Stop the world – England wants to get off, and Scotland could gain

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Russell Bruce argues that Scotland has everything to gain if the Tory Right proceed with a “hard Brexit” as their way out of Europe

Is a hard Brexit unravelling? Mrs May’s speeches at her party conference certainly are. Six years at the Home Office left her ill-prepared for premiership: She shows no grasp of basic economics, international relations or how markets work.

Theresa May
Theresa May

With a degree in geography she should have some knowledge of the world. Her pre-political career began with six years at the Bank of England followed by 12 as a financial consultant and senior adviser in international affairs at the Association of Payment Clearing Services. So why did she ignore what these years must have taught her to rely on sound bites and jingoism?

The online dictionary defines jingoism as “extreme patriotism, esp. in the form of aggressive or warlike foreign policy.” That hits the mark for the tone that May set for a conference on which the eyes and ears of the world were focussed on – especially financial markets in the wake of the Leave vote.

REACTION

The sharp fall in the value of sterling on 24rd June was an instant reaction to an event that changed the UK’s position in the world, with uncertainty in continuing momentum. Sterling lost 15 per cent of its value and with it the value of all assets denominated in sterling. May’s speeches last week wrought further havoc, as currency markets started to eye parity with the Euro and even the possibility of parity with the US dollar. What a slap in the face for Sterling to lose so much against the Euro, a currency we are constantly told has inherent structural flaws.

£ v $ and €.numbers

No currency is without some disadvantage to poorer performing countries or regions. The Euro is no exception but it has global strength due to the size of the Eurozone economy and the Euro’s weighting in IMF Special Drawing Rights (SDRs) at 31% against Sterling at 8% – a 4 to 1 ratio. SDRs are a form of reserve currency and likely to be of growing importance as the dollar wanes as the default international currency.

On a recent news programme Iain Duncan Smith, now consigned to the backbenches, tried to divert attention by pointing out that currencies fluctuate on a constant basis. True, but the big moves are the result of big events and perceived damage – like the UK leaving the gold standard in 1931, the 1949 devaluation, leaving the European Exchange Rate mechanism (ERM) in 1990 and the Leave vote result in the early morning of 24th June.

Duncan Smith also claimed the rise in the stock market indicated that everything was hunky-dory and demonstrated faith in UK plc. This is also to ignore reality. Investors are buying UK listed companies whose earnings come from overseas. Those earnings when converted from dollars or euros buy more pounds than was the case before the UK voted for Brexit and before Mrs May opened her mouth.

TUMBLE

The share price of miners and oil companies, who report and earn in dollars, rose because it costs more to buy these shares in pounds than it did before each tumble in the value of Sterling.

Investors like a bargain and overseas investors see opportunity to buy UK shares on the cheap. Expect to see an increase in overseas takeovers of UK companies as they move to pick off UK companies in bargain basement territory.

The FTSE 100 rose from around 6300 before the referendum result to just over 7000 now – a gain of 11.4%. In the same period sterling has lost value against all the main currencies. On Monday the 20th June £1.00 was worth $1.47. Today £1.00 buys just $1.21, representing a 17.7% fall in sterling against the dollar. In the same period £1.00 bought €1.30 on 20th June, today £1.00 buys €1.10, representing a fall of 15.4% against the Euro.

The stock market rise looks less impressive with a great deal of activity from UK investors effectively selling the pound and overseas investors bargain hunting. In dollar terms the FTSE 100 is only 90% of the value it was before sterling started to dive.

The problem for Sterling is perceived continuing weakness with May’s government doing nothing to halt the free-fall. The Financial Times is reporting that the pound is on a 168-year low against the dollar. A trend long established.

Long, long ago when Britain was a global power a dollar was five shillings or 25p, now it is 80p and we have not seen the end of the current trend when nobody is any the wiser on May’s exit strategy, or indeed if there is one, hearing instead outpourings of confusing and unrealistic positions on why the EU must deliver on Brexiteer terms.

LABOUR

The winners are the wealthy who can shift their wealth to wherever produces the best return and provides a safer haven. The Brexiteers have difficulty getting their heads round why the free movement of labour and capital within the EU is non-negotiable. Capital always finds a means of getting where it wants to be. Free movement of labour helps level the playing field.

The losers are the people on low and even those on above average incomes, pensioners, students, young people, those about to retire and those on zero hour contracts. In other words, pretty well all of us. Imported food and clothing will cost more, fuel prices are rising with another 4p a litre expected soon.

The hospitality trade will benefit from more overseas visitors but lose out on regular spend from the home market as belts tighten. Scotland welcomed record numbers of international visitors in the second quarter of 2016 spending £540 million in the 3 months to June. European visitors accounted for more than half at £276 million. The tourism sector employs 217,000. Continuing visa free travel within the EU, as a member state, is vital for this and every other business sector. Exports to the European Union by Scotland’s food and drink sector were worth over £724 million in 2015

Exports traditionally became more competitive when sterling lost value. Times have changed and goods have shrunk as a share of UK GDP from 36% in 1948 to 10% today. Manufacturers today are dependent on importing parts – 40% for the car industry – but with Brexit no automatic tariff free entry into Europe, as is the case at present. The UK no longer has the machine shops to act as local suppliers.

We are all citizens of the world whether Theresa May recognises that of not. We are affected by what happens elsewhere and the prognosis is not good. Frankfurt, Paris and Dublin are lining up to grab a share of the UK’s financial sector. The US Federal Reserve minutes for September have just been released and the vote was close, so the odds of a rate rise in December have increased. The dollar will increase in value if the Fed raises rates and the pound will take another beating. Some analysts are predicting another 30 per cent fall in the value of Sterling when Article 50 is triggered in early 2017. Say goodbye to holidays in Europe, already getting more expensive by the day.

Scotland could be a winner. Our export record is better than England’s but we have to retain our membership of the EU. Europe seems willing to accommodate us in a change from the question marks suggested in 2014. Crossing out UK and substituting Scotland in the present Treaty could deliver a quick safe passage and quite possibly the opt-outs and rebate for the early years of Scotland’s membership.

APPEAL

Many in Europe have had enough of the “half in, half out” years of Britain’s membership, Now that the UK is firmly on the way out such a simple, early deal for Scotland as continuing member number 28, would not be without appeal to Europeans.

Another silver lining, and one you will not find mention of in the mainstream media, is the benefit from the current fall in Sterling for North Sea oil and gas. Having worked through a painful period of cost reduction, with costs paid in pounds, North Sea output gains as the price is realised in dollars.

Then there is our own financial centre. Bankers remain unpopular in the public mind but there is more to the financial sector than the banks.

Scotland’s financial sector employs 85,400 people, contributing  £7 billion to GDP. Adding related professional services brings total employment dependent on the financial sector to 156,700. With strong connections to the financial sectors elsewhere, a cost base 25 – 50 per cent lower than London, Paris or Frankfurt, opportunities for Scotland are there for the taking if we remain in the EU able to provide “passporting” rights, lost to London.

Winnie Ewing famously said when elected for Hamilton in November 1967, “stop the world, Scotland wants to get on”. That ambition has not changed, and 49 years later we are closer to achieving our goal. England, it seems, wants to stop the world so it can get off. And today we learn Nicola Sturgeon has a plan to keep Scotland in the EU. Never doubted it.

eu-activist-pack2

“I’m no leaving you campaign” material designed by the writer who describes himself as a Scottish, European and a World citizen. In a collaboration with material from the National Yes Registry campaign, an activists pack of campaign materials is available from http://www.ayemail.scot/store/?model_number=EU-ACT

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15 COMMENTS

  1. I want Scotland to be a prosperous and internationalist country within the EU. A country that seeks to irradicate inequality and poverty. A country to the left of politics that plays a role commensurate with its size and values on the world stage and does not get involved in foreign wars. A country I can be proud of and that others wish to engage with.

    I could go on, but I beleieve most Scots seeking independence would have a similar view and many Scots who voted no, would be happier with this outlook, rather than Mrs May’s frightening outlook.

    Now for the big problem, England does not know what it wants!

    The Irish problem, the West Laotian problem and now the Scottish problem, when analysed these were not are are not problems for Ireland, West Lotian or Scotland, these are problems as perceived by the English establishment.

    Problem is now a days, England does not know what it wants, all it knows is that it intends keeping its colonial strangle hold on Scotland regardless of the negatives for either country and their peoples.

    England has the problem, the English establishment seek to continue to export it through colonial tools like the press, bbc, mundel, davidson, rennie and dugdale.

    The later tool being a witless tool, oblivious to the damage she does to poor and vulnerable people through her obsession with unionism and her british nationalism. The former tools are all very aware of the damage they do to poor and vlunerable people, they await their honours somewhere down the line.

    My two simple questions to the tools is, what does Egland want and what does England want of Scotland?

  2. I want my/our country of Scotland to control her own resources for the benefit of Scotland, her residents and the World in general – once we have that control, then we can decide to use it, or continue to give it away like we have for the past 300 years or so 🙁

  3. A sound explanation of what people instinctively know.

    One issue however that is not widely publicised is that of university education. In Glasgow alone Caledonia, Strathclyde and Glasgow are full of foreign students paying big fees and contributing hundreds of millions to our economy.

    Walk through the West End and you’ll see many of the thousands who come from China alone. But they don’t need to come here. They don’t need to spend their money here and neither do we need any of the academic cross fertilisation that filthy foreign tutor lecturers and their Dons may bring.

    Quite frankly all of these dirty vile foreigners can go elsewhere and we can get on with preparing our lists.

    And if I was one of the new universities being set up in the new university cities in places like Dubai and Doha, or indeed elsewhere I’d be making the pitch to MENA students and beyond to go there, to a welcoming university rather than a foreigner hating UK.

    Yes, let us send our message of foreigner hatred and resentment out there. Like Krystalnach and what followed it, this policy will bring ruin as sure as Herr Hitler did.

    • There is another side to this that you omit to mention, or perhaps you are ignorant of, namely:

      – Scotland’s elite uni’s actually discriminate against Scots students by allocating more places on certain courses to higher fee paying students coming from outside Scotland
      – ever increasing demand for student accommodation serves to inflate city rentals and city property prices making property rentals or purchase unaffordable to many Scots
      – a vast majority of high-fee paying postgrads at our elite uni’s come from outside Scotland and with post study visas they fill many of the top jobs after graduation, including in research/academia which explains why Scots researchers are now a minority in many faculties and institutes
      – the common established practice for elite uni’s in particular to mostly recruit their academics from outside Scotland, coupled with fewer Scots taking postgrad study/PhD’s, means there are less and less Scots academics working in the Scottish HE system (i.e. Scots are a minority in thair ain land!)
      – for example, 17 of 19 Scots uni’s are now led by people from outside Scotland and at faculty/dept head level a similar outcome more or less prevails.
      – as for the ‘income’ from foreign students, much of this goes toward excessively high salaries of senior academics (100+ people are on salaries of over £100k/yr at Glasgow Uni alone and a principal on over £400k plus exp/benefits, with much of the rest going to buy-to-rent landlords, the latter seen as a better pension investment (i.e. easy money) now for the middle classes, and with anything left heading into the coffers of asset-rich uni’s which are now run more or less as self-regulated corporate fiefdoms.

      As someone who worked in the HE system for over 25 years reaching professorial level, I am appalled at the state’s laissez-faire approach to university governance here in Scotland and as a former visiting professor in several other countries I can say that few other states have such an inept and lackadaisical approach which so emphatically discriminates against our own people.

      • Ah well Alf you can join the ” send em all home to their own countries ” Brexit Brigade if you feel so strongly against foreign students and tutors.

        • I am merely pointing you towards actual evidence and outcomes of prevailing practices Willie, in response to your personal opinion, which I respect, although I assume is based largely on what you have heard through the msm and from political mouthpieces (of all parties in Scotland), which tend to unquestioningly reflect the content of university press releases churned out by the bucketload. The real question here concerns ongoing institutionalised discrimination against Scots and I do not see how any of us can be content with that, and there are of course other examples of such discrimination outside of the higher education sector, much as would be expected in the ‘management’ of any colony.

  4. And why as a foreign tourist would you come to a foreigner hating Scotland.

    You don’t go to North Korea for your holidays so why would you go to the UKs northernmost region. The drawbridge is going up. Britain for the British and let’s keep the filthy scum out.

    And to the ones working here, let me say, we know who you are. The lists are being prepared. The Home Secretary herself has said so. And she’s not called the ” home ” secretary for nothing.

    And for all the thick foreigners , the answer is in the word where home means home, as in Home Counties and not some foreign field where foreigners come from..

    Makes you proud to be a True Brit.

  5. Yes, we should have said yes, in 14, , because if we had, we wouldn’t be having this horrible racist xenophobic conversation.

  6. What still perplexes me is that 3/4 of Scots do not vote Tory, and claim to oppose Tories, but around 1/2 go along with a UK Tory Government, and are not willing to take the essential step to remove Tory control.

    • This is a cultural issue/decision in my view, with people either feeling more Scottish or more British and voting Yes or No accordingly. Hence, if you are more ‘British’ you are prepared to put up with Tory rule (in order to prevent Scottish nationhood) even if you are Labour voter, or LibDem, or politically neutral!

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