Abandon ship!

Sunrise Orient wreck
Sunrise Orient wreck.
Do you remember when the Coalition government got into power in 2010 and introduced austerity because the UK’s finances apparently were so dire that foreign investors would pull out their money if nothing was done? There was some truth in that, but of course the Tories only made things worse by taking money away from poor people (who would have spent it) and giving it to the rich (who didn’t do much with it), so the deficit has continued to rise.

I’m mentioning this because the Chancellor of the Exchequer, Philip Hammond, has now abandoned Osborne’s fiscal rules because Brexit is forcing him to do so. This means that the deficit is likely to rise dramatically soon, but without seeing the improvements that borrowing to invest could have led to without Brexit.

The pound is already falling like a stone, but once the financial markets fully realise that the UK is heading for a hard Brexit (and Theresa May was very clear about this on Sunday, as I’ve discussed before), and once they’ve factored it this ballooning deficit, it’s likely to fall even faster.

I’m also very concerned that the Treasury seems to be contemplating to pay compensation to companies for losses caused by Brexit if they remain here. On the one hand they have to do so to prevent all exporting companies from leaving before March 2019, but on the other hand the money for doing so can only come from printing even more money, which isn’t going to be good for the exchange rate.

Of course the pound will stabilise at some point, but it can fall a lot before that happens, and there won’t be many well-paid jobs left at the end of it.

GDP of ArgentinaPerhaps things won’t be that bad, but I’m starting to think the UK could go the way of Argentina, which over a hundred years fell from being on the same level as Germany or France, to a point where their GDP per capita is less than 30% of the USA’s (see the adjacent graph).

Unless the majority of non-Brexiteers in the House of Commons get their act together and kick out this mad government before it’s too late, Scotland has to get off this sinking ship fast or we’ll get dragged down with it.

The Blue Tribe of Scotland

I thought I’d have a closer look at the four tribes of Scotland as described in my two earlier blog posts.

I defined the Blue Tribe as “the 33% of voters who want Scotland to be an independent country inside the EU [mnemonic: blue as the Saltire and the EU flag]”.

The Blue Tribe of Scotland encompasses a spectrum of people, ranging from people who’re closer to the Yellow Tribe and are relatively happy to put up with an independent Scotland being outside the EU so long as we get independence, to people who’re closer to the Green Tribe and only want to see Scottish independence within Europe, not without.

The Blue Tribe is the only one of the four tribes that has lost two referendums in short order, first the Indyref and then the Brexit vote. As a result, many of its members are getting a bit paranoid and are wanting to play it safe, calling Indyref2 only when victory is practically ensured. Although I’m a Blue myself, I do wonder whether this ultra-cautious approach is going to cause us to miss the boat by delaying the next independence referendum for too long.

Both the SNP and the Green Party are dominated by the Blue Tribe. However, the SNP also contains most of the Yellow Tribe, and the Green Party also contains a good number of Green Tribe members, so it would perhaps be more accurate to think of the SNP as a Yellow-Blue Party and the Green Party as belonging to the Green-Blues. As a result, the SNP is now perhaps finding it harder to rally all its members behind a new referendum than the Green Party.

It would probably be fair to describe the Blue Tribe as internationalist civic nationalists, and most of its members are probably as far removed from ethnic nationalism as you can get, which of course made them rather angry during the last Indyref when they were accused of being blood-and-soil nationalists.

So although this tribe is the one which has dominated Scottish politics for the past decade, its members are feeling rather paranoid and under attack. This will probably not change till we win Indyref2.

Brexit means hard Brexit, so Scotland must leave the UK

Theresa May has apparently been spending quite a lot of time reading up the EU: “[T]he prime minister is ploughing through hundreds of pages of briefing papers on all aspects of EU policy. After six years at the Home Office, she knows justice and home affairs inside out, but is having to learn at speed the intricacies of the customs union and the impact of Brexit on 38 economic sectors. She wants to master the detail before revealing her hand.” However, she must have set herself the Conservative party conference as her deadline to learn enough to decide what Brexit should mean, because today the time for waffling was clearly over.

In spite of claiming that “there is no such thing as a choice between ‘soft Brexit’ and ‘hard Brexit’,” everything else in her conference speech was pointing very clearly towards the hard variety:

We’re going to talk about Britain […] in which we pass our own laws and govern ourselves. […] In which we win trade agreements with old friends and new partners. […] Our laws will be made not in Brussels but in Westminster. The judges interpreting those laws will sit not in Luxembourg but in courts in this country. […] We are going to be a fully-independent, sovereign country, a country that is no longer part of a political union with supranational institutions that can override national parliaments and courts. So it is not going to a “Norway model”. It’s not going to be a “Switzerland model”. […] And we are not leaving only to return to the jurisdiction of the European Court of Justice.

She could hardly have been clearer than this. She wants the UK to fully leave the European Union and to become as independent from it as for instance Russia or Egypt. I think it’ll be an economic disaster because a lot of jobs are going to move to rEU countries, and she’s now given all companies the clarity they’ve requested to start the process.

She also slapped down any hope of Scotland getting a separate deal (such as the Reverse Greenland that has been discussed in the past): “[W]e will negotiate as one United Kingdom, and we will leave the European Union as one United Kingdom. There is no opt-out from Brexit.”

Finally, she gave us a time for Brexit: “We will invoke Article Fifty no later than the end of March next year.” This means that Brexit will take place no later than March 2019 (but possibly a few months earlier).

I thought it was right and proper for Nicola Sturgeon to explore all alternatives to a new independence referendum, and to bide her time. If Theresa May had opted for a soft Brexit, I’m sure we could have lived with that for a few years, and if they’d be open to a Reverse Greenland solution to allow Scotland, Northern Ireland and Gibraltar to remain within the EU after England and Wales left, if would have been very hard to argue that we needed to vote on independence at this point in time.

However, now that we know that the UK is leaving the EU fully no later than March 2019, with no special deal allowed for Scotland, there are no reasonable alternatives left on the table. We can of course hope that a majority of MPs decide to get rid of Theresa May within the next couple of years and elect a soft-Brexit Prime Minister instead, or that Brexit gets blocked permanently by the Northern Irish courts, but I can’t see it happening.

There’s only one realistic way to prevent Scotland from leaving the European Union and the Internal Market in 2019, and that’s by voting Yes to Scottish independence before then. It’s time for a new independence referendum, and this time we’ll win it!