On Thursday Boris Johnson threw down the gauntlet with a call for the total abolition of the backstop. He also said the Government was “turbocharging” preparations for a no-deal break on Oct 31 if the EU refused to engage.
The Telegraph asks Will the EU blink first as pressure builds towards ‘no deal’?
At a stroke, Mr Johnson appeared to sweep away the camp, nominally led by the Attorney-General Geoffrey Cox, that still believed that with a tweak – perhaps a time-limit or a unilateral exit-mechanism – the backstop could be rendered acceptable.
Not only did he announce the Irish backstop must be abolished, but he went further, turning the tables to set conditions for any future talks with the European Union.
EU diplomats and officials in Brussels have been clear that this will not happen, even if that puts the UK and EU on a collision course towards ‘no deal’ over the apparently intractable problem of the Irish border.
It is a wearingly familiar argument. Mr Johnson contends that the entire UK should be able to leave the EU customs union and single market while preserving a status quo border in Ireland.
The question now, is who will blink first as pressure builds towards an impending ‘no deal’ in the autumn?
Diplomats and officials were clear on Thursday that Mr Johnson’s statement, taken together with his decision to purge the Cabinet of all forces of compromise, could only be explained by a desire to create the conditions for an election.
The only question in European minds is whether that election comes as a result of Parliament blocking ‘no deal’ – and Mr Johnson being forced to request an extension to Article 50 – or after a ‘no deal’ has already happened.
Perhaps No One Blinks
Without a doubt, Johnson laid the groundwork for an early election.
But the notion Johnson will seek and extension other than for a week or so tie up loose ends in preparation of no deal seems silly. Also silly is the notion parliament will block no deal.
Parliament has no such power other than to force an election. And it’s now likely too late to force an election in time to kill Brexit.
Besides, with Labour splintered, it’s likely Johnson will achieve a strong working majority in the next election.
Meanwhile, as long as both sides believe the other side will blink, neither will.
It may take a crippling recession in the EU before it comes to its senses.
Germany, EU exporters in general, will get crushed in the event of no deal.
Mike “Mish” Shedlock
There is no chance the EU will agree to remove the backstop so I guess we’ll just have to see if the British political class is willing to carry through on a no deal outcome. Never forget that a prosperous post Brexit UK is an existential threat the EU will never allow. Thus, the EU will NEVER agree to Brexit that allows the cessation of EU sovereignty over UK law while granting free trade at the same time.
I guess we’ll just have to see how successful the new PM will be in getting a parliament with a majority of members who support Remain to allow a no deal outcome. Without a new election that increases the number of Leave oriented MPs the currently constituted parliament will stymie any PM who attempts to allow a no deal outcome.
“Germany, EU exporters in general, will get crushed in the event of no deal.”
Oh, good God, Mish; can you hear us all the way back in there in 2016? I hate to tell you this, but here in the future, the German car manufacturers did NOT rise and crack the whip and come charging over the hill like the US Cavalry to save the British from their own stupidity. It turned out that they, and almost everyone else in the EU, would rather take the hit of diminished British business than see the Single Market begin to be unraveled. Yes, that’s right… British trade, it turned out, was really NOT the be-all and end-all of the European Union; that vastly more trade goes on that doesn’t involve them than does, and THAT is where the interests of the Union, right on down to German carmakers, actually lies. Come November 1st, they will still have dozens and dozens of countries they can still sell their cars to, and eventually those markets can, and will, take up the slack for the percentage of cars priced out of range in Britain… and they know that. But where are the British going to sell THEIR cars, or anything else, when come November 1st, every country on Earth has to raise WTO tariff barriers on pretty much everything Britain wants to export to them? Do you understand how this works? By disconnecting from the EU, Britain has in effect decided to isolate itself from pretty much the rest of humanity, an be a tiny island of 65 million people who have no free trade ties with pretty much anyone else on Earth. And it’s going to take YEARS, literal years, for Britain to come anywhere near the kind of global access it enjoys RIGHT NOW, this very minute, as an EU member. Britain is about to become a horror show that the rest of humanity to can sit back and watch, munching popcorn and shaking its collective head. It’s going to be brutal, and ugly, and it’s going to go on for a generation or more. And the saddest thing of all is going to be that it was totally, utterly unnecessary, and that they did it to themselves.
Mish, as you might remember, I have long been skeptical that the British government would ever implement the results of the referendum. However, reading these new stories and the comments in this thread, I have now judged that no-deal Brexit is coming. The Remainer faction has now jumped the shark so to speak. The Remainer comments in this thread are at peak craziness- I take this as a good sign.
So no really surprise that Mish wants a hard Brexit. After all his hate for the EU is well known. So I ask how is he going to solve this..
link to bbc.com
In other words this is my take on hard Brexit
Ireland pushes for unification and hard border with GB lets hope without bloodshed
link to theguardian.com
Scotland calls for a new referendum to leave the UK and makes it.
So at the end hard Brexit gets you GB under WTO. I would love to see them negotiate any treat with the US that is any good for them. IMO first thing Trump will ask is the NHS to be sold to american interests. So at the end GB will no longer be under EU where at least they have a voice just to become a US colony talking about role reversal…
They should give in to a hard Brexit. I guarantee Britain comes crawling back once their economy dies on the vine. Brexit was a longing for the sun never setting on the British empire. Those days are gone.
Yes, there is global America, global China, global India, global EU and global England and Wales? Is the competition too strong for a small offshore island?
Find out soon enough. Too late to change anything now.
Find out soon enough. Too late to change anything now.
Read carefully, last sentence. UK supposedly more prepared than EU.
BBC and CBI receive EU funds? Trust neither.
Well worth reading.
Not just for some background but the implications of a resurgent EU military that will push up against a Russia that has resisted predatory EU liberalism by having overwhelming nuclear capability.
When power balances and French nuclear is shared and EU army spending/recruitment starts Russia will feel threatened, wont allow itself to become Ukraine or another periphery, and conflict potential rise – perhaps.
It’s not all sugar and light and the Eastern side deserves as much attention as Core, South and West. How can it be anything but deflationary? Try fighting that with more money printing.
There is a massive deflationary episode in play in the EU. Demographics, new cheap labour, new (cheaper) geographies for larger companies to move to. Best if they don’t fight it but as soon as core/west living standards slip because if it, to some new mean, watch out for a political backlash. As the East moves up, others will move down to meet them.
Capital will benefit.
This is no different than the US. Labor is chea
Johnson says he will get a deal with the EU before 31 October. His opening gambit is to tell the EU that he will not talk to the EU unless they drop the backstop. What a dipstick! Your choice Mr Johnson you want a deal but you don’t want to honour a deal made in good faith with the previous administration. Johnson is guaranteeing a no deal Brexit. As to why the US should be bothered well if everything goes tits-up in Europe do you really think that the US will not be affected?
The previous administration (May’s) made no ‘good faith deal’ with the EU. There was merely a potential ‘deal’ that May presented to the UK parliament and was firmly rejected. Nothing was ever signed and sealed. To suggest that it was ‘dishonorable’ to reject a(n extremely EU-biased) deal is absurd.
Johnson most certainly has NOT ‘guaranteed’ a ‘deal’ with the EU. He couldn’t do so even if he were so inclined. The UK has already given the EU notice that it is quitting the EU club on October 31. That does not require a ‘deal’ above and beyond what has already been stipulated in Article 50, which will leave relations between the EU and UK the same as between the EU and any other state in the world i.e., between the EU and the US.
It is certainly true that an economic or political downturn in Europe would be bad for the US (and vice versa), but this has little to do with Brexit. It’s more than other way around. The UK is pulling out of the EU club largely because it is a poorly designed agreement between neighboring states that is damaging Europe in general both economically and politically. Its authoritarian nature stands to be as disastrous for Europe (and the West in general) as the Soviet Union was to Eastern Europe (and the West in general).
Mrs May signed the deal. Parliament refused to ratify it. A no deal will not leave relations with the EU the same as relations with the EU and the US. There are a myriad of MTRs which the UK enjoys with the US via membership of the EU that fall with a no deal. No deal means joining North Korea in economic limbo with no FTAs or MTRs to fall back on. Your equation of the EU with the USSR is crass. Out of 2,500 votes on EU legislation the UK was on the loosing side on 59 occasions. Does that sound like a UK suffering under Soviet style oppression?
Parliament does not ‘ratify’ a Treaty. When a Treaty is signed, as the evil May signed the WA, a motion has to be laid before the House within 21 sitting days. This is what happened and it was resoundingly rejected, and was so subsequently and yet again. The Government is unable to Ratify the Treaty, nor can it resubmit its Motion in this Session of Parliament, and it should actually now abrogate the Treaty. The EU are being idiotic by refusing to reopen negotiations, and also you will note they have taken no steps to themselves Ratify the Treaty. Article 50 states that it is for the EU to negotiate an Agreement with a departing State, which it is failing to do.
Very true, unlike certain other posters who lie when it becomes serious, in the vein of the dark arts master himself.
The UK must be made to fail outside the EU else why be in?
May was a defender of the idea of a future Federalised EU. She faced both ways, was conflicted.
There will be stress going forward, much complaining, but little alternative to getting on with it.
The EU must have the UK remain in or fail outside.
Any benefit for being out will reduce reasons for being in.
Negotiations by the EU have been in bad faith.
Talking is a waste of time.
There is nothing left to talk about.
Mrs May signed no deal, she gave it the nod but had to get parliamentary approval before putting a signature on it. Parliamentary vote, December 2017, amendment to clause 9. She failed to get that approval, therefore no deal was agreed, in good faith or otherwise. Your argument looks pretty flimsy if you can’t even get the core facts correct.
Some of us remember the sight of Ted Heath signing the original deal after he’d been forced to hand over fishing rights and effectively sink the UK trawler fleet at the last minute. Not this time, thanks very much.
The EU (and especially the Irish) keep on telling us what they absolutely CAN’T do. What they mean is that they would rather prefer to stick with the conditions they introduced in the first week and that May & Co. swallowed in a single gulp. They have ample room for maneuver, it all depends now on who has the biggest stones.
The Gov change so far is just the start.
Watch the rats run for cover as SW1 comes under the spotlight.
Those not wanting to go along 100% will be gone.
Exiting is the easy part, then what? Sure, UK will regain sovereignty from the EU, does not mean it would be able to keep it for long, it may just lose it to the US. Trump won’t let Boris to get a lopsided deal — unleash tariffs on Stilton and British cars. Here’s Boris’ speech excerpts with some commentary:
“Leaving the EU is a massive economic opportunity – to do the things we’ve not been allowed to do for decades, to rid ourselves of bureaucratic red tape, create jobs, untangle the creativity and innovation for which Britain is famous.”
— sure blame the EU for your own failings, when after Brexit things don’t work out, will Boris blame the EU again for ‘hard’ exit?
“And we do not need to wait to start preparing to seize the benefits of that project. So we will begin right away to create the free ports that will generate thousands of high-skilled jobs – and revitalise some of the poorest parts of our country.”
— ‘free ports’? Why aren’t they free now? Does he mean ‘free economic zones’, what for and with who?
“We will begin right away on working to change the tax rules to provide extra incentives to invest in capital and research. We will double down on our investment in R&D, we will accelerate the talks on those free trade deals”
— free trade deals with what countries? Cross out EU (major trading partner now), China (Jeremy Hunt just pissed off China over Hong Kong; major partner) and potential major partners such as Russia. What’s left is the US, and see above.
I am pretty sure that Boris Johnson is a fine statesman and understands the problems. But why should we care about any of this in the US?
There are policies that cannot be put in place inside the EU. Outside, they can as the EU then has no control.
These policies, implemented properly, can increase UK competitiveness.
A Global Digital Marketplace would be a great goal, not just EU.
Corp taxes < 15%.
Incentives for the City.
Zero tax industrial zones.
All help compensate for operation under WTO until such times as new trade deals are in place.
If we can survive and prosper under WTO we can work to improve upon that and implement UK specific policies to increase competitiveness that are not possible in the EU.
More than 7Bn people are not in the EU and EU share of global trade is shrinking. We can also help other countries develop by reducing/ removing food tariffs if sources meet necessary standards.
What’s so wrong with the ambition of wanting to be global and independent?
“If we can survive and prosper under WTO”
If.
Very possible. Tariffs have decreased over the years. Average food cost saving is reasonable under WTO when you look at tariffs imposed to protect EU farmers – damaging developing countries.
“tariffs imposed to protect EU farmers”
You mean like the British ones who enjoy being well-paid and not having to directly compete with ones in the “developing world” who can live on a couple of dollars a day? You mean THAT kind of damage? Oh, don’t worry. Pretty soon there won’t be any such British farmers, no matter how much money BoZo and Grees-Gunn promise to shovel at them.
There shouldn’t be. There are far too many living on distorting subsidies. Get rid of them all.
One example was the 15% added to protect Spanish orange growers who are unable to compete. UK flour processing has 3 main sites, post Brexit only one needed.
Major adaptations needed as
The world is back to the situation when countries organize in packs. It is dangerous out there all alone for a moderate size country in terms of population and economy. WTO is dead. English have learned much from the Dutch, and Dutch are doing relatively Ok within the EU — remain is solidly in control. It is tempting to speculate that psychologically English would rather be a junior ‘partner’ to the US than to Germany and France. So, England will join the US led pack and in time become a US colony, sort of like Athens turned members of its defense league in its tributaries.
“Corp taxes < 15%. Incentives for the City. Zero tax industrial zones.” — Tax reduction as an economic policy has bankrupted itself. Making what and selling to whom? England has become great not through ‘free market’ and tax incentives. It has become great by learning and implementing policies from others. Maybe it will happen again. Will see.
Implementing EU policies has not helped Southern Europe. The Euro an example. Perhaps we should look elsewhere.
“Implementing EU policies has not helped Southern Europe”
It certainly has. It is not the fault of the EU that certain countries spent like drunken sailors. But what’s saved each of them from an Argentina-level default is A) having a serious currency they can’t just devalue backing them and B) having partners who are more-or-less obliged to do what it takes to keep them from defaulting. Their populations are living meanly to do what real people always do when they overspend: PAY THEIR BILLS. But at least the vultures didn’t swoop in and take away their pensions, their infrastructure, and start charging them vast sums for their own water as typically happens when other countries default. They acted like children and they’re b!tching because the catcher in the rye kept them from running over the cliff. But their grandchildren are going to THANK GOD that’s what happened.
Internal deflation is forced upon them to avoid external deflation that’s a problem for Germany. These countries have a problem getting off their knees and have received little assistance.
Their grandchildren will not be in their country, having to migrate for work, and replaced by aging northern Europeans who retire there as everything is so cheap and internally deflated.
They have lost themselves.
“These countries have a problem getting off their knees and have received little assistance.”
The same thing happens in any large free trading area. Do you actually think people in Mississippi and Alabama are as well-off as people in California, Texas, and New York? But the same remedy is available to southern Europeans as southern Americans: your skills are portable. Take them to where the work is. That’s why the Four Freedoms are so crucial to the EU and why they are never going to compromise them just to give the British a softer landing for bailing out of the plane without a parachute.
“Their grandchildren will not be in their country, having to migrate for work”
Yes, they’ll be grateful in another country… just like my British grandparents’ grandson is. That people can move to become affluent isn’t a tragedy… it’s a triumph.
What you fail to realise is the commoditistion of labour for the benefit of capital and the erosion of culture. You probably wouldn’t know what culture is nor that most of the migration is of minimum wage labour.
People are not commodities.
There is likely a global recession and maybe global war in 2020. Whatever happens will be unpredictable from there.
No surprise if the issues are delayed for a few more years but with even bigger negative consequences as a result.
More of the same on steroids.
The only thing the EU has to offer its members is a financial dumpster fire. Take, take, take.
Yeah. The dumpster fire is in Britain, and its corporate offices and jobs are what’s already being taken, taken, taken…
Since the Fed balance sheet still shows $2 to $4 Trillion in excess reserves, is there any need for interbank lending in 2010?
Also, do all banks have excess reserves in 2019?
Is there any inter bank lending going on in 2019?
(I ask because I don’t know and I am not trying to make a point.)
Does anyone believe the Fed won’t backstop to whatever level of reserves it needs ? The numbers are meaningless because the system is in place to “do whatever is necessary”.