What will happen if we do exit the EU without a deal?
The closest parallel example is probably what happened to NZ when the UK joined the EEC. At that time the UK took 30 % of NZ exports.
Currently the EU takes over 50% of UK exports.
The NZ exports to the UK had preferential customs and duty treatment ('imperial preference'). This could not continue once we were in the Common Market. We had to impose duties on NZ produce.
If we leave the EU without a deal then our European customers will have to impose duties on our exports - we pay no duties at the moment.
NZ exports fell sharply, as did business investment. Growth slowed, and it took 15 years to return to its previous rate.
Business investment has already fallen massively in the UK, with a number of firms disinvesting, and we haven't even left yet. A recent survey showed finance and service companies are planning job cuts. Meanwhile car manufacturers are already pulling out. Nissan is the most recent - announcing the closure of the Sunderland plant which they ploughed £250 million into only a couple of years ago. They are moving production to Japan, as the EU and Japan have just concluded a trade deal which will mean low tariffs for car exports, while Brexit may well mean high tariffs on cars made in the UK.
New Zealand moved its trade to countries nearer to it - ironically making trade easier and cheaper than when exports had to go half way round the world.
We will have to trade further afield, adding to transport time and costs.
Given that we don't even have a plan for Brexit, we should take May's deal and sort things out carefully over the next few years rather than jump off a cliff while keeping our fingers crossed.
Sunday, 17 March 2019
Monday, 4 March 2019
On the road to nowhere
The Road Haulage Association is very worried about a no deal Brexit. Their concerns centre on contracts and data. The contracts they have don't allow for no deal. Things such as pricing and delivery schedules will still have to be met even though tariffs will raise costs and border controls will delay deliveries. Failing to meet the contract requirements will mean financial penalties - just when costs are going up.
These contractual problems can then lead to legal disputes - and these will cause further problems. Currently, as a member of the EU, we are signed up to treaties which streamline cross-border dispute resolution. Leaving without a deal would mean that companies would have to defend themselves using a foreign legal system, in countries where there will be a feeling that as the UK created the problem it is not up to the EU to sort it out. The legal basis of the contracts themselves may even be undermined by our departure from the EU.
Even if our exporters manage to deal with the contract problems, there is another serious issue that could cause just as much pain. Leaving without a deal will mean that the UK would need to negotiate a specific 'data trade deal' with the EU to allow our companies to transfer personal data to and from Europe. If this doesn't seem a particular serious issue, consider an exporter that isn't allowed to store the addresses of its EU customers. The EU takes data protection seriously - just ask Google who were slapped with a £40 million fine for breaking the rules last month.
This isn't what Leave promised us. The Brextremists who refuse to sign up for Mrs May's deal are sacrificing UK businesses and UK prosperity to their misguided political obsession.
These contractual problems can then lead to legal disputes - and these will cause further problems. Currently, as a member of the EU, we are signed up to treaties which streamline cross-border dispute resolution. Leaving without a deal would mean that companies would have to defend themselves using a foreign legal system, in countries where there will be a feeling that as the UK created the problem it is not up to the EU to sort it out. The legal basis of the contracts themselves may even be undermined by our departure from the EU.
Even if our exporters manage to deal with the contract problems, there is another serious issue that could cause just as much pain. Leaving without a deal will mean that the UK would need to negotiate a specific 'data trade deal' with the EU to allow our companies to transfer personal data to and from Europe. If this doesn't seem a particular serious issue, consider an exporter that isn't allowed to store the addresses of its EU customers. The EU takes data protection seriously - just ask Google who were slapped with a £40 million fine for breaking the rules last month.
This isn't what Leave promised us. The Brextremists who refuse to sign up for Mrs May's deal are sacrificing UK businesses and UK prosperity to their misguided political obsession.
Sunday, 3 March 2019
The Will of the People
Mrs May has offered the Brexit MPs what they said they want, what they keep saying the People want, but they have refused it.
Instead of supporting Mrs May's deal to Leave the EU, they are blocking it. Essentially they are hoping to force her - and us - over the cliff edge. If they don't support the deal, they calculate, then we will be forced out with no deal at all.
This is hardly what they promised us three years ago - the easiest deal in history, with us staying in the common market.
Like a predatory loan shark who ups your payments week by week, the ERG faction in the Conservative party has been leveraging the referendum result ever since it delivered us into their hands. They have been steadily repudiating the promises they made in the campaign and replacing them with what they really want. Anyone who dared stand up to them has been vilified as 'enemies of the people' - be they judges, company directors or ordinary concerned citizens.
Mrs May thought that she was doing the right thing giving the job of negotiating a deal to the Brexit brigade, the ones who had wanted it. However, once they had that responsibility they didn't do a thing. Mr Davis was put in charge of the team and then sat on his hands. He attended only four days of negotiations in his entire time in post - and even then he brought no preparation with him. After some months of no progress at all Mrs May got rid of him, replacing him with Mr Raab, who proved equally uninterested in forging an agreement. Even then it should have been clear that the Brextremists were aiming to crash out with no deal. Unforgivably and inexplicably, neither did they make any effective effort to sign trade deals with other countries.
Mrs May finally had to take matters into her own hands, having to give up on developing her policies for the Just About Managing, letting domestic issues slide as her own ministers were not doing their job.
Now that she has a deal on the table - a deal that gives everything the Leave campaign asked for and more - they simply ask for impossible things, refusing whatever she offers.
The referendum only asked 'in' or 'out', the Brextremists use this vagueness now to justify their cry "the will of the people" for each new demand they make, with no reference to what the UK electorate actually want, with no concern for the effect on ordinary people.
What effects?
People are starting to wake up to this. 84% of new voters - voters who were too young to vote in the Brexit referendum - would vote Remain in a second referendum.
It is hardly surprising then that the very people who claim "the will of the people" are the very ones who are most strongly against a second referendum. What they are trying to force on us is their own dream - which for many ordinary people will quickly become a nightmare. They are not interested in what we, the British people, want.
The irony is that by trying to force no deal the Brextremists might end up keeping the UK in the EU, as the Tory moderates unite against them and Labour pivots towards supporting another vote.
Like a spoilt child throwing a tantrum, "I don't want that one, I want that one!", by refusing Mrs May's deal the Brextremists may end up 'betraying Brexit' themselves.
Instead of supporting Mrs May's deal to Leave the EU, they are blocking it. Essentially they are hoping to force her - and us - over the cliff edge. If they don't support the deal, they calculate, then we will be forced out with no deal at all.
This is hardly what they promised us three years ago - the easiest deal in history, with us staying in the common market.
Like a predatory loan shark who ups your payments week by week, the ERG faction in the Conservative party has been leveraging the referendum result ever since it delivered us into their hands. They have been steadily repudiating the promises they made in the campaign and replacing them with what they really want. Anyone who dared stand up to them has been vilified as 'enemies of the people' - be they judges, company directors or ordinary concerned citizens.
Mrs May thought that she was doing the right thing giving the job of negotiating a deal to the Brexit brigade, the ones who had wanted it. However, once they had that responsibility they didn't do a thing. Mr Davis was put in charge of the team and then sat on his hands. He attended only four days of negotiations in his entire time in post - and even then he brought no preparation with him. After some months of no progress at all Mrs May got rid of him, replacing him with Mr Raab, who proved equally uninterested in forging an agreement. Even then it should have been clear that the Brextremists were aiming to crash out with no deal. Unforgivably and inexplicably, neither did they make any effective effort to sign trade deals with other countries.
Mrs May finally had to take matters into her own hands, having to give up on developing her policies for the Just About Managing, letting domestic issues slide as her own ministers were not doing their job.
Now that she has a deal on the table - a deal that gives everything the Leave campaign asked for and more - they simply ask for impossible things, refusing whatever she offers.
The referendum only asked 'in' or 'out', the Brextremists use this vagueness now to justify their cry "the will of the people" for each new demand they make, with no reference to what the UK electorate actually want, with no concern for the effect on ordinary people.
What effects?
- A hardship fund is being created for the post-Brexit surge in jobless Brits - and a good thing too. The economists supporting Brexit are quite clear that Brexit is going to destroy a number of UK industries - that is why they want us to Leave (they call it 'creative destruction').
- The UK has not a single 'ready to go' trade deal agreed with any country or trade bloc. Leaving on WTO terms will mean price rises. Companies are starting to relocate to Ireland and the Continent to avoid price hikes on their exports - already taking jobs from the UK even before Brexit.
- The border checks necessary once we leave will mean delays at ports, causing shortages of goods in shops and industry - already stockpiles are being made.
- Teacher recruitment is falling. Attempts to boost teacher numbers by recruiting from overseas have raised little interest. Some schools receive no applications at all for advertised posts and end up relying on staff unqualified for the subject they are teaching. Our children's education is already suffering - our next generation of entrepreneurs and professionals - just when we are attempting to go it alone.
People are starting to wake up to this. 84% of new voters - voters who were too young to vote in the Brexit referendum - would vote Remain in a second referendum.
It is hardly surprising then that the very people who claim "the will of the people" are the very ones who are most strongly against a second referendum. What they are trying to force on us is their own dream - which for many ordinary people will quickly become a nightmare. They are not interested in what we, the British people, want.
Like a spoilt child throwing a tantrum, "I don't want that one, I want that one!", by refusing Mrs May's deal the Brextremists may end up 'betraying Brexit' themselves.
Saturday, 2 March 2019
Kamikaze Brexit
Ms Truss, the chief secretary to the Treasury and a hard-line Brexiteer, labelled three cabinet ministers "kamikaze ministers" because they wanted to avoid a no-deal dive over the cliff edge of Brexit.
Amber Rudd, David Gauke and Greg Clark told Mrs May they would have to resign if she kept no deal on the table. With the spate of recent resignations and sackings, Mrs May is running out of possible cabinet members and agreed to give MPs the chance to delay Brexit to avoid a no deal.
UK businesses are paralysed by Mrs May's continued delays. Business confidence is ebbing faster than ever, with profits having been falling all year, and business volume shrinking each month. Advertising spend is down, investment is down and more businesses are being wound up or fleeing the UK - Dyson for one, despite its founder banging on about how Brexit was going to be good for Britain.
Many Japanese firms - Honda, Nissan, Sony, Panasonic, Hitachi, Toshiba - are recalibrating their UK investments: cancelling projects and moving head offices out of the UK. This may have something to do with the recent Japan-EU trade deal, which the UK will no longer be party to. We are trying to negotiate our own deal with Japan - with little progress made so far.
If the Brexiteers cannot force Mrs May's hand soon then they will find themselves in the jetsam of history, relegated once more to being the swivel-eyed loons of the Tory fringe.
Amber Rudd, David Gauke and Greg Clark told Mrs May they would have to resign if she kept no deal on the table. With the spate of recent resignations and sackings, Mrs May is running out of possible cabinet members and agreed to give MPs the chance to delay Brexit to avoid a no deal.
UK businesses are paralysed by Mrs May's continued delays. Business confidence is ebbing faster than ever, with profits having been falling all year, and business volume shrinking each month. Advertising spend is down, investment is down and more businesses are being wound up or fleeing the UK - Dyson for one, despite its founder banging on about how Brexit was going to be good for Britain.
Many Japanese firms - Honda, Nissan, Sony, Panasonic, Hitachi, Toshiba - are recalibrating their UK investments: cancelling projects and moving head offices out of the UK. This may have something to do with the recent Japan-EU trade deal, which the UK will no longer be party to. We are trying to negotiate our own deal with Japan - with little progress made so far.
So Ms Truss and her supporters do appear to have a point. If we are going to take the medicine then shouldn't we just hold our noses and swallow?
The history of Brexit, the promises made by the Leave campaign, and the fact that these promises look more threadbare with every passing day, suggest a different interpretation.
The history of Brexit, the promises made by the Leave campaign, and the fact that these promises look more threadbare with every passing day, suggest a different interpretation.
The no-deal poison pill offered by Brextremists is not what we were promised two years ago. We were promised the 'easiest deal in history', we were promised we would remain within the common market, we were promised trade deals round the world delivered to us before we even left - we were even promised £350 million a week for the NHS.
None of this is now on offer.
Britons realise that this changes the argument. 84% of new voters - voters who were too young to vote in the Brexit referendum - would vote Remain right now. Labour is moving towards calling for a second referendum, Mrs May is losing support while Remainer MPs are gaining confidence as the country wakes up from its isolationist fever.
Britons realise that this changes the argument. 84% of new voters - voters who were too young to vote in the Brexit referendum - would vote Remain right now. Labour is moving towards calling for a second referendum, Mrs May is losing support while Remainer MPs are gaining confidence as the country wakes up from its isolationist fever.
Hence the invective of the Brextremists, the personal attacks. Hence the demonising of reason. There is no way to justify Brexit using facts and figures, using analysis and projections, it an emotional act not a reasonable one.
So it is no surprise that Ms Truss and her fellow loons are in such a rush to take us all over the cliff.
However, it doesn't make any sense that she is calling Remainers kamikazes.
However, it doesn't make any sense that she is calling Remainers kamikazes.
Sunday, 10 February 2019
Who needs allies?
The Conservatives were always against the idea of a 'European Army', they now seem to be against having a Royal Navy. The latest plan is to reduce our 6,400-strong Royal Marines by over 10% and scrap the navy's only pair of amphibious assault ships. Another plan is to cut the British Army from 82,000 to 65,000 (a 20% cut). Given they can't recruit soldiers to fill the current places, this may be forced on them anyway.
Meanwhile our entire fleet of destroyers is becalmed in Portsmouth due to technical problems with their engines and a lack of sailors. These ships are only eight years old, but are not able to operate reliably in the Middle East because the seawater there is too warm for the engines. HMS Diamond had to limp back to port due to a propeller problem, leaving not a single RN ship in the Gulf. We can't even send a frigate as not one of the thirteen we have is ready for deployment.
Overall the MoD will have a £20 billion hole in its budget over the next decade while the cost of maintaining our defence forces keeps going up, President Trump is talking about quitting Europe and NATO, and Russia under Putin and China under Xi Jinping are both expansionist, moving armed forces into neighbouring territories and threatening further incursions.
Not the best time to cut loose from our allies then.
Meanwhile our entire fleet of destroyers is becalmed in Portsmouth due to technical problems with their engines and a lack of sailors. These ships are only eight years old, but are not able to operate reliably in the Middle East because the seawater there is too warm for the engines. HMS Diamond had to limp back to port due to a propeller problem, leaving not a single RN ship in the Gulf. We can't even send a frigate as not one of the thirteen we have is ready for deployment.
Overall the MoD will have a £20 billion hole in its budget over the next decade while the cost of maintaining our defence forces keeps going up, President Trump is talking about quitting Europe and NATO, and Russia under Putin and China under Xi Jinping are both expansionist, moving armed forces into neighbouring territories and threatening further incursions.
Not the best time to cut loose from our allies then.
Thursday, 7 February 2019
Brexit means Brexit - but is now the time?
People do make big changes in their life - a new job, a new house, marriage - and because it is a big change they take time to do it right.
Someone considering a new direction in their career will get advice, join an employment bureau, decide what they need from the new job, sift through the posts available, research companies, go to interviews - and meanwhile they will discuss with their current employer how their current job could be changed to meet their new needs.
Sometimes they find the dream job and leave. Sometimes their current company wants them enough that they stay but with a new package. Sometimes they see what is happening around them, in their industry, in the economy, and decide it is better to wait for a better time.
Britain is in that situation right now. We handed in our resignation to the EU after being refused a better deal to stay in, and now we are reaching the day that we must clear our desk. Unfortunately we haven't managed to find a better job and - worse - the economic situation has taken a decided turn to the worse.
The USA, which the Leave team was relying on for a juicy trade deal, is now led by a protectionist who has already abandoned a regional trade deal, covering all of North America, and has imposed duties on a number of goods in order to reduce imports. He came close to wiping out one of our aircraft manufacturers with punitive duties last year. Fortunately Mr Trump was prevented by his own judiciary - he wasn't moved a millimetre by Mrs May's protests.
The Eurozone is also sliding towards protectionism, with state support of strategic industries to shield them from overseas competition - i.e. clamping down on free trade - while continuing to agree zero tariff deals with other big exporting nations. They have just added Japan to the list.
In contrast, we currently have zero tariffs with the EU (and the other nations that the EU has made trade agreements with) but are going to lose that deal when we leave. We will have renegotiate carefully just to get a worse deal - and with all those nations we are trading with currently under EU deals. Just when things are getting harder economically.
Our own economy continues to do well pre-Brexit, but even here there are warning signs which have nothing to do with Brexit. Carillion's collapse has reinforced concerns about the other large outsourcing companies which also look rather shaky. Car manufacturers have been winding down production due to the scandal over diesel vehicle emissions and the resulting crash in sales.
However, now Brexit is almost here, with no plan in place and a no deal looking more and more likely, car manufacturers and other large exporters are taking more direct action. Nissan has decided to move production of its X-Trail sports utility vehicle to Japan, the Micra is now built in France. Financial companies are starting to shift staff and services to EU countries. Even our universities are setting up overseas campuses as students start to shun the UK due to perceived xenophobia and the increasing difficulty of getting a study visa.
Look around. This is simply not the right time to leave. Let us hope that Mrs May does manage a sensible deal with the EU. We need to diverge strategically from the EU over time rather than rip ourselves away unprepared, exposing ourselves rudderless to an increasingly hostile world economy.
Someone considering a new direction in their career will get advice, join an employment bureau, decide what they need from the new job, sift through the posts available, research companies, go to interviews - and meanwhile they will discuss with their current employer how their current job could be changed to meet their new needs.
Sometimes they find the dream job and leave. Sometimes their current company wants them enough that they stay but with a new package. Sometimes they see what is happening around them, in their industry, in the economy, and decide it is better to wait for a better time.
Britain is in that situation right now. We handed in our resignation to the EU after being refused a better deal to stay in, and now we are reaching the day that we must clear our desk. Unfortunately we haven't managed to find a better job and - worse - the economic situation has taken a decided turn to the worse.
The USA, which the Leave team was relying on for a juicy trade deal, is now led by a protectionist who has already abandoned a regional trade deal, covering all of North America, and has imposed duties on a number of goods in order to reduce imports. He came close to wiping out one of our aircraft manufacturers with punitive duties last year. Fortunately Mr Trump was prevented by his own judiciary - he wasn't moved a millimetre by Mrs May's protests.
The Eurozone is also sliding towards protectionism, with state support of strategic industries to shield them from overseas competition - i.e. clamping down on free trade - while continuing to agree zero tariff deals with other big exporting nations. They have just added Japan to the list.
In contrast, we currently have zero tariffs with the EU (and the other nations that the EU has made trade agreements with) but are going to lose that deal when we leave. We will have renegotiate carefully just to get a worse deal - and with all those nations we are trading with currently under EU deals. Just when things are getting harder economically.
Our own economy continues to do well pre-Brexit, but even here there are warning signs which have nothing to do with Brexit. Carillion's collapse has reinforced concerns about the other large outsourcing companies which also look rather shaky. Car manufacturers have been winding down production due to the scandal over diesel vehicle emissions and the resulting crash in sales.
However, now Brexit is almost here, with no plan in place and a no deal looking more and more likely, car manufacturers and other large exporters are taking more direct action. Nissan has decided to move production of its X-Trail sports utility vehicle to Japan, the Micra is now built in France. Financial companies are starting to shift staff and services to EU countries. Even our universities are setting up overseas campuses as students start to shun the UK due to perceived xenophobia and the increasing difficulty of getting a study visa.
Look around. This is simply not the right time to leave. Let us hope that Mrs May does manage a sensible deal with the EU. We need to diverge strategically from the EU over time rather than rip ourselves away unprepared, exposing ourselves rudderless to an increasingly hostile world economy.
Thursday, 31 January 2019
Students
Overseas students are a big earner for the UK, contributing over £20 billion each year to the UK economy. This is after deducting costs such as housing and health care. Over 100,000 overseas students have applied for places this year. This compares with 559,000 home-grown applicants. However, Brexit is going to put a giant crimp in the business. Universities are already starting to prepare, with many starting up subsidiaries in the EU.
Their fear is that overseas students will cross the UK off their post-Brexit list, due to complex visa requirements, a government set on reducing the numbers of overseas students, and the spectre of rising racism and xenophobia in the UK, exemplified by the "Go home!" snarled at a holidaying family from overseas.
"Excellent," cry the Brexit headbangers. "Send them all home! All these foreigners taking up British places at British universities. Let our own kids have a place!"
If only it were so simple (and if only they weren't so simple). Even if we ignore the economic boost to the local area from spending on food, transport, accommodation and entertainment; even if we ignore the benefits for our trade balance, even then it will be painful to lose them.
Overseas students pay full tuition fees. This means that they are subsidising home-grown students. In effect they are paying down our own students' debt. Furthermore, as they are so keen to come and are so profitable, universities are able to fill lecture theatres, provide an enormous variety of courses, and pay good salaries to attract top-flight academics - thereby attracting even more overseas students. A classic case of a 'virtuous circle'.
As a result, UK universities are among the best in the world. In this year's university rankings the top two worldwide are both British.
An exodus of foreign students will mean fees going up, courses closing, the flight of top-notch academics to richer institutions overseas. Admittedly, government ministers have a answer for the fees issue - forcing students to work in the fields over their summer holidays. The virtuous circle will become a vicious one.
Meanwhile the Chinese are drawing in thousands of students, offering funding, grants and low fees - and excellent teaching, in English as well as in Mandarin.
They understand that it isn't the students that matter, it is who they grow up to be. The UK universities see overseas students as cash cows, Mrs May brands them wannabe immigrants, but the Chinese see them as ambassadors, who will complete their studies and take up powerful positions back home, with fond memories of their time in academic China.
Britain used to boast of its 'soft power', the fact that many of the world's most powerful people were educated in the UK. With the turning inwards of recent years, with Brexit-fuelled xenophobia, with the tabloid-stoked fears over immigrants and refugees, we are now letting go of our privileged position even as we try to cash in on it.
Not that we have much to pawn. Those promised trade deals still haven't been signed, universities are becoming paper-sellers (a third of graduates being awarded a First Class degree?!) who simply want bums on seats (up to 84% of offers are now unconditional - who cares about A-level grades?), our Parliament is held up to mockery (deservedly so).
So we may as well put the cherry on top of Mr Johnson's cake and pull out of the one supra-national organisation where we still have an outsized influence.
This is certainly the time we should be thinking about where we should be going as a nation. Sadly, the Brexit boosters never did get around to that. So here we are.
Their fear is that overseas students will cross the UK off their post-Brexit list, due to complex visa requirements, a government set on reducing the numbers of overseas students, and the spectre of rising racism and xenophobia in the UK, exemplified by the "Go home!" snarled at a holidaying family from overseas.
"Excellent," cry the Brexit headbangers. "Send them all home! All these foreigners taking up British places at British universities. Let our own kids have a place!"
If only it were so simple (and if only they weren't so simple). Even if we ignore the economic boost to the local area from spending on food, transport, accommodation and entertainment; even if we ignore the benefits for our trade balance, even then it will be painful to lose them.
Overseas students pay full tuition fees. This means that they are subsidising home-grown students. In effect they are paying down our own students' debt. Furthermore, as they are so keen to come and are so profitable, universities are able to fill lecture theatres, provide an enormous variety of courses, and pay good salaries to attract top-flight academics - thereby attracting even more overseas students. A classic case of a 'virtuous circle'.
As a result, UK universities are among the best in the world. In this year's university rankings the top two worldwide are both British.
An exodus of foreign students will mean fees going up, courses closing, the flight of top-notch academics to richer institutions overseas. Admittedly, government ministers have a answer for the fees issue - forcing students to work in the fields over their summer holidays. The virtuous circle will become a vicious one.
Meanwhile the Chinese are drawing in thousands of students, offering funding, grants and low fees - and excellent teaching, in English as well as in Mandarin.
They understand that it isn't the students that matter, it is who they grow up to be. The UK universities see overseas students as cash cows, Mrs May brands them wannabe immigrants, but the Chinese see them as ambassadors, who will complete their studies and take up powerful positions back home, with fond memories of their time in academic China.
Britain used to boast of its 'soft power', the fact that many of the world's most powerful people were educated in the UK. With the turning inwards of recent years, with Brexit-fuelled xenophobia, with the tabloid-stoked fears over immigrants and refugees, we are now letting go of our privileged position even as we try to cash in on it.
Not that we have much to pawn. Those promised trade deals still haven't been signed, universities are becoming paper-sellers (a third of graduates being awarded a First Class degree?!) who simply want bums on seats (up to 84% of offers are now unconditional - who cares about A-level grades?), our Parliament is held up to mockery (deservedly so).
So we may as well put the cherry on top of Mr Johnson's cake and pull out of the one supra-national organisation where we still have an outsized influence.
This is certainly the time we should be thinking about where we should be going as a nation. Sadly, the Brexit boosters never did get around to that. So here we are.
Sunday, 27 January 2019
Run, don't walk
The Dutch are negotiating with over 250 British-based companies, hoping to persuade them to relocate to the Netherlands.
The French are trying to tempt a fair chunk of our financial services industry to move to Paris - if the Irish or Germans don't get there first.
Dyson (pre-tax profits £100 million) is moving its headquarters to Singapore - it has already moved its manufacturing to Malaysia.
Burberry warn that Brexit without a trade deal will cost them "tens of millions" in WTO tariffs.
Our car manufacturers are running on short weeks and relocating their factories overseas.
The super-wealthy are already buying up London property, attracted by the low pound (fallen by a quarter against the dollar) and the weak housing market (house prices down by 20%). If we Brexit without a deal then UK assets would become even more attractive to the vulture capitalists as the pound falls further and the economy falters.
Union leaders are worried that Brexit will allow workers' rights to be taken away from them - the 'low-tax, low-regulation' vision of the free marketeers who support Brexit.
Is this what we were promised?
The French are trying to tempt a fair chunk of our financial services industry to move to Paris - if the Irish or Germans don't get there first.
Dyson (pre-tax profits £100 million) is moving its headquarters to Singapore - it has already moved its manufacturing to Malaysia.
Burberry warn that Brexit without a trade deal will cost them "tens of millions" in WTO tariffs.
Our car manufacturers are running on short weeks and relocating their factories overseas.
The super-wealthy are already buying up London property, attracted by the low pound (fallen by a quarter against the dollar) and the weak housing market (house prices down by 20%). If we Brexit without a deal then UK assets would become even more attractive to the vulture capitalists as the pound falls further and the economy falters.
Union leaders are worried that Brexit will allow workers' rights to be taken away from them - the 'low-tax, low-regulation' vision of the free marketeers who support Brexit.
Is this what we were promised?
A pragmatic Brexit
The EU is pragmatic and understands that the UK crashing out of the the union will be damaging to many of its members. This has been the bedrock of Brexiteer strategy - if we play tough then the EU will finally roll over.
Certainly, it seems to have done this before - look at Greece and its flouting of the economic rules, yet the EU still bailed them out. Well, if you do look carefully, you see that Greece had to completely capitulate to EU demands in order to be given the bail out - and the bail out was in the EU's wider interest, preventing a member from collapsing and quite likely dragging others down with it.
What about Germany and France breaking the EU fiscal rules they had insisted on themselves and escaping punishment. Instead of fining them, the rules and penalties were changed.
This is a good example of forward looking policy. If a big player who sets rules then breaks those rules it is time to look at retuning the rules and how they are enforced. Next time the rules are less likely to be broken.
What about the bespoke deals with non-EU members such as Switzerland and Norway, even the Ukraine (free movement of goods without free movement of people)?
If a country is going to join in the future then why not tempt it in with some special deals? Even your local TV shop does that.
In each of the above cases the pragmatism of the EU was clear.
With Brexit, however, we have a country leaving the EU. This time there are serious disadvantages to the EU if they sweeten the deal. This would make leaving more attractive for other members, and joining less advantageous for non-members. The swell of nationalism in Europe makes generosity even more dangerous. Being forward-looking the EU27 negotiators know they have to be intransigent.
It is important also to understand that the rest of the EU don't want us to leave. The reason they don't want the UK to leave is that Brexit will be bad for them economically. This is why they are willing to break-and-rewrite rules to allow us to stay in. This is why they are willing to offer a transitional period. This is why they are willing to renegotiate all the trading arrangements.
They are willing to do all this because they understand these things will benefit them. If we try to strong-arm them into expensive concessions then they will refuse, even if it means no deal. Hence, for example, their refusal to allow a leaky border in Ireland. We are one country, they need to keep 27 others together and encourage more joiners. If that means absorbing the costs of a chaotic Brexit then they will.
What a pity that our own politicians are not as forward looking as them. With only a few weeks to go we still can't agree on our plan for Brexit - forget dealing with the aftermath.
Mrs May's deal gives even the most rabid Brexiteers what they initially asked for. It would be up to them to keep the momentum going if they want to isolate us further. Trying to force us out without any deal by demanding everything now shows they understand that the country has turned against their vision.
It is now up to the many politicians who want the best for Britain - they need to get behind the deal.
Certainly, it seems to have done this before - look at Greece and its flouting of the economic rules, yet the EU still bailed them out. Well, if you do look carefully, you see that Greece had to completely capitulate to EU demands in order to be given the bail out - and the bail out was in the EU's wider interest, preventing a member from collapsing and quite likely dragging others down with it.
What about Germany and France breaking the EU fiscal rules they had insisted on themselves and escaping punishment. Instead of fining them, the rules and penalties were changed.
This is a good example of forward looking policy. If a big player who sets rules then breaks those rules it is time to look at retuning the rules and how they are enforced. Next time the rules are less likely to be broken.
What about the bespoke deals with non-EU members such as Switzerland and Norway, even the Ukraine (free movement of goods without free movement of people)?
If a country is going to join in the future then why not tempt it in with some special deals? Even your local TV shop does that.
In each of the above cases the pragmatism of the EU was clear.
With Brexit, however, we have a country leaving the EU. This time there are serious disadvantages to the EU if they sweeten the deal. This would make leaving more attractive for other members, and joining less advantageous for non-members. The swell of nationalism in Europe makes generosity even more dangerous. Being forward-looking the EU27 negotiators know they have to be intransigent.
It is important also to understand that the rest of the EU don't want us to leave. The reason they don't want the UK to leave is that Brexit will be bad for them economically. This is why they are willing to break-and-rewrite rules to allow us to stay in. This is why they are willing to offer a transitional period. This is why they are willing to renegotiate all the trading arrangements.
They are willing to do all this because they understand these things will benefit them. If we try to strong-arm them into expensive concessions then they will refuse, even if it means no deal. Hence, for example, their refusal to allow a leaky border in Ireland. We are one country, they need to keep 27 others together and encourage more joiners. If that means absorbing the costs of a chaotic Brexit then they will.
What a pity that our own politicians are not as forward looking as them. With only a few weeks to go we still can't agree on our plan for Brexit - forget dealing with the aftermath.
Mrs May's deal gives even the most rabid Brexiteers what they initially asked for. It would be up to them to keep the momentum going if they want to isolate us further. Trying to force us out without any deal by demanding everything now shows they understand that the country has turned against their vision.
It is now up to the many politicians who want the best for Britain - they need to get behind the deal.
Wednesday, 23 January 2019
Coping with change - who will weather Brexit best?
Ironically, Cambridge scientists have discovered that Remain supporters are better at coping with change than Leavers.
They tested 332 UK citizens by giving them a task where the rules changed while they were doing it. The researchers found that Remain voters showed the most flexibility. Leavers also came up as less creative than Remainers.
The scientists found that people with "tight, impermeable mental boundaries" dislike changing their minds when the facts change. Such people also tend to be socially conservative and ethnocentric.
Note that this has nothing to do with age, intelligence or education.
How ironic - Remainers will manage better when things really start to change.
Certainly it seems that leading Brextremists are worried about the consequences of what they have started. Some are putting in place their own personal backstop.
The latest is Mr Lawson, who chaired the Vote Leave campaign. He now lives in France and has applied for French residency.
Meanwhile Mr Farage has ensured his two daughters have German passports, though he says he isn't applying for one himself. This may be because he has applied for a job with Mr Trump.
What about Sir James Dyson, our top entrepreneur, worth nearly £10 billion, and a big supporter of a no-deal Brexit? He has just announced he is moving his HQ to Singapore, and is moving production of his electric car there too.
Do they know something that they aren't telling us?
They tested 332 UK citizens by giving them a task where the rules changed while they were doing it. The researchers found that Remain voters showed the most flexibility. Leavers also came up as less creative than Remainers.
The scientists found that people with "tight, impermeable mental boundaries" dislike changing their minds when the facts change. Such people also tend to be socially conservative and ethnocentric.
Note that this has nothing to do with age, intelligence or education.
How ironic - Remainers will manage better when things really start to change.
Certainly it seems that leading Brextremists are worried about the consequences of what they have started. Some are putting in place their own personal backstop.
The latest is Mr Lawson, who chaired the Vote Leave campaign. He now lives in France and has applied for French residency.
Meanwhile Mr Farage has ensured his two daughters have German passports, though he says he isn't applying for one himself. This may be because he has applied for a job with Mr Trump.
What about Sir James Dyson, our top entrepreneur, worth nearly £10 billion, and a big supporter of a no-deal Brexit? He has just announced he is moving his HQ to Singapore, and is moving production of his electric car there too.
Do they know something that they aren't telling us?
Sunday, 13 January 2019
Brexit was a vote about who we want to be
The Brexit referendum stirred deep passions. It wasn't a vote about the EU, it was a vote about the UK. It was a vote about who we are and who we want to be. It was about how we as a people want to face the world. Do we hide behind a fortified Trumpian wall, locked in looking out, or do we live as citizens of nowhere, all our doors left open and unguarded, with strangers wandering through at will? Or can we find a middle way?
The best predictors of how someone voted was their view on the death penalty and whether the voter had a degree. It was not about intellect or education, however, it was about where the voter stood on the scale between liberalism and authoritarianism.
Of course Brexit voters want to take back control, but it isn't about bendy bananas and EU regulations, it is about being able to punish criminals properly, including deporting them or imposing the death penalty. Brexit is about immigration, but it isn't about freedom of movement. Brexit voters don't care about freedom of movement, they simply want fewer immigrants, wherever they might come from.
They want sovereignty, blue passports and stronger borders, but they don't really care about the colour of their passports or better security, they simply want a clear and meaningful symbol of British separation from the rest of the world and evidence of the separation being enforced.
Brexit supporters may have marginally won the vote, but they won't get what they actually want - it was never on offer, and in our current society cannot be delivered. Only 17 million people voted for Brexit out of a population of 67 million. This is too small a minority to take back control of what Britain stands for. We are multi-cultural and have been for decades, we lead in many international organisations and have done so for over a century.
Mrs May made the control of immigration her main goal as Home Secretary - and failed. Her 'hostile environment' policy has been reversed due to public pressure. The government itself admits that immigration may even go up after Brexit because that is how Britain has remained near the top of the economic tree. Freedom of movement allowed people to cross borders without a passport, but we always checked passports, we always had the option to send people back. Brexit's implication for immigration is simply that we won't be able to return refugees to the EU, we will have to send them directly to their origin country - if we can.
We will still be subject to the European Court of Human Rights even after a hard Brexit. The ECHR is not part of the EU, it was created before the EU existed. so leaving the EU does not mean we leave the ECHR.
Brexit, of whatever flavour, may only achieve one lasting thing - isolating the UK from our current community of European nations.
It makes sense then to pick a Brexit that will harm us the least. The stock market has already fallen to its lowest point since the financial crisis. Jaguar workers are on a three-day week. Mr Trump's trade war with China has hit £2 billion worth of UK exports, with a further £2 billion at risk. Brexit hasn't even happened yet.
Many of the Brextremist politicians are now shying away from a hard Brexit and are backing Mrs May's deal. It may be a poor one, but it is the best we can do. That or rescind Article 50 and plan our future properly.
The best predictors of how someone voted was their view on the death penalty and whether the voter had a degree. It was not about intellect or education, however, it was about where the voter stood on the scale between liberalism and authoritarianism.
Of course Brexit voters want to take back control, but it isn't about bendy bananas and EU regulations, it is about being able to punish criminals properly, including deporting them or imposing the death penalty. Brexit is about immigration, but it isn't about freedom of movement. Brexit voters don't care about freedom of movement, they simply want fewer immigrants, wherever they might come from.
They want sovereignty, blue passports and stronger borders, but they don't really care about the colour of their passports or better security, they simply want a clear and meaningful symbol of British separation from the rest of the world and evidence of the separation being enforced.
Brexit supporters may have marginally won the vote, but they won't get what they actually want - it was never on offer, and in our current society cannot be delivered. Only 17 million people voted for Brexit out of a population of 67 million. This is too small a minority to take back control of what Britain stands for. We are multi-cultural and have been for decades, we lead in many international organisations and have done so for over a century.
Mrs May made the control of immigration her main goal as Home Secretary - and failed. Her 'hostile environment' policy has been reversed due to public pressure. The government itself admits that immigration may even go up after Brexit because that is how Britain has remained near the top of the economic tree. Freedom of movement allowed people to cross borders without a passport, but we always checked passports, we always had the option to send people back. Brexit's implication for immigration is simply that we won't be able to return refugees to the EU, we will have to send them directly to their origin country - if we can.
We will still be subject to the European Court of Human Rights even after a hard Brexit. The ECHR is not part of the EU, it was created before the EU existed. so leaving the EU does not mean we leave the ECHR.
Brexit, of whatever flavour, may only achieve one lasting thing - isolating the UK from our current community of European nations.
It makes sense then to pick a Brexit that will harm us the least. The stock market has already fallen to its lowest point since the financial crisis. Jaguar workers are on a three-day week. Mr Trump's trade war with China has hit £2 billion worth of UK exports, with a further £2 billion at risk. Brexit hasn't even happened yet.
Many of the Brextremist politicians are now shying away from a hard Brexit and are backing Mrs May's deal. It may be a poor one, but it is the best we can do. That or rescind Article 50 and plan our future properly.
Monday, 7 January 2019
Hedge funds banking on Brexit
Some of the biggest backers of Leave were the managers of multi-billion pound hedge funds, such as Sir Paul Marshall and Sir Michael Hintze. Why should they be so keen to cut our links with Europe?
Leaving the EU will mean losing financial 'passporting'. These allow financial services to be freely traded across borders. Brexit means losing these rights, so surely fund managers should have supported Remain just like banks did?
Fund managers are clear that leaving will put the UK in a very difficult economic position, unlike many high-profile Brexit supporters. We face losing our friction-free trade with Europe (around 50% of our exports go there) without yet having any compensating trade deals sorted out elsewhere.
Of course, our Brexit secretary, Mr Barclay at time of writing, promises that we will soon strike those trade deals, and even if things are not as simple as Mr Davis made out when he had first go at the job we will certainly recover a lot of lost ground over time.
So, essentially, we will have period where UK businesses will struggle as they are cut off from their markets and quite a number will go under. This will mean their creditors selling up them and their assets at fire sale prices. Given that they are sound businesses, once other trade deals are made they should build their value back up soon enough. Whoever snaps them up when they are cheap stands to make a pretty penny.
Coincidentally, that is what hedge funds do.
Surely the leaders of our financial industry wouldn't mess with the British economy just to make a few more billion quid?
Ever heard of Libor?
Leaving the EU will mean losing financial 'passporting'. These allow financial services to be freely traded across borders. Brexit means losing these rights, so surely fund managers should have supported Remain just like banks did?
Fund managers are clear that leaving will put the UK in a very difficult economic position, unlike many high-profile Brexit supporters. We face losing our friction-free trade with Europe (around 50% of our exports go there) without yet having any compensating trade deals sorted out elsewhere.
Of course, our Brexit secretary, Mr Barclay at time of writing, promises that we will soon strike those trade deals, and even if things are not as simple as Mr Davis made out when he had first go at the job we will certainly recover a lot of lost ground over time.
So, essentially, we will have period where UK businesses will struggle as they are cut off from their markets and quite a number will go under. This will mean their creditors selling up them and their assets at fire sale prices. Given that they are sound businesses, once other trade deals are made they should build their value back up soon enough. Whoever snaps them up when they are cheap stands to make a pretty penny.
Coincidentally, that is what hedge funds do.
Surely the leaders of our financial industry wouldn't mess with the British economy just to make a few more billion quid?
Ever heard of Libor?
Saturday, 5 January 2019
Breaking our (supply) chains
UK business investment is grim. It is only 5% up on pre-financial crisis levels, while we would expect to see an increase of over 30% at this stage.
Two-thirds of EU businesses with UK suppliers are going to drop them and change to EU suppliers due to Brexit. 40% of UK businesses will replace their EU suppliers with UK ones. It isn't just tariffs that are the problem - it is also VAT. After Brexit, UK businesses will have to pay VAT on EU imports up front, with enormous cash flow implications. Many UK businesses expect to terminate any EU sales operation they have, in order to avoid the red tape that soon will be involved.
The UK car industry isn't doing so well either. This year's 12% drop in UK car sales has hit UK manufacturers hardest, with production down 14%. Post-Brexit they may have even bigger worries. A hard Brexit will mean high tariffs, but the industry relies on complex supply chains where components are moved between continental Europe and the UK numerous times. If we don't have a trade agreement then at each crossing they will have a levy imposed of up to 10%. This would make production in Britain uneconomic.
Even imported cars will suffer. Imported German vehicles will have a 10% tariff imposed under WTO rules. We buy a million of them a year. Post-Brexit prices will be around £1,500 higher while choice will be reduced as overseas makers don't bother to certify their vehicles in the UK.
Overseas investment in the UK is still strong, with the 10% drop in sterling making every rouble or dollar go further. Already 200 UK businesses have been bought out by foreign investors. However the rise in overseas investment in the rest of Europe was double that in the UK (14% up compared to 7%), and investor sentiments are changing as they see Britain becoming less attractive on a series of fronts including education, infrastructure, skills, political stability, and - of course - access to the EU.
Our own research and development spending is also low compared to the EU average - successful countries such as Germany spend almost 3% of GDP on R&D. We spend half that.
R&D investment correlates strongly with productivity growth, so it is no surprise that the UK has poor productivity. Even worse, if we are going to be relying on exports then we need to be making stuff people want to buy at prices they can afford, and we need access to their markets.
The transition deal is vital, but industry needs to look beyond it, readying itself for the final divorce and the hard times ahead.
Two-thirds of EU businesses with UK suppliers are going to drop them and change to EU suppliers due to Brexit. 40% of UK businesses will replace their EU suppliers with UK ones. It isn't just tariffs that are the problem - it is also VAT. After Brexit, UK businesses will have to pay VAT on EU imports up front, with enormous cash flow implications. Many UK businesses expect to terminate any EU sales operation they have, in order to avoid the red tape that soon will be involved.
The UK car industry isn't doing so well either. This year's 12% drop in UK car sales has hit UK manufacturers hardest, with production down 14%. Post-Brexit they may have even bigger worries. A hard Brexit will mean high tariffs, but the industry relies on complex supply chains where components are moved between continental Europe and the UK numerous times. If we don't have a trade agreement then at each crossing they will have a levy imposed of up to 10%. This would make production in Britain uneconomic.
Even imported cars will suffer. Imported German vehicles will have a 10% tariff imposed under WTO rules. We buy a million of them a year. Post-Brexit prices will be around £1,500 higher while choice will be reduced as overseas makers don't bother to certify their vehicles in the UK.
Overseas investment in the UK is still strong, with the 10% drop in sterling making every rouble or dollar go further. Already 200 UK businesses have been bought out by foreign investors. However the rise in overseas investment in the rest of Europe was double that in the UK (14% up compared to 7%), and investor sentiments are changing as they see Britain becoming less attractive on a series of fronts including education, infrastructure, skills, political stability, and - of course - access to the EU.
Our own research and development spending is also low compared to the EU average - successful countries such as Germany spend almost 3% of GDP on R&D. We spend half that.
R&D investment correlates strongly with productivity growth, so it is no surprise that the UK has poor productivity. Even worse, if we are going to be relying on exports then we need to be making stuff people want to buy at prices they can afford, and we need access to their markets.
The transition deal is vital, but industry needs to look beyond it, readying itself for the final divorce and the hard times ahead.
Friday, 4 January 2019
The Cod Wars and sovereignty
The Cod Wars were 'fought' between the UK and Iceland over fishing rights in the North Atlantic. Iceland won every time. We lost access to prime fishing areas and thousands of fishermen lost their livelihood.
Why did we lose? We are much bigger than Iceland in every way - our GDP, our population, our armed forces.
We lost because all wars are about alliances. In this case Iceland threatened to withdraw from NATO if we didn't concede to their demands. This would have prevented NATO access to a critical submarine route. The other members of NATO decided that would be worse than some British job losses, and we had to concede to Iceland's demands.
Gibraltar
Another case to consider is what happened the last time things became strained over Gibraltar. In 2013 Spain imposed very strict border controls, causing a lot of problems for Gibraltar residents (many of whom work in Spain). We asked the European Commission to arbitrate, and threatened to go to the European Court of Justice. This time it was the Spanish who capitulated.
Brexit has given Spain the opportunity to try again. Once we are not part of the EU then any dispute over Gibraltar has to be settled by Spain and ourselves. It may end up being settled using political force with a dressing of armed force ("to show we mean business" as one politician put it). We may well lose this time, as Spain has the EU and we will have no-one.
Sovereignty
The point of both these cases is that the nations concerned gave up sovereignty.
In the first case our membership of an international organisation meant we had to take an economic hit for the good of the whole group. If we had not been part of NATO then Iceland could not have used the threat of withdrawal.
In the second case our membership of an international organisation meant we could go to arbitration over a dispute with another member. However, to do this we had to agree to abide by the decision whether we liked it or not - we had to give up sovereignty.
Giving up sovereignty has both costs and benefits. Our withdrawal from the EU has the benefit of letting us make our own trade deals, however this is at the cost of losing the deals we already have, losing the backing of the EU in trade and border disputes and losing the their expertise in making trade deals.
WTO rules
Ironically, the core Brexiteer trade strategy is for the UK to trade on WTO rules. This is an international organisation, to join them you have to agree to follow their rules. So right from the start we are giving up our sovereignty over trade to another group.
Worse, the WTO is in crisis. The US under Mr Trump is doing its best to emasculate the organisation by preventing it from doing its basic job - sorting out arguments. The WTO has a panel of judges who rule on trade disputes. A number of the judges are retiring, but the US trade representative has prevented any new judges being appointed to this panel.
Right now there are only three judges left - the minimum required for a panel. Two of the judges will be stepping down this year. If the US continues to block new appointments then the WTO will be unable to arbitrate in disputes - meaning that "WTO rules" will become "WTO suggestions". Rules which are not enforced are no longer rules.
So we are abandoning the biggest trade bloc on Earth, our biggest trading partner, with not a single trade agreement in place, just when the two most powerful countries in the world are gearing up for a trade war - and we hope to rely on WTO rules which can't be enforced.
This isn't what we were promised by the Leave campaign.
Why did we lose? We are much bigger than Iceland in every way - our GDP, our population, our armed forces.
We lost because all wars are about alliances. In this case Iceland threatened to withdraw from NATO if we didn't concede to their demands. This would have prevented NATO access to a critical submarine route. The other members of NATO decided that would be worse than some British job losses, and we had to concede to Iceland's demands.
Gibraltar
Another case to consider is what happened the last time things became strained over Gibraltar. In 2013 Spain imposed very strict border controls, causing a lot of problems for Gibraltar residents (many of whom work in Spain). We asked the European Commission to arbitrate, and threatened to go to the European Court of Justice. This time it was the Spanish who capitulated.
Brexit has given Spain the opportunity to try again. Once we are not part of the EU then any dispute over Gibraltar has to be settled by Spain and ourselves. It may end up being settled using political force with a dressing of armed force ("to show we mean business" as one politician put it). We may well lose this time, as Spain has the EU and we will have no-one.
The point of both these cases is that the nations concerned gave up sovereignty.
In the first case our membership of an international organisation meant we had to take an economic hit for the good of the whole group. If we had not been part of NATO then Iceland could not have used the threat of withdrawal.
In the second case our membership of an international organisation meant we could go to arbitration over a dispute with another member. However, to do this we had to agree to abide by the decision whether we liked it or not - we had to give up sovereignty.
Giving up sovereignty has both costs and benefits. Our withdrawal from the EU has the benefit of letting us make our own trade deals, however this is at the cost of losing the deals we already have, losing the backing of the EU in trade and border disputes and losing the their expertise in making trade deals.
WTO rules
Ironically, the core Brexiteer trade strategy is for the UK to trade on WTO rules. This is an international organisation, to join them you have to agree to follow their rules. So right from the start we are giving up our sovereignty over trade to another group.
Worse, the WTO is in crisis. The US under Mr Trump is doing its best to emasculate the organisation by preventing it from doing its basic job - sorting out arguments. The WTO has a panel of judges who rule on trade disputes. A number of the judges are retiring, but the US trade representative has prevented any new judges being appointed to this panel.
Right now there are only three judges left - the minimum required for a panel. Two of the judges will be stepping down this year. If the US continues to block new appointments then the WTO will be unable to arbitrate in disputes - meaning that "WTO rules" will become "WTO suggestions". Rules which are not enforced are no longer rules.
So we are abandoning the biggest trade bloc on Earth, our biggest trading partner, with not a single trade agreement in place, just when the two most powerful countries in the world are gearing up for a trade war - and we hope to rely on WTO rules which can't be enforced.
This isn't what we were promised by the Leave campaign.
Tuesday, 1 January 2019
Picking up the pieces
Mr Eisman is known as 'the big short'. He has made millions from betting that company values will go down. Right now he is gearing up for Brexit. He has already bet against the UK banks, no matter the flavour of Brexit, but he is waiting to see if we end up with a hard Brexit. If we do, "the UK stock market's gonna go down."
He says, "You could short anything in the UK at that point. It wouldn't matter. Just throw a dart at it - short it."
Ms Desmond, the chief investment officer at Mondrian Investment Partners' UK operation, manages investments of $60 billion. She has warned that the multimillionaires backing Brexit are all ready to cash in. They made their money in hedge funds and see Brexit as a great opportunity.
As Ms Desmond pointed out, they won't "stick around if things get difficult", and in fact if there is no deal they "will be eagerly waiting out the disaster on the sidelines with their vulture funds ready to pick up the pieces."
Certainly, a hedge fund should be looking after its clients' interests. When Britain hits the rough patch post-Brexit that everyone - Brexiteers included - has predicted, the fund managers have a responsibility to move investment elsewhere, or as Ms Desmond puts it: "the investment management firms will flee."
With big investors pulling out, industry will hit the skids. After the shake out there will plenty of bargains for the funds to snap up.
Not only that, but foreign investors are gearing up to sue us for millions of pounds in lost profits. If we leave the EU single market then they will have the right to sue the UK government for damages.
We have 95 bilateral investment treaties with other countries. These protect investors, promising "fair and equitable" treatment. Case law indicates that a substantial change in the regulatory regime is unfair treatment. Usually this arises in developing countries, where such changes are more common, but when Spain reduced certain subsidies in 2013 investors sued - two British companies have already been awarded over £100 million. Argentia had to pay investors $1.35 billion in a similar situation.
We still have the chance to avoid all this. Mr Eisman's only concern is that Mrs May might get her deal accepted, saying that the stock market would go up and he would have to pay up on the bets he made against UK banks. A managed Brexit will be painful, but not nearly as damaging as no deal.
Already a number of leading Brexiteers have realised this and now support Mrs May's deal. Let us hope the headbangers won't put a spanner in the works.
He says, "You could short anything in the UK at that point. It wouldn't matter. Just throw a dart at it - short it."
Ms Desmond, the chief investment officer at Mondrian Investment Partners' UK operation, manages investments of $60 billion. She has warned that the multimillionaires backing Brexit are all ready to cash in. They made their money in hedge funds and see Brexit as a great opportunity.
As Ms Desmond pointed out, they won't "stick around if things get difficult", and in fact if there is no deal they "will be eagerly waiting out the disaster on the sidelines with their vulture funds ready to pick up the pieces."
Certainly, a hedge fund should be looking after its clients' interests. When Britain hits the rough patch post-Brexit that everyone - Brexiteers included - has predicted, the fund managers have a responsibility to move investment elsewhere, or as Ms Desmond puts it: "the investment management firms will flee."
With big investors pulling out, industry will hit the skids. After the shake out there will plenty of bargains for the funds to snap up.
Not only that, but foreign investors are gearing up to sue us for millions of pounds in lost profits. If we leave the EU single market then they will have the right to sue the UK government for damages.
We have 95 bilateral investment treaties with other countries. These protect investors, promising "fair and equitable" treatment. Case law indicates that a substantial change in the regulatory regime is unfair treatment. Usually this arises in developing countries, where such changes are more common, but when Spain reduced certain subsidies in 2013 investors sued - two British companies have already been awarded over £100 million. Argentia had to pay investors $1.35 billion in a similar situation.
We still have the chance to avoid all this. Mr Eisman's only concern is that Mrs May might get her deal accepted, saying that the stock market would go up and he would have to pay up on the bets he made against UK banks. A managed Brexit will be painful, but not nearly as damaging as no deal.
Already a number of leading Brexiteers have realised this and now support Mrs May's deal. Let us hope the headbangers won't put a spanner in the works.
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