Thursday, 30 June 2016

Can we have Alternatives to EU Trade Post Brexit?

Some have said that we could easily strike trade agreements with other countries and can ignore the EU. Rather shortsighted if you look at the numbers:

  • GDP of Ghana was under $40bn in 2014
  • GDP of Germany was under $4000bn in 2014
  • Our exports to Germany were $46bn in 2014.

So we export more to Germany than the entire Ghana GDP. Do you really think we can replace trade with Germany with Ghana instead?

It's all very well looking at other trade deals but the reality is that the volumes are way off what we have with EU and cannot replace them in the short or medium term before you even think about what we could sell to other countries - our manufacturing base isn't exactly massive.

Guardian Comment - Has Boris Been Ended with Check Mate?

This was the fascinating analysis from a post on Guardian comments by user Teebs the day after the EU referendum result was announced.

Now that Boris Johnson has confirmed he is not standing for the Conservative leadership it looks even more intriguing.

Teebs - The Guardian Comments 25 June 2016

If Boris Johnson looked downbeat yesterday, that is because he realises that he has lost.

Perhaps many Brexiters do not realise it yet, but they have actually lost, and it is all down to one man: David Cameron.

With one fell swoop yesterday at 9:15 am, Cameron effectively annulled the referendum result, and simultaneously destroyed the political careers of Boris Johnson, Michael Gove and leading Brexiters who cost him so much anguish, not to mention his premiership.


Throughout the campaign, Cameron had repeatedly said that a vote for leave would lead to triggering Article 50 straight away. Whether implicitly or explicitly, the image was clear: he would be giving that notice under Article 50 the morning after a vote to leave. Whether that was scaremongering or not is a bit moot now but, in the midst of the sentimental nautical references of his speech yesterday, he quietly abandoned that position and handed the responsibility over to his successor.
And as the day wore on, the enormity of that step started to sink in: the markets, Sterling, Scotland, the Irish border, the Gibraltar border, the frontier at Calais, the need to continue compliance with all EU regulations for a free market, re-issuing passports, Brits abroad, EU citizens in Britain, the mountain of legislation to be torn up and rewritten ... the list grew and grew.

The referendum result is not binding. It is advisory. Parliament is not bound to commit itself in that same direction.

The Conservative party election that Cameron triggered will now have one question looming over it: will you, if elected as party leader, trigger the notice under Article 50?
Who will want to have the responsibility of all those ramifications and consequences on his/her head and shoulders?

Boris Johnson knew this yesterday, when he emerged subdued from his home and was even more subdued at the press conference. He has been out-maneouvered and check-mated.
If he runs for leadership of the party, and then fails to follow through on triggering Article 50, then he is finished. If he does not run and effectively abandons the field, then he is finished. If he runs, wins and pulls the UK out of the EU, then it will all be over - Scotland will break away, there will be upheaval in Ireland, a recession ... broken trade agreements. Then he is also finished. Boris Johnson knows all of this. When he acts like the dumb blond it is just that: an act.

The Brexit leaders now have a result that they cannot use. For them, leadership of the Tory party has become a poison chalice.

When Boris Johnson said there was no need to trigger Article 50 straight away, what he really meant to say was "never". When Michael Gove went on and on about "informal negotiations" ... why? why not the formal ones straight away? ... he also meant not triggering the formal departure. They both know what a formal demarche would mean: an irreversible step that neither of them is prepared to take.

All that remains is for someone to have the guts to stand up and say that Brexit is unachievable in reality without an enormous amount of pain and destruction, that cannot be borne. And David Cameron has put the onus of making that statement on the heads of the people who led the Brexit campaign.

Monday, 27 June 2016

Will UK Leave EU? When will Article 50 be Triggered?

Now that the referendum votes have been counted and the result announced the expectation is that the UK will be leaving the EU. However for this to happen the UK government needs to notify the EU in accordance with Article 50 and this still may not happen for some time, if at all.

There has been a petition organised to have a second referendum where the margin of victory is required to be much higher. Ironically this was initiated by a Leave supporter before the results were known and when they were expecting Remain to win. I think this has virtually no chance of success.

David Cameron has given his resignation and handed the responsibility for initiating the formal process of withdrawing from the EU to his successor. At the moment the two likely front runners are Boris Johnson and Theresa May. As I explained in my previous blog I don't think Boris is an enthusiastic Leave supporter and the result was unexpected for him. Theresa May was a supporter of the Remain side although much less visible and vocal than some other cabinet members.

As a result if either become Leader of the Conservatives and thus Prime Minister they would be following a policy that they didn't believe was in the best interests of the UK. If the leadership election takes place as expected in October 2016 then it is entirely possible by then that negative impacts of the UK leaving would have become clear and public opinion may have swung decisively against Brexit. It's also possible that they may have found that the trade deal to access the EU Single Market just isn't available on the terms that they find acceptable.

One possible scenario is that the newly elected Prime Minister decides to call a snap general election on a manifesto of reversing the decision and to Remain in the EU. A subsequent win on that platform would mean that Article 50 wasn't triggered and that the UK would continue as a member of the EU. It would also mean that the momentum for a second Scottish Independence referendum would have been blown apart as the UK would still be part of the EU.

As of June 2016 this sequence of events might appear fanciful. However when the Berlin Wall was breached in 1989, no-one could foresee that Germany would be reunited so quickly or that the Soviet Union would be gone within a couple of years. The saying goes that a week is a long time in politics and there are plenty of pitfalls that could scupper the whole Brexit process over the next 4 months even without external influences.

What do you think? Is this a possible scenario?

Sunday, 26 June 2016

Boris Johnson - A Reluctant Leaver? Has his Plan Failed?

Boris Johnson - A Plan in Ruins?

It’s often said that David Cameron has been a lucky Prime Minister but that his luck ran out over the EU referendum. Prompted by some comments over the weekend I wonder if the same can be said for Boris Johnson.

Seeing his body language and what he said as well as the time it originally took him to decide he was going to campaign for the Leave side I think probably shows he isn’t really in favour of leaving the EU and never expected Leave to win the vote. I expect he thought as with the Scottish referendum that when faced with the choice, voters would take the status quo and stick with Remain so the result was as much of a shock to him as to anyone else.

I’m sure his long term (now short term) aim was to be PM and his plan was to manoeuvre himself to be in the best position to lead the Conservative party when David Cameron stepped down before 2020. The delay in deciding if he was for or against Remaining seemed to be time he was deciding what would work best for him rather than having any ideological desire to stay or go. With his background it seems far more likely that he is in favour of European integration if not the imperfect EU structures. Early in the campaign he suggested that a Leave vote could trigger more concessions from the EU which again seems like someone not determined to leave in the way that Farage was.

My thinking is that his original game plan was to be a central part of the Leave side to increase his profile around the country but also to prove his Eurosceptic credentials within the Conservative party for the coming leadership battle. His expectation was that Leave would lose the referendum but he would still have that credibility as a key leader of the campaign to secure votes from Eurosceptic MPs and party members.

That plan has now been blown out of the water with the result and David Cameron passing the responsibility for initiating the process of Leaving to the new Prime Minister, likely to be Boris Johnson. In doing so Boris now has to make a decision he never expected and his relative silence since the result shows he probably realises the difficulty he is now in.

This is probably another example of the Law of Unintended consequences. Rather than just being a useful way to gain the Tory leadership but lose the referendum, Boris perhaps gave the Leave side more credibility and attracted voters that would otherwise have stayed at home or voted Remain. The consequences for him could be severe, will he invoke Article 50? Will he be the PM that oversees the breakup of the UK?

So what will happen next? My next blog will explore possible options

Friday, 24 June 2016

Back to Blogging

This blog has been silent for a little while as I've concentrated on other projects. However the EU referendum vote has galvanised opinion so much on both sides that it seemed an appropriate channel to post some thoughts as the weeks go on.

While I was firmly in the Remain camp, I had a high expectation that Leave would be on course to win from discussions with work colleagues and from viewing comments on Facebook groups. When various friends I considered to be balanced and considered, were posting Leave material in the days before the vote I believed it was a sign that the Leave vote would triumph.

As a result and for the only time in my life I placed some bets. I wish I'd known that bets could be placed after the vote had closed as the odds were much better then but I still managed to get odds of 4/1 for Leave and have ended up with a decent profit. Unfortunately it's somewhat tempered by the drop in my share portfolio but even there the fall hasn't been as dramatic as might have been expected due to dollar assets now being more valuable than before.