What caught my eye this week.
A UK budget visualization website did the rounds among certain of my excitable friends this week (I know, with friends like these…) and I promised to flag the tool up here.
I’ve no idea how accurate the data is, which is sourced to 2016 according to the slug. (The ‘total UK budget’ in the tool corresponds to ‘total government spending’ in the 2016 Wikipedia entry for the UK budget.)
Anyway, what they most liked was seeing the representation of our EU expenditure in blue.
No, not the large block of dark blue in the centre – the tiny light blue sliver next to the ‘D’ in ‘Departmental expenditures’:
Click to enlarge (but you’ll still have to squint to see the EU contribution)
That blue trace is the strand that the Conservatives, the Brexit Party, Johnson, Farage, and the rest have whipped this country into a fearful fury over. That is the torrent of money that can save our NHS and Make Britain Great Again. That is apparently worth spending three years fighting about and taking our democracy to the brink over.
In some quarters, that expenditure – much of which comes back to us one way or another – is the reason for all our ills. Apparently.
Of course in more sensible Leave voter living rooms it’s the laws and regulations that matter – not that as far as I’ve heard anyone can ever name more than a few edge cases they object to, and not that we won’t strive to meet EU regulations to trade with them in the future – but still… even for such voters is the juice worth the squeeze, as US rapper Lizzo sang earlier this year?
Most of us long ago made up our minds about that.
From Monevator
10-year retrospective: What a decade of returns tells us about passive investing – Monevator
Lars Kroijer on…market timing, currency hedging, and active managers – Monevator
From the archive-ator: How to enjoy life like a billionaire – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
UK housebuilding falls to slowest quarterly rate for three years… – Guardian
…which isn’t surprising with house prices down on no-deal Brexit fears – Guardian
Britain faces a heightened risk of recession as service sector contracts – ThisIsMoney
Defeat for women in state pension age challenge – BBC
Nine out of ten shared London houses don’t have a living room. Here’s why we need them – Guardian
Woodford has raked in £8m in fees from investors in his locked-up active fund – ThisIsMoney
Investment bank UBS reckons London is the third most overvalued city in the world [Search result] – FT
Products and services
Saga and Goldman Sachs team up to launch two savings accounts for the over-50s – Money Observer
Yellow stickers yellow-carded! Why Waitrose is scrapping its reduced price bargain bays – Guardian
Want to become an angel investor? Here’s a deal where we both get a cash bonus from Seedrs – Seedrs
How can shoppers make sense of sustainable fish labels? – Guardian
Free to select schools: FT launches Road to Riches board game to boost financial literacy [Search result] – FT
Homes for sale with a mooring [Gallery] – Guardian
Comment and opinion
When is the same return not the same return? – The Evidence-based Investor
Rejected – Indeedably
Early Retirement Extreme: The ten-year update – Get Rich Slowly
Change happens slowly then all at once: Zero-fee trading commissions – Abnormal Returns
How commission-free trading may ultimately hurt ETFs [US but relevant] – Forbes
Stamp duty is a half-baked tax that eats a years’ worth of savings when you move home – ThisIsMoney
Divorce: Dividing up the family home [Search result] – FT
Passive investing hasn’t taken over the world – Barry Ritholtz
Naughty corner: Active antics
Shining a light on hidden debt: Capitalizing lease obligations [PDF] – UK Value Investor
US equities: Resilient force or case study in denial? – Musings on Markets
“Divesting my portfolio of fossil fuels is complete” – DIY Investor (UK)
Factor investing has raised the bar for active management – Validea
Patience is a virtue in investing – and salmon fishing [Search result] – FT
Missing the financial forest for the political trees – Investing Caffeine
The great public market reckoning – AVC
Brexit
Pension schemes are ‘well prepared’ for Brexit and savers ‘should be reassured’, says industry body – ThisIsMoney
Gasp! Boris Johnson will send extension letter rather than ‘die in a ditch’ – court document – BBC
Johnson’s customs proposal falls flat along Ireland border [Search result] – FT
Jennifer Arcuri came late. But the Johnson franchise is unthinkable without her now – Marina Hyde
[In other populism news] How Trump’s steel tariffs have harmed US steelmakers – AEI
Kindle book bargains
Fooled by Randomness by Nassim Nicholas Taleb [The best Taleb book IMHO] – £1.99 on Kindle
Who Moved My Cheese? by Dr Spencer Johnson – £0.99 on Kindle
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle
Little Black Book: A Toolkit for Working Women by Otegha Uwagba – £0.99 on Kindle
Off our beat
Around half your chances of career success may be down to luck – New Scientist
Startup founders can be disadvantaged in the jobs market [PDF, research] – Tristan Bothelo [via A/R]
We need governments to fund the moonshot innovation VCs won’t touch – VentureBeat
If you want to change minds – Seth Godin
In praise of guilty pleasures – FastCompany
Come across Jacob Collier yet? A genius, probably. Try not to smile at this [Video] – YouTube
And finally…
“A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.”
– Daniel Kahneman, Thinking, Fast and Slow
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Enjoyed the ERE update. Looks like his FIRE continues to develop nicely with him now a homeowner sitting on spending that is 1/114 of his wealth. Learning to spend little really has enabled him to do some really interesting things since he stopped blogging. The quote “Spending money is a failure to solve problems by smarter means” really does describe what he’s all about.
If my FIRE is half as interesting I’ll be one happy camper.
That’s a lovely graphic and I appreciate your acknowledgement of the existence of ‘Sensible Leave living rooms’.
I really believe that for most Leavers (whether they articulate it well or not) it is about Democracy. It is a tragedy to my mind that so many Remainers don’t get this.
I am going to pick you up on your closing thought that ‘MOST of us made up our minds….’. Is the ‘US’ Monevator readers, your friends and colleagues or the electorate ?
@Passive Investor — I sort of meant most of the Monevator readership, since a lot of more hardcore Leavers left in 2016 when I threw my toys out of the pram. But having said that, isn’t part of the problem that we’ve all made up our minds, whatever side we’re on? I suppose I’ve moved a little since 2016 towards soft Brexit from somehow no Brexit, on the well-rehearsed grounds that the Referendum had happened and if we can do so sensibly we should reflect that, but even that small movement is more than I’ve seen from most, and if I’m honest I’ve shifted back again as the pantomime has continued. (At the least I’d fully support a second referendum now.)
I think there is a strong feeling in English culture that we ought to obey the rules (unless your name is Boris Johnson). So although opinion polls have suggested a slight majority in favour of Remaining for the past two years, many people think we should still Leave because that’s the rules.
So we find ourselves (probably) about to do something likely to damage our economy and our society which a (probable) majority of people think is unwise.
I don’t know what the answer is.
Nice links, I have seen that before.
I voted stay. Think economically and geo-politically (China but since the vote increasingly us and India) we’re best off sticking. But also believe we need to leave now because of the referendum vote. After all had the vote been remain but a conserv. Gov. was now seeking to leave to pick up brexit votes imagine the justifed outrage
A compromise should be common market plus / E.U. minus. Seems to fill the result of the referendum, the q of which was ill defined and minimises the economic damage. Not as good as we have now, doesn’t solve free movement of labour issue but better than no deal which by no means resolves the problem. And then we can take time to figure out where we want to go.
Do not think a referendum will solve the issue either way – a v narrow remain result may cause a different but equally significant problem to the one we have now. It is striking that considering all the evidence that has emerged the polls remain inconclusive.
I think there are good reasons why increasingly eu membership may become problematic witness macron, junker, Dragi etc desire for much closer integration – albeit Cameron did secure an opt out for uk. That said if the eu achieve that we will be in the shadow of a much bigger entity – i am sceptical they will of the oft said reasons of the differences in the people.
Looking at the wider geopolitical forces – this does seem to be a bit fiddling whilst Rome burns. The uk should be figuring out how we are going to maintain our way of living in the face of Asian countries increasing influence. As a govt I would be throwing everything at wind and solar and nuclear power to become energy independent. Would be massively beneficial for us economically.
I was interested to read in the Guardian that the massive job losses in the city haven’t happened.
https://www.theguardian.com/business/2019/oct/04/will-londons-post-brexit-future-be-as-gloomy-as-predicted
Also, can I recommend the ‘Talking Politics’ podcast – they talk by far the most sense, and knowledgeably, about Brexit.
https://www.talkingpoliticspodcast.com/
Re yellow stickers.
I find the politics interesting, there seems to be a very significant undercurrent of ‘if I can’t have it, others shouldn’t either’. I detect the same kind of thing going on with the latest insurance proposals.
Both markets exist for a reason, both operate successfully and ‘fairly’, but there is a mistrust that points to a fundamental misunderstanding by customers of the market.
It makes me think of a poor kind of socialism, I’m not old enough to remember that as a political force, so I don’t really want to draw too many parallels. Maybe in 40 years it will be completely normal for govt to set insurance rates, and ill be the old, racist, retired colonel reading the Telegraph.
Time the two side Remainers and Leavers started engaging with each other in a sensible manner as this is the only way forward to the normal state of affairs/endgame-a compromise
This forum and others seem to be the way ahead for reasonable debate as contributions from our current “leaders” in all spheres,MPs,Judges,Academics,Musicians,Celebrities and Actors seem to be singularly partisan and unhelpful
xxd09
Re the argument for democracy from Leavers. I would have more sympathy if their concern about a “democratic deficit” was focussed closer to home. The UK has an unelected House of Lords, an unelected Head of State, no constitution and our FPTP voting system results in parties who obtain far less than 50% of the vote often getting large majorities.
Re the New Scientist article “Around half your chances of career success may be down to luck”. Absolutely. I always find it amazing that so many people I meet, particularly of the older generation, seem to think their success is down to hard work, ability, skill etc. For the very small minority that are actually successful (rather than the majority where it’s a delusion of grandeur) clearly there was a huge dose of luck involved. We have a totally unjustified cult of meritocracy.
I propose that London stays in the EU, and the rest of England leaves without a deal on 31st October. My history is a little rusty but I’m pretty sure something similar worked in Berlin after the war (back in the days when we hadn’t surrendered to the Europeans). Minor technical details like customs declarations could easily be solved with lorry drivers adding a few notes about their cargo on the TFL website when they pay the congestion charge. Definitely no extra costs to business doing that. There would be no need for any “hard border” at the M25 and so no traffic delays or food and medicine shortages. Wales and Scotland could make their own arrangements via their devolved assemblies so we don’t need to worry about them.
Leaver or Remainer I’m sure we can all agree this is a sensible compromise and won’t have any practical issues with implementation. But I’d like to make it clear that anybody who refuses to sign up to this carefully thought out and detailed plan by the end of next week is an enemy of the people, democracy and the rule of law, and hasn’t respected the carefully considered views of 17 million people.
@theInvestor I’m enjoying the Lars Kroijer you tube talks. Thanks.
@David yes, what happened to that London independence campaign
The trouble with a second referendum (before the first has been enacted) is that a great many of the people who voted leave will (rightly in my view) disenfranchised. This could be devastating for further elections. Democracy is quite a fragile institution and it would be dangerous for people to feel that when their ‘side’ loses they don’t have to respect the outcome. Although the threats of civil unrest from politicians might have been ill judged (given their role as leaders of public behaviour) it seems likely to me on a historical reading that disenfranchised Leavers would be attracted to violent protest.
Practically I don’t believe it will settle the issue as it is likely to be quite close again…
@Eugene
Whilst I do agree with you, we are already a member, so all the benefits are things we stand to lose. I suppose you could phrase it as we get freedom of movement if we stay instead of we will lose freedom of movement if we leave.
I think most of the problem has been that Europe has been the whipping boy for as long as I can remember. There hasn’t been discussion on immigration, theres just been a “its not me, it’s Europe” from politicians that havent really taken responsibility. And then you’ve got the bendy bananas/straight cucumber thing which was never really challenged, when in hindsight maybe should have been.
So yes Bremainers should have been talking about the benefits, but 20 years ago, not 2016.
But then maybe Brexiteers should have been more honest about their concerns about Europe, rather than wittering on about said bananas and cucumbers. Its hard to take an argument seriously when that seems to be central tenet.
Just read Simon Sharma’s piece in the FT weekend. Who speaks for the people? He talks about the long history of populists turning into despots. Brexit by the 31 October at all costs. Even if that means attacks on the foundations of our liberal democracy. There is more at stake than Brexit here.
We need to turn down the rhetoric and look for compromise.
Nice graphic on public spending.
I do wonder about EU budget contributions and the ‘fiscal multiplier’. Presumably domestic spending delivers a greater multiplier than Spending that, by definition, is outside the UK.
Not necessarily an argument that the ‘membership fee’ isn’t good value.
It’s not about money. Wasn’t immigration a bit of an issue, rightly or wrongly ? If you believe in democracy you have to believe in diversity of opinion. No- one is right, no-one is wrong. As soon as you label those whose opinions are contrary to yours, racist, dumb, old ( some now dead which may tilt to remain), more susceptible than you to political bias, or plainly just not the calibre of human being you are: well you have just demolished democracy. It isn’t hard, I just don’t know why there is such a lack of self- knowledge. However, we are the English so no doubt we will manage.
Ok lets have a second referendum
two questions
1. You are happy to have a continued transfer of power, taxation, defence etc to a single unelected board of people who have the sole right to impose laws on you which you have virtually zero control.
2. You think your own country should be run by people you can elect and remove. You want your government to make decisions based on the national interest. You also think that its insane that just three EU member states – Britain, France and Germany – account for an two-thirds of the entire net income of the EU, with only 10 of the 28 paying in more than they take out.
If the budget is so tiny, then how about a wild idea. Lets give it a go and try see if the whole UK will simply implode the moment we leave – this must be a serious risk as naga munchety keeps harping on about it so it must be true.
This is not a decision about economics or anyones standard of living. Its a purely political charade….without the UKs ££££ then the EU is toast when our contributions get added onto the other countries and they say “non”. The UK cannot and will not ever be allowed to leave – too much money involved.
@2ndReferendumNeeded — An excellent comment to print out and frame to show my grandchildren when they ask why I thought Brexit was a stupid idea.
Yup. Look at the EUs defence spending for a start. They want the world to be as they want it to be, not how it is. Why not chat up Ukraine to have closer ties…how did that turn out? The future of the EU is in the euro. If you don’t want to be in the euro pact there is no future for you.
@TI.
I think you’re being harsh on 2ndReferendumNeeded’s opinion .
I too want a government that “make decisions based on the national interest”.
But who to vote for to achieve that is perhaps the more difficult question?
@ZXSpectrum.
We do have a constitution; it’s just not written down. Nor, IMHO, should it ever be. Look where a written constitution has achieved in the USA regarding gun control.
Regarding an unelected head of state, as Victorian, Walter Bagehot, wrote of the monarchy: “Its mystery is its life. We must not let in daylight upon magic”, and it seems to me that that magic has often acted as a balm on the wilder excesses of the government. Unlike an elected President in some countries we might think of.
I love posts like the AVC one (https://avc.com/2019/09/the-great-public-market-reckoning/) especially the last few paragraphs where the author talks about the financials behind Real Estate
Has anyone got information on Vanguard’s new accumulation version of their FTSE All-World ETF – the original income paying version VWRL and the new accumulation version VWRP?
@Eugene – I very well remember the Y2K scare. Perhaps why an awful lot of IT professionals in their mid 50s can retire early. Because of all the high contracting rates and effort we put in
@Eugene: https://blogs.spectator.co.uk/2019/09/ivan-rogers-the-realities-of-a-no-deal-brexit/
@TheBorderer — It’s true I have *some* time for the sovereignty argument, as I’ve much stated. I don’t recognize the EU as this un-elected body making undemocratic decisions; as we’ve all debated ad nauseam it’s elected by EU citizens and overseen by national governments. It’s true we, like any constituent in a democracy, don’t always get our own way, but it has mostly gone our way (e.g. the single market) and we even uniquely got a bunch of opt-outs and avoided the currency. (If this whole debate was in/out the Euro, I’d be a solid Leaver).
With all that said I do think sovereignty is a coherent intellectual position to hold, even if our own Government’s shenanigans over the past three years would make me wonder about leaping from frying pans to fires.
So we don’t have “virtually zero control” and we do have “people we can elect and remove”. The narrow frame of “national interest” is the only test not easily met (because the EU has to meet the national interests of more than two dozen countries) but again, there’s a wider point than ‘the national interest on this or that particular issue’. We’re about to discover this if/when we Brexit, especially if it’s no-deal.
As for the rest of the comment, who said anything about the UK imploding when we leave? (It’ll be a short shock followed by slightly lower growth and a smaller global role forever, in my view.) What is the relevance to budget being “so tiny”? Why the odd reference to BBC presenter Naga Munchetty?
The point of our contribution to the EU is it’s not a fountain of cash draining the country, that can be redeployed to salve our ills. If you’re a Brexiteer for economic reasons you must believe the payoff you foresee from superior growth / less regulation / freer trade (little to none of which we’ll get in reality) will make up leaving the EU. Stemming the payments to the EU is at most the icing on the cake.
If you’re a Remainer on economic reasons, you see that this small EU payment is just an entry fee to a club with wide benefits, including economic, that repays the investment many times over.
But of course as @MrOptimistic candidly said earlier, most of the Brexit debate isn’t about numbers, it was largely about immigration as he states (though as a Remainer *I* am given less leeway to state that!) with some sensible questions about sovereignty.
Then we have the final paragraph, without which I would have let the comment stand without making my late night quip. I think it stands for itself — this is true whether you agree with it or think it’s the sort of contradictory polemic that got us here:
@Eugene — I don’t think it will be a disaster. Rather it’ll be slower growth forever, because of the loss of the benefits of very free trade and perhaps lower immigration of the brighter types who came mostly to London to found companies, work in financial services etc.
If there’s a no-deal it’ll be a bigger shock at the start, but even that will of course be survivable.
The trouble is people are bad at understanding why slightly lower growth forever is a bad thing (economically speaking — Leavers might legitimately say it is worth it for them if it buys their other goals, like complete border controls or 100% technical sovereignty).
For example, I am near-certain we’ve had lower growth since the Referendum result than we would have had if we’ve voted to Remain and life had continued as normal. We went from the fastest growing (/recovering) member of the G7 to the slowest. Investment has been postponed or cancelled. Companies have been stuffed by uncertainty.
Did we get the recession I admit I thought likely (if only shallow?) from the uncertainty? No. But I’d estimate we’ve already lost around £100bn in GDP. Some of that may be recovered in a ‘relief spurt’ post exiting/remaining (because pent-up demand will be unleashed, and especially in a good deal or remain scenario foreign investment would likely pile in) but some will be lost forever.
Yet despite this actual economic hit, Remainers are largely seen as having lost the first round of the economic argument (‘Project Fear’ etc) because there wasn’t a recession. The definite slowdown is discounted/ignored.
How might this play out long-term?
Let’s say GDP in the UK would have run at about 2.5% indefinitely if we’d stayed in the EU. Let’s say in my ‘far from a disaster but more friction in trade and less useful immigration’ post-Brexit reality GDP drops modestly to 2.25%.
That is probably not something we’d feel day-to-day. It would be very hard to pin the blame on Brexit. But over time the differences add up.
For ease of maths let’s call UK GDP £2 trillion (it’s actually a bit higher) and compound this over 25 years, which sounds a long time but doesn’t even get me back to university so I think is reasonable. After that time:
2.5% scenario = GDP grows to £3.7 trillion
2.25% scenario = GDP grows to £3.5 trillion
So that’s a £200bn a year deficit (in nominal terms) from not being in the EU, in this (merely illustrative!) example.
Added up, over every decade the UK would have £1 trillion less to spend on the schools, hospitals, army, police, you know the drill.
There’s a reason that — for economic purposes — countries have been relentlessly moving towards the best free trade scenarios they can achieve. (Including Australia, since you cite it, which has many free trade agreements with countries in its area — again, geography matters, which is why the EU matters to us).
I always have to add because someone will say “but it’s not about economics you dimwit!” (because Brexit is many things for many people) that of course you can argue this economic price is worth paying if you see insurmountable political/social ills caused by EU membership. Fair enough.
But there is definitely a chunky economic price to be paid for exiting, IMHO.
Steering clear of the Brexit topic for a moment, can I just point out that the visualisation you started with is called a Sankey Diagram and is super way of understanding stocks, sources, sinks and flows in any system. Here is the UK energy system in 2018 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/818151/Energy_Flow_Chart_2018.pdf.
I have spent many happy/frustrating hours constructing and pondering these trying to find leverage points in circular economy systems where small changes can have big effects.
For anyone reading this on Sunday the 6th, one of the Kindle Daily Deals is “Money: A User’s Guide” – Take control of your personal finances with this concise, timely and indispensable guide.
It looks particularly well suited to anyone about to start out on leaving home and setting their finances up for the first time, but goes on to have sections on pensions and investing.
https://www.amazon.co.uk/Money-Users-Guide-Laura-Whateley-ebook/dp/B07CRGY73D
The thought comes to mind in all this debate-one from our folk history
“Man does not live by bread alone”
Economic arguments have their place but the train that would be affected by those”rational” arguments left the station a long time ago
People are looking for a purpose and short of apocalyptic climate change beliefs- there is very little out there
“Goodness” as a life style also seems to be running out of steam
Seems to be a fight to the finish between left and right
People’s default position is conservative in a crisis
Things have a way to go but Economics I am afraid is a bit player in this big existential game
xxd09
@TI (28). My comment was more than a little ‘tongue in cheek’. I think it’s fair to say that a government that “make decisions based on the national interest” was perhaps the only sentence in 2ndReferendumNeeded’s post I actually agreed with, and then not in the context he was saying it.
My point was, looking at the state of the political parties, that not one of them can be trusted to act in anything other than their own, party political, interest. Didn’t make it very well, obviously.
@ Investor I am no expert on the EU institutions but concern about lack of democracy arises from the fact that the EU parliament is more of a talking-shop than a proper scrutinising chamber that can hold the Executive to account. Executive power sits with the Commission (unelected) and the European Council (horse trading between member states). Slightly pompously but more fundamentally to have a functioning democracy you have to have a Demos. Ie the electorate has to have a sense of cohesion so that for example a Tory voter in SE England accepts a Labour government won with votes from the North. That doesn’t really exist in Europe – consider the way the German electorate bailed out the East Germans in 1989 but didn’t bail out the Greeks 20 years later. So the question is whether the best arrangement for governance is a group of independent democratic nation states cooperating through international organisations (UN, NATO, Interpol, WTO, lots of bilateral arrangements etc) or by the creation of a centralised – yes antidemocratic -European superstate. That to my mind is the fundamental basis of the disagreement between Remain and Leave
If immigration was the issue, why not focus on the bit that we already have control over? Immigration from outside the EU?
It’s like a ship that has 2 holes. They gave you a vote to plug one hole (along with many other consequences) and you completely ignore the other hole. It’s almost as if the electorate is rather misinformed, or ignorant. Not that Remainers are particularly brilliant either.
@The Weasel. Immigration only became an issue because the idea got around that they were taking from us. Getting an education and health care without contributing, remitting their earnings instead. We could and should have addressed this, if only as a political point. Nothing was done, the Labour Parties attempt was dismissed as a ploy towards a national identity card.
@weasel I don’t think that was the only reason immigration was an issue. The facts that it was uncontrolled and rapid and outside the control of the democratically elected government were important. The UK Governments were unable to plan services and unable to explain to the electorate their policy on immigration (because the govts didn’t have one – only the EU did). The relative generosity of the UK social security system was also an issue. For example Repatriation of child benefit was probably hardly significant in economic terms but very visible. The added dynamism and growth to the economy from immigration was highly significant but invisible.
Just saw (from the FT’s economics editor) this fair-handed take on the hit (but not smash) to UK growth since we voted for Brexit:
https://twitter.com/ChrisGiles_/status/1180543762205986821
The response to Brexit for several of my family members has been to try and get a Portuguese passport. Anyone else observed this phenomenon? Is this some sort of defacto/path of least resistance type thing? As far as I’m aware none of them have any prior ties with Portugal. I haven’t asked them directly as to the whys and wherefores as they are mad as cheese (IMHO). Anyone here doing similar?
Just listened to a radio 4 programme on religious conflicts that pointed out that as a species we have spent much more time in religious toleration than in conflict. Another interesting comment was that conflict between groups, ethnic, religious, political etc usually erupts when resources are scarce. One commentator said roughly “if you are well off, you don’t particularly care what god your neighbour worships”.
I also read today an article from Larry Elliot saying that the dismantling of much of the rail network following the Beeching report drove the centralisation of the UK, the reduced importance of the regions and led ultimately to the Brexit vote: https://www.theguardian.com/business/2019/oct/06/without-the-beeching-report-there-might-not-have-been-brexit
Both these struck a chord with me with respect to the reasons for people voting to leave. We were in a tough place following the global recession, austerity was making life difficult, and various tub-thumpers were encouraging us to blames others; immigrants, the EU, people visibly different from the white British majority, and the metropolitan elite (a more stupid characterisation of the enemy when you look at those fronting and funding the Leave campaign would be hard to imagine).
I get why people voted to leave, but they are not going to get what they thought they voted for. To quote someone with a much better turn of phrase than me “What was promised is not deliverable, and what is deliverable is not desirable”.
The economic argument for Brexit is toast, unless you are a disaster capitalist betting on a crash , or one of the very few people of the Minford persuasion that thinks the creative destruction of crashing swathes of both the manufacturing and agriculture sectors will in some undefined way be good for the nation’s soul. There is no discoverable economic upside to Brexit, just ways of limiting the damage.
As pointed out in the chart, the net contribution from the UK to the EU is trivial. Stopping it will do almost nothing to compensate for the economic loses of leaving, or to address the underlying problems that have given rise to a leave vote. I for one am happy to pay my contribution for Blue Flag beaches, and the ECJ pointing out to our government that having laws about air-quality and then studiously ignoring them is not a good way to behave (thank you Client Earth!).
That leaves the sovereignty argument. As has been said there is at least an intellectual argument that we have lost some sovereignty and it could be recovered by leaving the EU. Although I don’t think we have lost that much sovereignty, and I certainly don’t buy the democratic deficit, not after the shenanigans our recent Governments have got up to.
But I am a pragmatist, and my question is when we get this sovereignty back what are we going to do with it? What will we be able to do for the general good that we cannot do now? I know that we will be able to strike new free-trade deals, but with who?
We live in a world of multilateral and bilateral deals that govern the world economy. We will have to recreate many of those deals. There is cooperation between nations and blocs, but also competition. And we will be relatively weak. We know what the US wants out of a free trade deal – access to the NHS, dropping of food and environmental standards, no attempts to tax US tech giants. We know what India wants – more immigrant visas among other things. We know what the EU will want – alignment with their standards and rules, recognition of the rights of EU citizens, no border in NI and the £39bn payment of our outstanding obligations. I am sure every other nation or bloc we might do a deal with has their own list of preconditions.
How will our regained sovereignty stand up in a collision with those forces? So sovereignty in theory, but probably less sovereignty (in the sense of self-determination) than we have at the moment.
Which then comes to the “but we voted” and “we must respect the referendum” arguments. The sad truth is we were all lied to by the government. Referenda have a very iffy place in our constitution. We are in general a parliamentary democracy. There have been three referenda in our history, none of which were binding. They are effectively large scale opinion polls that allow the government to take the mood of the nation and then decide what action to take. I know Cameron said the government would act on the decision of the vote, but that was something he could not promise and certainly should not have promised.
There is no constitutional principle I am aware of that says a referendum can bind parliament and the government, and plenty that say it can’t. So we are in a political tight spot because the government simply lied about the status of the referendum. It is difficult but no amount of shouting from the leave side can make the result binding instead of advisory.
What one would have hoped would happen is that the government would have had a look at the very close result and decided that the softest of Brexits probably split the difference between the two sides and tried to find a compromise based on that view. Instead, May whipped her red lines out of a hat at the Lancaster House speech. Red lines that had not even been part of the referendum debate, and made compromise seeking impossible.
So we have a flawed referendum in which all sorts of undeliverable promises were made. Leaving under any of the options currently under consideration has done and will do immense damage to our economy. Damage that cannot be repaired quickly, if ever. We will have a theoretical increase in sovereignty but in practical terms less freedom of action.
Will this address some of the structural problems that caused many to vote leave? Definitely not.
I fear for our country.
@Rhino – yes, I’m looking into that too. Well, permanent residency first.
And if/when my family leave, the UK economy will be poorer by one IT Architect (me) and an ex Sub-Sea Oil & Gas Engineer and now Data Scientist (my wife).
@Passive Investor – You stated (not for the first time on this thread) that “Executive power sits with the Commission (unelected) and the European Council (horse trading between member states).” I thought this lie had been nailed? The Commission are unelected, yes. But they’re the equivalent of the Civil Service. They implement policy, not decide on it. I’ll assume you’re just misinformed, rather than, to put it politely, deliberately spreading misinformation
@old_eyes – Wonderful post.
What always makes me laugh is that any farmer could vote Leave (and many did). Their livelihoods are protected by subsidies from the EU that are mandated by law and protested, in the last resort, by the ECJ. Let’s see how those subsidies work out when there’s a Government short of cash…
@TheRhino — I began the process of making sure I had alternative arrangements if required (i.e. if the UK went right off the rails into populism / authoritarianism and this was the thin end of the wedge, which I assess as still only about a 5% probability but rising) within days of the result.
@brod This is from the Wikipedia article on the European Commission
Considering that under the Treaty of Lisbon, the European Council has become a formal institution with the power of appointing the Commission, it could be said that the two bodies hold the executive power of the EU (the European Council also holds individual national executive powers). However, it is the Commission that currently holds executive powers over the European Union.[49][50] The governmental powers of the Commission have been such that some, including former Belgian Prime Minister Guy Verhofstadt, have suggested changing its name to the “European Government”, calling the present name of the Commission “ridiculous”.[51]
There is some ambiguity in the term ‘Commission’ in a EU context which you will find in the rest of the article.
@old_eyes — Naturally, I couldn’t agree more with your comment. I recognize everything in it.
The one positive of the Leave vote for me was it forced me to open my eyes a bit more when visiting for instance former prosperous market towns or similar, many miles from London — or almost any of the big towns outside of the 5-10 cities (Oxford, Bristol, Cambridge, Edinburgh etc) that the typical London-centered Remain-y young professional could imagine living in before retirement. I had to concede most places were hollowing out, directionless, and a far cry from the dynamism that you see in London or even the likes of Cambridge.
Of course Brexit will do nothing at all for these places, just make them poorer, and in fact I’m not sure what exactly can be done (except more redistribution, which at least some seem to resent) given global/tech trends and forces, but at least I understood the disappointment a bit more.
Within months of the Referendum, two old family friends in the provinces where I hail from said words to the effect of “who knows if it will do anything but at least London will get a kicking / get a feel about how we feel”. It’s illogical but it is a human response.
Again zero justification for Brexit (even voting Corbyn for many would be a more logical way to change things, and the far end of his policies are bonkers IMHO) and I believe their boot that kicks London will swing around and boot them in their own arse. But three years of introspection has me understanding the position a tad better.
I suppose I’d count myself as living in one of these poor northern areas.
I can’t really say I recognise the viewpoint, except for a strong anti tory/anti thatcher feeling.
If you take Halifax, I remember the soot stained empty mills that seemed to be everywhere, well into the late 90s they’ve been redeveloped though. Its not as wealthy as Leeds or Manchester, but it isn’t a deadend town, and this is despite all the travails of the high street.
@Brod & TI – very interesting, so you’ve both got a Portugeuse passport! There must be something in it! Maybe my family-tree aren’t quite as mad as I thought? I’m going to look into it.
@TheRhino — Um, I didn’t say that?! I thought you had agreed to operate a read then reply policy going forward! 😉
No, I’m just trying to use more nuanced and subtle approaches to tease responses out of you. It didn’t work in this case. You’re a smart cookie TI.
@Ben — Well anecdote isn’t data — which obviously holds for both our experiences — although I would say my experience also accords with plenty of vox pops I’ve seen/read about provincial disgruntlement.
Perhaps it makes a difference that you live there, whereas when I’m visiting I’m down from London. i.e. You’re “us” not “them”. In all but one case I can think of, this generation I’m thinking of (my parent’s generation) saw all their brightest/most talented kids leave the town, most passed through London, and I’m aware (judging by Facebook etc) of few that eventually returned (as I say can only think of one). So there might be some parental… sadness (?!) in the mix, too.
@TI #20 “….. to show my grandchildren ….”
Is marriage possibly in the air? 🙂
@Factor — Very much a figure of speech. I haven’t got children and I’m more likely to have them than get married. 😉
@Ben… “If you take Halifax, I remember the soot stained empty mills that seemed to be everywhere, well into the late 90s they’ve been redeveloped though. Its not as wealthy as Leeds or Manchester, but it isn’t a deadend town, and this is despite all the travails of the high street.”
Having lived in that area from birth, and watching the industry of the town decline from the 70’s onward, mills closing down, engineering works shutting, large companies leaving or getting de-mutualised, the place has a long way to go back to it’s hey-day. Yes it’s a lot better than the Eighties, Nineties or Noughties but it ain’t no metropolis full of bright young hipsters. Soot blackened millstone grit is still in evidence, the stone cleaners still have work. On the other hand, you guys are not chopping heads off for thirteen pence ha’penny like you were before Cromwell. 🙂
@Passive Investor @brod
Yes, the Commission can be described as the EU executive because they execute the strategy and decisions of the Council and Parliament. But they are not ‘the Executive’ in the way that the UK Prime Minister or the US President are. They are not elected on a manifesto, but appointed by those who are.
They are more powerful than the UK civil service for sure, but in no way are they the ‘unelected bureaucrats’ running the UK in defiance of our democratically elected government; despite what brexiteers will tell you.
Is the current Brexit situation analogous to the Slave Trade?
Britain at one time was very active in this lucrative business but public opinion turned against the trade
Britain-in spite of the serious financial costs to the economy-became the foremost destroyer of this miserable business
Moral attitudes trumped Buisness/Economics
The American Civil War could be similarly viewed
Just a thought
xxd09
@ The Investor,
I live in a rural area that voted to Leave. I understood from the beginning why people around here voted to Leave. Our infrastructure is poor and decaying, good jobs are hard to come by, and our farmers are capable of complaining bitterly about EU rules whilst being very happy to take the subsidies and regional development aid. Not that many EU migrants (enough to support a couple of Polish shops for which I am very grateful), but fear of the threatened flood (especially the claim that Turkey was about to join).
What were they promised (what did they hear anyway)? No foreigners, freedom from EU bureaucracy and rules whilst continuing to receive all the financial benefits of the single market, massive investment in the NHS (£350m a week sounds immense if you are not used to public finance numbers), big expansion of the economy as we trade successfully with all the people the EU is stopping us trading with, more jobs and better jobs, some sort of buy British affirmative action…
In this area, we won’t get any of it, even if it were true.
The sole major employer providing high-value jobs in the immediate area is Airbus and their supply chain. How long will that remain without its JIT international supply-chain? Agriculture is upland and hill-farming; utterly dependent on subsidy. Farming productivity is poor. There are two main groups of farmers; the old, who cannot imagine any other life, and those dreaming of getting planning consent to sell their land for housing.
Any kind of brexit, even the softest, will be bad for our local region. Yes, Westminster could plough large amounts of money into the local economy in an attempt to mitigate the problems, but will they when there will be so many other calls on funds (see IFS estimates https://www.bbc.co.uk/news/business-49961301).
A question I have not had an answer to from any politician is what happens if we leave and the people who voted for that don’t get what they were promised? It won’t be good.
@xxd09
There were complex reasons for the abolition of slavery (good summary here https://www.bbc.co.uk/bitesize/guides/z3rj7ty/revision/1). Yes, public opinion had moved against slavery, but it was also not so economically important by this stage, the war with France focused political attention elsewhere, and of course the slave owners were fully compensated by the state for their loss of ‘property’.
I’d have more sympathy for the criticisms of democracy in the EU if they were
– based on fact
– the UK itself was in a better position to criticise – unelected upper house including bishops, unelected head of state, unelected special advisors, first past the post elections, prime minister able to suspend parliament for any reason for as long as they like .. until the Supreme Court ruled otherwise
@old eyes @brod but the point is that the 28 Commissioners do have significant executive power – the EU’s own summary documents are clear on that. The Lisbon Treaty was so controversial because it transferred powers to the EU. They aren’t held to account by parliamentary scrutiny and the electorate are and feel very distant from them. The last statement is a major reason that despite concerns about short-term economic disruption so many people want to leave.
For all the discussion here and elsewhere about economic disruption Nationalistic feeling is key to the discussion.
I have enjoyed reading the comments and am impressed with the ability of the commentators by and large not to descend into acrimony.
For those who voted remain, how do you square the clear objective of the European Union to forge every closer union of the people through a political project (skim read treaty of rome / nice / lisbon) with the clear (?) lack of enthusiasm on behalf of the majority of the people in the UK for such integration. It’s a major problem no?
For those who voted leave where do you see our future relationship in the world. There is an interesting book recently released by William Waldegrave , a previous conservative minister, called Three Circles who sees four routes (a) singapore on thames (b) rejoining EU in the future (c) subsidary of the US (d) Canada type positions?
I am interested to hear why brexiteers feel the country will see any of these routes as better than what we have. (a) probably suits me given where I am in the world (b) would be rejoining on worse terms than we have (c) is a major loss of the sovereignty brexiteers are seeking (d) one benefit is the UK might finally figure out where it is in the world but also has some hard choices to make in terms of sovereignty in terms of trade agreements with economic disruption.
Given we voted leave I am in favor of d as I see no appetite for the electorate for (a) whatever the likes of right wing conservatives really desire and (c) well if anyone still believes we have a special relationship it’s worth looking in the index of Hilary Clinton’s Hard Choices book on her time as secretary of state. The UK is mentioned half a dozen times, no more, no less than France / Germany. Considerably less than Japan / China. The US will push us around and smile as they are doing it. It is much trickier to push the EU around now albeit easier once we’ve left…hence why the president is keen – divide and conquer.
Hoping no one rational still thinks there’s major economic benefits of leaving….albeit agree (a) could arguably deliver it eventually…kill or cure! Didn’t go down too well in the 1980’s though.
Mark – There have been no material job losses in financial services as there has been no hard brexit yet. I work for a bank. No one wants to leave as it’s London. Neither will there be for a few months after as short term banks take stock. But it’s not sustainable from a cost perspective unless we agree to financial equivalence, which means signing up to the rules without having an ability to influence. Which we’ll probably do in which case what’s the point of leaving?
Portugal – lovely country, just have a look at the recent elections though (2 days ago) – it’s a country of fairly far left political persuasion. Which may not bother you as (a) they are part of the EU that limits things a bit (ironic eh) and (b) the NHR gives you a 10 year low tax regime but you need to have a lot of cash / high paying job for it to be of benefit I think (c) you are of far left political persuasion.
@seeking fire
As one who voted remain, I have some concerns but no great anxiety about the European political project.
All of my encounters with Europeans confirm my belief that the vast majority of citizens within the EU value their national identities just as much as we do and completely share our lack of enthusiasm for such complete integration. They also take the view that they are perfectly capable of preventing full political union if they were ever seriously confronted with the prospect.
Unlike us, however, they place a high value on the benefits that have flowed from extensive collaboration around trade, standards, security etc., want to keep them, and are perplexed that any nation would willingly throw those gains away.
It seems to me that there are several greater, and more imminent, threats to our future economic and social well being than the European political project and that those risks increase, rather than diminish, once we go it alone.
I would say that’s my position, too. We have swapped potential unknown complications in the future — that was very much up for grabs — for concrete known complications today/the past three years/the next ten years.
Would I be happy with the UK (or other countries of Europe) sitting within a superstate where national governments were reduced to at best the level of the devolved assemblies in the UK now, and perhaps to the level of local councils. Absolutely not (at least not as things stand, who knows where we’ll be in 50 years). But there would be plenty of opportunity to Leave if and when that drastic and IMHO overblown future ever became a reality.
As others have said, there’s no great appetite for it in Europe, either. And it’s grimly amusing for instance that Brexiteers on the one hand chastise Germany for not doing more to bail out Greece, say, but on the other hand claim national governments are going by the wayside.
No, national concerns remain front and center in Europe like everywhere else, which is why Germany for example hasn’t done many things it might have if it was the ‘London of a unified Europe’, by way of analogy. That fact is it isn’t, because the EU isn’t a superstate.
As for the focus on economic matters here on Monevator, well we are a financial website, I daresay we’re focus more on politics if we were called Polivator or similar. (Now there’s an idea haha).
With that said, most on the Remain side including me would have more sympathy for push back on that front if Leave hadn’t woven (nonsensical I’m afraid) economic claims into its pitch — the ‘Brexit dividend’, the £350m on the bus, etc.
If they’d said “There will be an economic price to pay but it’s worth paying for full sovereignty” I’d have far less of a beef with Brexiteers. But they didn’t, because they said almost anything to win.
The Investor said:
“Would I be happy with the UK (or other countries of Europe) sitting within a superstate where national governments were reduced to at best the level of the devolved assemblies in the UK now, and perhaps to the level of local councils. Absolutely not (at least not as things stand, who knows where we’ll be in 50 years). But there would be plenty of opportunity to Leave if and when that drastic and IMHO overblown future ever became a reality.”
But … that is the explicit direction of travel (superstate with national governments reduced to parish council status. Indeed, you have “Remain Champions” like Kenneth Clarke saying that’s exactly what they want). It’s all set out in the treaties!
Given what we’re seeing now – i.e. a vast, co-ordinated attempt to overturn the largest democratic decision ever taken in the UK (to trigger an explicit provision in the treaties to allowing us to Leave), what earthly prospect do you think there is of us leaving / being allowed to leave in the future when the headlong dash to centralised federalism and what that really means is suddenly clear for all to see, at a point when we’d be even more deeply enmeshed in the EU?
I’m not saying it couldn’t be done, but realistically, the only way it would happen would be through violence, not the ballot box…
Perhaps to stir the pot a little more!
In recent History when Germany has been in a commanding position on the Continent-things have not gone well .Twice there has been a serious problem which the world has had to deal with.
One hopes that history does not repeat but the human condition being what it is -if it has happened twice then a repeat of some sort is more likely than not
xxd09
Re: passports.
One friend got Portuguese nationality so her daughter (aged 10) could have an EU nationality (the right to apply went back to her ancestors were Jews chucked out of Portugal a few hundred years ago).
2 family members got Irish nationality, one of those so a son (aged 25) could have an EU nationality.
It’s a common story.