Brexit Election Double Bluff Could Avoid No-Deal

Cripes, doesn’t Boris love poking the hornets’ nest with a sharp stick?

Boris – back on the front foot

The reality of his decision to close this Parliamentary session and arrange a Queen’s Speech to initiate a new Parliament is relatively small. Instead of Parliament having a recess for three and a half weeks over the party conference season, the break is five weeks. However, it has acted as a lightning rod for all of the pent up frustration and anger of the Remainers. Suddenly, they can see their case is lost. It was lost before, but now they can no longer pretend to themselves that they still have a chance.

Guy Verhofstadt, with name label to prove it

The greatest endorsement came from Guy Verhofstadt, Chief EU Brexit Negotiator, who branded it a ‘sinister development’. Clearly, many in Brussels have been relying on the Remainers to weaken the UK position. The strength of Boris’s move is reflected in their dislike of it.

The Nuclear Option

So now the Remainers have only one option left – win a vote of No Confidence next week and force an election before the end of October. This would be welcomed by the Boris team, as discussed yesterday, who have developed a suite of policies on which to campaign, and have clearly judged that such a poll would be winnable.

Our view is that;-

  1. The Remainers will not be able to win a vote of No Confidence

  2. It is far from clear that Mr Corbyn will even dare to call one (see 1. above)

  3. The EU will have to sit up and realise that the Remainers will not postpone Brexit

  4. The EU needs to avoid blame for No-Deal, and so see a deal as necessary.

 

Suddenly, to us, a No-Deal Brexit seems less likely than it did 24 hours ago.

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A Bleak-Midwinter Brexit Recession By Christmas

Oo-er, suddenly the UK economy ain’t looking so good!

The news media are full of speculation about Brexit, and not many of the stories are looking forward to how wonderful the country will be once/if Brexit happens. We can expect more of the same for the next twelve weeks until Halloween.

Are we heading for No-Deal?

At the moment, both sides are digging in, trying to create a tough stance for the benefit of their populations (I hesitate to use the word electors when we are discussing the EU, but you know what I mean). Behind the scenes, it can be assumed that the diplomats and civil servants will see themselves as the grown-ups in the room, and thus be at least looking for common ground.

However, it seems unlikely that a comprehensive new Withdrawal Agreement will be crafted by October. But we can expect enough co-operation to keep the world turning.

So what’s the problem?

The problem is that investment is collapsing. The worst thing for businesses in uncertainty. Life has enough risks when it comes to business investment, without an unseeable future being only 12 weeks away. Similarly, house-buying and car buying are likely to miss out on their usual autumn surges this year.

And after Brexit day, will there suddenly be clarity and light? Nope. There will be hysteria in the media for a few weeks as every little shortage and business malady is blamed on you-know-what. And the effect of this – more hand-sitting and less spending.

What else is happening?

Leader of the Free World

The US is starting to suffer from Mr Trump’s tariffs, to the extent that Jerome Powell has cut interest rates despite full employment. Meanwhile, China is suffering a marked slowdown from the trade war. This has now spread to Europe, which is also teetering on the edge of recession.

Conclusion

The UK is heading for recession – and it is difficult to see when it could end. Domestically, we’ll probably pull out next spring…. but that depends on what the rest of the global economy does. If things keep softening elsewhere, it could be a big one!

PS. The slowdown in Q2 announced today was no surprise, given the stockpiling in Q1 for the original Brexit day, and the factory shutdowns brought forward to April in case of Brexit delays.

Theresa the Timid

PPS. The coming recession will be a direct result of Mrs May’s and Parliament’s timidity over Brexit. If they had gone ahead on 29 March, we’d be pulling out of it by now. The delay to October has just increased the uncertainty and halted the economy for 7 months, tipping us into a recession we need never have had.

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Brexit Delay Is Too Short……. AND Too Long

How do they do it?  It continues to amaze how the politicians can pull the worst possible deal out of the bag.  I guess that’s what happens when you go begging!

 

TOO SHORT

The delay until 31 October is too short because;-

  1. The new deadline is not far enough into the future that we can all forget about it and go back to investing in businesses, making a living and getting on with out lives without constant uncertainty.  So any rebound in the economy will not happen this summer.
  2. There is insufficient time for the Tories to organise themselves, get a new leader and negotiate a better deal.  So we are stuck with the May Deal, No Deal or No Brexit.  Even an election or a re-run off the referendum don’t really have enough time.
  3. Given the local elections, the European elections, summer recess and the political conference season, there isn’t even much parliamentary time over the next six months.

 

TOO LONG

The delay until the end of the summer is a disaster because;-

  1. All of the stockpiling and emergency plans will have to be maintained – or run down and then rebuilt.  So either a long summer of warehouse costs, or absurd gyrations in the supply lines, with no orders for 3 months as stocks run down, and then double orders for the next quarter as supplies are built back up again.
  2. The Relief Bounce to the economy for which we were all hoping will not happen whilst we continue to have the black Brexit cloud thwarting any enthusiasm.  So another summer of missed growth.
  3. The pressure is now off the politicians to sort a deal – so nothing much will happen for 4 months – then suddenly they’ll realise that we have a deadline coming, and like a rash student before finals, they’ll be up all night arguing and still not agreeing anything.

 

WHAT A SHAMBLES. Just when you think our political class couldn’t make things any worse, they go and under-reach our expectations yet again.

Sadly, the most lasting legacy of this whole farce will be a long-lasting contempt for all politicians and for our democratic system.  Whilst the MP’s deserve derision, such strong dissatisfaction with politics is not a good thing.

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Hurrah That Brexit is Sorted

Thank Goodness all the uncertainty is over!

After months of indecision, our politicians have finally given the country what it needed – a certain route forward. The economy has taken a pounding and politicians have been in utter contempt (and been held in total contempt) for what seems like a lifetime.

Views diverge on the economics of the deal. Our belief is that the agreed May + 5 Year Customs deal is better than staying in forever and only slightly worse than leaving quickly. But nobody can deny that the lack of certainty has caused a lost year for the UK economy, with businesses totally distracted from any investment or expansion plans.

Corbyn Saves the Day

And who would have thought that the breakthrough could have been by Jeremy Corbyn? His mission to persuade the EU to fast-track the Palestinians for EU membership was inspired. Surely it can be only a matter of time before many other Middle-East countries decide that life is unbearable outside the EU – or the MEU as we’ll have to call it. Even the war between Saudia Arabia and Yemen will be solved once they have a frictionless border within the EU.  Isn’t it great that all of the 245 Labour MP’s realised how Mrs May’s deal was almost identical to Labour policy and could be whipped to approve it over this wonderful triangulated issue?

OK, so it might be a bit tricky if Israel win the Eurovision Song Contest again, but let’s sort the details later.

Hurrah for Theresa May, Jeremy Corbyn and all our wonderful MPs, who have governed this country so selflessly and magnificently!

 

PS. Can I have the prize for the World’s Least Plausible April Fool Ever? Honestly, nobody actually could believe that Brexit has been sorted, could they?

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Ha. Ha. Ha. Ha. Ha. Ha. Ha. Ha. at Parliament

Well the Guardian already has the headline “No. No. No. No. No. No. No. No. With all those “No’s”, it could almost have been a negotiation with the DUP. We are now past despair and into gallows humour at Brexit.

Guardian Front Page captures Parliament’s Historic Choices

So the House of Commons took control – and then didn’t know what to do with it! Laughable isn’t it? But once we have finished smirking at their incompetence, it does leave one small, irritating, nagging point hanging there.

WHAT NOW?

Democratic Unionist Party. The Clue is in the Name!

As we said yesterday, we don’t think that the DUP will fold. If they did, then the May Deal would get through, she would resign in the next few weeks, and we can have the excitement of a leadership election over May and June.

Assuming that Mrs May’s Withdrawal Deal doesn’t get through, then what? A general election seems as unlikely now as it did when we reviewed in January. Whilst the Tory Party has plenty of turkeys, they still won’t vote for Christmas. A long delay still feels like No Brexit, and that won’t get through Parliament either.

Having failed to make any decision for all this time, will the EU put us out of our misery? Someone has to be the grown-up in this relationship – and, humiliatingly, it is not the UK.

Suddenly, No Deal is looking more likely than ever!

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Mrs May Killed Her Deal. EU Hammered the Coffin Lid Shut

If Theresa’s mad rant on Wednesday evening killed her deal by alienating the very MP’s she needed to win over, then the EU offering longer extensions has nailed down the coffin lid.

Theresa May in her usual listening mode

The EU has dangled the prospect of a long-delay / soft Brexit / customs union / no Brexit in front of Remainers; choices which Mrs May had previously removed. So now of course those MP’s wishing to frustrate Brexit have somewhere to go. Before, they could have seen the May Deal as slightly less worse than No Deal, and so held their noses and voted it through. Now they have a lifeline of hope to frustrate Brexit altogether, if they vote against the Deal. This guarantees that Mrs May’s Withdrawal Agreement (details here) will fail.

So now the question becomes who then will be in control? Will St Theresa still threaten No Deal if her deal fails next week? Will she be able to carry out her promise, after all these months of sticking to Brexit Means Brexit? Or will Parliament try to take control, and accept a delayed, watered-down Brexit or No Brexit at all? Watch this space for next week’s exciting episode of FrankenBrexit, the Monster Zombie they Couldn’t Kill (Nor Make Come Alive Either)

Our feel is that Mrs May will see enacting European Elections as a failure. And the potential for very much mischief! So she will choose No Deal over a long delay. And she will do her best to frustrate Parliamentary attempts go for the delay.

Jean-Claude Juncker

Yet again, this postponement is almost as big a problem as No deal. What happens for all of those businesses enacting short-term emergency management for 29 March, such as BMW (Mini) and Jaguar with their annual plant shutdowns timed to start next Friday? In the La-La-Land of Politics, nobody seems to realise that the problem isn’t Brexit, it is the lack of clarity and decision over what is going to happen. If only a real leader had made a decision nearly 3 years ago and stuck to it! That would have been a better outcome that any available choice now.

So what next?????  Well the EU has revealed that it is more worried about a chaotic No Deal than Jean-Claude Juncker ever let on.  Therefore, we think if Mrs May loses, and then achieves No Deal, an extra couple of weeks will be found to sort out logistics.  Thus, we STILL see a Fig-Leaf-Deal, (managed No Deal) on 26 April.

Gosh, we are keeping the same forecast despite all the recent events.  We must be nearly as bone-headed and stubborn as Mrs May!  Nearly, but not quite.

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Theresa May Aims for No Deal

Theresa about to Spill Her Bile – picture from BBC

What a disappointment was Mrs May’s address to the nation last night. On hearing its announcement, we expected nothing less than a major breakthrough – or a BIG resignation. As we sat there holding our cocoa, filled with anticipation, we wanted shafts of sunlight piercing the grey skies of politics – or if not that, blood on the carpet.

The snappily titled How to Win Friends And Influence People

Theresa, – I hope you don’t mind us calling you that, I’m sure you’ve had worse – can I recommend a classic book for you; How to Win Friends and Influence People by Dale Carnegie? It would make great reading on one of your many flights to “The Continent”. After last night, it is clear you need reminding of his most famous quote A drop of honey catches more flies than a gallon of gall. There are lots of copies on ebay, such as this one. If my expenses budget was just a little greater I’d send one over to Downing St now.

Ha, in reality, we feel that Mrs May is a slightly sharper operator than that. So our only conclusion can be that all the invective against her fellow MPs was to ensure that they don’t vote for her in MV3. Hence the EU won’t give us an extension. And we’ll be out with No Deal next Friday.

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Bercow Brings on No-Deal (with a Fig-Leaf) Brexit!

Has John Bercow brought on the very thing he sought to avoid?

 

John Bercow with schoolchildren – he is the one on the right

By preventing the third meaningful vote – MV3 in the Brexit-Nerd Jargon – what has Right Hon John Bercow MP achieved?

  1. Reminded the EU leaders that Mrs May doesn’t have control of parliament
  2. Notified EU leaders that they need to make big (meaningful?) concessions if St Theresa is even to get a vote on a last minute deal.  We think this will be counterproductive, and harden their resolve to offer nothing.
  3. By emphasising Mrs May’s lack of control in Parliament, we feel that Mr Bercow has ensured that the EU will not agree to delays either. As we have noted before, a short delay achieves nothing for the EU, whilst a long delay has the prize of keeping the UK in the EU, but the cost of having a belligerent UK in the EU and all the instability that would involve.
  4. So the choice is binary now – No Deal or No Brexit.  Bizarrely, Parliament has engineered a position where the largest choice of a UK Government for a generation will be taken by a third party!

 

It is a close call, but we believe that the EU Government Leaders will choose No Deal. Or more correctly, a Fig Leaf Deal to be cooked up in a 4 week extension.  Yes, after all that, we still think it is a Fig-Leaf Deal due 26 April 2019.

 

See our many earlier comments starting at Fig-Leaf Brexit Deal Still Most Likely- and Parliament Misses the Irony.

John and Sally Bercow
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Tariffs for a No Deal Brexit – The Negotiations Continue

Clever move eh? Cutting tariff levels to zero on a wide wide range of imports has two clear messages;-

Goods Being Imported
  1. To the EU that perhaps they need to be a bit more flexible in their no-more-negotiations approach, or they can expect their exports to UK to decline drastically (especially hot topics like Irish farmers and German car-makers)

  2. To the UK consumers – who tend to be voters – that leaving the EU without a deal could have some upside too, with cheaper prices for a wide range of goods.

So they just need to protect the farmers (hence still some taxes on imports of agricultural products) to avoid any bad publicity.

Oh, and a third message to Brexit Nerds (such as us). The May Deal is still open for negotiation.

The fun goes on!

Cheaper Imports?
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Two Hours in Strasbourg Resolves Brexit! (Not)

Forget about Relate, ACAS or all of the thousands of arbitrators and facilitators. Has your divorce, or workplace negotiation, boundary dispute or EU Withdrawal Agreement gotten nowhere in the last two and a half years? Clearly what you need is an evening in Strasbourg.

Pretty Strasbourg
Theresa of London
Jean-Claude of Brussels

Theresa of London had been travelling to Brussels to resolve an awkward tiff with her estranged partner Jean-Claude. Despite months of trying, she had achieved nothing but a trying time. Bringing in her lawyer Geoffrey and her “fixer” Oli had made matters worse. But two hours with Jean-Claude in the magical surroundings of Strasbourg has made all the difference.

 

Back to reality!

Sadly, in the cold light of day, what seemed like a wonderful way forward in the French moonlight now feels like a mistake. Will Theresa ever learn not to give so much away without more commitment? First it was her £39bln exchanged for nothing more than a vague promise of goodwill. Now she has bet everything on a “legally-binding” complementary document.

European Parliament Building in Strasbourg

Will she regret giving her trust by tonight? Sadly, once this morning’s euphoria wears off, we feel Theresa won’t make it across the line this evening. We know and love the phrase “It’s a long shot but it might just work”. But those advocating gambling on long-odds horses should ship out to Cheltenham for the Festival. By definition, the chances are that you will lose! It was a sterling effort by Mrs May, and like nearly all the real people in this country, we just want it over. Will the DUP change their minds – and will Bill Cash and his star-chamber of lawyers change their minds? We can’t quite see it.

Cheltenham Festival starts today
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