Brexit Thread V - The Final Countdown?!?

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I was sitting in a cafe on the Falls Road in heavily nationalist West Belfast when a local radio reporter came in looking for residents to interview about the effect of Brexit on Northern Ireland. She said that the impact was already massive, adding: “Stupid, stupid English for getting us into this pickle. We were doing nicely and then they surpassed themselves [in stupidity].”

It does not take long talking to people in Northern Ireland to understand that almost everything said by politicians and commentators in London about the “backstop” is based on a dangerous degree of ignorance and wishful thinking about the real political situation on the ground here. Given how central this issue is to the future of the UK, it is extraordinary how it is debated with only minimal knowledge of the real forces involved.

The most important of these risks can be swiftly spelled out. Focus is often placed on the sheer difficulty of policing the 310-mile border between Northern Ireland and the Republic of Ireland because there are at least 300 major and minor crossing points. But the real problem is not geographic or military but political and demographic because almost all the border runs through country where Catholics greatly outnumber Protestants. The Catholics will not accept, and are in a position to prevent, a hard border unless it is defended permanently by several thousand British troops in fortified positions.

The threat to peace is often seen as coming from dissident Republicans, a small and fragmented band with little support, who might shoot a policeman or a customs’ official. But this is not the greatest danger, or at least not yet, because it is much more likely that spontaneous but sustained protests would prevent any attempt to recreate an international frontier between Northern Ireland and the Republic that wasn’t backed by overwhelming armed force.

It is unrealistic to the point of absurdity to imagine that technical means on the border could substitute for customs personnel because cameras and other devices would be immediately destroyed by local people. A new border would have to be manned by customs officials, but these would not go there unless they were protected by police and the police could not operate without British Army protection. Protesters would be killed or injured and we would spiral back into violence.

We are not looking at a worst-case scenario but an inevitability if a hard border returns as it will, if there is a full Brexit. The EU could never agree to a deal – and would be signing its own death warrant if it did – in which the customs union and the single market have a large unguarded hole in their tariff and regulatory walls.

An essential point to grasp is that the British government does not physically control the territory, mostly populated by nationalists, through which the border runs. It could only reassert that control by force which would mean a return to the situation during the Troubles, between 1968 and 1998, when many of the 270 public roads crossing the border were blocked by obstacles or cratered with explosives by the British Army. Even then British soldiers could only move through places like South Armagh using helicopters.

The focus for the security forces in Northern Ireland is on dissident Republican groups that never accepted the Good Friday Agreement. These have failed to gain traction inside the Roman Catholic/nationalist community which has no desire to go back to war and give up the very real advantages that it has drawn from the long peace.

But that peace could slip away without anybody wanting it to go because Brexit, as conceived by the European Research Group and as delineated by Theresa May’s red lines, is a torpedo aimed directly at the heart of the Good Friday Agreement. This meant that those who saw themselves as Irish (essentially the Catholics) and those who saw themselves as British (the Protestants) could live peacefully in the same place. Moreover, the agreement established and institutionalised a complicated balance of power between the two communities in which the Irish government and the EU played a central role.

Yet ever since the general election of 2017, when May became dependent on the Democratic Unionist Party (DUP), it is the DUP – the party of Ian Paisley – that has been treated by politicians and media in Britain as if they were the sole representatives of the 1.9 million people living in Northern Ireland. Its MPs are seldom asked by interviewers to justify their support for the UK leaving the EU when Northern Ireland voted for Remain in the referendum by 56 per cent to 44 per cent.

In ignoring the nationalist community in Northern Ireland, the British government is committing the same costly mistake it committed in the 50 years before 1968 which led to the fiercest guerrilla conflict in western Europe since the Second World War. The nationalist community today has a lot more to lose than it did half a century ago. It is no longer subject to sectarian discrimination in the way it used to be, as well as being highly educated and economically dynamic, but this does not mean that it can be taken for granted.

It may also be that the majority of the Northern Ireland population in two years’ time, when the Brexit transition period might be coming to an end, will no longer be Protestant and unionist but Catholic and nationalist. In the last census in 2011 Protestants were 48 per cent of the population and Catholics 45 per cent. The Protestants are not only a declining proportion of the population, but an increasingly ageing one, figures from 2016 showing that Catholics are 44 per cent of the working population and Protestants 44 per cent. Significantly, Catholics make up 51 per cent of school children in Northern Ireland and Protestants only 37 per cent.

The Protestants are a community on the retreat, but many have argued that this does not make much political difference because it is a mistake to imagine that all Catholics wanted a united Ireland. Many felt that they were better off where they were with a free NHS and an annual UK subsidy of £11bn.

But Brexit has changed this calculation. With Ireland and the UK members of the EU, religious and national loyalties were blurred. Many Protestants, particularly middle class ones, voted Remain in the referendum, but the vote was still essentially along sectarian lines. “You would not find many nationalists post-Brexit who would not vote for a united Ireland in a new border poll whatever they thought before,” said one commentator, though the likelihood is that if there were to be such a poll there would still be a slim majority favouring the union with Great Britain.

If May’s deal with the EU is finally agreed by the House of Commons then the issue of a hard border will be postponed. Any return to it would put Northern Ireland back on the road to crisis and violence. Stupid, stupid, stupid English.

(source: The English are driving Northern Ireland into conflict - the fear is that they are too stupid to care by Patrick Cockburn for the Independent)


That's an interesting point. The border is not enforceable without active repression, and how long until the Protestant/Unionist voting bloc is aged out of society?

On joining up:
Without Brexit it would have been a fully natural process, from aging demographics to more Catholics, and from less and less people directly hurt and scarred from the violence.
And no hurry whatsoever.
Not 50% + 1 vote as criterium, but an ample majority from a much more general consensus maturing to a feeling to do it.
And that, from a distance, I guess will take many decades.

Including Brexit forcing the issue:
I would never ever want to see British troops "controlling" that border.
What lunacy to have military armed troops to do on the landborder the economical checks on transported goods. Military troops checking freights of trucks and lorries poking their bajonets in sacks ???
(that would amount BTW to 9 checks a day on the boats crossing the Irish Sea in the EU proposal of having the border there).

But when a no-deal would indeed force a hard border...
My first reaction was UN blue helmets without weapons.
But come to think of it, better have students dressed as clowns in rainbow uniforms that can do their study in containers, 2 in each of the 300+ crossing points in a 5 shift is some 4,000 students earning some money.

With the 9 checks needed per day from the WTO regulations, each of these students would on average do each just under 1 customs check a year.
And why not still under the supervision of the UN ?
 
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I do understand the numbers, though I disagree in that the difference is not so big that the UK becomes automatically the weaker part.

The UK is not the "weaker" part in terms of economical benefits and does not become the "weaker" part.

I did not say that.

It is just that whereas in a rough first order approach when the UK and the EU lose both the same size benefit in amount, that amount is % on GDP much smaller for the EU than the UK.

Going from EU membership to WTO is not as bad as stopping trade. It is more a partial stopping of trade + additional cost for the rest of the trade, and therefore proportional to the total amount of trade (whereby noted that the models used by everybody go into the nitty gritty of the economic sectors that all behave a little bit different and asymetrical)

As a binary example:
If the US would decide to 100% stop trading with Canada because of sanctions by Mr Trump. The result would in first order approach be, in absolute damage, the same for the US and Canada. But in relative terms it would be devastating for Canada.
And because most of the damage in the US happens in the bordering states, most states of the US would be impacted much less.

Here a graph of that showing trade as % of State GDP:
https://www.theglobeandmail.com/new...ally-have-with-united-states/article34014567/
The article going in on the bargaining power of Canada against the US.
Whereby asymetry from amount of trade divided by GDP comes into play. Canada under pressure, and the Northern States of the US under pressure. But the overwhelming majority in the House and Senate not under pressure.

Total US-Canada trade (imports + exports) of goods and services is around $ 670 Billion
That trade as % of GDP for Canada as a whole is 41%
That trade as % of GDP for the US as a whole is 3.3%

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All right, now I understood what your point was.

I do disagree on the devastating adjective. That assumes the desire was to not change the status quo, to keep things as they were regarding trade. But if a country did a political decision to change things, then need to change trade is a desired outcome, not an unfortunate devastating consequence. Though through it may be.
 
All right, now I understood what your point was.

I do disagree on the devastating adjective. That assumes the desire was to not change the status quo, to keep things as they were regarding trade. But if a country did a political decision to change things, then need to change trade is a desired outcome, not an unfortunate devastating consequence. Though through it may be.

Fair enough

On that devastating:
I can perfectly imagine that a people is willing to take a 5% GDP per Capita hit of missed growth over the first 2-3 years and then slowly over time a 1.0% slower GDP growth winding down to 0% difference over 20 years or so in exchange for more political freedom.
In that sense and clarity it is a desired change and not devastating. The UK is rich and developed. The UK can indeed counter part of the negatives with a well thought through and implemented transformation.
That would be fair enough if that transparent financial reality is and was part of the choice.

Unfortunately for the many... the Tories will be in command during the first years and setting the direction and structural changes.

For most people in the UK, this base WTO-FTA scenario will be devastating because they have other expectations on what is going to happen to their wallets.
Enough polls showing that current expectations of Leavers are "it will not hit that hard" to "positive".
When that damage will emerge over the years, the current generation of politicians that did not warn about this (coupled actions to it), are ripe for the political graveyard.

I don't care that much about those politicians...
But I do care about people... people misleaded that their misery is coming from the EU (instead from Tory austerity and global finance effects)... people misleaded that there was hope for a better future as stand alone (a hope that will be shattered).
And the net balance is a lot of people with a reduced trust in their political institutions (only increasing the power from private entities)
And after a while a lot of these people will be ready to follow the next El Salvador.

For me that all adds up to devastating.
 
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I don't care that much about those politicians...
But I do care about people... people misleaded that their misery is coming from the EU (instead from Tory austerity and global finance effects)... people misleaded that there was hope for a better future as stand alone (a hope that will be shattered).
And the net balance is a lot of people with a reduced trust in their political institutions (only increasing the power from private entities)
And after a while a lot of these people will be ready to follow the next El Salvador.
For me that all adds up to devastating.

It's all a matter of opinion, but a lot of people disagree with you. Many think the future’s bright, the future’s British.

World’s biggest wealth fund piles billions of pounds into Britain after taking 30-year bet that UK economy will be STRONGER after Brexit
Norway's £740bn sovereign wealth fund has 8% of its total invested in Britain
The Sovereign Wealth fund owns some £6 billion of the UK's national debt
The fund's CEO said they will increase the value of the investment despite Brexit

https://www.dailymail.co.uk/news/ar...ealth-fund-piles-billions-pounds-Britain.html

And:

Europeans double UK investment since Brexit vote
European investors are taking major bets on the UK economy, more than doubling investment in Britain over the past three years.


Uncertainty around Brexit has not stopped companies on the continent from embarking on a major deal spree in the UK, indicating faith in the economy’s long-term prospects among foreign money managers.

Buyers in the EU have snapped up 553 UK assets through mergers and acquisitions and private placements in the past year, according to S&P Capital IQ data.

Purchases of companies, property and stakes in fast-growing firms totalled $31.1bn over the past 12 months.
That is up from $21.2bn over 497 purchases in the previous 12 months, and $13.6bn on 454 transactions in the same period of 2016-17, the year encompassing the Brexit vote.

The weaker pound and the relatively poor performance of UK stocks since the referendum triggered fears that international investors would be cautious about investing in Britain.
But the numbers suggest those with a longer-term outlook have seen it as an opportunity.

https://www.telegraph.co.uk/business/2019/03/03/europeans-double-uk-investment-since-brexit-vote/


And:

Britain's economy is set to boom and become the largest in Europe - because of Brexit

The public finances are on the mend, recording a healthy surplus in January on booming tax receipts. Employment is at record levels, with real wage growth at a two-year high. Despite a global slowdown, Britain expanded 1.4 per cent last year, recording just 4 per cent unemployment. Yet Germany and France are on the brink of recession, the Italian economy is contracting and eurozone joblessness is twice as high.

The UK has economic problems – and let no-one say we don’t hear about them, given the relentless drumbeat of anti-Brexit media negativity. Just as the economy held up after the 2016 referendum, though – belying Treasury warnings of “an immediate and profound economic shock” – there are signs of defiant economic strength once more and confidence in our long-term future.

Norway’s $1 trillion (£753 billion) sovereign wealth fund, among the world’s most respected investors, has just confirmed it will boost its UK holdings.

“Over time, our UK allocation will increase,” said Yngve Slyngstad, the Norwegian Fund’s CEO.
<snip>
It’s precisely because Britain will thrive after Brexit that we attracted record foreign direct investment last year, beating the US, with only China attracting more.
Boeing has opened its first manufacturing plant in Europe – in Sheffield. Technology-driven investment is piling in – not just to London but to Manchester and the North East too. And, as Brexit-bashing stories about planes not flying are trumped by reality, investors from China to the Middle East are flocking to a country just judged by Forbes magazine as the “best place in the world to do business” for the second year in a row.

And there is far more that makes Britain attractive than temporary good value. Our relatively “young” demography means the UK is on course to outstrip Germany, becoming Europe’s biggest economy.

The UK boasts one of the world’s top three universities across 34 out of 48 subject areas, according to an authoritative new survey. There are seven British universities in the world’s top-40 – and not a single EU-based institution that isn’t in the UK.

https://www.telegraph.co.uk/politic...conomy-set-boom-become-largest-europe-brexit/
 
It's all a matter of opinion, but a lot of people disagree with you. Many think the future’s bright, the future’s British.

World’s biggest wealth fund piles billions of pounds into Britain after taking 30-year bet that UK economy will be STRONGER after Brexit
Norway's £740bn sovereign wealth fund has 8% of its total invested in Britain
The Sovereign Wealth fund owns some £6 billion of the UK's national debt
The fund's CEO said they will increase the value of the investment despite Brexit

https://www.dailymail.co.uk/news/ar...ealth-fund-piles-billions-pounds-Britain.html

And:

Europeans double UK investment since Brexit vote
European investors are taking major bets on the UK economy, more than doubling investment in Britain over the past three years.


Uncertainty around Brexit has not stopped companies on the continent from embarking on a major deal spree in the UK, indicating faith in the economy’s long-term prospects among foreign money managers.

Buyers in the EU have snapped up 553 UK assets through mergers and acquisitions and private placements in the past year, according to S&P Capital IQ data.

Purchases of companies, property and stakes in fast-growing firms totalled $31.1bn over the past 12 months.
That is up from $21.2bn over 497 purchases in the previous 12 months, and $13.6bn on 454 transactions in the same period of 2016-17, the year encompassing the Brexit vote.

The weaker pound and the relatively poor performance of UK stocks since the referendum triggered fears that international investors would be cautious about investing in Britain.
But the numbers suggest those with a longer-term outlook have seen it as an opportunity.

https://www.telegraph.co.uk/business/2019/03/03/europeans-double-uk-investment-since-brexit-vote/


And:

Britain's economy is set to boom and become the largest in Europe - because of Brexit

The public finances are on the mend, recording a healthy surplus in January on booming tax receipts. Employment is at record levels, with real wage growth at a two-year high. Despite a global slowdown, Britain expanded 1.4 per cent last year, recording just 4 per cent unemployment. Yet Germany and France are on the brink of recession, the Italian economy is contracting and eurozone joblessness is twice as high.

The UK has economic problems – and let no-one say we don’t hear about them, given the relentless drumbeat of anti-Brexit media negativity. Just as the economy held up after the 2016 referendum, though – belying Treasury warnings of “an immediate and profound economic shock” – there are signs of defiant economic strength once more and confidence in our long-term future.

Norway’s $1 trillion (£753 billion) sovereign wealth fund, among the world’s most respected investors, has just confirmed it will boost its UK holdings.

“Over time, our UK allocation will increase,” said Yngve Slyngstad, the Norwegian Fund’s CEO.
<snip>
It’s precisely because Britain will thrive after Brexit that we attracted record foreign direct investment last year, beating the US, with only China attracting more.
Boeing has opened its first manufacturing plant in Europe – in Sheffield. Technology-driven investment is piling in – not just to London but to Manchester and the North East too. And, as Brexit-bashing stories about planes not flying are trumped by reality, investors from China to the Middle East are flocking to a country just judged by Forbes magazine as the “best place in the world to do business” for the second year in a row.

And there is far more that makes Britain attractive than temporary good value. Our relatively “young” demography means the UK is on course to outstrip Germany, becoming Europe’s biggest economy.

The UK boasts one of the world’s top three universities across 34 out of 48 subject areas, according to an authoritative new survey. There are seven British universities in the world’s top-40 – and not a single EU-based institution that isn’t in the UK.

https://www.telegraph.co.uk/politic...conomy-set-boom-become-largest-europe-brexit/

A big long term investor diversifying its properties over the developed economies.
A long term investor buying bonds, real estate, (fast growing) companies, shares during a turmoil down at the Stock Exchange, etc...
An investor buying ownership is investing his money in property for the dividends and long term value... and that does not mean at all that this leads to investments in the UK economy leading to more jobs and more GDP.
=> It is a change of ownership.

The only real risk they take is a significant long term devaluation of the Pound compared to the current (medium low) rate
(whereby noted that on average the top 100 at the London Stock Exchange have 70% of their revenue and profits outside the UK, and are more a basket of currencies in terms of dividends).

In the financial world the risk on a no-deal is BTW seen as very low. But even if that would happen the extra dip in the Pound and disruption will for sure be gone in already 10 years from now, when the Pound has found a new balance, mostly influenced by the Current Account balance, mostly from the trade balance. A low Pound driving more export of goods. And when Global Financial Services becomes more important as export over the next decade because that market is still growing everywhere (the governor of the Bank of England estimated a doubling of that market in 10 years), getting export labor cost cheap by a lower pound does matter less.
If that future balance is within 10% of the current rate is for the crystal ball.


The UK has economic problems – and let no-one say we don’t hear about them, given the relentless drumbeat of anti-Brexit media negativity.

Do mind that Brexit did not yet happen.
The UK is still trading as a member.
And if we get a transition period, for another 2 years the UK can trade as a member.


The diverge is going to happen when the UK is outside the EU trading relation at WTO-FTA level.
When that happens on March 29 I guess it will start with a 5% missed growth in the first 2-3 years and then slowly diverge from less growth over 10-20 years..
When that happens in 2-4 years from now, the dip will be smaller and the diverge the same.

Nothing really happened yet.



And there is far more that makes Britain attractive than temporary good value. Our relatively “young” demography means the UK is on course to outstrip Germany, becoming Europe’s biggest economy.
That is nonsense

The UK boasts one of the world’s top three universities across 34 out of 48 subject areas, according to an authoritative new survey. There are seven British universities in the world’s top-40 – and not a single EU-based institution that isn’t in the UK.
As I said in more than one post: The UK is developed and rich and has to make a transformation plan.
Enough university knowledge enough money (as such), but both have to be focused on relevant innovations, and industrialised with real investments (not just buying real estate or shares)
 
That is nonsense
That was in response to the Telegraph saying:And there is far more that makes Britain attractive than temporary good value. Our relatively “young” demography means the UK is on course to outstrip Germany, becoming Europe’s biggest economy.

We will never be as efficient as the Germans at making things but it appears we are more efficient than them at making babies.:)

Luxembourg based Eurostat estimates that the population of both France and Britain will overtake Germany in 20 or 30 years time (as Germany’s population declines).

https://i.dailymail.co.uk/i/pix/2017/01/04/09/3BD5B4E500000578-4085590-image-m-2_1483520660148.jpg

https://www.dailymail.co.uk/news/ar...n-make-UK-populous-European-country-2050.html
 
That was in response to the Telegraph saying:And there is far more that makes Britain attractive than temporary good value. Our relatively “young” demography means the UK is on course to outstrip Germany, becoming Europe’s biggest economy.

We will never be as efficient as the Germans at making things but it appears we are more efficient than them at making babies.:)

Luxembourg based Eurostat estimates that the population of both France and Britain will overtake Germany in 20 or 30 years time (as Germany’s population declines).

https://i.dailymail.co.uk/i/pix/2017/01/04/09/3BD5B4E500000578-4085590-image-m-2_1483520660148.jpg

https://www.dailymail.co.uk/news/ar...n-make-UK-populous-European-country-2050.html

Haha... the babies
Yes... it does matter that you have a growing population !
My former Turkish colleagues (in Turkey) were always very enthusiastic to point out that it would be just a matter of time for them to outgrow Germany in GDP.

And Germany has indeed a real issue there and going the Japanese way of accepting that population stagnation decline.... and adding to that that the percentage of people in their working age will get smaller... It will be a challenge as well. Time to switch to a sustainable green economy and the Care Robots that Japan is industrialising: every oldie his own robot.
(between 1999-2017 the German population did on average anually grow with only 0.04% and for example France 0.58%, the UK with 0.66%, the US with 0.85%, Turkey 1.45%, Japan 0.06%)

The immigration policy of Merkel was recognising that issue, but shows also that there are cultural limits, cohesion limits, political limits, on the speed of absorption of immigrants in your economy. And immigrants do tend to have for at least 1-2 generations a higher birth rate (you can see that nicely in the details of the Dutch demographics).
Do mind as well that the population density of England (not UK) is already very high, just like the Netherlands. If for example the US would have the same population density the total population of the US would be well over 4 Billion people.

In comparing economies my own basic top metric is GDP per Capita growth and GINI.
GINI important because if you keep that good enough (your inequality low enough), the growth of GDP per Capita converts in a growth of well-being. If GINI is too high that does not happen.
 
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Yes, its not babymaking we are good at, its comparatively high immigration thats causing our population to rise, something the Conservatives have been trying to curb and the Eurostat study took no account of the possible effects of Brexit on immigration.
 
A Guardian article today quoting someone else pointed out that, by and large, it was older, less educated, less well-employed, southern Tory voters that had a far greater effect on the Leave vote winning than the northern constituencies did (Labour or otherwise).
 
It's all a matter of opinion, but a lot of people disagree with you. Many think the future’s bright, the future’s British.

While I will take the Teleggraph's pieces with a wagon-load of salt, it is undoubtedly true that the predictions of doom after the vote if it went for Leave have failed to materialize.

In my opinion the truth is that all these predictions seem more attempts at political manipulation that anything worth taking seriously. "No one" saw the GFC coming, wasn't it? Certainly none of the very same official entities now producing predictions about brexit. To me the credibility of economics professionals to do long-term predictions, any predictions, is throughly wasted. Is is a chaotic system, and one where political surprises happen and matter.
 
Economists never agree with each other: that's a long-standing joke. It's just when a large number of economists agree that someone else is wrong (e.g. Patrick Minford, the Brexiters' pet economist), that's when you should probably pay attention.
 
When rebutting all those prediction of voting Leave resulting in disaster we should always remember that the UK still hasn't left the EU.
 
London has many more foreigners anyway :)
Cornwall has even more, they just don't think of themselves as foreign because they're English, and the English imagine themselves to be constitutionally incapable of being foreign.
 
Oddly enough lots of areas that have done well out of EU regional aid like Wales and Cornwall voted for Brexit whilst London which hasn't didn't.
I am all but certain this was, in part at least, your point:
The very people in London who voted against Brexit would have deserved such aid, for they were not beneficiaries of the statistical GDP per capita of London.
You know, them.
 
Cornwall has even more, they just don't think of themselves as foreign because they're English, and the English imagine themselves to be constitutionally incapable of being foreign.

I don't know. I've lived in Scotland and Wales (the latter for over 30 years) but I wouldn't consider myself Scottish or Welsh.
Then again the vision of England that English nationalists tend to have,

Fifty years on from now, Britain will still be the country of long shadows on county grounds, warm beer, invincible green suburbs, dog lovers and pools fillers and, as George Orwell said, 'Old maids bicycling to holy communion through the morning mist' and, if we get our way, Shakespeare will still be read even in school.

isn't one I can identify with. Its funny that John Major thought he was speaking about Britain when all his imagery was English, and very Home Counties English at that.
 
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