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Brexit: The Summer of Concession

by John Brian Shannon

In the land of Brexit, some has been lost, while much has been gained in this, the summer of concession.

Thus far, UK Prime Minister Theresa May has passed the EU Withdrawal Bill, held a firm but fair meeting at Chequers where she stopped prevaricating and finally demanded a ‘For’ or ‘Against’ decision from her Cabinet on her Chequers Brexit plan — which resulted in the day-after resignations of two of her most powerful ministers and four others — and she has since met with European officials where she received cool support for her super-diplomatic, uber-polite and overly soft Brexit proposal.


How Very British!

In some ways those recently resigned MP’s (who will now sit as Conservative backbenchers) might as well be sitting on the opposition side because they possess deep knowledge of May’s inner circle and have the inside scoop on how Brexit is to proceed.

Yet, it was a polite affair with Boris Johnson making a gentle resignation speech in the House while still urging the Prime Minister to pursue the kind of Brexit that UK citizens want. Boris Johnson never looked so principled or gentlemanly in his life (struggling to sound almost deferential to May) and good on him for doing so. Of course emotions were high, and no doubt, he was extremely disappointed that (in his mind at least) the Chequers Brexit plan surrendered some amount of UK sovereignty to the EU politburo. Five stars for Boris.

David Davis, who is more of a moderate Brexiteer than Boris, tried hard to contain his deep disappointment and published a polite and informative resignation letter outlining his position. As a Brexit-lite minister (Brexit-lite, when compared to Boris Johnson or Jacob Rees-Mogg, for example) it appears he thought he could convince May to move to a slightly more robust Brexit plan only to have his hopes dashed. If she was going to be swayed by anyone it would’ve been him. So we understand his deep disappointment too, but that’s politics. Well done, David Davis!

The problem with forcing Cabinet members to declare support or non-support of her Chequers Brexit plan is that she has lost some of them, who now sit as backbenchers and are now free to hold the government to account.

Theresa May imagines herself to be an experienced operator, but if they choose to make her look bad, they could. Therefore, she should not be looking for a fight with them, nor should the Prime Minister default to her previous ‘slapping-down’ behaviors or she will get tossed around in a 30-month-long storm completely of her own making. (Approx. 9 months to go until the official Brexit date of March 29, 2019 plus the 21-month implementation period, equals 30 months of potential hell for Theresa May if she handles her former Cabinet ministers harshly)

Even so, it’s far better to head into the final Brexit stage with a unified team who are fully committed to her overly soft Brexit plan instead of a team that is trying to pursue several different Brexit versions at once.

Now that May has asserted herself she seems to be gathering respect from all sides, resignations notwithstanding. Since Chequers, she’s twice the Prime Minister than when she first took the job. Theresa May marque une victoire!


Notes on Theresa May’s Chequers Brexit Plan

  1. The Prime Minister’s plan suggests a ‘common rule book’ with the EU so that trade in goods and agricultural products won’t be impeded by conflicting sets of rules. ‘Red tape is the eternal productivity killer and the less of it, the better’, said every business person ever. Of course, adopting EU standards could make it more difficult to export UK produced goods to non-EU countries that follow a different set of standards, or so the argument goes. Yet, every other country seems to master this, so why not Britain?
  2. The Chequers plan suggests a common rule book on state aid for industry, and harmonized environmental and climate-change standards, social policy parity, and protection for employees and consumers.
  3. Formerly one of the PM’s “red lines”, the jurisdiction of the European Court of Justice (ECJ) will end, although UK courts would consider ECJ findings and/or consult with the ECJ in certain cases. Which seems a wise idea for any country to consider.
  4. An FCA (a Facilitated Customs Agreement) where the UK and the EU would operate as a combined customs area — which some might call a customs union of sorts — the UK would collect tariffs (on goods shipped from outside the two countries) that are destined for Europe, and presumably the EU would do the same for Britain.
  5. A mobility framework agreement to formally end the free movement of people between the continent and the UK. Unregulated immigration from the EU caused the number of EU nationals in the UK to rise to 3.8m in only a few years, which was a significant contributor to the Leave victory. The mobility framework would allow freedom of movement for persons — such as students that are actually enrolled in college, for retired persons that can well afford to live in the UK, and for workers who have a guaranteed job waiting for them in the UK. One would hope that the EU would reciprocate on this point. That part hasn’t been made explicitly clear.

The problem with the common rule book approach is that MP’s of any party may see it as a ‘BRINO’ (Brexit In Name Only) and consequently lower their level of support for Brexit — well, at least Theresa May’s version of Brexit. And if BRINO fears take root, Conservative MP’s could decide to vote for a different leader should a leadership contest arise.

Parliamentarians have very long memories… so the caution flag is out for Theresa until the UK crosses the Brexit finish line.


Summary

Although progress on Brexit seems agonizingly slow, Theresa May is an accomplished bureaucrat who realizes she can move forward only as fast as the other participants in the race, and if she moves too fast the government may lose support in Parliament, in the public space, and in Brussels (where she has precious little support to begin with and doesn’t want to suddenly find she has even less) and if she moves too slow, even worse may happen to the country and to her political career.

Therefore, the race she’s really in is an OJ Simpson-style slow-vehicle police chase to the official Brexit date with every camera rolling and catching every misstep.

Not very exciting to be sure, but if she gets a reasonable Brexit all should be forgiven.

At the very least, the next British Prime Minister will have a firm foundation upon which to Build a Better Britain. Let us hope!


  • View or download (PDF) the Chequers cabinet meeting Statement from HM Government here.
  • Iain Mansfield: May’s new plan isn’t perfect, but it’s practicable. However, it can only work if treated as her bottom line. (ConservativeHome.com)

Brexiteers Davis and Johnson Abandon May’s ‘Soft Brexit’ Ship

by John Brian Shannon

Over the past 24-hours two senior officials in Theresa May’s government have resigned due to differences in what kind of Brexit each seeks.

And frankly, it’ll be a blessing. Far less paint will be peeled off the walls each week at 10 Downing Street if you catch my meaning.

Even though both David Davis and Boris Johnson were and are strong proponents of Brexit (which Prime Minister Theresa May also claims to be) governing the country becomes an impossible task when three people fight each other daily to steer the ship of state.

Every Prime Minister must tolerate some division within the party caucus to be sure. Less so, but still important is to allow a variety of views within Cabinet so that it doesn’t become a sterile place where ideas go to die. But there comes a point when too much division becomes the main issue — instead of the people’s business being the main issue.

Which is why it’s important Theresa May stuck to her guns and didn’t make any last-minute deals (of a kind that a lesser PM might have made) to keep the crew together. Not that Davis and Johnson are going anywhere as they’ll remain Conservative Party backbenchers.

Certainly, Margaret Thatcher would’ve told Davis and Johnson to ‘go fish’ some time ago and probably would have physically evicted them from the room. 😉 (You never knew with Maggie!)


Whether You Agree with Davis and Johnson or Not, this Streamlines Whatever Brexit Modality Theresa May Pursues

While some would like the strongest possible Brexit — Britain’s future will be better with a Brexit agreement that doesn’t ruin relations with the EU, one that includes some kind of reasonable free trade deal, one that allows the UK and the EU to cooperate on a wide range of issues such as, but not limited to; A common rulebook where and when feasible, the Galileo project, the ECJ (where UK courts would include, but not be limited or bound by ECJ rulings and opinions) NATO, and agreeable relations or even membership with other important European institutions.

Theresa May’s sole goal (it seems) is to get a deal with the EU. Which is a noble goal in itself.

The flip side of that is when the agreement Theresa May intends to present is so diluted that her Cabinet walks out the door. Yet, the Prime Minister may still be proven right by events yet to unfold.

It’s obvious to all but the most politically tone-deaf that no matter what agreement is presented to the EU mandarins, it is likely to be swiftly rejected. Including Theresa May’s super-diplomatic, uber-polite and overly soft Brexit proposals.

Theresa May Soft Brexit

UK Prime Minister Theresa May sees off two Cabinet officials within 24-hours allowing her to get the team she needs for a Soft Brexit deal. Image courtesy GOV.uk


But if That’s the Case, Why Try at All?

As an experienced bureaucrat slogging it out in the Home Office for a decade Theresa May knows something that hardcore Brexiteers don’t. And that is, those who get ‘stuck with the bill’ wind up paying many times over.

Let’s look at three scenarios, and let’s see who gets stuck with the bill:

  1. Hard Brexit faction presents an uncompromising Brexit deal to the EU: The European Union declines the deal offered and the blame is on Britain ‘for being so unreasonable’ and from that point on… every single thing that ever goes wrong in Europe, the World, and the Solar System… will be the fault of *those* unreasonable Brexiteers. And it’s not that EU people are evil, it’s just human nature to feel that way when jilted.
  2. Soft Brexit faction presents a soft agreement for signing in Brussels which is accepted by the EU: It’s seen as a ‘Win-Win’ for both sides. But the EU ‘wins’ by a slight margin and when you’ve effectively ‘dumped your partner’ sometimes it’s a good thing to let them ‘win’ a little bit. The worst that can happen in such a case is that the next UK Prime Minister will try to improve the deal and may or may not succeed in that endeavor. Likely, as time rolls on, both sides will arrive at a better agreement and both can claim credit with their respective voters for any future agreements. Not a bad scenario at all.
  3. Soft Brexit faction presents a soft agreement for signing in Brussels which *isn’t* accepted by the EU: At that point, the British can walk away from the table knowing in their hearts and with the whole world as a witness that they ‘tried their best’ to accommodate the concerns of the people in Brussels but they just couldn’t strike a deal. (A sort of ‘no fault’ divorce) And Brexit proceeds on a WTO-style basis with a flurry of à la carte agreements signed following March 29, 2019 allowing EU cars to be sold in the UK and UK airlines to operate over continental Europe, for two examples.

In scenario #1: Britain and the Hard Brexiteers get stuck with the bill for about the next century. Maybe longer. ‘Those intransigent Brits! A bloody difficult people they are!’

In scenario #2: Britain gets stuck with the larger part of the bill and in the following years must work incrementally towards the final Brexit arrangements they were originally seeking. ‘Damn, Theresa, couldn’t you do any better? Oh well, we got a Brexit of sorts, you’re forgiven.’

In scenario #3: The EU gets stuck with the bill and the world decrying EU intransigence. And Theresa May *probably* gets re-elected in a landslide.


Summary

[Theresa May as Admiral Holdo, David Davis and Boris Johnson as Poe Dameron et al.]

The present Brexit moment is similar to those frantic scenes in Star Wars: The Last Jedi where Poe Dameron and his compadres tried and failed to stage a coup against Vice-Admiral Holdo (who didn’t have the best slate of options from which to choose, and consequently didn’t have the best plan, but in the end it was the only plan that could have worked) and essentially the people on good side of the Force got the result they wanted.

The lesson from this story is that when the chips are down and you *must* bring home a win *always* go with the plan that is *guaranteed to work*.

Which in the real world often isn’t the most glorious, most exciting, nor the most popular plan. Unfortunately.

But when a plan works, it’s a win. And beautiful or ugly, if the plan works that’s all that matters.

May the Force be with You, Theresa May!

 

Will a ‘No Deal’ Brexit Harm UK Manufacturing?

by John Brian Shannon

Certain pro-EU commentators paint a picture of either a catastrophic Brexit crash-out (Hard Brexit) or a ‘non-Brexit’ where the UK would retain few of the rights gained by a full Brexit but would still be chained to the responsibilities of EU membership (Soft Brexit) whether via the so-called ‘Norway’ model or the ‘Norway-plus’ model, or via any other model such as the ‘Canada’ model.

Those same commentators excitedly cite potential UK manufacturing job losses in the post-Brexit timeframe even though the UK is primarily a service based economy (80.2% in 2014 and rising) and they forget to factor-in the astonishing changes occurring every day in Britain’s manufacturing sector.


UK Manufacturing = Less Than 10% of GDP

Manufacturing in the UK accounts for less than 10% of GDP (2016) and provides jobs for 3.2 million workers (2016) but a recent PwC report says that by 2030 half of all UK manufacturing jobs could be automated. That’s less than 12-years from now. And it could happen much faster and on a much larger scale than that.

Repeat; Up to half of all UK manufacturing jobs will be lost within 12-years. It’s uncertain whether British workers are aware of these looming changes.

Economic impact of artificial intelligence on the UK economy

The economic impact of artificial intelligence on the UK economy. Image courtesy of PwC. Click on the image to view or download the PDF report.


What’s Great for UK Businesses Won’t be Great for Foreign Workers

In 2018, of the 3.1 million UK manufacturing workers (a stat that falls with each passing year as automation increases) we find that over half of manufacturing workers in the UK are citizens of other countries — primarily from eastern Europe, but also western Europe.

So, expect UK-based eastern European workers to be replaced by automation.

Increasing automation and Artificial Intelligence (AI) will cause UK companies to choose between UK-born workers and eastern European workers, and it’s likely that hundreds of thousands (perhaps millions) of eastern Europeans will be returning home with plenty of UK coin in their pocket. (And why not, they earned it)

I hope you didn’t expect the UK to lay-off its own British-born workers in order to protect the jobs of eastern European-born workers as automation proceeds, did you? Would EU companies show that level of courtesy to UK workers in the European Union, were the situation reversed?

Profits for UK manufacturing companies are projected to rise significantly as automation and AI become one with the system, while UK-born manufacturing workers should find themselves at 100% employment.

What’s not to like?


UK Manufacturing Job Losses Due to Automation – Not Brexit

If you’re one of the EU elites who fear that hundreds of thousands of eastern European workers in Britain will lose their UK manufacturing jobs due to Brexit you couldn’t be more wrong.

Let’s be perfectly clear; Half of all UK manufacturing jobs will be lost to automation by 2030 — and it won’t be on account of Brexit!


Summary

The narrative that says the UK economy will be severely damaged on account of manufacturing job losses due to a Hard Brexit is a complete and utter fantasy.

Every day from now until 2030, automation and AI will replace eastern European workers, Brexit or no Brexit. Meanwhile, British-born manufacturing workers will find themselves at full employment.

It’s all good!


Related Articles:

  • How will artificial intelligence affect the UK economy? (PwC)
  • The economic impact of artificial intelligence on the UK economy (PwC)
  • What would be the cost to the UK of regulation by a foreign power and major competitor? (BrexitCentral.com)