Author: johnredwood

It was amusing to read yesterday morning that the UK has emerged as the second most influential country in the world after the USA in some new assessment of power, influence and diplomatic success in the year after Brexit. This position can be strengthened if the UK sees through Brexit in a positive and outward looking way.

UK voters who voted for Brexit had confidence in our ability govern ourselves, to spend our money on our own priorities and to make our own way in a world where power and economic might is shifting to the Pacific regions.

Now many Remain voters also agree that we should get on with implementing the decision. The fears about the short term economic consequences put round by the Remain campaign have been proved comprehensively wrong.

The oddity is how negative so many in the UK establishment are. It is senior lawyers, large company executives, senior civil servants and some MPs who are the ones who refuse to take back control and have such a low opinion of our country and its capabilities.

Some senior officials seem to want to stay wedded to Brussels instructions instead of fashioning a new global presence and UK policy. Trade associations that have spent the last forty years trying to stop or amend EU regulations now often want to protect every last one and sign up to all future ones as well. When MPs and MInisters urge the UK machine to develop the capacity it needs to develop new UK solutions there is often a reluctance to welcome the freedoms we will soon enjoy fully.

The UK has much to offer the world. We wish to remain a reliable ally and partner of the EU, but can see ways to improve and amend our government for the conditions of the modern world. It makes it strange to see so many of the establishment huddled in the EU legal cell, the door now wide open, asking to be shut in again as they think the world too big and interesting for them. They should take heart from this latest survey, and ask themselves how we can we do more to enhance the lives of UK citizens and to contribute more to the exciting growing world as a whole.

The twelve month CPIH, the government’s preferred inflation measure, rose 2.7% in the year to August 2017. “The largest contribution to the 12 month rate is housing….electricity prices and Council tax” (0.6%) followed by transport at 0.4%. In the latest month clothing prices have risen. The narrower CPI rose 2.9%.

Overall shop prices were down 0.3% in the year to August, showing that competition kept prices down, and the currency effect on import prices was not as many forecast.

I am not going to claim the pound has risen in recent months against the dollar because of Brexit. It is up by 10% from the lows. I am sure anti Brexit commentators would have been full of how it was a result of Brexit if we had fallen against the dollar. Recent events remind us that the main forces shaping leading currencies have nothing to do with our vote. Sterling often sits somewhere between the Euro and the dollar, reflecting our substantial trade with both sides of the Atlantic, and our monetary policy which is also currently mid way between the two. We are witnessing a big move in the value of the Euro relative to the dollar.

So why is the dollar falling and the Euro rising? The Euro is strengthening because markets think the European Central Bank next year will have to tighten monetary policy and stop buying up so many bonds with created money. Meanwhile markets have revised their view of how quickly the US will move up interest rates, presently concluding no further increase is likely this year. There are spare places to fill on the Fed’s Policy Committee, where Mr Trump is likely to push for more dovish participants. Meanwhile Mr Draghi at the ECB is under German pressure to reduce the stimulus that Bank is pumping into the Euro area economy.

The Japanese authorities are still trying to keep their currency down. They plan to carry on with a large programme of money creation and have pledged to keep their ten year borrowing rate at zero, which makes it cheap for the state to spend more than it raises in taxes. The pound fell against the yen after the vote and has now risen back almost to where it was before. It is up from an October low of 126 yen to £1 to 143 yen.

So out of the big four reserve currencies used as SDRs, the dollar is the weakest and the Euro the strongest for the time being. Sterling and the yen lie in between, with sterling the recent stronger of the two. The recent move will help US and UK exporters to the EU, and hit EU exporters to the US. Mr Trump is having his way so far in the currency market, as he wanted a weaker dollar after a long period of dollar strength. Mr Draghi at the ECB has a new dilemma thanks to these changes. He does not want a stronger Euro as he is still trying to boost both inflation and output. A stronger Euro limits price rises and makes exporting more difficult.

The EU claims it bases its foreign policy on the wish to promote democracy and the freedoms of countries and people living near it. If they mean this it should be good news for us as one of their neighbours.Under the Treaties the EU is required to be both friendly and to promote trade with neighbours.

They pursue something called a European Neighbourhood policy towards the countries to the east of the EU, and the Middle Eastern countries to the south. For these groups of states they encourage political association, economic integration and increased mobility of people. The Eastern Partnership of the EU with Moldava, Ukraine, Armenia, Belarus, Azerbaijan and Georgia has proved fraught. Russia is worried by aspects of it, and the EU’s intervention in Ukraine has not proved well judged.

To the south the EU intervenes in Syria and Libya, both troubled countries. It seeks peace between Israel and Palestine based on a two state solution. It is concerned about the Iranian nuclear programme.

The EU sees itself as giant as it has a large collective economy, but it is not of course a military giant. It has two battle groups available to intervene on a small scale when it wishes, but relies for its bigger force on contributions from member states. In practice the EU cannot defend itself against a serious enemy without NATO support and the security guarantee provided by the USA.

So far EU foreign policy has not been successful in either the east of our continent nor to the south in the Middle East. The EU borders some very troubled states. Its proximity to Turkey and the Association Agreement it signed with Turkey has also caused difficulties, leading to Mrs Merkel’s recent harsh words about Turkey. She is now seeking to stop Turkey’s application for EU membership proceeding, after years of the EU encouraging Turkey and signing an Agreement for close relations.

In the synthetic debate about so called Henry VIII clauses in the EU Withdrawal Bill all seem agreed that Henry was a tyrant who ruled without reference to Parliament. Ignorance of history is clearly one of the pre requisites for the opposition to implementing the referendum. Whilst Henry during his reign did make decisions using royal prerogative that we would find unacceptable today, what is remarkable about his decision to reduce and then remove the power of Pope over English taxpayers and churchgoers was how he preceded at every step by Act of Parliament. He escalated the conflict when the Pope did not respond to the opening pressures, designed to allow England to stay in the Catholic Church whilst securing some independence for the secular government. It was a failed lengthy negotiation leading to schism.

Wanting Rome to consent to his divorce, he widened the disagreement by bringing in issues over dealing with the crimes of the clergy and having to pay taxes to Rome. Public opinion was ready to submit clerics to the same criminal law as everyone else, and willing to send less tax to the Papal see. To bring this about MPs sympathetic to the King proposed and promoted the 1529 Act to remove legal privileges of the clergy, the 1532 First Act of Annates to reduce the annates tax to the Curia, the 1533 Act in restraint of appeals to cancel the power of the Roman court over English courts, the 1534 Act concerning Peters pence to cancel another Papal tax and finally the 1534 Act of Supremacy to create the King as Head of the Church in England.

Today we are proceeding also by a series of Acts of Parliament for the things that matter and where we wish to change current practice and EU law. The EU Withdrawal Bill or continuity bill, will be followed by primary legislation on customs, trade, fishing and farming, and migration. The secondary legislation will not take the form of royal proclamations by-passing Parliament, but will be Parliamentary regulations subject to debate and vote where Parliament wants that.

Some have expressed regret that someone gave out a lot of EU flags for people to wave at the Last Night of the Proms. Relax, I say. I have no problem with people coming from the continent to enjoy our traditions and wanting to wave the flag of their emerging state.

It may help to remind readers that the Last Night of the Proms has a very UK patriotic second half. The audience gets most animated in support of Henry Wood’s Fantasia of seas shanties. He wrote this as a nine part celebration of the experiences of the ordinary seaman at Trafalgar, for the 100th anniversary of the battle in 1905. It included “See the conquering hero comes” and “Rule Britannia”. The latter has now obtained her own slot after the sea shanties. It was good of so many to join in with the commemoration of the UK’s naval traditions. His original medley has been adapted since.

The first tune is from the “Saucy Arethusa”. This was written in celebration of the first English victory over the French at the start of the American War of Independence. A tough battle between the English 32 gun frigate Arethusa ( captured from the French navy in 1759 and re commissioned) and the 36 gun Belle Poule, a French frigate, 30 miles off the Lizard was in practice inclusive. Both vessels were badly damaged with many dead, and both retreated to recover. The British claimed victory because they captured two smaller French vessels, having a superior force at sea. The French also claimed victory as the Belle Poule escaped from the superior force and did not have to bow to the British commands.

(The navy was still often called the English navy in the C18. At the time of this battle Scotland , England and Wales were united so it was by then the British navy. Ireland joined the Union in 1800, after this battle but before Trafalgar)

Mr Blair’s fantasy re negotiation of the UK’s deal with the EU ignores Mr Cameron’s long attempt to negotiate just such a change to the EU benefits and migration policies without any success He ignores the fact that there is no machinery or legal basis for any such attempted future renegotiation.

He of course dismisses the referendum, which he does seem to be aware of. He does not seem to have grasped that when we voted to leave we voted to take back control of all matters, not just EU migration. Did he not hear any of the debates about wanting to spend our own money, which I see he just ignores. Did he grasp that we want to pass our own laws?

It is most disappointing that a man who gained the top political office by democratic means now has such a scorn for the wishes of the people who used to sustain him.

A few noisy Remain supporters, including now much of the Parliamentary Labour party, persist in spreading falsehoods from Project Fear and the referendum campaign.

We now know that their predictions about the first year after the vote, and after the Article 50 letter, were wide of the mark. Unemployment did not surge. House prices did not plunge. Commercial Property did not tumble. There was no first winter recession post the vote. The economy continued to generate a lot of extra jobs and housebuilding expanded at a lively pace.

Today they still assert that the UK will lose the benefits of the 50 or so free trade Agreements the EU has with other countries when we leave. This includes particularly important ones with Switzerland, Canada and South Korea. There are no such agreements with USA, China, India or the other large economies. I have every confidence that all these FTAs will pass to the UK as a member state co signatory, as they are entitled to do under international law. The only thing that could stop them passing is if the non EU state that entered into the Agreement wished to block. None have said they will block the UK keeping these agreements.

It is still fashionable for them to argue that the EU will have to punish us for leaving, to discourage others from doing the same. This is a bizarre view of friendly neighbouring countries that they wish us to stay close to. If the EU is as good as they say why would others wish to leave? Many of them are net recipients of cash, unlike us, so they certainly have no incentive to leave. The reason they are wrong is that the EU does not have the power to punish us once we have left. They cannot give us worse trade terms than they afford the rest of the world, as they are co signatories of the WTO protocols and agreements. We have rights under the WTO to trade redress if they tried heavy handed tactics. We would also have common cause with many other countries who will not want the EU using UK departure from the EU as an excuse to turn more protectionist against the UK and all the other WTO members in consequence.

There is a strange wish on the part of many establishment figures in the UK to send lots more money to the EU because that is what the EU would like us to do. They need to grasp two simple points. The first is we owe them nothing other than our usual contributions up to departure. Secondly UK voters will be livid with them if they try to give large sums to the EU with no legal basis. We do not need to pay to trade – indeed that is illegal under WTO rules. If they want to charge us to trade it has to be done by imposing tariffs, where they are limited on what they can do by the WTO schedules.

There is also a stupid pessimism about the UK’s abilities to run a borders and customs system once we are out. We have to run a policed system at the moment. Lorries and planes arriving at UK ports have to be checked for illegal migrants, terrorist materials, animal welfare, plant health and other matters. Non EU trade has to be assessed for tariffs. It is well within the UK’s ability to have a functioning border to trade with the EU as we trade with the rest of the world if we have no deal by 30 March 2019.

Some say there will be huge problems with too many parked lorries in Dover and Folkestone. We do sometimes have a big problem with parked lorries when there are French strikes, and for that reason are putting in a huge lorry park near Ashford at the moment to cope with this eventuality. It will not normally be needed once we are out, but is a useful contingency for disruption if there are more French strikes.
Others say planes will not be able to fly! Try telling that to French and German airlines who will make sure they have rights to come to the UK and in turn will understand we need landing rights in their countries.

Occasionally I am invited to appear on German television. I usually agree, as I find I learn more about current German attitudes from the bias or drift of the questions.

This week I was surprised that many of the questions still seemed to be rooted in the idea that the UK was somehow going to remain part of their EU plans. In preparation I was asked what it was I disliked about the EU. Realising this would lead to a line of questions that either led them to tell me I had interpreted the EU wrongly, or to propositions that if we stayed in these disagreeable features could be toned down or changed, I gave my answer. “Everything” I said. I wanted to move us on to the more productive issues of what relationship will an independent UK have with Germany and the EU.

Instead they pressed the issue. What in particular was annoying, they asked. I clarified by saying it was the EU’s ability to make our laws and tell us what to do that we rejected. There were various individual cases that the UK was particularly unhappy about, but it was the general power, the ability to force more bad laws and policies on us in the future that led to the decision to leave. They seemed to think if there was some fudge or fix on migration the UK would be happy. They still have not grasped the meaning or significance of the winning phrase of the campaign, we want to take back control.

It made me think how absurd this whole so called negotiation the EU wants us to have about leaving is. The Treaty gives us an absolute right to leave. It imposes no additional bill or other requirements. All we had to do was send a letter and give them two years notice, which we have done. That notice will cost us more than £20bn and we accept that. It is not an invitation to negotiate over which of their laws and financial demands we need to carry on with in the future.

IN the interview proper the German presenter had got it, and allowed me to make clear that as far as the UK is concerned we are leaving. The UK is very willing to talk about our future relationship, and has made a generous offer of continuing free trade without tariffs. It is up to the EU to decide whether they want that or wish instead to impose what barriers they can on their trade with us under WTO rules. Clearly this all comes as news to many in Germany, who still see us a fellow paymaster of the EU under its control.