MAY WROTE PAMPHLET SAYING MPs SHOULD HAVE VETO

Mrs May's hypocrisy has been made clear with the news that she and her advisor Nick Timothy wrote a detailed pamphlet in 2007 (HERE) saying ministers should gain Parliamentary approval before talks with the European Union.  This is of course quite the opposite of what she is saying now.

The pamphlet is HERE.

It heaps praise on Denmark for the way that ministers have to obtain a mandate from the Danish parliament for their negotiating position  before" they go into any kind of negotiation with the EU. The discussions are held in private but a summary is published afterwards of the items on the agenda although the specific mandate remains private.

In the pamphlet she argues it should be impossible to override parliament.

HAMMOND UNDER PRESSURE FROM THOSE STILL IN DENIAL

Phillip Hammond is coming under pressure not to "panic" and offer any kind of stimulus in the autumn statement on November 23rd.  According to The Telegraph (HERE) Liam Fox is saying it would be a "huge mistake" if he accepts what Fox claims are nonsensical figures about growth collapsing next year.

The chancellor is in an impossible position.  The treasury and the vast majority of economists and commentators expect a serious slowdown next year but colleagues in cabinet and in parliament simply refuse to accept that there is even a remote likelihood of any sort of problem.  John Redwood says the forecasts in November are "clearly going to be wrong" before they are even published!

If Hammond acts to stimulate things he will be accused of bringing about a slowdown by panicking people into cutting back on spending and investment.  Daniel Hannan was on Radio 4 this morning making the same accusations against Mark Carney.

They are like passengers on The Titanic urging the captain, after the ship has struck the iceberg, to act as if nothing has happened.

BILL FOR NISSAN COULD BE "COLOSSAL" - CLEGG

Nick Clegg (HERE) says the deal with Nissan could lead to a series of deals across industry sectors that may end up with the taxpayer paying “colossal amounts of money” in subsidies.  Jeremy Warner in The Telegraph says Theresa May has taken a "massive gamble" on getting free trade with the EU in cars (HERE).

Bloomberg are reporting that, inspired by Nissan’s success, other industries will now likely intensify their lobbying: Banks want to keep so-called “passporting rights,” while pharmaceutical giants are keen for more foreign talent and a constant stream of funding. 

GlaxoSmithKline and AstraZeneca executives are already planning to meet ministers, according to the Sunday Times.

“Theresa May is digging herself deeper into a hole by promising help to Nissan,” Erik Nielsen, chief economist at UniCredit said in a report on Sunday.

One can't help but feel the Nissan deal was done because the government simply could not face the prospect of such a huge employer and contributor to exports pulling the plug so soon after Brexit and were prepared to offer anything to avoid it. All the EU need do is announce next April that they do not want to offer any kind of trade deal and are content to operate under WTO rules and we are sunk.

Update:  Reuters are reporting (HERE) that the aerospace and pharm industries are seeking the same assurances that the government has offered to Nissan.

STERLING CONTINUES TO STRUGGLE

This week's relatively benign economic news has failed to lift the pound above $1.22. Growth is surprisingly resilient at 0.5%, more or less what the Treasury forecast before the vote and Nissan's decision to build new models and even expand production at Sunderland is good news.  Although it does beg the question for Brexiteers why Nissan took some reassuring (and perhaps even money) to remain in a UK which is apparently going to prosper like never before.

It is as if they were just about to leave Heaven but were persuaded by St Peter to stick it out!

But all this is not good for sterling. If good news does not bring about a rally what will the first bit of bad news do?  Inflation is starting to bite (HERE) and consumer confidence is beginning to fall (HERE) so we may not have long to wait. The next set of trade figures will be interesting.

NISSAN - THE QUESTIONS KEEP COMING

A couple of articles on Friday raise questions about the Nissan deal. Reuters (HERE) suggest the flood gates will open with claims from other car makers to obtain "assurances" that they won't be impacted by Brexit.  And Anna Soubry, the former business minister (HERE) thinks the government must have made some big promises to keep Nissan either assuring them Britain would remain in the customs union or confirm that they will be compensated against any tariffs.  Also Bloomberg are asking what it cost Theresa May (HERE).

A couple of other people have articles saying we will stay in the customs union including Sky News political editor Faisal Islam (HERE).

I must admit it is difficult to fault Mr Islam's logic.

BACK TO THE 1970s SAYS FORMER BoE POLICYMAKER

Adam Posen, an American who was on the BoE monetary policy committee has, in an interview, said Brexit is going to take Britain back to the 1970s (HERE) and will be a source of economic pain for years to come.  He likens Britain outside the EU to a patient with arthritis.

He says Brexit is a delusional fantasy which will contribute to stagnant growth, rising prices and a smaller economy where we are all worse off. I agree with this.

GDP DATA - CONSUMER CONFIDENCE AND THE POUND

A few odd things happened yesterday.  The latest GDP figures came out and showed a healthy 0.5% growth (HERE) significantly more that the 0.3% forecast by economists. But during the day, the pound ended about 0.7% down at $1.21700 or so.  Some commentators think this was due to most of the increase coming from consumer spending with manufacturing and construction both showing falls in output.  Today the pound has not crept above $1.2150

Then there was the news about Nissan building the new qashqai in Sunderland with all the speculation about what incentives (HERE) Nissan forced out of the government in order to avoid being burdened with tariffs.  This was followed this morning the J C Bamford's owner saying being outside the customs union and the single market would make us better off (HERE).  This is amazing, JCB seem to think Nissan asked and the government offered something (we do not yet know what) that would, according to JCB stop them from becoming better off.

What a strange world we live in. The government is now offering support and reassurance to help companies avoid becoming better off.

NISSAN PLANT TO BUILD NEW QASHQAI

Nissan has announced the new Quasqai is to be built in Sunderland (HERE) which is fantastic news for the worker and the country.  However, questions are being asked about how the government did it and Nissan are saying they haven't got a special deal (HERE).

But newspapers think there is something here because the business minister refused to answer the question six times on The World at One (HERE) and this morning The Times is claiming a last ditch deal was done to protect Nissan (HERE) from punitive tariffs and this has been promised in writing.  This seems to be right. Let's look at the timeline:  Nissan say no new investment unless they get tariff free access to Europe or compensation. Greg Clark flies to Japan to meet Nissan executives.  Nissan announce new investment.  Government say they have given "support and reassurance".

Now there is speculation that other car manufacturers will have to have the same reassurance and questions are being raised about how much this might cost (HERE).  Jonathan Portes at the NIESR Blog (HERE) has a long piece about this and quotes Reuters:

Britain has given Nissan a written commitment of extra support in the event that Brexit reduces the competitiveness of its Sunderland plant, in return for new production investments by the Japanese carmaker, a source with knowledge of the matter told Reuters. In addition to unconditional investment aid, Britain pledged in a letter to offer further relief if the terms of Britain's European Union exit ended up harming the plant's performance, the source said.

State aid is regulated under EU law and they would take a dim view even after Brexit about allowing the import of goods which are state subsidised - even the WTO rules forbid this kind of thing as Phillip Inman points out (HERE).

ANALYSING THE VOTE

Professor John Curtice, the polling pundit has produced a report (HERE) about why Scotland voted to remain but for me the most interesting thing is the level of support for EU membership from the 18-34 age group who voted 67% in favour of remaining.  This compares with 47% for the 35-54 age group and only 41% for the over 55s.

So, the people least affected by the referendum voted overwhelmingly to leave while those most affected, the young, voted even more overwhelmingly to remain.

In the next 10-15 years as the older voters pass on and assuming people's opinions remain the same (a heroic assumption I know) the majority may want to stay.  What an irony this will be when a future prime minister's pen hovers over the signing page of a new trade deal with the EU, knowing that polling evidence is showing most people want to restore our membership.

FOX WAKES UP

Liam Fox was giving evidence yesterday to a select committee (HERE) where he seems to have noted for the first time that there is a risk the EU will put "politics over prosperity". After saying for years that the EU is a political project he has at last woken up to reality and now seems to be saying if he fails it will all be down to the EU's intransigence.

Nothing to do with me guv'.

HANNAN AGAIN

Daniel Hannan has an article in The Telegraph (HERE) extolling the virtues of free trade and warning that we shouldn't lock ourselves away behind protectionist barriers.  He argues that the EU should offer us access to the single market "as we become more competitive".  Quite how we are going to do this he (like most of the Brexiteers) doesn't explain.

I wonder how he is going to sell this to steelworkers in Port Talbot or farmers facing competition from Africa or India is going to be interesting.  In fact anyone in manufacturing (which as Patrick Minford has already said will be eliminated) should be a bit apprehensive.

If journalists and politicians jobs were at risk you can bet Mr Hannan would be banging the drum for as many protectionist barriers as possible.

HARD BREXIT LOOMS

Politico, a political website dealing with EU issues has picked up on a reply given by Mrs May to Edward Leigh in the House of Commons (HERE) where he asks, in a rather rambling question, if she thinks we should negotiate a free trade deal with the EU. She says she agrees.

This means we will be out of the single market but is in marked contrast to what she told bankers in a speech in May before the referendum where she says being outside the single market would damage our economy (HERE).

Taken together with he conference speech about not relinquishing control of immigration or accepting judgements from the ECJ, I think most people will think we are heading for a hard Brexit.

MIXED MESSAGES

Two opinion polls in the last month seem to be giving diametrically opposed messages. The first by ComRes (HERE) says a majority of people put trade before controlling immigration.  A second one (HERE) by Survation for ITV says we are happy to sacrifice trade if that means we can control immigration.

How do you make sense of that?

HYPOCRISY AND DAVID DAVIS

There have always been hypocrites in parliament and elsewhere but I used to think David Davis had something about him. Now I see he has the same feet of clay as all the others.

In a debate in 2002 on the Regional Assemblies Bill he was highly critical of John Prescott because a vote on the bill was being proposed before details of the assemblies powers and scope had been set out. He said this (HERE column 201):

In a democracy, voters have to know what they are voting for. They need to know what the choice is, to use his own word. For that to happen, the proposition has to come before the vote, but with the Bill, it will be vote first, proposition afterwards. The Bill proposes that referendums should be held without voters knowing the structure or powers of the assemblies for which they are asked to vote. Even the Deputy Prime Minister would have a hard job to convince anyone that that is democratic. 

Firstly, the 23rd June vote was against something and not for something. But also, now he is in the executive, he is proposing Mrs May and himself get to define what people voted for.  It is amazing that he can defend his position.  He went on to say:

Referendums should be held when the electorate are in the best possible position to make a judgement. They should be held when people can view all the arguments for and against and when those arguments have been rigorously tested. In short, referendums should be held when people know exactly what they are getting. So legislation should be debated by Members of Parliament on the Floor of the House, and then put to the electorate for the voters to judge.

GROWING INTOLERANCE

For years we have been fed a diet of poison about the EU by The Daily Mail, Daily Express and The Sun with very little in reply. We accepted their right to be critical of the EU and we accept a free press should hold the powerful to account.

But now we are told that any criticism or wish to reverse the decision to leave the EU is tantamount to treason. In fact a conservative councillor has even started a petition calling for support for the EU to be added to acts which constitute treason.

The Independent carries an article (HERE) about the tabloid press raging against those who want to "subvert the will of the people".  This is the people who they have spent thirty years brainwashing with nonsense stories about bent bananas and non recyclable teabags.  Apparently, they think because 52% have spoken the other 48% must shut up.  Democracy does not work like that. After an election the opposition continue to oppose and that is how it should be.

Moreover, it is the vacuum of policy which is causing the rising panic among the tabloids and this is no one's fault but their own. They had no idea what the 52% were being urged to vote for.

UK TO LEAD THE WORLD ON FREE TRADE

Theresa May is claiming after Brexit we will lead the world and be the most passionate and convincing advocate of free trade (HERE).

Before the vote, Patrick Minford from Economists for Brexit wrote a piece for The Sun (HERE) where he advocated free trade and said the effect would be that BMWs and Brie would be cheaper although I don't believe there are any tariffs on either at the moment so it's hard to see how they would be cheaper.  However, in the article he also said:

Over time, if we left the EU, it seems likely that we would mostly eliminate manufacturing, leaving mainly industries such as design, marketing and hi-tech. But this shouldn’t scare us.

Let us hope Mrs May explains this to the workers in manufacturing before she becomes the most passionate and convincing advocate of free trade.

TARIFFS - WHO PAYS?

Civitas has produced a report apparently showing the EU would be worse off by £7.7bn (HERE) if they introduce tariffs according to the regime in place at the moment and using trading figures from 2015. Newspapers have picked this up and are reporting it as a potential own-goal for the EU.

However, I think it is simplistic and wrong. Here's why:

Firstly, it assumes there is no change - either to prices or the behaviour of buyers or sellers. The more likely outcome is a change in both to some degree.

Secondly, although it is right to say the government of the importing country gets the benefit of the tariff and this comes from the supplier in the exporting  country, it is more likely than not that the customer in the importing country bears the cost because the price will go up.  Civitas appears to make the error of thinking manufacturers pay VAT - of course they do but it is the customer who bears the cost.

So, to say the EU will pay £7.7bn is misleading. If European suppliers increase prices by the same amount as the tariff, it will be the UK customers who will pay.  And if we are at the same time compensating Nissan (and others) for the tariffs applied to exports into the EU the UK will carry all of the costs of any tariffs (see HERE).

CONSTITUTIONAL CRISIS LOOMS - WARNS REPORT

The Institute for Government has issued a report saying a constitutional crisis looms unless there is agreement by all the devolved governments on the negotiating position for the terms of Brexit (HERE).

Mrs May has today announced a "direct line" to David Davis for all the First Ministers, offering them a way to shape policy. Whether this will be enough remains to be seen. I would have thought they already had a direct line to David Davis so it doesn't look to me like anything new.