Category Archives: Brexit

Retailers and the customs union

Stillorgan Shopping Centre - South Dublin (Ireland)
Stillorgan Shopping Centre - South Dublin (Ireland).
There was an interesting article in The Irish Times today about the consequences for Ireland when the (r-)UK leaves the EU’s customs union:

Even if there were a free-trade agreement, allowing free movement of goods between the UK and the EU, this will not apply to imports from countries outside the EU. Thus border controls will be essential to ensure that imports from third countries, such as China or India, comply with EU regulations.

This will have huge implications for the retail sector, much of which currently operates on a British Isles basis. Goods travel from warehouses in the UK to the Republic without problem. After Brexit, this will require new bureaucracy and customs duties, entailing a major increase in cost.

That could raise prices significantly for Irish consumers, posing serious competitiveness problems for the wider economy. Because of the small size of the Irish retail market, going it alone is a high-cost option.

Although they don't mention it, this is likely to be a much bigger problem than most people realise because of the way modern businesses depend on just-in-time manufacturing and low stock levels. What this means is that shops tend to get new deliveries all the time instead of having a lot of stock, and this will lead to huge problems if the over-night deliveries sometimes get disrupted by customs checks.

It's possible some companies will start treating Ireland as part of their French operation rather their British one (for instance, Kellogg's might prefer to sell the products made for the French market in Ireland instead of the British ones to avoid the customs checks). That would definitely make Ireland feel less British over time.

From a Scottish perspective, it means that if we leave the UK at the same time as Brexit in order to remain in the EU, and if the rUK proceeds with the harmful policy of leaving the EU's Customs Union, retailers are likely to start treating Scotland and Ireland as one market (which again might been seen as a subdivision of the Scandinavian or the French one), whereas the rUK will be seen as a rather distinct one. It would make the products in Scottish and Irish shops more similar over time, and less similar to the ones found in England and Wales.

It's worth bearing in mind that the EU's Customs Union is almost ten times as big as the rUK's one, so although it will be annoying to lose some of the English and Welsh products in the supermarkets, the consequences for Scotland will be much worse if we leave the EU together with the rUK.

I'd much rather Westminster decided to remain in the EU's Customs Union, but if they really are hell-bent on leaving it, it's yet another argument why Scotland should become independent within the EU.

People and companies are starting to leave the UK – we need Indyref2 soon!

BREXIT
BREXIT.
The UK government seems to be moving towards a hard Brexit, perhaps even a chaotic one. Of course it might well be that they'll change their minds after a few meetings in Brussels, but people and companies are already starting to act to protect themselves in case worst comes to worst. It's clear from the Facebook forum for EU citizens in the UK that a large number of people are already starting to leave the country, and in this article the Financial Times warns that companies will leave soon if there isn't a transitional deal to prevent Brexit from kicking in as soon as 2019:

The uncertainty over losing rights has made UK-based businesses call for early transition guarantees. Without those, big banks in London say they will take decisions assuming there will be no transition.

If there is no agreement by March 2018 — basically one year before Britain’s formal exit in 2019 — the value of the interim deal diminishes dramatically for the UK. Companies would already have taken action to protect their own interests. The Treasury is alive to the risk of a City exodus if transition terms are not clear at an early stage.

[...]

That leverage is strengthened by another cold calculation in Paris, Brussels and Berlin: the longer Britain waits for a transition deal to be discussed and agreed, the more likely businesses will decide to move or shift investment away from the UK. For the EU-27, late agreement on transition would maximise relocation while still avoiding a “cliff edge” — sudden and disruptive change for businesses stemming from a sudden exit.

So people have started leaving already, and companies will follow soon, and unfortunately they'll leave Scotland, too, unless it's clear that we're likely to remain within the EU. If we don't hold Indyref2 till Brexit is done and dusted, they will all have left and found permanent new homes elsewhere, and they'll be extremely difficult to tempt back to Scotland.

I'm not saying that we need to hold Indyref2 very soon – but just announcing that it definitely will be held in 2018 will make people and companies delay a move away from Scotland, and it might make companies in the rUK explore whether a move to Scotland would be cheaper and easier than relocating to Dubling, Paris, Amsterdam or Berlin.

Indeed, just announcing Indyref2 is likely to have a beneficial effect on the Scottish economy, so I reckon Kenny MacAskill is worrying needlessly when he thinks the economy is doing too badly to allow us to win a new independence referendum now.

If companies are leaving the rUK (but not Scotland) in great numbers during the Indyref2 campaign, surely that will be a great reason for many people to vote Yes.

However, we can't afford to wait till they've all left before we call the referendum. Nicola Sturgeon has been saying exactly the right things recently, reassuring people and companies in Scotland that we won't be leaving the Internal Market because she'll call the referendum if the Brexit isn't soft.

I expect the exodus away from the UK will speed up drastically once Article 50 gets triggered, so that would probably be the best time to announce the date for Indyref2 to ensure that Scotland doesn't get completely flattened by the Brexit train crash.

An extra referendum to cheer up the unhappy ones?

They Call Me Mellow Yellow
They Call Me Mellow Yellow.
Wings over Scotland is asking how we can prevent Yes-Leave voters from becoming No voters and suggests that the SNP should promise a referendum on EU membership post-independence:

We’re increasingly coming to the view that the answer is for the SNP to commit to a second EU referendum in the event of Scotland becoming independent.

Now, we can hear a lot of people sighing already. FOUR national referendums in the space of about five years (we’re not including the AV one, which nobody cared about) would be an awful lot of democracy and an awful lot of campaigning.

But we can see no other way to cut the Gordian knot of the electorate coming to decisions that contradict each other.

I fully understand the reasoning, and it's an argument that has crossed my mind, too. However, I think it would be a bad idea.

Firstly, I fear it will put off many No-Remain voters, which is the very group we need to convince to obtain a Yes vote next time. We'll need to argue till we're blue in the face that the extra referendum of course is a formality that will of course be won by the pro-EU side, and that'll turn off the exact voters that the referendum was designed for.

Secondly, as I've argued in another blog post, there simply aren't that many Yes-Leave voters left in the Yes camp. There are many, many more No-Remain voters that could be convinced by a Scotland-in-the-EU campaign than there are Yes-Leave voters who might vote No because they hate the EU so much.

Thirdly, all signs are that the negative consequences of Brexit will become much more visible over the next year. It would be foolish to have committed to a Scottish EU referendum if Brexit turns toxic.

Finally, we mustn't forget – as I've said before – that we cannot win a referendum by appealing only to Yes-Remain and Yes-Leave voters. Those two groups together add up to about 45% of voters, as Indyref1 showed. We have to win over a sizeable chunk of the No-Remain voters. As the Brexit referendum demonstrated, Yes-Remain plus No-Remain add up to 62% of the Scottish electorate. That's the way to win Indyref2. Chasing Yes-Leave voters is a dead end, and especially so if doing so means turning away No-Remain voters.

Brexit: The book

I often feel that the vast majority of people in the UK (including Scotland) know very little about the EU, believing it is basically a glorified free-trade area.

This lack of understanding has made it very easy for the right-wing media to portray the EU as being out of control, when most of the time it is doing exactly what it was supposed to do.

Ian Dunt's wee book about Brexit is thus very much needed. A lot of it is basically teaching the reader about the EU and the associated countries (with chapter headings such as "What is the European project?", "What is the single market?", "Norway" and "Switzerland"), and only then does it proceed to look at the details of Brexit, cataloguing the hurdles ahead (e.g., "How can we keep the UK together?", "How talented are the Brexit ministers?" and "Making a new country").

In general it's a fine book. Many people have described it as really scary, but I actually found it too positive and optimistic about Brexit in places. There are many interesting details in it – for instance this bit about vets was entirely new to me:

Industry estimates suggest that 95% of vets in meat hygiene graduated elsewhere in the EU. British vets simply do not like the work. The problem is not only it is more poorly paid, though it is. The trouble is that someone willing to go through the extensive training requirements of veterinary medicine generally does not do so in order to spend their working life watching animals being killd and the washing of their carcasses by former convicts.

I didn't like the chapter about Scotland much, though. I think the author has spent too much time speaking to Unionists or Yellow Tribe members like Alex Neil, because he seems to think that getting more powers devolved to Scotland (e.g., with regard to agriculture and fishing) would satisfy pro-independence voters, when of course it wouldn't. Those powers would be pointless because they'd need to be handed back to the EU post-independence, and they wouldn't allow us to build a more compassionate and socially just society, which is what motivates most of us.

In the concluding chapter, Ian Dunt suggests that the outcome of Brexit will be a European Hongkong:

Britain is about to experience a toxic mix of weak law and strong lobbying. It is tantamount to switching a country off and on again. Except that it will not revert to its original state. It will revert, in all likelihood, to a low-tax, low-regulation laissez faire economy, more akin to that of Singapore or Hong Kong than the countries on the Continent. [p.161]

As I've explained in another article, I agree this would seem like the likely result, and if we can't prevent a hard Brexit from happening, we need to get out before it's too late.

If you aren't a major EU policy wonk, you'll probably learn a lot of useful stuff from reading this book, and if you are, it's still a useful list of all the options and obstacles in one place. Everybody should read it before it's too late.

Stands Scotland where it did?

MovementsIf we take the Panelbase poll from September (which divided the Scottish electorate into four groups, Yes-Leave, Yes-Remain, No-Leave and No-Remain) and combine it with the findings from the recent YouGov poll that found that 15% of the voters who voted Yes in 2014 would now vote No and that 10% of former No voters have moved to Yes, we can draw an interesting graph.

I'm assuming that the two groups losing voters are Yes-Leave and No-Remain because they're both desperately unhappy with what's happening. So in the pie chart above I've split Yes-Leave into Yes-Leave-Yes (bluish yellow) and Yes-Leave-No (bright yellow), and No-Remain into No-Remain-No (green) and No-Remain-Yes (turquoise). Of the two groups changing their Indyref stance, Yes-Leave-No is slightly bigger than No-Remain-Yes (7% vs. 5%). This is consistent with the fact that YouGov found a tiny drop in the support for Yes.

So basically the polls are practically static because we're losing slightly more voters to No than we're converting to Yes.

We should be optimistic, however. We're unlikely to lose many more Yes-Leave-Yes voters to Yes-Leave-No – surely most of the remaining ones are so strongly pro-independence that nothing can convert them to No – and the Yes-Remain voters are unlikely to go anywhere so long as the Scottish Government remains pro-EU. At the same time, 24% of voters are still to be found in the No-Remain-No camp, and one would expect more of them to drift towards a Yes when it becomes a certainty that the UK is heading for a hard and messy Brexit with no special status for Scotland.

In other words, I expect the polls will start shifting towards Yes soon.

Brexit shock therapy

Child Labour Photo Contest 2012_Third Prize
Child Labour Photo Contest 2012_Third Prize.
Ever since the Brexit referendum, I've kept thinking that the hard Brexit plans surely must be due to a lack of understanding of the consequences, that the Tories would eventually opt for a much softer outcome (such as the Norwegian solution) or at least apply for a decade-long transitional deal to give them time to negotiate new trade deals and all that.

I simply couldn't see any benefit in causing utter devastation to so many people and businesses across the UK, so I kept believing the people opting for a hard Brexit must be ignorant or deluded.

Then two things happened. Firstly, the leaked memo showed that people in government do seem to realise what they doing and what the consequences will be. Secondly, I started reading Naomi Klein's “The Shock Doctrine”.

Parts of this book are now a bit dated (it's from 2007, so from before the crash), but the bits where she explains why it's only possible to implement radical neoliberal reforms after some sort of societal crisis are just as relevant today:

It was in 1982 that Milton Friedman wrote the highly influential passage that best summarizes the shock doctrine: "Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable." [...]

What [Friedman] understood was that in normal circumstances, economic decisions are made based on the push and pull of competing interests – workers want jobs and raises, owners want low taxes and relaxed regulation, and politicians have to strike a balance between these competing forces. However, if an economic crisis hits and is severe enough – a currency meltdown, a market crash, a major recession – it blows everything else out of the water, and leaders are liberated to do whatever is necessary (or said to be necessary) in the name of responding to a national emergency. Crises are, in a way, democracy-free zones [...]. [p.140]

If this is true – which I fear it is – a hard and chaotic Brexit will be a huge opportunity for the Tories to completely abolish the welfare state. They'll be able to get rid of the NHS, free education, unemployment benefits and whatever else they don't like. They'll be able to do this while looking immensely sad, saying that it's all the EU's fault for denying them the package they wanted (but quietly always knew wouldn't be acceptable to the other EU member states). They'll blame everybody else for the economic collapse, but use it to create a neoliberal wonderland where only the strong survive. Eventually people will realise what has happened, but by then it'll be too late to reverse.

In Ian Dunt's new book (“Brexit: What The Hell Happens Now?”), the conclusion is similar:

Britain is about to experience a toxic mix of weak law and strong lobbying. It is tantamount to switching a country off and on again. Except that it will not revert to its original state. It will revert, in all likelihood, to a low-tax, low-regulation laissez faire economy, more akin to that of Singapore or Hong Kong than the countries on the Continent. [p.161]

More than three years ago, I warned that many people in England wanted to go down that Singapore-style route:

In their book Going South: Why Britain will have a Third World Economy by 2014, Larry Elliott and Dan Atkinson claim the UK needs to make a fundamental choice: Should it move in the direction of a Scandinavian welfare state (similar to the Common Weal ideas currently being discussed in Scotland), or should it become a low-tax state based on free trade (called "Freeport Ho!" and "Freeport Britain" in their book)?

They don't really discuss Scottish independence in their book, and they seem to think that the UK must make the choice as a whole.

However, it appears to me that Scotland and London have already chosen. Scotland wants to go down the Common Weal path (and what we're really discussing in the independence referendum campaign is whether we can convince the rUK to go down that road with us, or whether we should do so alone), and Greater London has practically decided to become a global free port (which is why so many people in the South-East want to leave the EU, dismantle the NHS, and all that).

What I didn't foresee back then was that the Tories would be able to use the chaos created by their hard Brexit to implement this vision, which is so utterly different from the vision of an egalitarian society based of solidarity and fairness that the vast majority of people in Scotland share.

If we can't stop the Tories from administering their neoliberal shock therapy, we need to get out before it's too late. We're about to witness something that'll make Thatcher look like a cuddly socialist in comparison.

Scottish independence, Brexit and Trump: Similarities and differences

Yes
Yes.
2016 is continuing to surprise and shock people, and the election of Trump is definitely going to overshadow the Brexit referendum in many people's minds.

Some people started to comment on Twitter that the No vote in the Scottish independence referendum is starting to look like the exception in that the result was the one expected by the elites. For instance, here's Kenny Farquharson from The Times:

Tweets like this one have upset many independence supporters, because it makes an implicit link between the Yes campaign on the one hand and Brexit and Trump on the other.

Of course, there are some similarities, but there are also several important differences. Perhaps it gets clearer if we look at some of them in a tabular format:

Yes Leave Trump
Mainly appealed to older voters? No Yes Yes
Xenophobic? No Yes Yes
Internationalist? Yes No No
Did they win? No Yes Yes
Opposed by tabloids, Fox News, etc.? Yes No No
Opposed by broadsheets, the BBC and all that? Yes Yes Yes
Strong appeal to voters ignored by the elite?

Yes Yes Yes
Strong social-media campaign? Yes Yes Yes

So the similarities are basically that all these campaigns were opposed by the elite media (the broadsheets, the BBC and so on), appealed strongly to voters ignored by the elite for years, and ran strong social-media campaigns that to a large extent broke the conventional rules about how a successful campaign should be run. In most other regards, the Leave campaign and Trump were very similar to each other, but very different from the Yes campaign.

Interestingly, if we were to add Bernie Sander's unsuccessful campaign and the Greek party Syriza to the table, they'd tick almost exactly the same boxes as the Yes campaign.

So did we lose two years ago because of some of the differences? I'm sure we would have won if the tabloid press had supported us, but if the price had been to turn the campaign xenophobic, it simply wouldn't have been worth it.

If we had appealed more strongly to older voters, that would have pushed us across the line, too. It was hard to do without mainstream-media support, though, and this is something that we need to get right next time.

Perhaps Kenny Farquharson is right, and the independence referendum simply happened too early. Everything else was right, but people weren't desperate enough yet for what was perceived to be a leap into the dark.

Perhaps the time is ripe now, and things will be easier next time. However, it's likely to be a finite window of opportunity before people tire of insurgencies, either because the elites get better at listening to voters again, or because the future disasters caused by Brexit and Trump will scare voters away from audacious experiments.