Why do we run such a large balance of payments deficit with the EU?

As some are still worried about the possibility we will trade with the rest of the EU on WTO terms after exit, I am inviting them to explain why it is we run a huge trade deficit with the rest of the EU but a surplus with the rest of the world. Why has this usually been true during our 45 years of membership? Not even large devaluations against the DM and the Euro have changed this.

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120 Comments

  1. alan jutson
    Posted July 22, 2017 at 6:16 am | Permalink

    You also need to add to this the hidden spend which millions add to each year when on holiday in Countries which are members of the EU, a sort of personal trade deficit.

    • alan jutson
      Posted July 22, 2017 at 8:11 am | Permalink

      One of the reasons we run a trade deficit with the EU is because their member Countries are rather better at marketing their products over here, than we are at ours over there.

      I believe it is as simple as that, marketing and ease of availability.
      In addition perhaps their citizens are rather more patriotic when purchasing goods than perhaps we are here.
      Its also to some degree about life style education and the way in which your family has bought you up and lived, which helps shape your mind.

      • Peter Lavington
        Posted July 22, 2017 at 7:44 pm | Permalink

        Totally agree. I live in Spain and you go in almost any supermarket and nearly every foodstuff is Spanish made. All wines are Spanish. People just don’t think of buying anything foreign ie British. International trade makes everybody richer in the long run. The average continental doesn’t understand this, thus UK will always run a deficit with the EU.

    • NickC
      Posted July 22, 2017 at 1:55 pm | Permalink

      Alan, It’s not really hidden. Tourism (ie foreign tourists visiting the UK) is the UK’s third biggest export after chemicals and financial services. So equally the spend of British people going abroad counts as an import for the UK, but is an export for the USA, Spain, France, etc.

      • alan jutson
        Posted July 22, 2017 at 5:02 pm | Permalink

        NickC

        So are you suggesting they go through and itemise my credit card bills to add up the amount spent in each Country.
        Unless it is all logged simply under a title, foreign transactions.

        My cash however would be a bit more difficult, as I tend to change reasonable amounts which will last me over several holiday visits if the exchange rate is good, (one good thing about having the Euro for many Countries) I can therefore bring back unused foreign currency which we simply use next time. Indeed I still have some Euros left originally purchased at 1.36 to the pound..

        • NickC
          Posted July 23, 2017 at 8:31 am | Permalink

          Alan, No. The ONS uses the International Passenger Survey (IPS) for both foreign visitors leaving the UK and Brits returning from abroad – source: ONS Traveltrends 2015. Quote from the ONS Traveltrends: “The details collected on the survey [IPS] are used by ONS, along with other sources of information, to produce overall national estimates of the number and expenditure of different types of travellers.”

          • alan jutson
            Posted July 23, 2017 at 3:05 pm | Permalink

            Nick C

            Thanks Nick, is this the same sort of sample survey they use to record immigration numbers ?

            Never been asked a single question such as you outline in 55 years of foreign travel.

            Only been occasionally asked by immigration where I have come from and how long have I been away by the odd immigration official when checking passport.

            Me thinks the system may require a few tweaks before they can rely upon the figures.

  2. Lifelogic
    Posted July 22, 2017 at 6:16 am | Permalink

    Well the answer is the system is rigged to a degree by such things as CAP and other lunacies.

    The way to export more is to have a bonfire of red tape, to cut and simplify taxes, to relax planning laws, go for simply hire and fire employment laws, go for fracking and cheap non green crap energy and thus make UK industry more competitive and willing to invest. May alas seem to want the oppositve.

    Even VAT on school free Gove seems to have gone all climate alarmist now. We all want clean air, water and a pleasant country but bat & bird chomping windfarms do nothing but waste money, export jobs and destroy the environment.

    Remainer Lady Hale is surely a large mistake at 72. But then nearly all lawers are remainers usually thinking that the more law, government and layers of law their is the better.
    But why is she able to take the job when most judges are forces to retire at 70?

    • Lifelogic
      Posted July 22, 2017 at 6:32 am | Permalink

      I meant – But then nearly all lawers are remainers generally thinking that the more law, government and layers of courts and government there are the better. The opposite is generally the case.

      I you have a hammer every problem start to look like a nail as they say.

      Leave companies with some money to invest in efficiency rather than taking it off them to “invest” in lunacies like HS2, Hinkley and renewable subsidies.

    • fedupsoutherner
      Posted July 22, 2017 at 7:05 am | Permalink

      LL Exactly right. Gove going on about farmers being ‘green’ really bugs me too. All the farmers around us have put in bio mass boilers or turbines or mass arrays of solar panels all for subsidies. They are earning a fortune off the backs of bill payers who just see their energy bills rising. Our landscape has gone from one of beauty to that of towers of steel and it is the same all over Scotland even around Loch Ness. The numbers of birds and bats that these things kill are horrendous. ‘Green?’ My back side.

      • Lifelogic
        Posted July 22, 2017 at 11:56 am | Permalink

        Essentially rent seeking corruption under the guise of greencrap.

        Still some good news the NHS is to stop funding quack medicine butcwhy did they ever fund it? Money to burn one assumes and not theirs so what do they care.

        Perhaps we could stop funding quack greenery too. Then Prince Charles will be really annoyed. People who like quack medicine and are against GM crops usually fall for the quack climate alarm science too. Invariable arts graduates or geographers.

        • Lifelogic
          Posted July 22, 2017 at 12:16 pm | Permalink

          Interestingly Prince Charles warned in July 2009 humanity had only 96 months to save the world from “irretrievable climate and ecosystem collapse, and all that goes with it” caused by unchecked consumerism. What a plonker. So we have passed that. In fact their has been no significance warming at all since 2008.

          The forcasts of the green loons make astrologists look sound. Yet they claim they can tell us the climate in 100 year time! This without even knowing the Sun’s output or volcanic activity even for next month.

          • Lifelogic
            Posted July 22, 2017 at 12:33 pm | Permalink

            there!

          • ferdinand
            Posted July 22, 2017 at 8:27 pm | Permalink

            No significant worming this century, in fact very slight cooling.

          • hefner
            Posted July 23, 2017 at 5:00 pm | Permalink

            Ferdinand, could you please the source of this information as even Dr Judith Curry ( a guest lecturer at GWPF last year) and very much involved in discussing all physical processes and their interactions with various phenomena around the world is saying that that there has been a slight but positive trend in the observed temperature, not only globally with various effects on the oceans, sea-ice and glaciers, but also in a number of large areas (Australia, California, Mediterranean area, Sahel, …).
            Thank you in advance.

      • alan jutson
        Posted July 22, 2017 at 5:06 pm | Permalink

        feud-southerner

        Amazed that it has been reported only yesterday within the main news media, that 50% of a farmers income is from subsidies !

        If this is true, then we have all lost the plot EU included.

        • Lifelogic
          Posted July 23, 2017 at 3:59 am | Permalink

          Indeed and what proportion of “renewable” income comes from subsidies or distorted markets forces to use their output? Perhaps 60% plus?

          • hefner
            Posted July 24, 2017 at 7:46 am | Permalink

            Could you please as a seemingly very well informed person on all kinds of subjects give some proper figures with references to illustrate your comments.

        • A.Sedgwick
          Posted July 23, 2017 at 7:35 am | Permalink

          I read recently that 40% of the EU “income” goes to CAP and half of that as a payment to landowners, many of whom are not farmers. Given EU lunacy this could be correct.

    • Turboterrier.
      Posted July 22, 2017 at 7:34 am | Permalink

      Lifelogic,

      You are so right about Mr Gove I wonder if he ever reads or researches the net for info.

      Today on the net from Stop These Things is a report out of Germany highlighting how dependent they are on coal to provide back up 24/7 and the report also highlights the problems that is facing the whole of the EU. It doesn’t help that Germany is burning brown coal far more polluting than our own. This has been highlighted for years but completely ignored by the majority of our politicians.

      No one seems to care about the water contamination to private water supplies where turbines are erected. The thousands of acres dug up to provide the infrastructure which is normally prime to good farming land. The list can go on and on and nobody listens they just talk and talk.

      If Mr Gove wants to assist farming he wants to really support the farmers that do not benefit from turbines, solar and bio mass. Take away from the farmers who have the subsidies for the land and the lease payments for renewable equipment. Totally outrageous that for the selected few it is double bubble every day of the week. What they get from renewable payments it is taken off of their land payments creating a level playing fields and the savings reinvested in training the next generation of farmers as the UK farming industry is like many others suffering from an ageing population.

    • Richard1
      Posted July 22, 2017 at 8:08 am | Permalink

      We need to see what Gove actually does. He is one of very few ministers in the govt who present a positive case for Brexit. Most recently he has, very sensibly, opened up a debate for the basis on which farm subsidies should be paid, now we will be free to decide for ourselves. Clearly maintaining footpaths and the beauty of the countryside should be part of it. We need much more from the govt on the positive vision of what we can do with new freedoms post Brexit, less of this formulaic ‘we will implement the will of the people’ as if it’s all terribly difficult.

      On climate alarmism we need to see what he does. There is no choice but to intone the mantras of the green religion when in public office. But hopefully the govt will bear down on green crap and get fracking going.

      • Lifelogic
        Posted July 22, 2017 at 6:42 pm | Permalink

        Anyone who is daft enough to knife Boris and the back at the last minute and thus lumber us with the daft socialist T May. Then go on to propose huge damage to private schools by putting VAT on their fees (which would clearly raise nothing anyway as many would be pushed back onto the state education monopoly) is a bit confused to say the least. I used to think he was fairly sound but now he even seems to have fallen for the climate alarmist religion.

        • fedupsoutherner
          Posted July 22, 2017 at 9:35 pm | Permalink

          LL Agree about Gove. I always thought he was educated. Obviously I am wrong. Only today we hear that more scoping for turbines is to take place near us in an area where they are already curtailing the amount of energy some wind farms can produce. What is the point of installing more turbines when there are not the facilities to cope with what they produce now? Perhaps it’s me that’s lost the plot?? And only today I read this in a local newspaper.
          The impact of wind turbines on a top beauty spot is far worse than expected.

          That is the verdict from public agency Scottish Natural Heritage on a wind farm beside the Straiton Monument. This monument overlooks a conservation village in S Ayrshire. Gove needs to come and look at what is happening on farms in Scotland.

        • Richard1
          Posted July 22, 2017 at 11:48 pm | Permalink

          If you were appointed Archbishop of Canterbury I suppose you would profess a belief in God?

        • Richard1
          Posted July 22, 2017 at 11:57 pm | Permalink

          Is Boris really suitable to be PM? He certainly has a rare ability to attract public support. His journalism shows him to be a thinking man. But our distinguished host, who must know all the erstwhile leadership candidates well, supported Andrea Leasom in preference to Boris even though it is clear from her public utterances and reputation that she is…..intellectually challenged.

          • Alisha Rossi
            Posted July 23, 2017 at 1:20 pm | Permalink

            Birds of a feather flock together?

    • Denis Cooper
      Posted July 22, 2017 at 8:46 am | Permalink

      My concern about Lady Hale is not her age but her attitude to Parliament.

      Bill Cash speaking in January 2011:

      http://www.europeanfoundation.org/the-sovereignty-of-the-united-kingdom-parliament-is-hereby-reaffirmed/

      “I fear that the sovereignty of Parliament is in grave danger, however. There are judges in the Supreme Court whom Lord Bingham himself felt it necessary to name in black and white in chapter 10 of his book “The Rule of Law”, published shortly before his death. He publicly criticised their judgments and their attitude to parliamentary sovereignty. In the Jackson case, Lord Hope, who is now deputy president of the Supreme Court, said that

      “parliamentary sovereignty is no longer … absolute”.

      He went on to say that, “step by step”, it “is being qualified”. In his view, the rule of law, enforced by the courts, is the ultimate controlling factor on which our constitution is based. Lady Hale, who also remains on the Supreme Court, agreed with Lord Hope. The fact that that case did not relate specifically to EU law does not alter the fact that the views expressed by Supreme Court judges can be as easily applied to cases involving EU law as to another judicial matter, contrary to the suggestions being put forward by the Minister in evidence earlier.”

      Ultimately “in exceptional circumstances, it would be possible for judges to be removed, by an address by both Houses of Parliament”, but that hasn’t happened for a very long time, and such an address against Lady Hale would stand no chance of passing the Lords while it is packed with unelected legislators-for-life who do not believe in the sovereignty of the Parliament of which they are members.

  3. Mark B
    Posted July 22, 2017 at 6:27 am | Permalink

    Good morning.

    Because they provide us with things that we want. But not for long 🙂

    Once out of the EU and irrespective of tariffs, the EU will have to really compete for our pounds against other countries. No longer will we be a captive market. It is this that they fear, apart from breakup that is.

    They also fear that once out of the EU the UK will no longer have to suffer the regulatory burden and, we will once again be sitting at the ‘Top-top tables’ when it comes to making the rules. Rules that we can shape to suit our needs or, use as bargaining chips with the other 27 members of the EU to get better terms further down the line.

    • NickC
      Posted July 22, 2017 at 2:12 pm | Permalink

      Mark, Quite right, but we need more enterprises like JCB, Rolls-Royce, and Dyson in manufacturing to properly compete against the EU. We need cheaper electricity for basic industries such as chemicals, glass, aluminium and steel manufacture.

      But, beyond the practical, we need a civil service which doesn’t succumb to the EU so easily. I recently talked to a senior civil servant and he reprised all the usual trash Remain objections, like “we won’t be able to fly planes to the EU after Brexit”, etc.

      Worse, he regarded ministers as petty and transitory nuisances to be overcome by his superior (Remain) sense. Yes, Minister is real.

      • fedupsoutherner
        Posted July 22, 2017 at 9:38 pm | Permalink

        Nick C

        How many more of us recognise the need for cheaper energy but our ministers just overlook this. Sometimes I despair. Joe Public can see what needs to be done but our government is hopeless. They really need to change the cabinet and quickly. There is so much damage being done and the Tory party has lost its way.

  4. Lifelogic
    Posted July 22, 2017 at 6:27 am | Permalink

    No one dares to tell the truth about gender pay on programmes like Any Questions or discussions for PC reasons. The reality is that women are. on average, rather less motivated by money and more likely to take jobs that fit in better with their work life balance. They take career gaps and are also far less likely to study STEM subjects.

    Physics A level as about 80% male for example computer studies even more so.

    If there were no pay gap is would actually be a very clear sign of anti-male discrimination.

    If there were are huge number of under paid, talented women around companies clearly snap them up and have a competitive advantage anyway. Companies have no reason to “discriminate” and good competitive reasons not to.

    • stred
      Posted July 22, 2017 at 10:12 am | Permalink

      It is interesting that the BBC was only found out because they had to respond to an equality/feminist demand. Then it is presented as a gender issue rather than greed and incompetence. I was talking to my bird this morning about the issue. she work in a university medical research dept where some staff are clinicians and some scientists. They have found out that some scientists are paid £20k pa more than other doing the same job or less and even less qualified. We are talking about Drs and professors.

      They all have to undergo performance tests, but once paid more they stay on more. The reason for higher salaries is that they are brought in from outside when the rules are broken if the university thinks it is gaining prestige. Staff working their way up through the system get no- yes no- increase when promoted or chosen for special duties. They accept there is nothing that can be done because they are not able to see salary levels for individuals and only find out when the computer or printer goes wrong. The other reason is that the unfair pay applies equally to men and women, so they can’t use gender or race to find out.

      But this 40% discrepancy is nothing to the difference between clinicians and the scientists, where pay including self- awarded merits is often 400% different.

    • Alissa Rossi
      Posted July 22, 2017 at 7:57 pm | Permalink

      And why should I think that your views on the gender pay gap have any relevance, when they seem to come from what was some years ago called a MCP?
      As was recently shown by the salaries at the BBC for very similar jobs there are 20 to 200% pay gaps, simply because males think they obviously are the “best things since sliced bread” and women more balanced in evaluating their strengths and weaknesses.
      And given the very repetitive content of your posts, I am sure that most women would be able to provide more “incisive and topical” comments.

      • Lifelogic
        Posted July 23, 2017 at 4:17 am | Permalink

        Well because the facts support my view. Woman, on average, do study far fewer stem subjects, do take more career gaps for children, do more part time work, are less motivated by money and are more likely to make work life balance choices for family reasons. The tax system means they are very often better caring for their own children or other relatives than paying other to do so. Woman without children already earn more in fact.

        The unbiased research all supports this. They also, on average, choose very different jobs just look at the statistics. They are very sensible in doing this but cannot expect to have it both ways.

        Anyway companies would be very foolish indeed not to take up these talented, motivated but underpaid women if they existed. This would automatically then solve any pay gap. It does not do so as there clearly is none.

        • Alissa Rossi
          Posted July 25, 2017 at 1:52 pm | Permalink

          That was not the point. BBC presenters are unlikely to be science graduates. The point was why reasonably young female presenters earn much less than reasonably young male presenters. Stop the waffle and try (if you can) to answer directly the question above.

    • Cary
      Posted July 24, 2017 at 2:41 pm | Permalink

      The gender pay gap is a statistical lie. Women working full time in their 20s and 30s earn the same as men. When women leave the workforce to have children, they tend to either work part time or not at all. They come back into full time work when their children start primary or secondary school or university and earn less because they have less experience than men who’ve been working full time throughout this time. Children change women’s attitude to the importance of work in their lives in a way that they do not for men. That’s their choice. The government needs to stop assuming women make the same choices as men and that inequality of outcome is evidence of inequality of opportunity.

  5. Mick
    Posted July 22, 2017 at 6:38 am | Permalink

    Because we’ve been screwed by the eu and all political parties in this country have bowed down to the eu over the decades, that’s why one of the reasons I voted out because the public cannot trust the MPs to stand up for GB it’s just self self self to look after there own self interest and blow the rest

    • Robert Christopher
      Posted July 22, 2017 at 9:54 am | Permalink

      That is a valid view. I would think that, because I agree with you. 🙂

      I have spoken to Continentals and they thought that we should fix the problem MP’s (not the Euro-sceptics, but those who WON’T stand up for British interests inside EU negotiations) yet they don’t understand (or perhaps they do 🙂 ) that it is the combination of these MP’s and the EU that creates the impenetrable blob that we have rejected. We have found it impossible to separate the two.
      The Continentals didn’t disagree with the Euro-sceptics, they didn’t understand them, MPs or not, and didn’t see the need to either.

  6. agricola
    Posted July 22, 2017 at 6:51 am | Permalink

    We are now largely a service economy and I assume that you do not include the City of London in your equation.

    Within our manufacturing sector we fail to make the effort to export in many cases. If I want Yarg or Waterloo cheese I bring it into Spain from an England visit. Beyond cheddar from large factory manufacturers there is little in Spanish supermarkets. sad really because we have a range of cheese to rival the French and plenty of French and Italian cheese is readily available. English apples are a rarity in England, but unheard of in Europe. On the credit side beef exporters have tried harder of late. Our car and motorcycle manufacturers have done well, but in reality most are foreign owned.

    All of which poses the question, are we geared up for a post Brexit boost in exports or do we continue to stagger along with a could do better performance. If we cannot sell cheese to Europe what chance of selling it to far flung customers.

    • Mitchel
      Posted July 22, 2017 at 1:09 pm | Permalink

      When our first wave of merchant adventurers sprang up in the mid 16th century,forming “The Company of Merchant Adventurers to New Lands”(our first joint stock company-later renamed The Muscovy Co), through contact with Ivan the Terrible they set up a long-lasting trade in furs,tallow and caviar.Aiming to tap into the lucrative Asian trade routes ,they ,with safe conduct from Ivan,then set off on the perilous journey across lands recently conquered by Ivan from the Mongols to Persia.However,there they found the silk merchants turned their noses up at the coarse English woollens offered in exchange for their wares.

    • NickC
      Posted July 22, 2017 at 1:43 pm | Permalink

      Agricola, I know what you mean. I visited India, and I found that some of the people there – part of the growing middle class – were eager for traditional British goods. The Indians I met had a high regard for Britain. Yet when I talked to a UK soap manufacturer about it, he was extremely doubtful and hesitant.

  7. fedupsoutherner
    Posted July 22, 2017 at 7:09 am | Permalink

    I suspect that some of it is to do with the fact that the EU does not abide by its own rules on health and safety etc. Their goods are probably cheaper to produce and I cannot help thinking that many are more inclined to buy their own produce other than that of the UK. Looking at how talks seem to be progressing I still have the feeling we won’t be leaving the EU. There does seem to be some back peddling in the cabinet but then this is what we all suspected in the first place.

    • Turboterrier.
      Posted July 22, 2017 at 7:42 am | Permalink

      @ FOS

      Agreed the perception has to be that Boris, Liam and Micheal are all back peddling and edging their bets. What signals they send out to the EU. Lack of conviction for the job in hand. If the PM was really really for getting us out she would have found some way of getting farage in the mix to focus peoples minds.

    • Bob
      Posted July 22, 2017 at 7:46 am | Permalink

      @fedupsoutherner

      “There does seem to be some back peddling in the cabinet”

      yes, I heard it on the news last night, Michael Gove has gone native and Brexit has now been postponed for 4 years while the EU and their British agents figure out a way to cancel it altogether.

      I always said that the only way to Brexit would be to elect a political party whose raison d’être is self rule for the UK, which would have resulted in instant withdrawal without the Article 50 option (which has been described as a means to block leavers).

      • Mark
        Posted July 22, 2017 at 6:37 pm | Permalink

        I was concerned to hear that Gove was inviting Greenpeace, the FoE, and RSPB to write DEFRA policy. The last time we did that we ended up with the disastrous Climate Change Act. Does he really want the RSPB to ask for more windmills in place of food we can eat, and FoE to require us to grow yet more energy fuel crops to add to our expensive energy sources?

        • fedupsoutherner
          Posted July 22, 2017 at 9:44 pm | Permalink

          Mark If this is true then Scotland is doomed. Already FoE and Greenpeace are involved in Scottish policy. Nobody seems to realise the damage wind farms are doing to Scotland and indeed to the stability of the grid. There are literally hundreds of turbines waiting to be erected and hundreds more in the planning system. The RSPB has been refused permission to appeal to the supreme court over the latest off shore wind farm given permission when it is known it will harm vast numbers of sea birds and possibly the demise of the Puffin. What is Gove thinking of? Even when mammals and birds are supposed to be protected by law they still get slaughtered. Is this what they call saving the planet?

    • Atlas
      Posted July 22, 2017 at 11:44 am | Permalink

      Indeed fedupsoutherner, I for one have those combined feelings of betrayal and anger on hearing of Hammond’s victory in the Cabinet.

    • ian wragg
      Posted July 22, 2017 at 4:29 pm | Permalink

      Yes I agree, the latest buzzword is transition period. Just another way of keeping us enmeshed in the EU. At the end of the transition period, no doubt they would seek an extension as they were still not prepared.
      What exactly is there to transition, one day we are in the EU, the next we are out. We can’t be half in/out.
      If we are to go to WTO then we must make a clean break.
      If we are still in the Customs Union/Single Market and have freedom of movement at the next election, the Tories will be out of power for a generation. Then again some of the Quislings think that is a price worth paying.

  8. Ian Wragg
    Posted July 22, 2017 at 7:26 am | Permalink

    The French company I worked for only had French and German cars on its approved list.
    Needless to say most of us took the cash allowance and I bought 3 Hondas.
    Procurement is directed to France and Germany but again we try and frustrate this by buying elsewhere.
    We are royally shafted by the Brussels cartel.

  9. robert lewy
    Posted July 22, 2017 at 7:37 am | Permalink

    I am not concerned about possibility of WTO outcome.

    Further, our trading deficit with EU can be considered analogous to debt Credit Card
    as it comes with hefty contributions to the EU budget.

    Seriously, what negotiating skills have our former governments shown in securing a deal
    which requires us to continue to pay heavy bills for allowing the rest of EU to sell to us!

  10. Sakara Gold
    Posted July 22, 2017 at 7:44 am | Permalink

    We simply don’t manufacture much ourselves anymore. When we did, we couldn’t compete with the Europeans because they had invested in new technologies and made better quality goods at a cheaper price.

    • miami.mode
      Posted July 22, 2017 at 5:16 pm | Permalink

      SG. …and we’re probably still not investing in new technology while ever there is an inexhaustible supply of cheap imported labour.

  11. hefner
    Posted July 22, 2017 at 7:48 am | Permalink

    JR, what about properly reading the latest edition of the Pink Book from the Office of National Statistics, dated 30 June 2017? It looks like the increasing imbalance between the stock of assets (SoA) held by UK abroad and the SoA held by foreign investors in the UK, and the differential rate of return of these assets both play a role in the imbalance in the last 40 years. Surely something that could have been expected when in the 80-90s you were eagerly applying the neoliberal ideas of the successive PMs you were serving.

  12. DaveF
    Posted July 22, 2017 at 8:08 am | Permalink

    Between the EU countries and the countries of the rest of the world there are some notable differences, quality of goods being one- you can’t say that the rest of the world produces goods to the same standard of the EU generally speaking? So it’s no wonder that we buy from europe when we can. We holiday there each year in our millions so what’s not to like about Europe? No wonder we are running a balance of payments deficit. However with saying that in my opinion we are far better off overall by being attached to the richest economic club on the planet- if things need to change then UK is a heavy hitter- we should have stayed inside and forced the reforms necessary not going outside in a huff.. with no chance now to influence anything.

  13. Richard1
    Posted July 22, 2017 at 8:24 am | Permalink

    How can the UK hope to be competitive with nonsense decision such as those in Hinkley Point and HS2 are proceeding? Can Conservative MPs not use the Parliamentary arithmetic to force a change here?

    https://capx.co/the-hinkley-point-fiasco-doesnt-bode-well-for-brexit/

  14. Caterpillar
    Posted July 22, 2017 at 8:29 am | Permalink

    Dear Dr Redwood,

    Given your headline, would you be able to give all the respective components of the UK BoP with EU vs RoW?

    Also an opinion on whether the inward investment to the UK (about half of which is EU) and the resultant outflow of investment income is (overall) a suitable position for the UK – it can be difficult for us polloi to tell (from the media) whether the UK is selling the kitchen sink to pay for current imports, or whether there is great confidence that the U.K. will be a future high growth area, have a strong currency and will be an inventor of the future – which is it?

  15. Iain Moore
    Posted July 22, 2017 at 8:33 am | Permalink

    Because there is a consumer nationalism in European countries that supports their own industries, which has been extinguished here by appalling management, Bolshevik unions, and a British establishment who couldn’t give a dammed, and happy to see anything and everything flogged off. Our country resembles the department of state which has the most influence on it, the Treasury, and there it believes all assets are only good if they are being disposed off, where hire, leasehold, PFI etc is fine, and it doesn’t matter who you lease something from for they make no distinction between the Saudis, Qataris, Chinese or anybody else . We have become a people who are lease hold to our own country, which again is not surprising considering the barely disguised contempt with which the British establishment hold the British people, for they rarely miss an opportunity to tell us how useless we are, how lazy we are, compared to ‘hard working immigrants’ , and as for our culture, well that is only made tolerable by ‘enrichment’ . You feel the Treasury would be more than happy to see the country turned into a transitory migrant camp, for itinerant migrants to come here to work at some foreign owned operation. The British establishment have forgotten what it means to be a Country, and I believe the people voting Brexit was a lesson to them.

  16. Epikouros
    Posted July 22, 2017 at 8:43 am | Permalink

    Generally a balance of payment deficit only indicates that consumers are getting a good deal. It says very little about a nations economic health. Other indicators give us that information which unfortunately are open to wide and varied interpretation which when incorrect which is frequently are acted upon damagingly by the likes of the BoE.

    The fact that the EU sells more to us than we do to them is no doubt for a variety of reasons and identifying those reasons is difficult. Extrapolating back it is possible to suspect one of the major reasons. That being that although in theory the EU is a single market to all who subscribe to the membership of the EU in practice it is not. It is not because of the political and not the free trade way it has been designed and constructed.

    The guiding principle was to protect the mercantile and political interests of France, Germany and the objectives of the EU institutions especially the European Commission set up at Brussels. Whose sole aims is to create an EU superstate. Therefore putting all other members at a severe disadvantage politically and in conducting free trade as the UK and many other members have now found out.

  17. Peter VAN LEEUWEN
    Posted July 22, 2017 at 8:45 am | Permalink

    The EU27 have a very large trade deficit with the UK in services. Can that be allowed to continue post-Brexit? 🙂

    • libertarian
      Posted July 22, 2017 at 8:41 pm | Permalink

      P vL

      Hmm not long ago you were telling us that all the Bankers were going to Frankfurt and Paris

      The number of Square Mile jobs rose 17% in June compared to the same month in 2016.

      City Job Index Report
      “It is extremely encouraging to see that the number of roles has risen following the election, as has the number of jobseeking professionals, suggesting an increase in confidence among both candidates and employers.”

  18. Bert Young
    Posted July 22, 2017 at 9:30 am | Permalink

    Many of our manufacturing businesses were sold or closed down due to foreign competition ;ICI was one of our largest organisations and no longer exists . Our exposure to EU and world markets and the use of a credit card mentality in the high street has brought about a major shift in the investing scene . We are – as far as manufacturing is concerned , reliant on importing and then re-exporting with a technical higher added value .

    • libertarian
      Posted July 22, 2017 at 8:28 pm | Permalink

      Bert

      WRONG ! We are the 6th largest manufacturing nation on Earth , We are world leaders in many areas of manufacture and engineering. The thing is its the 21st century things changed

    • libertarian
      Posted July 22, 2017 at 8:35 pm | Permalink

      Bert

      ICI at its height employed 29,000 people it was bought out in 2008 by Dutch firm Akzo Nobel

      Today in 2017 UK firm Astra Zeneca is twice the size of ICI at its height employing 59,700 people with revenues of $23 billion

      Life moves on…..

      • Bert Young
        Posted July 23, 2017 at 9:59 am | Permalink

        Libertarian , the ownership of ex ICI is now foreign owned . The Dutch took over the Chemical side and , later , AZ went to the Italians . Ultimate control is what matters .

  19. Helen
    Posted July 22, 2017 at 9:41 am | Permalink

    Macron explained this to Trump. Trade is not zero sum, there are complex production and supply chains across borders. Your grasp of economics matches Trump’s!

    • libertarian
      Posted July 22, 2017 at 8:27 pm | Permalink

      Helen

      Someone who has never founded, run or conducted a business lectures a billionaire businessman on the economics of international trade…. remainers brain dead fantasists

    • libertarian
      Posted July 22, 2017 at 8:38 pm | Permalink

      Helen

      You are right supply chains in manufacturing exist across borders, most European manufactures have plants and suppliers all over the world. This is a major reason why the EU is a totally pointless trade organisation. Thanks for pointing that out. Pleased that someone has told Macron too.

  20. Chris S
    Posted July 22, 2017 at 9:53 am | Permalink

    In the retail sector we prefer to buy Mercedes. BMWs, VWs and Audis to Jaguars.

    In industry, Germany has thousands of mid-sized companies that are very successful in exporting engineering and other hi tech manufactured goods. Here in the UK we have only tiny businesses and Multi-Nationals, very few in between. The reason we have few mid-sized businesses is a lack of long term bank financing.

    • libertarian
      Posted July 23, 2017 at 11:43 am | Permalink

      Chris S

      According to EEF, UK manufacturing currently:

      employs 2.7 million people
      contributes 10% of GVA
      accounts for 45% of total exports
      represents 68% of business research and development (R&D)
      provides 14% of business investment

      UK manufacturing records fastest growth for three years in April 2017

      I think you’ll find that the UK manufacturing is also the home to many 1,000’s of mid sized businesses

  21. Peter
    Posted July 22, 2017 at 9:55 am | Permalink

    There is an article today that notes the EU are terrified by the loss of cash that .brexit will cause and as a result Britain not the EU holds the trump cards in negotiations

    http://www.express.co.uk/comment/expresscomment/831675/Brexit-bill-uk-money-collapse-eu-ross-clark

    It is good to see Leavers starting to make the news narrative at long last.

  22. Ed Mahony
    Posted July 22, 2017 at 10:02 am | Permalink

    Because we don’t create enough products and services people want. Germans are brilliant at exporting within and outside the EU because they create products and services people want (at least that’s what buyers / importers think). Euro helps. But euro isn’t enough.

    Brexiters (and all of us) want (quite rightly) more than just economic prosperity. We want economic stability. I think we can look at the Quaker business people of the past who created both – economic prosperity and stability based on hard work, work ethich + faith.

    But we all want (quite rightly) more than just economic stability. We want our country to be great. So does God (Christ / The Trinity). But not necessarily in the way man wants. God wants far more for us than we know what we really want. He wants us to have more beautiful towns and cities, more Jane Austens and Handels and Shakespeares and Samuel Johnsons, a stronger Parliament and patriotism, stronger families and community life, more respect towards others, better sense of humour, and so on. But much, much more than even this. But He can only do this if we allow Him to be God – and for us to tap into His wisdom, power and imagination. This requires belief / trust / faith in God. If we’re of a religious disposition, then we need to try and promote Christianity more, for the benefit of our country.

    Regards

    • Ed Mahony
      Posted July 22, 2017 at 10:17 am | Permalink

      Lastly, WB Yeats’ brilliant poem Sailing to Byzantium is about his desire for his body to be made into gold in the sense of some glorified sense where his body won’t grow old and die but be strong and vigorous and immortal. Others interpret as having an even more spiritual dimension, that’s it’s about a desire to live for ever, in a glorified sense – both body and soul.

      Clearly, this poem, whether intentionally or not, picks up on God in the Bible as being like a master goldsmith, fashioning each of us into something beautiful like gold. But this metaphor extends to all creation not just us. And that includes our country. Through us, God is able to be the master goldsmith turning our country into a something beautiful (first and foremost, its people as individuals, but also as a community, the arts, buildings, the natural world, our work and so on).

      Once out of nature I shall never take
      My bodily form from any natural thing,
      But such a form as Grecian goldsmiths make
      Of hammered gold and gold enamelling
      To keep a drowsy Emperor awake;
      Or set upon a golden bough to sing
      To lords and ladies of Byzantium
      Of what is past, or passing, or to come
      – WB Yeats

      The Glorious New Creation
      “For behold, I create new heavens and a new earth;
      And the former shall not be remembered or come to mind.’
      Isaiah 65:17

    • Ed Mahony
      Posted July 22, 2017 at 10:35 am | Permalink

      ‘a stronger Parliament and patriotism’

      – and a healthy sense of internationalism, including Europeanism.
      Shakespeare loved England but he also loved Italy and Renaissance Europe and was also highly critical of what was wrong about England, at least indirectly, through his plays.
      Dante loved Florence but he also loved Italy and early Renaissance Europe and was also highly critical of what was wrong about Florence, directly, through The Divine Comedy.

      • Ed Mahony
        Posted July 22, 2017 at 7:50 pm | Permalink

        ‘stronger Parliament’ – better Parliament, i meant.

  23. Pragmatist
    Posted July 22, 2017 at 10:04 am | Permalink

    “Why do we run such a large balance of payments deficit with the EU?” To strengthen our negotiating hand if we ever wished a better deal with the EU.

  24. Denis Cooper
    Posted July 22, 2017 at 10:14 am | Permalink

    It seems from reports such as this that Michael Gove has now been tipped over the edge, and he has taken the rest of the government with him:

    http://www.scotsman.com/news/politics/general-election/michael-gove-signals-agreement-on-free-movement-during-brexit-1-4511021

    “Michael Gove signals agreement on free movement during Brexit”

    “Prime Minister Theresa May’s Cabinet has agreed to a Brexit transition period during which EU citizens will continue to have free movement rights in the UK, it was confirmed yesterday.

    Environment Secretary Michael Gove said ministers were “united” around a transitional Brexit deal to allow continued access to migrant labour and provide economic stability.

    Under a plan championed by Chancellor Philip Hammond, European workers will be able to come to the UK for at least two years, with a transition potentially lasting as long as three or four years. The concession suggests that Britain could stay in the European single market for several years after its departure from the EU.”

    Look, JR, please could you explain to them that we don’t need or want any transitional arrangements with the EU at all to continue to have just as much “access” to EU workers as we want and choose to have in the future.

    It’s not as though at the moment we have a contract with the EU for the supply of a stated number of indentured labourers each year:

    https://en.wikipedia.org/wiki/Indian_indenture_system

    and we’re worried about that contract ending, and it’s not as if the EU governments will be forbidding their citizens from moving to the UK if the UK allowed them to do so and they wish to do so.

    This could easily be seen as an outright act of betrayal not just by Michael Gove but by the whole government, couldn’t it, and potentially it could finish off the Tory party.

    Repky I am arguing the case for just getting on and leaving in March 2019

    • Denis Cooper
      Posted July 22, 2017 at 11:38 am | Permalink

      http://www.conservativehome.com/thetorydiary/2017/07/has-the-cabinet-reached-a-deal-on-immigration-not-yet.html

      “Has the Cabinet reached a deal on immigration? Not yet.”

      “In fact, ConservativeHome understands from senior sources that no such agreement has actually been reached, although Michael Gove’s decision to stress “pragmatism” in his comments yesterday may indicate that one is yet possible.

      An agreed end goal and strategy would doubtless make the Government’s pursuit of a good Brexit deal much more straightforward.

      But ministers should be very careful about playing fast and loose with one of the core motivators of the Brexit vote, especially on a subject where public trust has already been eroded by repeated commitments to an unreachable ‘tens of thousands’ net immigration pledge.”

      The “agreed end goal” in this respect should be the restoration of complete control over our immigration policy to our national Parliament, and without any post-EU transitional period when control still rested partly or wholly with any one of the 450 million foreign EU citizens who might choose to come here.

      If it became necessary to build additional customs facilities then that might merit some transitional period after we have left the EU. Likewise if some computer system had to be changed, or some regulations had to be amended, those could be cases where there might justifiably be transitional provisions written into the new treaty or treaties. But not immigration policy, as far as I can see there is nothing to be agreed with the EU about our post-Brexit national immigration policy, which should be decided unilaterally in every respect by our sovereign Parliament from the day after the EU treaties cease to apply to us.

  25. Martin
    Posted July 22, 2017 at 10:15 am | Permalink

    We are a net importer of food. Transport costs of food import are less from the EU than say New Zealand or wherever.

    As the Pound has crashed against the EURO since Brexit then the trade deficit has worsened as our imports costs more. I wonder if the Brexit fan boys in the tabloids have told their stay at home readers about this?

    https://www.independent.co.uk/news/world/europe/pound-euro-88-cents-exchange-rate-airports-british-tourists-1-europe-brexit-latest-a7854386.html

    Even those more clued up are struggling to even get €1.10 to £1.

    • Mark
      Posted July 22, 2017 at 5:42 pm | Permalink

      That story is basically about a rip-off of the worst kind – taking advantage of those who are probably not clued up at all on exchange rates to offer a rate that is “the wrong way up” for a profit margin of over 25%.

  26. anon
    Posted July 22, 2017 at 10:27 am | Permalink

    We are historically open to trade, pragmatic and generally buy based our individual need, not generally based on country of origin.

    We generally like to play fair within the rules and take a dim view of anti-democratic views and dictats from unaccountable, un-elected bureaucrats, the use of imposed EU laws by decree with no full uk parliament scrutiny and votes.

    Overt propaganda disguised as news, cliff edge,project fear continued.

    I suspect our non-eu overseas trading partners can see this and our trade with them may equalize if our large imports deficit with the EU is spread around. Balanced trade seems a preferable outcome, why this presents a problem for the EU is for them to ponder and deal with.

    Finally threats by the EU, requiring ransom payments are just hardening our resolve to break free.

    I fully understand barniers position that their will be an EU explosion without such payments. Perhaps that is because there is a difficulty, when it comes to finding those willing to play fair.

  27. Denis Cooper
    Posted July 22, 2017 at 10:32 am | Permalink

    It will be interesting to see how it pans out as we continue to rebalance our trade after we leave the EU and its customs union, whether some of our chronic trade deficit with the EU countries will transfer to our increased trade outside the EU.

    But whatever happens there is absolutely no reason why we should pay the EU for access to its single market, something which occurs nowhere else in the world as far as I’m aware but which is now being mooted in various quarters, by politicians and journalists and others who are mental captives of the EU.

    If anybody is going to pay for market access, they should be paying us for free access to our lucrative domestic market.

    I’ll repeat that just so that it’s perfectly clear:

    IF THEY THINK MONEY SHOULD CHANGE HANDS TO SECURE MARKET ACCESS, THEN THEY SHOULD OFFER TO PAY US FOR ACCESS TO OUR MARKET.

    • Helen
      Posted July 22, 2017 at 7:03 pm | Permalink

      And yet, in the real world not your fantasy, Davis has already agreed we will pay them

      • alan jutson
        Posted July 23, 2017 at 6:58 am | Permalink

        Helen

        Good to hear you are so closely informed, perhaps you would like to share with us the agreed amount, so we can all either moan or rejoice.

        I believe we have already said we will honour our legal duties, so yes we will pay something, even if it is only our monthly subs up until we leave.

      • Denis Cooper
        Posted July 23, 2017 at 9:30 am | Permalink

        No he hasn’t, and you know he hasn’t.

        Answer the point: why on earth should we pay the EU for the privilege of running a chronic massive trade deficit with them?

      • zorro
        Posted July 23, 2017 at 9:56 am | Permalink

        No he hasn’t!!

        zorro

    • JoeBr
      Posted July 22, 2017 at 7:05 pm | Permalink

      Our market is not big enough compared to the eu market of 500million..so thats the way it goes ..and it’s not down to markets anymore.. it’s more a political game and if we want to have access into their market we pay.. the only way out of this is the cliff edge and then we can have access to markets worldwide a la michael gove, Liam Fox and iain duncan smith

      • Denis Cooper
        Posted July 23, 2017 at 9:47 am | Permalink

        We don’t pay the US for the privilege of running a substantial trade surplus, so why should we pay the EU to allow us to run a trade deficit?

      • zorro
        Posted July 23, 2017 at 9:58 am | Permalink

        Nonsense, is our trade with US, Canada, Japan, South Korea and every other non EU country conducted on a cliff edge?

        zorro

    • Leslie Singleton
      Posted July 22, 2017 at 9:21 pm | Permalink

      Dear Denis–Agreed–One would never guess, listening to people squawking about the wondrous benefits of the Single Market, that we have to pay through the nose to be in it–Everything has its price and the Single Market’s price is far too high. What would be good is for a way to be found, and broadcast effectively, to redistribute the money we presently “contribute” so that it stays within this country–Were this done, by for example lowering taxes for the maximum number of people, that would close down the clamourings overnight

      • A.Sedgwick
        Posted July 23, 2017 at 7:49 am | Permalink

        Our net contribution equates to lowering basic income tax to 15%, it would be interesting to see public reaction and a forecast how this could increase our GDP.

  28. forthurst
    Posted July 22, 2017 at 11:11 am | Permalink

    Our trade with the rest of the world under WTO rules is based upon mutual advantage; nothing could be further from the truth with respect to our trade with the EU. Our trade with the EU has been rigged by the rules concocted by them to benefit other members of the EU against our interests. Where they have not achieved this, as in the case of financial services, they scream like stuck pigs. The only way to ensure a gradual equilisation of our trade balance with the EU is to go for WTO rules. Do not imagine that after we have left, the EU will not try to increase the advantages of their suppliers, unfairly, when they can no longer directly hamstring ours. WTO rules give a far greater degree of confidence than the inept goings on with M Barnier et al. WTO rules have already been agreed internationally, appear to benefit our exporters, so why go for anything else?

  29. ian
    Posted July 22, 2017 at 11:12 am | Permalink

    This country has always been treated as separate country to europe. It things like buying steel for gov projects like warships, over 50% of the steel has to come from overseas under EU rules, but overseas to them is a bit of paper work in the office. I have never heard of them sending you their gov work apart from air plane wings for airbus, which is not government work. Before the embargo on Russia the EU countries sent most of their left over veg & fruit at cost or blow cost price, and most likely still are, but uk can not do that.

  30. ian
    Posted July 22, 2017 at 11:22 am | Permalink

    There a big difference between crossing a land boarded and having to cross water. This country will never be part of europe, only in name nothing else.

  31. Leslie Singleton
    Posted July 22, 2017 at 11:42 am | Permalink

    Dear John–Brown shrimps seem unbuyable in the UK–Tesco (our largest retailer?) I was told by a Manager have given up because unable to get hold of (enough of?) them, and the fish market stall in Braintree, when I this minute asked, replied, “I wish”–“They send them all to Spain and we don’t get a look in”. This sounds good for exports but doesn’t make much sense to me. Education as always welcome.

    • Leslie Singleton
      Posted July 22, 2017 at 7:47 pm | Permalink

      Post Scriptum–I have decided I don’t like globalism–Apart from my observations above on our brown shrimps I have, to something resembling horror on my part, just learned, in trying to complete an inherited Royal Worcester dining set, that these days one has, in my own way of looking at it, to beware items that have (I gather in recent years) been made in Bangladesh and Portugal and perhaps elsewhere–with that being printed on the base instead of Made in England and with separate markets accordingly. Royal Worcester has (had?) been going from I think 1751. Is nothing sacred? Luckily I realised in time.

      • Leslie Singleton
        Posted July 23, 2017 at 2:31 pm | Permalink

        PPS–And now I read in the Sunday Torygraph letters that there is a “Centre for Global Development” In London–I pray God that not one penny of my taxes is wasted on this

  32. Posted July 22, 2017 at 11:48 am | Permalink

    Superb Question John.

    Because many are still stuck in gold standard thinking they are educated that way. As per usual they concentrate on the currency which we can’t run out of and ignore our skills and resources that we can run out of very quickly.

    The whole point of trade is to get as many imports as you can for your exports it is called the real terms of trade. If you are really good at that which we are. Then as a country you will run trade deficits.

    When you look at trade from the correct 2 view points ( not many do) then you really see what’s happening.

    1) What are our skills and resources actually producing

    2) How do importers to the UK get paid

    When you really look at it from these 2 view points and think about our real terms of trade then what you quickly realise is exports are a cost and imports are a benefit.

    Exports are a cost because our skills and resources are being used to make products for other countries to consume. Allowing them to free up their skills and resources to do other things.

    Imports are a huge benefit because we have other countries working 12 hours a day, 7 days a week eating up their skills and resources to send us stuff to consume. Which allows us to produce things we need at home, spend more time playing golf and more lesuire time.

    So importers send us all these lovely goods and services which allows us to use our skills and resources to do better things. In return all the importers get are electronic blips on a spreadsheet at the BOE. They’ve waisted their skills and resources.

    What would you rather have our skills and resources doing ?

    Making cars for German and Japanese car manufacturers or working on green technology to make us more energy independent ?

    If Germany, Japan and China want to continue to be the worlds slaves then let them. I’m more than used to us running trade deficits which gives us all the life we enjoy and long may it continue.

    As per usual the problem is never about money that is created from thin air and something we can never run out of. The problem is always what we decide to do with our skills and resources. What actually do we want our people doing ?

  33. alan jutson
    Posted July 22, 2017 at 12:56 pm | Permalink

    I cannot understand why some of our Cabinet Ministers want an interim trade deal because time is running out as we approach a so called “Cliff Edge”

    They need to remember so called “Cliff Edge” if there is such a problem, works both ways if they do not want a sensible agreement.

    Tell the Auto workers in Germany they will be on short time in 18 months time, as this will be the date when they cannot sell any more cars to us without tariffs.
    Repeat it to the French farmers who sell us wine and cheese, to the Belgians who sell us chocolate, to the Italians who sell us Tiles, etc etc.

    Guarantee they are more worried about trade than us !

    Why do our media and politicians not understand this very simple fact.

    Once again delay with complicated clap trap.

    Bloody frustrating listening to all this garbage.

    • Helen
      Posted July 22, 2017 at 7:06 pm | Permalink

      You are an idiot. EU exports to the UK are about 6 per cent of their total. If we put up walls, no big deal. But if we lose the 45 per cent of our exports that go to the EU, we are sunk

      • Caterpillar
        Posted July 22, 2017 at 9:19 pm | Permalink

        Helen,

        Which is why negotiations should finish in the next 6 months, rather than dragging on. Businesses need time to adjust before the two years is up, rather than UK being dragged into a lengthy transition period. The closer the deadline gets the more monopsony power the EU has … It is time the UK specified its own deadline.

      • Sir Joe Soap
        Posted July 22, 2017 at 11:11 pm | Permalink

        The sun will still rise and there will be air to breathe.
        Not only that, we have ownership of our resources. They can’t be harvested for the common good of 27 countries which never contributed to building them.

      • alan jutson
        Posted July 23, 2017 at 7:06 am | Permalink

        Helen

        I think perhaps you need to do some further calculations.

        Yes 45% and falling is the amount of our exports that goes through and to the EU

        But our exports only account for about 12% or less of our total GDP, thus less than 45 % of 12% means that only 5% of our total GDP goes to to through the EU.

        In financial terms we export less to the EU than they do to us, thus they have more workers at risk than we do.

        In addition because the EU has a population that is 10 times ours you would expect that their trade given the financial figures is less of a percentage, because their total GDP should be 10 times larger than ours.

        If you just do the correct mathematic calculation, you will see that your silly comment is incorrect.

      • A.Sedgwick
        Posted July 23, 2017 at 7:52 am | Permalink

        Glad you weren’t around in 1940.

      • zorro
        Posted July 23, 2017 at 11:23 am | Permalink

        Speak for yourself madam! The EU will not put in a ‘Continental system’ as they cannot afford to do that. Their self interest is to continue selling to us, and they will do so no matter how they huff and puff. Have you read article 8 of the Lisbon Treaty and obligations under WTO? They are POSTURING!

        http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-1-common-provisions/6-article-8.html

        zorro

  34. Denis Cooper
    Posted July 22, 2017 at 3:02 pm | Permalink

    A few days ago Jo Coburn interviewed the Australian High Commissioner about the effect of distance on international trading opportunities, from 34 minutes in here:

    http://www.bbc.co.uk/iplayer/episode/b08yr8t8/daily-politics-18072017

    He scoffed at the idea was Australia is too far away for greatly increased trade with the UK and pointed out that the Australians had had no choice but to trade with distant markets – the nearest neighbour was Papua New Guinea with not much of a market – and had been very successful at doing that.

    But he was also asked:

    “What are your views on freedom of movement when it comes to a bilateral trade deal between Australia and the UK … ?”

    to which his reply was:

    “Well, we don’t believe with any of our trade agreements in negotiating at the same time complete freedom of movement, the only exception we have is with New Zealand, but we have no freedom of movement arrangements with any country in the world other than New Zealand and we have no plans to do that … in a negotiation on trade we might look at ways of enhancing, facilitating, people like academics, students, business people being able to move between our countries … ”

    Which sounds rather similar to the limited “Mode 4” interchanges which would facilitated under the planned EU – Japan trade treaty:

    http://johnredwoodsdiary.com/2017/07/12/trading-opportunities/#comment-878993

    It really is just the EU which has this bee in its bonnet about linking trade with unfettered uncontrolled mass interchanges of populations, which we do not want.

  35. Terry
    Posted July 22, 2017 at 3:34 pm | Permalink

    John, you can ask every day for a decade and still receive no answer from the Remoaners. They, who regularly predict doom and gloom if we do not have a trade deal with the EU. For it is not in their best interests to do so and it defeats their argument that the UK needs the EU more than it needs us.
    All ‘Baloney’ and to the nth degree of course!

    It has been calculated that the EU will have to find around £12 billions every year to cover the net “fees” the UK currently pays to the EU. Note there is much ambiguity over this figure which surely goes to prove we really do not know how much the EU are handed each year. Such is the dodgy book-keeping over there and probably the reason why they continually fail annual audits, which seem always to be ignored rather than addressed.

    Far from the UK Brexit being in a mess it is the EU who are in very dire straits over the pending loss of UK income.
    Of course Brussels couldn’t possibly cut their budget by the appropriate amount for the leaders would not want to lose their daily claret allowance would they? Nor would the 10,000 EU staff who earn more than Mrs May take a 10% pay cut to make up the difference.
    That sounds easy to do but “Easy” is never part of EU DNA, is it?.

    • Helen
      Posted July 22, 2017 at 7:10 pm | Permalink

      If you are right, then the EU will offer us cash to keep trading. Notice any sign of that? Notice Davis even asking?

      • Caterpillar
        Posted July 22, 2017 at 9:26 pm | Permalink

        Yep, MPs and other politicians need to unite to stop EU driving the agenda.

      • anon
        Posted July 22, 2017 at 9:38 pm | Permalink

        They should … it would probably be cheaper for them than paying WTO tariffs.

        A worse outcome perhaps would see the UK switch purchase to non -eu suppliers.

        I am more relaxed about no deal than a “remoaner” transition fudge.The unaccountable political part of the EU is also ok with that.

      • zorro
        Posted July 23, 2017 at 11:27 am | Permalink

        It’s not over until the fat lady sings so to speak….. but the fact that they haven’t asked might suggest something else in the long term!

        zorro

  36. Mark
    Posted July 22, 2017 at 5:32 pm | Permalink

    Here are the top 25 SIC classifications in descending order of total trade volume and the net trade with the EU in each for 2016, accounting for 82.5% of total trade with the EU:

    (£28.5bn)… 87 – Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof
    (£11.7bn)… 84 – Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof
    (£11.1bn)… 85 – Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles
    (£6.4bn)… 30 – Pharmaceutical products
    £5.7bn… 27 – Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes
    (£3.2bn)… 39 – Plastics and plastic products
    (£1.8bn) …90 – Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof
    £3.8bn… 88 – Aircraft, spacecraft, and parts thereof
    (£0.4bn)… 29 – Organic chemicals
    (£1.9bn) …71 – Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin
    (£1.8bn) …22 – Beverages, spirits and vinegar
    (£0.6bn)… 33 – Essential oils and resinoids; perfumery, cosmetic or toilet preparations
    (£1.6bn)… 73 – Articles of iron or steel
    (£2.5bn)… 48 – Paper and paperboard; articles of paper pulp, paper or paperboard
    (£0.3bn)… 62 – Articles of apparel and clothing accessories, not knitted or crocheted
    £0.1bn… 38 – Miscellaneous chemical products
    (£1.0bn) …72 – Iron and steel
    (£2.3bn)… 94 – Furniture; medical and surgical furniture; bedding, mattresses, mattress supports,cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified; illuminated signs, illuminatedname-plates …
    (£2.4bn)… 02 – Meat and edible meat offal
    (£0.2bn)… 61 – Articles of apparel and clothing accessories, knitted or crocheted
    (£1.1bn)… 21 – Miscellaneous edible preparations
    (£1.7bn)… 19 – Preparations of cereals, flour, starch or milk; pastrycooks’ products
    (£1.3bn) …76 – Aluminium and articles thereof
    (£0.8bn)… 64 – Footwear, gaiters and the like; parts of such articles
    (£1.6bn)… 04 – Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included

  37. Mark
    Posted July 22, 2017 at 7:04 pm | Permalink

    Looking at the breakdown and trends in EU trade in goods, it is apparent that there has been a faster rate of deterioration in the trade balance since about 2012, when Osborne reflated the economy and the property bubble. There are several sectors where we were once net exporters and now import, such as pharmaceuticals; precious metals and jewellry; electrical machinery. Our surplus in oil and gas has declined with falling North Sea production and refinery closures. Only aerospace net exports have grown significantly. Of course, some of the rise in imports is due to EU migrants preferring to buy the products they used in their home countries – one of the factors that is usually left out of account in looking at the extent to which migration is beneficial.

    The conclusion is that we have been selling off industry to help pay our balance of payments bills, and it has been moving its production abroad, in turn worsening those bills. Frankly, these are trends we need to snap out of. Leaving the EU may allow us to take corrective action. Staying in has seen them worsen.

  38. jeffery
    Posted July 22, 2017 at 7:23 pm | Permalink

    Slightly off topic, but relevant. The endlessly repeated claim that the EU is the richest/largest market in the world is just not true on any definition. Assuming this means GDP, not population (otherwise, China, India trump EU), the US has a GDP $1-2 tr
    larger than the EU at present exchange rates. At euro = $1.25, the GDP’s are roughly equal. But the US is 320m population versus 510m in the EU (both approx.), so obviously the US has a much greater GDP/head than the EU, the usual working definition of rich.

  39. Jack snell
    Posted July 22, 2017 at 7:25 pm | Permalink

    Terry, don’t know who you’ve been listening to nobody has to predict doom and gloom anymore..A50 has been activated and the talks have started..march 2019 is the desdline and we’ll be out straight away then..no question because the eu parliament elections are coming up in may 2019 and the eu want all matters pèrtaining to UK exit finished by that dste. All this talk about transitional petiods is coming from the uk side only..it will never be allowed by macron and the french..so we have nothing to worry about we’ll be out, free to make new trade deals with countries in south america and the far east as predicted by michael gove, liam fox, dsvid davis and so many of our political class..out means out..or as mrs may said..”and we’re going to make a success of it” so no need to be concerned about the eu..we’ll only trade with them on WTO rules

  40. Turboterrier.
    Posted July 22, 2017 at 9:25 pm | Permalink

    Reading all these comments it just highlights for many of us what is the real problem.

    Whether the PM likes it or not she has to really make things happen and if that means having a completely dedicated Brexit cabinet to actually restore more than an element of trust in the whole process, so be it. There are more than enough experienced, knowledgeable and dedicated back benchers that could be easily elevated to the cabinet and deliver the Brexit package and restore the faith of those 17m of us that voted to get this country out of this rapidly failing organisation. She has to stop all this impression of her ministers all talking their own personal agenda. They represent this country of heavens sake. At the moment they are by their actions showing a team of individuals each at odds with one another.

  41. robert lewy
    Posted July 22, 2017 at 11:43 pm | Permalink

    When it comes to Derivative posts this must rank fairly highly.
    72 posts already and still counting for only 77 or so words posted.

    On the question of UK’s alleged poor manufacturing capability, a word of caution.

    Surely, the existing level and range of exports would suggest there are areas within a competitive environment where our capabilities are valued. Any further depreciation
    in Sterling against Euro will help pay for any tarrifs required under WTO rules
    and/or increase our sales volume.

  42. Original Richard
    Posted July 23, 2017 at 7:57 am | Permalink

    With an increasing massive trade deficit with the EU now approaching £100bn/year it should be clear to everyone that for whatever reason our membership of the EU Single Market/Customs Union is not working for us and is simply not worth :

    Paying a large yearly fee which will increase each year especially as the EU expands further eastwards and suffers the illegal migrant problems caused by Mrs. Merkel’s unilateral invitation for Middle Eastern and African men to come to Europe.

    [The fact that the EU is requesting such an enormous exit bill shows just how much we really are being expected to fund the EU.]

    Accepting loss of sovereignty and hence our ability to elect and remove our governments, fix our taxes and decide upon our immigration policy.

    Accepting the loss of our assets, such as our fishing grounds.

    There is simply no reason that trading on WTO terms would not work better for us.

    The fact that the EU is so strongly demanding the agreement on the exit bill before discussing a trade deal shows quite clearly that it feels it is is in a weak position on any trade deal.

  43. Dennis Zoff
    Posted July 23, 2017 at 12:12 pm | Permalink

    I can give you a very real example of why British companies are missing out in Europe.

    In 2014 we were on the cusp of signing a multi-million-pound contract with one of the largest Telcos in Europe via one of our European subsidiaries – 12 months in the making. This came to the attention of the EU and they said we had to divest this sub to ensure competitiveness; allowing other European companies the opportunity to compete against our winning proposal. The fact that we had already won against these other European competitors was lost on Brussels!

    A long story short, we were forced to decline the contract and of course, the European Telco was extremely upset and vowed never to work with us again. Incidentally, the Telco was not angry with the EU interference, but simply that our company had not taken into consideration EU competition laws?

    In summary, our European competitors complained to Brussels, who in turn put the screws on us. A European company (our main competitor in Europe) won the contract, costing us dearly in revenue and brand name. Subsequently, we were forced to make redundancies.

    Hence why I am personally sick of hearing Remainers bleating on about how the EU is fair, equitable and good for the UK…total bull manure…they are working against the UK!

    …..sour grapes, absolutely!

  44. Lindsay McDougall
    Posted July 23, 2017 at 2:45 pm | Permalink

    Perhaps it is because the many technological specifications that are embodied in the Single Market overall favour German technology, with food and drink standards favouring the French.

    At one time, several motor companies were working on something called a ‘lean burn engine’ in order to reduce drastically (CO2?) emissions. This research was halted once the EU standardised on catalytic converters.

  • About John Redwood


    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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