News reports suggest that the Government has agreed to offer the EU a ‘Divorce’ payment of between £40 – £55 billion net, pretty much what the EU was asking for at the start of ‘negotiations’ (the €100 billion often quoted is a gross figure). This is a huge amount of our money, perhaps £800 for every man, woman and child. With that we could buy a few planes to land on our new aircraft carriers; or develop the ‘Northern Powerhouse’ infrastructure to rebalance our economy away from just the South East; or spend £350 million a week on the NHS for a few years; or have a really, really fabulous ‘independence day’ party!
Some of this ‘divorce money’ is for projects agreed but not yet started. If a family planned a new kitchen but suddenly found its income substantially reduced the plan would be abandoned if it was no longer affordable. Similarly expenditure not yet committed should be reviewed by the EU to take account of Brexit. Or if we must agree to pay for future infrastructure projects in poorer EU countries (roads in Romania, broadband in Greece) the money should logically come from DFID, the Department for International Development (our aid budget). However it would be absurd to pay for projects intended to defeat Euroscepticism, which is why we’re leaving after all. We gave an example in Shorties-12 (One size fits all) but more are planned in other countries.
The Government says that it will depend on agreeing a good trade deal, with full and free access to the Single Market and that, “Nothing is agreed until everything is agreed.” The EU negotiators agree but interpret that as meaning, “Nothing will be agreed until everything we demand is agreed.” From the experience of Tony Blair’s renegotiation of the CAP budget we know what to expect – the prospect of a deal that never arrives. Blair gave up a large part of the UK’s rebate on a promise merely to think about changing the CAP (nothing happened); now if we pay enough the EU might think about an FTA with us. Furthermore no figures will be put ‘on the table’ where we, the bill payers, can see the cost, but we can be sure the true cost will be much higher than the UK Government admits to voters; there will be disguised payments and accounting fudges.
In the face of gloomy ‘expert’ forecasts (which are always wrong), threats from big business and an intransigent, bullying EU the Government has lost its nerve. Even little leprechauns and minnows like the Irish Taoiseach and Maltese Prime Minister feel bold enough to kick sand in the face of a weakling. Meanwhile Brexit uncertainty is chilling our economy so it might be better to face the music now rather than prolong the agony.
The BoE has just completed its latest stress tests on UK banks and concluded that they will survive almost any possible crisis. This is far from true of Italy’s banks and many others that have lent too much to them and other feeble financial systems. Whilst the eurozone is currently recovering from its long-depressed growth period following the financial crisis it is not likely to last as the project is deeply flawed; the next cyclical downturn could be bad news for the zone and catastrophic for some of its most vulnerable members.
What we do know is that Barnier’s buddies will reject any trade agreement that allows us to cut regulations, red tape and rulings by the ECJ. What then would be the benefits of the Brexit we voted for if we can’t even make our own laws and design our own economic strategies? We might as well remain in the EU, risk giving up the rest of our rebate and losing every argument and EU Council vote as we subside within the smothering EU super-state.
This of course is what the appeasers want. Frightened of the unknown they are urging us to buy a poor future rather than strive for a better one. Our politicians need to find some backbone and make it clear that we will leave, to their considerable disadvantage, if they don’t start soon to negotiate for the best mutual outcome. Furthermore we will retaliate against the inducements already being made to lure our key industries to their countries by competing on taxes and regulations as necessary. If we must rely on WTO rules rather than a free trade agreement with the EU then in the words of Roberto Azevedo, Director General of the WTO, “ … it’s not like trade is going to stop. There will be an impact, but I suppose it is perfectly manageable.”