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The Brexit Team: Swiss Watch or Contraption?

by John Brian Shannon

One of the most credible economic stewards to serve Britain in a long time is the inscrutable Philip Hammond who has done nothing but improve the UK economy since the day he was sworn in to the post. Which was merely an extension of him having been born for the job, it seems.

It’s not only that; Mr. Hammond’s word carries a lot of weight in foreign capitals, and in the EU his word is his bond. Soft-spoken, adroit and adept, Hammond is one of the darlings of financial capitals everywhere and it’s a great thing to see him in his element.

So began Prime Minister Theresa May’s summer vacation, where she and her husband (also named Philip) went off to Switzerland to take the mountain air and hold long and meaningful conversations at full stride up the Matterhorn.

Leaving the country in the capable hands of Philip Hammond must be a comforting thought for Theresa May as she and hubby blow past the tourists struggling to get to the top for a selfie. My advice: Just get out of their way or you’ll get run over. Seriously.


The Exchequer comments on post-Brexit Immigration

However wonderful it is having a powerful Exchequer, there is the temptation for them to overstep their bounds and cross over into the areas of responsibility reserved for the Prime Minister.

And just as predictably as that; Before Theresa May had gotten her first alpine air, Hammond told reporters, “there should be no immediate changes to immigration or trading rules when Britain leaves the EU in March 2019.” (Sky News)

It’s forgivable, and probably wise for Conservatives to be seen voicing the concerns of voters on both sides of Brexit. However, Exchequers should stick to their primary interest (the economy!) and let others, whose direct responsibility it is, to hold forth on immigration issues.


With Theresa away, the Remainers will play

While Theresa May gets some mountain air, the Remainers in the Prime Minister’s cabinet are clearing the air by presenting their side of Brexit — and that’s fine. But let’s make certain that fair play rules are enforced; Which means that cabinet officers publicly comment only on their primary area of responsibility. Only the Prime Minister has the authority to publicly comment on all matters, otherwise it looks like a circus.

Every misstep is celebrated in foreign capitals. People in the EU who may be opposed to Brexit are incredibly strengthened by each implied criticism directed towards the Prime Minister by members of her cabinet.

The entire period of Brexit is a highly unique time, a time where all Britons must pull together and come to the realization that many in the EU are fighting for a ‘Win-Lose’ outcome, an outcome where Britain loses vis-à-vis the European Union.

Meanwhile, the best of the Brexiters are fighting for a ‘Win-Win’ outcome where both Britain and the EU win. And those are the people I’m putting my money on.


Clear Lines + Clear Thinking = Positive Results

There’s nothing wrong with MP’s on both sides of Brexit informing the public about how they would proceed on any matter — as a sort of trial balloon to gauge public mood. That can be useful moving forward by keeping those who voted Remain interested and engaged with Brexit, and there is every opportunity that Remainers may come up with excellent ideas related to soft Brexit implementation within their field of expertise.

But greater care must be taken to avoid strengthening the hand of anti-Brexit forces in the EU, now that Britain has finally! asserted her rights.

Government ministers must draw the distinction between legitimate discussions about how Remainers (read: Soft Brexiters) or vocal Brexiters (read: Hard Brexiters) would handle any Brexit issue — and how the wrong sort of discussions or even the wrong tone of discussions could work against Britain in foreign capitals. The wrong public discourse works against both versions of Brexit.

Let’s not be naive. Each misstep by anyone in the UK government is celebrated at the EU Parliament and certain EU capitals. Whatever is going on behind the scenes within the UK government, a unified face must be presented to the world in order to obtain the best Brexit result.


Controlling the Narrative: Job #1 for Every Prime Minister

UK government ministers, and possibly even the Prime Minister herself may not yet realize the extent to which the world now sees the United Kingdom as a completely different entity. The UK no longer exists as only one of 28 EU members, and what the UK will eventually become, is unfolding every day like an onion being unpeeled.

Is the UK destined to become a nation of cross-talkers, mixed messages and unreliable partners? Or is Britain starting with a clean sheet to become all that she can and should become in the 21st-century?

Only the Prime Minister knows, as she’s the one holding the pen. Let’s see what script she writes.

This Week in Brexit: The Conservatives weak negotiating hand

by John Brian Shannon

One of the reasons I’m a Theresa May fan is that she took a highly principled position by calling an election prior to Brexit, presumably to further legitimize her premiership with voters and thereby gain a stronger negotiating hand heading into Brexit negotiations.

Before becoming Prime Minister, Theresa May had been an MP for 20 years and served as Home Secretary for 6 years, and only then was she named PM by the Conservative Party when former PM David Cameron stepped down. Which is to say, Theresa May is as legitimate as any UK Prime Minister ever appointed (but not elected to) the PM’s chair.

Nevertheless, at the most important political moment since the end of WWII, Theresa May decided to further legitimize her premiership by calling a snap election with the intent of causing her party to rally ’round her in time for the upcoming Brexit negotiations, thereby empowering Britain in its dealings with the European Union.

By any definition it was an admirable plan.


It Worked! (Sorta)

Except for the Conservative MP’s that didn’t campaign hard for her and were only interested in maintaining their position as a Member of Parliament, and excepting the millions of former UKIP voters — only some of them supported the Conservatives on election day.

All in all, a surprising result.

Perhaps three terrorist incidents in the UK within 90 days of the election changed the mood of the electorate, or maybe when confronted with an actual Brexit complete with veiled threats emanating from some EU capitals it’s possible some British voters felt cowed into lowering their Brexit expectations.

If so, that would be a shameful indictment on the British people, the people who succeeded admirably even after suffering horribly in two world wars and are a people who carry-on through all manner of terror attacks, social upheavals, recessions, and Britain’s famously inclement weather.


Now with a ‘weaker hand’ Theresa May must pull-off a reasonable Brexit

How to do more, with less? That’s the job facing Prime Minister Theresa May over the next five years.

It’s an unenviable position for a veteran British MP with 6 years as Home Secretary to her credit and 1 year as Prime Minister of the United Kingdom, who deserved better from her party and from voters.

At least 42.4% of UK voters agree with Theresa May (see BBC election chart here) which was a gain of 5.5% for the Conservatives since the last election when David Cameron became Prime Minister. The business community likes the progress on the economy, and she is highly regarded by foreign leaders. But still, that got her (only) 318 seats, which isn’t enough for a majority government.

She deserves better than she’s gotten.


Methinks there are strings being pulled in places that we know not…

But just for the record, let’s look at a July 17 poll result from an internationally recognized polling firm.

One year on from the Brexit vote and business sentiment remains high
One year on from the Brexit vote and business sentiment remains high (Says it all, doesn’t it?) Click image to enlarge.

Another chart for the doubters

One thing that Britons have every right to be proud of is the National Healthcare Service (NHS) and in recent years it has begun to score well in the prestigious Commonwealth Fund rankings. In fact, the 2017 ranking puts the NHS in 1st place over 10 other wealthy nation healthcare systems. But you’d never think it because (according to some) the NHS is falling apart at the seams.

Just as former PM David Cameron was rightfully proud of the 2013 Commonwealth Fund ranking (1st place) so Prime Minister Theresa May should feel proud of the 2017 NHS ranking (1st place) even as some of the countries named in the study improved on their 2013 rankings.

UK and 10 other countries, Health Care System Performance Rankings
UK and 10 other countries, Health Care System Performance Rankings, courtesy of the Commonwealth Fund (2017) Click image to enlarge.

For comparison purposes, I’ve included the 2013 Commonwealth Fund ranking graphic below.

UK tag, The Commonwealth Fund 2013 International Health Policy Survey in Eleven Countries, courtesy of the Commonwealth Fund (2013)
The Commonwealth Fund 2013 International Health Policy Survey in Eleven Countries, courtesy of the Commonwealth Fund (2013) Click image to enlarge.

One more chart that uses actual facts to combat negative perceptions — shows how well the UK is faring

This chart shows GDP in Purchasing Power Parity (PPP) which illustrates that purchasing power of both UK citizens and expats is increasing — even though (according to some) the sky is falling every day!

UK GDP per capita Purchasing Power Parity PPP
UK GDP per capita Purchasing Power Parity PPP. Source: tradingeconomics.com Click image to enlarge.

With all of that going for the UK in 2017 (and more positives that I haven’t included because I don’t want to drown you in charts) you’d think that Prime Minister Theresa May would get plenty of respect from her party, from certain media outlets and from voters.

But apparently in the United Kingdom, almost-perfect scores aren’t good enough to get the Prime Minister the majority she needed to allow the country to cruise through Brexit. And that’s a shame.

This Week in Brexit: Trump Promises a Trade Deal

by John Brian Shannon

On the sidelines of the G20 Hamburg summit, U.S. President Trump found time to meet with UK Prime Minister May and to offer welcome words that the United States will sign a bilateral trade deal with the UK as soon as Brexit is complete.

It’s very good news for the UK and also for PM Theresa May (who has had a rough time in domestic politics of late) and it was obvious that the U.S. president went out of his way to assure Ms. May that a reciprocal trade agreement — one that works for both America and for Britain — is one of his administration priorities.

So much of the UK’s post-Brexit success will hinge on bilateral trade accords because no matter how good the final Brexit agreement, there will be some amount of economic adjustment for Britain in the months following Brexit. A quick trade agreement with the United States will not only ease the Brexit transition, but also  improve the UK (and America’s) economy indefinitely.

It was a classy thing for Mr. Trump to do for Theresa May knowing that her domestic political fortunes have taken a hit. Let’s hope the Prime Minister is able to return the favour at some point during the Trump administration. That sort of respect makes for strong allies.

During WWI, but especially during WWII the relationship between America and Britain was raised to a very high level by Prime Minister Winston Churchill and President Harry S. Truman, and in the postwar era during a time of unprecedented economic growth, President Ike Eisenhower continued the wise course set by his predecessor.

However, it could’ve so easily gone the other way if the leaders hadn’t gotten along.

Both sides would’ve missed geopolitical opportunities of huge importance such as the formation of NATO, the establishment of the Nuremberg trials and the creation of other institutions and agreements such as Bretton Woods and the IMF. Without the ambition of the UK and the power of the United States those things simply wouldn’t have occurred.

Millions of Americans and Britons prospered over the past 72 years because their postwar political leaders *didn’t drop the ball* and made a conscious decision to *make the best of the postwar relationship* for their respective people.


What Kind of Free Trade Agreement Should Prime Minister May and President Trump pursue?

Present-day Prime Minister of Canada Justin Trudeau was still in school when Canada first approached the European Union to ask about a bilateral trade deal, and that many years later it still hasn’t come into effect. (It’s about to, they say)

It will have taken eight years to hammer out and begin to abide by, the Comprehensive Economic and Trade Agreement (CETA) which arrives so late in the game and market conditions do change over time (remember way back to the 2008/09 financial crisis when the CETA agreement was first floated?) that some of the hard-won negotiating points are no longer relevant and may never be finalized.

Canada, EU to provisionally apply CETA in September (CBC)

I’m sure it’s a fine agreement and congratulations are due. However, with America and Britain at the controls of a mutually beneficial trade agreement between two friendly Anglophone nations, it should take less than a year from first discussion to signed agreement.

Though we don’t know what shape an Anglo-American trade agreement might look like from our vantage point in July of 2017, probably the best idea would be for both sides to embrace reciprocity and fair dealing in all trade matters as a way to enhance both economies, and as a way to later attract other Anglophone nations such as Canada, Australia and New Zealand to sign on to such an agreement.

Hitting the Right Note with Commonwealth of Nations member India

What a great thing it would be if all Commonwealth nations eventually agreed to sign on to a U.S. / UK trade agreement. Commonwealth of Nations member India has 1.5 billion consumers alone!

Both America and Britain could add 5% to their respective GDP just on the improved trade flows of doing business in the booming Indian economy.

“Although India’s rapid population growth is part of what accounts for the forecasted jump […] that is only part of the story. Drastic improvement in terms of per-person productivity due to capital investments and better technology will play an even more important role.

“PwC predicts that India’s economy will grow by about 4.9% per year from 2016 to 2050, with only 0.7% of that growth caused by population growth.

“India’s economy is currently the third-largest in the world, and is expanding at an estimated annual growth rate of 7.1% for the 2016-17 financial year. —  India’s economy is forecast to surpass that of the US by 2040 (Quartz)

Both America and Britain just need to hit the right note with India — a respectful note — in order to profit from the massive growth that is available in that burgeoning country.

Working out an Anglo-American trade agreement with a view to adding all Commonwealth member nations within 24 months, guarantees that other powerful trade blocs don’t beat the Anglo-American alliance to supply the rocketing Indian economy with much-needed goods and services.

Projected growth for selected countries – As measured by Purchasing Power Parity (PPP)

Projected GDP growth UK 2016-2050 PwC

Projected GDP growth UK and other countries 2016-2050. Image courtesy of Quartz.com


It’s so obvious but still worth repeating; ‘Hitch your wagon to the fastest horses if you want to place well in the race.’

Britain has the Commonwealth of Nations connections, Britain needs a trade agreement with NATO ally America and with Commonwealth partner India, and the United States wants to increase mutually beneficial trade with Britain and its 2-billion-strong Commonwealth partners.

In all of human history, rarely has such a synergistic match-up suddenly appeared where different but extremely valuable benefits are available to all three parties.

Just as nobody predicted the massive Japanese economic boom which began to form the day after WWII ended, an Anglo-American trade agreement, followed by a Commonwealth trade agreement (before other trade blocs grab the low-hanging fruit!) could match or exceed the massive performance statistics of the postwar Japanese economy.

Dear United States and Commonwealth of Nations, Let’s not miss this rather obvious ‘Win-Win-Win’ opportunity!