The British cabinet is preparing to retire to Chequers for a country weekend of Pimms, strawberries and footie and tennis on the telly. There may even be some croquet on the prime ministerial lawn and perhaps late night bridge in the drawing room.
Miss Marple and/or Hercule Poirot, however, should be on hand for a rapid intervention. The likelihood of blood on the vintage Axminster is high.
The stated purpose of the meeting is to finally reach an agreement on the British negotiating position for Brexit negotiations. Will they agree? Unlikely. The Brexiteers red lines are finally hitting the brick wall of reality. A growing coalition of business, trade unions and a hard-nosed Treasury are blocking Boris and Co at every turning.
However, they can’t back down. That would be political suicide. On the other hand, the Brexiteers can’t play their trump card and resign in protest. That would collapse the government and result in an election win for a left-wing Labour administration.
Prime Minister Theresa May is said to have devised a compromise solution which Downing Street sources say is “the best of both worlds.” Both Brexiteers and EU negotiators have dismissed it as the “worst of all worlds,”
So the likely result of the coming make or break weekend is a fudge falsely portrayed as a breakthrough. In short, more shambles with the likely final result of a no deal Brexit with all the nightmarish consequences that entails.
Of course, this exponentially increases the chances of a second referendum. The problem is that the Remainers are almost every bit as clueless about Britain’s national direction as the Brexiteers. Other than saying they want a second referendum on Brexit with the implied aim of a reversal of the 2016 vote, they have offered no clear alternative set of policies.
For a start, what would be the words on the ballot paper? Would it be another binary choice—stay out or go back in? Would it offer eternal negotiations with a return to status quo ante until they are never concluded?
Will the second referendum ballot paper be in or out or will it accept the result of the first referendum and offer merely soft or hard Brexit? If it offers soft Brexit will the Remainers make it clear that the UK would be subject to EU rules, laws, regulations and tariffs with only a limited—if that—say on their content?
Immigration and the EU’s rules on free movement of labour was a big issue in the first referendum. Most Remainers are multiculturalists. Unfortunately for them, a large proportion of the population feel threatened by the multiculturalism they embrace. The immigration issue has been inextricably linked to Brexit and exacerbated national divisions. How do the Remainers propose to deal with the perceived threat of free movement?
And finally—and perhaps most important of all— if the Remainers win a second referendum, how do they propose to answer the Brexiteers inevitable charge that they were cheated by an elitist conspiracy of big business, clever clog intellectuals, immigrants and international liberalism? How do they prevent an angry backlash from Brexiteers?
The current state of Brexit negotiations is a shambles because the Brexit advocates failed to look beyond the referendum campaign and result. They failed to recognise the Newtonian reality that every action has a reaction. They failed to address the complexities, the emotions or the realities of leaving EU. There was no plan and they have been justifiably castigated for their failure.
If the Remainers do not want to suffer the same fate then they need to prepare a detailed post-second referendum alternative. Presenting such a proposal would increase the chances of a second referendum being held as well as mitigating the consequences of a vote against the Brexiteers. The political formula cannot be a simple return to status quo ante. The referendum and the subsequent two years have moved the goal posts. A cunning plan is needed.
* Tom Arms is foreign editor of Liberal Democrat Voice. He also contributes to “The New World” magazine and lectures on world affairs. He is the author of “America Made in Britain,” two editions of “The Encyclopaedia of the Cold War” and “The Falklands Crisis.”
Follow @libdemvoice.org on Bluesky
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
The shame of Liverpool Labour councillors taking their allowances but not turning up to do the work
Should Labour reconsider the Brexit red lines?
Arriving at one of East Finchley's ghost platforms
Restrained
Chase Park fair photos
cim
FS People
Peter Martin
expats
18 Comments
If Brexit is stopped, as it obviously would be if prejudice gave way to factual analysis, the backlash from Brexiters would be a problem, but the alternative is Brexit! That would leave remainers annoyed and leavers furious (when they realised they’d been sold a pup). The protest element of the vote would still need to be addressed, and that might be the one good thing to come out of the referendum, but most of that protest had nothing to do with the EU.
Regarding immigration, those who fear that we are being ‘overwhelmed’ need to be reminded that the free movement of labour has led to ebbing and flowing of people following available work. The tide (within Europe) has reversed since job prospects have improved in other EU countries, and there was never the likelihood that we would be “swamped” by hordes of indigent invaders – that was a myth promulgated by the likes of Farage, who wanted to manipulate public opinion for their own ends. If a new remain campaign couldn’t overcome that puerile message we really ought to give up (I don’t intend to).
I worry about another (third) referendum. We may end up where we are now.
We vote for our MPs to represent us. It is time for those MPs to vote with their conscience. If they GENUINELY believe that constituents will be better out of the EU then vote to leave. If they don’t believe that then they must vote to remain.
This isn’t about party politics – it’s about the next 30-40 years – well after most of them will be dead and gone.
However, I think that the EU needs to listen to the real concerns of peoplevall over Europe, not just the UK. The EU needs reform. IF we stay it must be clear that reform must happen. Germany, Austria, Italy and France are seeing popular unrest about the EU. Now is the opportunity to push against an open door – the problem is that Theresa May hasn’t the courage to do that. Once again the Tories are puttng Party before Country. The problem is that it will be everbody else’s grandchildren who will pay the price.
The reality of the so called negotiations are not about what is best for britain but all about what position can be cobbled togethet to satisfy the warring factions in the Tory party. So it is almost certainly a position which will be rejected by EU. Philip talks about MPs voting with their conscience, I am not certain that they have the strength of character to do that. The fear of a Labour government, I dont think exists. It is more likely that Corben will get a backlash from voters over his tacit support for Brexit.
Europe itself seems to be understanding that changes are needed and our party could set out some of the adjustments which would be needed for our continued membership. Today is a pivotal moment to see if the Tory party has any interset in our country or that they will seek anything to keep the party together although in my judgement the Conservatives are so split that they do not constitute a political grouping anymore
It is actually very simple to understand the governments actions over BREXIT. They are working under the rules of the game ‘Mornington Crescent’ and hoping nobody notices. It appears they have adopted the variant called the ‘Nidd Rules’ (*) though…
(Apologies to all peoples worldwide who have never heard of the BBC radio satirical programme ‘Im Sorry I haven’t a clue’)
The version I have played involves avoiding naming ‘Mornington Crescent’ and forcing a competitor to do so. Putting the competitor into Zugswang to use the chess term. I suspect the cabinet is using this version of the MC rules, a variant in effect of ‘pass the parcel’ played with a bomb. You can see why they rush for safety under the Nidd Rules variant..
(*) guaranteeing deadlock.
https://en.wikipedia.org/wiki/Mornington_Crescent_(game)
The EU wants tighter integration of the Euro countries, others (if they do not want to join the Euro) should move back to the original trading partnership – that would give us a chance to get a reformed relationship and some restraints on free movement as well as paying less in over time (overall, the Euro zone countries have a much better debt/defecit position than poor old Blighty).
” They failed to recognise the Newtonian reality that every action has a reaction. They failed to address the complexities, the emotions or the realities of leaving EU”
The Newtonian reality is that if we are sitting in a chair the upwards force from the chair, on our backsides, is equal and opposite to our weight. This doesn’t, of course, mean that we are stuck to the chair and can never leave. The good professor is no longer with us, but I think he’d also agree that we can both leave our chairs and the EU. That is, if we want to and we push hard enough.
Before EUREf16 we often heard the argument from Remainers that the EU didn’t sap our sovereignty. We gained from pooling it etc etc. We still made our own laws and were still an independent country and could, of course, leave any time we wanted too. I didn’t buy that. The truth is now only coming out that we were much more entwined with the EU than anyone on either side cared to admit.
Remainers didn’t want to admit it because it shreds their ‘we are still a sovereign country’ argument. Leavers still don’t want to admit it because it makes Leaving harder than anyone previously supposed.
@ William Fowler,
“the Euro zone countries have a much better debt/deficit position than poor old Blighty.”
Do they? John Redwood, who I believe has good credentials as a merchant banker, says we shouldn’t count the £400 billion of Govt bonds held by the BoE, and bought as part of the recent QE program, as debt because the BoE owns it. The BoE are effectively owned by the Treasury. So, on the face of it, it does look like he might have a point.
So that gets the National Debt down to about 60% of GDP from 90% of GDP. Euro using countries can’t do that!
And if the QE program had been big enough then the National Debt would have been eliminated altogether. Yippee!
PS There is a flaw in John Redwood’s argument BTW. Can you spot what it is?
Go on Peter do tell what is the flaw in Redwoods analysis. I’ve often mentioned our actual debt is much lower than the Tories trumpet, how nice a Tory agrees. Redwood also advised his clients not to invest in the UK ( funny you failed to mention that). As to your analogue of sitting in a chair you forgot to mention it was parched on a cliff edge and by getting off it we would plummet ( gravity and facts get us everytime). As to Euro countries not being able to use the QE trick, why what does the European Central bank buy, it certainly seems to own a lot of bonds and who owns the European Central bank?
As the negotiations are clearly deadlocked with the EU refusing to accept all proposals that the UK Government offers, there are only two options for a second referendum question:
1) Remain in the EU on our existing terms (that is without the amendments agreed between Cameron and the EU), or
2) Leave the EU on WTO terms.
Option 1) implies that either the EU27 will accept a reversal of the Article 50 notification or the ECJ rules that we can withdraw it unilaterally. If neither is the case then a second referendum is pointless.
In some ways, I would rather see a General Election than a second referendum since a GE would force Corbyn to define his policy over our relations with the EU. At the moment all he has to do is to keep saying that the Tory Brexit is bad.
@ Frankie,
You ask:
“….who owns the European Central bank?”
According to the Target 2 balance sheet there’s only a couple of countries that have a net positive stake in the ECB. I’m sure you can guess who the are!
The flaw in JR’s argument is a little harder. I’ll let you think about that a little longer yet. But I’m sure you see what I’m getting at. If it’s so easy to reduce National Debt by getting the central bank to buy up ££ billions of bonds, why worry about so-called debt in the first place?
Of course, this exponentially increases the chances of a second referendum.
Disagree with this line of reasoning, what is increasingly likely is the infighting, currently being contained within the Cabinet and the Conservative party finally coming out into the open.
This potentially has the benefit of exposing all the differing views on Brexit within the Cabinet…
T.May not see Christmas as the PM resulting in frantic activity as the provisions of the Fixed Term Parliament Act come to the fore – can J.Corbyn really support the government, form a stable coalition, or will his MP’s demand an election?
So it is looking like we’re heading for not just a hard-Brexit but a messy hard-Brexit…
The flaw in the argument is Zimbabwe. They tried printing money and it failed. Money is only worth what people think it is worth (even gold). if you a stranded on a desert island and are dying of thirst, water is much more valuable to you than any amount of gold. But Peter at the moment people think the Euro, Yen, Sterling and the Dollar have value, so yes you can use QE. What you can’t do is use QE if people don’t believe in the intrinsic value of the currency. It’s a confidence “thing” but the BofE effectively used the QE trick to reduce our national indebtedness by 20% (ain’t they clever).
Peter the Central banks are owned by the politicians. In Europe the ones with the biggest clout have the biggest say, but while they may throw Greece to the dogs they don’t seem to be so quick to throw Italy overboard.
The Bank of Italy, on behalf of the ECB, has bought up more than €350 billion of multiyear Treasury bonds (BTPs) in recent years. The scale of its holdings overtook those of Italian banks, which have been shedding BTPs since mid-2016, making the central bank the second-largest holder of Italian bonds after insurance companies, pension funds and other financials.
https://wolfstreet.com/2018/03/15/italy-doom-loop-still-threatens-eurozone-financial-stability/
The EZ banking union takes financial supervision of big banks out of national hands and gives the responsibility instead to the ECB. It also led to the establishment of a euro area agency to handle failing banks, backed by a common fund.
No agreement has yet been reached on the creation of a common scheme to guarantee bank deposits, or moves to give greater financial firepower to euro area authorities tasked with winding up failing banks. Some governments, the ECB and the commission view the bank deposit proposal as one of the pillars of the banking union.
Northern Eurozone states like Germany and the Netherlands argue that the priority should be enacting more “risk reduction” measures to clean up the banking sector, against those in the south that want to push ahead with pooling more responsibility for tackling financial crises.
Another issue yet to be resolved is what to do about Eurozone banks’ often sizeable holdings of their own governments’ debt. Germany and a number of other governments have argued that regulations are needed to push banks to diversity their investments, and to force them to make provision for the risk that they will lose money if a sovereign defaults.
But Italy and other nations in the south warn that new rules could drive up costs for banks by forcing them to raise fresh capital. There is also concern among governments that the plans could weaken demand for their own debt, making it more expensive for them to borrow on the markets.
While it is agreed that the banking union should be a euro area priority, Macron has been pushing a plan for a stabilisation fund to support countries hit by economic shocks.
It’s a complex game of musical chairs with the central Chair at the ECB about to be taken up by a German ordoliberal banker, as the Italian banker Mario Draghi steps down.
Peter Martin,
this FT article discusses the impact of the QE program on the redistribution of wealth:
https://www.ft.com/content/031b49ec-c415-11e4-9019-00144feab7de concluding:
“In the long run, however, classical economics would tell us that the pricing distortions created by the current global regimes of QE will lead to a suboptimal allocation of capital and investment, which will result in lower output and lower standards of living over time. In fact, although US equity prices are setting record highs, real median household incomes are 9 per cent lower than 1999 highs. The report from Bank of America Merrill Lynch plainly supports the conclusion that QE and the associated currency depreciation is not leading to higher global output.
The cost of QE is greater than the income lost to savers and investors. The long-term consequence of the new monetary orthodoxy is likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.”
It echoes the comments of John Maynard Keynes on the effects of inflation on savers and pensioners in a way that worsens wealth inequality “governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens,” and, “while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth”.
@ Frankie @ Joe B,
“They tried printing money and it failed.
All money is either printed or created in a computer these days. This is simply a statement of fact which applies equally to both successful and unsuccessful currencies.
“Money is only worth what people think it is worth”
If I’m the King and I threaten to put you in jail unless you pay my taxes, which I decree have to be paid in the money that I myself have created then you, and everyone else will, likely think its worth something! That means everyone is likely to do what I ‘ask’ them to do when I pay them in my created currency. It shocks LibDems to think that’s how our currencies work but the prospect of personal sanctions is literally ‘as good as gold’ in giving dollars and pounds a value.
“QE will lower living standards long term”
Unfortunately this is all I can see of the FT article which is behind a paywall. But there’s no reason why it should.
We consider government IOUs which don’t pay any interest ie Pounds, euros and dollars to be ‘money’. We consider government IOUs which do pay some interest, even though it may be a tiny amount, or even a negative amount, to be debt. This is the flaw in JR’s argument incidentally. All issued IOUs of government should be treated in the same way. They are all debt. So just swapping one form of IOU which doesn’t pay any interest for another type which does isn’t doing anything very much except lowering longer term interest rates. That’s why they are now so low after the GFC and various rounds of QE. They have been deliberately engineered to be low by Govt. Has lower interest rates reduced living standards? For some – yes. For others – no.
If Government wanted longer term rates to rise it would instruct the BoE to sell the gilts it owned which would reduce the price of bonds in the market. Lower prices mean higher yields and effectively higher interest rates. Would that be a good thing and raise living standards? Again some would benefit and others would lose.
But the important thing to note is that Govt (and I’m including the BoE) can have whatever level of interest rates they choose to have. They are simply set by the MPC of the BoE in the short term and manipulated by bond sales and central bank purchases (QE) in the longer term.
This only applies to currency issuing Govts. It doesn’t apply to euro using govts. If Italy toes the line on fiscal policy the ECB will buy up its bonds and keep Italian interest rates low. If it doesn’t then the ECB won’t! So the EU has both a big stick and a big carrot to keep countries in line. If Italy pushes the EU too far it will face the choice of very high interest rates or leaving the eurozone and setting up its own currency.
“Do they? John Redwood, who I believe has good credentials as a merchant banker, says we shouldn’t count the £400 billion of Govt bonds held by the BoE, and bought as part of the recent QE program, as debt because the BoE owns it. The BoE are effectively owned by the Treasury. So, on the face of it, it does look like he might have a point.”
Yes, I always thought that once the UK was running a balanced budget, the powers that be would write off the QE covered debt. Printing excess money does lead to currency ruination, hyper inflation and thus the disappearance of the debt. The idea that you can have a left-wing version of Gordon Brown going on a spending spree to solve the country’s problems is as hilarious as it is alluring to the estranged in our populace.
Incidentally, John Redwood was originally leaping up and down about QE and ultra low interest rates, insisting there was a more prudent alternative but was drowned out by his fellow politicians.