Who is in charge?

The recent report from the House of Commons Home Affairs Committee on preparations for Brexit makes grim reading. Almost a year ago the committee warned that post-Brexit customs arrangements are the most important and time-sensitive of all the challenges of Brexit.

Six months later the head of the civil service, Sir Amyas Morse, announced he was very concerned about the lack of leadership and co-ordination of Brexit preparations, saying plans risked "falling apart like a chocolate orange". When he asked Mr Davis, the Brexit secretary, about seeing a report on the overall preparedness across government the response he received was "vague". As a result Sir Amyas publicly called for central coordination and central support for all government departments - "strong integration" - instead of each department doing its own thing.

The government response to Sir Amyas was, "Cabinet ministers meet regularly on Brexit to coordinate work on this and we have put forward a series of bills in the Queen's Speech to prepare the country for leaving the EU."

A few ministers meet every so often and put forward a couple of bills? This is the government's coordination strategy?

Now, once again and a year further on, the question being asked is: who is in charge?

The concluding statement of the most recent Home Affairs Committee report is a plea in all but name:

"The Government’s approach seems to us to lack focus, urgency and above all leadership. Any progress seems to rely on working groups of government officials, with no meaningful ministerial leadership...a fully joined-up approach from the Government is urgently needed, as well as proper coordination with the private sector. The impetus to achieve this is only likely to come from a named senior Government Minister taking responsibility."

Of course there is a dearth of leadership in our present government, of course this is a poisoned chalice, but is there really not one single senior Tory with the skills and courage to take on this task?

Bordering on madness

The EU strongly backs Eire's insistence that there must be no future regulatory divergence between Eire and Ulster. This would allow continued free movement of goods across the border. Due to their geographical position, Eire does a lot of trade with Northern Ireland so a hard Brexit (and thus a hard border) would damage them far more than other EU countries.

What is not possible is to remove Northern Ireland from the single market while maintaining the current invisible border.

Vague suggestions of a technological border solution or even a 'non-border' don't address this issue, but then how do we answer it? The issue for Mrs May is that keeping Ulster aligned with the EU means regulatory divergence between them and the rest of the UK.

Retaining EU regulations just in Northern Ireland could be done - and similar special regulations are already in force there (for example, in the all-island electricity market). We negotiated something similar for Hong Kong. No doubt, however, the Brexiteer headbangers will cry 'betrayal' and Mrs May is too weak to stand against them.

Even worse, her sickly and divided government is shored up by the DUP who fear anything that would weaken their link with the mainland. The DUP has said that they will withdraw their support if Northern Ireland was made to mirror Eire's rules - rules set by the EU which would not be applied on the mainland. Without regulation harmonisation however there could not be a soft border.

Mrs May hopes that she can avoid stirring up trouble by not answering the question, putting it off until later in the negotiations. However Eire has threatened to block talks from moving on until this is sorted. Mrs May might risk calling their bluff, of course, as a no-deal Brexit would be at least half as bad for them as for us.

The Irish deal was always a fudge with much left undefined, and that is why it worked - everyone felt that they had options. Brexit is closing down those options.

Zero tariffs

Economists all agree that free trade is a Good Thing. If you reduce barriers to trade then your manufacturing and service industries will specialise in what they are best at, boosting exports, productivity and wages. Certain sectors will disappear as other countries specialise in those areas and we import those items and services rather than produce them ourselves.

This also happens within countries - there are steel-producing regions (Sheffield in the UK) and service-oriented regions (London). It is happening within the EU since trade barriers are low or non-existent. For example, London has the greatest concentration of financial services in the EU.

Pro-Brexit economists say that it is therefore a no-brainer to leave the EU and unilaterally reduce our tariffs to zero. Instead of restricting ourselves to a free market within the EU we can trade with the whole world on the same terms.

Certainly this model would solve our customs problem - essentially we would only need to check for illegal imports.

So why are the Brexit-boosters trying desperately to set up trade deals? Because setting our tariffs to zero won't mean other countries would do the same. So our exports will have tariffs imposed, while imports won't. How do we bring in trade deals? We offer good terms. If we are already giving away zero tariffs then we have nothing to offer.

Clearly having tariffs imposed on our exports means our industries will find it hard to compete abroad. For example, WTO rules impose a tariff of 10% on cars. In contrast, overseas companies will have unrestricted access to the UK. It doesn't take an economist to see that many of our industries will take a severe beating. As one pro-Brexit economist admits, "you are going to have to run [the car industry] down."

Britain today has a current account deficit of £23 billion (it was zero in the 90s). Eliminating tariffs without any preparation would destroy much of British industry and ramp up imports to unprecedented levels, dragging the pound ever lower and pushing prices ever higher.

If we crash out of the EU we need to cushion the disaster. We need to give industry time to adjust to harsher trading conditions, not impose the harshest possible outcome instantly. Britain was working before the referendum. Why break it?

Reds in our beds

Mr Putin likes to have influence in the EU. That is hardly surprising as the EU is a very large, very successful, very powerful neighbour. Look at the problems caused in Mexico by that sort of situation.

The problem is that Mr Putin prefers to use propaganda rather than diplomacy, and his background in the KGB means that he is very good at propaganda. Not just the content but also the channels he uses.

The Russian media outlets RT and Sputnik are well known for their biased news coverage, and even fake news reports. However, not many British people watch these channels. Of far more concern is the admissions by Google that in recent EU votes they sold Mr Putin's minions advertising slots, slots for ads persuading people to vote for Brexit.

Equally concerning is the number of Twitter accounts that the Russian state controls, many being run from a 'troll factory' in St Petersburg. 150,000 Russian Twitter accounts switched to focusing on Brexit in the run up to the referendum and posted around 45,000 messages about Brexit in the two days before it. After the vote they simply switched back to their pro-Putin posts.

Facebook accounts were also involved, but it is impossible to discover how many. Facebook has refused to help investigate how its platform was used by the Kremlin, even though Facebook-based propaganda is more influential than Twitter feeds. Facebook's boss, Mr Zuckerberg, stated it was a "pretty crazy idea" that Facebook posts could influence votes - despite raking in $10 billion in advertising revenues. Clearly advertisers think it can influence people even if he doesn't.

Meanwhile the Legatum Institute is also being investigated for long-term Russian influence. The institute is an outspoken advocate for Brexit and has very close links with Conservative Brexiteers - for example, Mr Gove and Mr Johnson's recent letter to Mrs May voicing concerns about her approach to Brexit was adapted from a paper produced by the institute.

Of course, it may be that Mr Putin has simply been giving some moral and financial support to his admirer Mr Farage and has no wish to see a fractured and weakened Europe.

None of this invalidates a single vote in the referendum. People voted freely, and we can't say whether any were influenced by the propaganda. The point of the investigations is to find out exactly what is happening, and prevent future elections being subverted by foreign powers. You could say it is "taking back control".

Non-tariff barriers

The UK has almost never managed to export more than it imported - even during the years of Empire and the industrial revolution. This is despite the UK still being one of the world's biggest manufacturers. We export a lot, we just import even more.

And even though we are big manufacturers it is services that really earn us our keep. We exported £26 billion worth of motor vehicles in 2015 - but earned £29 billion from travel services and £50 billion from financial services. Services officially make up 43% of our exports, but this is probably a serious underestimate as earnings from services are hard to count and even hard to categorise - if Rolls Royce sells you an engine then is the maintenance contract counted as part of the engine cost or a service?

All this sounds like good news - exporting services will mean avoiding all those dreary tariff arguments. Who cares if we are ejected from the single market and have to trade using WTO rules, we are selling services which aren't covered by either.

The bad news is non-tariff barriers. The world goods trade has already gone global. Tariffs are at their lowest ever in history. It is now the non-tariff barriers that cause problems. For goods this means quality and safety standards. For services - well, there is a reason that trade regulations rarely cover services.

Services have a lot of rules attached because the damage done by dodgy services can be hard to detect, take a long time to kick in, and can become very expensive. Discovering your beef burger is half horsemeat may be distressing but you just chuck it and buy a fishburger. If someone sells you substandard financial advice then you end up retiring without a pension and living off state benefits.

So services have to conform to local rules and standards and providers need locally-recognised qualifications. To sell services internationally it is necessary therefore to harmonise regulations across borders and cross-recognise equivalent qualifications. It also means having an supranational adjudicator to rule on disagreements.

Of course, bowing to laws made elsewhere and accepting the decisions of a non-elected, non-UK body will mean giving up our new-won 'sovereignty'. But it's that or give up trading services.

Ironically, the EU has got closer to allowing free trade in services than any other group of nations ever has. Shame we're leaving.

Paying by instalments

Food prices are growing at their fastest in the past four years, going up another 4% and adding another £140 to the average family's annual grocery bill. So far Brexit has cost the average worker a week's pay in reduced earnings and inflation. The LSE has calculated that overall household costs have gone up by £400 due to inflation since the referendum.

GDP growth is predicted to stay well below 2%  for the next five years - the first time in recent history - which will keep us at the bottom of the G7 growth league table. In contrast, the EU has seen a surge in business activity, with manufacturers in particular celebrating the best month in nearly twenty years.

The Institute of Fiscal Studies predicts that it will be another twenty years before real wages start to rise again - and forty until our national debt falls back to normal levels. That's the positive view - assuming there isn't a recession in that time. The good news is that the Resolution Foundation and the Office for Budget Responsibility are a bit less gloomy, predicting only ten years of falling living standards.

The UK's tribulations parallel those of Japan over the past twenty years. Their problems also began with a debt-fuelled real estate bubble bursting in 1991. Wages flat-lined, banks weren't lending, businesses weren't investing. Meanwhile the population was ageing, reducing the number of people earning, and those that were earning were saving rather than spending.

Although we are still spending, the spending is paid for by borrowing so it can't go on for much longer. Furthermore, the Japanese government eventually lifted themselves out of the economic mire by cutting interest rates to the bone to discourage saving. We are already just about as low as it is possible to go.

The Brexit cheerleaders demand everyone is positive, but there is a difference between being positive and denying reality. We will get a bit more sovereignty and a different colour for our passports, but we have to be prepared for paying the price of these.