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What a vision for the future for a Brexit Britain January 16, 2017

Posted by WorldbyStorm in Uncategorized.
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Is the thought that comes to mind when reading Philip Hammond’s comments that:

…Britain could transform its economic model into that of a corporate tax haven if the EU fails to provide it with an agreement on market access after Brexit.

In an interview with the German newspaper Welt am Sonntag, Hammond said that if Britain were closed off from European markets after leaving the EU, it would consider abandoning a European-style social model with European-style taxation and regulation systems, and “become something different”.

How serious this is I’ll leave to others – the idea of the UK as a sort of a nuclear weapons equipped Singapore writ large on the edge of Europe is rather unlikely, but one could hardly say that the Tories hadn’t in small and various ways attempted to shift their models already.

But isn’t it remarkable that these thoughts – and Hammond supported Remain IIRC -would ever be crystallised in conversation. That a Chancellor of the UK would have said such things even a year ago would have been absurd. But then, welcome to absurdity. And difficult to argue with Jeremy Corbyn’s response:

Asked about Mr Hammond’s comments during an interview on The Andrew Marr Show Mr Corbyn said “He appears to be making a sort of threat to EU community saying ‘well, if you don’t give us exactly what we want, we are going to become this sort of strange entity on shore of Europe where there’ll be very low levels of corporate taxation, and designed to undermine the effectiveness or otherwise of industry across Europe.’
“It seems to me a recipe for some kind of trade war with Europe in the future. That really isn’t a very sensible way forward.”
Mr Corbyn also said Mrs May “appears to be heading us in the direction of a sort of bargain basement economy”, adding: “It seems to me an extremely risky strategy.”

It also points up that the line that somehow the EU is ‘threatening’ the UK is rather facile. The EU has a well established approach in regard to freedom of movement etc, the UK has decided to move away from the EU and is unwilling (it appears) to accept that and other elements that the EU regards as necessary for certain economic relationships with it by others. It is entirely the UK’s decision to terminate its membership – the conditions on which its new relationship with the EU are established will of necessity be different. And not as good – but that’s the nature of the exercise. For the UK to be attempting to – even rhetorically – threaten the EU seems curious, at best.

As to that Singapore-like future? The BBC points up some of the basic problems:

But turning a large G7 economy with a robust social model into a city state might be difficult. It might involve the government handpicking which industries it thinks will be successes and rapidly neglecting existing sectors.
Millions of people would need to get brand new qualifications while those with undesirable skills would become surplus to requirements. Massive infrastructure projects might be rushed through with minimal consultation.

Fantastic stuff. But only in one sense of the term.

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Comments»

1. An Cathaoirleach - January 16, 2017

The “Caymans sur la Manche” approach reflected in the Welt am Sonntag interview comes out more as a desperate threat, rather than as a definite policy.

The UK is too large an economy and too broadly based to survive by narrowing its development. However London is developing as a city state, separate from the rest of the UK.

Hammond is too clever a man not to understand that. The interview, carried out during a short trip to Germany to meet the scrutable Dr. Schäuble, may reflect how bad their discussions went.

The UK’s assumptions that it could tweak a deal which the larger countries would then push through is now seen as completely impossible, leaving the “Hard” departure as the only option. Mrs. May’s speech on Tuesday has all of this as a backdrop.

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WorldbyStorm - January 16, 2017

I’d tend to agree. it must have been one hell of a conversation.

Interesting point re London though. Problem is it can’t be politically separate.

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2. CL - January 16, 2017

“U.S. President-elect Donald Trump said that Brexit would turn out to be a great thing and other countries would follow Britain out of the European Union but promised to strike a swift bilateral trade deal with the United Kingdom.”
http://www.reuters.com/article/us-usa-trump-britain-idUSKBN14Z0Y2

This has obvious implications for Ireland; more than the fate of the Doonbeg snail is involved.

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