INDEX Monday, 9 January, 2017

Brexit means dithering!
The media is full of stories about how complex the exit negotiations with the EU are going to be. Some have even suggested that we need to import trade negotiators from Australia because we lack home grown expertise. As is usually the case this is complete nonsense. Nothing could be further from the truth.

When you ask people who advocate this case what exactly it is they think we need to negotiate about, they are invariably flummoxed. It's all far too complicated for them to explain!

In reality, of course, it is politics not complexity that is holding things up.

Trade negotiations are about working practices, employment law, government support, product standards, the power of the
Maybe it's because I'm a plunderer
The Economist catches up with my observation that the PM is the Maybe woman (Metro Friday, January 6, 2017.)
courts (and access to them) and stuff like that. On the day we leave the EU we will be entirely harmonised on all these things since we are currently subject to EU rules.

So far as tariffs are concerned (if there are to be any), the so called General Agreement on Tariffs and Trade (actually renamed but it's still popularly called GATT) has a fall back position of a 10% import tax. Since we import a great deal more from the EU than they do from us, a 10% tax would actually be rather a good thing for Britain, especially with the Treasury currently running a very large tax deficit. It might also do something to close the trade gap.

In the context of a very substantial fall in the value of the pound (from 1 pound = 1.3080 EUR to about 1 p-ound = 1.15 euros today) since the Brexit vote (a truly wonderful thing for British exporters and the workers who earn their living from providing products and services sold abroad) a 10% tax doesn't seem all that worrying.

What is truly frightening is the cavalier attitude of the May government towards Brexit. It is clear that many of them (most?) are at heart Remainers. They are being dragged kicking and screaming out of the EU.

Having lost the vote, their fall back position is to keep as much of the EU as they possibly can by the negotiations. It has even been proposed, somewhat preposterously, that we should join some kind of European army outside NATO.
This is a truly foolish strategy. For a start it won't work since the EU has bigger problems in the shape of the possible melt down of the Italian economy and a Le Pen presidency in France which would likely spell the end of the euro. This is not the time to risk rocking the apple cart to keep Britain sweet.

Most significantly, the thing business really hates is uncertainty. Every

By Absolutelypuremilk - Own work, CC BY-SA 4.0,
As of Q1 2015, UK government debt amounted to 1.56 trillion, or 81.58% of total GDP, at which time the annual cost of servicing (paying the interest) the public debt amounted to around 43 billion (which is roughly 3% of GDP or 8% of UK government tax income). Source Wikipedia.
day the negotiations are spun out, another British business will open up offices in an EU country in order to achieve some kind of EU domicile status. If the uncertainty goes on long enough some big financial services companies may even move their head offices.

Brexit is going to happen and can not be negotiated away by clever mandarins. What we need is not a hard or a soft Brexit, but a clean and swift one. Stop the dithering and end the uncertainty. The government might not like the result but at least the collateral damage caused by delay will be minimised.
Posted by Jonathan Brind.
INDEX Monday, 9 January, 2017