Author: johnredwood

Martin Howe, Richard Aikens and T Grant have written an excellent guide to the draft Withdrawal Treaty, published by Politeia.

They remind us that the whole Withdrawal Treaty, not just the Irish backstop, contains problems for the UK were we to sign it.

In particular they cite

1. It reaffirms the supremacy of EU law in specified  areas, requiring UK courts to strike down any UK legislation which contradicts EU law.
2. It gives the European Court of Justice an important role in settling disputes by referring them to the ECJ, a court of one of the two parties to the dispute. International Treaties usually go to third party independent appeal
3. It imposes stringent penalty payments  on the UK for non compliance and allows the EU to suspend its own Treaty obligations if they argue the UK has failed to comply
4. There is no exit clause for the UK without the permission of the EU

I wrote a letter to the Attorney General about various problems with the draft Treaty including  the long tail financial liabilities it would commit us to.

It is good the new PM has said this draft Treaty is “dead”.

In an era of ultra low interest rates some savers complain that they do not get a sufficient return on their savings. Anyone who wishes to keep their savings secure and not at risk of capital losses from price fluctuations of financial assets is left with a low income return on a deposit or a low yield on a secure bond with a specified later repayment date.

It is not true to say that all savers have suffered from the era of ultra low rates. Those savers who decided to run the risk of losing money have often done very well. Those who bought government bonds have seen them rise strongly over the last decade as rates fell and stayed down. Those who bought world shares have also seen good gains. Those who had property in the right places are sitting on capital gains on their property. Indeed, most savers own property, and many directly or indirectly own financial assets through their pension funds. This  blog is not offering investment advice or commenting on what  might happen next in markets but describing the past.

Japan has lived now with these ultra low rates for several decades. The big crash in Japan  did far more damage to property values, share prices and banks there at the end of the 1980s than the western crash of 2007-9. It  ushered in a long era of money creation and extra borrowing by the Japanese state. We can see in Japan what these distortions do if sustained. The state can make many investments at little cost, and may make investments that are highly marginal in more normal times. Some savers decide they need more savings because the return on safe investments is so low. The Japanese state has bought up around half of all the outstanding quoted state debt, and is also buying up substantial quantities of exchange traded funds that hold Japanese shares.

Japan’s economy grows but slowly, though if you adjust the numbers for a falling population they look  better. The high gross state debt at 250% of GSDP is far higher than anything in the west, but it is no great burden given the interest rates around zero and the state ownership of so much of that debt following Central Bank purchases. A policy of money creation which should have induced inflation has not done so, given the pressures against credit and inflation in the rest of the system.

Some will argue that giving states so much access to cheap capital will distort markets too much and lead to too many ill advised investments by governments. The alternative way through the current situation is a more concerted attempt to strengthen the banks and to encourage more private lending so there is more of a market test on new investment. The mood globally is once again to lower interest rates, with the Fed this week likely to cut rates. Australia has recently cut her rate from 1.5%  down to 1%. Many EU government and Japanese government bonds  now offer a negative interest rate, yet still people and institutions buy them.

Today I expect Boris Johnson  to be elected Leader of the Conservative party. Tomorrow he will take over as Prime Minister.

He will intensify so called No deal planning and get ready to implement his promise to leave the EU on 31 October.

The media is running the view that he will not be getting on planes to go to see EU leaders asking for a renegotiation. The Cameron/May style of European negotiation travelling as a supplicant to the capitals of Europe did not work for them or the UK. The UK should accept the EU often expressed view that they cannot re open the Withdrawal Agreement. The EU then has to understand the UK cannot sign the Withdrawal Agreement.

Once this has been understood it is then possible to discuss a potential free trade agreement and work on more improvements to trade arrangements for our departure. The EU Brexit officials would be welcome in London for positive talks on mutually advantageous trade arrangements . In the meantime WTO rules, a new lower UK tariff schedule and the WTO Facilitation of Trade Agreement will ensure trade continues.

In 1804 there were 572 fighting ships in  the Royal Navy. The UK was  engaged in a series of wars at the time which encouraged government to keep the force strong. In 1939 as war broke out the UK navy had 332 naval vessels. During the war there was a large expansion  in  the fleet, with 553 new ships added both to replace lost ships and to expand the size of the force. 58 new aircraft carriers were produced during the war years, for example.

Today in  a period of relative peace there are just 67 fighting ships in the navy, including 18 small patrol boats with guns.

At 11 pm on 31 October the UK becomes an independent nation again, promised by our likely next Prime Minister. Many of us will wish to celebrate this much heralded and delayed event.

You would expect national media to show the countdown to the moment through the movement of the hands on the clock on the Elizabeth Tower at Westminster, known as Big Ben. It is perhaps symbolic that this Parliament which has done so much to try to stop us becoming independent again, and so much to thwart the results of the referendum, should have decided the clock is unavailable on the stated date. We need to find a good alternative to look at.

There are many great public clocks around the UK. Should we turn to Big Brum on the Council House in Birmingham? Or to Manchester Town Hall clock, or Leeds Town Hall, or the Liver building? I invite your thoughts.

It is time for us to be confident as a nation, proud of our democratic traditions and keen to be an outward looking global influence for the good. We will regain our votes and voices on international bodies and be better able to shape our future as we wish.

I wrote shortly after the Gibraltar authorities seized the Iranian oil tanker about the need for the UK to protect other vessels going through the Straits from retaliatory attack, and asked about the possible prosecution of the Captain and senior officers of the vessel who had been detained with allegations of EU sanctions busting.

We now see a British flagged tanker has been detained by the Iranians with allegations of a collision with a fishing vessel which is denied by those on the tanker, and see that the Captain and officers of the Iranian tanker have been released on  bail.

This gives rise to  various questions for the UK government

1. Given the very public threat made by Iran to UK shipping in  the area, what measures were taken to give protection  to British flagged vessels?

2. It is said there are four minesweepers and an amphibious armed naval vessel as well as HMS Montrose in  the area, with a destroyer on the way.  What if anything can these vessels do to help?

3. What support will the UK receive from the carrier group and amphibious assault ship group the US navy has in the region?

4. When will the Captain and officers of the Iranian tanker  be charged?  What more can be published concerning the allegations against the Iranian tanker?

5. As we were told this seizure was made to enforce EU sanctions over oil to Syria, what support is the EU offering? Has the EU proposed a joint naval initiative to protect western shipping in the Straits?

6. Why is the advice now given to avoid the Straits for commercial shipping, when this advice was not given so clearly   before the tanker seizure?

It is entirely in keeping with Mrs May’s calamitous handling of government that her parting gift as PM should include Northern Ireland legislation which stokes up controversy between Leave and Remain  and is disliked by the DUP, the representatives of the majority in Northern Ireland.

She claimed to be a committed supporter of the  Union yet her words and actions gave heart to those who oppose the Union. In Scotland she seemed to encourage the SNP, out to use Brexit to weaken the Union. She rarely made the case that Brexit is a UK matter based on a UK wide referendum. She took SNP objections to  Brexit more seriously than the many Scottish voices who support Brexit.

In Northern Ireland Mrs May accepted the Republic view that the border is a problem against the view of her own allies, the DUP. She almost lost her government by agreeing to the Irish backstop in the Withdrawal Treaty without their consent.

So here is the irony. Mrs May claimed to be the champion  of the Union yet she sided with the Union’s strongest critics, Sinn Fein and the  SNP, on the EU question. Mrs May  put her loyalty to the EU above her alleged love of the Union, just as she put her enthusiasm for the EU above her democratic promise to get us out