The Consequences of Brexit

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I was away on holiday during the vote, I mean I go away for 3 weeks and you lot exit the EU, WTF! Oddly enough I was outside the EU in Norway, basking in land of milk and honey the leave camp promised us?…well actually no.

The Norwegians couldn’t understand why Britain left the EU. They have to pay to be a member of the EEA (one of them was moaning to me about its considerable costs) yet not gain any of the benefits of being an EU member. The main reason why Norway is not in the EU boils down to fisheries. Not because they fear EU regulations, actually they feel the EU doesn’t regulate fisheries enough.

But at least the Norwegians have control over their borders right? No! There are more migrants per capita in Norway than in the UK, about 25% more in fact and they are arriving at a much faster rate than in the UK (nearly 3 times higher per capita faster). At one point (keeping in mind I was in rural areas, small fishing villages, not major towns) I was on a bus, the driver was Chechen, there were several middle eastern gentlemen (who got off at a fish factory, where clearly they were working), quite a few Chinese (and with the prams and shopping bags, I’m guessing they were locals), some tourists like me and perhaps one or two actual Norwegians.

And Switzerland has double the number of migrants per capita that Norway has. The only EEA, non-EU country that has a lower number of migrants than the UK is Iceland (which is only marginally lower). Which probably has less to do with Iceland’s migration policy and everything to do with the name of your country including the word “Ice” in it (hence, migrants tend to give it a wide berth fearful they’ll freeze to death or be eaten by a polar bear). So unless the Brexiters are proposing to rename the UK “Icebergland” or “Monster Island”, its unlikely this will have any impact on migration.

And already a number of the predictions and warnings are starting to come true, the pound has plunged in value, the stock markets were down $2 trillion in just 48 hrs, trading in certain shares was actually suspended at one point. Inflation is likely to rise, food prices will go up and many of those retiree’s and people on low incomes who voted leave will soon themselves considerably worse off and baring the brunt of consequences (as predicted).

Immediately I felt this effect as it meant everything started becoming more expensive. Room’s I’d booked a few days earlier suddenly rose in price rapidly. It was like living in Zimbabwe. I was in a queue waiting to change the last of my Kronor’s in Oslo airport, reading the news when I saw the story about the UK being downgraded by all 3 of the major rating’s agencies, so when I was asked which currency I’d like my money back in I said euro’s, rather than pounds.

Dirty rotten scoundrels – Project Betrayal

On his way out the door Cameron said that the leave camp had a lot to live up to, by which he meant all the insane lies and promises they made prior to the vote. Well less than 24 hrs after the vote they were breaking every single promise made. Apparently they never promised the NHS £350 million a week, despite driving around on a bus with that written on it.

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Nor indeed will there be any changes to immigration law, because there’s no proof anyone voted leave due to fears over….despite the leave camp stirring up racial hatred for months (to the point where an MP got murdered). After all if Britain applies such restrictions to other EU states, they’d reply by doing the same to Britain in turn (which would lead to many ex-pats from the UK being forced to return home, and millions of them coming back in all at once would make any current issues regarding migrations seem pretty small).

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And fishermen have been warned to expect no increases in allowed catches. Indeed, the experts have been warning of over fishing for years, post-Brexit the expert advise would probably by for a complete halt to all fishing in UK waters for a few years.

To EEA or not to EEA?

The crucial question the markets are asking is whether or not the UK will now go for a “Norway model” of EEA membership. This would give the UK access to the single European market and involve the least amount of disruption to the economy.

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However, as noted earlier this represents pretty poor value for money. The UK would still essentially have to pay the EU for the privilege (Norway pays 83% of what we pay now), most of those pesky EU laws the leave camp were hammering on about would remain in place, only now the UK gets no say in any future changes to said laws (our EU parliament members are essentially replaced by fax machine in Whitehall through which future EU dictates will be received and implemented with question). And crucially there will have to be a commitment to free movement of people, the Germans have been pretty clear about that one.

The only reason Norway and Iceland accept these terms (rather than just go the whole hog and join the EU) is because of issues regarding fisheries (as noted), while the Swiss worry about the EU trying to arrest all its bankers and money launderers, if they became a member. So these countries accept these conditions for very specific reasons.

Yes there will be some changes. Much like other EEA countries, EU citizens coming over will have to fill in a few forms, it becomes a bit easier to deny them benefits (until they start working and paying taxes of course). But once they’ve been here long enough it will make no difference in real terms, just more bureaucracy (which of course UK tax payers will be paying for of course). The likelihood is that the result will be (as noted) no decrease in migration. Indeed in certain scenarios it could lead to an increase in migration, as minorities in the EU who currently can’t apply for asylum in the UK will gain that right.

The UK will also be able to pick and chose to keep certain elements of legislation its adopted from the EU. And the main two areas where they will be able to effect change are employment law and the environment. In short, its likely the Tories will now gut employment laws and remove many of the rights and protections that workers, particularly low income workers. have long relied on. By voting for Brexit they have now voted to remove the laws that say, stops you being fired by your boss just because you got sick or insisted on wearing a safety harness to stop you falling to your death. And forget about asking for Christmas day off to be with your family, or for overtime pay.

As for the environment, its now likely the laws here will also be gutted. Its now questionable, if not very improbable that the UK will remain committed to its the promises made during the Paris climate conference. Siemens has already announced it is freezing all wind farm development in the UK. Its also been warned that the £20 billion in new energy infrastructure the UK now needs to keep the lights on may not be build in time. Warnings have also been raised about further delays or a cancellation of Hinkley C.

Rise of UKIP?

Now while the markets, private industry and quite a few in the Tory party are quite happy to push back from the table and take EEA membership as the least worse option, this is very different from the milk and honey” promises made during the referendum. Of the leave camp people, I can count using my thumbs the number who voted leave for reason other than immigration. Many of the Brexit voters, once they realise they’ve been conned on a massive scale, will probably not accept those terms and probably drive for something else. Of course they won’t get it, but they’ll try. As Paul Mason puts it:

What happens when the investment banks move to Frankfurt, the carmakers to Hungary, the offshore finance wizards to Dublin, the tech companies to newly independent Scotland? What happens when, instead of Poles, it is poor white English people herded into the polytunnels of Kent to pick strawberries for union-busting gangmasters?”

But if the Tories think they’ve killed off UKIP, think again. My guess is that whoever emerges from the Tory leadership contest will go to the EU, sign away Britain’s sovereignty in exchange for EEA access, leave the country worse off than it was before. There will be (as noted) no specific immigration restrictions.

UKIP will ignore the reasoning behind this (reason and logic aren’t exactly their strong points) and they will respond to this complete betrayal of every promise made during the referendum by campaigning at the next election on a platform for tearing up any EEA agreement and “shutting the border”. They’ll promise a points system (which as I’ve discussed before, won’t work and ignores certain fundamental facts such as the fact that Canada or Australia don’t apply their points system to their immediate neighbours), and much other silliness. Inevitably they’ll pick up some significant portion of the leave vote and likely split the Tory vote.

In essence all Cameron will have done is guarantee that his warring party will now struggle to ever get a majority in future. They will only ever be able to form coalition governments with either the lib dem’s, labour, or if desperate UKIP.

Labour unity?

Now is the time for labour to take advantage of the political chaos in the Tory party, rise above events and cease the moment…..if they weren’t at war with themselves! Okay, Corbyn could have been a bit more active during the referendum campaign, but to blame him for Brexit is simply not fair. The blame lies squarely with Cameron. Like everything else he screwed it up, holding it at a time of year when the turnout from young voters would be low (as they won’t be at term time addresses, or working, or at Glastonbury) and millions of Brits abroad or EU citizens who’ve lived here all of their lives were excluded from the vote.

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But such is the labour party’s hatred for their own leader, he can’t do anything right. If he rescued a baby from a burning building, half his team would quit on grounds that he was anti-fire, mocking man’s greatest invention while taking jobs away from hard working firemen.

A labour leadership battle now could not be more ill-timed. And the balance of probability is, either Corbyn will emerge victorious (once the party faithful have another vote) or someone else from the hard left of the party will take over in his place. Granted, labour’s changes at the next election are better with a centrist in charge, but a leaderless, warring labour party has no chance.

Scotland?

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As expected, the SNP have suggested a 2nd referendum on Scottish independence is now very likely. 63% of Scot’s voted to stay in the EU, in parts of Edinburgh, the remain vote was as high as 78%. And as also expected, opinion polls are starting to show a lead for independence. A recent poll post-EU referendum suggests a whopping 27% lead to independence, although previous polls suggest a smaller lead.

It would make sense for the SNP to delay any independence vote for as long as possible. Let the economic bad news build, let more of the leave camp realise that they’ve been betrayed and conned by the Tory party, then when the country is nice and angry, call the referendum. While I was minded to support independence last time (but critical of the SNP), but I guessed it probably won’t pass. This time., I’m not so sure. Like I said, it will boil down to timing.

And Sturgeon shows every sign of playing it cool this time. She’s been in talks with Gibraltar, Northern Ireland and even the London mayor about some sort of plan to keep these regions in the EU, but perhaps still in the UK. I’m not entirely sure how that would work, but by going through the motions she can claim that she at least tried.

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She’s also talking to the EU directly (having already been in talks with the Irish) and will be meeting with the EU president shortly. And some of the murmurs coming out of Brussels suggest she made find a sympathetic ear.

If Scotland can get some sort of deal from the EU, either an option to leave the UK and stay in the EU (unlikely, but worth a shot), or some sort of fast track framework to EU membership (keep in mind, leaving the UK will take a few years anyway) then that could dramatically change the outcome of any 2nd Independence referendum. A narrow chance of a Yes suddenly becomes a near certainty.

Currency is an issue too, as it was a key factor last time. I would hope this time the SNP have the sense not to propose keeping the pound, which is falling in value and probably not a very safe bet. Some sort of “Denmark model” for a future Scottish pound is a possibility. It would be pegged to the euro initially (until an independent Scotland is able to find its own feet), then later allowed to float more freely. This would be a much more sellable option that all the if’s and possibly maybe’s from last time.

In short, by England voting for Brexit an independent Scotland looks a lot more likely.

United Ireland?

And in Northern Ireland too, Sinn Fein are already seeking a border poll on uniting the Island. Of all the regions in the UK, Northern Ireland will suffer the worst from Brexit. They have to compete against a Republic of Ireland where taxes are lower, our GDP is higher (so people have more money to spend), we have better infrastructure, more third level graduates, access to the eurozone and now post-Brexit the single market too. Ask yourself if you were setting up a company on the Island of Ireland, which side of the border would you set up in?

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Its worth keeping in mind that Brexit puts the northern Ireland peace process under threat. The lack of border controls, means any attempt to impose any kind of immigration restrictions on EU citizens in the UK will be impossible. All a Polish guy will need to do is get a cheap Ryanair ticket to Dublin, hop on a bus (there are buses direct from the airport) and he’ll be driven straight to Belfast city centre.

Any sort of tariff’s will result in smuggling, which means more money going towards terrorist groups up in the North (this was sort of the whole point in doing away with border controls, eliminate a key flash point!). Putting border controls at northern Ireland ports would be unprecedented (and probably unworkable given the shear volume of traffic they handle). I know of no other country that has border posts within its own national boundaries. They effects on the Northern Irish trade would be considerable, and inevitably drive more towards voting for a united Island.

So the Good Friday agreement will have to be renegotiated and you can bet what Sinn Fein’s demands will now be. Certainly opinion polls, all taken prior to the EU vote I might add, do suggest no appetite for a united Ireland. Even among Northern Ireland Catholic’s its questionable if you’d get a majority. However, I suspect that given time this will change.

It is often forgotten that the silent majority of Northern Irish people are neither strongly unionist, nor republican. They just want to get along and keep their job. Naturally if this majority now start losing jobs, start see their mortgages and living costs rising, then those poll numbers will start to shift and eventually you will probably find that a majority voting for a united Ireland isn’t that unlikely.

Interestingly there’s been a huge rush for Irish passports since Brexit. Being Irish (which fortunately I am) is a sort of post-Brexit hack. You have all the rights of British citizenship, but are also an EU citizen. The Irish passport office is starting to complain about the shear volume it now needs to process. Potentially 6 million in the UK could apply (that’s nearly 10% of the population!).

Certainly one has to say, as I’ve been saying for years, a UK outside of the EU might well mean an end to the UK. Hence why UKIP should really call themselves the UK destruction party.

Indeed, a complete break up of the UK isn’t that unlikely. I don’t think it will happen soon, but it may well now be a medium term inevitability. One could argue that the UK is a pact based on the understanding that the England will not allow overt English nationalism to do anything that would harm the interests of the non-English minorities within the UK. If you take the view that that contract was just torn up on the 23rd, then the pact that has allowed the UK to exist is broken and its very possible the different parts of the UK will eventually go their separate ways.

I mean, even some in London are talking about independence from the rest of the country now!

Economic fallout

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As noted there’s been turmoil on the markets the last few days. And while there’s been something a a rally (which I’d put down to news that Teresa May seems more likely to success Cameron than Boris!), one can expect this to be temporary. With every drip of bad news the markets will gradually drop that little bit further. Already many companies have put in place a hiring freeze, my uni’s already done so, were expecting an announcement as to whether a spending freeze will also now come in.

Obviously a slow down in the economy will produce a bear market, falling stock prices, rising inflation, wages frozen yet the cost of living going up and falling tax revenue. While Osborne has backtracked for now on a post-referendum emergency budget, its difficult to see how some changes won’t be needed.

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The trouble is Osborne’s already pulled all of the Austerity levers he can. His options now are to either go after areas where he hasn’t cut substantially which is basically those things that benefit pensioners, raise taxes (fat chance of that!) or pull the one lever he hasn’t tried yet – the compulsory enforced retirement of public sector workers above the age of say, 60 (some countries have gone to this extreme already as part of their austerity). And before the many Brexiters who are in this age group start whining about how he can’t do that, why we have rights….oh you mean those rights in EU law you just voted against?

Half a million civil service are believed to be at risk. Bottom line, if you thought things were bad before they are about to get worse and its generally been those who voted for Brexit who will feel the pinch.

The generational gap

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Which brings us to the issue that there was a large generational gap in voting patterns. The old disproportionately voted for Brexit, while the young voted to stay in. Had the turn out of young people been higher (as it would have been had Cameron held the referendum at another time of year) the result could have been different.

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Some have likened this to a generational betrayal. As Jack Lennard puts it:

“This is a final middle-fingered salute to the young from the baby boomer generation. Not content with racking up insurmountable debt, not content with destroying any hopes of sustainable property prices or stable career paths, not content with enjoying the benefits of free education and generous pension schemes before burning down the ladder they climbed up, the baby boomers have given one last turd on the doorstep of the younger generation”

Or as Nicholas Barrett puts it:

“the younger generation has lost the right to live and work in 27 other countries. We will never know the full extent of the lost opportunities, friendships, marriages and experiences we will be denied. Freedom of movement was taken away by our parents, uncles, and grandparents in a parting blow to a generation that was already drowning in the debts of our predecessors”

Many of the younger generation are now stuck with the reality that Brexit will make it harder for them to get a job and harder to get on the property ladder (yes house prices might fall, but if you can’t get a mortgage or a job to pay for it, what difference does that make!). Inter-generational betrayal could well lead to anger and eventually inter-generational revenge (a scenario, a BBC “if” episode looked into a few years back, where the younger generation rebelled against the generous deal pensioners are getting and voted in politicians who withdrew many of these benefits).

Hence why if the government were to exercise the options I mentioned earlier (gut pensions, withdraw winter fuel payments and free TV licenses, force older workers into retirement) I don’t think there will be a lot of sympathy from the younger generations. And when pensioners start to struggle because a jump in inflation and a bear market has suddenly made it harder to fund their retirement, I suspect many will say, you made your bed now lie in it.

In short anyone of pension age, or approaching it (and you might be retiring a little earlier now than you thought!) who voted for Brexit has just voted for a more scary and unpredictable financial future.

Anti-Intellectualism and racism

We now live in a post-facts era. In the referendum campaign, many facts and certainties (i.e. that the £350 million a week claim was rubbish, that the pound would fall in value, that the UK’s credit rating would be cut, etc.) were simply ignored by leave voters, in favour of lies, myths and half baked bullshit. It is, as Dana Nuccitelli points out, not really surprising to learn that many Brexit voters also happen to be climate change deniers.

So Brexit does suggest the sort of rising anti-intellectualism that we’ve been seeing in America has now spread to the UK. Given how crucial science is to the UK economy, this is a very worrying development. Quite apart from the fact that UK universities and tech companies are highly dependant on EU research funding (as well as access to the EEA for collaborative research purposes), this could well represent a slide backwards for the UK. One could see the UK falling behind in the science race, which will of course eventually have a devastate economic effect on the country.

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And one of the post-referendum effects seems to be that its now okay to be openly racist in the UK. Many ethnic minorities have complained about an upsurge in racist abuse. Least we forget an MP was killed during the campaign. Unfortunately, I don’t think this will prove to be an isolated incident.

And coincidently, the view from abroad isn’t good. Many in the hostel’s in Norway whom I met from around the world took this referendum as being essentially an opinion poll on how racist Britain is. Given that 52% on a turn out of 70% voted leave, some are interpreting this as saying that 37% of British are racists. Britain’s reputation in the world has taken a severe beating as a result.

It worth watching what some of the US media are making of this, here’s Samatha Bea’s take on Brexit, the Daily Show’s and John Oliver’s.

Will German’s still buying Mini’s or Indians buy Jaguar cars they know to have been built by bigots? Will Beefeater Gin (which was being heavily marketed in Sweden while I was there) still be touting their Britishness when most people associate Britain with racism and bigotry? And will high tech firms set up in a country where their ethnic minority workers face racial harassment on the streets and bureaucratic racism from the state just because they had the nerve to come here and push money into the UK economy?

UK Trumped

Donald Trump, who showed all his keen political skills by arriving in the country at the worst possible time. It was a bit like a fan of KISS showing up to a concert the day after when a Baptist prayer group were renting the hall.

Trump did make some noises that he favoured Brexit and would offer the UK a favourable trade deal. Fat chance of that, Trump after all has flip-flopped his way through this whole campaign.

Trump is very much a protectionist and the idea that he would offer the UK a deal that will put his own business and the jobs of those voting for him at a disadvantage is clearly not going to happen. Once all of this is pointed out to him, he’d likely drag his feet on any deal and demand lots of concession, which (given how desperate the UK will be to get a deal) Westminster will have to concede on. He’ll probably insist on Windsor castle being named the Trump palace and putting a golf course across the tops of the cliff’s of Dover.

The UK’s best hope is that Clinton wins and wins big, with her party gaining a majority in Congress. This will cause her to focus on domestic politics and she’ll be anxious to avoid distractions. So she’ll toss the Brit’s a bone and perhaps given in on a few points. However anyone thinking that 60 million can get a better deal from 300 million Americans, than 450 million Europeans can get is clearly living in cloud cuckoo land.

And the UK will also now have to negotiate trade deals with other countries too, Japan, China, India, etc. In all cases they have the UK over a barrel. As noted, already there’s talk of Hinkley C being cancelled because of Brexit and of major infrastructure projects being put off as it is. Many UK jobs are dependant on foreign firms (increasingly owned by Asia) remaining in the UK. So its inevitable that the UK will not get anything like the deal it currently gets from these countries by being in the EU.

Indeed, its the WTO the UK first needs to square the circle with. Technically the UK will now have to join the WTO and its chief has already warned that’s not going to be straight forward, getting more difficult the further the UK drifts from a EEA style Norway model. Without WTO membership foreign trade becomes increasingly difficult.

A second vote?

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All of these things explains why several million have signed a petition calling for a 2nd vote. Already several Tories have suggested that there should be a 2nd referendum on the terms of any exit deal, while the lib dem leader is promising to try and stop Brexit and if that doesn’t work campaign on a platform of taking the UK back into the EU.

All of this raises the possibility of a 2nd EU referendum. Which given how dangerously flawed the last one was, its hardly fair that a racist minority (i.e. 37% of the electorate) should be allowed to cause so much damage to the lives of the remaining majority. However there is a rather significant obstacle to any talk of a 2nd vote. The EU itself.

As far as the EU is concerned out means out, as Junker has made very clear. Any idea of informal talks is being denied and the EU is putting increasing pressure on the UK to invoke article 50 and start the ball rolling on its EU exit. Quite simply put, the EU is fed up with pandering to the Brits, you’ve decided to leave, fine piss off then and don’t let the door hit you on the way out.

And keep in mind some eurocrats in Brussels have long favoured some sort of arrangement that demotes the UK to 2nd class status within the EU, so a push towards EEA membership is probably the next least worse option as they see it.

Also by shuffling Britain towards the exit door, the EU knows it makes it more likely that they will get an agreement favourable to them. The UK will have two years to negotiate its exit or risk being chucked out without any agreement, likely provoking a full blown economic crises and mass capital flight (if you thought events on Friday were bad, wait a while). As I pointed out before a future UK PM will come under enormous pressure at this point from the civil service, business, the military and allies to sign any such deal put in front of them by the EU, even if it ultimately leaves the UK worse off that it already is. So Brussels strategy here is sound.

So even in the best case scenario, e.g. the Tory party splits, an early election which a labour and lib dem coalition wins. Along with the pro-EU elements of the Tory party they hold an immediate 2nd referendum and win; I would still expect the EU to insist that the UK need to renegotiate its membership. This means that all of those “reforms” Cameron got will go (they were only there to appease the bigot brigade, which clearly didn’t work, so no point in keeping them) as will likely things like the British rebate. Of course if they are feeling particularly uncharitable they may insist the UK must now accept entry to the EU under the same terms and conditions of a new EU member state (i.e. all of the UK’s opt outs will go, we have to commit to joining the euro, etc.).

In short the UK just said no to the best deal we were ever going to get from Brussels. Any attempt to dither about leaving or re-enter the EU will mean accepting an agreement which leaves the UK worse off than it was before. There is basically no going back from this. If your a regret full leave voter, then your a moron and and idiot, do me a favour and stay away from ballot boxes.

Ignore it?

Another option is that parliament simply ignores the referendum. In theory its not legally binding, both houses (and arguably the Northern Ireland, Welsh and Scottish assemblies) have to approve it and its probable at least one of those will say no (actually all would vote no if given a free vote). In short, Parliament could treat this referendum as if someone just chucked a dead cat in their yard, get a shovel and throw it back over the fence.

However, I don’t think that’s a realistic option politically, nor do I think the EU, nor the markets would except this without some form of 2nd referendum or an early election.

The positives?

Which brings me to at least the one set of positives we can salvage from all of this. Brexit marks probably the end to all of the right’s lies and myths. Like a serial killer they’ve finally managed to act out their twisted fantasy and are now stuck with the consequences of that.

And the consequences are the buck stops here. Pretty much everything bad that happens over the next few years will be blamed (rightly or wrongly) on Brexit. Can’t get a job, or you’ve just lost the one you had, guess who’s fault that is? Not foreigners, not migrants or the EU, but the people like you who voted for Brexit! Your company can’t export overseas anymore because of a loss of free trade deals with the China and the US, guess whose to blame for that one? Your benefits cheque just got cut and you’re in dire financial straits, well you shouldn’t have voted leave then! You’re a pensioner and now can’t afford to heat your home or buy food anymore, well guess whose fault that is? Going abroad is now a pain in the ass because of all the passport controls and red tape, well I suppose you shouldn’t have voted for Brexit should you!

In essence Brexit amounts to the Bigot brigade breaking cover. And out in the open they are now exposed to certain day to day realities in a way they’ve previously managed to avoid. Because unfortunately reality has something of a pro-liberal and pro-progressive bias.

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3 thoughts on “The Consequences of Brexit

  1. Pingback: EU citizens, or British ones, are not Tory pawns | daryanblog

  2. Pingback: The beast that will not die | daryanenergyblog

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