Vote Leave Reality
https://twitter.com/theobertram/status/1154277075332804608
Johnson Will Deliver Brexit
Eurointelligence has finally come around to my long-held four-point stance.
- Boris Johnson is not bluffing.
- He will deliver Brexit.
- The EU would be wise to make a deal.
- Germany and the Eurozone will be in a world of hurt if they don’t.
From Eurointelligence
Forget the cabinet reshuffle. The one single appointment we take very seriously is that of Dominic Cummings. The head of the Vote Leave campaign has been given the position of special adviser to the PM, with responsibility for Brexit and the civil service. He is essentially the CEO of Number 10, Downing Street.
Cummings has been immortalised by the Cumberbatch movie The Uncivil War, in which he was portrayed as the mastermind behind the Vote Leave victory. We rate him as probably the smartest political operator in the UK right now, somebody who often works outside the policy consensus. He was the first campaign manager to use modern Big Data methods in political polling and campaigning. His elevation underlines our expectation that Boris Johnson will do his utmost to deliver Brexit by the end of October. And that he is getting ready for an election at some point in the autumn.
We don’t know what Cummings is plotting, but we do know that this a guy who is gaming the scenarios in a way that Theresa May’s people didn’t. And we know that he will be operating from different data sets than those of most pollsters.
The strategy will be to take the negotiations with the EU to the brink, and then either agree a deal at the last minute or walk away. We have argued from the beginning that the UK parliament massively overestimates its own role in being able to micro-manage the stages of the Art. 50 process. Its ability to force an extension is far more limited than is widely acknowledged in the UK. A no-deal Brexit will be a consequence of the EU not agreeing to a deal, or of the UK parliament not voting in favour of a deal that Johnson presents. At no point will he advocate no deal himself. All he needs to do is not to seek an extension.
This is a dynamic process. MPs will think twice before openly rebelling against Johnson if only because the result of any rebellion is highly uncertain. We suspect that the much-predicted Tory rebellion of 10-20 MPs voting against the government in a no-confidence motion is going to wither – especially once Remain MPs start to think it through, which they have not done yet.
Key Points
- Rise of Dominic Cummings
- UK parliament massively overestimates its own role in being able to micro-manage the stages of the Art. 50 process.
- Johnson is getting ready for an election at some point in the autumn.
Who is Dominic Cummings?
To better understand the role of Dominic Cummings and his role to date, please consider Who is Dominic Cummings and was he really responsible for Brexit?
Boris Johnson has caused a major stir with his one of his first appointments as the new Conservative leader, after asking the highly controversial “mastermind of Brexit” to be his senior adviser in government.
Cummings is seen by many as the evil genius who delivered Brexit, a role that became the basis of Channel 4 drama The Uncivil War about the referendum campaign. To others, he is a brilliant thinker with a record of driving through radical policy changes.
Cummings was the brains behind the notorious “£350m-a-week for the NHS” claim emblazoned on bright red buses, despite it being proven to be false, and the winning “take back control” slogan.
As the head of Vote Leave, he also made a show of refusing to work with Brexit bad boys Nigel Farage and Arron Banks – while admitting his campaign relied on their toxic anti-immigration messages.
Intriguingly, just one year after the referendum that turned Britain on its head, he was branding it a “dumb idea” and admitting that future generations might well view leaving the EU as “an error”.
Cummings was found in contempt of parliament in 2018 after MPs said he had refused to appear in part of a Commons committee to give evidence about Vote Leave campaign as part of an investigation into fake news.
With that explanation out of the way, let’s return to my four-point stance.
It’s not that Euroiintelligence ever strongly disagreed with any of my points.
Rather, Eurointelligence wavered greatly and never strongly endorsed that set of viewpoints until now.
In addition, there is one more point below that is a huge change in their stance.
What Should the EU Do?
It is no secret that Boris Johnson is held in contempt by the chancelleries of Europe. But, whatever EU leaders think of him personally, they will soon be confronted with a formal request to re-open negotiations on the withdrawal treaty.
EU unity has held up extraordinarily well during the entire Brexit negotiations, but this is because the EU was confronted by a weak negotiator. Olly Robbins gave the game away when he said that either the Commons would vote for the treaty, or Brexit would be postponed for a long time. From the EU’s perspective, this was a game of head-I-win, tails-you-lose.
But, when confronted with a partner willing to accept a no-deal Brexit, the situation changes. The EU will need to consider, for the first time in earnest, the political dynamics in the European Council in the days and hours before a no-deal Brexit. Are they really prepared for it as they say? Politically and technically?
We don’t think so. The German media has spent the last two years in denial that Brexit is happening, focusing much of its reporting on the second-referendum campaign. Lately they switched to portraying Johnson as a buffoon or, in the case of Spiegel, as a madman. But what will happen once they realise that Germany is about to face tariffs in the two largest export markets for its cars, the US and the UK? We think that complacency will turn to panic overnight, as it so often does in European politics. The EU will need a strategy to deal with the Johnson administration. EU leaders will need to explore among themselves how far they will go in opening up the discussion on the Irish backstop. And they will need a no-deal strategy that goes beyond the regulatory preparations of the European Commission.
“We Don’t Think So”
Eurointelligence fully expected Theresa May would deliver her pathetic deal. I didn’t.
But what is most striking is this Q&A:
Q: Are they [the EU] really prepared for it as they say? Politically and technically?
A: We think that complacency will turn to panic overnight, as it so often does in European politics.
Complacency Will Turn to Panic
A prediction of “panic” is one heck of a change in stance from a publication that repeated at every turn the EU would never make any changes or even consider them.
And perhaps the EU won’t. But the EU will hold serious closed door discussions despite what they say they will do.
And that has been my position from the moment Theresa May was outed.
EU in Recession
Germany is in recession right now. That’s my call but it is a minority view.
By October 31, the entire Eurozone is likely to be in recession.
To understand recession chances and the potential for EU panic, please see US, Germany, Japan in Manufacturing Recessions: Full-Blown Recessions Coming Up.
Pretending Period is Over
The pretending period is now over.
Johnson will deliver Brexit. And there is not a damn thing the UK parliament can do about it.
Trigger elections? So what?
Labour leader Jeremy Corbyn threatens trigger elections via a motion of no confidence. But he doesn’t have the votes or her would have done so already.
Johnson is likely to call for elections himself. For details, please see Early Elections Coming, But How Early?
I am sticking with my assessment that Johnson or Parliament will trigger elections in September and they will be held shortly after Brexit is delivered.
October 31, a Thursday, would be fitting. But I opt for November 7 as the most likely date.
Mike “Mish” Shedlock
ECB money printing will end up stimulating the UK as long as the BOE doesn’t print at a faster rate.
Mish
Please tell me what is the use of a WTO Brexit that excludes Services?
Something changed after G20 meeting. I don’t know if good or bad but Macron later talked of France as an independent global power – a model the UK would like.
Interesting he said that as NO WAY is that EU speak.
Why did that change?
Didn’t he say Brexit was making it look like the EU had failed – I think this relates to the case if if the UK is seen to prosper post-Brexit?
God willing, the UK can be independent and prosper.
Please wish us well, the end is near.
Post Brexit, when in rear view mirror, the problem will be keeping the pound down.
Yes recession both but absolutely backward
EU will suffer more – guaranteed
This is not even close
EU will be a disaster
You are dreaming but time will tell. BTW UK exports twice as much to the US as it imports. Tell me do you think Trump will reach a trade deal that is actually better for the UK? Do you know that %8 of the UK economy is services? BTW you are as wrong on this as you were in Catalonia gaining independence. BTW UK imports %53 from the EU add tariffs to those and you are looking at Armageddon of the UK consumer.
A crashing pound means they will export even more.
To who? I can just see Trump putting up tariffs because you know currency manipulation. Any delusional person who think that the UK is in a stronger position negotiating one on one with the US is sadly mistaken. The UK will be beaten into US submission by Trump. Your master will be the US instead of the EU.
You do understand that flinging names and other ad homonym attacks on us is not helping you get your points across right?
The EU is a house of cards, an evil construct that SHOULD go under, some of the things that Europe has done have been great, I like the Schengen Agreement and mutual defense (though if I had russia for a nearby land neighbor I think I would be willing to spend more on it) but, the EU is risking foolishly any cohesion when they act tough with GB. It is just as much the fault of Brussels that GB is leaving as it is the English. And ditto Johnson is risking the union of the UK if he thinks a no deal Brexit is preferable, or even advisable, I think that was the substantial reason May looked weak, she was not willing to risk the dissolution of the UK on the alter of Brexit.
It may well be that the people of Northern Ireland would prefer reunification with the republic rather than be taken out of the EU by Brexiteers complete with hard borders now that they have got used to an open border. It has brought prosperity to Ulster they have not known maybe ever. And most think Scotland was bluffing about another referendum on leaving the UK for the finer welfare pastures of the EU. Add to that a sentiment of independence in Barcelona, Italy, the gross unhappiness in Greece, the willful disregard of EU norms in Hungary and Poland.
No, running a nation by bankers and central bankers will not work, the Parliament is a waste of electricity to keep the lights on, they get nothing of value done, the EU might have bureaucrats in Brussels seeing to some of the details but the governance of the EU comes from the ECB and it is evil.
“You do understand that flinging names and other ad homonym attacks on us is not helping you get your points across right?“
Not sure about that. It got Trump elected..
BTW which first world country is not run by bankers?
BTW The Catalans wanted independence from Spain not the EU.
My point is that so far no one in favor of hard Brexit has articulated a road map.
Like feel in the blanks
A. Hard Brexit
Z. UK is living in economic Nirvana
Can Mish or any here please fill in the blanks between A to Z?
To me hard Brexit will clobber the people. Let me give you an example.
You want to go to the moon and back. Do you rather have a very methodical plan that takes longer or will you prefer just board the rocket and say all engines go?
The reality is that Brexit is a very complex issue. You can ignore the complexity and do a hard Brexit or bite the bullet and do a negotiated transition. Which one do you think kills the astronaut ?
You forget displacement. Just agricultural displacement will be a boost to developing countries and lower UK food costs. Just one example.
The EU has been bad for developing countries reliant on agriculture to help them climb out of poverty.
Mish,
2.Canada, South Korea, Japan, Mercosur- India soon to follow now that it looks like the UK’s dead hand will be removed from the negotiations. Do keep up Mish.
5.Divided by 27 the UK contribution is chump change. The 39b is to be divided over 30 years, again chump change.
6The UK fishing industry employs 12,000 people. It exports almost exclusively to the EU. EU tariffs will destroy the UK fishing industry.
The £ has been falling against major currencies for three years. This depreciation has had little or no effect on the UK’s export performance. Any further depreciation due to a no deal will only increase price inflation.
Don’t agree or disagree with most of your points, none of us has a crystal ball. But, I like fish and wish I could afford a lot more of it, with the pound dropping they will be able to export more, what they do not sell in the EU they can sell to me. 🙂
And I disagree that the pound has been falling for 3 years, it has fluctuated range bound, look at a 3 year chart, it is a very well delineated head and shoulders pattern. $1.32 on July 29, 2016. Rose to $1.42 April 2018. It has fluctuated between $1.32 and $1.25 all year. That is hardly enough to change international trade patterns. However, if it drops to $1.10 and stays between 1.10 and 1.20 a lot more of their products will become a lot more attractive. When Trump says he is thinking about trade tariffs on EU autos that should scare the living crap out of Draghi/Legarde because with the Euro at $1.30+ their stuff is already too expensive in the US. I would probably have to consider trading my BMW for an American car because repairs and parts are ready just insane. $76 for new windshield wipers for example.
GB is going to have a rough time after Brexit, but I think the EU is going to have a much worse time of it than they predict as well.
Avid.
They are progressing because of Brexit that showed EU stuck in past. They are also deflationary so interesting to see what happens also also encourage multi-nationals to set-up outside EU.
Study it. No deal will be a disaster for EU banks. EU was reminded of this about 8 weeks ago by banking authorities and now work ongoing to make sure they understand it’s a ticking time bomb. They have deliberately played this down and ignored. It’s a massive global systemic risk.
The EU will be to blame for GFC MK2 that starts Nov 1st. Remember this.
Brexit, perhaps a disaster but your posts are massively imbalanced.
Another point.
UK hs been losing manufacturing to Eastern Europe. Hence forward UK can implement policies that discriminate toward UK manufacture.
Complete Brexit could work, partial won’t. UK model probably to change including reform of House of Lords, BBC, Civil Service etc. Major shake-ups post election if Tories win under Johnsson.
As for inflation – wasnt 2% a target. GBP will rise over time post Brexit – watch.
There will be a need to manage exchange rate – trying to keep it down.
As a small % of global trade UK will be more free to implement independent policies. The EU is heading for massive deflation ala Japan on steroids.
Demographics, new trade deals bringing down import prices on finished goods etc.
What surprised me was what looked like the small benefit to EU on Japan trade deal (luxury goods and food) vs potential massive downside on manufactured goods? Japan was a big winner. Why did the EU do that? Same for Singpore? Brexit forced it and EU downside looks larger than upside, at least to me.
“A: We think that complacency will turn to panic overnight, as it so often does in European politics.”
…
As well it should. The EU will end up with the short end of the stick, economically.
Giving others considering skedaddling courage/blueprint.
Go Brexit!
No one else likely to leave. It’s not easy and the others have all lived under Nzis occupation, fascism or communism. They know no different.
If the UK does well (at least better than EU) with Brexit, I can see others splitting cough Italy cough.
I can see where you are coming from but Italy is hamstrung by having even tighter institutional integration with the EU than the UK does via the Euro.
It’s too late for the founders. They are tied to the mast.
If Italy did break away we should welcome them and help where we can. A potentially useful ally.
If EU is in a recession by October do you actually think the UK will be in a better shape?
My prediction is if there is a hard Brexit the EU will indeed go into a recession. The UK will go into a deep recession several times over.
You may be right but if EU ran to have a trade deal with others, after a few years, why not UK?
UK was employer of last resort for some time as unemployment rocketed elsewhere in EU. Granted, hard times ahead but what happens when the employer of last resort is no longer available? More political backlash in EU and Eastern Europe? Where is there an escape valve?
At the same time major EU economies hit recession, more zombie corps, even higher pension and fiscal deficits.
Boring little GB can implement it’s own policies under it’s own currency for itself.
“The UK will go into a deep recession several times over.”
You sound like Paul Krugman saying the market would crash and never recover, if Trump is elected. Instead, the market soared.