“... then shall the realm of Albion come to great confusion.”
William Shakespeare
Thus spake the fool in ‘King Lear’, his speech concluding ‘This prophecy Merlin shall make, for I live before his time’.
The Brexit pantomime is indeed worthy of being turned into a Shakespeare play, with so many rich characters and twists and turns - and it’s not over yet. Last week Parliament gave up the last vestige of its negotiating power, as Messrs. Clark, Gauke, Mundell and Rudd removed any ‘no deal’ leverage: thus bringing our ability to hold out for more concessions to an end – would someone please communicate this to Boris?
We are where we are, with two choices on the table: the Withdrawal Agreement, or breaking faith with the referendum result. So in this commentary we look at what may be our last chance to avoid the approaching economic black hole of the European Union.
‘Beware the Ides of March’ (typically meaning a day falling between 13th and 15th March), Caesar was warned by a soothsayer: perhaps Theresa May likes to tempt fate. However, the challenges presented last week were not confined to Europe: they included Helen Goodman’s debate on the Child Trust Fund and the Bishop of Oxford speaking of a whole young generation being exposed to the insecurity of a huge experiment of social media and technology, and how the Church might help – plus, of course, the Chancellor and his Spring Statement. And they’re all accessible from this commentary.
The removal of ‘no deal’ must have been a considerable relief to the EU Commission, who were warned on 21st January by the International Monetary Fund of the major threat ‘no deal’ presented to the Eurozone. It must also have been just the tonic Leo Varadkar needed on St. Patrick’s Day, as he chuckled with Donald Trump in Washington last week.
There had been a narrow 10-day window when it was, as we said in our commentary on 4th March, ‘All down to Leo’: but now the Republic of Ireland is off the hook of a potentially devastating ‘no deal’, and there’s no longer any pressure on Leo to shift his position on the Northern Ireland backstop. Indeed, I would go so far as to suggest that, taking into consideration both Leo’s and Arlene Foster’s respective roles in this drama, never in the history of the British Isles has the island of Ireland had so much influence over the destiny of Great Britain.
So, if it’s not third time lucky for Theresa’s Withdrawal Agreement, we’re in for at least 21 months of Article 50 postponement, and the pressure for a second referendum will become unbearable. Of course, this is the standard EU process by which the Commissariat overrules its members’ democracies - to beat them into submission by forcing re-runs of popular votes.
Fiona Bruce was so on target last Thursday in BBC’s ‘Question Time’, when she spoke of the Attorney General Geoffrey Cox needing a fig leaf to cover his codpiece. Anyone who wants Brexit to happen - whether European Research Group or the DUP - must now just hold their noses and vote for the Withdrawal Agreement.
The Economic Research Council published an interesting chart last week, of GDP per hour worked in Germany and Greece (and the United Kingdom). Stretching back over 17 years, it showed graphically why the Eurozone is well down the slippery slope towards collapse. With Germany showing nearly double the productivity of Greece and the gap continuing to widen year by year, it referred to Greece’s ‘debt/deflationary spiral’ resulting from imposition of the German Hartz reforms of 2005. They concluded with the observation that there is rarely a policy in economics which is always correct or universally applicable.
The Hartz reforms may have been the final twist of the knife, but it is the single currency which has really destroyed the European Union project, as we pointed out on 10th December 2018. Germany’s failure to share its wealth across the Eurozone has left its economy powering away at far too low an exchange rate, while Greece and Italy are driven into despair by operating at far too high an exchange rate – and migration has taken the strain.
So, in our view, the Eurozone will collapse, and the only question is when. If we do find ourselves forced to stay in the European Union as a result of a second referendum, our task should therefore be to press urgently for dismantling the single currency in an orderly fashion. The EU Commission might bear that in mind when they’re deliberating how co-operative to be with facilitating our departure at their summit later this week.
Finally, and totally overshadowed by Brexit shenanigans, there was a really important debate taking place on Wednesday 13th March in Westminster Hall. This was tabled by Helen Goodman, MP for Bishop Auckland, and it set out the challenge to recover the Child Trust Fund.
With six million young people whose individual accounts are worth over £9 billion, the CTF scheme presents a huge long-term opportunity for those aged 8 to 16: but there’s also a huge challenge, since very large numbers - over 25% of them - are either ‘Addressee Gone Away’ or have no awareness of their good fortune. And that situation is worse for the most disadvantaged.
You can watch the whole debate here, and read about The Share Foundation’s recovery plan for the whole scheme.
So, it’s been an eventful week ending on the Ides of March, one with long-term implications for the young as regards Brexit, the Child Trust Fund scheme and the Bishop of Oxford’s analysis. Let’s hope we will start finding solutions to the challenges they present.
Gavin Oldham
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