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10 January 2019

After watching three hours of the non-procedural part of the House of Commons's Brexit debate it is apparent that the political and economic fallout of the no deal option can be estimated but the administrative chaos cannot.

Those MPs that have turned up for their debate are taking their responsibilities very seriously.

One notable absence from updates to progress on negotiations has been on reciprocal citizens' rights. If one has policy objectives one must take care not to arrive at counter-productive outcomes. Freedom of movement cuts two ways. More British people retire on the Continent than the reverse. Emigration from the British Isles has a long history of being a safety valve when times are hard; it may yet need to be so.

This is not a collateral issue but one of the central ones. Opposition to Brexit has always centred more on the freedom of Britons to settle temporarily or permanently in as many places as possible than on the economic issues. This is particularly so amongst the young. For those experiencing job competition within the U.K. from migrants, the reverse may have been true in many cases. This is why an asymmetrical arrangement like a derogation should have been asked for before the referendum. It would have allowed a nuanced policy response.

After all, it might be argued that Germany created its own derogation by allowing a migrant flow, on humanitarian grounds, of 900,000 over a short period, alarming some elsewhere.

The opposition to Brexit will not be erased by a restriction of rights. A closing of the difference can be achieved by securing rights.

Securing rights is also behind overtures to trade unions and others on workers' rights.

15 January 2019

As the British negotiators now go back to the EU it is necessary that the outcome spells out publicly how the exit payments are to be phased and a schedule of the reciprocal rights to be secured published. The latter should include future study opportunities and retirement rights on the Continent and in the U.K. and not solely address those already settled. If necessary, there should be linkage between payment and the progress of future negotiations.

This is necessary to assuage concerns in Britain about insufficient information and also payment without delivery as the total sum involved is substantial.

[As of information available on 30 January 2019 the EU is beginning to address these issues].

With TTIP we saw that insufficient information gave rise to opposition on the Continent before any treaty approached conclusion.

22 January 2019

Britain has one of the most open, well regulated and easy to use systems for the establishment of businesses.

An outcome has been that many EU entrepreneurs choose to establish their businesses in the U.K. even if, in a small minority of cases, these businesses do not trade here.

This should be permitted to continue in any post-Brexit environment. The flow of EU citizens seeking to establish businesses in the U.K. and work here to operate them should not, as a matter of policy, be diminished.

Citizens' rights are different from employers' rights although there is a great deal of overlap.

Freedom of movement of labour is an employers' right (though not solely). Establishment, retirement and study rights are citizens' rights - we do not believe these should be significantly curtailed post-Brexit and it should be a duty on both the EU and the U.K. to maintain them.

Movement of labour is the biggest source of migration flows and so the area to be controlled.

For many years Britain had relatively static population growth and London a declining population. Anecdotal observation suggests that part of the London decline was due to emigration to Spain, Australia and the U.S.

It has long been our view that near-to-freedom-of-movement arrangements with these three countries, and perhaps Canada and New Zealand too, would lead to outward migration flows.

Though not necessarily desirable in itself it would be useful as the U.K. housing situation has intractable elements to it.

Spain, obviously, cannot be separated from the EU.

Subtract eastern European nations from the equation (which cannot be done) and we would have said that freedom of movement within the EU would have led to net emigration, at least for some years.

A derogation (as mentioned above) could have served to require agencies to place employment advertisements locally for 60 days prior to wider publication and for similar measures.

30 January 2019

Beyond Brexit the U.K. cannot depend primarily on inward investment by large corporations as the driver of the economy much as that is appreciated and to be encouraged.

Neither can it depend on infrastructure financed by taxation as the driver.

Taxation reduces activity elsewhere in the economy and, as has been evidenced in France and the House of Commons, increases in personal taxation meet with political opposition expressed in a range of ways.

Infrastructure has to be financed by new money either sourced externally, as is the case with Hinkley Point, or from pools of capital in the City, as the third runway at Heathrow may avail itself of.

Infrastructure like HS2 is unlikely to increase net economic activity by much for a decade other than if it is deficit financed.

Britain must create an economy angled towards allowing entrepreneurs to emerge which is not at all the case currently. The idea that most would seek to be subcontractors to a company like Carillion and that is good enough is farcical.

Early stage entrepreneurs do not in the main pay themselves a salary. Entrepreneurs from the EU would hence not meet a minimum salary requirement for residency and would not be coming to Britain any more.

There are few assets left to be sold abroad and the personal sector has dangerously low capital which can be freed - in practice it can no longer finance entrepreneurship as it once did.

As for venture capital it will only finance the most potentially profitable, scaleable businesses.

So entrepreneurship is being driven out by policy and ideology yet one of the few ways up for Britain is entrepreneurship.



Political Utopias are never much noticed as such at the time.

From 2008 to 2011 we had the green Utopia where output was down, purchases were down, energy consumption was down and everyone made do with what they had because they could not afford much more but few were happy with that and clamoured for more economic growth.

From 1945 through to the end of the 1970s we had the redistributionist Utopia, very severe in some places under Communist governance. We are not going back to that with the internet having freed people to follow a plurality of paths. There is no way that a group of states knows better how to distribute material goods than the enlightened consensus of citizens when it can be achieved, which is not always.

From 2002 to 2018, with the exception of the recessionary years, we have had a neoliberal Utopia shading latterly into a libertarian Utopia. Predictions are where we all go wrong but its heyday looks like it is coming to an end. The next global set of securities market crashes is likely to do for it. Bailouts for oligarchical companies in whichever sector are not on the cards; there are not sufficient funds.

Brexit is one of the great disruptors, however it pans out. It is not going to leave any of the earlier Utopian dreams intact. We probably need some good sense, not Utopias, in all events.

In the next week or so we are scheduled to have the "meaningful vote" on Brexit in Britain's House of Commons.

The problems for Britain with the EU were always the move to an ever closer union, the prospect of a European army and the insufficiency of democracy in the institutional architecture. These were not problems manifesting themselves immediately but were likely to down the line, maybe decades down the line.

Though not much part of the public debate, these problems are cleared out of the way by Theresa May's unratified agreement with the EU. Were it to go forward Brexit's main benefits to Britain would have been secured.

The agreement leaves the substance of how the ongoing commercial and other relationships are managed to future negotiation. Maybe we can live with most outcomes of that if a bit of commonsense and pluck are shown in negotiations.

If the unratified agreement is voted down its substance might still be preserved by changing the political declaration to say that Britain will persist in customs union, without calling it that, till its parliament signals in a vote that it wishes to leave it. The EU could also make reassuring noises outside the political declaration that it is not necessarily opposed to state aids. If he were so minded Jeremy Corbyn could then instruct his party to abstain in a further vote on the terms.

These are approaches that require finesse rather than secrecy.

Going elsewhere, it is better to be clear cut.

One option is to withdraw Britain's Article 50 notification of intention to leave - revocation. The Prime Minister could say that best efforts have been made to negotiate a withdrawal but due to circumstances it would be better to recommence not under time pressure. That would be better than requesting a six month extension of the process. Going down the second referendum route does appear to be less clear cut than this.

Another option is a no deal Brexit. We have been going round the houses long enough trying to get a successor trade agreement with the EU. We should not spend another two decades trying to arrange trade deals with the rest of the world.

Whilst the TTIP negotiations were under way one could be neutral as to whether net benefits would be delivered to citizens by concluding it. Now that they are over TTIP is unlamented. Perhaps France and Donald Trump should take a little credit for sparing us it.

Nations can prosper behind tariff barriers, though imposing permanent tariffs where they have been removed is perverse.

Japan, Korea and China have all risen industrially behind tariff walls to positions where they no longer need them.

What has to be noted though is that small and medium sized businesses are the backbone of China's export economy. The industrial ascent of Japan, Korea and China came about by having small businesses grow and grow. They know how to expand behind a tariff wall. Oligarchical businesses do not like tariffs, which is fair enough.

The way Basel banking rules are applied, and British tax policy, has resulted in the least entrepreneurial culture in Britain since the Act of Union. Oligarchical businesses, once the founders have gone, are rarely entrepreneurial. They will, in the main, be unsuited to power Britain forward with tariffs in place.

A no deal Brexit will necessitate a change in business culture.

We have reached, near enough, the time when we have to stop overvaluing the oligarchical merchant class, funnelling so much of society's benefits its way at the expense of the rest of it.

Napoleon hated the merchant class. It preferred trade to war, its biggest plus point and one that should override all the others. War aside, he had a point. Listening to what it says too much and doing what it wants too much leads to dull politics, lacking creative imagination.

There are considerable benefits for citizens to be lost by leaving the EU and there are political risks to Britain by staying in but instead of exploring these concepts properly in the debate we have been fussing about trade deals that may never happen.

Whatever parliament decides following the debate that starts tomorrow there is no Utopia the other side.