May’s Government is broken

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By Russell Bruce

For nearly 3 years May has trundled along attempting to get her party behind her. After twists and turns she agreed a deal only to find out her party would not back it, sending her back to the EU. International relations does not work this way. If the PM does not have at least the overwhelming majority of her party behind her, she is not in power or able to make agreements with other countries.

The Prime Minister came back from Strasbourg with a bit of paper. She was careful not to wave it at the cameras, no doubt because Geoffrey Cox told her on the plane coming back his legal opinion was unchanged. The much hyped draft appendix was useless in convincing her Advocate General to change his legal opinion or bring the ERG to heel. Like Neville Chamberlain, with his Munich agreement in 1938, it was defeat captured from the jaws of incompetence.

May’s is a dead parrot government yet reports suggest she is planning to have another ‘Meaningful Vote”. If 40 shifted to supporting her agreement on Tuesday the reasoning is opposition is falling. Another 40 votes switching reduces the failure from 149 to just 69 but, she needs 75 switchers to take her over the line. That seems to be her thinking although thinking is perhaps not quite the right term for such obstinacy.

The ‘Deal’ needs to get through both Houses of Parliament before the Council of Ministers meet on 21st March. That is just 5 working days away. Article 50 will have to be extended to allow for subsequent processes. A much longer delay, or better still the withdrawal of article 50, is necessary for the UK to come to a consensus on its future relations with the EU.

The Tories will blame everyone but themselves for the current impasse, including the beleaguered Mrs May. Attempts to remove her stuttered along for months then failed. Demands for her to go are still swilling around Westminster corners. Mrs May does not need HM Opposition, she has one embedded on her own benches.

Car production in the EU

Around 19 million cars are produced in EU countries. The main market for those produced in the UK is unsurprisingly, for the moment, other EU countries. Around 5.5 million cars are produced in Germany, 2.3 million in Spain, 1.8 million in France and 1.6 million in the UK. The Czech republic produces 1.4 million cars and Slovakia over 1 million.

Big bites are being taken out of the UK car industry as models are dropped or switched to other manufacturing bases. It is in any case a very vulnerable industry. Demand for diesel cars has fallen dramatically and the move to petrol hybrids and electric takes time. The UK produces many fewer cars than Germany, France or Spain. As they recalibrate, their plants in the UK become ever more vulnerable, whatever happens.

Growth down, No deal tariffs, exports hit

Meanwhile business is up in arms. The frictionless trade the UK has enjoyed with the EU and 60 other countries is about to be snatched away. £1trillion pounds has moved out of the City of London. UK growth is constantly being downgraded. NIESR estimates UK first quarter growth at 0.2%. With indications the global economy is slowing, countries not part of a major trade block are more vulnerable to the actions of other actors. As things are turning out the UK could not have picked a worse time to go it alone when trade disputes are on the rise.

There is safety in numbers and staying in the Single Market and Customs Union will protect the population in these islands in a way May’s bad deal does not. With just 16 days to the cliff the UK government has finally issued its list of tariffs for goods imported into the UK in the event of a no deal. It has to be approved by the WTO and the UK does not have the customs officers or processes to ensure it would work anytime soon. The full list is here.

Imported cars will be subject to 10%, clothing faces 12% tariffs even
baby mitts will have a 8.9% tariff. Clothes were one of the things the ERG claimed would be cheaper. As most clothing is imported then prices for the majority are set to increase by 5 times the overall rate of inflation. Farmers have some protection in the home market with tariffs on imports of beef, lamb, pork and dairy products but Scotland’s important export market to Europe will be hit facing 70% tariff on beef and 45% on lamb under a no deal outcome.

It is one thing to protect some home industries in their home market, quite another to simultaneously damage their export potential.

15 days, 14 days…..

Parliament has rejected a No Deal outcome by amending the final motion in Wednesday’s votes. Unfortunately that does not secure parliament’s intention of making No Deal impossible. May can use parliamentary procedure to bring her Withdrawal Agreement back for a third shot. If it fails No Deal is what happens. Can parliament assert its authority in that case and effectively take the matter out of Mrs May’s hands? Thursday’s vote on extending Article 50 will give us some pointers.