Wednesday, 18 January 2017

May's Brexit plan is ambitious if nothing else

This article originally appeared on United Politics on 17/01/2017

Well there’s no need to speculate any further, Britain will be leaving both the EU and the single market. Theresa May’s Lancaster House speech this afternoon, in which she set out the government’s plans for leaving the European Union, was ambitious if nothing else.

Eschewing the option of remaining party to the EEA agreement, May has stated that we will not be seeking continued membership of the single market. Instead, she aims to conclude a bespoke “comprehensive and ambitious free trade agreement” with the European Union, ending European Court of Justice jurisdiction, contributions to the EU budget, and controlling the number of migrants entering the country from europe.

The fact that all of these things can actually be achieved by remaining an EEA member apparently is of little consequence. The plan is to skip over an interim arrangement and go straight to the final deal. Given the EU’s historical lethargy in completing bespoke free trade arrangements, one has to wonder whether May has bitten off more than she can chew in pursuing one within a two year time period.

There are a vast range of areas that will need to be covered. Passporting rights for financial services, customs operations, mutual recognition agreements, government procurement, intellectual properties, dispute settlement, and so on and so on.

There is a mechanism within Article 50 for extending the two year negotiation period, but it requires the unanimous approval of all 27 remaining member states. And whilst we are admittedly not starting from scratch, the pursuit of a bespoke arrangement in such a timeframe is a big stretch.

May’s plan to avoid the cliff-edge is for a phased implementation of this deal. What exactly that means is anyone’s guess, but it would still seem to suggest that the deal itself will be concluded within two years. This does nothing to increase the distance between us and the rocks below.

Encouragingly though there was an acknowledgement that in order to fully grasp the opportunities that Brexit affords us, we need to be out of both the Common External Tariff and the Common Commercial Policy. It’s the first time we’ve heard a prominent politician actually acknowledge the difference between these areas of the European Union treaties and the customs union as it is widely interpreted. That level of detail will be essential in the negotiations.

Overall it was a rather emphatic speech. The tone of friendship and conciliation with Europe ran right throughout it, and the emphasis on leaving the EU not a being a rejection of our friends on the continent or the values we share with them was a welcome one.

Several times the PM used the word ‘partnership’ to describe her vision of our future relationship with the EU. Working with the EU as equals, rather than subordinates, is precisely what Brexiters want.

The emphasis on a global, outward looking Britain building relationships “with old friends and new allies alike” should finally lay to bed any notion that the Brexit vote was the UK retreating from the world, and May was keen to stress the UK’s historical internationalist outlook, and it’s racial and cultural diversity.

The emphasis on reconciliation was applied to the domestic arena too, with an assurance that powers reclaimed from Brussels wouldn’t stop at Westminster, but passed further down the chain to the devolved governments of the UK. Though there was a warning to Nicola Sturgeon in her emphasis on maintaining common trading standards across Britain that Scotland won’t be able to stay in the single market on it’s own, even if that were remotely possible.

May acknowledged that the referendum had been divisive, but the acknowledgement that Leave voters did so with their eyes open, accepting that there would be uncertain times ahead was a welcome change to the patronisation heaped on them by some in the remain camp.

Equally, Remainers will be pleased to hear that both houses of parliament will get a vote on the final Brexit deal. What happens should Parliament reject that deal though, is still unclear.

Ultimately, the speech will have pleased hard brexiters the most. Those leave voters who saw an interim EEA arrangement as the safest option will be a little concerned, and the assertion that ‘no deal is better than a bad deal’ is complete and utter nonsense. Relying on WTO arrangements only would be catastrophic.

The insistence that a good deal is in the best interests of both the UK and the EU, coupled with the themes of co-operation and friendship though, should mean that that is unlikely.

The indication that, were the EU to play hardball, the UK would position itself as the singapore of europe, with incredibly competitive tax rates was an interesting one. It is in fact, arguably something we should look to do anyway once we’ve left the EU, to really help us flourish at a global level.

Chancellor Philip Hammond, in an interview with German newspaper Die Welt this past week, suggested something similar. A Britain with competitive tax rates pursuing global trading arrangements and acting as a beacon of free trade is one many would like to see.

So it turns out brexit really does mean brexit. May’s speech was assured and statesmanlike, and her vision for Britain and it’s future relationship with the EU is admirable. Whether or not it’s achievable though, remains to be seen.

Monday, 16 January 2017

Corbyn's maximum wage cap exemplifies his ignorance

This article originally appeared on United Politics on 16/01/2017

Nobel prize winning economist Friedrich Von Hayek once famously remarked 'if socialists understood economics, they wouldn't be socialists', a point Jeremy Corbyn took it upon himself to demonstrate this week when calling for a maximum earnings cap.

During a media blitz ostensibly to 'relaunch' his opposition, he appeared on Radio 4's Today Programme, ostensibly to talk about Brexit and immigration. After taking almost the complete opposite position to what had been briefed on those issues the day before, he then made an offhand comment about imposing a maximum earnings cap in the name of equality.

"I would like there to be some kind of high earnings cap, quite honestly. I can't put a figure on it and I don't want to" he told Today. "I would to like to see a maximum earnings limit, quite honestly, because I think that would be a fairer thing to do."

Needless to say, this became the headline of the day, and dominated his subsequent media appearances. And for good reason too, a maximum earnings cap would have profound effects on our economy.

If you limit the amount people can earn, you immediately put a limit on their productivity. If there is no incentive to work beyond a certain point then people will cease to do so. Why would anyone currently earning £10m do the same work for £1m? They'll either do 10% of the work, or go elsewhere where their efforts are rewarded.

The argument seems to go that nobody is worth that sort of money. But that assertion is not backed up by reality. For example, Steve Jobs' death wiped $17.5bn off of Apple's share price. The value a competent CEO can add to a firm is why shareholders are happy to pay them such high sums.

This is a point seemingly lost on Corbyn. During an interview with Laura Kuenssberg on the BBC he referred to the lower levels of employees as "those that are actually doing the work" belying a belief that CEOs don't actually do all that much bar, well, smoking cigars and diving into swimming pools full of gold coins presumably.

Despite Corbyn's assertion that income inequality is running rampant, the statistics show otherwise. The crash of 2008 made us all poorer, but it also made us more equal. Data from the ONS shows that income inequality, far from being on the rise, is at it's lowest point in 30 years.

Regardless, his pursuit of egalitarianism within company ranks is, and I struggle to find a diplomatic way to put this, sheer idiocy. For example, he proclaimed his disgust at the high wages earned by CEOs compared to 'shopworkers' et al.

I'm sure many people have sampled the delights of retail work at some point in their lives, this writer included. But the idea that my 8 hours a day stacking shelves, ordering stock and serving customers required the same level of skill and attention to detail (or indeed the same level of giving a toss) as the CEO is ludicrous.

Moreover I'd wager you'd be hard pushed to find a shop worker who knows what their company bigwigs are paid, much less care. Their concern is for themselves and that they're being paid fairly for the work they carry out. If they feel that isn't the case, they seek employment elsewhere. Such is life.

But, as much of a cliche as it is, Corbyn's wage cap is the politics of envy encapsulated. This is not even a Robin Hood approach, where 'excess' earnings are redistributed. Just a straight up, 'no, you can't earn that much, it's not allowed.' It is spectacularly authoritarian, born out of the fallacy of the fixed pie.

Of course, if Corbyn actually means to confiscate any and all earnings above a certain level then we're now talking about an income tax level of 100%. The fact this is being suggested by the leader of the opposition on national radio and not by a pimply sixth former in a debating society shows just how devoid of serious thinking Labour have become.

Inequality doesn't matter. What does matter is overall poverty levels. If the poorest man is getting richer then it is of little consequence that the richest man gets richer still. In fact, some research suggests that growth occurs more readily when there is more inequality.

A rising tide lifts all ships, but Corbyn's approach would drain the ocean. A cap of the likes he advocates would see a mass exodus of talent, and thus tax revenue from this country. The public services, and public sector employees, who's funding and wages rely on those tax revenues would soon find themselves without income.

Not only would it strangle economic growth, it would also halt progress. Why would the tech wunderkind with a killer app bother to pursue the idea if the fruits of his labour and rewards for his ingenuity are destined to be disposed of by the state?

It is incredible that such an ill-conceived idea has been seriously suggested by a prominent UK political figure. It's closer to communism than socialism. The most surprising thing of all though, is that Corbyn can still surprise us with his ignorance.

Saturday, 24 December 2016

Brexit: Six months on

This article originally appeared on United Politics on 23/12/2016

It’s six months to the day since the historic vote for the UK to leave the European Union. The intervening months have been, by the expectations set during the campaign, rather uneventful.

Sure, we’ve lost one Prime Minister and gained another (our second female leader to boot), the Government’s been dragged through the courts, Labour had it’s annual leadership election, UKIP ripped itself to shreds and the Lib Dems did, well, whatever it is they do these days. But the British landscape has been curiously devoid of recession, world war three, or the collapse of western civilisation.

Of course, far from having actually left, we have yet to begin the exit negotiations that commence upon the triggering of the notorious Article 50. Some of the blame for this can be laid at the feet of Vote Leave. Whilst it was ultimately a successful campaign, it contained no more substance than Stronger In’s doomed efforts to keep us tied to Brussels.

There was no Brexit plan laid out whatsoever, and whilst it allowed for more maneuverability during the campaign, enabling them to paint Brexit as whatever it’s current audience wanted it to be, it means that there’s been plenty of flapping around since.

This has actually played into the hands of continuity Remainers who wish to see the referendum result ignored.  The lack of any sort of plan allows them to indicate that we’re woefully unprepared for the challenges ahead, and/or push for a Brexit so close to continued EU membership as makes no difference.

The vacuousness of some of Vote Leave’s campaign messages has left Leavers wide open to these criticisms. Touting the £350m figure was a spectacular own goal, as the same point could just as easily be made using the net figure, or even the savings to be gleaned from an EEA/EFTA position.

Not that all of the blame can be laid at the feet of Vote Leave. They were after all only a campaign group, and regardless of how detailed or otherwise any plan of theirs may have been, they were not being elected. A point seemingly lost on Chuka Umunna and his meaningless ‘Vote Leave watch’ outfit.

David Cameron on the other hand, when he called the referendum, should have put more effort into ensuring government and the civil service was prepared for either eventuality, rather than enlisting the machinery of government to campaign for his favoured outcome. The lack of preparation for a Leave vote, and the arrogance that signifies, should mean history sees him vilified, regardless of his other achievements.

This is why, despite the calls to invoke Article 50 immediately, there has been a necessary delay whilst the government finds it’s feet. They’re certainly taking their time, but slowly but surely they seem to be coming to grips with what can and can’t be achieved during the two year Article 50 negotiation period.

But if Vote Leave has been shown to be the shallow campaign it was, Stronger In’s entire case for remain has been utterly obliterated. In the immediate aftermath of the vote they pointed to the fall in sterling as proof positive of the economic ruin that awaited a United Kingdom sans EU membership.

But economists have long been arguing that the pound was overvalued, and a devaluation was necessary and desirable in order to rebalance the economy. This has been demonstrated in both the FTSE 100 and 250 which have soared since the vote in June, now sitting comfortably above their pre-referendum levels.

Nor has there been an exodus of investment. A cursory glance at the ironic #DespiteBrexit hashtag on Twitter unveils a litany of, shock horror, good news in the wake of the referendum result. From car manufacturers (plural), to banks, to supermarkets, a litany of companies have committed to the UK for the foreseeable future.

This is because the UK still remains an attractive place for businesses to invest. Forbes yesterday moved the UK from tenth to fifth in it’s list of the best places in the world to do business. Couple this with the OBR predicting further growth of 1.4% in 2017, returning to the long run average by 2019, as opposed to the -0.7% recession predicted by the Treasury, and the foretold economic armageddon looks as likely as Jeremy Corbyn becoming PM.

All this is taking place alongside a sideshow of various challenges to UK democracy. The high court battle on whether Parliament should vote on triggering Article 50 seems somewhat of a red herring, and has wrongly been shouted down by Brexiteers worried about the result being overturned.

Their fears aren’t completely unfounded, given the ‘March for Europe’ demonstrations in London (they would be much more accurately entitled ‘March Against Democracy‘), the various petitions for a second referendum, and the numerous MPs and political leaders, celebrities, and academics calling for another vote or for the vote to be ignored outright. It’s been quite a spectacularly worrying admonition of democracy.

Those that would seek to subvert the result in this way should perhaps be careful what they wish for, considering the latest poll shows that we’d still vote to Leave were there a second referendum. Given the largely positive economic news since the vote, negating Stronger In’s entire shtick, it’s not exactly difficult to see why.

We’re still three months away from Theresa May’s stated timetable for Article 50 notification. Ministers appear to be catching on to the inevitability of an interim EEA or ‘Norway’ option, as we begin unpicking 40 years of political integration with mainland Europe. Brexit was never going to be an event, it was always going to be a process.

Post-Brexit politics has made the last six months utterly enthralling. But it’s mostly been white noise thus far. Once the Article 50 ball comes loose from the back of the scrum, and negotiations with the EU begin in earnest, things will start to get really interesting. Roll on March 2017.

Sunday, 18 December 2016

REVIEW: Super Mario Run

Back in 2011 late Nintendo President Satoru Iwata proclaimed that Nintendo would 'absolutely not' be making mobile games, and that any moves to do so would see Nintendo 'cease to be Nintendo'. Cut to five years later and, following a more off-the-wall experiment with Miitomo, we have our first fully fledged Nintendo game on iOS.

Super Mario Run sees the portly plumber stripped of everything but his core mechanic: jumping. Mario runs automatically across the screen, with a simple tap making him jump across ravines, onto enemies, and over obstacles. It's a perfect adaptation of the Mario franchise for mobile devices and, being a bespoke offering, is much more welcome than say, a straight port of the original Super Mario Bros.

Contrary to Iwata's prediction, the level designs are classic Nintendo. Initially accessible yet fun to vault your way through, with the challenge escalating across the 24 stages. Whilst I never had any real difficulty in finishing a level, it certainly got more satisfying to do so, especially in the single screen levels. These stages see Mario change direction when he reaches the right hand side of the screen, or run straight through to appear on the left once again a la Mario Bros. These involved a little more brain power to figure out and broke up the pace nicely from the standard 'run to the goal' levels.

Not that those outings are in any way monotonous. Classic Mario levels with green hills and mushrooms, haunted Boo mansions, Pokey infested desert settings, and of course Bowser's nefarious castles are all here and vary massively from course to course. They often have a unique mechanic to help - or hinder - your progress through the level, from enemies throwing huge spiky balls at you from every direction to utilising a well timed shell to clear your path. Every level on offer was a fun and unique experience. Throw in some mechanisms that allow Mario to somersault backwards, or stand still for a moment to time his way through a moving obstacle, and there's enough variety to stop the game ever getting repetitive.

As mentioned, it's fun if relatively easy to power through the 24 levels on offer here. The real challenge comes in collecting the special coins. Each level has five pink coins to locate. Doing so unlocks an ever so slightly modified version of the level with five purple coins to gather and if you can manage that, a further change up gives you a final challenge of five black coins. The pink ones can be collected on your first playthrough of a level if you're switched on enough, but by the time you reach the black coins the challenge can be fiendishly difficult, with the need to perfectly execute a series of jumps across multiple enemies to reach that one coin that's otherwise out of reach. It's a great excuse to keep coming back to the main 'World Tour' mode and there's a few bonus levels available as an extra challenge for those that manage to find them all.

Further replayability can be found in the high score mechanism. By adding friends, either directly via friend codes or by linking your Facebook and Twitter accounts, you can see who has managed to gather the most coins in any given level. It adds a cool competitive element and offers a further challenge to increase your high score.

Competition is the name of the game in the second mode, Toad Rally, which sees you compete against the ghost data of other Mario Run players in order to gain the approval of onlooking Toads. Collecting coins and pulling off sweet jump combinations will boost your score, and the winner will attract more Toads to their kingdom. As well as acting as a 'high score' in your friends table, gathering more Toads for your kingdom unlocks further items in the game's third mode; Kingdom Builder.

A much more serene affair than the other two modes, Kingdom builder lets you spend the coins you accrue in the other modes on buildings, items, flora and fauna, to customise your very own mushroom kingdom. The Toads you unlock in Toad Rally come in various colours, and various buildings require different combinations in order to unlock. It's mostly cosmetic, but there are extra playable characters you can unlock this way with their own unique traits that may help you reach a few elusive black coins back in World Tour mode.

Some may balk at paying £7.99 for a mobile game, but what you're getting for that is the full experience. There are no annoying adverts popping up after every level, no prompts to go and buy extra coins or jewels or any other nonsense. There is no 'pay to win' mechanism. The expansion of your Mushroom Kingdom relies solely on your platforming skills, and for a game that's so well built, packed with this many features and replayability, eight quid is a very reasonable price tag.

The biggest drawback to the game though is the requirement for a constant internet connection in order to play. If you're at home or at work that isn't necessarily an issue. But once you're on the move it can start to scupper any platforming fun you might have. City dwellers won't have too much of an issue, but those of us that live in more rural areas may find that their bus ride into town won't be as Mario centric as they may have hoped. It seems a daft requirement, when the game is ideal to play on a commute, but if you have an unstable 3G connection, or say, a tube journey to undertake, you may find yourself reaching for other games.

All in all, Super Mario Run is an excellent first foray into the mobile gaming market for Nintendo. It's well built, plays excellently, and offers plenty of replayability for it's price tag. The need for a decent internet connection may mean that some won't get to play it when they would ideally like to, but it's nevertheless a great take on the Mario franchise that works perfectly for mobile devices.

Tuesday, 6 December 2016

Does Brexit really mean leaving the single market?

This article originally appeared on United Politics on 05/12/2016

“Brexit means Brexit.” If there’s one soundbite that exemplifies Theresa May’s premiership thus far it’s that. Once a reassuring riposte to those that seek to subvert our democracy by ignoring the referendum result, or in true EU fashion, making us vote again until we get the ‘right’ answer, it has quickly become a source of frustration. Yes, Brexit must mean Brexit, but what exactly does that entail, besides an increasingly infuriating ouroborus-like argument?

Different leave voters checked that particular box for varying reasons, and varying priorities. Although Brexit does indeed mean different things to different people, there are a few broad areas almost all Brexiteers agree on. We wish to repatriate our trade policy and regain the freedom to strike trade deals with whomever may want one. We wish to see an end to the jurisdiction of the European Court of Justice over UK affairs. We wish to have far greater control over immigration than we currently enjoy, and we wish to see an end to obligatory EU budget contributions.

The main point of contention it seems is whether or not we can achieve these various goals by remaining in the single market, otherwise known as the European Economic Area (EEA). This debate is an incredibly important one and has been completely undermined by an unholy combination of hard-headed Brexiteers, Remainers in denial, and clueless politicians.

One point of confusion is the difference between the EEA and the customs union. Far too many politicians and commentators are either wilfully conflating the two or are completely unaware of the differences, or even who is involved in each one.

It’s now been five months since the referendum result, and over a year and a half since the Tories won the general election thus ensuring that a referendum was coming. Despite this, only last week the Guardian has incorrectly reported that Switzerland is a member of the EEA and the BBC erroneously asserted that members of the single market cannot strike their own trade deals. It is no wonder confusion is the order of the day when our media is so woefully uninformed.

Switzerland of course, whilst a member of the European Free Trade Area (EFTA) is not a member of the EEA, and instead has a series of bilateral trade deals with the EU. Meanwhile the remaining EFTA members, Norway, Iceland, and Lichtenstein, are also members of the EEA, yet remain outside the customs union. This gives them maneuverability in pursuing their own trade agreements with the rest of the world.

There is an assumption amongst some politicians that remaining in the customs union is essential to ensure that barriers to trade and customs checks are not erected between the UK and the EU. This too is wrong. The customs union, following the signing of the Treaty of Rome was fully established by 1968, yet internal border checks between member states were still commonplace until the 1980s.

It was the establishment of the single market, and the signing of the Single European Act in 1985, that eliminated these internal border checks, and thus continued EEA membership, not participation in the customs union, is what ensures smooth trade post-brexit.

Furthermore, it is not the customs union that limits our ability to pursue our own trade deals, but rather the EU’s common commercial policy. It is possible to remain in the former and outside the latter, as these areas are covered separately in the Treaty of the Functioning of the European Union (TFEU) by Articles 28 and 206/207 respectively, and therefore not reliant on each other.

Turkey of course has an arrangement of this nature, participating in the customs union whilst remaining outside the EU, and having the freedom to pursue it’s own trading arrangements with third parties. Rules Of Origin regulations mean that the duty is collected once the goods move to another member of the customs union.

But this scenario, post-Brexit, would merely serve to add further complications when negotiating trade deals elsewhere. With internal customs checks covered by the single market, there is no discernible advantage to remaining in the customs union, so leaving it must be a part of Brexit.

Turning to the EEA, much of the misinformation can ironically be traced back to Remain advocates trashing this option prior to the referendum. It was commonplace to hear Remainers, including David Cameron, preface their economic doom-mongering with ‘if we leave the single market…’. It was a cunning strawman argument, and a key part of Project Fear, but ultimately irrelevant.

The false conflation of the EU and EEA was the most erroneous aspect of the entire campaign and anyone who did so was rarely pulled up on it. This dishonesty (as well as the voices seeking to usurp the result) has of course now come back to haunt them as they try to make the case for continued membership of the EEA.

Given that the EEA agreement, to which the UK is a signatory, is separate from the EU treaties, it is entirely possible that even if we reached the end of Article 50 negotiations with no deal, we would still remain members of the EEA. Withdrawal could require the separate triggering of Article 127 of the EEA agreement, which can only be done unilaterally. There is no precedent for a country remaining a member of the EEA whilst not also a member of either EFTA or the EU, but it nevertheless remains somewhat of a legal grey area.

These issues would be best overcome by the UK applying to rejoin EFTA. Whilst a contracting party to the EEA agreement moving from the EU side of the two pillar structure to the EFTA side has yet to be done, Austria, Finland, and Sweden all moved in the opposite direction without the need to reapply to join the EEA. The UK could easily pull the same trick in reverse, assuming the other EFTA states were on board. We should be exploring this alongside Article 50 negotiations, and fortunately there has already been some encouragement from the other members.

On a related note, countries that have joined the EU do not automatically become members of the EEA. They must apply to the EEA to acquire contracting status and ratify the agreement accordingly. These differentiations alone technically means that leaving the EU doesn’t equate to leaving the EEA, but let’s explore it further.

Opposition to the EEA option is predicated, primarily, on the desire to limit immigration and the belief that this can’t be done whilst remaining a member. On the contrary, the precedent set by Lichtenstein demonstrates that members can have quantitative restrictions on freedom of movement whilst remaining party to the EEA agreement. By utilising the safeguard measures set out in Article 112, the principality has limited the number of migrants crossing it’s borders since it joined the EEA in 1995.

Moreover Iceland utilised the same safeguard measures in the wake of the 2008 financial crash to restrict the flow of capital. These instances give lie to the notion that the ‘four freedoms’ are non-negotiable, despite what Merkel and EU officials may assert.

Similarly, remaining in the EEA does not mean continued subordination to the ECJ. As the EFTA site points out: “the EEA EFTA States have not transferred any legislative competencies to the EEA institutions and they are unable, constitutionally, to accept direct decisions by the Commission or the European Court of Justice.” This could not be clearer and should be proof that EEA membership is perfectly compatible with the re-establishing of British sovereignty, the number one issue for Leave voters.

What’s more, arbitration for EEA/EFTA states is conducted by the EFTA Court, and unlike the ECJ, it’s rulings are advisory rather than binding, given the UK further flexibility when it comes to single market regulations.

The EFTA site also describes how EEA/EFTA states take decisions relating to EEA legislation by consensus, rather than by majority vote as in the EU, meaning the UK could have a greater say over single market regulations than it currently does, enjoying a de-facto veto at the EEA Joint Committee.

Coupled with regaining an independent voice and veto on global regulatory bodies such as the WTO, UNECE, Codex Alimentarius and a whole host of other industry specific institutions from which the EU increasingly takes it’s cues, the threat of having no say over the rules is an empty one.

This just leaves the matter of budgetary contributions. As well as having no say in the rules, it was often claimed by advocates of the EU that Norway still paid into the EU budget. Like the ‘no say’ assertion, the ‘still pay’ one is also wildly inaccurate.

Norway’s expenditure relating to the EEA consists of several factors. Firstly there is the ‘Norway Grants’, aid paid by Norway as a form economic rehabilitation of post-Communist countries. There are also the EEA grants, for which Norway currently provides 95% of the funding. Crucially, not a cent of these grants goes into EU coffers.

Norway does participate in several EU programmes, including Horizon 2020 and the Erasmus research programmes, and pays towards the specific budgets for these programmes. These costs though are essentially for services rendered, and nor is the funding one way.

A thorough breakdown of what Norway contributes, and what similar arrangements for the UK would be, can be found here, but scaled up, total UK expenditure with relation to single market participation would equate to around £8billion. This is still a substantial haircut on the £13bn we paid last year.

Hard Brexiteers may cry foul at this, but participation in any market does not come free.
Customs co-operation costs money and the various decentralised agencies that facilitate the free movement of goods across our continent and with our closest neighbours are essential. Any money saved by extracting ourselves from those arrangements would have to be spent on duplicating them here, as well as beefing up our own border and customs controls. This is as nonsensical as it is inefficient.

The point that the likes of Canada don’t pay for access to the market is also a red herring as they do not co-operate in these customs agencies. Both the US and Canada both spend huge amounts of money on customs co-operation with each other to smooth the movement of goods across their border. This is for exactly the same reason the EU does.

Article 50 gives us two years in which to negotiate our withdrawal settlement from the EU. Given the vast complications that have arisen after 40 years of political and economic integration, a bespoke deal cannot be constructed within that time frame. This is why an interim option, maintaining single market membership for the time being, is a sensible one.

The reticence from some Brexiteers for this option is based upon the fear that there would be attempts to keep us in the EU via the back door, rejoining fully further down the line. The egregious attempts to subvert the largest vote for anything in British history is incredibly troubling. The little faith the public has in it’s politicians, and politics in general, would be wiped out with lord knows what consequences, were the likes of David Lammy successful.

This is why we should have a longer term plan, perhaps based on the Swiss model, for our relations with the EU. The beauty of the EEA option is that it gives us the time and breathing room to evolve our position, whilst freeing us up to pursue trade with the rest of the world, reducing our budget contributions and repatriating multiple policy areas including home affairs, employment, justice, foreign, and defence, as well as ditching the appalling Common Agricultural and Common Fisheries policies, ditching ECJ jurisdiction in the process.

The main goals of Brexiteers of all stripes can be achieved whilst remaining in the single market. The confusion stems from the repeated false conflation of the EU and EEA during the referendum campaign by Remainers.

Those that called that nonsense out at the time, now find themselves making the exact same arguments to Brexiteers who are rightly sceptical. They see the same dishonest people who wanted us to remain in the EU, now make similar statements about leaving the single market, against a backdrop of anti-democratic MPs, commentators, petitions and demonstrations calling for the decision to be overturned.

But provided Theresa May’s government continues to honour the referendum decision, we can trigger article 50, leave the EU, and take back control whilst still remaining party to the EEA agreement. Leavers should not characterise this as a betrayal, but as proof positive that Project Fear’s central tenant – that the EU and the single market were one and the same – was as false as they always claimed it was.

Friday, 25 November 2016

Austerity is stillborn

Yesterday, Chancellor of the Exchequer Philip Hammond delivered his first major fiscal presentation to parliament. Overall it was a somewhat underwhelming event, opting as he did for a 'steady as she goes' approach, rather than seizing the opportunities afforded to him by the referendum result. Nevertheless there were a few key areas that stood out.

Firstly, as has been leapt upon by some Remainers, are the OBR projections that the economy will be £122bn worse off compared to George Osborne's projections in March. They claim that this is proof of the damage the Brexit vote has done to the economy, but fail to take into account several factors. To begin with, the OBR attribute less than half of that extra borrowing, £58.7bn, directly to Brexit. But in doing so, the OBR have had to make several assumptions, namely that Brexit will lead to increased barriers to trade, lower productivity, and lower investment.

It's difficult to blame the OBR for making such assumptions, given the Government are still coming to grips with Brexit and formulating a plan for our withdrawal, but nevertheless, these are incredibly pessimistic assumptions based on a rough hard Brexit scenario. As this blog has argued repeatedly, such a scenario would be madness and is thus very unlikely to happen. Despite the panic induced by May's speech at the Tory party conference, there have been no indicators to suggest the government intends to press ahead with a hard Brexit.

Those assumptions were based on May's stated desire to limit immigration, and jumping to the wholly false conclusion that this cannot be achieved if the UK remains a member of the EEA. What's more, we're increasingly hearing reports of an interim deal, which would see the UK remain in the single market in the short to medium term. Given this, the barriers to trade the OBR assumes in it's forecasts will fail to materialise and thus investment and productivity will be unlikely to fall too. In fact, given the safeguarding of our single market participation, coupled with the opportunities Brexit will afford us globally, there is the distinct possibility of these increasing, rather than falling.

Even taking the OBR forecasts as read, they are still predicting economic growth, from 1.4% next year rising every year to 2.1% in 2020. This is hardly catastrophic and still a far cry from the 'instant recession' proclaimed prior to the referendum result. Most leavers acknowledged there may be a short term economic impact of leaving the EU. These projections show that, and also demonstrate that growth will return to normal after a couple of years. By then we'll be wondering what all the fuss was about.

The biggest takeaway from the chancellor's autumn statement though is that austerity has been stillborn. George Osborne painted himself as the man taking the tough decisions to get the country's finances back on track, yet his cuts amounted to just 0.2%, the national debt now stands at £1.7 trillion and he missed every single deficit reduction target.

Far from correcting this, Hammond has abandoned his predecessor's tentative plans to balance the books, announcing more spending and more borrowing. The jump will see the UK borrow £68bn in 2016/17, then £59bn, £46.5bn, £21.9bn, £20.7bn, and £17.2bn, with government spending representing, a still far too high, 40% of GDP. Moreover, the national debt will break an eye-watering 90% of GDP next year.

The chancellor needed to be far bolder in his approach to a post-Brexit UK. His abandonment of fiscal prudency means that we will run a current account deficit for 22 consecutive years, and will still be living beyond our means 13 years after the financial crash. This saddles future generations with higher debt and higher taxes.

His top down approach to dealing with economic uncertainty is a risky business. It would have been far better to implement tax cuts, rather than spending rises, to boost productivity. The continued freeze in fuel duty was welcome, as was going ahead with the reduction in corporation tax. But there was still a missed opportunity. A further reduction in corporation tax would send the message that the UK is truly open for business, and would help ease the inevitable uncertainty around Article 50 negotiations.

Similarly, the chancellor has taken the wrong approach to the nation's housing problem. Abolishing stamp duty, liberalising planning laws, and reclassifying small sections of the greenbelt would do far more to help those struggling to get onto the property ladder than his announced spending plans. As Hinkley Point and HS2 demonstrate, the Government is woeful at picking projects with decent benefit to cost ratios. Far better to make it easier for the private sector to invest that money where it would be more effective.

All in all, the Brexit costs are at worst, in line with what some Leavers said before the referendum, and still nowhere near the catastrophe predicted by Remainers. But the big take away is that between a far left Labour party and a Conservative party apparently fully wedded to Gordon Brown style 'investment', those voters who want simplified, low taxes, a vast reduction in state spending, and a fiscally prudent government, currently have nowhere to turn.

Saturday, 12 November 2016

Sorry Donald, but your victory is the antithesis of Brexit.

Donald Trump winning the US Presidential election is the biggest political upset since, well, only June as it happens. A completely unexpected result, Trump's victory has been likened to the UK vote to leave the EU on June 23, not least by the man himself, who earlier this week described the possibility of him winning as "Brexit plus plus plus."

There's no doubting that both results gave the establishment a bloody nose, but the comparisons between the Donald's rise to the White House and Brexit have been massively overblown. In fact, putting aside the rejection of the status quo, the two are practically antithetical.

For starters, Trump's platform railed against free trade. He constantly denounced NAFTA, and threatened to pull out of the agreement if Canada and Mexico were unwilling to renegotiate it. On top of this, Trump also threatened an all-out trade war with China, suggesting the introduction of tariffs, the bringing of trade cases against the country at the WTO, and labelling it as a currency manipulator.

Compare and contrast those protectionist instincts with the Leave campaign's message on trade. The cornerstone of the Brexiteer's message was the ability, freed from the EU's common external tariff, to sign our own trade deals with countries across the globe. Campaign literature, both official and otherwise, was awash with statistics showing where the current growth was in the world, which emerging economies would be the powerhouses of the future, and how our share of exports with the rest of the world was increasing, whilst that into the EU was in decline. Trump sought to be elected in order to make trade with China as difficult as possible. We voted to leave the EU in order to make it easier.

This isolationism can be found elsewhere in Trump's policies too. The president-elect has described NATO as 'obsolete', and has suggested he would look at pulling the United States out of the agreement. Compare and contrast, once again, with the Leave campaign. On security, one of the main tenants of the Leave position was that the EU's expansionist policies, and plans for an EU army, threatened to undermine NATO. When Remain supporters suggested that peace in Europe since the second world war had been secured by the EU, leavers pointed out that this had much more to do with the North Atlantic alliance than Brussel's bureaucracy. A desire to ensure NATO is maintained as the strongest military alliance in the world, not weaken it exponentially by pulling out of the agreement, was a core part of the Leave position.

Even on immigration Trump and Brexit are worlds apart. Yes, there was a strong part of the leave campaign that wished to control immigration, but the key word there is control. No-one on the leave side advocated closing the borders completely, but rather sought to ensure that the level of immigration into the country was manageable. Moreover, in the wake of the referendum result, Leavers have been just as aghast as Remain supporters at May's refusal to guarantee the rights of EU citizens currently in the UK to remain here. How diametrically opposed is this to Trump's call to deport 11 million people and ban all Muslims from entering the United States? The equivalency is a spectacularly false one.

There is no doubt that both Brexit and Trump were unquestionably votes against the status quo. Both campaigns rightly tapped into an anger at the ruling orthodoxy that for too long had been ambivalent about the concerns of ordinary voters. But that, bar the occasional appearance of Nigel Farage, is all the two events have in common. Trump is a bigoted isolationist, advocating the very worst forms of protectionism. Brexit on the other hand, was always about looking beyond the parochial borders of the EU, and engaging fully with the world, pursuing a free trading, global agenda, working constructively with our friends and allies, both in Europe and beyond. Far from Brexit plus plus plus, Trump is Brexit minus minus minus.