Here’s the Power, Where’s the Glory?

Power

Whereas many believe the EU represents a move towards a world that acts together peacefully we see it as representing the worst aspects of globalism. [1]

Where big business and big government get closer together control is lost at the local level and the powerless eventually react to give these elites a ‘populist’ kicking. [2] Brexit wouldn’t altogether solve this if power is simply restored to London and not to the neglected regions of the Kingdom but this is something its own voters can try to redress. Some attempts at devolution have already been tried in the UK though they are hardly sufficient to reconcile those who have lost their industries and not found new roles.

Part of the problem is that during our time in the EU too much focus has been on uniting the continent rather than the country. [3] Talent has leaked to Brussels where the opportunities are bigger and what passes for leadership of our own country now gives us little confidence.

For example, Theresa May is extremely hard working as a constituency MP (for one of our authors) but she is out of her depth as Prime Minister, she is not a leader with a vision for the future relationship between the UK and EU. We think her primary goal might be to unify her party (that should be secondary) but she is more likely to destroy it. She also seems more driven by her legacy and her strange obsession with EU immigration as the only thing that really matters about Brexit. [4] Outside the London area a majority feel ignored and that the EU isn’t working for them. (Scottish nationalists may direct their discontent towards Westminster, which many see as worse than the EU, but turnout for the 2016 Referendum was pretty low; the Northern Irish had particular concerns also.)

The EU’s Treaties seem to recognise this issue. Article 10 of the collective Treaty on European Union declares that the EU “is founded in representative democracy and that decisions must be taken as closely as possible to citizens.” This is known as the principle of ‘subsidiarity’. Article 13 obliges the EU’s institutions to act within the limits of their competences under the treaties; however, these competences are relentlessly expanding with every decision of the Commission and every judgement of the ECJ. [5]

Subsidiarity-2 The term subsidiarity was first used by the Roman Catholic Church in 1891, adopted by the Council of Europe in 1985 and copied from there (as so many things were) into the EU’s Treaty of Maastricht, signed in 1992. This treaty explicitly introduces the term: “Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.” Obviously the Union knows best and knows better still with every bite it takes from our liberties.

We have covered the issues of subsidiarity in several posts and we remain unimpressed by the EU’s reluctance to implement its own principles. [6]

Wealth

The Brexit stalemate doesn’t appear to have harmed the British economy much, except that the increased uncertainty is restricting investment, which will do long-term harm if it continues. We believe it’s possible for the UK to thrive rather than survive but it would mean taking actions to free up our economy in ways that might not get the popular support needed. So, is it possible to agree a customs union (CU) that only constrains sectors, such as cars and some agriculture, that might actually benefit both sides? After all our services won’t be covered anyway, which is where the UK is most competitive. Where the economy isn’t going to be much affected perhaps we can compromise but stiffen the sinews where it does matter – our freedoms. [7]

Disunity Elsewhere economic issues are a more serious concern; the divergence of opinion and action among EU member states is causing friction and increasing stress on the political fabric of the Union. For example, Germany is in an industrial recession and manufacturers are worried about Brexit; the effect on France could be worse but (Napoleon) Macron seems more interested in his mission to make the EU an empire in the French image, and to boost his presidential popularity, than the welfare of his people (or ours). [8]

Suppose Germany were trying to leave the EU – that seems unlikely unless it were being asked to bail out or write off Italy’s debts, imagine then how the Bundesbank, Bundestag and voters would react. Would the German government accept the insulting terms agreed with May? We doubt it would agree to concede so much sovereignty to an external power.

Italy has just signed up to China’s ‘Belt and Road Initiative’ (the first big EU economy to do so) while the EU has been urging a “common approach” to trade with China. Germany and France are furious but haven’t themselves offered similar investment, only austerity and bailouts necessary to save their own banks from contagion [9]. It’s worth noting that Germany has rejected a common approach to increasing its gas supplies from Russia [10]. If German manufacturing in particular feels threatened by Chinese competition, how long before the EU acts to increase protection, at the expense of customers? Under May’s deal, or a ‘Soft Brexit’, the UK will get trapped, whereas the Westminster Government must be made free to flourish. The EU has proven its eagerness to protect important economic sectors in France (agriculture) and Germany (manufacturing) whilst overruling, regulating and plundering the UK’s (finance). This will continue even if we stay in the Union – it started before the Referendum but trust and forgiveness are unlikely whatever the Brexit outcome.

EU risk-1 The EU is taking a big risk. A no-deal Brexit could intensify recessions amongst members, hasten the collapse of Italy with contagion to Spain, Portugal and then France (its banks are tightly linked to Italy’s). The UK could survive, it still has the tools (though it might not choose to use them), principally a floating currency and its own central bank. The EU is virtually out of tools and the political will to do what is necessary for its weakest members – which lack independent monetary policies – namely debt sharing. The next ECB president is less likely than Draghi to agree to do “whatever it takes”. [11]