Why the Britannia’s not coming back….nor the Empire!

the-royal-yacht-britannia-in-1960-136397590004503901-150416125808

The Britannia….where the queen would wine and dine blood thirsty dictators so the UK could sell them weapons

Liam Fox, Boris Johnson and a number of the other Brexiters want to bring back the Royal Yacht Britannia. They fantasize about a future where they travel the world signing new trade agreements from its decks. Really?

Well the current yacht was built in 1952 and completely obsolete (it was declared as much when it was decommissioned 22 years ago). I mean there’s a long list of things it won’t have (such as this thing called “the internet”….Liam Fox might want to look that one up!) and you’d have to train an entire crew as to how to use it. One would have to question the logistics of bringing it up to speed and back into service.

Furthermore, its also way too small for modern trade negotiations. The days when a UK minister could settle an international trade deal with some tin pot dictator over a glass of sherry and a handshake are long gone. A typical trade delegation these days will consist of several hundred lawyers and negotiators (of which Britain currently employs…..none!). Such talks will typically take place over a good few months, with the politicians only flying in for the last few days to settle any sticking points and basically knock heads together where necessary.

So you’d need something a little bit bigger….as in like a cruise ship! And you’d probably want more than one. And just one of those will set you back about half a billion, with an annual running cost of about a tenth that. And that’s for a ship kitted out for budget holiday makers, crewed by staff mostly drawn from developing world shipping nations. A ship decked out to the sort of royal standards we are talking about, crewed by the Royal Navy, you’re likely thinking many times these amounts, probably a few billion to commission and maybe a hundred million a year to run. Perhaps more. So not cheap.

But we’d get value for money from all those trade deals and saving on flights & hotels, right? Well aside from the little niggle that its going to be difficult to negotiate a trade deal with China from this ship….seeing as Beijing is 150 km’s inland. Australia? Canberra’s now the capital and that’s about 200 km’s inland. New Delhi? Over 1,000 km’s inland. Ottawa in Canada? 400 km’s inland. Washington DC’s close to the coast, but you’re not going to get a boat that big up the Potomac. Moscow in Russia?…you get the idea. And let’s not even consider the gas and oil rich states of Kazakhstan or Uzbekistan.

Now I suppose the Brexiters will argue, oh but johnny foreigners will hop on a train and come to us. Ya and if Putin showed up in his yacht, moored it off Brighton and summoned the PM to appear before him, how would the brit’s react? Probably by telling him to get stuffed and get on his bike and we’ll see you in London.

Also one has to wonder how it would look to the locals with their minsters being wined and schmoozed on a luxury yacht by an ex-colonial government. Dodgy as hell one assumes. Again how would the tabloids react to news of one of the UK’s minsters attending secret meetings on a foreign head of states private yacht? These days politicians, even those in less than democratic countries, have to at least pretend to not be corrupt.

And as I pointed out in a prior post, the British have a very brazen view of the British Empire that is not shared by the rest of the world. To many in India or former UK colonies, the history of the British Empire, its oppression of native populations, the atrocities it committed, the Empire’s use of concentration camps, are listed in the same section of the history books as nazi Germany and its crimes. So to draw an analogy if Angela Merkel commissioned a Reichsyacht the SS Bismarck and sailed it into Southampton for a trade negotiation, how would the British react to that? Not well I expect! How do you think the Indians are likely to react to a royal yacht in their waters? My guess is you’ll get ten minutes to turn around before they launch the torpedoes.

And this is perhaps the real problem here – the warped fantasy world view of these Brexiters. They don’t seem to realise how much the world has changed in the last 60 years. Or indeed how much of history they were taught in their posh boarding school is at odds with reality. Hence why they don’t understand the consequences of trying to reset everything and pretend its 1950 again.

There is worrying talk that the hard Brexiters are winning the argument behind closed doors. What’s wrong with that? Well a hard brexit pretty much guarantees a harder landing for the UK. It would almost certainly lead to another independence referendum in Scotland. And furthermore the harder the brexit the more likely a yes vote in Scotland becomes. Also it could even be enough to provoke a border poll in Northern Ireland. So hard Brexit might well turn out to mean Engexit….as in it will be England essentially leaving the EU and the UK breaking up.

Also a hard brexit will have a much more significant impact on trade, given the inevitable link between trade and free movement. Already a number of universities are talking of setting up campuses in the EU, most likely shifting much of their research staff overseas. A number of high tech firms and banks are also talking about moving and again the harder the brexit the more incentive they have to push into Europe. And the head of Nissan has hinted that he will be expecting some sort of “compensation from the government for brexit to maintain operations in the UK.

british_leyland3

UK factories in the 70’s were a model of unproductivity, crap cars produced using outdated technology by work-shy strike-happy workers, companies that needed significant state intervention to stay afloat

Now while you could accuse Nissan’s boss of being a little cheeky, but back in the old pre-globalisation days many industries were given a large government subsidy, were state owned or their market share defended by punitive tariff’s against foreign competitors. Even Tory governments prior to Thatcher didn’t really question this, as it was understood that the UK’s industrial jobs won’t survive in a completely free trade environment without some form of protectionism or subsidy. As a consequence the ideological enemy right now of Mr Fox isn’t Jeremy Corbyn but his hero Thatcher, who would be rolling in her grave….if she had one.

dr-liam-fox-with-former-prime-minister-baroness-thatcher

Fox with his hero…and ironic ideological enemy…well at least that’s one positive thing we can say about him!

Now while rolling back Thacherism would have its advantages, but its cutting off your nose to spite your face to leave the EU to achieve this (it would make more sense to do it from within the EU by convincing the rest of the union to do the same). And its also throwing the baby out with the bathwater given all the other unintended consequences. More crucially however from a future British trade point of view, it is how much the global economy has changed since last trade deals were signed on Britannia’s decks.

Back then the UK went around the world offering to open its trade door a crack in exchange for full access to foreign markets for UK firms. Now the boots on the other foot. The Chinese economy is vastly larger than the UK’s. Many of the UK’s firms (about 52% in all) are foreign owned (Nissan, the country’s largest carmaker is a joint Japanese and French endeavour, Jaguar Land rover is owned by India’s Tata group, who also own…you get the message!). Instead the UK will be offering an access all areas pass to Indian and Chinese businesses, in exchange for slightly more favourable terms for the UK…sorry England…. to sell goods to them.

top_economies_2050-2

Global economies compared. Note how India’s will be 6 times bigger than the UK by 2050 and China’s 10 times bigger. Also note the above figures are in nominal GDP which arguably overvalues Western economies and undervalues developing ones.

And faced with tariff free competition from either Polish or Chinese made goods British manufacturing firms and parts of the service economy, will struggle to compete, especially against foreign firms based in countries not run by bigots who can recruit more freely. Its not foreigners coming over here and “stealing” your job people need to worry about, its foreigners staying at home and your job moving overseas. And the decision to sack British workers will be made in foreign board rooms.

The only many English companies could hope to survive in this environment is by essentially turning the country into France…..and I don’t mean today’s France, I’m talking about Mitterand’s France with massive levels of subsidy and state intervention. The recent Hinkley deal, which will be subsidised to the tune of 68.8% of the cost of every watt it generates, is likely to be the shape of things to come. Without this level of interventionism certain sectors of the UK economy will collapse, in much the same way some sectors collapsed when Thatcher took over.

The irony is, many of those who voted Brexit in the hope of seeing more control over foreign trade and immigration will likely see the opposite happening. More big government, more bureaucracy, more foreign goods coming in, less jobs for British people, with the UK more foreign owned and more dependant on foreign workers being brought in to meet temporary skills shortages.

And much of what any future UK trade delegation will be negotiating, likely from a hotel on the Beijing ring road rather than a royal yacht, will essentially be the orderly surrender and fire sale of what’s left of the UK economy.

Advertisements

2 thoughts on “Why the Britannia’s not coming back….nor the Empire!

  1. Pingback: Send in the Clown | daryanblog

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s