Tom Brake had this to say as the House of Commons debated the first batch of line by line amendments to the EU Withdrawal Bill:
Today the Prime Minister’s desperate attempt to buy off her hard Brexit supporters with red meat has been found out for what it is; a pointless and dangerous political ploy which has no legislative coherence and boxes the UK into an arbitrary timetable. This will only make our negotiations harder, limit our room for manoeuvre and increase the risk of No Deal.
It has been rightly and resoundingly rubbished by both sides of the House.
Only the Liberal Democrats are committed to a vote on the deal and an exit from Brexit, which safeguards UK jobs and family livelihoods
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82 Comments
I suspect the Tories will get the Bill through with few if any amendments. The Tory rebels will huff and puff and fall into line; I hope I’m wrong in that assessment but I fear the pain will have to get much worse before they muster the courage to break ranks.
Watched most of the debate today, and sorry, Frankie, the Tory rebels led by Dominic Grieve and Anna Soubry (with a superb contribution from Ken Clarke) seem pretty fired up and determined to me. Watch this space.
David as i said I hope I’m wrong but I suspect with the help of a few Labour MP’s they will scrape through. Lets hope I’m wrong.
The media announced that today was the start of a “line by line scrutiny of the Bill”. If this is line by line scrutiny, I am a duck-billed platypus. Wait for the spring to see how it’s done properly!
I’m sure the 6% Lib Dems will be completely ignored and rightly so.
For the short term at least the only way is Norway. Probably should have done it three decades ago in truth.
You could hardly expect David Davis to climb down the whole way in one go. The next step will take a little while, but the Government will have to agree to a proper vote. The choice should obviously be: accept the deal, or accept that Brexit would be a mistake.
Lib Dems and fellow remainers in other parties need to make sure that when we reach that point the Brexiters haven’t succeeded in making leaving the EU look a good thing for the UK, worth the temporary pain of a bad Brexit.
In the referendum the Leave campaigns did things like stoking up general anti-foreigner sentiment, and offering a return to a past era when life was simpler. Now they need to make a robust case for UK plc doing better after being ‘freed from the constraints of the EU’. They could only succeed by perpetrating another fraud on the British people, but there is a real danger that they could do that. Right now the man to watch is Michael Gove. He is nowhere near as stupid as he looks, and this week he has come up with the idea that the fishing industry will transform our economy and revitalise our coastal towns. There was a real loss of sovereignty over our inshore waters when we joined the EU, and the idea of regaining it will appeal to Leavers. Of course, when we joined the EU we greatly expanded the tariff free market for our fish, and we would lose that, but Leave campaigners will play up the gains and play down the losses.
As ever, our task is not just to force a further referendum, or another decisive vote in Parliament, but to make sure we win it.
Jackie,
Again I will repeat after voting for the pig in the poke option “You don’t get to pick the type of Brexit you want, you get the Brexit you are given”. You may want Norway you are very unlikely to get it. As Brexiteers are fond of saying “Get over it, you won”.
Andy,
By then much damage will be done. This is going to be painful, the only question is are enough leavers going to repent their stupidity ( and it is stupidity) before or after we leave. I fear their own self worth won’t let them change their mind until the pain gets too much and even then they’ll just mutter “We shouldn’t have done it, but only because we didn’t get the type of Brexit I wanted, all the fault of the EU and our politicians that is and them remoaners. If only we’d had (insert their Brexit of choice)”.
frankie – After the propaganda avalanche of misinformation, half-truths and outright lies pumped out by the tax-avoiding media barons and their hirelings, together with the failure of remain leaders to articulate the many and demonstrable benefits of continuing EU member, it is unfair to accuse Leavers of stupidity. Not only that but it simply contributes to reinforcing the divisions.deliberatlely sown to distract people from the real source of the deep injustices in our society.
I watched quite a lot of yesterday’s debate (yes , I know I should get out more). Tom Brake spoke well but why did he seem to be virtually alone on the Lib Dem bench? There were multiple interventions from others – thank goodness for Dominic Grieve constantly picking up loose statements from others and putting them right – but where were the Lib Dem members who are supposed to be leading the anti-brexit campaign? There are many more days of debate to come. Let’s see our MPs taking an active part in the proceedings.
If the Brexit deal (if there is one) is put to a vote in parliament, the Government will lose. This will result in a vote of confidence. If there is no deal, the result will be the same.
If Government loses, the Prime Minister will resign along with the Government.
The Brexit question will then be ‘up in the air’ and whichever government and Prime Minister takes over, they will need both a fresh mandate and guidance from the electorate on how to proceed.
I say ‘guidance’ because no Prime Minister will want a fresh instruction leaving no room for manoeuvre. We’ve been there and it didn’t go well.
This could come by means of a non binding (informative) referendum with four options.
1 The Deal as proposed by the former Government
2 A ‘No deal’ exit.
3 Further negotiations with Brussels
4 No Brexit
No complicated voting is required. A simple cross in the box for your preferred outcome will suffice.
The referendum could take place on the same day as the General Election.
In one visit to the polling booth the electorate would express a view on the way forward for the country, and which party they want to take us there.
There are reasons why this outcome might well be acceptable to all parties and would need to be in each parties election manifesto.
It would give the Prime Minister a genuine mandate, and guidance from the electorate, in order to form a new approach on the biggest issue of our time.
Following up Tony’s comment, there’s a certain irony in the Lib Dems depending on the non-elected house (still containing 92 herediteries – more than the combined total of elected non Tory and Labour MPs) to apply scrutiny to the Brexit issue.
Mr Balfour’s poodle apparently still has the opportunity to snarl. Whether it can bite we will have to ‘Wait and See’.
@stephen johnson. On what grounds do you say the Government would lose a vote on the ‘Deal’? How many of the 15 Conservative ‘rebels’ as outlined in the Torygraph today would actually vote to in effect bring down the Conservative Government when it comes to it? Would it be enough to counterbalance the Labour ‘rebels’ who will vote for the Brexit deal? I seem to recall that on one Brexit vote a few weeks ago, on a Labour motion, exactly one Conservative ‘rebelled’ by abstaining (Ken Clarke) and up to 30 Labour MP’s ‘rebelled’ by abstaining on the Labour Motion or voting with the Cons.
Now I voted for remaining in the EEC in 1975 and I voted Remain in 2016 but I do think there needs to be some realism in what people think can be done at this stage. I note that leading Conservative rebel Anna Soubry said yesterday that the aim was to get the best Brexit deal possible -not to overturn the Referendum vote or bring down the Conservative Government.
Given that exiting with no deal, or being offered a deal that people didn’t want, would be unacceptable, parliament needs to retain the “emergency brake” of remaining in the EU. Writing finality into statute for 29 March 2019 would remove this option and weaken the EU’s bargaining position, as Tory rebels (and Tom Brake) have argued.
I agree with you Andrew -although how ‘what the people want’ is determined is a moot point.
But for Parliament to do what you say requires a majority to vote that way. Will enough Cons rebels do so in order to outweigh pro Brexit Labour MP’s who would vote the other way? Especially if such a vote could, in effect, bring down the Conservative Government?
Frankie just because someone makes a decision in opposition to you does not equal stupidity. I cannot repent when I have committed no sin. I have yet to have found anything to make me regret my decision but I have an open mind.
There is hope in the working together of pro-Remain Parliamentarians, which is clearly happening. Wera Hobhouse spoke in yesterday’s debate as well as Tom Brake, and as others have noted, Dominic Grieve was important in it. (I wish I had heard Ken Clarke, but was only able to listen for a short time, and just missed him.) The ’emergency brake’, as Andrew Toye says, must be retained.
It seems to me though that to ask the Tory rebels eventually to help bring down their government is not feasible, so we should concentrate on extending support for a vote to allow a referendum, which would enable the government to save face by throwing the decision back to the people. I had not thought there could be more than two options in such a referendum, but perhaps Stephen Johnson is right that there could be four.
Sean,
Brexit is a stupid decision, the fact you can’t see it yet doesn’t make it less stupid. We all make stupid decisions, in your case Brexit is one of them. I have and will make stupid decisions but on Brexit I didn’t. I’m a great believer if someone and that includes me makes a stupid decision the kindest thing to do is to point it out, in the hope we will learn from their mistake. Sometimes we do learn, other times we don’t but pretending that what we have decided was anything other than stupid while it may protect our self image only encourages us all to do it again. We tend to work on the assumption that if it hasn’t been rammed down our throats how stupid we have been, it can’t have been all bad or even bad at all and we make the mistake again.
Stephen Johnson’s four options referendum is theoretically a perfect way out of this mess. However, recalling the dubious campaigning for the simple yes/no decision in the last referendum, it is difficult to have much confidence in getting a good outcome with such a complex decision on the ballot paper.
If the polls start to show steady and growing support in the country for cancelling Brexit, Parliament will have no need to go back to the people, and will be able to do what they have always been able to do in the past – vote for what they believe is right for their constituents. Cameron lost the referendum, but that didn’t bring down the government, so why would losing a vote on the deal ? Fear of bringing down the government (and losing their jobs) would clearly make Conservative MPs reluctant to vote with their consciences, so there would have to be an understanding that it wouldn’t become a confidence issue. There is no reason why the House of Commons shouldn’t be able to agree to that.
By your logic by you voting to remain I could condemn you for stupidity but I chose not to. We made our decisions based on our own interpretation of the information before us. Let’s wait and see what happens when Brexit occurs.
Has anybody done the numbers? A four-way referendum can be won with 25,1%. Would that then be the new will of the people?
Sean,
I’ll let the following snippet answer you
Michael Bloomberg, the billionaire media mogul and former mayor of New York, has said Brexit is the “single stupidest thing any country has ever done” apart from the election of Donald Trump as US president.
https://www.theguardian.com/politics/2017/oct/24/michael-bloomberg-brexit-is-stupidest-thing-any-country-has-done-besides-trump
mr Bloomberg thisks it’s stupid as do most experts, I’m willing to go along with them and stick my neck out and say Brexit is a stupid decision. You may disagree but you’ll find precious few experts who will agree with you.
Mike Blomberg is a highly successful man in business. His terms as New York mayor had mixed reviews. He is a man who believes in mega tax breaks for corporations and the super rich. He is quite happy to slash and burn public services when it suits him.
The roof didn’t fall in the day after the referendum despite the best views of all the experts. The view of any expert for either side remains to proved either way. For example Mervyn King spoke of opportunities for growth.
@Paul Holmes ‘On what grounds do you say the Government would lose a vote on the ‘Deal’? ‘
It depends on how good the deal is.
Take the extreme. Say there was no deal. That would be valid grounds for a Confidence vote. At that point all MPs would have to decide if they wanted the Government to continue down that path.
Confronted with a cliff edge, (and things will be very much clearer in, say, 12 months time) I believe MP’s will feel that they should hold hands with electorate if we are all going to jump.
and Patrick Minford said
“Over time, if we left the EU, it seems likely that we would mostly eliminate manufacturing, leaving mainly industries such as design, marketing and hi-tech. But this shouldn’t scare us.”
Well it scares me. By the way he’s as committed to Brexit as you are.
@Arnold Kiel ‘A four-way referendum can be won with 25,1%.’
You have missed my suggestion that the Referendum would not be binding. It would provide advice to the new Prime Minister and Government to enable them to develop a new policy. The advice might be clear cut. It might not. In either case the Government’s policy would need to show how it had taken the vote into account.
and Patrick Minford said…
‘Brexit free trade critics are wrong to dismiss the classical model of UK trade’ [September 2017]:
http://brexitcentral.com/brexit-free-trade-critics-wrong-dismiss-classical-model/
@Andy Daer
Mr Cameron did resign. Mrs May will resign. I believe any new leader of the Conservative party would need their own mandate, especially if they were faced with implementing a ‘no deal’ Brexit.
Even if opinion polls move against Brexit, a new leader would need a very special mandate to stop Brexit. Brexit supporters will not go quietly. Hence a referendum.
My argument for a four choice ‘non binding’ referendum is that the result does not have to be a ‘decision’. If the electorate has indeed changed its mind by this time, it would be apparent from the referendum vote.
The vote would inform the Government, and allow any new Prime Minister to claim referendum support for a new policy on this issue.
A government that has Rory Stewart as a minister not in cabinet and Heidi Allen, Dominic Grieve ad Anna Soubrey as backbenchers, is led by a leader who does not know the talent she does have, in favour of second rate cabinet !
We need to work with these .
Jeff,
Mr. Minford is, as all leavers do, presenting an incomplete, one-sided picture. Firstly, a devaluation only helps with respect to local content, not the previously imported components and ingredients of exports. Because of falling FDI, local content will shrink, and lose its anyhow questionable ability to overcompensate tariffs. Secondly, future regulatory divergence will introduce complexity cost. Thirdly, he ignores the fact that lost purchasing power of local workers will create inflation and thereby erode any devaluation advantage. This will accelerate UK de-industrialization further, and perpetuate the old game: gradual impoverishment through devaluation and inflation. Why should continuous productivity-gains suddenly happen in this downward scenario?
He is also wrong implying that the UK’s service-sector will trive: advertising, high-tech, financial services, etc. depend on recruiting and retaining the best talent. Don’t forget, the UK was a successful, fun, cool, and friendly place to these highly skilled and highly mobile people just three years ago. Not anymore. The startup-scene is moving on.
Remainers present a one sided argument also.
@ Jeff @Arnold,
The odd thing is that we used to understand all this very well. In 1973 the governor of the Danish central bank is reported to have said:
In 1972, for example, the Governor of the Danish Central Bank said:
“I will begin to believe in European economic and monetary union when someone explains how you control nine horses that are all running at different speeds within the same harness.”
No-one has explained but we are now trying the same trick with nineteen horses, or twenty seven if you include the whole of the EU except the UK.
Economists also warned that EMU, ie the move to a single currency, wouldn’t work for obvious economic reasons. There needs to be a single government with the authority to levy taxes in wealthy areas and spend the proceeds in the less wealthy. Otherwise we just create areas of economic stagnation as the euros flow out. The alternative is to have floating currencies so that wealthy areas have a higher valued currency than poorer areas. In this way everything works much better. Trade balances. Currency flows are equalised as they have to be if we include the capital as well as the current accounts.
A simple way of understanding the issue is imagine if Louisiana had to borrow money after hurricane Katrina at high interest rates instead of grants supplied by federal intervention. That’s the current state of the EU. The lesson that you can’t have economic and monetary union without political union has yet to be learned.
@ Sean Hyland, the remain-arguments are not one-sided, just focussed on what matters: people’s economic wellbeing. We have no time for costly sovereignty-nonsense or xenophobia.
@ frankie, you have said it. Concisely and fittingly. And all MPs know it; just a few of them are happy about it.
@Peter Martin, I know that for you a currency union is a better reason to leave this continent (better: planet) than global warming or a nuclear war. It just has nothing to do with our argument here about a country outside a currency-union. Devaluation never solves problems of competitiveness, it just conceals them for a while. In the end, you need to get better or poorer.
Such certainty about the future from both sides, claiming to know as a fact, the outcome of Brexit in advance, is a failing that neither side in the above string appears willing to consider.
It will not be until long after the event, if it happens, that the picture will become clear, and even then it may not be as clear as many hope or expect.
One of the most difficult decisions our MPs took was in our stand against the Iraq War.
We claimed at the time that we knew what was right and how we should vote, but to be honest, we thought long and hard and then hoped we had got it right, but we did not actually know what was going to unfold in the months and years after the decision was made.
Calling the other side stupid, long before the outcome is known, is never wise for two reasons. The first is that the outcome might prove otherwise and secondly , even if it doesn’t, many will have made their decision after serious thought and if they are shown to have got it wrong, they will know it for themselves, without some smart Alex pointing it out.
I remember talking to MPs who had voted for the Iraq war, long after the event, and the death toll of civilians had reached horrific numbers, saying that while they believed at the time they made the right decision, in the end they would be haunted by that decision.
The future was not clear then, but we got it right. The future is not clear now and it is too early to know for certain how things will unfold, but that will not stop many claiming that they know otherwise.
@ Arnold,
The term “devaluation” stems from the days when all currencies were either pegged to another currency like the US dollar or gold. That all ended with the demise of the Bretton Woods agreement in the early 70’s and currencies were allowed to float. It meant that a country’s currency moved up and down to accommodate its economy to prevailing world economic conditions.
The Canadian dollar is now worth less than a US dollar. C$1.00 = US$0.78 A few years ago it was worth more than the US dollar. So would you say that was a “devaluation”? Are the Canadians just “concealing their problems of competitiveness”?
Would the Canadians be better off pegging their dollar to the US dollar? It would make trade so much simpler if they just used US dollars. So why don’t they? Hint: They aren’t as stupid as you might think!
@John Barrett,
I do not agree that stupidity or intelligence are (dis)proven by future outcomes. We must evaluate them at the moment of decision-making in terms of logical processing of information available at that moment in time. I insist that both, the Iraq war and Brexit were stupid decisions at the time. In the case of Iraq, we already have the historical confirmation. If the Brexiters should be proven right (without even providing a quantitatively sound theory for such positive outcome) for the wrong reasons, I shall call them lucky gamblers against all odds, but certainly not intelligent.
@ Peter Martin,
I was not addressing the healthy floatations of exchange-rates, but the faith-healing interpretation of the abrupt Brexit-induced devaluation of Britain by 15%. Viewed from abroad, this amounts to a roughly $ one trillion (1.000.000.000.000) discount the entire UK could be bought for today compared with May 2016.
But who decides what constitute wrong reasons. By being proven right surely that constitutes right reasons? Decisions are made at a moment in time based on a logical evaluation of the information available. That is true in the majority of cases on both sides of the referendum. Hopefully that is what is occurring in parliament at the moment. As John Barrett said we will not know the outcomes of the decision made until brexit occurs.
It is interesting that you believe that remain supporters do not have a one sided argument. An article is referenced supporting leave then that is one sided, an alternative referenced argument for remain is not? Again we have the old standard flung – leavers are stupid and xenophobic. Why can you not acknowledge that we had logical reasons for our decision based on logical evaluation of the information available at the time. Same process but different outcome – this is what happens in a debate.
But who decides what constitute wrong reasons. By being proven right surely that constitutes right reasons?
Perhaps more to the point, what is a ‘right’ and what a ‘wrong’ decision can depend on what you value.
People who concentrate on only the economic arguments end up sounding like Caroline Bingley complaining about the irrationality of dancing at balls. They may be right, but they are certainly missing the point.
“Perhaps more to the point, what is a ‘right’ and what a ‘wrong’ decision can depend on what you value.”
That comment from Dav, is one of those ‘in a nutshell’ revelations, so true, that you’re forced to read it twice to really let it sink in.
So can we conclude that in relative value terms, leavers value sovereignty very highly indeed, whilst remainers value sovereignty much less so.
To be fair to remainers, they reconcile their giving up of UK sovereignty, in exchange for what they perceive as a ‘greater good’ within Europe.
But for leavers there is no worthy ‘exchange rate’, for the giving up of UK sovereignty, and they’re certainly not willing to exchange it for an ill-conceived attempt at pacifying the historic aggressors of Europe by handing them ultimate sovereignty over us all.
@Sheila Gee
One person’s “giving up sovereignty” is another persons “sharing decisions”. And our influence in those decisions has been at least our fair share.
Further, these shared decisions include non-economic ones that matter to me at least more than the economic advantages/disadvantages that dominate most brexit discussions. Cooperation on climate change, conserving biodiversity, safer healthier food, reducing pollution, culture and science are all more important than this imagined “sovereignty”; we can try to continue these things after brexit but they will be more difficult.
One person’s “giving up sovereignty” is another persons “sharing decisions”.
That’s exactly the point. Whether you think it’s good or bad depends on how you see it. People will have different views on whether something is a good or a bad decision not necessarily because they disagree about the facts, but because of the different values they attach to those facts.
And if someone disagrees with you, they might not be stupid, or hoodwinked: they might just have different values than you.
@Dav
Are these the sort of facts that were written on the side of that red bus? I agree that people are entitled to weigh facts differently but what if the facts are not facts.
Think Dav brings the point clearly re values and has been my contention with the easy dismissal of leave voters as stupid/xenophobic etc. The vote for me was based on many things and was happy to concede sovereignty in many areas. Denis I sincerely hope we find ways of continued cooperation with Europe on various issues. Sheila I have long ceased to view nations as historical aggressors. One thing we can agree on is that the EU has been a force for peace in Europe.
Why we all voted the way we did has varied reasons. Would never dismiss the reasons for someone to vote remain and happy to debate on the issues.
I voted remain not because I don’t value sovereignty but because I believe Leavers have a false picture of the world. Brexit will mean less control, less accountability, and more decisions made about this country by people who are not citizens of it. It would be funny if it wasn’t so horrible that a decision driven at least in part by xenophobia is going to leave the country more reliant than ever on the kindness of strangers.
“Sheila I have long ceased to view nations as historical aggressors.”
Reasonable point Sean, but it depends on how you define aggressors, and whether you see a trace of the dominating undercurrent still persisting within the construct of the EU.
If you are the architects of a ‘common’ currency, which massively favours your German economy, but ultimately crushes everything south of Naples, and worse than that, purposely excludes any ‘balancing’ mechanism for money transfers to poorer regions, I’d call that pretty aggressive.
To dominate Europe, a persistent aggressor doesn’t need a gun or tank, if instead, they control the currency and the bank?
@Arnold Kiel,
The Canadian dollar is down by some 35% from its value of just a few years ago. Is that “a “healthy flotation” or an “abrupt .. devaluation”?
Look, if the pound is valued at one euro that will be good for our export industry. If it is valued at 1.50 euros it will make the cost of our imports cheaper. There’s pros and cons to whatever our £ is valued to be by the forex markets. It’s better to just get on with making sure our economy is working to its full potential and live with whatever valuation others choose.
We’re in a much better position that other EU countries which don’t have control over their own currencies and cannot properly regulate their economies.
P.J. 16th Nov ’17 – 5:08pm:
Are these the sort of facts that were written on the side of that red bus? I agree that people are entitled to weigh facts differently but what if the facts are not facts.
If, as the EU claim, we owe several tens of £billions in accrued liabilities on top of what we’ve already sent, then that £350 million would seem to be an underestimate of our weekly cost of membership. The Remain campaign’s £109m a week ‘fact’ certainly was…
‘Britain Stronger in Europe: Get the Facts’:
http://www.strongerin.co.uk/get_the_facts#economy
Andrew Toye 15th Nov ’17 – 1:29pm:
Given that exiting with no deal, or being offered a deal that people didn’t want, would be unacceptable, parliament needs to retain the “emergency brake” of remaining in the EU.
Parliament has already voted, by a majority of 384, to leave without a deal.
‘Since Article 50 was triggered, a no-deal Brexit has been the default’ [November 2017]:
https://blogs.spectator.co.uk/2017/11/since-article-50-was-triggered-a-no-deal-brexit-has-been-the-default/
Will the EU agree to a deal which could obtain parliamentary approval? Christopher Chope MP is of the opinion that ‘no-deal’ will be better than their deal…
‘After meeting Michel Barnier and Guy Verhofstadt, I’ve concluded that ‘no deal’ will be better than their deal’ [November 2017]:
http://brexitcentral.com/meeting-michel-barnier-guy-verhofstadt-ive-concluded-no-deal-will-better-deal/
There can be no guarantees of any sort, Jeff, while we have such a shaky Government. But rather than recognise the hopelessness of some of the negotiations and leave the EU without a deal, we can decide to STAY IN. There aren’t any certainties in the next few months, but there is a job for us to do – keep pointing out to the voters that leaving is demonstrably a bad idea, and keep pointing out to the Government that they can save themselves and the country by agreeing to another referendum before March 2019.
@ Katharine,
If we do change our minds and stay in we’ll probably never have another chance to leave. I can’t imagine any future Govt wanting to repeat the referendum process in our lifetimes. The country will be irrevocably split with many claiming that the democratic process has failed them. This betrayal, as they will no doubt see it to be, could well be used as a justification for a campaign of widespread civil disobedience or even more confrontational methods of direct action.
But we will have a chance to rejoin in the future if Brexit works out to be as bad as many are predicting. If it doesn’t we can stay out. There’s going to be problems whatever we choose to do but this would seem to be the safest option for even those Remainers who aren’t at all happy with the present course of events.
I can’t imagine any future Govt wanting to repeat the referendum process in our lifetimes
They won’t have a choice. At some point there’s got to be a change in the EU treaties, at which time the European Union Act 2011 will require a referendum in the UK, which will be treated by everybody as a de facto ‘in or out’ referendum (Nick Clegg got that bit right, at least).
‘Chance to rejoin in the future’, Peter? Only if the requirement to accept the Euro is set aside, and that, at this time of the EU feeling the need to strengthen itself for the future (Pesco, anyone? see the final comment on my current piece about Making Britain Great Again) seems an entirely unlikely prospect. But your view that reversing Brexit will make the country ‘irrevocably split’, with cries of ‘Betrayal!’ and no doubt you mean also ‘Saboteurs!’ etc. etc. is just unfortunately echoing the strident cries of the most benighted brexiteers and their media feeders. Surely you can see by now that people voted to leave or remain for a variety of complex reasons, or no reason except feeling obliged to vote even when unsure, and there is now much understanding of the other side’s position and much wishing for good ways out of this national trauma.
It all speaks of desperation, making a date in the hope that doing that increases the chances of it happening.
@ Katharine,
I’ve always thought ” that people voted to leave or remain for a variety of complex reasons”. You and I aren’t , perhaps, too far apart in our thinking on the EU. You don’t want, if I understand you correctly, to be a member of the EU if it means the UK having to adopt the euro. I don’t want to be a member of the EU because of the adoption of the common currency by everyone else.
It’s a recipe for disaster. If I thought otherwise I’d be both in favour of membership and of the UK adopting the full rules of the EU. Including adoption of the euro and Schengen.
Hi, Peter, it seems to me that a majority of the British people probably doesn’t want to join the Euro, and I understand (I think!) your economic reasoning on the problems there. (Though you never answered why you think Greece still wants to stay in.) But you are again ignoring the fact that eight other states aren’t accepting the Euro, and maybe they can put it off until there is eventual treaty reform.
I must admit I have been partly persuaded towards Arnold’s viewpoint that the EU IS driving towards greater union by reading about the new defence pact joined by so many of the states, which I mentioned elsewhere. But still they have the great disunity problem also mentioned there, the non-cooperation of Hungary and Poland on dealing with migration, along with their increased authoritarianism. Surely the EU is still liable to reshape itself, in view of its threats internal and external, and if we remain in we will have a powerful voice in reform. The defence pact, for example, if carefully managed need not be incompatible with NATO, but I guess there are many desirable reforms still possible but awaiting above all the negotiations on Brexit.
@Katharine,
I can’t speak for the people of Greece. I’d just refer you to what Yanis Varoufakis has to say on the matter. I’m a big admirer of his writings and intellect. He has all the understanding of the flaws in the euro and the EU itself yet still manages to find arguments as to why both Greece and the UK should continue to be a part of it. So admiration isn’t quite the same thing as agreement!
I thought I had explained about the eight other states? All are effectively in the EZ, if they are sticking to the rules of the SGP in preparation for adoption of the euro. All bar Denmark are doing that, or trying to, and even Denmark is sticking to SGP rules. It’s not a problem for them as they run a large export surplus. But as I keep banging on, not everyone can run an export surplus.
Peter Martin – It is also worth pointing out that I believe Varoufakis suggests that the UK should pursue the Norway option.
My feeling from my travels in a few of the non-euro countries in Eastern Europe over the last few years is that they are almost in the position the UK was in about 15 years ago. They are realising that a big problem with the EU is that what you sign up for and what you end up with are rather different. The deficit is not democratic as such, but constitutional. The euro they signed up to is rather different to what they see now. If nothing else the experience of Greece has shown them that the risks here are rather more than theoretical. Indeed we are yet to see how Germans will react if this does end up as a transfer union, or if the rules on excessive surpluses do get meaningfully enforced.
Norway of course does not solve all of these problems, but it is the first and only realistic step from where we are.
I think EU internally is perhaps now struggling with the historical legacy of putting the cart before the horse on EMU. From the earliest days of the European project the desire for a common currency recognised the need for a degree of political union and the supranational fiscal structures that went with it. Somewhere along the line the political union part was put on a slow track. The stresses to the Eurozone exposed the the lack of agreed mechanisms which are now being put in place. To protect all the eurozone these structures have to work.
The difficulty as has been pointed out by others here is that there seems to be issues with the countries waiting to join. Issues of conformity with EU principles and policies will be the test. Will they able to overcome these? I think it will become a question of political expediency. EU has been willing to adapt when it suits but usually only by minor adjustment and not by major treaty reform. How strongly will they want them inside the tent? They know UK will always be outside on EMU so not an issue for them.
I suppose that we are really only speculating here about how the EU will conduct itself in future, how far change and adapt, how major the changes might be. Are the eight apart from the UK really planning to conform and join the EZ? Are they waiting to see what happens over Brexit? Is everybody waiting for somebody else to act, as David Davis and the EU leaders seem to be doing? Nobody knows, and I certainly don’t – I don’t even know what SPG means. There are roller-coaster times ahead in the next few weeks, I imagine, but still time for hopeful outcomes.
I think you are correct Katharine. Much remains to be experienced and developed. If I remember rightly SGP is the Stability and Growth Pact an agreement to maintain the integrity of EMU.
This is a moment in history in which some phantasy is needed. The idea that a recently enjoyed (better: retrospectively romanticised) status quo is can be brought back and then frozen is an illusion. Brexit, Trump, Kacinsky, Orban, AfD, Catalunya, Front National, Wilders, Putin, etc. are all manifestations of this illusion. The realistic scenario is: the US defence-shield is no longer reliable, neither is the civilized consensus of the liberal, free world. Someone has called this the end of the west, I forgot who. I am not repeating my assessment of Russia’s and China’s trajectories. The middle-east is about to explode again, with Russia, the US, and China actively involved, so far in the background. Turkey is sliding back towards islamic dictatorship, and democratic India looks more like religious and militant Pakistan every day.
This is the moment when a small, old, stretched and tired European country, ironically with superior collective brain-power as its only competitive strength, endeavors to go it alone. Ridiculous.
And some of you argue, this must be done, because the only force still defending freedom, modernity, civilty, decency, and the rule of law on this planet, the EU, is (through consensus and persuasion!) integrating too much. Totally ridiculous.
And, horror upon horror, this EU even has agreed mechanisms for further integration. Rule-based, negotiated, non-violent, criteria-based, flexibly applied. Nonono, this free buccaneering beacon of global freedom in trade with everyone, including those who never wanted free trade, cannot be held back by these shackles of suppression. Absolutely ridiculous.
“The people” have demonstrably failed to see any of this, because they are just looking back (through rose-tinted glasses). This is a moment when politicians with a clear vision and principles (luckily, unlike the electorate, still a majority) must take charge, show leadership, and direct the country back to reason, in the hope that by the next election, enough voters will understand the real situation.
An afterthought: is this the moment to listen to the most failed ex-Chancellor of the most failing and smallest, oldest, most stretched, and tired of the European countries?
@ Arnold,
You seem to be somewhat concerned about Chinese, and other, expansionism. Have you taken a look at what is happening in Greece recently? You question the UK wanting to leave the EU, and have used the word ‘ridiculous’, but this is just madness.
https://www.nytimes.com/2017/08/26/world/europe/greece-china-piraeus-alexis-tsipras.html
@ Katharine,
It’s really the rules of the SGP, the misnamed Stability and Growth Pact, which are the problem rather than the euro itself. The EU, in true Germanic fashion, likes rules. We must obey the rules! And there does have to be some rules in the absence of a EU government. But they aren’t the right rules. So, for example, we have a 3% of GDP rule on the amount of Government debt which is allowed but no rule at all on the permissible amount of private debt.
So when the private sector are busily borrowing like crazy to build houses, like in pre GFC Spain, the economy grows like crazy. But nothing is said because Spain isn’t breaking any rules. Then we have a banking crisis, the borrowing stops, and the economy crashes. The same thing happened in the UK and the USA too, but we don’t have any rules! We’re responsible for our own currencies. Maybe we should – but they have to be the right rules and the amount of permissible private debt could be one of them.
Arnold, that was a magnificent piece of prose writing, so well articulated, so reasonable, and yet so passionate and sad at the same time. It seems that 4.30 in the morning is when the literary gift most fully lights on you! As you can gather, I am so struck by it that I am more inclined to wonder if you have also written books, than to dissect it just now. (And in what I suppose is not your first language, either!)
However, you do deserve consideration of the content… I don’t understand the first line, since phantasy is what is holding us back, surely, not desirable at all; and I query your description of Britain at least in the words ‘oldest’ and (most) ‘tired’. To me, Europe was created by the Romano-Graeco civilisation while your and my peoples were barbarians. But coming back to practicalities, I have to side with Peter Martin’s viewpoint, that the SGP hasn’t been great for the states within it, which is surely the major reason why the dream of a United States of Europe should, rather sadly, remain a dream. But I can still see Europe’s greatness, and want it manifested by a reformed EU.
Thank you Katharine, for your kind words. You seem to have detected some limits to my second-language skills: I should have used the term imagination to describe the required mindset to read our current precarious environment, which still looks stable at the surface.
My last paragraph referred to Greece’s Varoufakis, a unique chancellor, who did not spend a second of his tenure on fixing his country’s problems. Instead, all he ever did was extracting money from the taxpayers of other counties to fund his and Tsipras’ complacency. Which brings me to the SGP:
It is an attempt to instill good governance and responsibility into EU-countries’ finances in a rule-based way that respects each Governments sovereignty. A logical foundation of Europe’s prosperity. The suggested alternatives are dissolving the eurozone or taxpayers of some countries permanently funding the unearned excess-consumption of others. I prefer an imperfect SGP.
I previously contributed my conviction that historic poor governance in the South has nothing to do with the euro:
https://www.libdemvoice.org/is-the-euro-a-good-reason-for-euroscepticism-and-brexit-53952.html
Katharine, I think when Arnold used the word “phantasy” he meant to suggest “vision” or “dream”. The difference between the words is interesting.
It could be argued that if someone has an ambitious, possibly difficult to achieve, idea for what they wish the future to be, they will refer to this as a “vision” or a “dream”. But they will refer to someone else’s very different idea for what the future should be, as “fantasy”. “I have a dream, you have a fantasy”.
People who believe Britain can be a successful, outward looking nation outside the EU, would consider their plan for Britain to be a “vision” or a “dream”. They would probably consider the idea of a successful United States of Europe to be a “fantasy”.
The truth is that both might be difficult to achieve, but both might be possible. They are both “visions” rather than “fantasies”. But I think it’s undeniable that the majority of people in Britain would choose to aim for the successful independent Britain “vision”, rather than the United States of Europe “vision”.
Arnold, I really must take issue with your claim that the EU is “the only force still defending freedom, modernity, civility, decency and the rule of law, on this planet”! I cannot understand how even the most ardent Remainer could claim this.
Many organisations and nations are trying to achieve these things. Some are doing a good deal more for these values than the EU. To give just one obvious example, The United Nations, which has made a significant step towards achieving a world free of nuclear weapons, with its recent nuclear ban – an issue on which the EU has said and done virtually nothing.
Catherine Jane Crosland, you are right about my imperfect choice of words, but please distinguish between my overall scenario, which is hopefully, among some minor autocrats, only Mr. Trump’s or Mr. Putin’s vision, and the question of the right response.
These two gentlemen, together with Xi Jinping, can currently (my point of reference, not history) veto any UN resolution. Do you really believe they are “doing a good deal more for these values than the EU”, or are serious about “a significant step towards achieving a world free of nuclear weapons”? Incidentally, any EU-initiative against nuclear weapons would have just two targets. I am sure all British EU-sceptics would have welcomed that.
@ Arnold Kiel,
You are could be right about historic poor governance in the so-called South. But, that’s a different issue. It’s not the reason for the problems that many countries have faced since taking on the euro. If it were then countries like Finland, wouldn’t have had a any trouble with the euro. Neither would Spain. Spanish Debt to GDP was well with SGP limits prior to 2008. There was even a small budget surplus. So why the slump since?
You really shouldn’t be too bothered about Brexit. The EU has much more pressing problems!
https://www.vox.com/2016/6/29/12052494/brexit-eu-euro-disaster
This has been a real learning experience for me about the Eurozone, thanks to Arnold Kiel and Peter Martin. Arnold, I referred back to your April article, thank you, and re-read it and most of the comments. Peter, thank you for the important extra references you have put in. I hope I am fairly clear about the issues now, beginning by realising Arnold was referring to Greece not Britain in his magnificent lament!
It seems that Greece probably wouldn’t gain by returning to the drachma, but that without some way of credit transfer from Germany to Greece and perhaps also the other poor southern countries their economies cannot flourish, and (for instance) youth unemployment will stay high there. Some changes in the system of the Stability and Growth Pact would seem needed. But as things are, Greece has increasingly accepted Chinese assistance and investment to restore its economy and reduce the effects of austerity – even at some cost of keeping quiet about certain EU values. That does sound threatening to the EU, Arnold, and not to be improved I suppose by ever-closer union built on the present economic arrangements.
Just a few, unorganized points:
Spain built 800,000 unneccessary homes on credit in a year. Fault of the euro?
Massive defaults in the US subprime-mortgage market affected banks invested in such instruments globally, resulted in global risk-repricing, and consequently in a credit crunch affecting all but the best borrowers. Nothing to do with the euro.
The credit transfer (and before the EU structural funds) from Germany and other EU members to Greece were and are massive (>100.000.000.000). Greek politicians squandered the money by buying votes instead of advancing their country. This rescue was neccessitated by the common currency. Otherwise, the normal IMF-program (much more brutal and frugal) would have been applied. This represents a conscious and continuous violation of the SGP, anyhow a red herring, which was never rigorously applied.
Chinese investment in Greece is about geopolitical influence, not the Greek economy or austerity. They could not care less: China still has 700.000.000 people who are worse off than the poorest Greeks (say 1.000.000). There was no European bidder willing to turn a blind eye to the pollution, tax evasion, theft, human- and drug-trafficking, labor-law-, and marine-safety-violations that characterize Piraeus’ daily operations. More strongly shared values (or call it ever closer union) are the only solution to this.
But, of course, a sovereign Greece chooses its investors independently. Is anybody arguing for an EU-veto here?
@ Arnold,
“Spain built 800,000 unneccessary homes on credit in a year. Fault of the euro?”
Yes! Or the fault of whoever wrote the SGP. Whichever way you want to look at it. It has rules about public debt but nothing about levels of private debt. It wasn’t the Spanish Govt that built unnecessary homes. I’m not sure about the 800k figure, but, whatever the number, it was caused by excessive levels of private lending not excessive levels of Govt lending. What might be an appropriate monetary policy for the richer parts of Germany, like Bavaria, turned out to be quite inappropriate for the entire euro region. It wasn’t just Spain. The same thing happened in Ireland and other countries too.
“…… and consequently in a credit crunch affecting all but the best borrowers. Nothing to do with the euro.”
This comment shows a lack of basic economic understanding. A credit crunch, self evidently, means that the level of private sector borrowing suddenly falls. Private borrowing always translates into more spending. There’s no point borrowing money unless you have plans to spend it! So, a credit crunch means less spending. Less spending means less taxation revenue for Govt. Less spending means a lower GDP. The correct course of action is for Govt to spend more/tax less to maintain spending level, and GDP, in the economy and to prevent recession.
However, the rules of the SGP don’t allow this. Govts were compelled to reduce their spending to try to minimise their deficits. ie they had to apply austerity economics. Severe recession wasn’t therefore prevented.
I can’t quite work out your exact thinking about Greece but I get the gist of it. The problem is all the fault of lazy Greeks and their corrupt politicians etc 🙂 It’s really nothing to do with either Alex Tsipras and Yanis Varoufakis. Greece was in a bad way when they were first elected. YV would no doubt have tried to explain the causes of the problem in macroeconomic terms but his message was simply rejected out of hand by the ordoliberals in charge of the EU’s position.
@Arnold,
(cont)
Europeans can’t have it both ways. They can’t insist that countries like Greece and Germany should share the same currency without considering the economic consequences. If you don’t trust Greece, make them use their own currency. It’s as simple as that! If a common currency is the choice, there has to be a system of fiscal transfers in place to counteract the tendency of euros to gravitate to the wealthy areas leaving the poorer areas short of euros and in a state of recession. It’s nothing to do with socialism. This happens in every currency zone. It has to happen in the eurozone too but Germany is dead set against it.
This is a huge problem.
Of course if the EU imposes austerity on Greece and the Chinese come in with some money they are going to take it! What do you expect? So why impose austerity in the first place?
Arnold i think you have to acknowledge that Greece was never in a position to join the Euro. Several governments before Varoufakis and Tsiparas were elected had played fun and games with the official Greek government figures and used accounting tricks to make sure they met the criteria. A proper look at the figures by the EU powers could have discovered it and blocked their membership. To be fair neither France or Germany met the criteria when the currency was introduced and the criteria were adapted to suit. Couldn’t have the architects unable to inhabit their own creation. Having said that Greece was a long way beyond the criteria and heading further away and France and Germany were heading towards the criteria.
I fully accept that Greece was politically unstable and to some extent based on patronage and nepotism. The crisis exposed the failure of its fiscal and financial structures.
As per Spain, Ireland etc that was mostly cheap private money chasing a return in low interest times. The EU structural funds helped with the infrastructure, and Spain’s, ghost airports, but the banks,pension funds, investors needed higher returns and thought there was no risk in the Euro -zone. They also confused the ECB with a national central bank and thought there were bail-out funds, the ECB had an explicit no bail-out rule when established. There are some good books out there on the establishment of the EMU, Euro and ECB.
Sean Hyland,
I fully agree with you. From a euro-perspective, excluding Greece would have been right, but from a European perspective? Imagine this weak country with its funny currency today squeezed between the Balkans and Turkey. I am not surprised the Greek are willing to pay any price for keeping the euro and remaining in the inner circle of the EU.
Peter Martin,
now you really confuse me. So your criticism of the SGP is that it did not limit private lending levels? How should monetary policy between Bavaria and Spain be dfferentiated? As Sean has pointed out, credit-mispricing ocurred when lenders assumed a (contractually prohibited) implicit bail-out. This has been painfuly corrected.
I think we understand and agree on what a credit crunch is and the benefits of (prudent) deficit spending. But there was no buyer for additional Greek or Spanish debt, just the solvent EU-members who, in your view, should not have been in a currency-union with them (in which case they would have had no motivation to buy Greek or Spanish D-rated junk). Are you arguing there would have been a deep Drachma- or Peseta-debt market at sustainable spreads without northern guarantees in 2009?
I remember YV’s “explanations” very well: it is a law of nature that Greeks consume way above their productivity, that the state needs 3 times the public employees per overall capita as Germany, and that pensions must be higher than in any other European country as a percent of average wages. Also, since >100.000.000.000 tax arrears are non-recoverable, let’s not even start building a proper tax administration. Etc. etc.
@ Kathrine,
Thanks for the complimentary comment. You say It seems that Greece probably wouldn’t gain by returning to the drachma. But, in the absence of the necessary fiscal transfers from the wealthier EZ areas, this is what I’m advocating. Of course, it isn’t a sufficient condition for economic success. If the Greek Government badly mismanages its economy it won’t perform at all well. But a cheaper currency than the euro, and the freedom from the austerity inducing rules of the SGP, will give it a chance. In that sense, it is a necessary condition.
Arnold Kiel,
To be fair to the EU, the mainstream economic thinking prior to the GFC was that high levels of private debt didn’t much matter. Just why the mainstreamers thought this way is rather a mystery to me. Steve Keen’s been banging on about this for quite a while:
http://evonomics.com/economists-ignore-one-of-capitalisms-biggest-problems/
The tendency to ignore private debt levels has resulted in problems in many non euro countries too, like the UK, and even non EU countries like Australia and NZ. All have allowed the creation of too much private credit which has created a bubble in the property markets. We have yet to see the full extents of the fall out from this.
So probably this was the reason it was ignored in the GFC rules. Had it not been ignored, it may have been possible to control excessive PS borrowing by ensuring that levels of regulation weren’t too lax in countries like Spain and Ireland and were at least as tight as they were in Germany. That would have helped a lot.
It didn’t really matter whether there were willing buyers of Greek and Spanish debt. The ECB had all the powers needed to buy up as much as it wanted. It’s started to do this recently and so has reduced interest rates that these countries have to pay. It has produced some economic improvement, but it should have happened years earlier. It’s a positive step but, in the longer term, there will still need to be an effective system of fiscal transfers to make the eurozone work properly.
We are talking about hundred of billions of euros. All the German surplus, or some 250 bn euros pa needs to be recycled. That’s not going to be a vote winner in Germany though!
Peter Martin, the lessons of economic history are soon forgotten when the good times seem to be never ending. The ones who cried foul were dismissed as cranks and fools. Nobody likes the worrier in the corner even if they suspect he may be on to something.
The ideals behind a common currency are laudable. The problems for what became the Euro started long before it was introduced. It was subject to political gameplay and comprises. It failed to ensure that the political union and full fiscal/financial structures were in place first. It then focussed on a narrow band of indicators. It looks like its finally making some positive steps. But as Peter Martin points out you got to convince the voters in the surplus countries and that may be a step too far.
I worry what will happen if a Euro country is forced/chooses to return to its own currency. The EU may struggle to stay together.
A return to the Drachma is impossible: it would first require a stealth political decision and thousands of Greek civil servants would have to work secretly on this project for months. Full ECB-alignment would also be required. Then, on one midnight, all IT-systems in the country as well as all Greece-related open transactions and contracts would have to be reset. All banks would have to have stocked enough of the (secretly printed and distributed) new bills and coins. Prior, all police and military would have to be mobilized and sent to the streets. Next day, a 30-50% devaluation of everything Greek would create an economic deep-freeze, a general strike, riots and plundering.
Irrespectively of its merits, this would be quite a remarkable executional and administrative achievement for a largely failed state.
A publicly announced (or leaked) return to the Drachma would, if confirmed after the inevitable snap elections, have pretty much the same results, plus capital flight. Capital controls will not work. All liquidity would immediately flow abroad, into real-estate or imported durables. Euro-debt would have to be converted and marked to market to prevent another foreclosure-wave. Banks’ capital would imediately turn negative.
Massive EU rescue package would have to flow immediately, with other nations’ citizens unprepared for this (“I thought we had gotten rid of the Greek problem by kicking them out”). The ECB could hardly be a buyer of worthless new debt in a currency it does not control.
Looks like the continental equivalent of a no-deal Brexit to me. Just that the Greek have a better sense of self-preservation than the British.
@ Arnold Kiel,
“A return to the Drachma is impossible”
Is it? The euro is not quite the common currency many assume it to be. A single currency only requires one central bank. If the PTB in the eurozone had wanted that, they would have dispensed with the Bundesbank, the Banque de France etc and all euros would have been exactly the same. All would have been the direct IOUs of the ECB.
But instead they done it differently. All accounts in the EU have simply been renormalised to the euro. So, for example, in the UK, if we decided to join the euro, all the numbers in our accounts would be multiplied by 1.12 and we’d have euros instead of pounds. But we still have the BoE and those euros would still be, essentially the IOUs, of the BoE.
A UK euro wouldn’t be quite the same as a German euro. It just seems to be superficially. But look closely at your euro notes and coins and you’ll see they are all country coded. They aren’t quite the same. Euros are all different but pegged tightly together at a 1:1 rate by the overall authority and control of the ECB.
So if the ECB pulled the plug on any National central bank and refused to guarantee parity, the peg would be broken and that particular euro wouldn’t be worth the same as other euros.
Sure, it would be messy with everyone scrambling around looking at their notes and coins etc but it would be doable.
This is not news to the rich in Europe. They know very well that it’s much better to have their accounts in Germany than in Spain or Greece. I’m told its not easily possible for everyone else though. You can’t have an account in Germany and supply a Greek address for example. If the euro was truly a single currency there would be no reason why not.
Peter Martin:
The origin of Euro coins is obvious, but there is nothing obvious about the notes. You can find a number printed on each note. I have one here, its number is 277357914965, do tell us if you can say what the note is and where it is from. If you cannot the claim that the similarity is superficial is wrong.
Plenty of people do have German bank accounts who do not have an address in Germany. This must be obvious, though as it the UK, it may be increasingly restrictive. I am told the restrictions are to prevent money laundering; if so it is placing restrictions on many law abiding citizens in the vain hope that criminals and shady financiers will not be able to get round the system.
Arnold Kiel is so obviously right: the ECB cannot and would not “pull the plug” as you put it (whatever that means). Perhaps a country could start to issue its own exchangeable IOUs, but if the government lacked credibility their value would not be trusted. This is why you can get a better interest yield on Greek bonds than on Dutch bonds and why UK bond yields are likely to rise further.
@ Martin,
The code for banknotes is in the letter. Germany is X. Greece is Y. France is U etc.
http://www.thisismoney.co.uk/money/news/article-1693427/How-to-find-out-where-a-euro-note-is-from.html
I’d suggested to a friend who lives in Spain but near the French border that they should try and keep any substantial amounts of money outside of Spain in case a similar crisis to the one we saw in Greece developed there. But that needed a French address or so I was told.
If that isn’t correct I would be interested to know. EU residents in the peripheral countries should not be held to ransom over their bank accounts whenever their government ends up in a dispute with the central EU. Or Germany!