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Ghost Dog

Profile Information

Gender: Do not display
Hometown: Canary Islands Archipelago
Home country: Spain
Member since: Wed Apr 19, 2006, 01:59 PM
Number of posts: 16,881

About Me

A Brit many years in Spain, Catalunya, Baleares, Canarias. Cooperative member. Geography. Ecology. Cartography. Software. Sound Recording. Music Production. Languages & Literature. History.

Journal Archives

So Anglosphere and Commonwealth take priority over EU on trade

... As to this fabulous agreement, it will be "a new relationship based on free trade and friendly cooperation, not on the EU's treaties or EU law". Furthermore, "there will be no political alignment with the EU". It will "keep the UK out of the single market, out of any form of customs union, and end the role of the European Court of Justice".

Just so that there is no misunderstanding, the Manifesto goes on to list the attributes of this future relationship. It will, we are told, allow us to take back control of our laws and our money and control our own trade policy. We are also to have an Australian-style points-based immigration system. A new Conservative government would also raise standards in areas like workers' rights, animal welfare, agriculture and the environment. And it would ensure we are in full control of our fishing waters.

But then comes the key part. "We will negotiate a trade agreement next year", the Manifesto says, "one that will strengthen our Union". Crucially, it then tells us, in bold, "we will not extend the implementation period beyond December 2020"... The thing is that there are no "new post-Brexit freedoms" that come to us on 31 January, the date Brexit is supposed to be "done". We move immediately to the transition period where we are still bound by the full range of the EU treaties, the only difference being that we no longer have any representation in the Commission, the Council or the European Parliament... The thing is, though, that we know that a trade deal is possible by the end of December 2020, as long as Johnson elects for a "quick and dirty" agreement. And there is nothing in the Manifesto which precludes him taking that line. The word "comprehensive" attached to the trade agreement does not appear anywhere...

... Here, we have an interesting conundrum as the Manifesto pledges that the new government will aim to have 80 percent of UK trade covered by free trade agreements within the next three years, starting with the USA, Australia, New Zealand and Japan. These deals are supposed to be negotiated in parallel with the EU deal... But the very fact that a deal with the US, for instance, could only be concluded once Brussels had been squared, might actually incentivise Johnson to get the EU out of the way as quickly as possible, regardless of short-term problems... What we could be looking at, therefore, is a major sea-change in trade policy, breaking away from Euro-centric deals in favour of the Anglosphere and the Commonwealth. And as long as Johnson sees no great harm in weathering a few years of lean times while he settles his new trade policy, there is every reason why he should aim for concluding negotiations with the EU by the end of December 2020...


Brexit Brokenomics: The Economic Consequences


... In the short term we could be looking at a substantial increase in unemployment (though from a very low level now), depressed wages and lower investment. Much of the “pent-up” investment supposedly waiting to “unleash Britain’s potential” would be cancelled. Key sectors that rely on EU markets and European Union supply chains would suffer most grievously – cars, aerospace, pharmaceuticals, agriculture and the City and financial services.

Geographically, places such as the northeast and West Midlands that depend on manufacturing (and in which many districts voted Leave) would be hardest hit. Northern Ireland (which voted Remain) may find it derives some advantages from its anomalous position of staying in aspects of the EU customs union or single market. Overall, the continuing contraction in business investment is especially problematic, because it implies slower productivity growth for the future, which in turn means lower economic growth, wages and the funds to pay for (expensive) improvement in public services such as social care...

... The usual adjustment mechanism for an open economy in such a situation is via the exchange rate – the value of the pound against other currencies. Remember, too, that the UK is even now running a large trade deficit at about 6 per cent of GDP. Another sharp depreciation of sterling seems inevitable, to make UK exports more competitive. However, that will mean higher prices for imported goods and, possibly, higher wage claims (and higher minimum wages) and the sparking of an inflationary spiral – how the Bank of England reacts to these trends will be crucial. If they decide to ramp up interest rates to choke off inflation that will, in turn, hit the housing market, property values, investment and consumer spending...

... The few winners under such a set of circumstances would include those individuals and companies who derive much of their income or own assets denominated in foreign currencies, and those who are most able to reform their operations to make them globally competitive in a hostile trading environment...

How to compete in a hostile environment? By behaving very badly yourself.
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