2018 after years of financial mismanagement and is still in special measures, is set to get a £7.5m boost to its budget. A reward for failure, perhaps?
  • East Sussex, council stands to gain £6m a year

However, my personal favourite is Wokingham in Berkshire, which, as one of England’s most affluent boroughs, hardly need the promised 30% increase in funding.

This analysis, commissioned by the Local Government Association, presents Johnson with an early test of his promise to ‘level up’ resources between the south and the north and Midlands. The government is expected to issue a formal consultation on the new formula, which has been developed over the past 12 months, in the spring.

For the full story see:
https://www.theguardian.com/society/2020/jan/25/former-red-wall-areas-could-lose-millions-in-council-funding-review?CMP=share_btn_link

And so, our journey ends. By the time you read this we will no longer be a member of the EU, we will have taken back control, a once great nation arising phoenix-like from the ashes of Europe.

Or, is this just some out-dated fantasy fuelled by bigotry, nationalism, and people pining for yesteryear?

In many ways Brexit is a return to the past; the nation state as the primary locus of political loyalty and as the collective manifestation of a unified ‘people’.

the nation state as the primary locus of political loyalty and as the collective manifestation of a unified ‘people’

Brexiters paint pictures of us as a suppressed people rising, as Jacob Rees-Mogg puts it, to set itself ‘free of the heavy yoke of the European Union’.

This highlights a lack of understanding, we have never has been a nation state, instead we were a vast multinational and polyglot empire.

The UK is a four-nation amalgam of England, Scotland, Wales and Northern Ireland, there is no single pre-EU UK ‘nation’ to return to, and there is no unified ‘people’ to return the power to.

Two of these nations, Scotland and Northern Ireland, rejected Brexit even more emphatically in the general election of 2019 than they had done in the referendum of 2016.

And, as mentioned earlier, a clear majority of voters in the UK as a whole voted in 2019 for parties that promised a second referendum and an opportunity to stay in the EU.

Despite Johnson romantically describing the 31st of January as ‘this pivotal moment in our national story’, it isnt; it isn’t Northern Ireland or Scotland’s story, it isn’t even London’s story.

The supporters of Brexit aren’t a ‘people’ with a voice of their own, they are nationalist revolutionaries without a political nation, trying to create one for themselves, what Anthony Barnett, co-founder of Open-Democracy, calls ‘England without London’. Oh please, set London free….

‘I met myself in a dream
And I just want to tell you everything was alright…’ 5 

 

OK lyric spotters we are honoured and extremely grateful that Philip has delivered us of an extremely powerful piece to mark this day of days – Brexit Day – as it will almost certainly never be known.

The story has ebbed and flowed in the four (yep) years since Philip’s first article and you can see them all by clicking the link below; there has been much vitriol on either side and we now have a country in need of healing. Philip has never wavered from his belief that Brexit would have a disproportionately negative impact on those that can least afford it, and the £5m cuts faced by Workington Man appears to bear witness to that.

He’s generously served up five lyrics for us and thrown those of us that have struggled of late a bit of a bone by including a couple of anthems; however, they are book-ended by some real testers as well – entries will be accepted in the normal way during the transition period.

First off the rank 1 Philip generously suggested I might get the band (1 pt) but not the song (2 pts); he was wrong – bragging rights if you got Joy Division and ‘The Eternal’.

Next 2 should be a gimmie – just one point for the Sex Pistols and ‘Anarchy in the UK’; likewise 3 you’d expect some Bowie (1 pt) and won’t be disappointed with ‘Rebel Rebel’ (2 pts)

Then it starts to get a bit fiendish, but a couple of cracking tracks – 4 is ‘one of the first punk anthems’ – three points for Iggy and the Stooges and ‘Search and Destroy’ and last but by no means least 5, consider it doffed if you got to The Velvet Underground and the excellent and totally apt ‘Beginning to see the Light’ 

So, ‘The End of the Beginning of the Never-ending Story’ – and let’s hope not the beginning of the end; one thing’s for sure the next eleven months is not going to be dull as the ‘Get it Done’ tub-thumping is replaced by some serious elbow grease and inevitably some logs on the line along the way.

Just how secure will the loan of some of those Tory votes be on 1st January 2021? We hope that Philip will treat us to his occasional thoughts as the year progresses and things unfold, or perhaps unravel. 

If you would like to respond to anything in this article or perhaps have a contrary position, we would love to hear from you – ask@diyinvestor.net

 

 

 

 

Philip Gilbert 2Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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