Nick Clegg has been writing for the Guardian on Theresa May’s approach to Brexit. The article was published before May made her bizarre statement in Downing Street yesterday. Here is what Nick had to say later about that:
Theresa May’s desperate, bizarre statement could have come word for word from Nigel Farage.
The Coalition of Hard Brexit between the Conservatives and UKIP is now complete, and it will be hard-pressed families up and down the country who will suffer most.
In his Guardian article, he looks at the costs we are already paying for Brexit – which, remember, we were told would cost us nothing an in fact give us more money to spend on our NHS:
Voters are already aware that the cost-free Brexit they were promised is unravelling. The £350m a week for the NHS, the VAT cut and the instant solution to immigration have all evaporated. Instead there is the chilling grip of a growing Brexit squeeze on people’s income and public services.
Sterling is about 17% lower against the euro than it was in summer of 2015 (a lesser devaluation, of 14.3%, undid Harold Wilson’s government), which has led to inflation rising from around zero to 2.3% today. With average earnings continuing to stall, the cost of living is rising as we are forced to pay more for imported goods. Prices on supermarket shelves will go up. Energy bills will increase. And the cost of holidays this summer will be higher too, with everything from ice creams to hotel rooms noticeably more expensive.
Brexit will damage public services too. The Office for Budget Responsibility’s growth estimates, coupled with the chancellor’s revelation in November that he will have to borrow about an extra £15bn a year from next year to plug the Brexit gap, amounts to a £59bn Brexit dent in the public finances over five years. That’s money that could have been spent on hospitals, schools and social care. The chancellor will have no choice but to cut elsewhere or raise taxes to provide our public services with the additional funding they desperately need. Whatever his choice, it’s you – the taxpayer – who will foot the government’s Brexit bill.
We voters need to understand the consequences of May’s reckless strategy, he argues:
What is also often overlooked in Westminster is that we will be negotiating with 27 proud, sovereign governments and parliaments – not a colourless team of stateless bureaucrats in Brussels. May might choose to dismiss everyone who stands in her way as “citizens of nowhere”, but she would be making another grave error if she fails to understand that for much of the rest of Europe, the survival of the EU is a visceral, existential question. They are sad that we are leaving – they would have us back if we changed our mind – but faced with May’s needlessly belligerent “hard” Brexit, the rest of the EU will do what we would do in their place: defend their national interests.
And the rest of the EU also knows this: however much May declares that she could live with “no deal”, however much the Brexit commentariat makes the evidence-free claim that severing our links with Margaret Thatcher’s single market will usher in an economic utopia, the cold hard facts of economic reality will soon intrude.
You can read the whole article here.
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38 Comments
“Prices on supermarket shelves will go up.”
Nick, clearly you don’t do the family shopping. Supermarket prices have already gone up as a result of the fall in the exchange rate and continue to do so.
As ever , much of what Nick Clegg says is sensible and supported by me here
The tone needs balance it is way too often and too much that we get all this understanding of the EU leadership but not of the UK government
Both are led by centre right mediocrities
Balance, the essential ingredient Msr Macron, a Liberal , gets !
Let us have some !
“The Coalition of Hard Brexit between the Conservatives and UKIP is now complete,”
(ie – “Attention all you UKIP voters, especially those in the South West, there is no need for you to vote UKIP, you perfectly safe to vote Tory and get what you want.” )
He just doesn’t understand political campaigning. This statement will have a similar damaging effect on our candidates’ fortunes as did his ill thought through BluKip campaign in April 2015. It is exactly the same message and it’s helping put roughly 5,000 votes over to the Tory tally in every seat in the South West.
And by the way, we desperately needed that monetary easing (depreciation). That is why nominal Gross Domestic Product is presently running at 5% pa, instead of roughly 2% pa during 2010 -15 costing the UK economy circa £500 billion pf lost National Income over those years.
Brexit is the main – some would say the only – issue that the Lib Dems are fighting this election on. Why are you using one of the most unpopular politicians in the country to present your case? The polls are telling you there is a problem, but the leadership just aren’t listening.
PS. The pound exchange rate against the euro was much lower for a decent period under the coalition government.
Nick is absolutely correct, the 27 members will act not only in their own National interest, but for the EU values and beliefs. May might try to peel off some members by the way of offering some goodies, but the other 27 know unity is their strength, they understand collectively they hold the cards. May stated yesterday, a no deal would be catastrophic for the living standards of the UK, compare that against what Davis stated only a few weeks back, that a no deal wouldn’t be much of a consequence. The two positions are contradictory, not good for the coming negotiations.
May has taken LEAVE of her senses.
Since when did the continental press affect UK General Elections?
When did they try?
So the continental press supposedly misrepresented something?
How often do the Mail, Sun, Express and Star report politics correctly or fairly and are they more accurate than Le Monde?
When have EU or Continental leaders launched aggressive attacks on Theresa May or even those other three prize idiots? If they did, how would the nationalistic pond life on these shores react to that?
May is playing politically dumb nationalists for the fools they are and they look like buying it. The office of PM has never looked lower and it’s an election day.
This is desperate stuff, as if May, her party or Britain were up against the wall over a bit of supposed, gentle EU gamesmanship or that outstanding contributions we have already agreed, would have paid anyway and will be picked though in detail.
May could have played the statesman and risen above it, but she’s chosen to bring Britain into disrepute and launch herself into the gutter.
The outstanding contributions are not a fine and even if they were they are dwarfed by what Britain will lose from coming out of the Single Market, just on financial services alone, which is £440 billion every year through the loss of passporting, spirited away to Frankfurt, Dublin, Paris and Luxembourg. But the most common comment over that is that they are all boring Cities? Well I beg to differ and in any case, they have to go and they are going and the UK has nothing to replace the lost jobs, GDP, tax revenue and spin off from the multiplier effect in the economy.
The car plants that came here from Japan and Germany, only did since we were inside the Single Market and Customs Union and their business models will not work otherwise. The Japanese Government has been very clear. The same is now due of Ford and Vauxhall who will not commit beyond 2-3 years.
Northern Ireland now joins Scotland as seriously looking for a European future outside of little britain. It is an existential crisis.
It could have been avoided by the Tories running a one nation policy with proper regional and industrial policy, plus more progressive tax and better support of public services, but no. The Tory Party talks one nation, then pushes every bit of wealth it can up the income brackets to Corporations, Banks, the rich dead and those with high incomes, while London gets the lion’s share of everything.
But this is now the beginning of the end of the party. It’s past the point of no return and little england is the future, fractious, brutal to the unfortunate and increasingly irrelevant in the world.
John Littler.
The Conservative party did not get here on its own and it has not substantially changed since the Coalition. That is Nick Clegg’s own existential problem.
Glenn, I believe the coalition was the best option at the time, did help the economy out f recession and greatly moderated Tory policies as well as adding a lot of LibDem ones. What they did not do was list them all achieved by LibDem ministers and the Tory government since ought to inform you of the differences.
The tuition fees issue was partly a Cameron ambush and it worked better than he could have imagined. It is easy to pretend that we would have done it better.
John Littler
sadly true and very well said. I am not only questioning the PM’s senses, but also her style: is it proper for her to report on Parliament’s dissolution on the steps of No. 10 (after seeing the Queen), and use 80% of that occasion for partisan campaigning?
@John Littler
“May could have played the statesman and risen above it, but she’s chosen to bring Britain into disrepute and launch herself into the gutter.”
To some extent I agree with you, but when you consider the other major parties leapt upon the leak around the dinner it is hard to deny they have been used in attempts to effect the outcome of the election.
I actually think Merkel’s remarks (supposedly on hearing an account of the dinner from Junker) were the ones closest to attempting to have an impact. If May started to question the wisdom of Merkel’s open door policy on immigration (something my Bavarian friends tell me is a big issue in their upcoming elections) it would be wrong. Brexit is the big issue here, enough had been said prior to the election being called for the EU position to be known they should have respected our election and been more careful with their statements.
I’m sorry, but the word ‘deluded’ doesn’t sit well with a party that takes a major stance on mental health.
I so find Nick Clegg and the Lib non dems patronising. We are also a proud nation. It’s apparently ok for the EU27 to be but not for us. I can’t believe anyone wants to be in a ‘club’ with bully boys running it. It’s about time you and others like you Mr Clegg get behind Theresa May and keep the country together while we get through this ‘divorce’. Mr Cameron and others like him were arrogant enough to think that people would vote to stay in the EU. He said he would stay as Prime Minister whatever the outcome was only to give up at the first hurdle. Theresa May is doing a damn good job. Why don’t you get it in your head that the British people voted out – do you honestly think there would have been all this discussion if the vote had gone the other way. If you, Tony Blair, Paddy Ashdown and Tim Farron have your way, you would keep having a referendum until you got the results you want.
I’m sorry, I genuinely don’t get it. How can anyone argue that a soft Brexit is possible? The EU simply won’t give us one. They have said so time and again. They need us to suffer to discourage others from leaving.
Let’s actually think about the events of the last week. At the Brexit dinner they openly stated, again, that we must suffer. Juncker did a completely absurd piece of pre-planned theatre involving packing in his luggage beforehand and then taking to dinner two thick reports to plonk on the table. The day after the dinner and Juncker’s phone call with Merkel, the exit bill went up arbitrarily from 60bn to 100bn. They say that is non-negotiable. They want EU citizens living here to be subject to decisions of another legal system, the ECJ, something that no sovereign state on the planet would accept. They are bullies, pure and simple. They openly want a win-lose negotiation. We are supplicants presented with ultimatums, as the Greeks were. There are no liberal values on display. No tolerance or democracy or attempts at a win-win solution. Just a self serving elite desperate to cling on to power, with Germany calling all the shots. Anyone with the slightest doubt of this, or who dismisses me as a secret Kipper trolling this blog, should read the Varoufakis pieces in the Guardian (to tie in with his new book).
Today I voted LibDem, as I have done most of my life. But in June I will lend my vote to May. I hope she fights back using every power at her disposal, including stopping payments for the next two years, withdrawing security and military cooperation, and more. I do not want the hardest of hard Brexits that the EU is planning for us. I know many other Remainers like me whose views have changed in the last week. Prepare to do well in the local elections, then badly in June.
David, the word ‘deluded’ does have a common-sense usage, so I don’t think it is offensive here. Actually when I heard about the May’s astonishing attack on Brussels, the adjectives that sprang to my mind were ‘hysterical’ (which does have a heritage in psycho-analysis, so I wouldn’t use it in a headline) and ‘manipulative’ – which left me wondering which of those was nearer the truth. And this making public pronouncements from a booth outside No.10 is usually saved for extremely important and significant announcements, so that I also wondered if there were a touch of megalomania developing, again a word to use sparingly! But I do feel that this is ‘over the top’, and wonder if she is now not noticeably a strong leader, but a devoted follower of her spin doctor, the two of them buoyed up by the slavish devotion of the right-wing tabloids.
When will people realise they’ve been sold a Brexit dud? When will the penny drop? What does it take?
You remainers never stop do you. It’s you guys that ought to wake up to smell the roses. If we don’t get out now we will never be able to leave. The EU’s true colours are really starting to show and I for one find them scary and intimidating, hardly good neighbours.
Yvette, why should we stop? Opposition is part of a healthy democracy.
And this is a nasty and painful divorce, entirely of Britain’s making, with both sides looking out for their own interests, and May and co ramping up the tough talk for their own domestic political gain.
What did you expect? The other 27 to roll over and say ‘take half the house and all the silver, and would you like the TV as well, perhaps you’d like it gift-wrapped?’
Yvette
I wonder if a may ask a question. I am not dismissing your opinion, far from it.
However, I am curious.
Are you able to explain to me how the UK will be able to provide both a strong economy and good public services on a par with (or better than we have now) outside of Europe?
What I do expect us for the British people to get behind the Prime Minister. We had our referendum, we are now getting what the majority voted for. You might call it democracy but I call it undermining what people want. I feel that the EU are behaving extremely harshly. Did they honestly expect nobody would ever leave like an eternal prison sentence!
What I do expect is for the British people to get behind the Prime Minister. We had our referendum, we are now getting what the majority voted for. You might call it democracy but I call it undermining what people want. I feel that the EU are behaving extremely harshly. Did they honestly expect nobody would ever leave like an eternal prison sentence?
The 17% drop in the value of the pound (devaluation) can only mean that demand for pounds has fallen. That suggests either that inward investment has dropped off, or orders for our exports are dropping, or a mixture.
And all the imported things Nick mentioned will get more expensive, so we will either need to work harder to get the same purchasing power, or accept lowered real wages.
None of which seems to be a good thing.
Richard – good to hear from you again.
Economists will tell you, ‘Never reason from a price change’. By which they mean that a change in price will or can have a demand or/and a supply cause.
The Bank of England were active in the markets ‘managing’ this depreciation.
Yvette: You are arguing essentially that the UK is at war with Europe so normal democratic process should be suspended. So everyone should “get behind” Theresa May. Opposition is “undermining what people want”. This is the Putin/Erdogan/Trump view of democracy.
@Bill Le Breton – Many thanks. I see no evidence that the Bank of England were deliberately over-supplying pounds. But it’s always interesting to read of newly invented sayings! 😀
@Yvette “What I do expect us for the British people to get behind the Prime Minister. “
What has she done to deserve our backing? and what is it exactly we are backing her to do? For your information, “Leave the EU”, “regain sovereignty” etc. are not valid answers.
Were you behind the Prime Minister at the time of the Referendum and given he was elected on a pro-EU manifesto, as by your logic, you would have voted Remain?
You might call it democracy but I call it undermining what people want.
You’ve obviously forgotten Nigel Farage, who regarded any result which didn’t have over 60% of the electorate voting for Remain as being “unfinished business”.
The idea of a strong Leader whom everyone has to “get behind” is fascism, pure and simple.
A sobering thought.
100 billion (Brexit Bill) divided by 18.9 million (families in UK 2016) = £5,291.00 per family. Wonder if that will be in the Tory manifesto.
Yvette, you appear to be on a trolling excursion here. You won’t be influencing LibDem members, supporters and activists here.
May’s anti EU outburst will not help negotiations and will make crashing out onto WTO terms at the mercy of Argentina and Spain, far more likely. Jobs, business and investment will suffer and much is already being planned to leave the UK.
Wait and see.
Yvette, leaving the Single Market will necessarily lose rights on Financial Services passporting, which at £440 billion a year, would cost the UK far more than EU subs or the exit bill. This will be catastrophic to the UK economy and tax take.
“The chancellor will have no choice but to cut elsewhere or raise taxes to provide our public services with the additional funding they desperately need. Whatever his choice, it’s you – the taxpayer – who will foot the government’s Brexit bill.”
This is household economic thinking at its worst! Thatcherism pure and simple.
What has the party of Keynes become in recent years? Has the leader of the Lib Dems still not realised that the decision to raise VAT to 20% in the middle of a recession was just about as stupid as it gets? The Lib Dems should have walked out of the coalition there and then.
Vince Cable has been warning of another recession coming along shortly. It’s nothing to do with Brexit though. But, even if it were, and regardless of the causes, the imposition of more tax rises would make it much worse.
@ Richard Dean,
You’re quite right to say that the pound has fallen because of a reduced demand. I’m not sure about that figure of 17% though. I suspect there may be some cherry picking of highs and lows involved to come up with that figure.
The pound has risen and fallen due to the workings of the market since the early 70’s. The Labour Government panicked when it first feel below $2 in the mid 70’s and needlessly called in the IMF. Mrs Thatcher’s government let it fall to almost parity with the $ just a few years later but hardly anyone remembers that. Her government blundered in the early 90’s when they tried to peg it to the DM. That was a big mistake and which brought about Black Wednesday and achieved nothing at all. The currency speculators just ended up a lot richer than they were before.
So the best advice for any government is to just let the pound float. If our overseas trading partners want to save in pounds then it will rise. If they don’t it will fall. The government just needs to look at how the UK economy is going. They need to steer a sensible middle course between having too much recession and too much inflation.
The pound will take care of itself.
@ John Littler,
“…. leaving the Single Market will necessarily lose rights on Financial Services passporting, which at £440 billion a year, would cost the UK far more than EU subs or the exit bill. This will be catastrophic to the UK economy and tax take.”
There is an argument for saying that the UK economy has become far too dependent of the financial services sector in recent years. The sector is of course necessary to finance the workings of the more directly productive manufacturing sector but there are big disadvantages if it is allowed to become a law unto itself.
In recent times London and the SE of England has prospered enormously from financial services. This has pushed up the pound and made the manufacturing that used to support the regional areas uncompetitive and in decline. So it’s quite likely that Yvette is from an area that is in decline whereas you’re more likely from an area that’s done well and you both see the economy in different ways. That was the pattern of voting in the referendum.
Yvette then would say that there has already been a catastrophe. Millions of well paid manufacturing jobs have been lost and have been replaced, if they have been replaced at all, by lower paid highly insecure jobs.
Yvette might then argue its your turn to feel a bit of pain for a change!
The phrase “re balancing the economy” is often bandied about but nothing much has ever happened. But if the financial services sector declines, which I would argue it should, we’ll have to re-balance it in favour of manufacturing. We’ll have no other option.
There is an argument for saying that the UK economy has become far too dependent of the financial services sector in recent years.
I think the argument is more that the government, since circa 1997, became overly dependent upon the financial services sector for the seemingly ever increasing tax revenues and its ability to finance PFI/PPP.
Putting this detail to one side, I think Peter, your comment is highly relevant in starting to take the Brexit debate on to the next stage, namely: if we really are going to leave the EU and have a smaller economy, significantly lower immigration etc. then rather than simply “re-balancing the economy” shouldn’t we be talking about transforming the economy and our society and thus realise the benefits to be gained from ‘downsizing’.
Richard Dean, are you still out there? Perhaps you cd read this from the Telegraph ,
“The pound tumbled and UK gilt yields dropped to fresh lows after the Bank surprised markets by restarting its money printing programme to buy government and corporate debt alongside the first interest rate cut in seven years.”
http://www.telegraph.co.uk/business/2016/08/04/super-thursday-markets-brace-for-bank-of-england-interest-rate-c/ with a film of the Governors remarks.
Oh and try googling ‘never reason from a price change’ – every economist knows a price change can be cause either or both by a change in supply and a change in demand.
@Roland,
The phrase “re-balancing the economy” is generally taken to mean that we move away from what some economists call the FIRE economy. Finance, Insurance and Real Estate. It’s been far too easy for those with money to make even more money by speculation and playing the system rather than investing that money in something productive. I would be in favour of that.
We can do well both inside and outside of the EU if we understand how our economy works. The example of the PFI/PPP you mention shows that we don’t. Particularly, a so-called PFI makes no sense whatsover. A PFI involves an infrastructure project (eg a hospital, road or school) being funded by private sector equity and then being paid for by the public sector ‘customer’ over the life of the project. Why? What’s the point?
The Govt can borrow money much cheaper than anyone else. The effective rate on long term gilts is less than 2%. Less than the current inflation rate. In other words it’s just about cost free. Why involve a private lender when it comes to financing a hospital? The hospital is never going to get such as good deal from a private lender. They’ll naturally want a higher rate of interest by lending to the hospital than lending to the government. But why should the taxpayer just give it to them? It’s little short of legalised corruption. Those with money to spare can either choose to buy virtually risk free gilts or, if they want a higher return, they can invest their money in making something and selling it at a profit.
This rebalancing of the economy sounds good (who wouldn’t like balance), but is much more easily said than done. Where are the examples of success?
It would seem sensible to first work on your weaknesses, not start by destroying your strengths, as Brexit does.
The devaluation of GBP is a vote of no confidence in the UK’s economic prospects, not an advantage. Let’s take the car-example: A Nissan assembled in the UK consists of a non-UK blueprint, many imported components, some British labor, logistics cost (mostly international) and energy ($-priced). The limited local content (factory workers) will be quickly inflated, because these people need imported goods to live. Even if a Nissan landed in Calais had a notably lower eur-cost (which it doesn’t), Nissan would not immediately lower its continental list prices, because the positioning of cars in the various competitive environments is a long-term strategic game. Therefore, prices cannot fluctuate with volatile FX-rates. Besides, continental competitors would immediately respond to tactical discounting. Nissan’s limited and transitory additional profit can be realized and reported anywhere in its global network and would not necessarily boost UK-activity.
It is a good thing that your Government’s socalled “industrial strategy” is rather opaque. Whatever it is, it will fail.
@ Arnold Kiel,
You really need to look historically at how Germany has nearly always managed to run a trade surplus. In the days before the euro, the DM was controlled by the Bundesbank. Effectively it was an IOU of the supposedly independent Bundesbank, or to the outside world, an IOU of the German government.
German exporters sold their goods and were paid in foreign currencies. Like dollars and pounds. But they needed DMs to pay their own workers and suppliers so they presented the dollars etc to the bank and swapped them for DMs. If Germany had balanced its trade there would have been a natural balance in currency trade too. But as it was, there was always a surplus of dollars and pounds, and a shortage of DM.
But that was no problem. The “independent” Bundesbank simply created as many DM as were required. This kept the DM down in the forex markets. They used the surplus of dollars and pounds to buy up Treasury bonds from the UK and US governments and keep these currencies high. The proceeds were then deficit spent into US and UK economies so that American and UK customers could continue to be good customers.
So the upshot of all this, is that for years Germany has been happily swapping a greater value of goods and services for a lower value. That’s what a surplus means. It still does the same but uses the cheapness of the euro relative to the strength of its own economy to achieve that.
This isn’t really great for the the German people. Instead of having the benefit of using the things they make themselves, they are shipping too much of it overseas. It isn’t good for the US and UK either. It creates debts and deficits. It wouldn’t be so bad if people didn’t worry about them but they do. Politicians think they can reduce them by cutting spending and raising taxes but that doesn’t work. It just sends economies into recession.
The only thing that will work is to take a leaf out of the German book and manipulate our currency downwards too. It’s not something we’ll hear any politician say. There are no votes in it. But either the UK has to balance its trade somehow or continue to accumulate debt.