Sunday 27 September 2020

Brexiteers as mad as ever

Steve Baker was chair of the ERG at one time and is certainly one of the more committed Brexiteers but as with many of his colleagues he has little idea what he's done or is doing. Like a lot of MPs they are hung up in the belief that somehow, in some mystical way, the Chancellor Rishi Sunak is going to come up with a a tax and spend regime that will bring about an "economic transformation for the better". Brexit is universally seen as a disaster by the very companies and people who are needed to do the transforming so it will probably have the opposite effect.

He Tweeted a long incoherent thread yesterday which included a bit about Sunak waving a wand and this:
It was the bit about the City of London Corporation - a body I did a bit of research on some time ago for a blog post I never wrote - that caught my eye. It is essentially responsible for governance in The City, the financial heart of London.

The Corporation’s head of policy Catherine McGuinness, speaking at a webinar a few days ago was sharply critical of government plans to repudiate the Withdrawal Agreement,  warning it could “seriously damage” the UK’s relationship with its biggest trading partner. She said the government has forgotten about financial services in the talks with the EU and reminded her audience that she had "said some time ago that we’d been thrown under a bus. I do feel the bus has driven off and we’re definitely not sitting on it,”,

On Thursday, The Telegraph had an article: EU tries to stop relying on City of London after Brexit
Brussels fears that London could pose a threat to its ability to set financial rules and regulations after Brexit.  It quoted the words of Valdis Dombrovskis, an executive vice-president of the European Commission.

Mr Dombrovskis admitted that the EU’s dependency on financial centres outside the EU was “one of the reasons why we are developing capital markets”.

“Brexit has made it more urgent - there are specific risks which we are seeing with so much financial activity now effectively moving out of the EU,” he said.

The Commission has published an action plan to build a capital markets union, a long-term strategy to establish large integrated sources of finance for businesses in the bloc. 

"Brexit has a significant impact on the Capital Markets Union. It further strengthens the need for the EU to have well-functioning and integrated capital markets,” the Commission said in a communication to EU governments.  

The EU would have a number of lesser, fragmented financial centres dotted around the bloc after Brexit, rather than a single dominant hub in London, it added.

And I have no doubt the EU will do it too.  Remember Boeing used to dominate the civil aircraft market. The EU are very good at slowly building things almost unnoticed and unseen. Over the years they have become a regulatory superpower because nobody cared about regulating things like Brussels and they can now force their will on the USA and China even, who adopt EU regulations because they're sensible.

In a few years, they will be a global power in financial markets.

Only this week J P Morgan announced another 200 staff will move to Frankfurt along with $230 billion in assets that will make it Germany's sixth largest bank.

This is how Brexiteers think we are going to transform things for the better. Cummings talks about creating trillion dollar businesses like Apple or Google or Amazon - but conveniently overlooks that it was the huge home market in North America that helped to catapult them to global dominance. Brexit cut our home market down by 85 per cent, while Johnson trashed our reputation for respecting international law and keeps poking our best customer in the eye.

They then stand back and demand the Chancellor (who was also involved in all this state vandalism) transforms the economy for the better!
European economies do better (the Eurozone is expected to shrink by about half of the UK during the Covid crisis for example) than we do precisely because they don't need to rely on a magic wand which has to be waved in vain every few years in the hope a rabbit will pop up.

EU economies are built slowly from the ground up and not from the top. Also, politicians do not destroy the pitch based on nothing more than ideology either.

Baker is sitting in the passenger seat yanking on the handbrake while urging the driver to step on it. Crazy, eh?

Finally, a sign the public are starting to smell a rat:
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