Tag Archive for Brexit

Project Fear says butter and cheese will be luxury items after Brexit

Try not to laugh but the Independent have run a headline today claiming that cheese and butter will be luxury items after Brexit because (they claim) dairy products will be more expensive to import from the EU.

Image result for milk me i dare you

We’re something like the 10th largest producer of dairy products in the world but because we export such a lot we have the second largest dairy trade deficit in the world. As a consequence, the UK is one of the world’s most valuable dairy markets and around 20% of EU dairy exports go to the UK. Where the UK buys its milk and cheese makes or breaks a country’s dairy industry and the EU as usual stands to lose most by punitive restrictions on trade with the UK. The overnight withdrawal of the average 36% tariffs on dairy imports from outside the EU will certainly see buyers looking outside the EU for their butter and cheese on independence day and there is no shortage of countries on our doorstep producing dairy at relatively low cost who will no longer be priced out of the market by EU tariffs.

Dairy production in the UK has decreased over the last couple of decades because it is unprofitable on anything but an industrial scale thanks to supermarkets paying below cost price for their milk. If the cost of importing dairy products from the EU does go up (and it’s a big if) then that will make imports less economically viable for large retailers and domestically produced products more profitable for them. They will buy more UK produced dairy which will grow the domestic industry and drive up exports as we have already seen with the manufacturing sector following the drop in the value of the pound.

It was the threat of importing cheap Polish milk that helped Tesco break the dairy farmers when they played hardball over wholesale milk prices a few years ago. If Polish milk becomes more expensive to import then that leverage disappears and UK dairy farmers could end up turning a profit on their dairy produce. The supermarkets of course tell us that paying a fair price for milk will drive up prices for consumers but it is in reality an investment in the dairy industry that will allow producers to benefit from economy of scale and reduce costs.

Leaving the EU isn’t going to result in a shortage of cheese and butter, nor is it likely to make it more expensive to the consumer. This is just more ridiculous Remainer scaremongering.

Theresa May’s Brexit Betrayal

Theresa May took her majority Remain-supporting cabinet to Chequers at the weekend and would you believe, they agreed to support a Brexit position paper that keeps us as members of the EU in all but name.

I know. Shocker, right?

Image result for brexit betrayal

This paper sets out Theresa May’s opening offer to the EU on our future relationship with them and represents complete capitulation. It proposes to keep the jurisdiction of the EU courts, the adoption of every EU present and future law on trade and maintains privileged immigration rules for EU citizens.

This proposal is just the opening gambit which the EU will reject and as we get closer to what should have been independence day will use as the basis for a much worse deal. The bulk of MPs have already ruled out a no-deal Brexit and will vote for whatever last minute deal is offered. And it will be a bad deal. Much worse than what is being proposed now.

There have been several resignations over the Brexit betrayal starting last night with the Brexit Secretary, David Davis. His resignation was quickly followed by Steve Baker and Suella Braverman who were junior ministers in the same department. Today Boris Johnson resigned as Foreign Secretary and Chris Green has resigned as private secretary to the Department for Transport. It is believed that the 1922 Committee that is responsible for leadership elections in the Conservative Party has received 42 of the required 48 signatures to call a vote of no confidence in Theresa May. A meeting of the committee was held this evening with conflicting stories emerging about what actually happened in there. Theresa May has survived this meeting but the publishing of the paper has been delayed by a week following it which would suggest she has been given an ultimatum by her backbenchers. She may survive the week after all but she is still on borrowed time.

There is only one good deal and that is no deal. Nothing the EU offers us will be in our national interest. The EU’s negotiators are petty, vindictive and have delusions of adequacy. They would rather the UK leaves with no deal which would be seriously damaging to the EU economy than come to a mutually beneficial agreement. With a no-deal Brexit forecast to provide a big boost to the UK economy we should have the strongest negotiating position but we are being led by a Remainer Prime Minister who has willingly given all that advantage away.

Theresa May has to go and sadly the future of Brexit is in the hands of 320 Tory MPs, most of whom are Remainers. It’s looking pretty bleak.

JLR job losses are not caused by Brexit

Jaguar Land Rover has announced it is cutting 1,000 temporary jobs at JLR plants in Halewood and Solihull.

Jaguar iPace

Remainers are, of course, blaming the job losses on Brexit but the blame is being put (partially) on the uncertainty around Brexit not the fact we are leaving the EU. In fact, every time you see a headline in a newspaper or on the BBC website saying Company X is cutting jobs/losing money/issuing a warning because of Brexit you will find that they cite the uncertainty around Brexit. It is the weakness of Theresa May and her largely talentless cabinet full of Remainers in dealing with the EU that is causing businesses angst.

The UK is the world’s 5th largest economy and was the fastest growing developed economy in the world last year. We do just 4½% of our trade with the EU and that figure is declining. Over 80% of our trade is domestic and will be largely unaffected by the outcome of Brexit negotiations. The fact that we are leaving the EU is really of little concern to the majority of businesses in the UK, it is the risk that is associated with not knowing what our relationship with the EU is going to be when we finally do leave that is a problem.

Our trade deficit with the EU in 2016 was an eye-watering £60bn. That’s the difference between what we export to the EU and what they export to us. Of that £60bn extra that we spend buying stuff from the EU, about £26bn is what we buy from Germany. The EU’s largest economy and most powerful member state has the most to lose from a drop in UK/EU trade. We hold all the cards but Theresa may is a rubbish poker player so she has dithered and grovelled and bent over backwards to accommodate every unreasonable demand that the EU has made. It’s embarrassing.

The British government should dispense with the ridiculous notion of a “transition period” during which we will blindly follow every rule the EU makes without a veto and without any input. We have a leaving date of 29th March 2019 and that is the date at which EU rule in the UK should end. The default position should be to assume that we will leave the EU with no special deal and will trade with the EU under WTO terms as most of the world does. If the EU comes back to the negotiating table with a sensible offer that is mutually beneficial in time then that is a bonus but it should be assumed that pigs will not be seen flying over Brussels any time soon.

This will allow businesses to plan for Brexit with some certainty and work out what risk that poses to their business. Some of those companies will decide that it’s not going to work for them and will either shift operations abroad or restructure to allow them to continue to be suffocated by the Brussels red tape factory and that’s fine. Every major change in industry regulation or taxation sees companies reevaluate their business and adjust their plans to make the best of it and sometimes that means cutting their losses. Brexit will be no different in that respect.

After that lengthy digression, let’s quickly come back to JLR and what they have actually said. Well, strangely they haven’t blamed Brexit. JLR have blamed “continuing headwinds” in the car industry for the job losses and the BBC have turned to a Professor of Industry in Birmingham to turn those two words into something that can be blamed on those bastard Tories. But he’s a professor of industry so he probably knows what he’s talking about so let’s see what he says:

With the big turn against diesel engines, Jaguar Land Rover is particularly exposed as more than 90% of its UK sales are diesels.

So that’s him pointing the finger at the war on diesel engines for a starter. It was widely publicised during the EU referendum campaign that JLR were being forced to cease production of the iconic Land Rover Defender because of EU regulations and of course the current all out assault on diesel engines has come from the EU.

JLR has just revealed its full-electric i-Pace model and have indicated offering all-electric or hybrid variants of all their models by around 2021, but they have been far too slow compared with Tesla and BMW.

Now it’s JLR’s late entry into the electric car market letting their competitors in the emerging high end electric car market steal a march. It pains me to big up either BMW or hybrids but the BMW i8 a not just a thing of beauty, it is an engineering masterpiece and despite being unable to fulfil customer orders for years and some pretty shocking build quality stories, Teslas have the cult status of the equally shoddy iPhone. The iPace has some impressive statistics but JLR are on the back foot.

It’s hard to say how long this production uncertainty will continue around Brexit negotiations, because it’s still unclear what the trading relationship will be between the UK and EU with regards to tariffs.

And there is the line that provides the anti-Brexit headlines. It doesn’t matter that he says quite clearly it is uncertainty about Brexit or that he goes further and specifically mentions not knowing what tariffs will be in place. The word Brexit is in there, it is all Brexit’s fault.

When we finally leave the EU – and I mean actually leave, not doing the Brexit hokey cokey with one leg in and one leg out – then I may accept some events being attributed to Brexit but misquoting someone entirely unrelated to JLR giving an opinion based on two words at least a year before we actually leave just doesn’t cut if for me.