Monday, 27 June 2016

Whats happens next after Brexit vote?

After the momentous events of today my mind is in a whirl. I fear that unless I put into words how I feel about the Brexit vote I will have numerous sleepless nights! I hope you find my views balanced and interesting, please feel free to comment.

While writing this I will try and remain positive in my comments as the decision has been made and there is little to be gained from moaning about the result, it is what it is, but what’s now important is what happens now the decision has been made.

 I will attempt to cover the political, legal and economic issues that we now face over the next few years.

 Legally we now have to invoke Article 50 of the 2009 Lisbon Treaty. In doing this we effectively are giving the EU two years notice to negotiate an orderly exit. As it has never been invoked before then many believe the two-year timescale to be a rough guide.

However, this period can be extended or reduced but only with the consent of every one of the remaining 27 EU member states, which is highly unlikely as Spain has already indicated it will veto any extension. Some European leaders are saying we should start the process today. In reality it looks as though the process won’t start until a new PM is chosen by the Tory party.

Once the clock starts ticking that gives us two years to pass new legislation on a whole raft of policies that have previously been controlled by the EU. For example, there are virtually no UK laws on Immigration, Agriculture, Fishing, Employment rights and we need to decide which part of the laws we want to keep, dismiss or decide on new policy.

All these laws will have to pass through the normal channels of select committees, House of Commons and House of Lords, all of which can take months and months, if not years.
Put simply there isn't the time available to pass all these laws in the two-year time limit we have to leave the EU. We also cannot just take the EU laws we have now and substitute them as UK laws as all EU laws are written for all member states and bear no resemblance to how laws would be drafted in the UK.

This is just the tip of the iceberg. For an unbiased and greatly more informed view on this watch this you tube video.

Added to all this additional urgent legislation we will now have to negotiate new trade agreements with every country in the world we trade with. Many of the Leave campaign have pooh poohed this as scaremongering, but the harsh reality is that when we leave the EU we need trade agreements arranging with the EU, USA, China, India, Japan, Canada, and every other major economy in the world.

Each agreement will be unique and will require a huge amount of time and effort on the behalf of the government to achieve anything within two years.

Just ask the Canadians who have spent the last 5 years attempting to negotiate a trade agreement with the EU and still don't have an agreement in the pipeline!

Trying to negotiate a trade agreement with the EU will be a nightmare. Norway is often used as an example of a country who are not part of the EU but have a free trade agreement with the EU.

But the Norwegian’s trade agreement wont work in the UK, as their trade agreement with the EU works on the basis that they have to have free movement of labour from other EU countries as we have now. Something the Leave campaign was vehemently against claiming it leads to uncontrolled immigration.

If we don't negotiate any trade agreements, then we revert to the basic World Trade Organisation agreement. This basically means huge tariffs and taxes on what we export (and import). Exporters are right to be worried as without these agreements their goods and services will cost more.

So we have 100's of new laws to draft and pass through Parliament and negotiate 10's of trade agreements with our export markets. All in two years.

And that's before the political situation unravels. Cameron's resignation is only the start. There is going to be a huge lurch to the right in the next two years. The Leave Tories will gradually take control of the top political positions. Look at them all. Their politics are generally on the right of right.

Scotland will undoubtedly vote for Independence and ultimately leave the UK. (With the EU welcoming them with open arms).

This will create a larger majority for the Tories as the SNP have 56 MP's and Labour, Lib Dems & Tories virtually none in Scotland. Thus presenting the Tories with a windfall in the guise of a hugely increased majority.

This will co-incide with the time the new legislation I have discussed previously will be passing through Parliament.

Add to this a Labour Party in total and utter disarray the Tories will bulldoze umpteen Laws through parliament without any credible opposition. History shows when you have large unopposed majorities bad laws are created. The Poll Tax being a prime example.

I said previously I didn't want to discuss why the vote had gone to Leave, but I can't write this piece without discussing the totally inept performance of the Labour leadership throughout the campaign.

Time and time again I saw senior Tories share the stage with past Labour Premiers, Chancellors and other prominent Labour supporters. Not once did I see the Labour leadership share a platform with fellow Remain Tory MPs.

Corbyn's lack of passion and unwillingness to back anything to do with the Tory Remain MPs was disgraceful. Especially when so many other left wing politicians put their political differences aside. He reaps what he has sown and it's no wonder there are already rumblings about his ability as Leader of the Labour Party.

Earlier today someone commented to me that the country was in great shape when we joined the Common Market in 1975. It certainly wasn't.

We were recovering from 3-day weeks, power cuts, an oil crisis, inflation over 20%, similarly high interest rates and an economy in such a mess that we are still today, the only Western country to have to go cap in hand to the IMF for a loan. We were bust as a country in 1975.

In the 41 years a lot has changed, mostly for the better. We are still a sovereign country with our own parliament and own currency. We raise our own taxes and our sovereign government decides how they are spent.

Unemployment is low, and employment at all time high despite many jobs being lost because of EU policies of funding manufacturing elsewhere in the EU.

The £350 million a week we send to Europe is the grand total of 0.6% of government spending. From this payment we receive money back in various ways.

We have a (much maligned) Common Agricultural Policy which subsides farmers and keeps the price of basic foods low. Many parts of the UK have benefitted enormously from EU grants that have encouraged employment through supporting business and infrastructure projects, especially in economically deprived areas.

I am sure we would all want cheaper food and government funding for infrastructure project to continue, but there is a cost to this and it will come from the £350 million a week not going to Brussels.

Because of EU legislation employees have much safer working conditions through increased health & safety and The Working Time Directive. I believe our country is a far better place because of the EU not worse because of it.

My worry now, with the political lurch to the right inevitable, is how this £350 million a week will be spent. Right wing governments generally don't spend as much and are tax cutting and we will have a right wing government.

We will have significant extra costs to bear. For example, increasing protection to our own borders will incur huge extra costs.

The cost of all the new legislation and negotiating trade agreements will lead to an increase in the size of the Civil Service. In other words, the EU bureaucrat will be replaced by the UK bureaucrat, maybe not as many bureaucrats as the EU but a significant increase nonetheless.
Add all these extra costs to a potential for our exports to reduce because of a lack of trade agreements with our export markets and that £350 million a week soon disappears.

In 1975 we joined a Common Market. This meant we could trade freely with other countries in the Common Market without tariffs and taxes on our exports and imports. If the EU had stayed as a Common Market and not become a huge social experiment to try and become the United States of Europe we would not have had this referendum.

The EU has been characterised as this huge undemocratic bureaucracy wasting our money on vanity projects. I don't doubt for one minute this is the case. An example of this is the huge waste involved in moving the EU from Brussels to Strasboug for 4 days every month at a cost of £2 billion a year!
I hope the Brexit vote will make the EU politicians think carefully about how they see Europe in the future, with less legislation and more emphasis on a free trading market, but somehow I doubt it.

France is rumoured next to have a vote to leave. They will never vote to leave as they receive more in grants and funding than they contribute. They also have an additional problem in that they would have to negotiate their exit from the Euro. Something we thankfully don't have to do and is about the one thing Gordon Brown should be praised for during his time as Chancellor.

So after 41 years we are on our own again. Will Britain ever be Great again? Or is it already Great? Its probably a bit of both. There is so much to do in a short space of time.
Once Article 50 of the Lisbon Treaty is activated those two years we have to exit the EU will fly by. I worry that there is no-one capable of being the "New Captain of the Ship" as The PM described his successor said in his resignation speech today.

I hope someone steps up to this enormous task. I hope the Civil Service back our new leader up and do not hold up legislation and negotiations.

I hope our new leader does not encourage laws that create a more insular society with more hatred, bigotry and racism. Immigration and Islamic radicalism isn't suddenly going to disappear because of the Brexit vote. We also have the potential for the US to lurch towards protectionism if Trump becomes POTUS. I fear the world is about to become a more insular place with emphasis on looking after yourself and sodding your neighbour. There’s nothing wrong with that but its got to be balanced.
 I hope I am wrong. I really do. I think I have put into words my thoughts. It’s going to be an interesting few years and I hope we will come out of it stronger and more respected in the world.

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