Nick Hubble – Capital and Conflict (Great Britain) –
Yesterday we left you wondering who Barmie Barnier is. Quite simply, he’s the key to Brexit. He’ll decide whether the referendum was a mistake or the beginning of something great.
True, we’ll get something in between good and bad in the end. It’s never clear cut once politicians start talking about “compromise”. But the point is the coming negotiations between the UK and EU are the most important part of the whole Brexit campaign.
If the negotiators come up with something terrible, even the most ardent Brexiteer will get nervous. If the negotiations are a success, the Remainers will have to whine about Donald Trump instead.
So who are the negotiators in charge of Britain’s future?
Today we’ll focus on the EU’s man on the ground. Their lead negotiator for Brexit is an interesting choice.
Anti EU campaigners often bring up several posterchilds as examples of EU failures. Favourites are agricultural policy, a European defence force, the Treaty of Lisbon which French and Dutch voters rejected, lagging entrepreneurship, and the EU’s banking policy during the sovereign debt crisis. Each example shows how the EU bungles things.
So why not put in charge of the Brexit negotiations someone who was in charge of all those shemozzles?
Enter Michel Barnier, henceforth Barmie Barnier. He led so many of the policies which made Britons vote to leave the EU it just can’t be a coincidence.
Having lost the vote on the European Constitution, he became the French agriculture minister, pushed for the creation of a European defence force, rewrote the rejected European constitution into the Treaty of Lisbon which his own voters rejected, went on to regulate the banks at the onset of the European sovereign debt crisis and became the Commissioner for Entrepreneurship in the EU.
His CV reads like a UKIP attack ad. As President Junker put it, “I wanted an experienced politician for this difficult job.” Barnier even held down a job in the 1993 French government called Minister for Way of Life! If anyone typifies the EU’s upward ambitions in the face of steady failure, it’s Barnier.
No doubt we’ll be seeing a heck of a lot about him in coming months as we near the beginning of negotiations. All the positioning so far is informal. Barnier threatened to make Britain pay around 60 billion euros in obligations to the EU. Theresa May threatened to suspend automatic residency in the UK for EU citizens unless other countries offer the same to Britons.
It’s the makings of an interesting few months. Make no mistake, the negotiations really will have an impact on our wealth, trade and way of life. So you need to know who’s running the show.
Even if we get the Brexit negotiations right and the British economy embarks on a new path to prosperity, we won’t know about it for quite some time. Economic data is just too bizarre to untangle in the short term.
Take the big moves in exports and business investment since the Brexit vote as an example. Remain and Leave campaigners have been harping on about this economic data since the vote. Leavers point to booming exports, while Remainers panic over falling investment. But the data is really just a statistical aberration related to the way gold trades between countries.
80% of gold trade goes through the London Bullion Market book’s. London is in the UK. So if gold demand pops or flops, British trade swings with it. And the gold that flows through the LBM is classified as an asset, so an increase in gold exports reduces the “investment” figure in our national accounts.
The narrative here is that a surge in gold demand from China is what’s really responsible for the jump in exports and fall in investment, not Brexit. But if you think about it, the gold that flows from around the world to China via the LBM really isn’t a Brexit issue.
That didn’t stop economists and politicians from hijacking the narrative whichever way suits them. “See, trade increase because of Brexit!” Or, “See, investment fell because of Brexit!”
If the world gold trade can influence the Brexit debate so much, simply because we have the London Bullion Market instead of the New York Bullion Market, then don’t expect much sense to come out of interpreting future economic data either. Only our long term prosperity compared to Europe will be a valid indicator.
The EU is toast
Yesterday I explained why the Brexit negotiations would be about what’s going on inside Europe, not about the EU’s relationship with the UK. Eurocrats are worried about their jobs existing, not about the UK trade balance. And the confirmation just came from inside the EU.
The European Commission President Jean-Claude Juncker penned a draft white paper which basically dissolves the EU. He’s trying to placate members by allowing them to integrate at “multi-speed”. Under the proposal, countries wouldn’t have to adopt EU policies immediately. They could delay and stagger the process. That way the EU can proceed on its disastrous integration while leaving dissenters behind.
But what’s the point of a union where people can do their own thing? It destroys the entire premise of the EU. In any other union, selective enforcement of policies is unconstitutional.
In other words, the Eurocrats have given up on the EU as they envisioned it. At least temporarily. Once countries know they can flout the rules, nobody will obey them fully. If Juncker’s proposal is accepted, this is going to be a major chapter in the end of the EU.
Tomorrow we’ll leave Brexit back to the mainstream and take a look at Warren Buffett’s latest financial advice. The Oracle of Omaha has released his annual letter to you. And it’s downright dangerous.
Editor, Capital & Conflict
Category: Britain and the EU