A Macron-Merkel Plot to 'Destroy' London?

The world has been so intrigued by the bizarre conduct of President Trump that far too little attention has been paid to the oddity of the French president. Mr Trump has been ridiculously intrusive in sharing his rapidly-changing views with the media and in the Twittersphere: M Macron has been tight-lipped to an unusual degree; and there have been many reports of his contempt for the media. He has been reported as saying - to his own staff - that there is no point in him giving interviews and press conferences because his intellect is so far superior to the norm that people simply will not understand his statements and his answers to questions. His path to office has been engineered by the old establishment of the 'higher schools', who experienced the agony of the Hollande regime and were determined to seize upon the national consensus that politics had reached a nadir. Thus they presented a new sort of candidate from a new generation: a man with few friends and a most peculiar private life. His allies engineered a parliamentary landslide, and he appears to be in an unassailable position with a clear popular mandate - to be 'different' - backed by a parliamentary majority.

With these assets, he is attempting - as half a dozen of his predecessors did - to attack the established position of the trade unions and of the farming interest, and to try to change the culture of work generally in France. Given the fact that recorded French 'productivity' is very much greater than the British, and not far inferior to the German, it is unclear why he thinks that such disruption is desirable or necessary; but he is having a go anyway: and it fills column inches in the press.

His career record includes a few years with a major international bank, where he greatly refined his spoken English and learned how far ahead of French practice in banking and finance are the systems in new York and London; and how much bigger are the financial markets in those centres - and in Singapore - than in Paris. He also gained a perspective an the depth of support that the London finance sector has, from a huge array of specialist lawyers and a raft of support professions such as actuaries, arbitrators, loss assessors and adjusters. Some English-speaking critics reckon that he has developed a profound envy of these markets, and that he came into office with a determination to push Paris as a rival to those centres even though the ancillary trades there are massively under-developed.

Doomsters in London have now come up with the idea that he has decided to use the Brexit opportunity to diminish London massively: and that he has enlisted Angela Merkel and the gnomes of Frankfurt to his plot. This is seen as the hidden agenda behind the determination of a loyal, ambitious and deeply egocentric Frenchman, Michel Barnier, to use his role as EU negotiator with the UK to delay and diminish whatever settlement the UK can achieve with the EU. This sort of conspiracy theory can be very powerful in times of massive uncertainty; and the absence of any such plot  - as with any negative argument in politics - is ultimately impossible to prove.

Mrs Merkel grew up, graduated and worked in the German Democratic Republic, and presumably had to learn Marxist dogma sufficiently to be allowed into university and into a research post. There is very little evidence that her education since 1990 has included any significant familiarisation with serious political economy. Her chancellorship has been supported by strong and well-informed ministers who have dealt with economic affairs and with business: she has read appropriate speeches, but no significant initiative has been attributed to her [other than the catastrophic decision to open Europe to mass immigration, which will mark her rule throughout future history]. It is possible, but improbable, that she has actually committed to any scheme systematically to attempt to smash the London market which - as is being stressed today - is an irreplaceable asset to world trade that even Germany and France rely upon heavily.

As a boy growing up in Lancashire, I became used to hearing older people say: "The French will never forgive us for saving them in two world wars", whereupon a minority said: "the First World War, yes: they don't like admitting that they needed us. But in the Second they hated us for disrupting their comfortable collaboration with the Nazis: remember, we bombed them and fought our way through France. DeGaulle was very much in a minority until the Americans put him in power."

It would be no surprise to discover that Macron grew up surrounded by the French mirror-image of such sentiments.

Back to Blogging: Barnier and Boris

I have begun to draft a prolonged 'Thinkpiece', and am already thinking that it is probably going to be too wordy for the normal blog format. I'll press on with it for a few days, but in the meantime I intend to carry on blogging most days in simple, short dollops. It seems to suit my temperament.

This morning, the radio brought me the shocking early gossip that David Davis - the Brexit Secretary who has made such heavy weather of a simple job, so far - has suggested that in the summer of 2019 he will retire and leave to Boris Johnson the task of implementing whatever Brexit deal the UK ends up with at the March deadline. The one reassuring thought to which this gives rise is that it is probably Johnson's destiny to lead the Tory party to a defeat of greater proportions than that of 1945.

The prospect of two dangerous Marxists leading a cosmetically-rational Labour majority in the Commons down a road to ruin is not enough to scare anybody sensible into voting for Boris, who seems anxious to display his complete failure to understand either the crazy orthodox Economics of the 'free market' school or the realities of economic existence. I have not heard his comment on the scandal of the botched roll-out of the Single Benefit, and suspect that he has not made one. I don't suppose that he would understand even as little as does the Prime Minister of the situation of people who are faced with the prospect of having no income for an average period of six weeks. Most Conservative MPs seem mollified by the assurance that these desperate individuals can get a loan of half the level of benefit that they can expect ultimately to get, on strict payback terms. So little do most recipients trust the system to treat them fairly that they suspect that if they took up the offer of the loan they would be under even more intense scrutiny than they already have been. The disconnect between the 'hard Brexiteer' minority in the Commons and the grassroots of the electorate - including traditional Tory voters - has become greater than one could have forecast even a year ago.

In the 2017 General Election Mrs May got a greater Conservative vote than did her predecessor in either 2010 or 2015: but that did not translate into a majority of Commons seats: just as happened when Hillary Clinton's three million vote lead in the election failed to translate into Electoral College votes in the USA. Mrs May's largely zombie-like performance since her wining defeat is comprehensible, but it is desperately bad for the country. Her most egregious error was to hire a hall in Florence in which to make a statement to some of her ministers and to the British press [and a handful of local Italian politicians] that she should have made in more precise terms to the House of Commons six months earlier. That would have obviated the 'need' for any election in the UK, and made it possible for M Barnier to say: "Ah, now I begin to understand where she is coming from: let's start the serious talking."

Mrs May could, possibly, have been a competent prime minister: had she possessed the one essential quality that she conspicuously lacks: confidence in her own instincts. This seems increasingly to be derived from the circumstances of her upbringing an early career. A nice home in the home counties, a nice school in the home counties, an easy passage into an easy degree at a top university, a comfortable partnership with a slightly younger man, a job in the Bank of England and an easy passage to a safe parliamentary seat. There has been no need in that life to struggle: no hardship; not even experience of work in a competitive business: and how all that now shows!

The same goes for Boris, of course; his troubles have come from his lies and his lusts. Jeremy Corbyn's origins in the family manor house and his career on the champagne socialist circuit have kept him carefully isolated from the harsh realities of life. Here we have three of a kind; and there are more of their kind all around.

It is good to have practical builders like Philip Hammond and successful competitive investment managers like the egregious Mr Mogg to bring balance to our political life!

Straws in the Wind

The extreme Tory Brexiteers are not quite so thick that they all fail to realise that once the nation understands the extent of the damage that a 'hard Brexit' will do to the economy, the government will have to back away from that option. So their tactic has been to push as hard as possible for the government to adopt positions from which a complete retreat would be impossible.

As the government has started to publish slightly more precise position papers as a basis for negotiations with the extremely well-prepared team around M Barnier it is clear than common sense is still present in most of the arguments and suggestions that are appearing. And while this moderate position is developing, so the events in the economy - and the predictions to which they trend - show that the UK would be ruined to an incalculable extent if it withdrew from the European Free Trade Area. Mrs May has made sticking-points [or 'red lines'] on immigration and the the ECJ [the European Court of Justice]. The immigration issue has been somewhat clarified by the discovery that the number of international students remaining in the UK when their visas expire each year is certainly less than 20,000: not the hundred thousand of the May myth. Also, the largest flows of immigrants by country of origin are India, Poland and Pakistan: the immigration that has been unaffected by the European policy of freedom of movement - that has always been under British control - is massive; and it is that migration that is of most concern to many people. On the issue of the European Court it is evident that some compromise will be made, that allows the ECJ a role in Britain that is not 'above' the British courts.

Meanwhile, the economic data stack up against the idiotic assertion that the UK can survive as an economic power, and maintain the people's living standards, outside the cocoon of the European Economic Area. Britain's growth is lowest among the G8, productivity is not improving, the decline of the pound [now 18% against the euro, since the referendum] more than offsets any benefit that the UK gets from its exports seeming cheaper in other countries; and government policy continues to be hurtful to firms and their capacity to invest. Today the Chambers of Commerce point out that three policy initiatives that lie within Mrs May's concept of a caring society are laying a heavy toll on business and on employment. The living wage has been increased, while the productivity of labour generally is not increasing. Mandatory workplace pensions are part payable by employers, and employees who have their share of the contribution to pay are seeking wage increases to pay it, so it is a double-whammy for employers. And in addition, the introduction of the apprenticeship levy on firms [according to the number of people they employ] will better educate those who could well become unemployed in coming years, as technological change makes the skill that the apprentices acquire become redundant]. An economy that should be training the young in the mathematics and in the principles of engineering and coding that support IT and AI [artificial intelligence] is instead preparing young people for jobs whose obsolescence is virtually inevitable.

The economy's capability to employ the whole available population increasingly depends on investment, adaptation and the rising productiveness of industry and commerce, on which productivity improvements depend. Living standards are now falling, and people are feeling it. Real wages are still lower than before the crash of 2008; and although the USA has begun to rein in Quantitative Easing and raise interest rates, and the European Central Bank is expected to so the same soon [it may announce steps in that direction at Jackson Hole this weekend] there is no sign that the Bank of England under Mr Carney - who is to be absent from Jackson Hole - has the opportunity of the bottle to do similar things.

As the extreme fragility of the British economy becomes more apparent, the idiocy of the Cameron-Clegg-Osborne gang and of their 'project fear' becomes more obvious. One can have slender sympathy for Mrs May as the inheritor of the mess and the inheritor of Brexiteer bullying, but not very much. She is grown up, and should be able to recognise the weakness of her negotiating stance. If she does not act on that basis, she will attract odium even greater than that which has settled in the Cameron clique.

Brexit: Trouvez la Femme

So now we know, for sure; definitely.

As on the previous Sunday, when I went to get a copy of the Mail to check on the context of remarks by Vince Cable, so yesterday I bought the Telegraph so that I could read exactly the piece attributed to Philip Hammond and Liam Fix. It was cited on the radio as representing the formation of a joint strategy for Brexit, and thus the conclusion of a cabinet spat that has been reported over this year's 'silly season' by much of the media.

It was a short piece, attributed to the two men [and doubtless accepted by them] but indubitably crafted in 10, Downing Street, and polished by party professionals. It represented what had generally been understood to be Mrs May's position ever since she made her sublimely idiotic remark that "Brexit means Brexit". Since it was coined, derived from 'Grexit' which meant the threatened departure of Greece from the eurozone, the term Brexit has simply meant "the departure of the United Kingdom from the European Union, in response to the referendum decision of 23 June 2016". Mrs May was asked how she interpreted the terms: did it mean withdrawal from the European Common Market and the Customs Union? Did it simply require departure from the political institutions only? What mix-and-match of possible options did she favour?

None of this has been clear: either in her much-cited 'Lancaster House Speech' early this year or in her disastrous election campaign. Nor has it been any clearer whether she favours a 'hard Brexit' [undefined] or some 'softer' version. Two things that do appear to be consistent in her few and often oblique remarks on the matter are:
1. Her proclaimed determination to reduce net immigration: the great 'failure' of her six year tenure of the Home Office which she apparently thinks she can achieve from Number Ten. If she does achieve it, she will alienate industry and commerce, the universities, and the immigrant communities from the Commonwealth who had seen a reduction in EU immigration to the UK as a chance for them to bring more friends and family members into the country.
2. Her equally definite declarations that there is no place in the UK post-Brexit for the European Court are equally likely to make for an extremely difficult negotiation with M Barnier on trade matters that should be straightforward.

Lewis Carroll, in one of the most brilliant satires on society, has a character declare that they can think of six impossible things before breakfast. Mrs May, without saying anything on those lines, has made it abundantly clear that she has one impossible thing on her mind all the time: the removal of the British economy from its European Economic Community context without significant damage to Gross National Product or to the standard of living of the mass of the nation.

It now appears that Fox and Hammond have accepted that they must both support this point of view, at least publicly and for time being. This is a consensus that cannot last. The crisis in British politics will continue: well done, David Cameron, Nick Clegg and Odious Osborne!

The Tories' Dilemma: 'Hard Brexit' or Continued Austerity

Mrs May appeared to think that she could do three impossible things on becoming Prime Minister: now she has come to realise that not only is each of them unfeasible in itself, but that they are mutually exclusive.

First, she did not even consider an alternative to the continuance of the Cameron-Clegg-Osborne austerity, so that had to be maintained, as near intact as possible.

Second, although she had been an unconvinced remainer, she was prepared to embrace the idea of a 'hard' Brexit: though she had no idea what this might mean, so she appointed not one, not two, but three Brexiteer Secretaries of State to come up with the policies that would be needed.

And thirdly, she wanted to be a 'compassionate conservative': at zero cost [because finding any 'new money' would, by definition, breach austerity].

Then she called an election in which she thought that she could defeat Labour purely on the grounds of the intellectual and moral deficiencies of the party's leader. Because he had decades of experience of not being a conformist or conventional politician, Corbyn almost won: and Mrs May had to clear out her inept kitchen cabinet and begin to respect ministers who she was reported to have wanted to dispense with.

Meanwhile Philip Hammond as Chancellor of the Exchequer was becoming buried in 'The Treasury View', a centuries-old tradition which insists that any new expenditure is unnecessary and any unnecessary expenditure must be opposed; regardless of the social and moral benefits that the expenditure is predicted to deliver to taxpayers. Thus he learned that stopping the free movement of people from the EU into the UK, and movement the other way, would cost billions of poundsworth of new expenditure in frontier police recruitment, training and salaries, and in the construction of immigration and emigration control points and the IT backup that would be needed to make such controls achievable at all. Add to that the cost of building modern port controls that could prevent smuggling and validate the contents, provenance, ownership, insurance and compliance with health-and-safety requirements [et cetera] of every item in every cargo and every private piece of luggage - and staffing them with men and women as tough as eighteenth-century revenue officers, in sufficient numbers, adequately well-trained and remunerated and backed up by the most advanced IT - that would be more billions.

A 'hard Brexit' would not only interrupt much trade with Europe, and permanently end more - it would thereby cause massive unemployment and demands for billions more in social payments. Most firms that trade significantly with Europe would experience catastrophic falls in sales, which would force some to cull their workforces and many to declare bankruptcy and their inability to pay their debts and their taxes. The government's income would plummet as the demands of a desperate population became clamorous. Not only would austerity have to be abandoned: government would become untenable in the context of democracy.

Thus minsters have been running around, meeting groups of representatives - particularly from the business communities - whom the May team had ignored in their first year in office. Now the government is indicating that Brexit will be 'soft', and nobody or no firm will find themselves at a 'cliff edge'. There will be a 'transition period' as long as Mr Barnier will be allowed to concede; followed by a shoddy compromise which lets the Treasury maintain at least the skeleton of austerity in place. On that basis of squalid surrender to the ghosts of Clegg and Osborne, a sort of exit from the EU Commission and Parliament, and a limitation of the powers of the European Court 'of Justice' [sic] will be found; and Britain will remain within the EU otherwise. Any alternative is unaffordable in the context of Treasury thinking: and The Treasury Rules: OK?