I am writing this on the Eurostar gambolling along at 200 mph under the English Channel heading back to Blighty just after an incredibly revelatory meeting in Brussels in which I was privileged to participate; I am so “full of it” that I am wasting no time in sharing it all with you, It has changed my thinking.
As you know, Michel Barnier is the Chief European Union Negotiator in the Brexit negotiations. I was invited to meet him and discuss the whole situation, with both of us hopefully learning from the other.
Whilst I shall respect the requirement of confidentiality regarding the specific things that were actually said, I am allowed to share with you what I said and also the general impressions I took away from the meeting.
I observed that whilst Stage One of the negotiations was about taking sides (Junker, the unelected, unaccountable General EU Panjandrum wanted €100 billion from us, we wanted to pay €20 billion and we agreed at €39 billion over 10 years) surely Stage Two means we are all on the same side. Getting an unemployed young man in Athens into work, securing the future of a single mum in Madrid, giving hope to the 35% of the Paris banlieus who are under 30 and unemployed; that requires the creation of wealth to generate the tax to pay for it and that requires successful Business (whatever Marxists like Corbyn and McDonnell might say to the contrary); successful Business comes from Trade…..and Stage Two is all about that. Setting out a framework for how the fifth largest economy on earth, the UK, can trade to mutual advantage with the 27 countries in the European Union.
I pointed out to Mr Barnier that around 70% of the UK economy is Services. Moreover, 8% of our entire national annual income is Financial Services which produces some 12% of the Nation’s entire tax take. No matter how unpopular bankers are, no matter how much Socialists hate them, their sector is the genuine article of value-added, globally-excellent business activity. No UK Government, no British negotiator, can be expected to, indeed will not, allow a Trade Agreement to ignore the Services sector in general and Financial Services in particular.
The trade in manufactured goods will be tariff-free; both sides agree that increasing tariffs from zero would be sheer folly. Non -tariff barriers to trade are an issue; the bureaucracy, the red tape, the delays and queues of trucks at the Border (and the French have previous on this one). There’s work to be done on this.
But it was made very clear to me that Services will only be included in a Trade Deal if the UK accepts loss of control of our borders and submits to the jurisdiction of the European Court of Justice, precisely what 52% of the Country voted not to have. The ABC Cabal (Adonis, Blair and Clegg) do NOT represent the UK, their machinations belong to yesterday not tomorrow.
“Equivalence” in Financial Services to obtain an EU Passport would be allowed but only if the shedload of uncompetitive EU regulation fettered the UK in its global dealings which have nothing to do with the EU! Why? To help Paris and Frankfurt around the World. We must NOT fall for that one!
I pointed out that this was thus an intractable impasse. Our Country would be forced to leave the EU without a deal and join the World Trade Organisation and Trade with the EU according to its rules (just as the USA, Japan, China and many other economies do). This would not only mean tariffs on manufactured goods (hurting the sale in the UK of the million cars a year made in Germany much more than the sale in Germany of UK-made cars) but, of far greater importance, there would be an expected drop in the value of sterling, probably of some ten per cent. Overnight every car made in the EU would be on sale in the UK at 10% more than rivals made in the UK. It is expected that there would be around 20,000 job losses in Stuttgart, Wolfsburg and Munich. That matters since Germany bosses Europe; they’re in charge.
But the hopes of that lad in Athens or woman in Madrid would also be dashed.
I was left in no doubt that Brussels and Berlin see that as a price worth paying for the preservation of “The Grand Project”. The political imperative trumps everything. The need to deliver, over time, The United States of Europe. Nothing will get in the way of that.
And Brussels and Berlin have moved on already; in their eyes, we’ve left and Mr Barnier is merely showing us out of the door. The Remoaners’ hopes are forlorn; there is already no way back. Brussels are concentrating on immigration, a faltering Euro and especially preventing Poland from “doing a Brexit”. We are no longer on their radar; it’s over and Mr Barnier is just going to let the ongoing civil war in Britain do his job for him.
It was then that the scales fell from my eyes!
Michel Barnier didn’t need to do anything in Stage One; just keep saying no and allow the Remoaners in the UK plus the media do his job for him. They successfully got the price for their own taxpayers up to €39 billion.
He won’t budge during Stage Two either; the Grand Project is too important; but the UK also can’t budge this time. Services are too important.
In 1973 we joined the Common Market for Trade; we put up with 43 years of all the depredations of Brussels because of the opportunities of Trade; we are seeking to leave with a deal on……Trade. But “they” aren’t looking at this whole situation in the same way at all. The destruction of wealth and the removal of opportunities to get those out of work into work (at which the EU has been spectacularly poor) count for nothing as long as the integrity of Le Grand Project is unharmed.
They are dealing in apples; we are dealing in pears. We are looking for stuff that isn’t even on their agenda; we cannot win because we’re playing one sport and they’re playing another. This is irreconcilable.
So what’s to be done?
We should tolerate the deluge of criticism and cries of “failure” from the unbiased (don’t make me laugh) media and Big Business and announce right now that we’re off to the WTO. It’s not what we want but we have no choice. And (unlike any other country in the EU28) we have other hinterlands to fall back on: the Commonwealth, the USA, Japan and interestingly, Europe. We must do it, do it now, and not falter. We must explain we do so reluctantly but we are doing it…..and then get on with it. Let us put the Ball firmly in Berlin’s and Michel Barnier’s Court.
Business would know where it stands and can plan accordingly (something it’s rightly been screaming for); we would save that part of the €39 billion that isn’t payment of the Notice Period (€20 billion) since all parts of this deal are inter-dependant.
And Berlin would have to justify to everyone from Warsaw to Stuttgart that the consequent destruction of wealth and opportunity across Europe really is a price worth paying for an unattainable dream.