In search of unicorns

In search of unicorns

So the Brexit saga continues with Captain May still at the controls of H.M.S. Titanic, despite hitting a rather large iceberg yesterday when Parliament comprehensively rejected her EU withdrawal deal.

In trying to predict what will happen now, my natural inclination is to look at the logical outcomes. I’m fully aware that this might seem hopelessly naive. Politics is not logical, either in Parliament or in the electorate at large.

But bear with me for a moment. My logic is as follow. There is no version of a Brexit deal that can be agreed with the EU and also get through Parliament. No deal would be a disaster that almost nobody wants. The only way to break the political logjam will be another referendum.

I’m aware that politicians don’t want this and that another referendum might give the same result. But at least going back to the people would enable us to move forward. In the end I think politicians will be forced to accept that this is the only option.

The key thing will be to ensure that all the options that we ask the people to choose between are real, implementable, options.

Not lies, fantasies and unicorns.

Brexit: Bidding for a Dollar

Brexit: Bidding for a Dollar

There is a famous game, at least amongst economists, known as “Bidding for a Dollar”. In this game, players participate in an auction for a dollar bill. The bill goes to the winner, who therefore stands to make a profit if their winning bid is less than $1. However, the bidder who comes second has to pay over the amount of their final losing bid.

The game starts off sensibly enough with bids of 5, 10, 15, 20 cents and so on, with the participants trying to land the winning bid and maximise their profit. However, as the bids mount and approach $1, it begins to dawn on the players that the best they can hope for is to make a very small profit. However, the second highest bidder realises that dropping out now means that they will lose money. That is hard to accept, so the bidding continues until the highest bid stands at $1.

If they hadn’t realised it before, this is the moment when the participants work out that this is a “no-win” game and continuing to play now guarantees a loss. However, having started, it still makes sense to keep on bidding and so a bid of $1.10 is placed. Better to lose 10 cents than a $1.

It seems to me that this is the point that the UK has arrived at in the Brexit negotiations. We spent the first two years after the Referendum with the different Brexit factions squabbling over the “Brexit dividend”, or which faction was going to get what share of the dollar bill. Reality has now dawned that there isn’t any Brexit dividend and the factions are now desperately trying to minimise their losses and make sure the blame for this fiasco lands somewhere else.

The only smart strategy for playing the “Bidding for a Dollar” game is not to start playing at all. The Brexit equivalent is to jump in a time machine and stop Theresa May triggering Article 50. The latest polls seem to indicate the British public has rather belatedly worked this out (“Two-thirds of the public now think the outcome of Brexit negotiations will be bad for Britain”).

Let’s hope someone knows where to find that time machine.

Brexit: Hard Facts

The Irish problem with Brexit

Brexit: Hard Facts

Theresa May attempted to clarify the government’s vision of what life after Brexit would look like in her Mansion House speech on Friday.

In it, she made reference to the need for the country to face up to some “Hard Facts” about Brexit. I think that should be welcomed, as facts have been something that have been sadly missing from the Leave camp to date.

However, those hard facts were buried pretty deeply in the usual sea of platitudes and slogans. Sifting through the 6,700 words of the speech and the Q&A which followed, I have tried to extract what seem to me to be the facts that we all need to face up to in the Theresa May vision of our post Brexit future.

1. No customs union

The government has finally admitted that regaining the freedom to negotiate trade deals with the rest of the world, one of the key objectives of Brexit, means not being part of the customs union.

Brexiteers believe that other countries will be more willing to open up access to their markets to the UK than they are to the EU as a whole because we are more willing to open our markets to them than the EU is. Whether deeper access to the UK market is worth more to other countries than shallower access to the whole of the EU is hard to judge. Personally I doubt it, but only time will tell.

So the first hard fact that comes from this is that our access to EU markets will reduce. Theresa May was fairly up front about admitting this.

The second consequence is that there will be a border in Ireland, or between Northern Ireland and the rest of the UK (or perhaps both). Theresa May did a lot of dancing on the head of a pin to avoid saying this, but the graphic above demonstrates that this is unavoidable. The only question is how “soft” those borders can be. The government seems to be placing its faith in technology to solve this. Maybe with a sufficiently long implementation period that might be possible, but nobody really knows.

2. We will still need to abide by EU rules in many areas

The Brexiteers are famous for wanting “have their cake and eat it”. This was obviously never going to work, given that the other side has a stronger negotiating position. It is more likely that the UK will end up neither having nor eating the cake. To paraphrase Theresa May, we will end up with the rights of Canada and the obligations of Norway.

My take on Theresa May’s speech is that the government has made a subtle shift of strategy. Rather than trying to keep the good bits and lose the bad bits at an overall UK-EU relationship level, they are now trying to cherry pick sector by sector. Hard Brexit for agriculture, soft Brexit for the Automotive Industry and so forth. The hope seems to be that the EU will take a pragmatic approach and give the UK a continuing say in regulations for sectors where the UK is a major player, such as Pharmaceuticals, Air Transport and Financial Services.

The challenge as ever is whether the EU will play ball. Making the EU single market work is already a famously complicated business. Overlaying a bespoke set of sectoral arrangements with the UK will make this harder. In the real world of EU politics, trading off the interests of one sector against those of another is a key tool for getting to agreement amongst the member states. Allowing the UK to participate selectively is a big ask. Ironically, it might have been easier to achieve this from within the EU. In two of the most sensitive areas, monetary policy and border controls, the UK secured an opt out, participating in nether the euro nor the Schengen Agreement.

In the end, I remain of the view that the whole Brexit decision was a big mistake. As the hard facts of what is possible to negotiate become clear to people and the cake eating wishful thinking is revealed for what it always was, I hope that it is not too late to reconsider. But I am not holding my breath.

Brexit Aftermath

Some things are clear, but much is still murky
Some things are clear, but much is still murky

Brexit Aftermath

It is just over a week since the Brexit referendum. The leader of the Leave campaign, Boris Johnson, has fled the field. I’d like to think his decision not to stand for the Tory leadership was driven by shame for what he has done, but it was more likely a simple act of political realism and self interest. In the post vote, post Boris, world, some things are now becoming clear but much remains hard to predict.

It seems the Conservative MPs are going to close ranks, elect a ‘safe’ leader in Theresa May, accept ‘the will of the people’ as far as leaving the EU is concerned and avoid an early General Election which would put their own jobs at risk. Worryingly, the irreconcilable objectives of the Brexiteers (control immigration, avoid paying into the EU whilst staying in the single market) look like being resolved by abandoning the single market, hoping that increased trade with the rest of the world can compensate for lost trade with Europe. The EU’s refusal to have any dialogue with the UK about the terms for exit before the UK commits itself irrevocably to leaving by triggering Article 50 seems to have made it very likely that the UK will be irreversibly on course for exit before the 48% of people who didn’t want to leave (and perhaps a few more who now regret their Leave vote) will get an opportunity to try to change the policy in a General Election.

What is less clear is what the opposition is going to do, with Jeremy Corbyn still apparently determined to try to hang on. Many of us are still hoping that there is a chance to avoid an exit. I loved this letter to the FT, speaking out on behalf of “the 48%”. I agree that we need an effective opposition arguing the case for the half of the country that views the exit vote as a national disaster of historic proportions. The Conservatives seem to have decided that the survival of their party and their own political careers require them to implement an exit, whatever the cost for the country. Perhaps Corbyn will go quietly and a new Labour leader will rally the MPs in the House to speak out for “the 48%”, for Leave voters who now realise they were lied to, and for common sense. I only wish I could be more hopeful that this will happen.

Meanwhile, don’t give up. Let the MPs who want to fight know they have mass public support. Let the rest of the EU know how many people in the UK feel European and want to stay that way. And let the non British born people living in and contributing to our country feel welcome and valued, not rejected, hated or unwanted.

Brexit Madness

Sick of being attached to a tree, a man decides to take back control of his branch.
Sick of being attached to a tree, a man decides to take back control of his branch.

Brexit Madness

Sad, angry and fearful for the future of the UK and for Europe. That is how I felt when I woke up on Friday morning to the news that the Leave campaign had won the Brexit referendum. The sadness and the fear remain but, somewhat to my surprise, my feeling of anger has only grown over the last 24 hours. I’ve never posted anything political here before, but I am so angry that I feel I need to speak out.

How did we get here? The root of the problem is the deep divisions about Europe in the Conservative Party. The party has been held together by a series of leaders who managed to paper over the cracks. The rise of UKIP made this more and more difficult. Prior to the last election, David Cameron made a disasterous short term political decision to offer a referendum to the Eurosceptics in his party. He had tried the same trick over Scotland and that almost ended in disaster (indeed it still may). Whether he thought he would be saved by the Liberals, or was confident he would win the referendum is hard to say. Whatever the case, it was a stunning case of gambling the future of the country for short term political expediency. Well, the gamble has failed. He has ended his own career and possibly also destroyed his party. In fact, I have come to the conclusion that the destruction of the Conservative Party as we know it is what needs to happen next if we are to avoid Cameron’s reckless gamble destroying the country too.

I know people will say that the people of the UK have spoken and we must respect their decision and leave the EU. But this was never an issue that should have been decided by a referendum with a simple yes/no answer. Everybody had a good idea about what voting Remain would mean. Nobody knew what a vote for Leave would actually mean. For some, it would be more money for the NHS. For others, it would be reductions in immigration. For many, it was a desire for the UK to “take back control” – people were fed up with being “told what do by faceless, unelected eurocrats”. OK, these are all valid and legitimate goals. But the simple truth is that there isn’t any chance these are all going to happen. Unlike after a General Election, there isn’t a leader or party that can be held to account to deliver on the promises made during the campaign. There has never been an overall plan of action set out by the Leave campaign. It has no overall leader with a complete vision of where to take the country. Instead we have single issue politicians like Farage and political opportunists like Boris who will say whatever he thinks will get himself into number 10. Whether you agree with Farage on his single issue or not, anyone who would trust the future of the country to him needs their head examining.

So what should happen now? Whatever happens, we should have a General Election before anything is done to enact leaving the EU. Let us see who would be Prime Minister and have a chance to vote for them. Let us hear the whole plan of the party or parties that want to go ahead and leave the EU. The implications of leaving are so significant and intertwined with other issues that it can’t be just “grafted on” as an optional extra. You can’t just choose your party of government and then add or subtract EU membership to taste.

The second thing that needs to happen is the breakup of the Conservative Party. I have voted for them in every election, so I say this with great sadness. But the truth is that what we now need is a proper centrist party to vote for, free of both left and right wing extremists. In 1981, the ‘Gang of Four’ broke away from the Labour Party to form a new centrist political party, the SDP. Sadly, this came to nothing in the end. But 35 years later, it is time to try again, this time starting with a break away group of pro EU Conservative MPs. Perhaps the current political crisis and the disarray in the Labour Party under Corbyn even makes it possible for them to be joined by a break away group of moderate Labour MPs. Now that would be a party I would vote for and I think would give the country an option which might beat “none of the above” as the party of choice.