The EU Withdrawal Bill

We were told yesterday that the government invites Parliament  to consider the Lords Amendments to the Withdrawal Bill, starting on Tuesday June 12th. These need to be carefully considered by the Commons with a view to making final decisions as soon as possible.  Where the Commons decides to disagree with a Lords Amendment it will be because the amendment waters down the commitment to implement the wishes of the voters in the referendum. I trust that any Commons vote to reverse a Lords amendment will be end of the process.

The role of the Lords is to ask the Commons to think again. Traditionally the Lords does not oppose matters which form part of a governing party’s Manifesto commitments. You would have thought the Lords would be even more careful about a commitment that stems from a free vote of the electorate. We were all told in a government leaflet that we the people were making the decision, so Parliament should now facilitate it.

There are all too many times when the Commons does not scrutinise a Bill extensively enough, owing to a lack of interest by the current Opposition. Then the Lords have more justification in detailed examination. No-one can deny that the EU Withdrawal Bill has been one of the most scrutinised Bills in history in both Houses. We have not lacked debate, insights, counter proposals or arguments. What we now desperately need are some decisions. That is what the Commons must now do.

It is important the Bill has passed all stages by the time the Prime Minister goes to the June 28 Council. It will show our EU partners that we are getting on with all necessary preparations and are serious in our intent. There are some on the continent who seem to think if they help Remain influences in the UK delay the process they might force us to think again. Almost two years have passed since the decision. It is high time Parliament confirmed the decision one more time. In voting for the EU Withdrawal Bill in its unamended form the Commons will be reaffirming its careful consideration of this Bill the first time round, and reinforcing its overwhelming vote to send the Article 50 letter. That letter, after all, was the effective Parliamentary decision to leave the EU. The purpose of the Withdrawal Bill is to ensure there is legal continuity when we leave. Sensible Remain supporters accept that a decision was taken on June 24 2016, and want to see the legal continuity the EU Withdrawal Bill can bring us.




More Project Fear leaked to the newspapers

I find it difficult to believe 2 years on the civil service are still writing and leaking absurdly pessimistic scenarios about Brexit. Ministers have offered clear directions that they should work up the best way of leaving without a deal. That is what they were charged to do. I am told by Ministers that is what they are doing. Ministers assure us all will be ready to leave in March 2019 and to carry on importing goods from the EU if we still want to buy them. The Germans are particularly keen that should be true, given the size of their trade surplus!  So why are some other civil servants  inventing nonsensical outcomes and leaking them when Ministers have asked them not to and told them these forecasts are just silly?

Apparently according to  the latest leak someone in the civil service thinks if we leave without a deal Calais will not co-operate and so create interruptions to the supply of imported food and pharmaceuticals to us. No sensible person could make that up. The people running Calais port want to earn fees for running a smooth business. They do not have legal powers to discriminate against particular cargoes going to particular places. If they did try any such thing Oostende, Zeebrugge, Antwerp, Rotterdam and other Belgian and Dutch ports would be delighted to lift the business from Calais, assuming the French competitors were also in an illegal sulk.

There is then the rest of the world. They are looking to see if the EU messes up its very lucrative food export business to the UK by imposing food tariffs and other barriers. If they do there will be plenty of suppliers from outside the EU selling us products, to say nothing of the response of UK farmers if the EU makes itself less competitive.

The leak is revealing. It shows that there is still a strand of thinking in the civil service that wishes to stop Brexit, and is  busy inventing difficulties that do not exist. They seem to want to help those on the continent that think they can reverse Brexit and keep our money flowing into their expensive organisation. What they are all succeeding in doing is creating an ever bigger volume of support for leaving with No Deal, as they keep on working to ensure any deal on offer will be a bad one for the UK.




Trade wars

I agree with the consensus that trade wars are not helpful, and higher tariffs do impede growth and prosperity.

I do not agree with the view that the UK needs to be in an EU  tariff zone/Customs Union  in order to enjoy more of the benefits of free trade. That is an absurd contradiction of a view. The EU Customs Union imposes tariffs and barriers against the rest of the world that are  not helpful. If pro EU people agree, as they seem to do, that Trump’s new tariffs are harmful, they should also agree that the EU’s far bigger and more numerous old tariffs are also  harmful.

The irony of Mr Trump’s stance is lost on them. He is imposing tariffs to try to bash down the barriers and unfair trading practices others have imposed. His main two targets are China and Germany. There is an interpretation doing the rounds that his only target is China and some of his tariffs are therefore ill judged. Mr Trump starts with analysis of the largest trade surpluses around the world, which reside in China and Germany. Because Germany’s trade  stance is handled by the EU it leads the USA into conflict with the EU. It is true that his steel tariffs do hit the wrong people, as the USA imports little steel from China which is the main  cause of overcapacity and of subsidised or unrealistically low prices.

The US has written a report into how China has in the US view cheated with Intellectual Property and technology products. The US is currently reviewing the practises of the German car industry, to see why Germany sells so many more cars to the USA than the USA sells to Germany. Part of the reason is obvious. The EU levies a 10% tariff on US cars, but the US only levies a 2.5% tariff on German cars. I can see why the USA may wish to question that.

I look forward to the day when the UK can negotiate her own trade terms around the world. The danger of the current situation is we get dragged into an unhelpful trade war between the EU and the USA which is primarily about the huge German surplus, not about our own global trade deficit.

The UK will regain her vote and voice at the WTO. The sooner the better. This is exactly the time when an independent UK could act as a strong voice and influence for freer trade worldwide, assisting the USA where she has a good case to bring the barriers down that others have imposed, and working with those who oppose unilateral US tariffs that do not tackle the underlying problems.




Trade wars

I agree with the consensus that trade wars are not helpful, and higher tariffs do impede growth and prosperity.

I do not agree with the view that the UK needs to be in an EU  tariff zone/Customs Union  in order to enjoy more of the benefits of free trade. That is an absurd contradiction of a view. The EU Customs Union imposes tariffs and barriers against the rest of the world that are  not helpful. If pro EU people agree, as they seem to do, that Trump’s new tariffs are harmful, they should also agree that the EU’s far bigger and more numerous old tariffs are also  harmful.

The irony of Mr Trump’s stance is lost on them. He is imposing tariffs to try to bash down the barriers and unfair trading practices others have imposed. His main two targets are China and Germany. There is an interpretation doing the rounds that his only target is China and some of his tariffs are therefore ill judged. Mr Trump starts with analysis of the largest trade surpluses around the world, which reside in China and Germany. Because Germany’s trade  stance is handled by the EU it leads the USA into conflict with the EU. It is true that his steel tariffs do hit the wrong people, as the USA imports little steel from China which is the main  cause of overcapacity and of subsidised or unrealistically low prices.

The US has written a report into how China has in the US view cheated with Intellectual Property and technology products. The US is currently reviewing the practises of the German car industry, to see why Germany sells so many more cars to the USA than the USA sells to Germany. Part of the reason is obvious. The EU levies a 10% tariff on US cars, but the US only levies a 2.5% tariff on German cars. I can see why the USA may wish to question that.

I look forward to the day when the UK can negotiate her own trade terms around the world. The danger of the current situation is we get dragged into an unhelpful trade war between the EU and the USA which is primarily about the huge German surplus, not about our own global trade deficit.

The UK will regain her vote and voice at the WTO. The sooner the better. This is exactly the time when an independent UK could act as a strong voice and influence for freer trade worldwide, assisting the USA where she has a good case to bring the barriers down that others have imposed, and working with those who oppose unilateral US tariffs that do not tackle the underlying problems.




Populist challenges to the Euro

There are waves of voters on the continent wanting substantial change to the Euro scheme which lies at the heart of Project EU. The endless austerity policies designed by Germany to avoid the need for substantial transfer payments from the richer parts of the zone to the poorer parts are universally unpopular in the south and west of the EU. Voters swept aside the two traditional main parties in Greece, only to see their chosen champions Syriza blown away by a resolute EU defence of austerity. In Italy now a populist government has been formed, as 5 Star and Lega have almost destroyed the two traditional centre left and centre right parties of that country. In Spain Cuidadanos and Podemos are on the march again and poised to do well from any early election. Even in fortress Germany herself, the home of Euro orthodoxy, a growing impatience with just how much Germany is nonetheless committed to has led to the worst ever result for the two traditional parties in the last general election.

All of these pressures go back to the Maastricht rules and criteria. These rules still have some sway in the UK, a non Euro member. The UK Treasury has used the budget discipline rules to require progressive reduction of our deficit, with the aim of starting to reduce the debt as a proportion of our national income. I often support the policy of controlling public spending and debt, and agree it should not be allowed to get out of control. I do  not support our subservience to an inflexible EU rule that pays little attention to the state of the cycle, the level of unemployment and none to the tightness of monetary policy. Today tight fiscal policy in the UK is reinforcing tight monetary policy with the inevitable slowing of the economy we saw in Quarter 1.  I think we need to look at all of these  things together to get the right policy trade offs between inflation, output and future debt levels. A lot of Maastricht thinking is based on the pre crisis European economies. Today with mass migrations affecting wage inflation, and the liberal global supply of goods and services keeping down prices, the old identities that full capacity automatically led to high inflation do not work.

Much  more serious than our position is the impact these disciplines have had on the south and west of the Euro area. Far from creating stability, the Euro scheme  gave Ireland and Spain a wild ride. First it led to a massive boom, with asset inflation on a big scale, over development of property and over extension of bank credit. Then it gave them a big bust, where all of that reversed. In Italy’s case it has given them more than a decade of pitifully low growth and high unemployment. In Greece it has led to a major slump with large falls in living standards. In Cyprus a banking crash led to people not being able to withdraw their Euros from some banks, and suffering losses on larger deposits.

Today the voters of Italy and Spain are saying they want reform of the Euro. They want more latitude to spend more, tax less and borrow more to try to accelerate growth and job creation. It is important how the EU responds. If they seek to do to Italy what they did to Greece, we are all in for a very bumpy ride. What they need to do is to move more rapidly to complete their political union, and to put into it a system of transfers of cash from rich to poor and from surplus to deficit areas. In the UK large sums are moved to the areas that need it via the nationwide benefits system and the Council revenue support grants. That is why the sterling single currency area does not  have these periodic crises we see in the Eurozone. If they are not prepared to do this then they need an orderly break up of the zone so deficit countries can devalue against Germany and price themselves back into markets. When they broke up the rouble zone the countries that got out and established their own currencies soon did well out of that reform.