The old nutter David Davis spoke in the debate on the economic impact of Brexit on Thursday but as usual his contribution was a mix of error, ignorance, bluster and convoluted nonsense - meaning not very much has changed since he was a minister. He focused on the balance of our exports to the EU compared to the rest of the world, something he often does.
His figures are simplistic and selective and wrong. This is the 'logic' of why he thinks we'll be better off outside the EU:
His figures are simplistic and selective and wrong. This is the 'logic' of why he thinks we'll be better off outside the EU:
"In that time [the last 30 years of free trade], this has had an impact on us, too. We have gone from having 60% of our trade with the European Union and 40% with the rest of the world 20 years ago to nearly the other way around—in a couple of years, 60% will be with the rest of the world and 40% will be with the European Union. I am loth to quote forecasts, given the bad name that they are being given at the minute, but the projection—not a forecast—is that that will continue".
During the campaign it was accepted that 44% of our exports went to the EU - I assume they were 2014 figures, the most recent then available. Davis clearly expected a decrease to 40% but in fact by 2016 while the campaign was raging, exports to the EU were actually rising and reached 48%. But Davis, who is 'loth to quote forecasts' instead made an entirely wrong assumption. The old scourge of Treasury forecasts not only got the magnitude of the change wrong but also the direction. And he then rounded the old 2014 figure down to 40%.
Davis also carefully excludes the additional 12-15% of our non EU exports which go to countries with whom the EU has a trade deal. So, actually the balance is 60%+ of our exports go to the EU or countries the EU has a FTA with. Under 40% goes to other countries, so the position is actually the total opposite of what he claims.
However, he then goes on to compare the top three EU export destination countries with the top three rest of the world markets for UK exports:
"To pick up on the point made by the hon. Member for Dundee East, if we take the top three markets for British goods, or UK goods, in the rest of the world versus Europe, the top European ones of Germany, France and the Netherlands are dwarfed by our sales to America, China or Australia" (HERE 1:46 pm)
I am not sure even what this is supposed to tell us and Davis didn't explain, but is it true anyway? Err, no. Figures on the ONS for 2016 are HERE and I can give our exports to the individual countries he listed as follows:
"To pick up on the point made by the hon. Member for Dundee East, if we take the top three markets for British goods, or UK goods, in the rest of the world versus Europe, the top European ones of Germany, France and the Netherlands are dwarfed by our sales to America, China or Australia" (HERE 1:46 pm)
I am not sure even what this is supposed to tell us and Davis didn't explain, but is it true anyway? Err, no. Figures on the ONS for 2016 are HERE and I can give our exports to the individual countries he listed as follows:
USA £99,569 million
China £16,807 million
Australia £ £8,607 million
Germany £49,123 million
France £33,848 million
Holland £31,022 million
We export £125 billion to the top three RoW countries and to the top three EU countries it's £113 billion. Is this 'dwarfing' as Davis says? Of course it isn't. It's about ten per cent more, hardly dwarfing. He could have easily checked these figures but since he's David Davis, truth and accuracy are optional extras - which he declines to use when it suits his argument.
Now bear in mind that the USA (325 million) is about four times the population of Germany (82.7 million), so exports per head to Germany are actually twice as much as to the USA. Exports per head to Holland are about five times as much as to Australia.
If I take the combined population of China, the USA and Australia at 1,736 million and compare it to the combined population of Germany, France and Holland at 167 million you can see we export ten times as much per head to three EU countries as we do to the top three RoW countries. Of course, one might conclude there are more opportunities in fast growing markets but I'm not sure that the USA and Australia could be described as that. But Davis then says, with no evidence to back this up whatsoever:
"Our trading future is more in the rest of the world than it is in Europe. This has huge implications— massively underestimated by Treasury and Bank of England forecasts over and again—for the need to keep our freedom to do trade deals to maximise our ability to exploit that".
Needless to say all the experts in global trade plus the thousands of economists in The Treasury disagree with him. In fact Davis is essentially turning the so-called and widely accepted gravity model of world trade on its head.
And leaving without a deal is nothing to fear according to the ageing SAS reservist because in the nether world of Davis there is a "whole stratum, a whole spectrum, of possible types of no deal". In fact it ranges all the way from no deal to a deal if you see. They are all forms of no deal really because even the best deal won't include some aspects of the relationship and so it's just a form, a part of the spectrum of possible no deals. If you thought quantum mechanics strange try understanding Davis' logic. This is actually what he said (warning: if you suffer from migraine look away now):
"Let me start with the issue on which I disagree with pretty much everyone who has spoken so far: the World Trade Organisation deal, the so-called no deal. The Chancellor called it a strict no deal, because he knows full well all the preparations that have been made in the Government to create a basic no deal, or basic negotiated outcome. There is a whole stratum, a whole spectrum, of possible types of no deal. Some of them deal with the issues that my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) raised earlier—aviation, data and so on. If this deal goes down, as I think it will in a few days, there will be a scramble in London and Brussels to start putting those one-on-one, unilateral negotiations together. So there is a range of possibilities".
There it is in a nutshell. Simple really. A deal is no deal and no deal is a deal. Anybody should know that.
Now bear in mind that the USA (325 million) is about four times the population of Germany (82.7 million), so exports per head to Germany are actually twice as much as to the USA. Exports per head to Holland are about five times as much as to Australia.
If I take the combined population of China, the USA and Australia at 1,736 million and compare it to the combined population of Germany, France and Holland at 167 million you can see we export ten times as much per head to three EU countries as we do to the top three RoW countries. Of course, one might conclude there are more opportunities in fast growing markets but I'm not sure that the USA and Australia could be described as that. But Davis then says, with no evidence to back this up whatsoever:
"Our trading future is more in the rest of the world than it is in Europe. This has huge implications— massively underestimated by Treasury and Bank of England forecasts over and again—for the need to keep our freedom to do trade deals to maximise our ability to exploit that".
Needless to say all the experts in global trade plus the thousands of economists in The Treasury disagree with him. In fact Davis is essentially turning the so-called and widely accepted gravity model of world trade on its head.
And leaving without a deal is nothing to fear according to the ageing SAS reservist because in the nether world of Davis there is a "whole stratum, a whole spectrum, of possible types of no deal". In fact it ranges all the way from no deal to a deal if you see. They are all forms of no deal really because even the best deal won't include some aspects of the relationship and so it's just a form, a part of the spectrum of possible no deals. If you thought quantum mechanics strange try understanding Davis' logic. This is actually what he said (warning: if you suffer from migraine look away now):
"Let me start with the issue on which I disagree with pretty much everyone who has spoken so far: the World Trade Organisation deal, the so-called no deal. The Chancellor called it a strict no deal, because he knows full well all the preparations that have been made in the Government to create a basic no deal, or basic negotiated outcome. There is a whole stratum, a whole spectrum, of possible types of no deal. Some of them deal with the issues that my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) raised earlier—aviation, data and so on. If this deal goes down, as I think it will in a few days, there will be a scramble in London and Brussels to start putting those one-on-one, unilateral negotiations together. So there is a range of possibilities".
There it is in a nutshell. Simple really. A deal is no deal and no deal is a deal. Anybody should know that.
