Monday 1 November 2021

Fishing, polling and inflation

We seem to be on the verge of a trade war with France just months after Brexit, over fishing licenses for a handful of small boats around Jersey. The French are now resorting to setting deadlines and say they are going to block entry of UK boats into French ports and step up checks on trucks through Calais from tomorrow unless the whole thing is resolved. I don't know the truth of the whole thing but I understand not all the French boats can 'prove' they fished in Jersey's waters before a certain date.

Some fishermen have apparently bought new boats since and don't have records, others are too small to have electronic GPS systems and records. The French say they have supplied everything they can. Now the problem has the French PM writing a letter to the EU Commission which has been leaked to a journalist at Politico. This has been much commented on.

The letter’s existence was revealed by Alex Wickham at Politico, a former Guido Fawkes journalist and apparently godfather to one of Johnson’s children.  He is no friend of Brexit or the EU.

Wickham claimed in the letter that PM Jean Castex said the EU must demonstrate that Britain "has been damaged" by Brexit.

There are plenty of people on Twitter who say the letter doesn’t actually say that. Let me confess that although I worked for a French company for ten years I don’t actually speak French so I can’t comment on the translation. 

I think a lot of remainers don’t want to see the EU engage in that sort of language and HOPED the letter didn’t say what Wickham alleged it did.  But it probably does. 

Someone offered what they say is the right translation.

I'm not sure there is that much difference. For what it’s worth I think Wickham was right or as near right as makes no difference. France wants to make sure Europeans do see the damage Brexit is causing and I don’t think this is necessarily a bad thing.  We would do the same in their shoes.

Johnson has said the letter is "explicitly asking for Britain to be punished for leaving the EU" and this is obviously wrong and even Wickham didn't suggest that.  The word 'punish' isn't anywhere in the letter at all.

The French are not asking for us to be punished - explicitly or implicitly - in any case. Neither are they calling for us to be damaged, they seem to be asking only that the EU don’t offer concessions that allow us to escape the damage we have caused ourselves. That is quite different.

Brexiteers in the government have been going around the EU for the last few years trying to provoke a domino effect and so help to break up the bloc. Johnson spoke to the Polish President the other day to moan about the ECJ and I assume to encourage him to make as much trouble for Brussels as possible.

So, why Frost and Johnson are upset is hard to know.

I would add that this is exactly the sort of dispute that would have been quietly settled in Brussels between member states, it is precisely the sort of low level disagreement the EU was set up to deal with and prevent a few wisps of smoke developing into a raging fire that engulfs the continent.

Polling

On another matter now, Opinium have done their usual voting intention survey (fieldwork done on 28-29 October after the budget) with some added results about people’s impression of how Brexit is impacting the economy. The Conservative party still holds a five per cent lead in voting intention although Johnson’s personal rating is well negative now so it’s not obvious (to me) what is keeping the party afloat. 

It used to be thought he was more popular than the party but it seems not. A lot of it is I think inertia. People’s opinion changes very slowly and perhaps they simply don’t think very much about politics.

However, the Brexit results are simply stunning. The pollsters asked people if Brexit was impacting various things affecting themselves and the economy in a good or bad way. They were:

  • Salaries and wages
  • The economy as a whole
  • The ability to export to the EU
  • The ability to import from the EU
  • Their own personal finances
  • Prices in the shops

There was not a single category where Brexit was seen as having a ‘good’ effect, not one. And note the question is about now (the present tense having, not will have) not about how things might pan out in future. 


These are shocking numbers for the government who are trying to show Brexit in a good light. And I honestly don’t believe we’ve seen the worst of it yet. On imports there has been no impact whatsoever, things are more or less as they were except perhaps for marginally increased transport costs, but by 51% to 15% people think Brexit is affecting our ability to import goods in a bad way.. 

When importers are faced with masses of extra paperwork and long delays it will be far worse.

Prices in the shops have hardly risen at all although everyone in the supply chains thinks they will increase dramatically over the next few months. At the moment by 53% to 13% people believe Brexit is already having a bad effect.

I noticed in The National, a Scottish newspaper, farmers their are discussing with the supermarkets who is going to bear the higher costs for labour, feed, fertiliser, fuel and energy and you can bet it won’t be either of them. The consumer won’t be sitting around the table when the cost increases are ‘discussed.’

Which brings me to David Smith’s column in The Sunday Times (there’s a link to his blog where you can read most of it HERE) this week which is about the OBR fiscal outlook report with some scary figures about inflation.  He is the Sunday Times' economics editor.

The OBR modelled a couple of possible future ‘scenarios’ where energy costs rise more than they expect and another where big wage rises start to become endemic - as anyone who lived through the late sixties and seventies might remember. Inflation in either case could go higher and be more persistent and the bank "would have to put up interest rates to 3.5 per cent."

This sounds pretty benign compared to the 15% we had after black Monday. In my era interest rates were usually in the 4-8% range even during during normal times so 3.5% may not seem too bad.  But it's 35 times more than at present.

For many homeowners with big mortgages it might be a serious issue.  And for businesses with big loans or "highly geared" as they say it could also be a problem. But for the chancellor servicing a debt pile around £2 trillion and the taxpayer who foots the bill, it could prove to be a catastrophe

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