Bank of England and Royal Exchange
It has come to this: the MSM are in an uproar about a ‘leaked worst-case scenario’. Yes, we’re all going to die … but when I looked closer, I found some interesting stuff.
Firstly, you can read the MSM reports here and here (not paywalled). Secondly, these reports give the important information right at the bottom, namely that his breathtaking document, obtained by a SKY News reporter (see here) was leaked all right – but it was actually ‘created’ under the auspices of the May government.
Since we have now picked up our jaws from the floor, let’s look at the crucial points:
“The internal government document entitled “What this could look like on the ground” and marked “Official Sensitive” sets out what a no-deal Brexit could look like in practice. It appears to be the first time the worst case scenarios have been set out by the government in a single document.The slide was prepared in the final weeks of then-prime minister Theresa May’s time in office. It was shown to some cabinet members but not the whole cabinet and is understood not to have been “agreed” by ministers. It is marked: “For Discussion – Not Government Policy”. (link)
Ah! So why ‘leak’ something which is clearly ‘old news’? See the next bit:
“The slide attempts to summarise all the potential challenges for government, consumers and business in a no-deal Brexit, divided into three categories – the challenges on the first day, after the first fortnight and at the end of the first month. It comes on a day that the new Chancellor Sajid Javid announced £2.1bn of spending to mitigate no-deal plans.’ (link)
Notice something? Firstly, that this ‘slide’, from the last May Days, wasn’t even seen by her whole Cabinet – and was only ‘for discussion’. So even the May Remainers must’ve thought this was a bit over the top.
Then look at that last quoted sentence again. The clue is not just in the timing – right when the Chancellor announces extra spending on No Deal Brexit – it surely provides a nice hint as to who might have ‘leaked’ that slide.
Playing the game of insinuating something without actual proof – something the Remain MSM are so very good at – here’s a little piece of gossip which caught my eye yesterday, according to which
“Philip Hammond and Gavin Barwell have been spied ramping up the plotting against the new Prime Minister. The pair were spotted out with their wives at the Wolseley last night.”
That was published yesterday morning. You may draw your own conclusions – I couldn’t possibly comment …
Meanwhile, Ms Truss plans to create ‘Free Ports’ after Brexit (here and here, and paywalled here) while economists are forecasting dire things in case of a No Deal Brexit, this time not just for us but also for Germany (see here) and, surprise surprise, for Ireland (here).
In the paywalled DT, Jeremy Warner has picked up on this subject. His report has the title “Europe has more to fear from a no-deal Brexit than Britain” (paywalled link) and he makes some good points:
“Most damaged is Ireland, with its very close trading relationship with the UK. Indeed if forecasts contained in the Central Bank of Ireland’s latest Quarterly Bulletin are to be believed, the adverse consequences will be greater in Ireland than the UK, with output 4 percentage points lower after two years than otherwise, at a cost to jobs of 34,000 in the short term and 100,000 in the long term. Few forecasts assume as much relative damage to the UK. In insisting on retaining the backstop, the Taoiseach, Leo Varadkar, is therefore taking a massive gamble with his economy. It may play well in terms of nationalist sentiment, but from an economic perspective it is an extraordinarily high risk strategy. He’s playing Russian roulette with his own citizens.” (paywalled link)
Mr Warner observes further:
“If a messy Brexit tips the whole of Europe into recession, then the single currency is once more likely to be in serious trouble. The forces of disintegration pulling at the EU’s centralising purpose would come racing back; this time, there are even fewer tools with which to fight them. The European Central Bank is out of ammunition. Interest rates are already negative, making further easing like pushing on a string. […] Contrary to received wisdom, then, both in the short and long term the UK could actually end up performing better than much of the rest of Europe.” (paywalled link)
Meanwhile, the outgoing Arch Remainer Mark Carney, Governor of the Bank of England, has produced another gloom-and-doom forecast. Here’s a quote from RemainCentral, the Times:
“The Bank of England has downgraded UK growth for this year and next and warned that a no-deal Brexit would drive the pound lower, push up inflation and weaken the economy. […] The forecast is based on a smooth transition to a Brexit deal and a disorderly exit would have more severe consequences. Mark Carney, the Bank governor, said that sterling would probably fall, borrowing costs would increase, inflation would rise and GDP growth would slow.” (link, paywalled)
Ah, but wait – don’t cry yet! See this next:
“Asked whether the Bank had preparations in place for a severe market disruption, Mr Carney said: “You would expect us to be ready to take appropriate measures to ensure that that is the case but it’s highly, highly unlikely.” (link, paywalled)
Matthew Lynn in the DT comments acerbically:
“Even by the fairly useless standards of its forecasts, the Bank was on particularly weak form with its latest round of predictions. In truth, it is virtually impossible to forecast what will occur if we leave the EU with no deal. No major developed economy has ever walked out of its main trade bloc before.” (paywalled link)
I really like his next scathing remarks:
Maybe we’ll be reduced to growing root vegetables in our back gardens and chopping down trees for fuel as we struggle to survive the winter (the Lib Dem version). Or perhaps the economy will boom as we strike trade deals around the world and everyone rushes to invest in our newly-liberated economy (the ERG version). Or somewhere in-between (the actual real-life version). It’s anyone’s guess. Putting a 33 per cent probability on a recession is just a pretentious way of shrugging your shoulders and saying “Dunno mate. Search me”. It is more of a cry of frustration than a constructive contribution to the conversation.” (paywalled link)
Well written, Mr Lynn – well written indeed! His conclusions are worth bookmarking for future use when Remainers again deploy ‘worst-case scenarios’:
“From a trade body or think tank, that wouldn’t matter very much. From the Bank, it isn’t good enough. […] If businesses and consumers felt reassured that, while a no-deal Brexit might well cause some turbulence, both the Treasury and the Bank were working flat out to fix that, they would be more likely to carry on investing and spending. And any shock from the exit would be reduced. The Treasury is finally working on that. But the Bank, it appears, still hasn’t got the memo.” (paywalled link)
And finally, the warning from the ERG should Johnson try and re-introduce Ms May’s WA by sleight-of-hand and with a few new cosmetic alterations:
“Dozens of hardline Brexiteer MPs are vowing to vote down the Withdrawal Agreement even if it does not include the backstop, after Boris Johnson suggests there will be a transition period. Mark Francois, the vice chairman of the European Research Group, […] said that Tory members of the ERG on the backbenches – now understood to be around 60 – would vote down any agreement.” (paywalled link)
Continuing, Mr François said:
“Even if you took the backstop element out of the bill you are still talking about a very substantial bill. You’d have to spend weeks in parliament […] and you’d have weeks and weeks of people like [Dominic] Grieve and [Oliver] Letwin and co. tabling wrecking amendments. You’d have a running Parliamentary war probably for at least a month and I don’t think that any sensible government would want that in the run up to 31st October, so in practical terms I don’t think it’s a good idea. […] I don’t think you could revive the Withdrawal Agreement realistically. Even if you took the backstop out, there are too many other things that are wrong with it.” (paywalled link)
In retrospect it is excellent that neither Mr François nor Mr Baker nor Sirs Cash and Redwood have received Cabinet posts. They can thus attack the government from outside and fight for Brexit ‘no ifs no buts’.
Given Mr François’ observations and given the Brecon by election results, Sir John Redwood’s last point in his Diary today should be read as a warning;
“Even this Parliament would not vote to revoke Article 50 and then repeal the leaving legislation, recognising that would be a provocation too far of the majority who want Brexit.” (link)
On that note, and given the “worst-case-scenario” leak reported above its obvious that the Remainers are not giving up. So it’s for us to stay vigilant and