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Brexit: The Never-Ending Story : Part 3 – ‘Little Britain’

Brexit: The Never-Ending Story : Part 3 – ‘Little Britain’

October 31, 2018borisbrexiteconomyeumay212Views

Leicester Square

 

In the third of his razor sharp articles Brexit: ‘The Never Ending Story’ Philip Gilbert posits that we are going back to the future and highlights what he sees as the rather hollow ‘victories’ currently being scored by those with a Little Englander mindset. Fire her up….

 

The ice age is coming, the sun is zooming in, Meltdown expected, the wheat is growin’ thin, Engines stop running, but I have no fear, ‘Cause London is drowning, and I, I live by the river…….1

 

Brexit continue to steal headlines; the following are from the last 2-weeks.

Firstly, like the detective in BBC’s ‘Life on Mars’ we are going back to the 1970s.

In my very first Brexit: ‘The Never-Ending Story’, I wrote about the London I remembered growing up in the 1970’s, ‘… it was grey and drab. In case anyone can’t remember, the winter of 1978-79 was christened the ‘Winter of Discontent’ because of the widespread strikes including refuse collectors, leading to Leicester Square being submerged in rubbish sacks’.

… it was grey and drab. My fear then was that a vote to leave would see us lose the thriving multi-cultural metropolis I now live in and return to that

My fear then was that a vote to leave would see us lose the thriving multi-cultural metropolis I now live in and return to that.

Well, Wetherspoons’ Tim Martin seems to think that’s a good idea, he is going through his drinks list and barring everything from Europe.

Jägermeister, owned by the German Findel-Mast family, is the latest, along with cognacs Courvoisier (Japanese owned – when was Japan in Europe?) and Hennessy (part-owned by Britain’s Diageo).

Perhaps the Brexiteer wants to return to those warmly remembered days before foreigners, loud music and reliable electricity, when men drank Double Diamond beer and women had gin or a glass of hock next door in the saloon bar.

No doubt many Brexiters will cheer at this change, many love him for his Eurosceptic sound-offs, drinkers of premium liqueurs don’t go there.

But, this look into the future feels more like a weary pub crawl, a return to the 1970s and 1980s when one big treat was a booze cruise to France, the exciting choice in their supermarkets.

when men drank Double Diamond beer and women had gin or a glass of hock next door in the saloon bar

Cheap Bordeaux and Roquefort for the parents, exotic sweets, Orangina and dairy desserts for the kids. Whilst back home the local grocers seemed dull by comparison. Vimto, Corona and a Vesta curry if you were lucky.

Thanks to closer union with our European neighbours, we no longer need to cross the Channel for San Pellegrino and Parma ham. The fickle amongst us may have even moved from parmesan to pecorino cheese, tariff-free trade has brought us better, happier choices, not to mention Jamie Oliver’s ‘Jamies Italian’!

But of course, these are all imports, and let us look more closely at where we import from. We imported US$644.1 billion worth of goods in 2017, and, as of June 2018, UK’s imports totalled $338.1. The geographic split for 2017 was:

  • 58.6% from fellow European countries.
  • 22.7% from Asia
  • 12.2% from North America.

The data highlights our reliance on Europe for our imports. If this continues post-Brexit, will the change in tariffs means we are all paying more for these goods? Likely importing inflation and lowering our standards of living. Alcohol isn’t in the top-10 products we import, so Mr Martin’s gesture is just that, a gesture!

But, one of the big plusses of Brexit we are told is that we can export more. Last year we exported US$445 billion worth of goods, and as of June 2018, total experts were $244.6. The geographical split was:

  • 54.4% to Europe
  • 22.6% to Asia.
  • 1.5% to North America.
  • 1.6% to Oceania including Australia and New Zealand

Source: http://www.worldstopexports.com/united-kingdoms-top-exports/

Now there are a few points that need to be highlighted, e.g. over-half our exports go to the European ‘partners’ that we are divorcing, more of that shortly, and virtually nothing goes to the Commonwealth.

Our second biggest export sector is vehicles, valued at US$53.7bn or 12.1% of the total, how timely! The following is sourced from the BBC on 11th September 2-days ago. Jaguar Land Rover’s Ralf Speth called the prospect of a cliff-edge break with the European Union as ‘horrifying’.

Mr Speth, who has previously warned of Brexit’s impact on JLR, said that if the ‘wrong decisions’ were taken in the negotiations with Brussels, it could result in the ‘worst of times’ for the UK and cost the company more than £1.2bn a year. ‘Any friction at the border puts business at jeopardy,’ he said at the UK’s first Zero Emission Vehicle Summit. We are absolutely firmly committed to the UK, it’s our home. But a hard Brexit will cost Jaguar Land Rover more than £1.2bn a year – it’s horrifying, wiping our profit, destroying investment in the autonomous, zero-emissions, we want to share.’

a hard Brexit will cost Jaguar Land Rover more than £1.2bn a year – it’s horrifying, wiping our profit, destroying investment

He said that if poor UK productivity worsened after Brexit, he would be forced to move manufacturing to somewhere such as Poland, where it was cheaper to make cars. About a quarter of a million people in the UK rely directly, or indirectly, on the success of his company, Mr Speth said.

Fear not, a spokesman for the prime minister said her Chequers Brexit proposals included protections for the car industry!

Source: https://www.bbc.co.uk/news/business-45489818

Now what of the Chequers proposal, well it isnt looking too good. David Davis has resigned from the cabinet over it, and has since confirmed he will vote against any deal with the EU based on the proposal, saying it would be ‘worse than staying in’ the European Union.

Boris Johnson, never one to be out done, went even further saying, ‘We have opened ourselves to perpetual political blackmail. We have wrapped a suicide vest around the British constitution — and handed the detonator to [EU Brexit negotiator] Michel Barnier’.

I am assuming that’s a no from Boris? In addition, 50 Conservative MPs are lined up to vote down the proposal.

Over in Europe, Michel Barnier has warned he is ‘strongly opposed’ to the prime minister’s Chequers proposal on future trade with the EU after Brexit, warning the ‘illegal’ offer would ‘end’ the European project, saying that allowing Britain to ‘cherry pick’ regulations would have ‘serious consequences’. Now this must be the first time any of the above have agreed on anything.

But wait, what are the alternatives? Well there is always the No Deal scenario, personally I love this one! Dominic Raab, the new Brexit minister, who is obviously competing with Tim Martin to be the Brexiteers pin-up boy, says that No Deal means no £39bn divorce bill, full control over immigration and free trade deals.

Now just hold on a minute, over 50% of our exports go Europe. Not only have left their party telling them its rubbish, we are now going to tell them to whistle for their £39bn! I can see that being a bit difficult.

But don’t worry we will have our own trade deals, there is the US for example, where Trumps foreign policy is America First (then, when wasn’t it?), so good luck with that. But we have a special relationship with the US; seemingly one based on them telling us what do and us doing it, in return we ask them for support and occasionally its forthcoming, e.g. the Falklands War. Cue Hugh Grant in “Love Actually”>

What other repercussion might a No Deal Brexit have? Well if you’re a chocoholic, Cadbury are preparing to stockpile key ingredients. Hubert Weber, the European chief of the food giant, said the UK is ‘not self-sufficient in terms of food ingredients’ and the chocolate manufacturer will have to stockpile chocolate, biscuits, and other ingredients to meet supply. Being a chocolate eater in Wetherspoons would be pretty miserable, you won’t be able to get an espresso and cognac to go with the chocolate, if there is any. Somehow black coffee and English brandy doesn’t do it for me.

Somehow black coffee and English brandy doesn’t do it for me

More seriously, the government is in talks with drug companies about funding the extra costs of stockpiling and flying in vital medicines in the event of a no-deal Brexit, the health secretary has revealed. Matt Hancock said the discussions were not a remnant of the so-called project fear campaign against Brexit, but part of ‘responsible planning for a no-deal’.

The pro-Europe Best for Britain warned last week that Hancock’s plan to set aside six weeks’ worth of vital medicines for a no-deal would cost £2bn. This, of course, is a drop in the channel compared to the £39bn we have saved on not paying the divorce bill.

….every time I thought I’d got it made It seemed the taste was not so sweet…

All in all, it isn’t looking too pretty, however for all those Brexiters dreaming of returning to the 1970s and raising their glass of keg beer as they sing alone to Slade its looking great. I wont credit them with David Bowie, way too cool, but he did sing ‘….every time I thought I’d got it made It seemed the taste was not so sweet…’. This isn’t tasting sweet and what we left with:

  • Chequers Deal; the PMs own party are, in large part, against it, as is the EU. Is it really an option? Surely not
  • No Deal; putting aside flares and Noddy Holder, we will perhaps upset our biggest export market, after £39bn is rather a lot!
  • Plan B, is there one?

Are there other solutions? Well, what about a Federal Britain, the regions that voted for Brexit leave and those that didn’t stay. The following data taken from the BBC, www.bbc.co.uk/news/uk-politics-36616028, shows how this might look:

Region Leave Vote % Stay Vote %
South East 51.8 48.2
London 40.1 59.9
North West 53.7 46.3
East 56.5 43.5
South West 52.6 47.4
West Midlands 59.3 40.7
Yorkshire and the Humber 57.7 42.3
East Midlands 58.8 41.2
Scotland 38.0 62.0
Wales 52.5 47.5
North East 58.0 42.0
Norther Ireland 44.2 55.8

So, London, Scotland, and Northern Ireland become federal states, which is rather neat. Scotland gets devolution, it deals with the Irish border issue, and the M25 becomes a moat!

Interestingly, this might be a rather better situation for London that other parts of the country as the capital generates 22% of UK GDP despite accounting for only 12.5% of the UK population. According to the Centre for Economic and Business Research, it makes a net contribution to the Exchequer of £34bn.

Scotland gets devolution, it deals with the Irish border issue, and the M25 becomes a moat

The above figures are for 2015, the latest I could find, though I suspect any change is minimal and maybe in London’s favour. Source: https://www.bbc.co.uk/news/resources/idt-248d9ac7-9784-4769-936a-8d3b435857a8.

Perhaps, more seriously, a second and final Brexit vote is required. It should be obvious to anyone other than the most rabid-Brexiter that many leave voters didn’t really understand what they were voting for and the full implications of their vote. Whilst 72.2% of the eligible population voted the demographics need to be considered. The following is sourced from:

https://www.independent.co.uk/news/uk/politics/eu-referendum-brexit-turnout-young-voters-youth-vote-double-a7129181.html

  • 64 per cent of those young people who were registered did vote,
  • 65 per cent of 25-to-39-year-olds
  • 66 per cent of those aged between 40 and 54.
  • 74 per cent among for 55-to-64
  • 90 per cent for those aged 65 and over

The article concludes by saying, ‘On balance, the results of our surveys on the turnout of 18-to-24-year-olds would suggest that it would not have been enough to overturn the result of the referendum … but it would have almost certainly reduced the advantage of Leave to such a point (likely less than 500,000 votes) that the very concept of a majority would have been highly controversial.’

I would suggest that a higher proportion of 18-25s would vote in a second referendum, and in addition there will be an additional 1.5m of eligible voters who were 16 and 17 last time. I am willing to bet that when you add that to the no voters who have seen the light and it’s a stay vote. If not its Forza London for me!

Now I am off to the Italian café for espresso, grappa, and cannoli, whist I still can!

1 Trebles all round if you cracked the opening lyric this time, and even Bowie’s ‘Changes’ that was sneaked in; London Calling maybe one of the better known lyrics – but, if pushed, would you have said it is coming up to 40 years old?!

Enjoy it anyway, and if you’ve no clue, ask your Dad; if he’s of a certain vintage, remind him that the Bowie track is 47 years old, then retreat!

 

 

 

pgPhilip 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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