The UK economy and EU trade

I have long argued that we are unlikely to trade less with the EU after we have left than we do today, whether we have a special deal or not. Clearly the rest of the EU will want to keep on selling their goods to us, so they will not be able to impose big barriers on trade. Nor can they under WTO rules. Both the rest of the EU and the UK will remain under WTO rules on our departure.

The good news about offering the rest of the EU the choice between confirming current tariff free arrangements and registering it as a Free Trade Agreement at the WTO, or accepting most favoured nation status with low average WTO tariffs is that either outcome will be fine from the UK point of view.

This obvious commonsense does not prevent some “experts” claiming we might lose trade and therefore they think lose some output. Indeed, one or two extreme Remain enthusiasts have suggested all trade with the continent will cease if we leave without an agreement, an absurd proposition. Trade will continue. Germany will not stop selling us cars nor France her dairy products.

It is interesting, however, to ask what happened to the UK economy when the extreme outcome did occur. In 1939-40 when war broke out with Germany, Germany soon took over much of the continent by conquest. It was also in alliance with the Axis powers, which included Italy, Hungary and Romania. The Axis countries and the conquered lands did not trade with the UK, so for a period there was no trade between the UK and most of the continent.

What happened to the UK economy? It leapt ahead, growing by 32% in real output and income between 1939 and the peak in 1943. Much of the growth in output was of course production of military transport and weapons. By 1943 the UK was producing a staggering 26,000 planes a year from widely dispersed component and assembly factories around the country. By the end of the war the UK had also developed the first jet engine fighter, and had produced 250 Gloster Meteors. Output of military vehicles, ammunition, military clothing and much else was massively increased.

The UK was also turning out large quantities of commercial shipping. There were strong advances in coal and steel output to fuel and supply the industrial activity. Much of this was paid for by public spending and public borrowing.It would have been equally possible to expand civilian production with private sector spending and lending if there had been no military imperative.

What 1939-45 demonstrated was the potential in the UK to have a much larger energy and industrial sector if the demand was available and if imports from the continent were closed off. The country also converted much more land to agriculture to produce much more of its own food.

Fortunately we will not be revisiting those extreme times. We can ,however, learn from them that the UK is very adaptable, and could also adapt in more benign conditions where it would be good if we produced more of what we want and import less from the rest of the EU. I doubt they will want to impose tariffs on their exports to us to encourage us to produce more of our own goods and farm products.

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79 Comments

  1. Fedupsoutherner
    Posted January 11, 2017 at 5:53 am | Permalink

    I just wish businesses would be as positive as you are John. The BBC has much to do with the doom and gloom forecasts together with the banks and the money men manipulating the markets to destroy public confidence. The longer Brexit drags on the more chance the public will lose confidence in any government plans.

    • Lifelogic
      Posted January 11, 2017 at 8:13 am | Permalink

      The BBC with all their favourite lefty, greencrap, pro EU, editors, presenters, politicians, air heads from “The Arts”, pop musicians and their carefully selected lefty “experts” is indeed much of the problem.

      I see May has appointed Sir David Clementi to chair the new BBC governing body. I suppose he must be a better choice than Cameron’s dire choice of Lord Patton.
      He does seem to have held some proper jobs, though worryingly he is another Oxford PPE chap and the recent record of the Bank of England is dire.

      • mickc
        Posted January 11, 2017 at 8:10 pm | Permalink

        No, he is a poor choice. It is his proposals which have destroyed the solicitors profession. He is, of course, a former banker with all the qualities of judgment to be expected from that calling.

        • Hooe
          Posted January 12, 2017 at 9:44 pm | Permalink

          If you have a former New Labour minister in charge of Radio and TV what do you expect impartial broadcasting! Anyone with such political leaning or involvement should be banned from such positions in an allegedly impartial organization.

    • oldtimer
      Posted January 11, 2017 at 8:27 am | Permalink

      The BBC is programmed to propagate this narrative which is supported by those who wish to preserve the status quo because they make money out of it. Change is unwelcome because it causes uncertainty which in turns provides fodder for the BBC propaganda machine. We can, with confidence, expect this to continue for at least the next two years and probably beyond because it is in the shared interests of the BBC and the remainers. The rest of us can get on with life and adapt to the opportunities and challenges that lie ahead.

    • Chris
      Posted January 11, 2017 at 9:25 am | Permalink

      I fear that the BBC is part of the Government’s plans i.e. for whatever reason it suits the Government to have the BBC doing this. If it were not, the BBC apparent bias and negativity would have been sorted out long ago.

      • getahead
        Posted January 11, 2017 at 8:59 pm | Permalink

        Cameron the Coward had a chance to change the BBC’s mandate but as with many other things, chickened out. I suppose it was part of his pro-EU agenda.

  2. Mick
    Posted January 11, 2017 at 6:44 am | Permalink

    I just cannot see any problems when we leave, we already deal with the other 27 countries so we should know the in’s and out’s of what they all want it’s not as if we are just starting to deal with them, or am I being to simplistic

  3. Mark Cannon
    Posted January 11, 2017 at 7:13 am | Permalink

    The wartime example is not very helpful. We were borrowing/printing money and running up the National Debt. By the end of the War the UK was out of cash. There was plenty of demand for warplanes during WW2, with the government keen to buy all that could be produced. It helped that quite a few of the planes were shot down and needed replacing. That is not something which could be reproduced in peace.

    • Lifelogic
      Posted January 11, 2017 at 8:00 am | Permalink

      In the war they were indeed building up national debt and largely using it to pay for unproductive weapons of war and the cost of fighting of that war. This had little real value after the war at all. (Rather like the “investments” in HS2, wind power and Hinkley C in fact).

      In the current position we could invest in things what produced real returns and have lasting value. The current position is hugely better (or could if the government would use a working compass).

    • acorn
      Posted January 11, 2017 at 8:59 am | Permalink

      “By the end of the War the UK was out of cash.” Not so Mark, a currency issuing government never runs out of its own cash, it has a bottomless pit full of the stuff at the Treasury. And; the global central banking system was basically untouched by WW2. The Swiss did quite well out of the Axis Alliance.

      UK Debt to GDP peaked at the end of WW2 at 230%, about where Japan is today. This due to the massive injection of spending power into the economy to build armaments and pay for Atlantic supply convoys and generally run the economy flat out 24 hours a day. Unemployment dropped to under 1% when peace time very full employment is circa 3%.

      Such a massive injection of spending power would have generated massive inflation, so very high tax rates had to be used to control sectors of the economy that didn’t aid the war effort. The economy was being run on MMT lines and was successful world wide until the “monetarists” turned up in the mid seventies and invented austerity for the little people; and, a bigger share of national income for the 1%. Have a read of the A level economics “debt” brief:
      http://www.economicshelp.org/blog/11697/debt/post-war-boom/

    • Mike Wilson
      Posted January 11, 2017 at 4:44 pm | Permalink

      I think the wartime example is very helpful. It shows what can be done when the motivation is there. We could, for example, quite easily grow a lot more of our own food if we had to. Why not another Land Army? It is high time we shook ourselves out of our torpor and became enterprising and self-reliant. The decimation of steel production and the general loss of manufacturing capacity should never have been allowed.

    • zorro
      Posted January 11, 2017 at 5:04 pm | Permalink

      That’s not the point. The point is that we can and have adapted to differing economic circumstances in the past and very extreme ones. The other point is that Brexit is nowhere near this scenario. I am amazed that supposedly sentient people cannot see this simple point.

      zorro

  4. rick hamilton
    Posted January 11, 2017 at 7:20 am | Permalink

    I agree that whatever happens after Brexit, business will adapt to the new circumstances. It always does. Those involved too closely with the internal machinations of the EU appear incapable of imagining that any country could exist without it, hence the endless pessimism.

    However wartime is surely a poor comparison as the massive increase in output was financed by means of huge national debt, which took decades to pay back. As an aside, it seems to me that the only time British governments actually care about manufacturing at all is when we are at war.

    • Lifelogic
      Posted January 11, 2017 at 8:18 am | Permalink

      War was borrowing just to win the war with little of value at the end of it but victory. Borrowing to invest sensibly (as people and businesses will do) is far better for living standards. Just get the state out of the way, tax less, halve the state sector, inconvenience less and the UK will boom.

    • Mitchel
      Posted January 11, 2017 at 10:07 am | Permalink

      The debt wasn’t so much paid back as inflated away.As,I suspect,our current debt mountain will be in due course.

    • Mockbeggar
      Posted January 11, 2017 at 12:32 pm | Permalink

      Taking your two points in reverse order:

      I think that Mr Redwood was trying to illustrate how quickly British industry can adapt when it it is obliged to. Nobody likes change when they are comfortable (viz Sir Andrew Cook) with the status quo, but that doesn’t mean they can’t.

      I therefore heartily agree with your first point. The machinations of the politicians, civil servants and associated bureaucrats within the EU are very entertaining as they desperately try to avoid the inevitable – that we are leaving. One or two are finally beginning to grasp this fact but clearly have no idea how to deal with it. Adam Boulton in last week’s Sunday Times seems to think that they’ve got their act together but that we’re still ‘fumbling for a plan’. That may be so for the Brussels bureaucrats but what about their member politicians? How can Boulton say we don’t have a plan simply because the Govt. won’t tell him? However, apart from some disaster like remaining in the customs union and denying ourselves the ability to make trade agreements outside the EU or, worse still, agreeing to continue allowing free movement and remaining in the ‘single market’, in the end, it will be industry that does the business – because they will have to.

  5. Richard1
    Posted January 11, 2017 at 7:25 am | Permalink

    In his reply to your open lettter, the industrialist Sir Andrew Cook said he was not worried about tariffs but by non-tariff barriers, by which he appeared to mean imposed product standards etc – they could be used to discriminate against U.K. Exporters to the EU. The same would apply eg to financial services passporting. Trade under WTO rules would presumably also require new customs clearance procedures between the U.K. And the EU (eg across the Northern-Southern Irish borders and the English-French border). This, it is feared, would be costly, time-consuming and damage trade. What answer do you give to such fears?

    • Posted January 11, 2017 at 8:47 am | Permalink

      He can’t give an answer because he has not got one.

    • a-tracy
      Posted January 11, 2017 at 9:13 am | Permalink

      A bit like the French Macron Law July 2016, that they want to impose even within the EU. Reciprocal costs will hurt the entire EU including the UK. The French don’t like free movement of goods and workers so they want to charge administration and ensure you have to have French documents, contracts, contacts, fees and fines.

    • Know-dice
      Posted January 11, 2017 at 9:22 am | Permalink

      That was strange, as Sir Andrew suggested that it was non tariff barriers relating to EU specifications that would be the problem. He should already be meeting those specification if he is selling to EU based customers so nothing changes.

      Unless he means the unwillingness of EU customers to take products from out side of the EU. But that should be addressed by marketing and a strong sales force…

    • Lifelogic
      Posted January 11, 2017 at 9:46 am | Permalink

      Well they would be damaging themselves rather more than the UK if they did do that. If needed the UK companies can switch to produce and supply the home market or other markets than do not take such a daft self harming approach. Or they can use joint ventures or set up EU based companies where sensible. There will always be some ways to get round the absurd and damaging red tape that bureaucrats so like to produce

    • acorn
      Posted January 11, 2017 at 10:24 am | Permalink
      • forthurst
        Posted January 11, 2017 at 10:00 pm | Permalink

        “He means “Quotas” and “Tariff Quotas” as well as technical specifications.”

        Are you putting words in his mouth, acorn? This is Sir Andrew’s response to JR’s request for clarification, “The non tariff barriers concern product specifications. They are a real problem in my trade with non-EU countries. They are not a problem when I trade in the single market. They will be a real problem if the UK leaves the single market.”

        Sir Andrew’s businesses make assemblies, not finished goods which can be the subject of quotas and substantive tariffs..

        • acorn
          Posted January 13, 2017 at 7:18 am | Permalink

          There’s no difference between components and finished goods. Look at the thousands of component codes in the schedules.

  6. Lifelogic
    Posted January 11, 2017 at 7:38 am | Permalink

    Indeed it is not in the EU’s interests, but then neither was the EURO nor nearly all of the endless red tape and regulations that spew out of the EU every day. This did not stop the EU bureaucrats and politicians from bringing in such insanities and retaining and augmenting them.

    We have nothing to fear but fear itself. That and the dreadful lefty, interventionist, greencrap sense of direction Theresa Miliband seems to be taking, for some bizarre reason.

    All that is needed is cheap energy, a bonfire of red tape, easy hire and fire, cheap (non greencrap) energy, cancel HS2, the wind and PV subsidies & Hinkley C, cut of all the waste and misdirection of government (circa 50% of it), relax planning and building control, have lower simpler taxes, get real competition in banking and permit only the higher skilled immigration. Just get the government and lefty Mrs May out of the way and the UK will certainly prosper.

    • Lifelogic
      Posted January 11, 2017 at 7:50 am | Permalink

      Public spending before the war was (as a percentage of GDP) circa half what it is now (nearly 50%). That and the lack of red tape would have helped hugely. Health and safely, climate alarmism, bloated government and endless red tape kills or exports so much of productive industry today. Just get rid of most of it and indeed most of the dire and largely unproductive state sector.

    • Lifelogic
      Posted January 11, 2017 at 2:06 pm | Permalink

      Philip Johnson has it right in the Telegraph today.

      May’s desire for even more state intervention puts her on the same political spectrum as Corbyn.

      Brexit voters certainly did not sign up even more bloated and incompetent government and red tape, we have far too much of that already. What on earth is she playing at?

  7. Duncan
    Posted January 11, 2017 at 7:59 am | Permalink

    It is a dereliction of political responsibility that PM May should be rabbiting on about the mental health needs of children (a typically contrived social project designed to promote public sector employment while allowing May to promote herself as a caring conservative PM) when our capital city is being held to ransom by Marxist rail unions

    When is she doing? Pull your finger out and get these unions sorted out. Stop playing silly pathetic games with social project fluffery

    The public know when a politician is playing politics with our money (social engineering projects) and at present May is doing precisely that..May will be exposed if she doesn’t start addressing the real issues facing the UK starting with public sector reform and curbing Marxist unions

  8. turboterrier
    Posted January 11, 2017 at 8:01 am | Permalink

    Thought provoking post John.

    Apart from there being a war on and a real fight for survival and our very existence.

    The difference then was we had real leaders who united the country and parliament forgetting about party differences and beliefs for the common good.

    We have several areas of real crisis at the moment and all we the public get is the knockabout round robin point scoring exchanges and the problems still remain.

    It is too easy for every man and his dog to challenge any decision made by governments and businesses and it is has become the politics and legal management doctrine of the mad house. Wholly supported and orchestrated by the BBC. All doom and gloom and no mention of the thousands of businesses and employees working miracles as a matter of course just doing their day job day in day out.

    The reports coming out of Europe are one of a ship slowly taking on water and the damage control is failing. Does any one on the remain side ever get pressured into answering questions on “what if it fails”? As WW2 produced real leaders so the leaving of the EU must identify the people with the skills and drive and determination to occupy the highest offices to give the country the greatest chance of success.

    So many remainers are yesterdays failed politicians who are desperate to try and stay in the limelight rather than hold their hands up except the peoples vote and go off and get a life. For too long we have had to accept second best when for whatever reasons the real makers and shakers are confined to the back benches of both parties always presented as a thorn in the side of their respective parties.

    Enough is enough and so the hope is that parliament will drag itself into the 21st century with more of a tad of what made us great back in the 1940s. It is people not processes that make it happen. Too many round pegs in square holes.

  9. David Cockburn
    Posted January 11, 2017 at 8:12 am | Permalink

    The other interesting war-time example is from the Napoleonic wars when he implemented his ‘continental system’, forbidding most of the continent from trading with the UK.
    We in response turned our focus to the rest of the world, importing ship-building timber from Nova Scotia rather than the Baltic for example.
    If anything, Napoleon helped us to expand our empire.

  10. WingsOverTheWorld
    Posted January 11, 2017 at 8:13 am | Permalink

    Richard1 – I have thought this too. The narrative really needs to be brought back down to earth. It is fairly obvious that if we are to control immigration and if we wish to take advantage of the many trade deals with the ROW we would have to leave both the Single Market and Customs Union. We should admit as much and let business adjust. The narrative therefore should be about an MRA on conformity, and since we already have 100% compliance, we should take the line that we will continue as such for goods sold to the EU. A deal would not be difficult to strike.

    • Denis Cooper
      Posted January 12, 2017 at 8:23 am | Permalink

      If it helped to reassure the other EU member states the UK Parliament could make it a matter of UK domestic law that any company which intends to export to the EU must comply with its relevant standards as in force from time to time. That law applying specifically to exporters to the EU would be instead of the current law, ECA72, requiring ALL businesses in the UK to comply with EU law, and it would be the responsibility of the exporting businesses to keep apace with changes in the EU regulations and ensure their own .

  11. The Prangwizard
    Posted January 11, 2017 at 8:21 am | Permalink

    It may be that getting out of the EU that will make a difference and I hope so but doubt it.

    The problem is the national mindset, that imported products are better than our own, that ‘inward investment’ is always good, and why make things here when we can buy them elsewhere, and the malign power of City spivs. The City has drained the life blood from our manufacturing economy by encouraging short-term and parochial thinking, and actively sought with government encouragement the sale of our major and minor industries. Look around, how many truly UK brands do you see? How many US or European ones? We need more Dyson’s and JCB’s. I think they have remained only because they have been kept private by the patriotic owners and out of the hands of City greed.

    The analogy of WW2 is worth emulating. Curb the City and change the mindset.

  12. Ian Wragg
    Posted January 11, 2017 at 8:21 am | Permalink

    With the governments adiction to intermittent expensive green energy we couldn’t prosecute another full blown conflict.
    When China becomes the master of our power industry the end is nigh.
    When are the Europhile judges going to share their deliberations with us or are they waiting for guidance from Brussels.

  13. Trumpeter
    Posted January 11, 2017 at 8:29 am | Permalink

    The Labour Party should be asked how the UK was victorious over the better part of Europe and then became in Labour’s eyes dependent on Europe and a dependant of Europe.
    Go on Mr Labour Party, tell us we were too weak to have done that without America! Go on!

    Obama is gone in 9 days time. At the back of the queue for Welfare.
    Our Uncle Donald loves us. He is the true son of a United Kingdom mother. So there!

  14. Mike Stallard
    Posted January 11, 2017 at 8:45 am | Permalink

    “Indeed, one or two extreme Remain enthusiasts have suggested all trade with the continent will cease if we leave without an agreement, an absurd proposition. ”
    It will.
    Why?
    Because this is not about tariffs at all.
    It is about trading arrangements post 9/11 where the customs were able to nod through containers with the right paperwork. Once this EEA agreement is nullified, all these arrangements come to an end. Fortress Europe is just that. You are either outside the walls or in it. It is not tariffs: it is AEOs.
    If – and the tide is running against us – we manage to salvage the EEA and join EFTA, we will be able to trade with Europe while we fix up our future arrangements.
    If not, not.
    A more recent parallel is the BSE crisis where France managed to prevent our beef leaving the country for some years.

    Reply What nonsense

  15. Richard1
    Posted January 11, 2017 at 8:58 am | Permalink

    On yesterday’s topic, there was a discussion this am between Norman Lamb, Andy Burnham and Sarah Wollaston who boldly agreed an all-party approach was needed to look into radical options for the NHS and social care and politicians need to be honest with the public. All sounds sensible – but they were united that any change to the model of the NHS being funded by higher and higher tax, being ‘free’ – I.e. a state monopoly – was unthinkable. It’s rather as if a reforming Soviet economist in the 70s had called for a radical no-holds barred look at productivity in Soviet industry – but had ruled out on principle any consideration of allowing private ownership of business.

    Let’s recognise: 1). The NHS isn’t the ‘envy of the world’, its outcomes are worse than those in comparable countries, 2) the stated cost of the NHS excludes the huge unmeasured cost to the economy of waiting lists, the need to take a day off work to see a doctor and the Difficulty of accessing healthcare after hours or at weekends etc and 3) no other country in the world has imitated the NHS so it can’t be all that great.

    Then let’s have a radical, no pre-conceived notions, discussion about how best to provide health and social care.

  16. margaret
    Posted January 11, 2017 at 8:59 am | Permalink

    There have been many comments in the media about the UK brexiteers being in cloud cuckoo land if they think that a quick Brexit with good trading arrangements can be reached. Nicola Sturgeon was also threatening to hold another referendum if we opted out of the single market . I would certainly not like my company to go under due to being denied previous customers by politicians . Perhaps companies do not see it like this , perhaps they do not mind losses.

  17. The Great Ear
    Posted January 11, 2017 at 9:01 am | Permalink

    Outside the EU, approximately 330 to 360 million people speak English as their first language in the rest of the world ( including ourselves ) with somewhere between 500 million and one billion speaking English as a second language ( as opposed to “learning a bit in high school” ).

    So we will not be “isolated” or “marginalised” “on the periphery” ” a tiny island people ” as Labour Party and LibDem language speakers would have it. We will be rejoining our own people outside the EU. Why did we ever leave them?

  18. Bert Young
    Posted January 11, 2017 at 9:10 am | Permalink

    Faced with challenges all business enterprises modify and react ; it would be madness to conclude that the assets and know-how that existed were worthless . Shareholders and other interested parties who participate – actively and inactively , also are major influences and will direct what happens .

    Life after Brexit in my book represents fresh air . The bureaucratic and sometimes idiotic controls from Brussels will be a thing of the past . Trade and service links with Europe will continue – there is too much to lose for the European side if it were to say ” all is stopped “.Also our overseas investments are huge ; they exist in all parts of the world ; they will play an important part in how we prioritise our efforts and influence the outcome . Trump is a UK enthusiast and his policies on trading will only add to our case .

    From a future point of view there is no doubt that the EU faces challenges and the threat of break up . Already dissenting forces are emerging ; the hard case of Southern EU countries vs the economies of Northern EU countries still exists ; add to this are the other EU counties in need of hand-outs . One lump cannot and will not balance out the discrepancies . I foresee no solution other than the restoration of sovereign states who wish to co-exist with each other .

  19. Tony Harrison
    Posted January 11, 2017 at 9:40 am | Permalink

    Good stuff as usual, Mr Redwood, but I must quibble with your suggestion that we produced the first jet-engined fighter: that honour goes to Germany, which introduced the very good Messerschmidt 262 “Schwalbe” (Swallow), an excellent aircraft that saw combat well before the Meteor and which was also about 100mph faster than our ‘plane…

  20. Shieldsman
    Posted January 11, 2017 at 9:43 am | Permalink

    When you look at everyday products sold by the major international Companies, e.g. Proctor & Gamble, where does it say it is made? Now I am talking about products that were at one time manufactured in the UK.
    Without being specific, you will often find manufacture has migrated to Germany, Holland or another EU member State.
    This all creates extra transport costs, currency exchange and job loss for the UK.

    Just maybe, outside of the EU we might regain control of our own businesses.

  21. Denis Cooper
    Posted January 11, 2017 at 10:44 am | Permalink

    Off-topic, I read here:

    http://reaction.life/flip-flopping-sturgeon-will-hold-another-referendum/

    “With a flourish, Scotland’s First Minister has taken a referendum off the table in 2017. Her announcement ‎has gained attention out of all proportion to its relevance to reality. There could not be a vote this year. The enabling legislation being planned by the Scottish government will not be ready in time, and in law, if not in practice, the granting of a referendum is a Westminster not Holyrood decision. But a poll conducted by BMG and published recently demonstrates that Scottish voters are clearly opposed to an immediate vote, with 61% against a referendum taking place this year.”

    I suppose this is what happens when the UK government constantly panders to the devolved Scottish government over two decades – we get to the position where “in law” something is a Westminster decision but there is a weak-kneed assumption that “in practice” it will be a Holyrood decision.

    Why? If Sturgeon really believes that it should be her decision, let her go to court and seek a judicial declaration that the Scottish authorities have the legal power to order a second referendum, and notwithstanding her signature on the Edinburgh Agreement for the first one implicitly acknowledging that they only have that power when it has been granted by the UK authorities through a Section 30 order.

    Personally I have no objection to the Scots being given another opportunity to decide whether they want to separate from the UK, but only after the UK has separated from the EU and the various consequences of that major change have become clearer. On no account should Sturgeon be permitted to reduce the UK’s EU withdrawal negotiations to chaos, and nor should the Scots be asked to vote again until they have had a fair chance to see how just good or bad their lives have become with Scotland outside the EU.

  22. forthurst
    Posted January 11, 2017 at 11:03 am | Permalink

    What actually is Sir Andrew Cook’s problem with product specs? I note that although Norway is in the EEA, no Norwegian language is an official language of the EU; if we left the EU would English cease to be an official language, despite it being an official language of Malta? Is there a requirement that product specs must be published in an offical language as requested by a member state’s supplier?

    Rather than squandering the leaving dividend on the International Health Service, whose problems are significantly those of organisation, why not get to grips with the genuine concerns of component manufacturers like Sir Andrew and if necessary offer them transitional arrangements for training staff in understanding requirements and negotiating supplies to foreign customers who might be less sympathetic than now, expecting fluency on technical matters in their own languages etc?

  23. Antisthenes
    Posted January 11, 2017 at 11:05 am | Permalink

    Logic and common sense does indeed dictate that trade with the EU after Brexit will remain at least at current levels and trade with the rest of the world should increase. As the UK has in place conditions that should allow that to happen with Brexit and in fact allow those conditions to be improved and expanded. Despite the EU and the left making every effort to cause the opposite during our membership. The EU and remainers myopic Brexit vision of the future results from a combination of an intellectual deficiency, hubris, annoyance at having their grand plans questioned and fear that dissatisfaction with the EU which Brexit indicates is contagious. The fact of which makes the use of logic and common sense far from certain by the officials of the EU. Their rhetoric so far indicates that is at least their current position.

    A position we should not take at face value as may doomsayers do me included on occasions. If we look at Brexit as two protagonists shaping up for a fight which they are then we are seeing how they are preparing for it and trying to gain an advantage before the first blow is struck. The EU believes psychology and an aggressive stance will win them the fight even before the fight begins. The UK is being much more cautious and is sizing up it’s opponent and looking for weaknesses to exploit. Who wins will depend on how long the fight lasts and what tactics are used. A long drawn out punch trading fight does not favour the UK. The UK must go in fast and furious and with steely intent to cower her opponent and land a knock out blow. As the EU has no lethal punches it can throw it will have to recourse to wearing the UK down so that if it cannot win it will at least cause a draw which for the EU is just as good.

  24. Posted January 11, 2017 at 11:12 am | Permalink

    We heard most of these doom and gloom stories from big business when we failed to join the Euro. Major companies would be closing their UK production plants in favour of them moving to the Euro Zone. None went, and in fact many expanded here. The only major company that left was Cadbury who were taken over by a US company, nothing to do with the Euro.
    US companies are setting up offices in the UK, another one mentioned yesterday, they clearly are happy with Brexit. My daughter worked for a US company’s European HQ and staff were worried about a move to Europe. They were assured that the company would stay here; the reason – most of their customers throughout Europe speak English which is generally the first foreign language learnt in Europe. If the company went to, say, France, communication would be far more difficult as far less of their customers would speak French.
    We should do far better following Brexit provided our civil service can cut back on unnecessary red tape.

  25. mikebravo
    Posted January 11, 2017 at 11:18 am | Permalink

    Nice bit of wishful thinking.

    One major problem.

    If we do not have access to the Single Market, with customs clearances etc, via agreement, the Chanel Ports will be backed up to the M25 within a couple of days.

    Perhaps we can re-plant some apple orchards and eat more home grown pork?

    • Denis Cooper
      Posted January 12, 2017 at 8:20 am | Permalink

      But of course these queues of lorries will only be on our side of the Channel.

      #sarcasm

    • Hope
      Posted January 12, 2017 at 1:02 pm | Permalink

      The same applying to EU countries wishing to sell here at double the rate based on imports and exports to the UK! Stop the unnecessary pessimism.

      • mikebravo
        Posted January 15, 2017 at 2:00 pm | Permalink

        It is not unnecessary pessimism.

        It is reality.

        Stop the undue optimism.

  26. ferdinand
    Posted January 11, 2017 at 11:42 am | Permalink

    I agree entirely. It ill behoves bosses at banks (HBSC) to issue scare stories when they should be getting ready to increase their efforts towards maximising their European business. Trade is trade and all customs unions do is to reduce it in favour of a minority who then lose out by being uncompetitive. We are approaching the wide open spaces.

  27. Denis Cooper
    Posted January 11, 2017 at 11:51 am | Permalink

    Somewhat less off-topic, even though I’ve checked other sources I still cannot quite believe that Andrew Tyrie said the following in a speech on Monday night:

    https://www.theguardian.com/politics/2017/jan/10/senior-tory-says-theresa-mays-clarification-of-brexit-position-is-overdue

    “Clarity on this point would enable Britain to start making a crucial point to our counterparties: the four freedoms of the single market are neither immutable nor irretrievably interdependent.”

    When on the same day Merkel reiterated that in her view they are in effect “immutable”, and “irretrievably interdependent”, a hardline ideological view which she expressed before the referendum – when it was reasonable to guess that she would see sense if we actually voted to leave the EU, despite the threats – but then straight after the referendum – when maybe it could still be thought there was still a chance that she would come round once negotiations has started – and along with other EU luminaries has consistently maintained since then and shows no sign of abandoning:

    http://uk.reuters.com/article/uk-britain-eu-merkel-idUKKBN14T1NX

    “Merkel says no ‘cherry picking’ for Britain in Brexit talks”

    “”One cannot lead these (Brexit) negotiations based in the form of ‘cherry picking’,” Merkel said in a speech before members of the German Civil Service Association in the city of Cologne.

    “This would have fatal consequences for the remaining 27 EU states,” added Merkel. “Britain is, for sure, an important partner with whom one would want to have good relations even after an exit from the EU.”

    But it was important, said the chancellor, “that on the other hand, we are clear that, for example, access to the single market is only possible under the condition of adherence to the four basic principles. Otherwise one has to negotiate limits (of access).””

    And followed by this yesterday:

    https://www.ft.com/content/8eef080a-d72d-11e6-944b-e7eb37a6aa8e

    “German industry chief backs Berlin’s tough stance on Brexit”

    “Dieter Kempf, who took over this month as president of the BDI, the German employers’ federation, told journalists on Tuesday there could be no question of Europe bowing to British demands for immigration controls, saying the EU’s four freedoms — including the freedom of movement — must not be “put into danger”.”

    Oh, and anybody who thinks Merkel would be willing for the UK to leave the EU but stay in the EEA, knowing that there was a cunning plan to abuse a provision in the agreement to limit migration from the other EEA states, really needs to think again.

  28. Very cross party
    Posted January 11, 2017 at 11:56 am | Permalink

    A Lib Dem MP on TV just now speaking to cross-party agreement on allocating more money to care services. He says we need persuading.
    He is wrong.
    We do not need persuading. MPs though, do need persuading to stop allocating money to Local Authorities for them to waste.

    I am always tired of meeting Labour Party members per se.
    Always tired of discovering they are employed by the Local Authority, many in the NHS and in the caring services.
    Very weary of discovering how Labour Party membership is proportionately much less in the private sector.
    Everyone is tired including people on social housing estates of seeing on average, and I do not use the term “on average” loosely, seeing one repair van parked in the street for every 20 homes, each day. Including the social housing of ALMOs.
    So many fake repairs.

    The government needs cross party agreement to stop vast amounts of money squandered openly and without pause in every aspect of Local Authorities and political intrigue to stop anything being done.
    Then MPs can “persuade” rent-rate and tax-payers for more allocation to the care services.
    We should have a Referendum on whether we wish Local Authorities deconstructed entirely with Party membership banned.Trades union membership banned No elected official to have any input whatsoever except by the PMs office.Local Authorities and their
    funding is literally unspeakable as well as figuratively unspeakable.

  29. Newmania
    Posted January 11, 2017 at 12:12 pm | Permalink

    I daresay my despair at contempt for this betrayal of the country are unlikely to be published and I see much working towards admitting there is no deal whatsoever to be done
    Never has it been clearer what a pack of lies was told at the time of the referred even if it had been an appropriate subject for the idiocracy . What is happening is that the UK have told, to get stuffed by the EU by the US by India and everyone else
    Just staggering , this will go down in history as the worst government this country has ever had , and , come to think of it the worst opposition as well
    Something has got to be done about the state of our democracy and quick I will not go on being ruled by the dumb the extreme and the irresponsible

    • Anonymous
      Posted January 12, 2017 at 11:20 pm | Permalink

      I take it you’re not happy about Brexit then, Newmania.

    • libertarian
      Posted January 13, 2017 at 4:06 pm | Permalink

      Something troubling you Newmania

      Are you in danger of losing your job? Maybe we can help?

  30. Richard Butler
    Posted January 11, 2017 at 12:17 pm | Permalink

    Gina Miller was given an hour on LBC last night. The sneering sanctimony was hard to bare. Her opening statement was that she never walks on by if she see’s injustice (presumably she’s therefore using the Courts to get ex servicemen off the street etc etc…….?).

    Callers kept asking the same question; What is Ms Millers true motivation.

    She of course stuck to her ‘champion of justice and the legal process’ narrative, but slowly callers teased out her true underlying sub-text.

    She slipped out that she wanted to address the injustice that people voted based on lies (poor dears aren’t we), and that the remedial action to this was for all MP’s to return to their constituents in order to have a ‘facts’ based ‘honest’ conversation.

    In other words she wants the vote over-turned following a process of ‘liberal’ (authoritarian) re-education.

    Sneering, contemptuous ‘liberal’ authoritarians seek to place their idealistic ‘liberalism’ beyond the reach of democracy by invoking the State and Courts.

    How ironic they cared not a jot for the will of the people when handing away our rights and democracy to Brussels over and again.

    Holland may well vote in Wilders, France Le-Pen and Italy who knows who, but I think the EU is on borrowed time.

  31. John Finn
    Posted January 11, 2017 at 12:22 pm | Permalink

    John, I have no problem accepting this statement

    Both the rest of the EU and the UK will remain under WTO rules on our departure.

    or this

    The good news about offering the rest of the EU the choice between confirming current tariff free arrangements and registering it as a Free Trade Agreement at the WTO, or accepting most favoured nation status with low average WTO tariffs is that either outcome will be fine from the UK point of view.

    However, isn’t it the case that the operating under WTO rules means the UK would need to negotiate Schedules (?) with the EU which requires the assent of all 27 member states.

    Isn’t it also true that we would need to set up Mutual Recognition Agreements (MRA?) so that goods can be transported uninterrupted by expensive and time consuming border checks.

    I know you’ll argue that it’s in the EU’s interests to reach an agreement on these issues quickly and there should, therefore, be no problems but the EU is not a single entity. I believe there are a number of EU states, with relatively to lose, who will play hard ball. I accept this will damage the EU as much as the UK in the long run – but it’s the UK that will reach the edge of the cliff first.

    • Denis Cooper
      Posted January 13, 2017 at 8:25 am | Permalink

      Where the UK is bound by an international agreement on the basis that it is a member state of the EU it will be open to any of the parties to the agreement to complain if that basis is changed by the UK leaving the EU. But the EU cannot dictate the reaction of its counterparties, for example it cannot insist that they must treat the agreement as invalid for the UK but not for the continuing EU member states, and in fact it has been reported that a number of countries have already approached the EU Commission to express concern that without the UK the EU will not be the same EU with which they made their agreements. In principle therefore the so-called cliff edge would be a cliff edge for the other EU countries as well as for the UK and for the third country counterparties.

  32. Denis Cooper
    Posted January 11, 2017 at 12:55 pm | Permalink

    Another somewhat off-topic comment, about Philip Hammond in Ireland:

    http://www.irishtimes.com/news/politics/chancellor-denies-brexit-preparations-badly-handled-1.2930666

    “Chancellor denies Brexit preparations ‘badly handled’”

    “UK government yet to decide on single market and customs union, says Philip Hammond”

    How can he say at this stage, just months before formal negotiations start:

    “Well we’re clear that at the end of the process, we have to be able to control migration into the United Kingdom, that is a clear message that we took, a clear mandate that we took from the electorate on June 23rd.”

    while still dangling the prospect of staying in the EU internal or single market, when the equally “clear message” from EU leaders is that this will not be possible if you insist that you must “be able to control migration into the United Kingdom”?

    I really cannot see the point in the UK government in continuing with its “maybe this, but maybe that … ” prevarications; just say that we are taking back complete control of our immigration policy, so it’s up to the others to decide what unnecessary impediments to trade they wish to reintroduce for purely ideological reasons and in direct contravention of international commitments they have previously made.

  33. Gareth Jones
    Posted January 11, 2017 at 1:12 pm | Permalink

    Using WW2 as an example is not helpful at all. UK output was achieved at the cost of massive national indebtedness, to the point that we only finished war debt repayment to the US in 2006. And the Empire was lost.

    Not, frankly, much to write home about. Basically, what you are saying is, we could live off our fat reserves and charity for a few years, and then we’re finished. No thanks.

    • bluedog
      Posted January 12, 2017 at 6:38 am | Permalink

      Agreed. India financed WW2 for us with massive Sterling Balances held in London. The rest of the Empire sent food and raw materials as well as manpower in a huge collaborative effort, which would be impossible to replicate today. Heath saw to that in 1973, and new generations have grown up since with different loyalties. Today with just 13 escort vessels, the RN would be struggling to get a single convoy from Halifax in Canada to Liverpool while managing its other commitments. Well done, Dave.

  34. Atlas
    Posted January 11, 2017 at 1:17 pm | Permalink

    John,

    I agree with you – although we did get into deep debt with the USA during the Second World War to pay for it all.

    When I consider the money squandered on fantasy ‘Green Energy’ as well as all the rent-seeking ‘Climate Change’ research grants, then I suspect we could finance our NHS properly without further tax-rises.

    • Lifelogic
      Posted January 12, 2017 at 8:37 am | Permalink

      Indeed we could. It would also be far easier to run with easy hire and fire, a bonfire of red tape, the abolition of the working time directive. But the main problem is the absurd structure of the NHS and the free at the point of rationing, delays and incompetence system they operate.

  35. Posted January 11, 2017 at 2:49 pm | Permalink

    I see that Xavier Rolet, chief executive of the London Stock Exchange, has told the Treasury Select Committee that Brexit could cost the City 232,000 jobs, three times his previous estimate !

    What utter nonsense ! The idea that we could lose 232,000 jobs is preposterous.

    Passporting is frequently mentioned but the term “Equivalence” rarely comes up. “Equivalence” means that as long as the country in which a business outside the EU carrying on Financial Services work is regulated, can demonstrate that its regulatory systems are “Equivalent” to those within the EU 27, they can conduct business within the EU.

    Naturally the UK MUST qualify because our current regime is within the EU regulatory framework and the Government has already committed to adopting all current EU legislation within UK law to start with !

    So, unless the European Commission’s Directorate General for Financial Services suddenly decides that the UK’s current system is not “Equivalent” after all ( Despite being in the EU for 40 plus years ) it should pose no problem. If Juncker and his foolish cronies start to play games over this, their actions will be open to legal challenge.

    As others have said, it seems equally preposterous that the EU could legally require all currency transactions that involve the Euro to take place in Frankfurt or Paris. Other currencies such as the Dollar and the Yen are not the subject of this kind of restrictive practice so I very much doubt that it would be legally enforceable.

    By the time the EU has imposed its Torbin tax on financial transactions within the EU the cost of doing FS business in the 27 will be highly uncompetitive anyway. The only way they could keep the current amount of FS business would be by imposing draconian restrictions of dubious legality.

    Finally, when the Euro fails as it surely will, there will be more European currencies to trade, increasing the business opportunities for the City. Given their higher cost base, It is extremely unlikely that Frankfurt or Paris will pick up much of that business it will mostly go to London with a small proportion to New York.

    Given the terminal financial problem that is the Euro, in my view, the future outlook for the City is brighter now than it has ever been.

  36. rose
    Posted January 11, 2017 at 2:54 pm | Permalink

    “The country also converted much more land to agriculture to produce much more of its own food. ”

    We had much more land then to convert into farming land, and a smaller population to feed. With the madness of mass immigraton over many years we have lost that advantage in England, and with each extra million people it is only going to get worse. At this rate we will be needing to reclaim land from the sea.

  37. Julien Tabulazero
    Posted January 11, 2017 at 3:03 pm | Permalink

    Dear sir,

    Are you seriously comparing the UK under war economy conditions in 1939 to its current situation in 2017 ? That is preposterous, verging on the ridiculous.

    Have you realised that there are 78 years in-between those two events and that the UK economy might have dramatically changed in the meantime.

    Best regards.

    Reply As I made clear in my piece!

    • zorro
      Posted January 12, 2017 at 12:37 am | Permalink

      I really do despair…..

      zorro

    • Lifelogic
      Posted January 12, 2017 at 8:39 am | Permalink

      There are, nevertheless, some sensible parallels and lessons to be drawn.

  38. Stephen Berry
    Posted January 11, 2017 at 3:43 pm | Permalink

    If we are looking purely at our economic relationship with the states that comprise the EU then it would be best to end all cooperation with Brussels – including sending them money. There should be no negotiations over trade. Free trade should simply be allowed by the UK, even if the EU were foolish enough to restrict it on their side. At the same time we could declare free trade with the rest of the world. That would be the best economic choice for the UK, though I do realise it would present a number of political difficulties in the present world.

    I think it’s unfortunate to use the World War Two analogy. There is massive waste in wartime and the figures on the size of the UK economy then need to be taken with the large pinch of salt which greeted Soviet industrial production figures. True, for instance, we produced much more of our own food between 1939 and 1945, but if this diverted capital and labour from more productive work, this would not be a good thing. Remember that Britain emerged from WW2 bankrupt and had then to go cap in hand to the Americans for money.

    Best just to point out that if the EU does now impose tariffs on the UK, this will simply accelerate an increase of our trade with the rest of the world – something which is, in any case, coming.

  39. fedupsoutherner
    Posted January 11, 2017 at 7:23 pm | Permalink

    I did notice on the BBC tonight that they very generously offered us about a minute on Carney’s observations that Brexit is not now the biggest threat to the UK. They didn’t elaborate and didn’t let us know why but went onto something about IPlayer on the BBC which they thought was much more important. How are the British public ever to get a reasonable assessment of what is going on if the BBC can’t be bothered to let us know anything??? It’s about time they were called to task. I resent having to pay my licence for such low grade reporting. More time was spent on Trump. Now, I don’t know if I have got my priorities wrong but I would have thought the UK was more important.

  40. Baffled
    Posted January 11, 2017 at 7:48 pm | Permalink

    If you say we are going to continue to trade with EU, what do we stand to gain economically by leaving? And don’t say trade with the rest of the world, because we do that already.

  41. cold
    Posted January 11, 2017 at 7:52 pm | Permalink

    Good clear piece. Interesting also with the historical perspective.
    OT. DT was brilliant today. Hopefully his example will empower others over here.

  42. Posted January 12, 2017 at 9:53 am | Permalink

    I don’t often disagree fundamentally with our host but in this case I fear I have to.

    We could not possibly repeat the superb efforts made during WWII, when the Country was placed on a war-footing and the production of ships and weapons was vastly expanded.

    In 1939 -1940 production of cars was halted and the manpower and assets of the entire motor industry was switched to military hardware : for example, the Castle Bromwich factory that now builds elegant Jaguars produced equally elegant Spitfires throughout the war. Obviously today we don’t have an entire industry that we could turn over to industrial production ( unless, of course, we dismantled much of the legal and accountancy professions and threw on a few surplus MSPs and MEPs politicians to the task).

    Prior to 1939 we also had an immense shipbuilding industry. Because that has all but disappeared we are not in a position to expand it !

    Very regrettably. we no longer have the infrastructure or the skilled manpower to respond to a requirement for increased industrial production. It would take us at least three to five years to train up apprentices to be effective engineers and production would suffer in the interim while the efforts of skilled craftsmen were diverted to help train the additional workers.

    Almost none of the machine tools used in industry today are produced in Britain. All would have to be manufactured abroad and imported.

    • Denis Cooper
      Posted January 13, 2017 at 8:00 am | Permalink

      Ah, machine tools. I remember Wilson talking about machine tools.

      • Lindsay McDougaal
        Posted January 13, 2017 at 6:04 pm | Permalink

        And I remember Enoch Powell’s comment about that:

        “Sometimes I think that the Prime Minister’s concept of our economy is making machine tools to make machine tools to make machine tools.”

        At the time, that was a fantasy, but now we already have robots on motor car production lines.

      • Mitchel
        Posted January 14, 2017 at 1:33 pm | Permalink

        Only a teenager at the time but I can remember the hand-wringing at Alfred Herbert finally biting the dust early in the Thatcher years.

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    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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