My journey from Passionate ‘Remainer’ to ‘Canada Plus’ Advocate

Regular readers of this blog will know that I have been a passionate advocate of the UK remaining in the EU. My political bias is well-known, left-leaning conservative but Brexit has frequently aligned me with left leaning viewpoints. After the referendum, I favoured a ‘Soft Brexit‘ and was an early advocate of a second referendum after Theresa May’s ‘Chequers Proposal‘ was announced.

All Summer, I have patiently waited for Jeremy Corbyn’s Labour Party to change their position on Brexit. Despite Labour MPs and unions now favouring a referendum on Theresa May’s final terms, the leadership has stuck to it’s line, calling for an election if May’s government cannot get parliamentary approval of the Brexit terms.

Whilst, I was an early advocate of  another referendum, I recognize that the practicality of holding this before the UK leaves the EU is remote. Brexit is approaching, like a train crash. ‘Crashing out’ of the EU, on ‘WTO Rules‘ will certainly bring enormous economic hardship, with a risk of social disorder – the toxic climate will be ripe for populism to be exploited by the Far-Left and the Far-Right. There’s a real risk of shortages of food and medicine, with the Army mobilized to protect civil order.

Theresa May’s Salzburg performance was a total disaster, both for her and the UK. She totally overrated her negotiating hand and misread the evidence from Europe. It was clear that ‘Chequers’ was a dead-duck when Boris Johnson and David Davies resigned. All Summer the EU has rigorously analyzed the   ‘Chequers’ proposal, proclaiming it unworkable. When Theresa May went to Salzburg, with the ultimatum of ‘Chequers’ or crashing out of the EU, she was holding a gun to the head of the EU. Theresa May’s public humiliation in Salzburg was regrettable, albeit perhaps understandable. She seriously misjudged her position – she seems to be surrounded by ‘flunkies’  and is oblivious to context and political reality. May seems to be playing two tunes, one for her domestic audience and one for the EU but the messages are  blurred and social media is ruthlessly critical.

It’s clearly time to publicly abandon  ‘Chequers’ as unacceptable to both the EU and the Tory Right. To avoid a Dunkirk-style retreat with the UK crashing out of the EU, with both global and national risks, the sensible fallback would be to advocate ‘Canada Plus‘, as favoured by Boris Johnson, David Davies and Jacob Rees-Mogg. There will still be large risks of achieving any deal with the EU, and getting the proposal through Parliament, with the Labour Party forced to accept job losses, loss of job security, weakened social services etc. But for me, ‘Canada Plus’ will be less damaging than ‘Crashing-Out’. Either way, I fear the Conservatives need to start mitigating risks of losing the next election, with the strong probability of a Far-Left Labour Government. Bottom-line is ‘hope for the best and plan for the worst’ – the risks are surprisingly high, increasing with every blunder from Theresa May.

Thoughts?

 

 

Top Blogs Revisited -An in Depth Look at Deleveragings – Ray Dalio – Bridgewater

This is an excellent article looking at good, bad and ugly deleveraging experiences over the last century. It is written by Ray Dalio, billionaire,  head of the World’s largest hedge fund operator, Bridewater Associates. I STRONGLY RECOMMEND this article for a deeper understanding of the deleveraging debate underpinning the argument of the austerian politicians in the  US, the UK and Germany.

Open this link to read the article which is in PDF format.

The article is quite long but easy to read with lots of interesting colored charts.

Based on historic precedent, I think that there is hard evidence that austerity has been too severe in many countries since the financial collapse in 2008, especially in the UK and Southern Europe.

Good national economic house-keeping as advocated by Germany makes excellent sense but as this article explains there are different rates of pain associated with different deleveraging strategies; also and most critically because of the Euro and the European Commission, Southern European countries do not have a full range of economic policy tools, both in terms of fiscal and monetary policy.

Any thoughts?

(Originally published in this blog, July 14, 2013)