Will Santa come for me? May you all feel the excitement of Christmas.

Once again this week we have seen the UK growth rate revised up, both for 2016 and for 2017.  I drew attention to the strange downgrade of 2016 from 2% to 1.8% in the official figures at the time and queried it. Now I see they have put it back up to 1.9% so far.  There never was a shred of evidence that the referendum vote led to any loss of output growth in the second half of 2016.

The latest figures for the five years to end 2016 make interesting comparisons. Top of the pack was the USA at 13.1%, followed closely by the UK at 12.7%. Germany was the best of the larger continentals, at 10.8%, followed by France at 6.1% with Italy actually down by 1.8%. In 2016 with half the year after the vote the UK was the top performer of these countries.

The UK this year is likely to finish the year at a higher rate than many forecasts. There have been various reports of how our growth rate is now the slowest of the G7 but this looks likely to be untrue  and has definitely been based on unduly gloomy figures. It is the case as I have pointed out that the tax increases on property and cars have had an adverse impact on sales and activity of these items,  the official concerns about diesel cars in particular have depressed sales substantially and the Bank is seeking to reduce consumer and car loans.  None of this has anything to do with Brexit.

One day Little Red, white and blue riding hood decided to visit her grandmother. She was told by her Mum to gather together a fish they had recently caught, some vegetables they had grown and some beef left from their big roast meal and take it with her to her Grandmother’s cottage in the woods.

She told Little Red, white and blue riding hood she needed to be very careful not to encounter the big EU wolf who these days prowled freely in their local area. She was to rush to her Grandmother’s without delay.

Little Red, white and blue riding hood thought this fear of the wolf was all a bit exaggerated. So what if she met the wolf? Other people said he was quite a nice wolf, and was likely to be friendly if you met him. No-one had ever been eaten by him and some said he wanted to help people grow food and look after their neighbours. So she set out with plenty of delay, pausing on her way to pick some wildflowers to add to her basket of goodies for Granny. She was secretly hoping she met the wolf, so she could tell everyone it was fine.

Before long Mr EU wolf appeared. He seemed quite polite, though his accent was a bit gruff. He told her she need not be afraid. He also said he now controlled the local woods, and needed to check her basket before she went on to her Granny’s. Little Red white and blue riding hood thought that sounded possible, and decided anyway as he was a lot bigger than her she had better co-operate.

When the Wolf saw the fish he was very cross. This fish is not the sort we let you fish he said. You must throw it away, as we have to conserve our fish stocks.

“How does throwing away this dead fish help conserve the fish?” , asked Little red white and blue riding hood. “Well if you can’t see that” said Mr Wolf “I can’t help you. It’s obvious. More importantly it’s our policy, so you either throw it or I have to arrest and fine you.”

Little Red white and blue riding hood decided there was no point in arguing, so she threw away the fish. There were plenty of other goodies left in her basked, after all. When the Wolf saw the  wildflowers he wanted to know where they had come from. He thought maybe they came from a special site of scientific interest where the wildflowers needed protecting. .

The Wolf then spied the vegetables. Goodness, he said, you usually  import these vegetables from the continent. I did not know you were still growing them around here. Anyway, in order to trade them you have to pay a large contribution to the EU, so I will need proof of payment before I can let you take these to someone. As he looked round to see how she responded, he realised he was talking to himself and she had run off in the direction of her grandmother’s house.

Not to be outdone Mr EU wolf knew a short cut and bounded to the cottage before Little red white and blue riding hood arrived. He knocked and pretended to be the old lady’s granddaughter, to get access. Once inside he demanded a substantial payment for the EU and proceeded to rifle the money from the old lady’s purse and from the stash under her mattress.

A little laterLittle red white and blue riding hood arrived. She was horrified to see the wolf taking money from  her granny. Before she could escape the wolf told her he was not like the story book wolf. He was a nice EU wolf who did not go round eating people’s grannies. He did however govern the wood and both Little red white and blue riding hood and  her granny had to follow his rules.

He was busily inspecting the vacuum cleaner to see if it complied with EU regulations to limit the power. He also sized up the bananas before joking that it was of course a myth that the EU wanted them to be straight. They were just fine, bent as they were.

Granny took on the wolf. She told him they had recently decided not to be in the EU any more so she had no need to obey its rules. She wanted to know what had happened to all the things  she had been promised.  Surely, she said there could be no rule that applied to her granddaughter just trying to help her out? The wolf told her it was not so easy getting out of the EU, and in the meantime all the rules still applied. Granny told him what she thought of the rules, and told him to mind his own business.

Whilst the argument was going on Little red white and blue riding hood slipped out and rushed to the local woodman to help. He immediately came, slipped an instant sleeping pill into  the wolf, and got the money back the wolf had been seizing. He then took the knocked out wolf far away from the cottage and his own home, into a deep foreign wood where he could no longer demand money with legal menaces of anyone or anything in red white and blue land. They all lived happily ever after, including the wolf who found lots of other woods to wander in, and plenty of new rules to enforce there. They got on better once Red white and blue land was out than they ever had before.

(Some versions of this story have a different  ending. They say the Wolf had some powerful friends in red white and blue land who helped him carrying on taking money from  people for many more years after he had gone. They say he persuaded people to carry on obeying his rules and importing their food. The poor old woodman was prosecuted for assault and Little Red Riding Hood’s granny had to accept his rules after all). I like happy endings so I don’t believe this second version.

I am of course neutral over the issue of whether Catalonia should be independent or remain part of Spain. It does not help  for outsiders to express voting preferences  before elections or referendums in other countries.

I did, however, find the BBC coverage of the Catalan election amusingly inaccurate. Before the poll they were running the Spanish government line that people were switching to parties that wanted Catalonia to stay in Spain, in response to the economic Project Fear campaign that the Spanish government were pursuing. Now we know the result,  nothing of the sort was happening. I loved the irony. The BBC was busily giving credence to the  views of the Partido Popular (a right of centre party it is alleged) that leads the Madrid government and has followed a thuggish policy of trying to suppress enthusiasm for devolved government and independence within Catalonia. That self same Partido Popular itself slumped from 11 seats to just 3 seats in the 135 seat Parliament”!

The one view I do hold is these matters of identity and democratic accountability are best settled by democratic means. If Spain had let Catalonia have a referendum to decide the issue the public may well have voted to stay with Spain, as Scotland did when we rightly offered them the choice. Instead, the unpleasant ways used to try to extinguish nationialist feeling has ensured the independence parties won this latest election. The EU, which used to encourage regional identity and regional political movements now seems ashamed of what it has helped unleash and will not speak out for a democratic way of resolving the tensions.

Numerous commentators are interested in so called populist parties. These are challenger parties of the right and left ranging from Syriza to the Austrian Freedom party, including Podemos and Ciudadanos in Spain, and Five Star in Italy.  No-one apart from me seems very interested in why the traditional Centre right main party in each country, often Christian Democrat, and the traditional centre left party, often Social democrat, have collapsed or shrunk badly in so many places.

Just look at what has happened. Two main parties used to alternate  in government in continental countries like Labour and Conservative in the UK ,depending on how well they did with their domestic economic policy primarily. Today few of them are left in power and none has a majority. In Spain the PP leads a minority coalition which can scarcely govern. In Germany and  the Netherlands no majority coalition has formed. In Greece the two main parties were swept away by Syriza. New Democracy (centre right) has recovered to second place whilst Pasok (centre left) remains on 6.3% of the vote. In France both main parties were demolished by Macron’s new movement in Parliamentary elections. Mr Macron beat the National Front to take the Presidency. Neither former main party had a  candidate in the second round.

It is true many of these places have systems of proportional representation making it more difficult for a main party to get a majority. It is also true that Greece and Italy have systems with offsets  that give extra blocs of seats to first placed parties to try to create majorities. The French two round system allows a main party to get a majority through ballot by exhaustion.

The underlying problem seems to be EU and Euro economic policy. The traditional parties in each country are wedded to EU and Euro requirements.  The policies often do not work out well economically for many people, so frustrated voters decide to challenge the orthodoxy by voting for a challenger party. Many of the challenger parties are explicitly Eurosceptic. Wilders in the Netherlands, Le Pen in France and Grillo in Italy are hostile to the Euro scheme. The Austrian Freedom party is hostile to EU migration policies, as is the National front in France, the Freedom party in Austria  and the Freedom movement in the Netherlands. The AFD in Germany began with opposition to the Euro and has moved on to be in favour of more restrictive immigration policies.

Meanwhile in the UK the opposite movement has happened. In the 2017 election the Conservative vote share rose by 5.6% and the Labour share by 9.6%, taking the two main traditional parties to a combined 82.4%. In Germany the equivalent was 47.3% combined share for the CDU and SPD, in the Netherlands 30.4% combined, and Greece 34.4%. Why did this happen?

There were two main reasons. The first is both UK parties decided to accept the verdict of the referendum and became Eurosceptic. The UKIP vote collapsed as a result. The second is Labour cut loose from the austerity policies of the EU  budgetary system and offered to spend and borrow much more money. This proved very attractive to young voters who were told they would get all their large student debts paid off, a promise which Labour only admitted was impossible after the election.

By offering to take back control, and by having a genuine difference of economic policy and approach, the two main parties in the UK re captured most of the vote. On the continent the refusal of main parties to criticise any aspect of the EU approach left voters looking around for ways to change a  consensus that does not work for them.

It is the oddest situation I have ever seen in politics. Normally old well  establlished and successful political parties adapt and change, altering policy when the electorate want change. Instead on the continent party after party is being slimmed or dem0lished by sticking with Euro austerity policies. As the member states governments get weaker, so the Commission gets stronger. More powers will inevitably gravitate to the centre, making the task of national pro EU parties ever more difficult.

The economic good news keeps flowing. The November CBI survey showed orders for manufacturing in the UK higher than any time since 1988 under Margaret Thatcher.  Retail sales continued to rise in real terms despite all the gloomy forecasts. Large sums have been invested in UK commercial property by overseas investors who believe in it more than UK valuers.

Yesterday we were told that the UK plans to maintain open access for EU businesses coming to the UK under current rules, whether we leave with or without a deal. It makes sense to stress we do not want to put up new barriers. Such a statement if one comes from official sources needs to complement a direct question to the EU negotiators. Given our wish to have no new barriers, will the EU agree to the same? Or if they do want barriers, will they get on  and specify what barriers they intend to place so business can progress  and adjust accordingly? Any such barriers will of course need to be compliant with World Trade rules and international commercial law.

If the EU does decide on barriers I trust the UK government will see that as good reason to spare us paying any so called divorce settlement. From here there should be upside for us, and downside for the Commission if they continue to be unhelpful.

Latest car sales figures in the UK continue the poor trend I forecast, which started in the spring with higher VED, a squeeze on car loans  and with the change of policy towards diesels. As a result diesel car sales are down 16% year to date compared to last year, whilst petrol car sales are only up 3%. However,  around 78% of cars made in the UK are exported and exports are doing well.  Engine production is up 4%.

I have been careful not to criticise Conservative MPs personally who voted for Amendment 7, and am not going to change  my stance in this article. I do wish, however, to explore why some MPs vote against the whip and ask is it reasonable to do so in certain circumstances? In the UK system an MP is there to exercise judgement and to hold the government to account, or to be part of the government. He or she should also be conscious that they were voted in because they belonged to a particular party, as well as for their own merits. It is important to look at the general Manifesto of their party when considering their later conduct.

It is true that Brexiteer MPs did often vote against new European laws, larger EU budgets and other increases in EU power under the Coalition. We did so because we took seriously the Conservative party Manifesto of 2010 which we had stood on. It said:

“There should be no further extension of the EU’s power over the UK without the British people’s consent… We will bring back key powers over legal rights, criminal justice and social and employment legislation to the UK”. “The steady and unacceptable intrusion of the EU into almost every aspect of our lives has gone too far”

We took this to mean that we should resist the extra powers which successive new EU inspired  laws and larger budgets brought to the EU. We understood the Lib Dems in government took a pro federalist line which was very different to the our party view in the Manifesto.

So what did the 2017 Manifesto say which might influence the conduct of Conservative MPs today?  It said

“We are leaving the EU. In leaving the EU we have chosen a truly global role for Britain….No deal is better than a bad deal….We will no longer be members of the single market or customs union….the days of Britain making vast annual contributions to the EU will end”

Any individual MP may have stood on a personal Manifesto that modified some part of the national Manifesto. Ken Clarke, for example, has always made clear his opposition to the Referendum and its result. The rest of us did not disagree with the views I have quoted above. In 2010 I included in my personal platform a pledge to work for a referendum on the issue of membership of the EU, which we secured as a policy promise before 2015.

Those Labour Opposition MPs who are seeking to use Parliamentary tactics to delay or derail Brexit are opposing both the decision of UK voters in the referendum and the terms of their own Manifesto in 2017. To defy one expression of the public will is foolish To defy two may prove very damaging to them in a future election.

There has been some confusion created by this slim document that came from the EU after the recent Council meeting. Some seem to think it was an agreed document with the UK, and that we should therefore take its positions as the likely outcome of the negotiations between the UK and the EU. It is, of course, just a statement of a bargaining position by the EU preparatory to the talks on transition  and a future relationship. The UK’s opening position will I assume be rather different!

That became clear in the Prime Minister’s response to questions on her Statement yesterday following the EU Council meeting. She confirmed that

1. Nothing is agreed until everything is agreed

2. The UK will not make a formal offer of money unless and until there is an Agreement on everything else which the UK  Parliament approves

3. There will need to be UK legislation to provide the powers to pay the money and to implement any Agreement

4. The UK is seeking a wide ranging partnership based on good access to the EU single market.

The EU document wants the UK to convert the draft partial Agreement so far into legally  binding promises. It says if there is to be a 2 year transition the UK will have to obey all legal and financial commitments of a member of the EU.  It is coy over what it might offer on trade and access to the single market over and above the access we will have anyway as a WTO partner. It suggests no deal on trade before we have left. It imagines we will spend two years accepting all EU law and decisions, without the benefit any more of a veto over some items and a vote in Council on others.

There would clearly need to be changes to this approach if there is to be any deal the UK could expect Parliament to accept. It remains the case that a zero for zero tariff deal on goods is greatly in the EU’s interest, as is continued similar service access.

Any potential Agreement will be subject to ratification by  both sides. This rightly includes the UK Parliament, as well as the Council and the EU Parliament. The EU will need to understand that a Deal does indeed have to be better than No Deal. No Deal gives us freedom to make our own laws, settle our own borders,sign our own trade deals and spend our own money. A wide ranging partnership could add to that, but only if the price of it does not damage the changes No Deal offers too much.

The Cabinet this week  debates what kind of a country we wish to be, and how we should be governed once we leave the EU.

The vision of Leave was uplifting. We want to belong to an independent democratic country.

We want to take back control of our laws, our borders and our money.

The people reasserted their sovereignty. They now wish their Parliament to act in their interests. They want the UK Parliament to spend the taxes raised on our priorities. They want the UK Parliament to pass wise and humane laws. They want the UK government to have a confident global vision, acting in the best interests of our country and acting for the wider good.

We did not vote to be some minor state following meekly the EU’s laws and policies. We voted for our country to regain its vote and voice in global bodies. We voted to be friends and trading partners with the EU, but not to be part of its legal system and budgets.

This vision means, as the PM says, leaving the EU and its single market and customs union on 29 March 2019 in accordance with the Treaty.

It means from that date  being able to pursue our own agenda in world councils, and to negotiate our own trade deals and partnerships.

It means seeking the best possible access to the EU’s single market, knowing we can have general access through our membership  of the World Trade Organisation, where the EU also is a member and accepts its rules .

It means being able to amend and improve our laws whether the EU is doing so or not.

It means welcoming EU students, tourists, investors, people coming to jobs with permits, people wishing to live here on their own resources.

It means having our own fair policy for the whole world on access to benefits and work.

It means having our own fishing and farming policies, seeking to rebuild home  output for the home market.

It means spending our money on priorities at home, and on helping those most in  need elsewhere in the world.

It means being a force for the good in the world, using our soft power and military capability to promote peace, free trade, democracy and greater prosperity.

I am pleased to see the government does intend to put the departure date into the Withdrawal Bill. It needs to be there to ensure continuity of law on the day we leave, which will be 29 March 2019 according to the Treaty procedure. I accept the addition of the proviso that were the UK to request to stay in for longer and were all 27 to agree Parliament would need to change the date. Parliament could do that anyway. That seems very unlikely.

The next issue is so called Transition, or Implementation. The Prime Minister has always been very clear. She has said we will need an Implementation period, assuming we have an Agreement to implement. She rightly says it would not make a lot of sense of exit on 29 March 2019 going over the WTO arrangements for trade and making other arrangements for issues not covered elsewhere, only to switch systems again a year or two later when the new Agreement with the EU comes into effect.  She has also rightly said this Implementation period should not be longer than needed, and could be of variable time depending on the issues concerned and the complexity of completing the arrangements for the new Agreement.

Were there against her aim and wish to  be no deal because the EU was unreasonable in its approach, there would be  no need for an Implementation period. It  would be best to pass straight to the new arrangements for out without a special partnership on 29 March 2019. The government assures us they are planning for just such a contingency, whilst stressing it is not what they want to happen.

During transition it would be best if the UK were not subject to the ECJ, the freedom of movement provisions and the restrictions on negotiating trade deals. Because we are assured we are leaving on 29 March 2019 none of these will apply unless the UK enacts them into UK law for a period in furtherance of an Agreement with the EU.

The opponents of the government include numerous opposition  MPs and lobbyists who want to slow down or delay Brexit. They see Transition as effectively another two years in the EU, paying our contributions and accepting all old and new laws as if we were still full members, without any voice or vote over what the EU does. This they see as a period for further negotiations over what might happen next. Some of the government’s opponents want to use the next year and the Transition to effectively mirror everything the EU currently requires of us into UK law and into an Agreement which is membership in all but name. This is clearly not the Prime Minister’s view. She repeatedly argues we are leaving the EU, the customs union and the single market. We will take back control of our laws, our borders and our money. Leave voters knew exactly what they were voting for and expect no less.

The issue is now one of timing. Many Leave voters feel they have waited too long already. They can accept waiting until March 2019, but do not want another two years in the EU thereafter. As the government sits down to talk about Implementation it needs to stress three things. One, the issues that do need settling even without a  wider deal can be settled  prior to March 2019. We have unilateral fixes, but agreements would be better. Two, the UK does need to be free to negotiate its own trade deals with others, to put in its own migration policy, and to get on with reforms of fishing, agriculture and the rest from March 2019.  Three, nothing is agreed until everything is agreed. The UK cannot legislate for the draft Agreement so far without having agreement on the wider partnership. The public are not in favour of making large payments to the EU without good reason, or even at all in many cases. The government will need to show a good wide ranging Agreement to persuade people to accept  a generous settlement.