Union Jack was asking himself once again why he was called Union Jack.

He had just been reading a history book about a time when his country, the United Kingdom, was independent and free and used to display lots of so called Union jacks or flags.

Could his Mum have been wandering down memory lane? He asked her again.

She was quite severe with her reproof. “I have told you many times” she said “that I called you Union Jack after our glorious European Union, and don’t you forget it.

It’s seditious talk, you know, to suggest otherwise. If you bang on about the old union jack flag they might start questioning you for racism, and I haven’t got time for all that”.

In truth, all was not well in the UK part of the great European Union.

Jack and his mother could see the distant European castle that governed them. More importantly they had regular dealings with the EU Inspectors and tax collectors. They were told about all the latest laws by the local police.

Jack thought secretly that they were having to pay more and more tax.

Their income did not seem to go up. Indeed, it was going down. The fish from their local seas mainly went to the Union’s ships, so they were banned from fishing for them.

They had to accept big taxes on any food coming in from outside the Union. They lived under increasingly complicated and expensive rules which made it slower and more costly to grow and make things for yourself.

If Jack ever shared any of this with his mother she warned him off it. She told him the European Union was very good to them really, and it would be much worse if they were not in it.

For a couple of months, they had to just concentrate on changing all their emails and website to comply with some new directive, instead of earning their living.

Privately, Jack’s mother did understand that things were going from bad to worse.

She could not afford to keep going as they were, but was scared of saying so to her son in case he got into trouble for repeating it.

The European Union had been very clever, and made sure anyone in government, in the universities and in big business all thought the Union was great and defended it at every opportunity.

The system was too powerful to pick a fight with. They all thought the same. They all talked down to people like her.

They were good at making predictions of how much worse her life would be if the people did revolt against the European Union. They did have powers to make her life even more difficult.

One day though, the money had run out. She told her son things were a bit tight, and told him to take their cow to market to sell.
It was a dangerous measure. It meant they could pay the bills for a bit, but would no longer have any milk.

On the way to the cattle market Jack met a man who asked him where he was going. Jack told his sorry story.

The man was very sympathetic, and said he too thought the European Union was damaging their prosperity.

He got some beans out of his pocket, and said these were special freedom beans. If Jack took those for his cow, he could grow the precious plant of freedom which should transform his position.
Jack was much cleverer than people realised for someone who had not had a great education.

He did know a bit about freedom, and had been thinking for sometime how the Union was crushing him and his mother. So, he asked, “how could freedom help me?”.

“Well” said the man “if you were free you would not have to pay all those taxes to the EU, and not have to obey all those costly regulations.”

Jack was smitten, and willingly accepted the beans for his cow. It also cut down the journey and the difficulty of getting a half starved reluctant cow to market.

When he got home, Jack told his mother the great news that he had a way to improve their situation.

When she heard his mother was livid, and afraid. How could her little Jack stand against the might of the EU.

She scolded him and threw the seeds out of the window. Didn’t he know the great and good would rig it all against his precious freedom?

Next morning Jack and his mother arose and were shocked beyond belief. A massive beanstalk led away from their garden right up to the gates of the European Castle.

His mother was distraught, realising they could be found. Jack took courage and decided he was going to see how the other half lived.

When Jack crept through the castle gate unseen he was astounded by the wealth they had.

All those tributes from the Union meant they lived well in the governing castle, led by the five Presidents. They always seemed to have a fish course from all those fish they took from UK seas.

Jack soon found the Treasury and there to his delight was the money that the UK had agreed to send.

It was a signed promissory document, so Jack tore it up. He took the pieces away with him and showed his mother when he got home. “We are rich”, he said.

“Now our country can have all the teachers and nurses and doctors it needs, and we can pay less tax so we have more to spend. “

“You are naïve” said his mother. “Don’t you understand our local government will just send it back again to the EU because they want to keep us poor”.

“So,” said Jack, “we will have to see about that”. Off he went again to the castle before his mother could stop him.

The next time Jack came back with more torn up paper. He had found the binding document that required the UK to impose high tariffs on the rest of the world and blocked any special trade deals and lower tariffs with their friends in the USA or Australia or New Zealand.

“There” said Jack to his mother, “this is just like the golden goose in the old fairy story.

Now we can buy cheaper goods and trade better for ever, so we will be better off”. Once again, his mother, petrified by now of what the EU and all their powerful friends nearer to home might do, told him to stop.

Once again Jack dashed up the beanstalk. This time he seized the most precious item of all, the voices of the UK people who were singing by a large majority that they were going to be free and they would not obey the 5 Presidents any more.

Just as he was leaving the castle, the 5 Presidents were catching up with him and chasing him.

They didn’t shout at him that they could smell the blood of Englishman, because they didn’t want to be a caricature of badness. They did want to teach him a painful lesson.

He raced back down the beanstalk, whilst they were still trying to negotiate it.

They were slower than him as they had so many good meals at his expense over the years. Jack, as in the old fable, hacked the beanstalk down, and the 5 Presidents disappeared from view and from the UK for ever.

The chopped down beanstalk deposited them in France, still alive but knocked about a bit.

So, what happened to Union Jack?

All the sages in the UK government, the Central Bank, the universities and big international business predicted poverty, isolation and unhappiness.

They expected Union Jack to have a few bad years and then to beg to go back to the EU on worse terms than before. Instead, Union Jack and his mother flourished.

Spending all their money at home bought lots of improvements to public services, with tax cuts to give everyone’s income a boost.

Catching their own fish meant they could have fish every day if they wanted to, or sell it to others if they didn’t.

They had lots of friends in other countries who wanted to trade more with them.

Even the EU, after a hissy fit, agreed a free trade contract and accepted in the end the UK did not owe them any more money.

The people’s voices had been right, and all those experts wrong. Just as in the original tale, Jack and his mother lived happily ever after.

They had rediscovered freedom, thanks to the voices of all those UK voters.

And what happened to all those so called experts?

Well they did alright as well. They pretended they had not made such a big fuss and got it all so wrong.

They carried on paying themselves lots of money and giving themselves lots of grand titles and honours as if nothing had ever happened.

The people grew less angry with them, because everyone was better off.

The people did have one last hurrah against the establishment.

They voted out all the ones who had done most to stop them being free. They felt better for doing that.

Freedom is wonderful thing.

This blog contains substantial fact based analysis of the current economic and political situation worldwide. I use published official sources and wish to be accurate. It also provides my views and forecasts, which are distinguished from the factual analysis. I often compare what governing institutions say they are planning to do with their outturns as captured by official figures and reports.

In a recent blog I said that the government has delayed the vote on the Withdrawal Agreement until January 14th. I had not read this in an official source, but relied on press and media reports which I assumed were based on official briefings. I need to correct my piece, as there is still no official statement of when the Withdrawal Agreement will be voted on. All we know is the Parliamentary debate on it starts again on Wednesday 8th January and continues on the following two days. I will keep you posted as to when the debate will conclude and when there might be votes.

Secretary of State for Defence, General Mattis, has resigned over a dispute with the President. The President wishes to keep his campaign promises to pull US troops out of Syria and Afghanistan. The General thinks the US should stay in these countries to be close to its allies.
It is true that the world’s leading power will have more influence and be more likely to succeed if its builds and maintains alliances. The US can depend on NATO, whilst understandably objecting that many NATO members fail to meet the minimum financial contribution which the US and the UK manage. The US will also have more influence in the Middle Eastern war torn region if it maintains local alliances and keeps troops there. This does not mean, however, that the President was wrong to campaign to reduce US military commitment to the Middle East, nor does it prove he is wrong to insist on keeping his word.
When the President asks his staff what US military intervention in Syria has achieved so far, there is no easy answer. The US and her allies did not want the Assad regime to continue, but had to assist the Assad regime in getting rid of ISIS, seen as an even bigger threat. Vacillation by the West over who the true enemy was – Assad or Isis – led to indecision and to growing Russian influence, based on strong backing for Assad. The roots of President Trump’s wish to exit can be found in the unwillingness of the Obama regime to commit fully to helping Assad against Isis, or the failure of President Obama to come up with another strategy to rid Syria of both, which would have required huge force from the US and her allies to have any chance of success.
When the President asks what good can current low levels of troops do in modern Syria, where Assad is close to controlling the country again and where Russia is well dug in as a substantial external influence, there again is no great answer. If the USA and her allies are not prepared to commit many more forces, and if they have no clear alternative to the Assad tyranny backed by Russia, there is not a lot of point in staying.
In Afghanistan things are a bit different. The USA and her allies does have a government to co-operate with, and the western coalition in the past has spent much blood and treasure on resisting extremists in that country. There, too, however, defenders of western involvement have to answer how much longer do we have to stay? How much more training do the Afghan security and defence forces need? Are we happy with the political results of the long war?
On both sides of the Atlantic there is war weariness over the Middle East, and some disappointment with the results of substantial past intervention. The military have done a brave and good job in difficult circumstances, but the politicians have found it difficult to translate that into successful political action to form war free states following democratic principles. President Obama help create a power gap in Syria which Russia exploited, and began the long withdrawal from Afghanistan. It is difficult to see what military options remain for NATO, or how military intervention would make benign democratic government more likely.

Some in government wrongly worry that Brexit could damage our car industry. Latest sales figures show there is plenty of damage being done by EU regulations, UK taxes and a credit squeeze before we leave. Why doesn’t any of this worry them? Why don’t they do something to stop it?

Yesterday the government published its draft Immigration and Social Security Bill.

There were some good bits to it. The intention is to treat the rest of the world fairly and equally, with no special treatment for EU citizens. The aim is to encourage tourism and visitors. There will be no visas required for EU tourists coming here, and all tourists can stay for up to six months without the need for additional paperwork. Anyone gaining a place at a UK HE institution will be eligible for a permit. All those graduating from a UK university can stay for an additional six months to look for a job or to enjoy their time with us.  These are important principles to assist our HE sector and tourist industry and show that the new global UK is outward looking and engaged with the wider world. Citizens of Australia, New Zealand, Japan, South Korea, the USA and Canada will be able to use the egates and faster entry system at our airports as EU people can today.

The proposals also include lifting the current quantitative controls on visas for people coming to undertake higher paid and skilled jobs in the UK currently applying to non EU citizens. The government  argues that the UK is good at generating jobs and business activities and needs to be able to attract talent from all round the world to take up these opportunities. The provisional proposal is that such jobs would need to pay more than £30,000 a year to be free of controls.

The government is also suggesting a transitional system of allowing people to come in to work for up to a year at lower pay levels. They would not be eligible for benefits and would have to return home at the end of the year. The longer term aim is to stop inward migration to take low paid jobs, to seek to drive up productivity and pay and to give UK based individuals more chance of getting employment. Having access to fewer people from abroad willing to accept low pay should increase investment in machine power to do some of the tasks, and to make the remaining workforce more productive.

The Common Travel area with the Republic of Ireland is maintained, as before we joined the EEC/EU.

We read that the Chancellor and the Business Secretary are unhappy about any policy which reduces the flow of migrants from the EU into low paid employment. The Home Secretary himself seems unhappy about continuing the policy aim of reducing inward migration substantially in line with the Prime Minister’s often stated wish and with the Conservative Manifesto.

No deal has always been a misnomer of leaving the EU without signing the Withdrawal Agreement. Proponents have called it leaving on WTO terms, or a Clean break exit with global trading or some such. More recently others have called it a managed exit, drawing attention to the various areas of collaboration and agreement there will be on a so called No Deal exit.

So let me have another go at explaining the WTO option. It is if you like the “multi deal option” or deals on wheels, as the UK and the EU agree a series of measures to smooth transport and trade across the Channel and across the Irish border.

We now know there will  be the following Agreements

The Common Transit Convention

The facilitation of trade Convention

WTO trading rules

Air Services Agreement

Continued arrangements for London based derivatives to trade and settle

Phyto-sanitary arrangements

Possible continuing membership of the Government Procurement Agreement

In other words a WTO Brexit will also include a number of important agreements to ensure the planes will fly, the trucks will move and the trade will flow after March 29

There will be the added bonus that we can stop all these groundhog day debates and show how absurd so many of these scare stories are.

The government announced this means “simplified cross border trade for UK businesses exporting their goods”. “It will provide cashflow benefits to traders and aid trade flow at key points of entry …….. traders will only have to make customs declarations and pay import duties when they arrive at their final destination.” How about some apologies from all those who said border friction would b e very damaging?

Apparently the Treasury think we are going to be creating so many new jobs in the next few years we need to ensure we can invite in a large number of new workers without restriction. That must be a revised forecast,  based on a new optimism about Brexit.

The government has now decided to delay voting on the draft Withdrawal Agreement until 14 January. It looks likely that it will still lose that vote.  The government hopes that it will extract from the EU better language about a  timetable for negotiating a trade and future partnership agreement, which is the way to avoid the Irish backstop.  They want  stronger language about avoiding use of the Irish backstop in any way that might be available. It may also play up some of the fears of No deal in the hope of persuading more MPs to vote for the Agreement. Given the 100 or so Conservative MP public pledges to vote against it is difficult to see how the government can win the vote, even allowing for a substantial number of MPs changing their minds. The DUP have said they cannot vote for the Agreement unless the text concerning the Irish backstop is amended. The EU so far has refused all attempts to re open the legal text. Instead it offers clarifications and reassurances that are not legally binding.  The DUP and others say if it is the intention of both sides to avoid the backstop, then delete it from the text as an earnest of good will on this matter.

Meanwhile the government is intensifying work on a Clean WTO Brexit. It has announced resolution of the aviation issues so it can assure us the planes will fly, and is well advanced with fixes to ensure reasonable transit times for goods  through channel ports. The EU and its member states too are busy working on this, as they now sense it is a possible outcome even though the UK government says it intends to pilot the Withdrawal Agreement through Parliament. The government has announced the UK will remain in the Common Transit Convention after departure which ensures simplified cross border trade as today.

The House of Commons has a large Remain majority, with a set of Opposition parties keen to use the issue to destabilise the government. There are several other options in play amongst Remain factions. Some favour a second referendum. Some want to cancel Brexit altogether and just tell the people they cannot negotiate a satisfactory exit. Some believe it would be possible to negotiate a better or different deal and favour a delay to attempt a different approach.

The second referendum idea cannot now be legislated in time to hold the vote before the UK  leaves on 29 March 2019. Proponents therefore have to support delay to the UK exit, which requires agreement with the EU and repeal or amendment of the EU Withdrawal Act. The EU is reluctant to allow much slippage as they have European Parliamentary elections to consider next May which could change the political direction of the EU itself. The current plan is the UK will not be contesting them.  Advocates disagree about the question to be put in a referendum. Some want a three way question, offering WTO exit, staying in or the Mrs May Withdrawal Agreement.  Were staying in to win with say 35% of the vote the other 65% would say they had been cheated of Brexit by a minority of voters. Some want a two way skewed to staying in, running Remain against Mrs May’s Withdrawal Agreement. Leave voters would say this did not offer them their choice. Some want a Leave oriented vote, running the Withdrawal Agreement against just leaving, on the grounds that Leave/Remain has been settled by the original People’s Vote. Remain of course does not like this approach. The government so far has ruled all these out comprehensively. It would require a government with a majority to draft the legislation and make the time available to try to pass it through Parliament. This all looks unlikely. Conservative MPs are mainly opponents of a second vote and would not even wish to vote for a timetable motion to help get a second Referendum Bill through, so it would require full Labour backing from the outset which Mr Corbyn would  be reluctant to offer.

It is difficult to believe this Parliament would vote to simply remain and argue the people were wrong to vote for Leave. It would need the full repeal of the EU Withdrawal Act and supporting measures. Both main parties in the Commons stood for election in 2017 on a Manifesto to implement the result of the referendum. It would require the two front benches of Labour and Conservative to join together to force it through against a major revolt on the Conservative side and a smaller revolt on the Labour side, with considerable public anger.

So that leaves us with some form of delay as the other option to the WTO Clean Brexit. The EU may well say they have set out the terms for delay. They are in the Withdrawal Agreement. The UK would just have to swallow those if it wants another 21 months or up to 45 months more to negotiate a future relationship. In the meantime the Withdrawal Agreement sets out the terms for the UK continuing in the single market and customs union. If the EU were to back down on this stance, they could presumably agree to the UK continuing with current arrangements for  a bit longer to see if anything different could emerge from new  talks. This would be quite a loss of face for the EU, but would not guarantee they would go on to concede on all the issues over the future partnership to make it palatable to the UK. It is difficult to see what new would emerge from the talks, given the lack of any progress on the future partnership in the 30 months used up so far.

There could be an agreement to delay for a few months  to tidy up remaining issues for a managed No Deal Brexit between the EU and the UK, but this would also require legislation in the UK and the consent of both the UK and EU Parliaments.

We are told today the Cabinet meets to review and progress preparations for the UK to leave the EU next March without signing a Withdrawal Agreement. Many Ministers and officials have been working on this contingency plan ever since we voted to leave the EU. Preparations should by now be well advanced. Today the Cabinet needs to set out a programme for telling us all of their success in ensuring things work smoothly on March 30th next year, and in giving helpful guidance about how trade will be progressed and transport will continue to move.

Ministers should be  confident that the arrangements they are putting in place will work, and sensibly reassuring that in many cases things will continue just as they are the day before we leave. The Transport Secretary has set out in detail that the planes will continue to fly after March 29th, and that everyone who wishes can book their business trip or their holiday with confidence for next year after exit. Air Services Agreements are being put in place.

Work is well advanced at Calais to handle customs and any additional checks required without undue delays for trucks. Calais wishes to keep the  business and is well aware of the competitive threat from Belgian and Dutch ports if they were not capable of handling lorries with good transit times. The Republic of Ireland is  very keen Calais gets its act together, as substantial volumes of Irish goods use the roads of the UK as a land bridge to get things to and from the continent more quickly than going by a longer sea ferry route. They wish to see rapid transit times at Calais as well as us. French exporters to the UK also have a strong interest in Calais working smoothly and efficiently. We need to  be told of the various Ro Ro and container options and arrangements so trade continues to flow.

The NHS needs to continue importing pharmaceuticals from the continent under existing contracts. These drugs are all licenced and approved, and already need to come to the UK with proper reporting of how and where they were made, what the tests results were and how they conform with the standards required.  The Health Secretary needs to confirm he has ensured this will continue in good time. There should not  be a need for additional stockpiles if he has done his job properly for the NHS.

I know of no supermarket that thinks it will  be short of food in April. Ministers should spell out what if any additional checks are needed and how they have put in capacity to ensure these take place without delaying imports.

Ministers are employed by us to  make these things work. Instead of fuelling fears that things might go wrong, as some seem to do, we want to hear well based reassurance from them that they are doing their jobs properly and have plans in place to make things work. I have still not heard a scare story I believe, and do not think the EU will be able to mount some kind of self harming blockade of their trade with us after we leave. I find myself in the position of having more confidence in our Ministers’ abilities to make it work than they sometimes express in themselves. I have this confidence because most of what happens to ensure imports and exports work is nothing whatsoever to do with governments. It rests on a willing buyer and a willing seller, who will still  be there in abundance the day  we leave the EU. The day after we have left the same rules and regulations apply in the UK as the day  before we leave. There can be a gentle transition on that day as a result.

It is apparently a shock to some in government that the UK can once again run her own affairs. That is what we pay the government salaries to do, so let’s hear how they are doing it .I repeated my request yesterday to the Prime Minister that we should publish our tariff schedule now, and should remove all tariffs form imported components to be used by UK  based manufacturers. That would  be a good boost to UK manufacturing.