Why the Conservative Party can no longer be considered the natural party of business

Our market economy is certainly far from fair but as a result of a series of poor Government decisions, it is going to get a whole lot worse, for businesses and private citizens. The Conservative Party has often been considered the natural party of business, but a raft of policy outcomes on the horizon means this may no longer be the case.

I needn’t reiterate the fact that the UK has now left the largest trading block in the world. However, let me illustrate the disastrous consequences of this decision. By virtue of proximity, the EU remains our largest trading partner. To ignore this fact is to ignore the reality for our British business community.

Trade with the EU constitutes 45% of our exports and 50% of our imports. The red tape that will become a necessity as a result of leaving the Single Market will be disastrous for goods exports in this country.

While the Government scrambles around to pull together a bare bones sector-by-sector trade deal, their fixation remains on borders. This by all accounts is for good reason. Their decision to leave the Customs Union means the EU must protect the integrity of its customs territory and by proxy creates complications for our UK-EU borders in Northern Ireland, Dover and Gibraltar. However, our economy remains 80% services based. A Canada-style deal, focused on goods, would be of little use in this regard.

Furthermore, the idea that UK-negotiated free trade agreements can replace this arrangement ignores the realpolitik of global markets. Three regulatory spheres of influence exist – the EU, the US and China. Only one of these is in any way participatory, with alignment to either of the others likely to result in subservience of our domestic markets.

The Conservative Party’s fixation on immigration is starting to hamper the UK economy. At a time of heightened employment where many sectors face skills shortages, a more restrictive immigration system will further exacerbate this problem. The UK economy needs immigrants.

Further still, the UK economy needs “lower skilled” immigrants. You need only look at the numbers of EU citizens working in sectors such as agriculture or social care to see that. Being tough on immigration will hamper the UK business community’s access to human resources.

Finally, the Tories’ promises to repay the faith placed in it by its wave of support across new parts of the country means capital spending for political gain, but not necessarily a return on investment. Many parts of the country are in need of this support but watch out for more vanity projects akin to HS2, which make little economic sense.

What would help our business community and what can a party like the Lib Dems do to support it? The closest possible relationship to the EU would help. As the high street fails, a replacement for our out-of-date system of business rates would help local economies.

A market-based immigration system, run out of the Department for Business, Energy and Industrial Strategy, could lead to an immigration policy that responds to labour needs and not one based on arbitrary caps.

Where the Conservative Party says f*ck business, lets step up and support our business community, in our pursuit of a fairer and more prosperous economy for all.

* Mark Johnson is a party member in Camden and was a Parliamentary Candidate in the 2019 General Election.

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54 Comments

  • GDP hit by Brexit and then kneecapped by the Corona virus, not sure how you get out of that one other than cutting income tax/NI and then savage cuts to non-frontline services.

    BTW many more votes in moving taxes from individuals on to companies…

    Govn posturing pre negotiations do not necessarily mean much, the March budget should show where the govn is really going.

  • Why is this happening? Why has the Conservative Party become so separated from the traditional business world? After reading innumerable articles about Brexit and before that about the 2008 economic crisis and related problems, I have come to the conclusion that it is basically a result of the rise of a new type of financial business, especially in Britain. Traditional business is concerned with the production of real goods and services. This means continual interaction with the real world: management of land, buildings, equipment, employees and relations with suppliers and customers. This means that a business person has to be genuinely competent and have a complex and realistic understanding of the real world.
    On the other hand, the new type of financier is mainly concerned with moving huge amounts of money around to wherever it will make the most short-term profit, to a large extent from changes in asset prices, rather than from actual production. People like this do have to engage so extensively with the real world. They can live in a world of mathematical formulae, computer programmes and abstract ideas. As a result over-simplified theories about deregulation and free markets are very attractive to them. They have made a huge amount of money in recent decades, and they spend some of it on supporting think-tanks, newspapers, websites and politicians that support their ideas. And Brexit is their triumph.

  • David Becket 3rd Mar '20 - 12:28pm

    Where are we today?
    The coronavirus is threatening to destroy the world economy, including ours.
    The floods are playing havoc with our agricultural industry, risking our food supply.
    The daily evidence is that Climate Change must be dealt with now.
    The Heathrow Airport saga is likely to upset many infrastructure issues.
    The government is pressing ahead with Brexit to an unnecessary time table. A No Deal or poor deal will cost us 4% of GDP, and lose the EU 1.5%. Whilst the best we can expect from the US is a .16% uplift
    Economic Irresponsible Tories in Action.

    The Lib Dems really need to get hold of this and plug it as hard as we can, but it will need major changes in the party to get us moving forward.

    Remember EITs, and do not let anybody forget it.

  • Crispin Acton 3rd Mar '20 - 12:52pm

    Interesting comment from MCStyan. I recently read “Quiet Politics and Business Power” by Pepper D Culpepper. Based on empirical research around company takeover policy in several European countries and Japan, it finds that business influence does not determine political decisions that matter a lot to voters. It only carries sway for ‘low salience’ issues which are little reported by media. It seems that the Conservatives have, in effect, decided to part company with most business interests in forging their new electoral coalition. They do not need business for political donations, as the biggest of these come from wealthy individuals now, who tend to be more ideological than most businesses. The Conservatives have ruthlessly prioritised taking power over any policy stances, including pro-business policies.

  • Agree with David Le Grice, For instance, phasing out council tax and replacing the revenue with a transaction tax on companies would get the voters’ interest. House price inflation could then be balanced with a variable sales tax (close to zero in depressed areas, high where prices are on a roll).

    I would be interested to know if the party ever picks up ANY ideas that come out on this site…

  • Barry Lofty 3rd Mar '20 - 1:45pm

    This government does not care about manufacturing business it is all about financial manipulation which is where a major part of their party donations are derived from, that and large builders and property developers etc. If the Liberal Democrats adopt the tactics of Johnson and Cummings and use lies and false promises to achieve some sort of power it would be a very sad for our party and the country.. And I was going to stop giving my opinions on this site, sorry to bother you again!!

  • Mark Johnson 3rd March 2020 – 8:30 am:
    By virtue of proximity, the EU remains our largest trading partner.

    Our largest trading partner is the United States. The EU is 27 separate markets speaking 24 different languages with different customs and conventions not least for advertising and marketing. Have a look at the goods on sale in your local supermarket; how many could be sold in France or Finland without repackaging? By contrast, the US is a genuine single market.

    Trade with the EU constitutes 45% of our exports and 50% of our imports. The red tape that will become a necessity as a result of leaving the Single Market will be disastrous for goods exports in this country.

    Our exports to countries outside the EU are growing FIVE times faster so custom’s ’red-tape’ doesn’t appear to be a problem for our goods exporters. Outside the EU Internal Market we will be free to cut EU imposed ‘red-tape’ from the vast majority of UK businesses which don’t export to the EU.

    ‘UK exports outside the EU boosted by 6.3% in the last year to £376bn’ [December 2019]:
    https://www.pesmedia.com/uk-exports-outside-eu-five-times-as-fast-376-billion-ons-data/

    New ONS figures show in the 12 months to September that UK exports outside the EU grew nearly five times as fast as exports to countries inside the bloc.

    UK exports to the EU grew by 1.3% and now total £296.8 billion [44%], while exports to non-EU countries saw growth of 6.3% to reach £376.7 billion.

    Over the 12 month period, non-EU markets remained the top destination for the UK’s renowned service sector. 60% of UK services exports, including financial, travel and transport, go to non-EU markets and are now worth £190.8 billion.
    […]

    The USA maintains its position as the number 1 destination for British goods and services, with increased demand driving exports up 11.4% to £133.7 billion – compared to £120.0 billion in the previous 12 months.

    ‘SHOCK EU 2019 REPORT: ‘UK benefits least from Single Market’ [July 2019]:
    https://facts4eu.org/news/2019_jul_single_market_debunked

    The latest official EU Commission Single Market report of 2019, released yesterday, shows that the UK benefits LEAST out of the 28 member states when it comes to the EU’s ‘Single Market’ for goods.

  • Peter Martin 3rd Mar '20 - 2:10pm

    @ Brian Lofty,

    “This government does not care about manufacturing business…..”

    This is very likely true, but what about the rest of us? Every country that does care about its manufacturing does what it takes to prevent its currency becoming too expensive so that its exports are more affordable to others and that its home market is protected from cheaper imports.

    What do we care about? It’s the level of the pound! The higher the better. A high pound means that those French gites, which are cheap anyway, are even cheaper with a high pound. The fall in the £’s value after the 2016 referendum was seen as a very very bad thing. Who cared that it might have breathed a bit of life into what is left of UK manufacturing? Who works in that these days anyway? Why can’t ‘these people’ get a job in the public sector like anyone with any sense?

    So, much as I would like to heap all the blame on the Tories, I do have to say they probably are neither better nor worse than everyone else in the country in this regard.

  • Not seeing any evidence that a weak pound is helping export industries, with many manufacturing companies going bust and others relocating overseas… there is a huge tax benefit for the owners of businesses in having production in another country, very easy to make huge amounts of money disappear (that is different to corporation tax, talking about directors/owners getting huge sums of money off the books by dodgy charging of production cost in the other country via an intermediate company located in low or zero tax country).

  • Frank West 3rd Mar ’20 – 4:09pm:
    Not seeing any evidence that a weak pound is helping export industries,…

    Here you go…

    ‘British exports hit a record high, according to new official data’ [May 2019]:
    https://www.gov.uk/government/news/british-exports-hit-a-record-high-according-to-new-official-data

    Data released today (10th May) by the Office of National Statistics (ONS) shows the 2018/19 financial year was a record-breaking year for UK exports, as they reached £639.9 billion.

    Total exports grew at a rate of 3.0% and increased by £18.5 billion compared to the 2017/18 financial year.

    Despite the uncertain global economic outlook, UK exports have been growing for the past 36 consecutive months on an annual rolling basis, an indication of the unparalleled spirit and resilience of UK exporters up and down the country.

    In terms of services alone, the ONS figures show our dynamic services sector saw exports increase by 1.4% to £283.8 billion in the 2018/19 financial year.

    Separate data published by the Organisation for Economic Co-operation (OECD) showed between 2016 and 2018, UK total exports grew at 13.8%, faster than Germany (10.5%), France (10.1%) and Italy (11.4%).

    The OECD data also showed UK export growth was faster than the overall rate for the European Union (11.9%).

    So Vince Cable called this correctly…

    ‘Sterling Overvalued by 10-15%’: Vince Cable’ [October 2014]:
    https://www.foremostcurrencygroup.co.uk/sterling-overvalued-10-15-vince-cable/

    The Business Secretary Vince Cable has warned that the UK recovery is being held back by our declining level of exports and attributed sterling’s recent gains to some of the stall. Speaking at the Liberal Democrat party’s annual conference in Glasgow, Mr. Cable went further to say “arguably, the pound is overvalued by 10 to 15 percent on a trade weighted basis”. This comes just a few months after both the IMF and BofE deputy Governor Broadbent both separately suggested the pound was up to 10 percent overvalued with Mr Broadbent further suggesting back in July that the strength of the pound may have a long lasting impact on inflation.

  • A couple of comments about shifting the tax burden onto companies, but I think that reflects a misunderstanding about what companies are & by whom taxes on companies are borne.

    While companies pay plenty of taxes (corporation tax, employers NICs, irrecoverable VAT, business rates etc), those taxes ultimately get borne by someone else. That can be their shareholders (lower net profits) – which are mostly pension funds & other small investors; it also indirectly impacts on employees’ wages and on prices to consumers through the supply chain.

    So passing the tax burden onto companies is really just passing the parcel: the burden eventually has to fall on real people. And the vast majority of those people aren’t millionaires; they’re principally pensioners, employees & consumers.

  • David Becket 3rd Mar ’20 – 12:28pm:
    No Deal or poor deal will cost us 4% of GDP, and lose the EU 1.5%.

    That’s ‘project fear’ on steroids. If the EU don’t agree a Free Trade Agreement then we leave on our existing WTO agreements which remain unchanged (we are all WTO members). In addition we have already agreed numerous sectorial ‘mini-deals’, such as continued membership of the Common Transit Convention, which apply however we leave. We would suspend tariffs on most imports as per the table published last year. This scenario is similar to the respected German IFO Institut’s ‘Hard-but-Smart’ strategy in which both the UK and EU are predicted to lose around 0.5% of GDP. The options for mitigating that are asymmetric. Outside the EU, the UK will be free to conclude trade agreements that are optimised to suit our economy, remove stultifying EU regulations, and rebuild our fishing industry. Any one of those could boost UK GDP by 0.5%. The EU has no similar options.

    ‘Brexit: A Hard-but-Smart Strategy and its Consequences’ [May 2019]:
    https://archive.intereconomics.eu/year/2019/3/brexit-a-hard-but-smart-strategy-and-its-consequences/

    Scenario S4, in which the hard-but-smart Brexit strategy is used, reduces the economic damage in the UK to half a percent. The reason for this is that now British consumption would not be burdened by Brexit because no new barriers would arise; on the contrary, by lowering tariffs to other WTO members to zero, consumer prices would fall even further. However, the EU is presumably introducing barriers, which is hampering British exports and lowering nominal incomes. In sum, some damage remains, probably in the form of additional depreciation of the British pound; no other scenario is more bearable for the UK, even though the EU is building new barriers.

    More important than this finding is that there is no longer any statistically significant difference between the effects in the UK and the EU. What applies to the average of the EU Member States also applies to e.g. Germany, which at 0.48% loses about as much as the UK, or France at 0.40% (see Table 1 for details). When the UK plays hard-but-smart, it suddenly no longer gets the short end of the stick.

  • Well, the Brexit debate has been settled. And there are actually some positive leeway from Brexit that can allow us to do stuffs like managing our currency to help exporters, or giving direct state investments (limited by EU state aid rules) in companies in strategic and emerging industries (which should be done in pair with export discipline).

    Jeff – “The reason for this is that now British consumption would not be burdened by Brexit because no new barriers would arise; on the contrary, by lowering tariffs to other WTO members to zero, consumer prices would fall even further.” – OK, Communist China included, and this will open a new can of worms. Meanwhile, a deal with the US is either a shitty deal (if Trump wins again) or no deal at all if the Democrats win. Not to mention it seems that Canada will renegotiate its current trade deal terms with Britain after Brexit (and Trudeau possesses a team of very formidable trade negotiators, in contrast to the Tory clowns). And I remember that Australia once flat out said that Britain will not be able to join CPTPP.
    What I mean is that it will not be easy for Britain to make deals around the world like Brexit fantasists believe.

  • Jeff – “remove stultifying EU regulations” – so, removing consumer, labour and environmental protections, wow, you sound like a Yellow Thatcherite. The only similarity between you and Peter Martin is perhaps your Brexit stance. This party does not need “wet conservative” people like you, especially we no longer need to chase after Tory Remainer votes.

  • Peter Martin – “So, much as I would like to heap all the blame on the Tories, I do have to say they probably are neither better nor worse than everyone else in the country in this regard.” – the Tories have been historically in favour of financial interests over industries. Just look at their stance over the issue of Gold Standard during the 1920s, and compare it with that of Keynes and Lloyd George.

  • Peter Hirst 4th Mar '20 - 2:11pm

    While the Conservatives maintain their poll rating, they can say and so much as they wish. The electorate want some action from the referendum result. We might have to wait until the end of they year to see how things develop. They are going to remain vulnerable on economic issues while they pander to control of borders, leveling out the north-south divide and creating trade deals.

  • Julian Tisi 4th Mar '20 - 2:14pm

    A good article. There are certainly votes to be had in being business-friendly, if we attract people in the right way and don’t detract them with other policies. Ultimately being business friendly is about supporting the growth of our economy, jobs and better living standards. And I agree that the Conservatives have traditionally taken the business vote for granted but their policies are now causing damage and we can/should capitalise.

  • William Francis 4th Mar ’20 – 3:15pm
    The fall in the value of £ since the Brexit referendum hasn’t caused an export boom.

    The J-Curve effect: A currency devaluation initially reduces the monetary value of exports and increases the cost of imports widening any trade deficit before export sales rise due to being more competitive and imports fall as a result of import substitution.

    So measuring trade as a percentage of GDP understates the UK’s strong export performance which has continued to grow to record levels…

    ’UK exports boom in all 4 nations’ [June 2019]:
    https://www.gov.uk/government/news/uk-exports-boom-in-all-4-nations

    Data released today by HMRC (6 June) shows every UK nation recorded a greater value of goods exports in the 2018/19 financial year than ever before.

    This highlights how the UK’s recent surge in exports is not driven by a single region, but is rather, a nationwide phenomenon as businesses tap into the growing demand for British produce across the globe.

    In the 2018/19 financial year, goods exports from:

    England grew at 3.0% to £251.9bn
    Scotland grew at 12.9% to £32.8bn
    Wales grew at 7.5% to £17.7bn
    Northern Ireland grew at 4.4% to £9.0bn

    All of the UK nations have now recorded at least 3 consecutive financial years of goods export growth, illustrating the consistency of the success of exporters up and down the country.

    It’s instructive to compare the EU’s non-EU export performance with that of the UK’s…

    ‘EU’s global exports down -4.4%, UK global exports up +15.3%’ [August 2019]:
    https://facts4eu.org/news/2019_aug_eu_trade

    Latest EU international trade figures, June 2019 vs June 2018:

    Eurozone exports to the non-EU world fell by 4.7%
    Eurozone Intra-EU exports (within the EU28) fell by 6.6%
    EU28 exports to the world fell by 4.4%
    EU28 Intra-EU exports (within the EU28) fell by 6.4%

    Source: Official EU Eurostat data, latest release, 16 Aug 2019.
    […]

    Latest UK international trade figures, June 2019 vs June 2018

    UK exports to the non-EU world increased by 15.3%
    UK exports to the EU27 fell by 4.2%
    The EU27’s share of the UK’s export market fell from 48.0% to 43.4%

    Source: The above figures for the UK come from the Office for National Statistics…

  • >Jeff – “remove stultifying EU regulations”
    Like employment rights…
    I suggest you take a look at: https://norightsemployee.uk and especially the “Heroes” page, to just how well employment without employment rights is supported by Conservative MPs.

  • @Jeff

    >Trade with the EU constitutes 45% of our exports and 50% of our imports.
    >Our exports to countries outside the EU are growing FIVE times faster so custom’s ’red-tape’ doesn’t appear to be a problem for our goods exporters.

    Well that to me; is to be expected after 30 years of Single Market membership and demonstrates that M.Thatchers reasoning that the Single Market would benefit the international competitiveness (outside of the EU) of UK business was sound!

    This rapid growth of the UK’s non-EU exports under EU trade agreements and ‘red tape’ also demonstrates the EU ‘red tape’ isn’t hindering UK export business.
    Given the growth in UK (non-EU) exports during a period when “Eurozone exports to the non-EU world fell” would also seem to indicate that the economic performance of the Eurozone isn’t negatively impacting the UK’s exports.
    Add in the UK governments own projections for an “economic boost” of 0.16% due to US trade without EU red tape, would also seem to support the case that EU ‘red tape’ isn’t an issue.

    Remind me, what was the business problem Brexit was supposed to be solving?

  • Thomas 4th Mar ’20 – 5:31am
    “remove stultifying EU regulations” – so, removing consumer, labour and environmental protections,…

    Here are three EU regulations ripe for removing…

    Being allowed to remortgage onto a CHEAPER mortgage would be good for consumers…

    ‘No resolution for 140,000 mortgage prisoners as Treasury Committee calls for immediate action to help them’ [November 2018]:
    https://www.moneywise.co.uk/news/2018-11-14%E2%80%8C%E2%80%8C/no-resolution-140000-mortgage-prisoners-treasury-committee-calls-immediate-action

    …the economic secretary says in his letter that lenders’ hands are tied due to stringent European Union directives relating to mortgages. The EU’s Mortgage Credit Directive (MCD) prevents lenders from waiving the affordability requirements when a borrower moves to a new lender.

    Bringing an end to austerity would be good for labour…

    ‘Austerity has not been a Tory choice, but an EU one’:
    https://joelrwrites.wordpress.com/2019/07/04/austerity-has-not-been-a-tory-choice-but-an-eu-one/

    These are remarkable powers for the EU to hold over its member states. The United Kingdom, as a non-Eurozone member, cannot be fined or be the subject of punitive action, as it has an exemption to Article 126. However it is obliged to comply with any recommendations issued by the EU, as a treaty obligation, and the United Kingdom is bound by Treaty Protocol No 15, which states: “the UK shall endeavour to avoid an excessive government deficit”.

    Scrapping the 20% VAT on energy saving materials would be good for the environment…

    ‘Court of Justice of the European Union’: ‘Judgment in Case C-161/14’ [June 2015]:
    https://curia.europa.eu/jcms/upload/docs/application/pdf/2015-06/cp150065en.pdf

    The United Kingdom cannot apply, with respect to all housing, a reduced rate of VAT to the supply and installation of energy-saving materials, since that rate is reserved solely to transactions relating to social housing.

  • Jeff kind of forgot to quote the very next paragraph from the moneywise article:
    “The Financial Conduct Authority (FCA) has flexibility to allow exemptions, but only if the borrower does not increase the size of the debt when remortgaging.”

    Which kind of runs counter to the ‘EU directive doesn’t allow this’

  • Thomas 4th Mar ’20 – 5:29am:
    Well, the Brexit debate has been settled.

    Indeed it has, but some remain voters are still stuck in the denial phase and attempting to rewrite history by pretending that the instruction of the Referendum wasn’t to leave the EU ’single market’ and Customs Union.

    Thomas 4th Mar ’20 – 5:29am:
    Communist China included, and this will open a new can of worms.

    Why impose tariffs on goods where we have no industry to protect? For example, the EU imposed punitive tariffs on Chinese solar panels slowing down their installation and increasing our electricity prices…

    ‘Solar panel duty on Chinese imports ‘could cost UK billions’’ [February 2013]:
    https://www.theguardian.com/environment/2013/feb/19/solar-panel-duty-chinese-imports

    In the UK, which sources the vast majority of panels from China, the measure could cut the industry by up to 80%, costing the economy £3.46bn and 38,600 jobs over a three-year period if a duty of 60% were imposed on solar panel imports.

    If a lower duty rate of 20% were put in place, it could still cost the UK £1.6bn and 19,300 jobs, the report by European thinktank Prognos said.

    …it will not be easy for Britain to make deals around the world…

    The UK has already made 20 agreements and is currently negotiating 16 more . As the World’s sixth largest economy and fifth largest importer countries are keen to conclude trade deals with us.

    ‘Trade agreements that have been signed’ [February 2020]:
    https://www.gov.uk/guidance/uk-trade-agreements-with-non-eu-countries#trade-agreements-that-have-been-signed

    Agreements with the following countries and trading blocs are expected to take effect when existing EU trade agreements no longer apply to the UK, from 1 January 2021.

  • William Francis 4th Mar ’20 – 3:18pm:
    The EU doesn’t stop countries dolling out corporate welfare.

    ‘State aid control’:
    https://ec.europa.eu/competition/state_aid/overview/index_en.html

    …the Treaty generally prohibits State aid unless it is justified by reasons of general economic development. To ensure that this prohibition is respected and exemptions are applied equally across the European Union, the European Commission is in charge of ensuring that State aid complies with EU rules.

    That is just another Leaver lie.

    These are the only references to “state aid” on the Vote Leave site…

    ‘The EU has forced up the price of energy’:
    http://www.voteleavetakecontrol.org/briefing_energy.html

    On top of this, EU state aid rules have delayed the construction of the Hinkley Point power station and the scheme is currently the subject of legal challenge in the European Court by Austria. There is as yet no date for a hearing and no way of knowing what the European Court will decide.

    ‘Andrea Leadsom: The choice the UK now faces is to accept a largely unreformed EU, or choose the route of freedom and democracy’ [May 2016]:
    http://www.voteleavetakecontrol.org/andrea_leadsom_the_choice_the_uk_now_faces_is_to_accept_a_largely_unreformed_eu_or_choose_the_route_of_freedom_and_democracy.html

    So now to the opportunities of a vote to leave: there is an area of energy policy where leaving could really help the UK bill payer. And that is in getting away from the huge restrictions of EU State Aid rules.

    We’ve seen only recently how help for our steel sector is subject to EU State Aid, making it not only difficult, but also painfully slow to save our steel!
    […]

    And, less well known, but a huge thorn in my side every day, is the need to get EU State Aid approval if we want to make any policy choices about our energy mix. So the Capacity Market that ensures our electricity supply, the Contracts for Difference auctions that support new renewables, even our new nuclear ambitions, all have to be approved under EU State Aid, a process that can take months or even years leaving us unable to efficiently address issues of value for the bill payer.

  • Jeff – “Why impose tariffs on goods where we have no industry to protect? For example, the EU imposed punitive tariffs on Chinese solar panels slowing down their installation and increasing our electricity prices…” – it is much more complicated than that. China may require the UK to remove restrictions Huawei’s entry into its broadband network, to recognize China as a market economy (well, the US will not take this kindly), to immediately open its market for Chinese firms while not doing so for British firms trying to enter into Chinese market. China can also dump its surplus into British market. And, how about building our own solar equipment manufacturing capability, and also, wind turbines are better for countries that lack sunlight but have huge wind potential like Britain.

    “The UK has already made 20 agreements and is currently negotiating 16 more” – certain countries, e.g. Canada, may renegotiate the deals following a hard Brexit to make them more favourable to them (possibly at the expense of Britain) (and I will bet on Trudeau’s highly capable trade expert team over some Tory clowns).

    William Francis – “The EU doesn’t stop countries dolling out corporate welfare. That is just another Leaver lie.

    “The UK ranks very low down, spending just 0.38% of its gross domestic product – the total value of all good and services produced. This is far lower than Germany (1.31%), France (0.76%) and Poland (1.59%).”” – You may be right in this case, but I fear that the EU can block more ambitious industrial policy e.g. a hypothetical British equivalent of “Made in China 2025”.

  • @Jeff – Why impose tariffs on goods where we have no industry to protect?
    Well basically, there is very little the UK can produce that can’t be produced cheaper offshore, so following the “costing the UK economy” logic (and the logic of intelligent idiots like the Treasury advisor Dr Tim Leunig), having any industry is a cost to the UK economy…

    Remember one of the big reasons why the UK effectively has no industry to protect is because of poor government decision making over many decades, hand-in-hand with poor business management by UK bosses, who have also bank rolled the Conservative party over the decades… The only good thing about Brexit is that they are now on the spot to deliver an economic miracle, that we know can only be delivered within the reality of a Hollywood blockbuster…

  • Dilettante Eye 5th Mar '20 - 10:57am

    “The only good thing about Brexit is that they are now on the spot to deliver an economic miracle, that we know can only be delivered within the reality of a Hollywood blockbuster… “

    You simply don’t know that.

    You forget that British business has been part of the EU for decades, and the primary concern of the EU is an increasingly fortress-like protectionism. Even those UK businesses which had no exports to the EU, had to abide by laws derived from EU directives as part of the protectionism coming from other EU members.
    The EU has now gone down this protectionist ‘rabbit hole’ so far, as to make the eurozone increasingly sclerotic.

    British business has been hampered by that sclerotic protectionist ‘habit’ that EU membership imposed on it.
    Not anymore from 2021.

    Remainers have consistently got it wrong at every step of their anti Brexit stance. Not least the absurd notion that Barnier was in the driving seat, and poor old Britain sixth biggest economy and second biggest financial contributor to EU coffers would have to take what they were offered from the mighty EU. Well now negotiations are about to start, let’s see who is in control

    I think in the coming months remainers are going to be shocked at how hollow and powerless this ‘Potemkin’ EU construct really is?

  • Daniel Walker 5th Mar '20 - 12:01pm

    @Dilettante Eye “You forget that British business has been part of the EU for decades, and the primary concern of the EU is an increasingly fortress-like protectionism

    No it isn’t. This is incorrect. it’s one of the most open economies in the world.

    Your conception of EU protectionism has be challenged before, and you were wrong then too.

  • Dilettante Eye 5th Mar '20 - 1:06pm

    Daniel Walker

    Which bit of Barniers ‘we demand a level playing field’ is not an implicit acknowledgement that the EU is not at all an open economy, and is not just an admission of their protectionism, but that they are terrified that a Britain free from their protectionist rules will not just thrive better in the future, but also be a serious competitor?

    I think we won’t have to wait for very long to see who is wrong about the status of the EU.

  • Peter Martin 5th Mar '20 - 1:48pm

    @ William Francis,

    “Most British exports aren’t that sensitive to currency value fluctuations.”

    Aren’t they? The value of the £ is determined by market forces. The inflow and outflow of money has to equalise for a freely floating currency. These flows are, conventionally, split into the current and capital accounts. The current account is made up of our trade plus some invisibles. The capital account is mainly invisible too and consists of purchases of Govt and other bonds plus some land and property transactions. We’re nearly always in deficit with our current account. Meaning that we’re nearly always in surplus in our capital account. The two have to sum to zero.

    But suppose that the big net exporters decided we weren’t credit worthy any longer. The Germans, for example, would instruct their central bank, the Bundesbank, to not buy any more gilts. Maybe even that they should sell some and convert the proceeds into euros. If enough overseas “investors” (for want of a better word) did this the capital account would be in deficit. Incidentally, the reason the Bundesbank doesn’t do this is that it would bring an end to their trade surplus with the UK.

    Meaning that the current account would have to be in surplus. There would be a surplus of exports over imports. It’s just arithmetic. And it would be in surplus because the pound would fall in value making our exports cheaper and our imports dearer.

  • Peter Martin 5th Mar '20 - 2:01pm

    @ Martin,

    “I suppose the EU is protectionist in that it is protective or what are widely agreed around Europe as fundamental values and rights. An example could be women’s pay.”

    Well, maybe it could, if women were guaranteed equal pay throughout the EU. As it is, they aren’t. The minimum wage in Romania being just over 3 euros per hour. I’m not against the idea of a level playing field, per se, but I am if it means that we have to reduce the UK minimum wage to something like £2.50 ph to be able to achieve that.

  • Peter Martin 5th Mar '20 - 2:48pm

    @ Martin,

    The idea behind “a level playing field” is, as you’ve correctly put it, to prevent the following:

    “The UK or another state could do away with this in order to lower production costs and thereby try to gain a competitive advantage”.

    “This” has to mean lower wages in general. Even if UK women were, by law, permitted to be paid 20% or so less than men, for equal work, they would still be earning much more than both male and female workers in many EU countries. So how can that be a level playing field?

    The issue of equal pay is a red herring. And, no, I’m not saying that we shouldn’t have equal pay! But we had laws about that in the late 60s before we were ever in the EU/EEC. When the EU legislation is for higher wages, for both men and women, than we have in the UK then maybe they will be in a moral position to lecture us !

    Until then they should keep out of it!

  • Martin 5th Mar ’20 – 1:42pm:
    An example could be women’s pay. The EU protects the right of women to be paid the same for the same job of work.

    Rather than wait decades to have such legislation dictated to us by a bunch of unelected foreign bureaucrats, our own democratically elected parliament legislated for this way back in 1970…

    ‘Equal Pay Act 1970’:
    https://www.legislation.gov.uk/ukpga/1970/41/enacted

    Apart from EUphiles who want to see ’the closest possible alignment with the EU’ I don’t see much support for lowering workers rights to match those of the EU. It would mean scrapping our minimum wage, losing 38 weeks paid maternity leave, and cutting eight days statutory paid holiday…

    ‘What EU Workers’ Rights’? [February 2019]:
    https://facts4eu.org/news/2019_feb_workers_rights

    1. EU workers’ rights laws are lower than UK’s.

    UK statutory paid holiday entitlement is 28 days, in EU only 20 days.
    National Minimum Wage Act 1998 – there’s no EU minimum wage law.
    Maternity leave – UK: 52 weeks, EU: 14 weeks.
    Under EU laws, the British people’s rights would decrease.

    2. UK established workers’ rights long before EU.

    “Protection against sex, race and disability discrimination in the UK pre-dated EU law” (from TUC report).
    Women’s rights: Equal Pay Act, Abortion Act and Divorce Reform Act were all passed before UK even joined EU.
    Sex Discrimination Act, Domestic Violence Act, Employment Protection Act – no EU involvement.
    EU’s Posted Workers Directive means EU workers can be employed in UK for fraction of the cost of UK workers.
    […]

    4. Finally, workers’ rights are only relevant if you have work.

    In the Eurozone, austerity has taken the jobs of millions of workers.
    You’re nearly twice as likely to be out of work in the Eurozone.
    An entire young generation across southern Europe has been devastated by 30-50% unemployment for years.

  • Dilettante Eye 5th Mar '20 - 9:11pm

    Martin
    “I can imagine D. Eye protesting that he is against trashing women’s rights (or perhaps not?), but I would want to know which rights he would want to protect and how he would protect these rights,..”

    I am indeed against trashing women’s rights and agree that equality between men and women should be a priority. That’s why I agree with Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security.

    That EEC directive was the causal factor in the 1995 UK law to comply with equality in state pensions between men and women.

    Equality in gender state pension provision was a much needed correction. I would hope that WASPI women will agree with me, that the 1978 EEC directive was a welcome fix to the state discrimination of men and accept the loss of some £40,000 of state pension with good grace in the interests of equality of state treatment with men ?
    Thanks to the EU.

  • Peter Martin 6th Mar '20 - 2:45pm

    @ William Francis,

    If you are exporting a finished item in US dollars (or euros it doesn’t really matter) and importing components to make the item, also in US dollars, what you say can only be true if the cost of the components is higher than price of the finished item. In which case I’d question whether UK economic policy should be tailored to suit those of such poor business acumen.

    If our exports are so ‘price inelastic’, why don’t we charge a bit more anyway? Why wait for a higher pound to force us into that? Methinks they might not be quite so inelastic after all!

    You need to put on your thinking cap a little more often!

  • Peter Martin 6th Mar '20 - 3:06pm

    @ Martin,

    “What EU supported workers rights/safeguards do you have in mind for tearing up?”

    In a single word: None.

    But having said that, I really don’t care what rights the EU may or may not support in the UK. The problem with you remainers (if that still an appropriate word) is that you feel that a country like the UK is totally incapable of deciding what those rights should be.

    This is just as true of many of my “comrades” in the Labour Party too. For far too long we’ve abrogated our responsibilities in that respect, and decided to leave it to the EU. Our core support, rightly in my opinion, doesn’t trust the EU “Tories”, or Christian Democrats or whatever you’d like to call the self serving neoliberal elite of the EU, any more than our home grown UK Tories.

  • William Francis 6th Mar ’20 – 1:54pm:
    Higher value added good exports (like most of our top 10 exports) benefit more from a strong currency, as a) input materials (often imported) cost less b) they have a lower price elasticity of demand.

    What an absurd self-contradictory sentence. By definition, “higher value added” goods have a relatively low Bill Of Materials, imported or local. For example, the cost of the chemicals in a patented drug is a vanishingly small percentage of the drug’s sale price. I used to work in one such high added value industry and was occasionally responsible for producing costings. The cost of materials such as silicon wafers and gold bonding wire was a tiny percentage of the final cost. It was almost all labour.

  • Peter Martin 6th Mar ’20 – 3:06pm:
    This is just as true of many of my “comrades” in the Labour Party too. For far too long we’ve abrogated our responsibilities in that respect, and decided to leave it to the EU.

    Larry Elliot, the Guardian’s economics editor, thinks that the TUC were duped…

    ‘Don’t be fooled – the EU is no defender of workers’ rights’ [October 2019]:
    https://www.theguardian.com/commentisfree/2019/oct/24/eu-workers-rights-capital-multinationals

    Jacques Delors did one heck of a job when he showed up at the TUC conference in 1988. Britain was a year into Margaret Thatcher’s third term and the mood on the left was despondent.
    […]

    Fear not, Delors said. The domestic political outlook may be bleak but Thatcherism can be circumvented by action at a European level. Brussels has a plan for a social Europe that will protect workers, tame capitalism and prevent a race to the bottom.
    […]

    The truth is that social Europe never delivered all that much, even in the days when the European economy was in much better shape than it is currently. That’s because a succession of EU treaties has enshrined in law four basic freedoms for business: the right to provide services; the right to establish an enterprise; the right to move capital; and the right to move labour. These freedoms trump all other considerations, including the right of workers to withdraw their labour.
    […]

    The left doesn’t need the EU to fight its battles. What it needs is to make the case for better working conditions and win over a public sick of a labour market loaded in favour of employers. With a bit of self-confidence it shouldn’t be that difficult.

  • Mark Johnson 3rd March 2020 – 8:30 am:
    Their decision to leave the Customs Union means the EU must protect the integrity of its customs territory and by proxy creates complications for our UK-EU borders in Northern Ireland, Dover and Gibraltar.

    It was the decision of the EU Referendum. Any “complications” with borders is largely the EU’s problem; the UK can simply suspend most tariffs as per the previously published table…

    ‘Non-preferential tariff rates and quotas on imports if the UK leaves the EU with no deal’:
    https://www.gov.uk/government/publications/temporary-rates-of-customs-duty-on-imports-after-eu-exit/mfn-and-tariff-quota-rates-of-customs-duty-on-imports-if-the-uk-leaves-the-eu-with-no-deal

    If your goods are not listed on this page, you will not have to pay customs duty (tariff) when importing them into the UK.

    Talking about complications…

    ‘This EU tariff takes the biscuit’ [August 2016]:
    https://tradebetablog.wordpress.com/2016/08/18/eu-tariff-takes-biscuit/

    If Brexit manages to get rid of this EU monstrosity, it will indeed be an achievement.
    […]

    The system is so complex that as the UK heads out of the EU, it could do the world a service by binning it before it shuts the door behind it.

    How? The UK and EU will have to renegotiate their WTO commitments: the UK to separate its own from the EU’s, and the EU because it is losing a member.

    The UK should unilaterally declare it will not use such a devious scheme to set its own tariffs. And as a WTO member in its own right, it should join forces with the rest of the world to refuse to agree on any revised EU commitment that includes the scheme.

    After all, as an EU member, the UK has been shamelessly complicit in this monstrosity for decades.

  • Martin 5th Mar ’20 – 8:37pm:
    What EU supported workers rights/safeguards do you have in mind for tearing up?

    I’d ‘tear up’ the EU’s requirement to have 20 days paid holiday and increase our current 28 days statutory paid holiday to 29 by adding a new United Kingdom Day Bank Holiday on the Friday nearest June 23rd. to commemorate gaining our freedom from the EU.

  • Roland Bell 7th Mar '20 - 5:39pm

    @jeff
    >I’d ‘tear up’ the EU’s requirement to have 20 days paid holiday and increase our current 28 days statutory paid holiday…

    You do realise the EU requirement is a minimum not a maximum? there is nothing stopping the UK (within the EU) from enacting your wish, additionally, within the EU the UK can put pressure on the EU27 to level up to the UK standard.
    Thus Boris’s decision to disregard the EU’s employment “level playing field”, without proposing a levelling up to current UK norms can only mean his party are set on reducing employment protections and encourage the use of highly dubious constructs such as employment with no employments rights…

    It does seem that Boris in trying to impress the nuttier Brexiteers has missed an opportunity to use the negotiations to showcase how far ahead the UK is and that a “level playing field” can be created by the EU levelling up to our standards.

  • William Francis – “In the same way the EU can block the establishment of true socialism in the UK. It’s a pointless hypothetical because its never going to happen in the UK, the most free-market state in the EU by far” – I mean, the Libdem is proposing an industrial policy. If our industry policy reaches hundreds of billions pounds in scale (which is likely given the upcoming Fourth Industrial Revolution and Britain’s need of aggressive investments to cover its own historical underinvestments), the EU may strike it down.

  • @Thomas – If our industry policy reaches hundreds of billions pounds in scale (which is likely given the upcoming Fourth Industrial Revolution and Britain’s need of aggressive investments to cover its own historical underinvestments), the EU may strike it down.
    Yes, this one area where I would agree is going to be problematic with the UK in the EU.
    However, I suspect the UK’s problem is more that it has demonstrated that it just hasn’t got the political skills to do largescale state investment and stay within EU guidelines, unlike some of its fellow members…
    Another of the UK’s problems is actually doing rational and efficacious largescale investment, recent experience (ie. over the last circa 80 years) isn’t favourable.

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