(Editor’s note: Liam Fox infamously said Brexit would be “the easiest negotiation in human history.” With a new prime minister, literally anything could happen. See below for details.)
When the Brexit vote came up on 23 June 2016, we went to bed that night thinking this wasn’t a big deal. Who in their right mind would vote to leave the European Union, the largest, richest and most frictionless single economy in the world?
We awoke to the answer on 24 June 2016: A majority – 51.9 percent – of the voters in the United Kingdom, or more than 17 million people.
In the run up to the election, then-United Kingdom Independent Party leader Nigel Farage (who has a German wife and several French mistresses), Boris Johnson – now prime minister – and others on the Far Right had convinced a lot of British people the EU was the bête noire, responsible for all the UK’s troubles.
Leaving the EU would mean an extra 350 million pounds each week for the National Health Service; the UK would get a Brexit dividend and would soon be able to cut taxes with the windfall from brilliant new trade treaties around the globe.
None of which has turned out to be actually true.
After more than three years, what was billed as “the easiest negotiations in human history” has gone nowhere as former Prime Minister Theresa May’s government discovered what those Remoaners suspected – divorces are bitter to the end.
After three years, Brexit remains at Square One.
So we have a running update of Brexit developments:
• Okay, it’s been a tough week for Brexit and normally we wouldn’t indulge.
But we just had to show you this:
• It was one year ago on 6 September 2018 that several British media outlets including Sky News revealed the existence of Operation Yellowhammer, the May government’s planning for a worst-case, no-deal Brexit scenario. That plan includes messaging to reassure financial markets to keep them from collapsing, budget austerity and emergency measures such as stockpiling pharmaceuticals and other essentials.
A year later, the actual documents are public and a no-deal Brexit looks worse than originally predicted, with “disruptions” (also known as riots) as food supplies dwindle along with the availability of medicines and fuel as lorries get hung up in the new customs regimes.
• With daily crises and reversals, is Boris Johnson asking himself why he ever backed Brexit? Not a zealot like Moggsy or Nigel, Johnson originally opposed leaving the EU, the decided he was for anything that could put him into 10 Downing Street.
If you apply a simple risk/reward test, the United Kingdom’s Brexit reward is scant.
On the reward side, both left and right Brexiteers believe the EU has too much regulatory power especially when it comes to free movement. There’s also a payment imbalance, with Britain paying 13.1 billion pounds to the EU in 2016, then getting back 4.5 billion, with a net contribution of about 8.5 billion pounds. But no one knows how UK would fare outside of the largest free-trade bloc in the world.
On the loss side, the risks include:
- the breakup of the UK, with Scotland already moving to leave the union.
- the breakup of the Conservative Party, which is on-going.
- the likelihood that England will end up with less favorable trade agreements with European countries, not better because let’s face it – it has no real leverage.
- the departure of its financial sector, which is already happening.
- Britain’s auto industry disappearing.
- the terrorism risk rises since the UK no longer has intel-sharing rights with the EU.
- declining workforce skills as migration blocks out highly skilled internationals.
The Week has the most balanced look at the pros and cons of Brexit.
• Once again, the foreign press is doing a better job of explaining the ripple effect of the Brexit mess than the (mostly far-right and parochial) British media.
MarketWatch, a partnership between the Wall Street Journal and CBS, has a post by Senior Writer Pierre Briançon outlining why EU presidents and prime ministers are sitting smugly in their capitals watching Brexit – how can we phrase this delicately? – turn to shit.
Briançon makes the point that those EU leaders including France’s Emmanuel Macron believe they’ve done as good a job as they can preparing and frankly, they’re just over it.
Moreover, Brexit has distracted EU leaders from more important crises such as Putin and Russia, Donald Trump and the global economy.
Finally, he says, whatever happens with Brexit, leaders across the EU know Brexit isn’t going to blow up in their faces because their constituents basically don’t care anymore.
• Can there be a square before Square One? If so, that’s where we are. Again, the British Parliament doesn’t want a no-deal Brexit. They don’t want any transition plan that’s been submitted and they don’t want elections.
Which pretty much leaves the UK right where it started on 23 June 2016.
A lot has happened … Boris Johnson lost six votes in six days. There was a riot as MPs protesting the prorogue tried to block Speaker John Bercow in his chair. Parliament has been suspended until just before the Brexit date. And a no-deal Brexit has been outlawed, though hardliners warn Boris might ignore that law. And there are all sorts of legal challenges.
We finally had to resort to one of those flow charts to understand the possible outcomes. We recommend Jon Worth’s Euroblog.
The latest is dated 6 September, before the most recent vote to block a no-deal Brexit.
There are different interpretations of what could happen next. Sky News, which is about as impartial as any of the new services, states the earliest date for a general election is 21 November, by their calculations. But Worth sees a 79-percent chance of a general election on 29 October or afterward. (Parliament returns for the Queens’s Speech 14 October, just before the European Council meeting 17 and 18 October.)
BoJo is sticking to his promise the United Kingdom will leave the European Union on 31 October “do or die,” but at this point, the only way that can happen is a no-deal Brexit. Johnson claims to be intent on getting a deal with Brussels though no one has seen any negotiating details. Former Secretary of Work and Pension Amber Rudd says that’s because there aren’t any.
• Brexit has come down to a showdown. And it’s hard to imagine anything could still be this screwed up after three years of negotiations and votes.
In the most telling moment of the past three days, Prime Minister Boris Johnson responded to yet another defeat in the House of Commons by proposing a general election, then asking Brits who they want to represent them at a crucial European Union summit on 17 October – him or the dastardly Jeremy Corbyn?
This latest round of chaos started on 3 September when Parliament took control of the legislative agenda, giving MPs the right to propose legislation. Which they did, proposing a bill to block a no-deal Brexit. That bill passed the House of Lords and will come back to Commons for yet another vote.
If the bill becomes law, Johnson said, it would take off the table his only real bargaining chip with the EU, which is true. Now he wants a general election to settle that whole “me or Corbyn” issue.
However, MPs trying to stop a hard Brexit quoted EU officials as saying Johnson has never even sent them his negotiating points because his only plan is a no-deal Brexit.
However, MPs want their legislation blocking a no-deal Brexit codified into law before any election.
However, Corbyn winning a hypothetical election wouldn’t necessarily guarantee a no-deal Brexit because his Labor faction wants to leave the EU, which they view as a capitalist tool.
So, the British Parliament doesn’t want a no-deal Brexit. They don’t want any transition plan that’s been submitted and they don’t want elections.
Which pretty much leaves the UK right where it started on 23 June 2016.
• So much madness, so little time.
With every passing day, hope fades that there will ever be any real clarity about what’s coming next with Brexit. Will the suspension of the Parliament assure a no-deal Brexit? Will Boris Johnson’s threat to kick rebel MPs out of the Conservative Party trigger a general election as the Tories lose their majority? Will those Tory rebels defy Johnson and join Labour and Liberal Democrats in blocking a hard Brexit? Will Nigel Farage be the first Brexit Party prime minister?
As predicted, BoJo lost the 3 September vote, which means Parliament can now introduce a bill for yet another Brexit delay.
This all comes after Tory rebels revealed their plan to delay Brexit until January 2020 if a no-deal is still an option come mid-October. Now, a number of the most prominent Conservatives will be ejected from the party including former Chancellor of the Exchequer Philip Hammond, former Justice Secretary David Gauke, Winston Churchill’s grandson Sir Nicholas Soames, and Rory Stewart.
Buckle your seatbelts … it’s going to be a bumpy ride.
• Was this the political move that ensures a no-deal Brexit?
The word “prorogue” is yet another arcane parliamentary term from some bygone century that’s only resurfaced with Brexit. But it’s a word Brits likely will remember for a long, long time. It means to suspend a parliamentary session without actually doing away with parliament itself.
Prime Minister Boris Johnson has gotten Queen Elizabeth II’s permission to prorogue parliament for five weeks, with PMs only returning two weeks before the 31 October deadline to leave the European Union.
The suspension could begin as early as 9 September and last until 14 October.
Johnson has said the suspension is only to refine his “very exciting” agenda, but it was telling that MP Jacob Rees-Mogg, the most avid Brexiteer, accompanied Johnson to Balmoral to meet with the 93-year-old monarch.
It remains to be seen what sort of backlash Johnson’s maneuver will provoke.
It seems that after three years, Brexit is just getting interesting.
• Operation Yellowhammer is not exactly news. The Guardian was reporting about the emergency post-Brexit preparation plans one year ago.
What is news is that the red-meat, nationalistic Brexit-supporting Times of London got hold of the full secret report and it ain’t pretty.
The quick-and-dirty summary is:
Britain faces shortages of fuel, food and medicine, a three-month meltdown at its ports, a hard border with Ireland and rising costs in social care in the event of a no-deal Brexit, according to an unprecedented leak of government documents that lay bare the gaps in contingency planning.
Again, it’s not so much the news … we knew all this long ago. It’s the fact it’s dawning on the Times that Operation Yellowhammer isn’t “Operation Fear” or a worst-case scenario. This is what is going to happen in the event of a no-deal Brexit and Boris Johnson & Co. have done f*ck all to prepare.
There simply are no deals in place of any kind to replace existing trade, customs, residency and transportation rules under the European Union.
• At mid-August, a flurry of developments … and none of them good if you’re Remainer.
A new study projects that half of the United Kingdom’s farms could fail in the event of a no-deal Brexit, according to the Guardian.
Jeremy Corbin humbly promoted himself as caretaker PM in order to get rid of Boris Johnson, a move immediately blocked by the Liberal Democrats.
In the United States, Speaker of the House Nancy Pelosi said she’s block any trade agreements with the UK if they were predicated on a no-deal Brexit that would lead to a hard border between Northern Ireland and the republic … and a violation of the Good Friday Agreement.
Finally, CNN’s Hala Gorani did the math and figured out the first possible date the UK could call a snap election is … wait for it … 31 October.
• Boris Johnson is signaling to EU officials he’s only interested in a no-deal Brexit. Which will be a very bad thing, for everyone, according to the University of Leuven in Belgium. Leuven researchers released a recent study done for the Belgian province of Flanders.
The study, “Sector-Level Analysis of the Impact of Brexit on the EU-28,” quantifies what a hard Brexit will mean in terms of job losses and economic pain across the European Union and the whole of Europe.
According to the report, the UK is projected to take the biggest hit, 527,000 positions, or about 1.75 percent of all jobs. Ireland could lose about 500,000 jobs, or 2.6 percent of the total. Germany is projected to lose about 292,000.
In short, every country that does business with the United Kingdom will take a serious hit and every industry sector would be affected from textiles to food, according to the report.
• Sky News reporters were able to able to get their hands on a sensitive, official internal British government document projecting in real-life terms what a no-deal Brexit will be like.
The briefing, titled “What this could look like on the ground,” predicts “law and order challenges” in Northern Ireland, which would immediately be cut off from the Republic of Ireland. Consumer shortages and panic. British expats could lose their rights to services and residency. Oh, and the pound would plummet. (Even more.)
All and all, a no-deal Brexit would be just the thing to toughen up a British populace gone soft from decades of the good life as citizens of the European Union. Right, Moggsy?
• On a fundamental level, currency trading is a popularity contest. You buy the currencies that have rising demand, and dump the ones that are dropping in value. Take the British pound sterling, for example. Because of Brexit, the pound has dropped to its lowest level vis -à-vis the euro and dollar since 2016, when the United Kingdom voted to leave the European Union.
At the end of July, it only took 1.09 euros to buy 1 pound … inching toward parity, something that hasn’t happened since the euro was introduced in 1999.
That means everything the U.K. buys from E.U. countries from Mercedes to Montrachet is going to cost more. A lot more. This is not good news for British pensioners living in Spain and Portugal who receive their retirement valued in pounds. Bloomberg has a post predicting the pound will fall an additional 13 percent should there be a no-deal Brexit.
• If business, not politicians, were deciding Britain’s fate, Brexit would have been dead a long time ago. It tells you a lot when one of the U.K.’s richest men, inventor James Dyson, supports Brexit, then promptly flees Britain for Singapore, where he just spent 70 million pounds on two luxury homes.
Dyson, Britain’s 12th richest person, assured everyone his decision to leave Britain and take his company with him had absolutely nothing to do with Brexit.
Most of Britain’s auto industry is leaving or threatening to leave including French giant PSA, which announced it will close a plant in northwest England should a no-deal Brexit occur.
Investment in Britain’s car industry has stopped, according to the Guardian, with a “pitiful” 90 million pounds pledged for new capacity in the first six months of this year. Before Brexit, the automotive industry was investing more than 2.5 billion pounds per year in British R&D.
• The conditions are aligning quickly for a no-deal Brexit. Immediately upon taking office, Prime Minister Boris Johnson reiterated he’ll never agree to keep open the border between Republic of Ireland and Northern Ireland. EU officials immediately responded they’ll never agree to closing the border.
The question is, are there enough Tory, Labour and Liberal Democrat parliamentarians ready to vote to block a no-deal before 31 October?
• The Conservative Party has elected Boris Johnson its leader and by extension, prime minister of the United Kingdom, the fifth-largest economy in the world. Let that sink in for a moment.
If Brexit is about anything, it’s about a leadership deficit. No one will ever describe the Brexit instigators– Nigel Farage, Arron Banks and Dominic Cummings – as men of substance. Ditto for Johnson.
By Johnson’s age, Winston Churchill had been an army officer, fighting in Cuba and India. He’d written several books before becoming a journalist, then switching back to soldier during the Boer War in South Africa, surviving a stint as a prisoner of war, then becoming the conquering hero.
Churchill went on to parliament, became Home Secretary, then First Lord of the Admiralty before becoming prime minister and pretty much single-handedly saving the UK during World War II.
By comparison, Johnson spent his early career making up stories as a “journalist” in Brussels before becoming mayor of London, where his most notable moment was getting stuck on a zip line during a publicity stunt.
In fact, Johnson’s entire life has pretty much been one big publicity stunt.
We’re sure Brexit will be different.
• After three years of nothing much happening, everyone not named Boris, Nigel or Jeremy has has pretty much figured out the 2016 Withdrawal Referendum was goof of historic proportions. Then, everyone not named Boris, Nigel or Jeremy realized a no-deal Brexit will be a catastrophe. Now, everyone not named Boris, Nigel or Jeremy is figuring out making Boris Johnson prime minister would be a goof of historic proportions. Johnson is getting lampooned for his transparent lie about kippers, of all things, even by the Telegraph, were he’s still a contributor, paid something on the order of 275,000 pounds sterling per year. And then there was that whole ugly row with his young girlfriend.
The trouble is, the United Kingdom looks completely idiotic if it backs off Brexit, and the Conservative Party looks completely idiotic if it bails on Johnson. Which means there’s probably nothing that can stop the UK from making the biggest mistakes in its illustrious history.
• Who’ll suffer the folly of Brexit for decades to come? Young Brits, of course. The Wall Street Journal, which is a conservative Murdoch outlet, has a post about the widening gap between generations, with young Brits generally opposing Brexit because it limits their career options.
Their parents’ attitude is basically, “You’ll be fine. We’ll get you a nice job at the Sainsbury in Swindon.”
Sam Mejias, a research fellow at the London School of Economics, conducted a 2017 study for lawmakers. Mejias found younger people resented what they saw as “a decision made by an entitled older generation (who) grew up when college was free and housing was affordable,” according to the WSJ post.
“The thing I was most likely to hear in almost every single focus group was something along the lines of, ‘No offense to the older generation, but they are going to be dead soon.’ ”
• BBC Panorama has conducted exhaustive interviews with many of the top officials on both sides of Brexit and the depiction of chaos they’ve assembled is amazing. For one, May’s government never actually had a plan. Nothing.
The EU, by comparison, entered the Brexit negotiations with one clear goal – to punish the UK and make sure EU countries with populist governments didn’t try to follow Britain out of the union.
In a long summary, BBC Panorama documents all the missteps including May’s unwillingness to be honest with herself about her ability to win over parliament; the unsolvable issue of walling off Northern Ireland from the Irish Republic and violating the Good Friday Agreement and the inability of the May government to appreciate how EU officials idealize the European Union as the mechanism to prevent another European war.
• The original pitch for Brexit way back in 2016 was that it would be an instant return to greatness. Freed from the tyrannical shackles of the European Union, the United Kingdom’s economy would soar like an eagle into new markets, prosperity would rise and taxes would fall. That was then.
Then, one of the two candidates for Tory leadership, Jeremy Hunt, admited that a no-deal Brexit would basically crush Britain’s small businesses with tariffs, but it will be well worth their sacrifices.
On 30 June, the BBC’s Andrew Marr asked Hunt – who constantly reminds everyone he is an entrepreneur – if he is really prepared to look business owners and employees in the eye and say, ” ‘ you’ve got to lose your job because I’m going for no-deal?’ ”
“I would do so, but I would do it with a heavy heart,” Hunt replied.
An incredulous Marr responds, “Really?! How would you feel if your company was in that position, you’d built up your company and a politician came along and said, ‘Sorry, I’m going to destroy your company for ideological reasons …?’ ”
Marr gave a verbal shrug, basically saying the people have spoken, sorry about your luck. One of them most amazing – and depressing – revelations of the past three years of this never-ending disaster.
• Britain, like the United States, clings to magical thinking. In the case of the United Kingdom, the two Tories running for the top executive job both claim they – and only they – can negotiate a better deal with European Union officials. Who’ve said repeatedly there’s nothing to negotiate … the deal they offered Theresa May – and that got voted down twice by huge margins – is the only deal on the table, or that will ever be on the table.
But to show voters they’re nobody’s fools, both Boris Johnson and Jeremy Hunt vow to take the UK out of the EU deal or no deal. The tough bargaining of shrewd politicians. Which would be laughable if there were a counterweight to their madness in, say, the Labor Party.
Alas, there is not as Trotskyite Labor leader Jeremy Corbyn also wants to leave that running-dog capitalist trade union.
• Seeking to be “great again,” one of the world’s most advanced democracies elects to the highest executive office a man with abysmal history of erratic behavior including narcissism, serial philandering, mistreating women and chronic lying pretty much about everything. Though those who know him best warn he is unfit to be elected dog catcher, everyone is entranced by The Show … the loopy rhetoric, the flashy lifestyle and above all, the hair.
The parallels between Donald Trump and Boris Johnson are uncanny. And as with Trump, whose own ghost writer of his best-seller “The Art of the Deal” exposed him as a fraud, people are coming out of the woodwork to warn Tory voters about Boris.
Max Hastings, Johnson’s former editor at The Telegraph (where Johnson is still paid 275,000 pounds per year, or about 2,291 pounds per hour, for his words of wisdom) has written a long post about Johnson’s many failings.
Though they are too numerous for this forum, they include lack of capacity for abstract thought, much less character; bullying and, well, unrelenting lying.
Hastings quotes one Bishop Berkeley as to why Prime Minister Boris Johnson would never rise above his worst instincts: “It is impossible that a man who is false to his friends and neighbours should be true to the public.”
He concludes by writing, “For many of us, his elevation will signal Britain’s abandonment of any claim to be a serious country.”
• The New Yorker has a less-than-flattering profile of Boris Johnson, who made his bones as mayor of London. “The Empty Promise of Boris Johnson” revisits all his most clownish and boorish moments from his time as a fake-news generator for The Telegraph, taking revenge on Brussels – which he hated from his youth – to his self-described “royal goatfuck” of an announcement endorsing Brexit in 2016.
The comedic episodes do not lessen the impact of Johnson joining Trump and Putin to form an Anti-Europe Triumvirate, dedicated to destroying the EU.
• If your friends think you’re delusional, imagine how happy Brexit must make Putin?
Dutch Prime Minister Mark Rutte, who describes himself as an anglophile, told his English friends that Brexit in any form, but especially a no-deal Brexit, will leave the United Kingdom “diminished.”
It is unavoidable. Because you are not any longer part of the European Union and you are not big enough to have an important position, important enough on the world stage, on your own.
Ouch. Tell us what you really think, prime minister.
Putin’s foreign policy is focused on undermining institutions from the United States to Ukraine in hopes of weakening liberal democracies. He must be thanking his lucky stars every day for Boris Johnson and Nigel Farage.
• File this under, “See you; wouldn’t want to be you.” That’s the message British Tories are sending to their “allies” in Northern Ireland and Scotland. A majority of Tory leaders said they’d be fine with jettisoning Scotland and Northern Ireland if it meant they could realize their dream of leaving the European Union.
• If Brexit is about anything, it’s about nostalgia for that great Great Britain and United Kingdom that ruled the world. And we’re nostalgic, too.
Remember those halcyon days when London was the world capital of capital? Boy, it seems like only yesterday, doesn’t it?
Wait, it was only yesterday. Today, the financial world has moved on.
New York City has replaced London as the world’s financial center, according to a survey by New York-based consultancy/security firm Duff & Phelps. More than half those queried named New York as the global financial capital, and only 36 named London.
“Last year, Brexit cast a shadow of uncertainty over the United Kingdom’s economy. It has now escalated to a full-blown crisis,” the report states.
• Next ….
Theresa May didn’t support Brexit but took up the crusade after the June 2016 vote to take the United Kingdom out of the European Union to further her political career. Now, she has no political career as she steps down as Tory leader on 7 June.
May will go into the history books with Neville Chamberlain and John Major as among the most ineffectual British prime ministers. In May’s case, she proved unsuited to the task of bridging the gap between no-deal aristocrats and rural and elderly Brexiteers, and the young and ethnic pro-European Union urban Remainers.
So, who is?
• After a Far Right Austrian leader was caught on video pretty much offering to sell out his country to the Russians, more people (including investigators) suddenly are interested in where the money funding Brexit leaders is coming from.
Apropos to this, Channel 4 News documented how Arron Banks has been bankrolling Brexit Party leader Nigel Farage’s extravagant lifestyle to the tune of 450,000 pounds per year, paying for his 13,000 pound per month Chelsea digs, trips to meet Trump in the U.S. and of course his dry-cleaning bills.
But where does Banks’s money come from? The National Crime Agency is investigating Banks, trying to figure that out. Meanwhile, even the pro-Brexit tabloids are noticing that Brexit Party Chief Richard Tice won’t say whether the new party takes foreign money.
Ever stranger, the Telegraph, which runs regular Farage columns and is rabidly pro-Brexit and anti-EU, has a post about a UK-taught Spanish developer who developed the tech that Russians trolls used to sway the Brexit vote. That post is from The Signals Network, a project to bring together whistleblowers, investigative journalists and major media outlets.
Will the exposure of Vladimir Putin’s tireless efforts to undermine Western democracies turn out to be the catalyst for creating a movement to defeat Russia and the populists it funds?
• While May and Corbyn fiddled, is Rome about to burn? That’s the conclusion of Sky News’s Lewis Goodall. After spending time with Nigel Farage at a Brexit Party rally, Goodall predicts Trumpian politics will fill the vacuum created in the United Kingdom by the incompetency of the establishment parties.
You can see the full “Brexit: The conditions are ripe for the biggest backlash imaginable” post here.
• So, this is what greatness looks like ….
Financial Times is reporting 30 billion pounds in equity fund investments have left the United Kingdom as investors flee to the relative safety (and at least some predictability and continuity) in Europe-based funds.
The funny thing is, the Daily Express has a post stating the opposite … that money is POURING into Britain because of Brexit.
Foreign direct investment in the UK for 2018 was GREATER than in Germany, Portugal and Poland “combined,” the Express is reporting. That PROVES (the Express loves caps) “doom mongers who predicted an economic downturn after the 2016 referendum vote to quit the EU had been proved wrong again.”
You have to go to the Tory’s official news site, the Telegraph, to find out that the Express is wrong … again.
In “Dutch steal UK’s crown as most attractive destination in Europe for foreign investment,” the lead paragraph states, “Foreign direct investment into the UK slumped last year as the Netherlands poached the top spot in Europe for the first time since 2015.”
Obviously, FDI is a different bucket of capital than investment funds. But the trend is for all capital classes to be exiting – not entering – the UK because of Brexit.
• Is it just us, or is Labour’s Jeremy Corbyn that grumpy old man always feuding with neighbors while yelling at kids to stay off his grass? Corbyn appears to be distracted form tormenting Theresa May for the moment, feuding with his own party. Corbyn and deputy Tom Watson are going at it over a second Brexit referendum – Watson wants one; Corbyn says, “nay.”
• Okay, we found that ray of sunshine mentioned below ….
John Thornhill has written a post on the Financial Times opinion page, “Brexit has a chance to kick-start a period of radical change” that outlines how more rational minds will prevail in the United Kingdom.
Thornhill’s take is, “scarcity is clarity” … that entrepreneurs in the tech sector, not Britain’s discredited and inept ruling class, will understand that the UK is running out of time and quickly seize opportunities to upgrade healthcare, education and the environment.
• If you’ve been trying to understand Brexit as a single irrational act, you can’t. In “Britain is once again the sick man of Europe” – possibly the most insightful and concise analysis we’ve read – Martin Wolf at Financial Times argues that Great Britain has six concurrent crises including constitutional, political, economic and sociological. The longer these issues remain unresolved, the worse things will get, Wolf concludes.
If you’re looking for a ray of sunshine in the Brexit debacle, this ain’t it.
• Ask Robinson Crusoe – there’s nothing worse than being stuck on an island. Which is why ferry bookings to cross the English Channel surged 40 percent overnight after the U.K. and EU agreed last week to delay Brexit until October, according to Bloomberg.
• The plan was for the EU to give Theresa May and her Tories more time to come up with a new Brexit deal … any deal … that could make it through parliament. But a week after the Article 50 extension, the only thing happening is that other countries are starting to flex their economic leverage. In the United States, Democrats control the House of Representatives, where trade laws are drafted. Speaker of the House Nancy Pelosi is wading into Brexit with a warning that if the Brexiteers get their way on a hard border with the Republic of Ireland, they can forget a trade deal with the U.S.
• First, it was 29 March. Then it was 12 April (or 30 June … who knows.) Now, the Brexit date apparently is 31 October. Let the jokes begin.
What is no joke is this might be enough time for the Conservative Party to dump Theresa May. Then, the question becomes, “Would the next prime minister be legally obliged to honor this latest Article 50 extension?”
• The British media has reverted to horse-race coverage, trying to keep up with rapidly unfolding events. So if you seek a deep understanding of why a hard Brexit is likely, you have to go to the long-form American mags.
The New Yorker has a post on how the border between the Republic of Ireland and Northern Ireland is an unsolvable problem.
From the post:
This is the paradox and the tragedy: Brexit fundamentally conflicts with the Good Friday Agreement, but the U.K. government is in a state of denial about that conflict. It insists that it is committed both to Brexit and to the peace accord: Brexiteers claim that they can maintain a “frictionless” open border with the Republic of Ireland after Brexit—in the same place that the newly hardened border with the E.U. will be.
The Washington Post has an opinion post that compares Brexit to a zombie horror movie. Which is funny, right? Except the same post by British political writer Ian Dunt finds that you have to go back to the English Civil War to find a comparable level in parliamentary infighting.
• Scotland is already running around on the United Kingdom. On Friday, 29 March – the original Brexit date – Scotland released a love letter to Europe in the form of a video that invites the Europeans to “continue our love affair.” Bold as brass, that!
Of course, 62 percent of Scots voted to remain. And Scotland has been dreaming about independence at least since Robert the Bruce in the 1300s. A Scottish exit from the United Kingdom could be the next big challenge for whoever the unfortunate soul is who takes Theresa May’s place.
• Brexit was a 2-percent vote … only two percent more people voted to leave the EU than voted to stay. Which Brexiteers hold up as a vote sacred to British democracy. But is it possible that many who voted for Brexit only understood the complexity and profound ramifications of leaving the world’s largest trade block after companies fled and no-deal loomed? Could it be that a majority now wish to stay?
Perhaps no two events illuminate that point better than Nigel Farage’s pro-No Deal march from Sunderland to London, which attracted a handful of people (Nigel sat out most of it) while Saturday’s pro-Remain march in London drew an estimated 1 million. As right-wing Bolsheviks, the Moggsies and Borises don’t give a fig what the majority wants. As it turns out, democracy becomes terribly inconvenient when history is no longer on your side.
• Prudential, the UK’s largest insurer, has just moved most of its operations to Luxembourg. But it has nothing to do with Brexit. No way … it was just that it “made sense,” said its CEO. In financial filings, the company stated it has moved 36 billion pounds (about $48 billion) of assets to Luxembourg, which will be its Europe HQ. But this has nothing to do with Brexit. Don’t be silly.
• Businesses – especially multinationals – have as sector never supported Brexit, not just because of the potential trade barriers to the EU, but simply because of the uncertainty it’s injected into UK’s business environment. The Washington Post has a detailed and well-written post documenting the havoc even possibility of a no-transition Brexit has caused.
Companies have been forced to spend hundreds of millions of dollars on contingency planning or put off expansions, the post notes. And the biggest just left.
From the post:
“Dublin is our headquarters for our European bank now — full stop,” Anne M. Finucane, Bank of America’s vice chairman, told the Financial Times’s European Financial Forum last month. “There isn’t a return. That bridge has been pulled up. . . . From a trading perspective, likewise, Paris would be the European trading arm.”
By the way, chalk up another big win for Amsterdam as Japanese pharma company Shionogi just announced it would leave London and make the Dutch business center its new Europe HQ. At least 275 companies representing about 1 trillion pounds of capital and 5,000 executive positions are leaving the UK including companies such as Dyson, controlled by Brexit supporter Sir James Dyson.
The question is, are Brits tired of all the winning, yet?
• What? Donald Trump has turned on another ally? Nooooo way!
This time it’s the UK. The American president and acolytes such as Steve Bannon encouraged Brexiteers to flee horrible EU tyranny, promising “a very, very big deal, very very quickly” if they leave. Turns out that as we move to only three weeks till Brexit, the America First mentality has superseded outreach to May & Co. Instead of a fast, sweet deal, Trump is offering “a preview of what it can expect from take-no-prisoners trade negotiations after Brexit,” states a CNN post. The US is demanding major trade concessions and not offering much in return.
Ending EU rules could open the UK to American agricultural products including genetically modified crops, animal feed with antibiotics and chlorine-washed chicken, all currently banned in the European Union.
• At the 44-day mark, Ford officials followed Honda and Nissan execs out the door, announcing plans to move production out of post-Brexit UK. The Times of London is reporting that during a call with business leaders, British-based executives with the Detroit automaker told Theresa May they were “preparing alternative sites abroad.” Ford of Britain has 13,000 employees at multiple facilities including three factories – Bridgend, Dagenham and Halewood. But the big hit for the UK would be losing Ford’s R&D center in Dunton, Essex, which employs more than highly paid 3,000 engineers.
• Dang, what do you really think, Donald Tusk? EU President Tusk got something off his chest at a presser with Taoiseach Leo Varadkar. He looks right at the camera and says, “By the way, I’ve been wondering what that special place in Hell looks like for those who promoted Brexit without even a sketch of plan how to carry it out safely.” And if you think he “misspoke,” he immediately tweeted the same thing.
Can you say, “Righteous indignation?”
• It increasingly appears the possibility of returning to a hard border between Northern Ireland and the Republic of Ireland might be the unsolvable issue that guarantees a no-deal Brexit. Theresa May seems to be trying to have it both ways, assuring the Irish there won’t be a customs-and-passport check while assuring her hardline Brexiteers there will be.
A hard border would essentially abrogate the Good Friday (Belfast) Agreement signed in 1998, a peace agreement that opened the border and ended “The Troubles,” decades of sectarian tension between pro-independence Roman Catholics and pro-Union Protestants. But Brexiteers see an open border as an affront to its sovereignty and one more way Britain will still be tied to the EU post-Brexit.
• Earlier in January it was Dyson. Then Airbus. CEO Tom Enders released a video saying in the bluntest possible language – pointed language you rarely hear from top executives of multinationals – that no companies should have to deal with this much uncertainty 65 days out from Brexit. This could be the most sobering moment yet is this wildly chaotic process as the normally diplomatic German went right to the point: “We can’t move our operations and workforce overnight, but move them we will in the event of a no-deal Brexit.”
“Please don’t listen to the Brexiteer’s madness which asserts that because we have huge plants here, we will not move and we will always be here,” he says in the video above. “They are wrong.”
The departure of Airbus operations from the UK would be the biggest potential financial blow yet. The aviation industry giant has 14,000 employees in Britain and supports another 110,000 jobs through its supply chain, according to CNN.
Using a median wage of 50,000 pounds in a back-of-the-envelope calculation, that would be a potential 7.25 billion pound loss just in pure wages. Which seems to us to be a high price for making the UK great again
• On 31 October 2018 – Halloween, appropriately – the Guardian reported that Manhattan-based rating agency Standard & Poor’s warns that a no-deal Brexit would plunge the U.K. into recession, send unemployment skyrocketing, home prices lower and office leasing rates off the cliff. Oh, and for good measure, Britain’s credit rating would be downgraded.
• The New York Times has a post about a new phenomenon – Brexit Preppers. They’re the Brits who are hoarding food, medicine, toilet paper and other supplies, preparing for the disruption of supplies likely after a no-deal Brexit.
From the post:
“People are talking about World War II and rationing,” said Ms. Mann, a former midwife. “People have also been talking about the blackouts in the 1970s, and how power was rationed. This has the potential of being a combination of the two,” she said.
• On Sunday, 9 September, The Times of London published details of a leaked report from the National Police Co-ordination Centre. The report warns that in the event of a no-deal Brexit, the military might have to be deployed to back up police to quell civil unrest after food and other necessities start disappearing from British shelves. The NPCC report warns that traffic jams at ports could lead to “unprecedented and overwhelming” disruption to the road network.
• On 23 August, then-Brexit Secretary Dominic Raab sent out 24 technical notes he called “practical and proportionate advice” in case the UK leaves the EU without a deal. Raab’s release of the documents was meant to demonstrate to the British public that adults are in charge, with plans to ameliorate the worst effects of a no-deal Brexit.
Why, “the vast majority” of consumers won’t even notice any impact, Raab said, apparently referring to Brits who don’t fly, eat food, work for a living or make credit card purchases.
• May’s Chancellor of the Exchequer Phillip Hammond stated in a letter to Tory MP Nicky Morgan, chairwoman of the Common’s Treasury Committee, that a no-deal Brexit will mean a 7.7 percent decrease in the UK’s GDP over the next 15 years.
To put that in perspective, the real GDP contracted by 4.2 percent between late 2007 and mid-2009 during the U.S.’s worst economic downturn since the Great Depression.
From Hammond’s letter:
Under a no deal/WTO scenario chemicals, food and drink, clothing, manufacturing, cars, and retail were estimated to be the sectors most affected negatively in the long-run, with the largest negative impacts felt in the North East and Northern Ireland.
Bottom line: Government borrowing is projected to increase by 80 billion pounds per year by 2033 to cover the budget shortfall in order to simply maintain the status quo.