I mentioned last week in this blog post - The dislocation between the PMC and…
The Brexit predictions of doom are proving to be wildly inaccurate
When the British Office of National Statistics published the January 2021 trade figures in March, the first after Brexit was finalised, they showed a 42 per cent decline in UK exports to the European Union. Exports fell by £5.6 billion and imports fell by 28.8 per cent or £6.6 billion. it was the worst monthly drop since records were first published on a monthly basis in 1997. The Remain crowd went berserk and the ‘I told you so’ chorus was raucous. I wonder where there voice has gone now the February 2021 trade figures show a 46 per cent rise in UK exports to the UK. Boats and trucks are carrying goods to the EU from Britain still. We shouldn’t take the monthly data too seriously, especially as it has been complicated by the transition arrangements and COVID. There will be costs from the change in border arrangements. But the predictions of doom are proving to be wildly inaccurate. I have my flame suit standing by.
YouGov poll latest
Australian politicians regularly cite the – pub test – to guide assessments of what is right and wrong.
As the narrative goes, if something doesn’t “pass the pub test” it must be the object of disbelief.
British readers may be familiar with the original version – the Man on the Clapham ombinbus – which is a concept in British law used to determine whether an action is reasonable or not.
So in that tradition, consider this proposition: If Brexit was so bad and so damaging to the people of Britain and would have generated evidently visible manifestations of badness, then one would expect the government that brought this malaise to the nation would not be surging in the polls and the party that opposed it (Labour) should not be languishing in the same polls.
Especially when the government has been mired in scandals and overseen a disastrous response to the COVID-19 pandemic.
And when the Labour party had installed a new leadership full of talk or flag and patriotism.
The latest YouGov polling on – Voting Intention – produced from surveys over April 13-14, 2021, are shown in this graphic.
Labour has lost 5 points and the Tories have gained 2 points. Have some of their voters moved to the Greens?
YouGov remind us that “Labour’s lowest level since Keir Starmer took over”.
Overall, those who think the Prime Minister is doing “Well” (46 per cent) is now equal to those who disapprove. But back on October 26, 2020, the ratings for Boris Johnson were 34 per cent “Well” and 59 per cent “Badly”.
It is also becoming clear that the Labour leader is failing after undermining Jeremy Corbyn and promising a new start.
Here is the latest ratings from YouGov as at April 12, 2021. Not much ambiguity there.
Now even 44 per cent of Labour votes do not approve of him, whereas on June 8, 2020, the rating was 8 per cent disapproval. The Labour voters who think he is doing “Well” has dropped from 71 per cent on June 8, 2020 to 37 per cent now.
More British voters approve of Boris Johnson’s performance than Starmer (34 per cent to 26 per cent).
And in response to the polling question: “How well or badly do you think the government are doing at handling Britain’s exit from the European Union?” – the gap between “Well” (40 per cent) and “Badly” (47 per cent) has narrowed dramatically.
The gap was 68 per cent (in favour of Badly) in August 2019.
So as more information comes to light and the more ridiculous predictions of doom from the Remain lobby prove to be hot air at best, the perceptions are changing rather substantially towards “Well”.
There are many issues driving these results.
But given the predictions of doom, one would expect that if Brexit was that bad for the citizens, they would not be increasing their voting likelihood for the government that brought that badness to the nation.
The ‘pub test’!
Latest data from ONS
When ONS announced the trade figures for January, there was a cry of ‘we told you so’ from the Remainers.
William Keegan, who has become obsessed with this issue (he should go out more), wrote in his column (January 24, 2021) – Brexit has left us all at sea – even the fishing industry – wrote:
What did Johnson, Gove and co claim? That Brexit would free us from all that Brussels red tape and wasteful bureaucracy. And what has the great deal achieved? The strangulation of cross-Channel and cross-Irish Sea trade, the erection of huge regulatory barriers in the UK, and an increase in costly, very British, bureaucracy.
In his December column (December 13, 2020) – Brexit lies do not bring freedom: the truth alone is sovereign – he wrote:
… the wonders of Brexit are falling apart as the truth of what the Brexiters have wreaked unfolds in front of our eyes.
The ports face chaos; the customary smooth functioning of supply chains is threatened (see the problems Honda is having in its Swindon factory); Tesco and others warn of Brexit-induced price rises; and business investment stalls. Investment is the key to economic growth, but the manifest horrors of Brexit cast a dark shadow.
He is a loud voice and his relentless arguments along these lines have at least been consistent.
Consistently wrong that is.
But his noise is representative of the on-going claims that Brexit is a disaster from Britain.
When the January trade figures came out on March 12, 2021, Keegan’s next column (March 21, 2021) – When will we get Brexit’s Black Wednesday? – likened the results to Black Wednesday.
I wrote about the currency crisis (Black Wednesday) in this blog post – Options for Europe – Part 51 (March 24, 2014) – among others.
And, by the way, Black Wednesday was a line in the sand for Britain that liberated it, once and for all, from the arguments that they should peg their exchange rate to the European currencies.
So not a great analogy anyway.
But Keegan wrote:
The damage is already apparent to businesses and traders that are struggling to cope with the huge impact of the red tape imposed by Britain’s departure on exporters and importers. The recently published overseas trade figures were truly shocking.
Various business lobby groups joined the chorus.
The BBC reported that: “Accountancy firm KPMG pointed to Brexit as the likely culprit for the plunge in trade between the UK and the EU” (Source).
So I wonder what they are all thinking after the release of the National Accounts data (released April 13, 2021) and the Trade data for February 2021 (released April 13, 2021).
The latest GDP data – GDP monthly estimate, UK: February 2021 – shows that:
1. “UK gross domestic product (GDP) is estimated to have grown by 0.4% in February 2021, as government restrictions affecting economic activity remained broadly unchanged.”
2. “Output in the production sector grew by 1.0% in February 2021, as manufacturing grew 1.3% following contraction in January.”
No-one is claiming these figures are good but they are not as bad as previously projected and they look like what happens when a rather strict lockdown is enforced.
On the same day, the ONS released the data – UK trade: February 2021.
We learned that:
1. “Exports of goods to the EU, excluding non-monetary gold and other precious metals, partially rebounded in February 2021, increasing by £3.7 billion (46.6%) after a record fall of £5.7 billion (negative 42.0%) in January.”
2. “The increases in exports to the EU in February 2021 were driven by machinery and transport equipment and chemicals, particularly cars and medicinal and pharmaceutical products” – so not all the car factories have moved across the Channel!
3. “Imports of goods from the EU, excluding non-monetary gold and other precious metals, showed a weaker increase of £1.2 billion (7.3%) in February 2021 after a record fall of £6.7 billion (negative 29.7%) in January.”
4. “Trade in services imports and exports have consistently remained at a lower level since Q2 2020 as services accounts such as travel and transport trade continue to be affected by coronavirus (COVID-19) restrictions” – that is, COVID-19 not Brexit.
So while exports to the EU fell by 42 per cent in January 2021, they rose by 46.6 per cent in February 2021.
Here is a graph for UK exports for the last two years to the EU and to the Non-EU:
The ONS provide more insights into what happened in January 2021:
The falls are also consistent with the unwinding of stocks, after businesses stockpiled in November and December 2020 in preparation for the end of the transition period …
… it is still too soon to determine to what extent the monthly changes in trade for January and February can be directly attributed to the end of the transition period …
… trade patterns are likely to also reflect the impacts of the unwinding of stocks, coronavirus (COVID-19) pandemic restrictions, and lower demand due to the UK and global economic recession. It is too soon to be able to assess to what extent recent trading patterns are short-term or reflect more lasting structural changes.
So just as the January slump did not justify the likes of Keegan and Co attributing the results to Brexit, the February figures do not tell us whether there is massive long-lasting damage to Britain’s trade with EU.
They indicate that perhaps there is no massive damage – but time will tell.
This ONS article helps us get a more balanced view of what has been going on – Did UK firms stockpile items ahead of the Brexit deadline? (published February 1, 2021).
Further information can a;sp be found in this ONS information sheet (March 8, 2021) – Impact of the coronavirus and EU exit on the collection and compilation of UK trade statistics.
It is clear that the pandemic and the changing relations with the EU have impacted on how data is collected and the volatility of it.
It will take a while to settle down.
But the February figures tell us that goods are flowing from Britain to the EU as before. There might be new bureaucratic rigidities but the goods are flowing, which is not the impression the Remainers would like to present.
I thought the latest – Shipping Data – published by the ONS on April 1, 2021, was very interesting.
Some background to this data can be found in this article (March 18, 2019) – Faster indicators of UK economic activity: shipping – which discusses how the ONS has been developing more timely information about the state of the economy, given that traditional national accounts data lags by 3 months.
For the week ended March 28, 2021, there was a rise of 1.1 per cent in the number of daily ship visits (average over the week of 356 compared to 201 on January 2, 2021).
Wolfgang Münchau’s latest Eurointelligence column (April 16, 2021) – So much for the Brexit scare stories – is a sobering assessment of the State of Brexit.
He predicts that both UK exports and imports will recover from their disruption due to the pandemic and the ‘wait-and-see’ approach adopted by both British and European firms to the transition.
He wrote:
What these and other numbers are telling us is that even this bit of the Brexit scare stories will not come true … The future prosperity of the UK will depend to a large extent on the future policies of the UK government – Brexit or no Brexit.
Which is what I essentially wrote in this post – Why the Leave victory is a great outcome (June 27, 2016) – the first blog post after the Referendum.
I considered the Leave vote to be a chance for British Labour to recognise the class struggle that led to the Vote and to reclaim the voice of the workers, which the Right has increasingly been usurping.
I wrote:
Planet Earth to British Labour – do something about it or wither away and make way for a progressive new organised working class movement …
… exit will unambiguously restore British sovereignty and frees it from the austerity-obsessed neo-liberal European Commission and Council. It will no longer be subject to rulings from the European Court of Justice …
… the opportunities by the British polity to depoliticise poor decisions which harm the interests of ordinary people by appealing to the external forces beyond their control have been reduced …
… the choice will not free Britain from neo-liberalism but it does bring the debate back into focus – voter face to face with the British politicians.
There are no guarantees that the decision to leave the European Union will lead to good outcomes, by which I mean help those who have been disenfranchised by the neo-liberal system.
There are scenarios that would lead to the conclusion that exactly the opposite might occur. Indeed, UKIP has every right to claim it ‘won’ and to further pursue its racist plans.
That is, Britain’s future depends on what its politicians do.
The wild doom forecasts from the Remainers were never going to be correct.
They just disguised their ideological positions as economic modelling, and pretended that gave them authority.
Wolfgang Münchau is scathing of this modelling:
The forecasts of unmitigated gloom, however, have been wrong and deceitful. When economists failed to predict the global financial crisis, they did not so out of malice or political bias. But their Brexit forecasts were not an innocent mistake – nor will they be remembered as such.
Food for thought.
Conclusion
I remain of the view that how the British economy turns out post-EU will depend on how far it abandons austerity, restores the public sector, and deals with the ravages of past austerity.
If the Tories return to form, then it is a bleak future.
The Labour Party has to go through more pain and finally expunge its Blairite past before it will be a progressive contributor.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.
Kier Starmer attempted the ‘pub test’ yesterday in Bath. The landlord, a lifelong Labour voter, threw him out for failing to oppose the government’s policies.
As a freight forwarder (although airfreight but European surface department is next to us) I can tell you that it is absolute chaos. They are having to turn away all sorts of loads, transit times to and from the Netherlands for example has gone from 2 days to around 22 days. Things are moving but mostly slowly.
Freight coming from the EU is basically being waived through as we don’t yet have the Border Control Posts in place and that has now gone to later in the year so as yet not getting the full effect.
Frankly yes don’t take the data seriously at all as yet.
On the plus side for us is income is up doing all these entries is the size of customs clearance departments has quadrupled and is a very nice earner for the company, of course that increases prices on any imported goods..
Thanks, Andy. Although I voted Leave – twice – it was not for free trade deals and free ports. We would have been better off with an EU customs union deal, which is what Corbyn would have pursued if he’d won in 2017.
Bill, 1st paragraph, ‘the February 2021 trade figures show a 46 per cent rise in UK exports to the UK’ should be to the EU.
I can well believe that Brexit, and then Quitaly are necessary if the UK and other European countries are ever going to work for their citizens, but have no doubt that Andy B above has a point in that Johnson + EU are likely to have handled Brexit in the most ham-fisted way possible. In particular, the true trade effects won’t be felt while imports from the EU are waived through but the EU is doing its best form-filling exercise to hastle UK exporters.
Meanwhile, British Labour have got some way to go to recognise the class struggle that led to the Vote in favour of Leave. Whatever Starmer says, of which little has been worth hearing, the best guide to Starmer’s Labour is the Shadow Chancellor’s appeasement lecture to the City bankers, which set the straightjacket from which the vision will be expounded. Let’s at least hope he will ignore Keegan with his weekly message to be ‘concentrating on the economic and social disaster that is Brexit – not least as manifested in the problems with the Irish border.’ Unfortunately for him, it is quite obvious to everyone in Great Britain that Brexit is not the main cause of any economic or social disaster, and so far it seems that a return of the Troubles is even less of a concern for the Irish Government and EU than it is for Johnson.
@Patrick B
In fairness the form filling exercise by the EU is things those of us who mostly deal with non EU trade do all the time. The problem comes when most companies have no idea about dealing with non EU countries (every country has it’s requirements … try sending wood based goods to Australia for an example of form filling), if i had a penny for every time in January/February when helping companies show correct details on their commercial invoices that they said but we have a deal, no we have a deal on rules of origin and quotas and that’s about it.
There are some exceptions where it seems both sides don’t seem to know what they are doing. The example being the dispute over shellfish from class B waters. The media would have you believe the EU banned them but they haven’t. The problem is certification, they are allowed in using the EU’s model certificate to cover these goods but there isn’t one!
“and so far it seems that a return of the Troubles is even less of a concern for the Irish Government and EU than it is for Johnson.”
That may change if the loyalists don’t see significant improvements in the approach. London isn’t the only capital city that can have bombs planted in it. The EU has prodded a slumbering beast and knows not what they horrors they have awakened.
It’s pretty clear from the loyalist position that the EU is being deliberately obstructive, and may have to find out what that means the hard way.
Let’s hope sense prevails before that happens.
3. To permit them to live under their own laws, drawing a tribute, and establishing within it an oligarchy which will keep it friendly to you.
All of them doesn’t matter who it is are part of that oligarchy that serves US interests. If they refuse they get the Corbyn treatment by the media. Democracies are corrupt and not democracies at all.
Nothing is going to change unless….
a) America changes in a very big way.
b) Or we are prepared to say to the US enough is enough.
The Berlin wall forced the US for decades to carry out social democratic economic policies. China might force the West to do the same again if they plan to keep up with China. The growth of China might end up being a good thing in that respect unless the US decide to use war instead. They are crazy enough to go down the war route rather than embrace socialism.
Let’s face it they can’t build a KaDEWe on the Hong Kong border or Taiwan border like they did in Berlin to try encourage the fall of the Berlin Wall. Saying look in the Windows this is what you could have to the East Germans. China already has them and makes the stuff.
Geopolitically, Something has to give before the MMT lens is used for the good in the West. Or it will never be used.
It’s all a wash !
Create full employment at home via the job guarentee and trade really becomes a non issue. Domestic policy is what really matters. Exporters will be standing in line round the block desperate to steal some of your aggregate demand. They will even be willing to discount their own currency to do it. No matter how many different coloured forms they have to fill in. If done right our own government can negotiate and set the price by playing them off against each other.
Geopolitics does not allow it. Too many countries that threaten US power would benefit from that model. With strong domestic policies in place. Countries would realise they don’t need the US at all.
The change we all want will need a to start in the US. It really is as simple as that. Unless, you are willing to take them on and fall out with them.
None of them will embrace the MMT lens unless the US says so. You’ll see. Mark my words it ain’t gonna happen otherwise.
Positive things could really emerge with a very strong China and Russia and climate change.
A modern day invisible Berlin wall. Force the US to rethink its politics.
I live in hope. But like I say the US are definitely crazy enough to go down the war route instead.
Derek Henry wrote: ” the US are definitely crazy enough to go down the war route instead”. (against China).
Yes, owing to the classical liberal delusion that individual “freedom” is an inherent (natural) right.
Marxists know that community cohesion fostered by rule of law is required, before freedom can be secured. Just look at the US….whereas China’s youth are rapidly seeing their own government in a more positive light. I hope China has the wisdom to leave Taiwan to its own stupidity, at least until China can tell the US where to go…….which should not be too far away, if intelligent public economic policy intervention in free markets is indeed superior to mostly private sector “invisible hand”, individual-profit-seeking in free markets.
Regarding how Tories might govern going forward.
I’m encouraged by the supposed infrastructure investment plans up north.
I hope they follow through with that aggressively
@ Neil Halliday re: ‘I hope China has the wisdom to leave Taiwan to its own stupidity’. I also hope the PRC doesn’t decide to continue the civil war after a 70 year break, but unfortunately 70 years is short term in Chinese dynasty terms. But the RofC seems to have been far from stupid, despite the rest of the world bowing to PRC wants, especially of late where it showed everyone else, including its big unfriendly neighbour, how to deal with a pandemic. The PRC meanwhile, though so far avoiding the financialisation trap, still has plenty of problems to overcome, even if the population stay compliant: massive and aging population, environmental destruction and water shortage, export reliant.
Patrick B wrote: ” The PRC meanwhile, though so far avoiding the financialisation trap, still has plenty of problems to overcome, even if the population stay compliant: massive and aging population, environmental destruction and water shortage, export reliant”.
As MMT’ers know, those problems are a matter of resource management. Advances in technology including AI and IT (requiring less workers to produce the population’s requirements) will solve those problems.
Meanwhile, the opportunity to cease engaging with junk US outfits like Coca-cola and other junk-food enterprise always exists, which consume resources, cause ill health, pollution and waste of transport and advertising resources.
‘Fighting’ yesterday’s ‘battles’?
Usually the ‘economists’ who use ‘macroeconomic models’ ‘believe’ that the solution to the current macroeconomic problem is the implementation of the ‘correct’ type of demand side policies. That is, how to increase income/output {‘growth’}.
Increase M0, M2 or M3, cut r, or make it negative. Increase G and finance it by ‘borrowing’ from the central bank or by borrowing from the private sector. Or ensure that private credit is extended only for GDP transactions.
All that is lacking is a ‘sufficient’ increase in effective demand!
The neoclassical/Austrian economists, who believe that income/output is ‘supply determined’, will argue that all that is required to generate a large increase the growth of the underlying productive potential of an economy is for taxes to be cut and more ‘competition’, etc be introduced!
Aside from the negative externalities of ‘growth’, what they ignore is the ‘net energy supply side’?
It’s ‘too late’?
‘We’ have ten years?
” . . . our best estimate is that the net energy
33:33 per barrel available for the global
33:36 economy was about eight percent
33:38 and that in over the next few years it
33:42 will go down to zero percent
33:44 uh best estimate at the moment is that
33:46 actually the
33:47 per average barrel of sweet crude
33:51 uh we had the zero percent around 2022
33:56 but there are ways and means of
33:58 extending that so to be on the safe side
34:00 here on our diagram
34:02 we say that zero percent is definitely
34:05 around 2030 . . .
we
34:43 need net energy from oil and [if] it goes
34:46 down to zero
34:48 uh well we have collapsed not just
34:50 collapse of the oil industry
34:52 we have collapsed globally of the global
34:54 industrial civilization this is what we
34:56 are looking at at the moment . . . ”
Louis Arnoux on youtube.
@Neil Halliday Advances in technology are a double-edged sword for a country with huge labour resource to draw on, albeit an aging one. Advances in agriculture (rice production) left millions to be migrant worker wage slaves making products for foreigners, or joining the ranks of the PLA. Agreed, there is still room for some of these to be redeployed in more social work. But China doesn’t have a surplus of natural resources comparative to the population to be supported and is as at risk of climate change related destruction as any country. Also, I can assure you that local junk food competitors haven’t been able to harm the popularity of KFC and MacD. Personally, I will always go for a street stall made roujiamo (Chinese-style burger) if peckish.
@NeilW,
That landlord was a Covid-denying nutter who made a complete tit of himself.
He would have had Starmer adopt a Corbynite approach to the whole pandemic.
And by that I mean the utterly bonkers Piers, not Jeremy, his younger brother.
Much as I despise Keir Starmer, he handled the encounter with dignity.
@Mr Shigemitsum, Starmer may have handled the situation with dignity, but it was really poor planning by his team.
@Carol Wilcox the phrase, couldn’t organise a piss-up in a brewery, springs to mind. Starmer should probably find an alternative to Johnson’s quaffing beer with the people act. He, Johnson, can actually play the part better than Starmer or that other man of the beer drinking people, Cameron.
@Mr Shigemitsu – spot-on.
@MrShigemitsu are you following the science like austerity followed the economics?
“That landlord was a Covid-denying nutter who made a complete tit of himself.”
Really
“All I did was offer him data and request the issues it raised get talked about – and that the whole thing gets seen in context. I’m not suggesting that there hasn’t been a pandemic. I’m not suggesting that Covid doesn’t exist, or that it’s not serious. It’s just that our reaction to Covid has been out of proportion.”
From the Spiked interview with the Landlord – “Boris is barred from my pub too”.
How did that get translated into what you believe inside the “Labour bubble”?
How do you think Labour is ever going to be elected if the people that continue to support it go around calling those who will vote for Labour names?
The “we know better than you do – get back in line” attitude is precisely the reason why UK Labour is currently doomed to permanent opposition.
Pub landlords have suffered immensely over the last year. Quite a lot are self-employed and yet there has been no push at all for the far more generous furlough scheme to be extended to all the self-employed.
Boris’s description of Starmer as “Captain Hindsight” is entirely correct. He’s the inept head of yet another metropolitan Liberal party, of which we have more than enough already.
Sorry, not much to do with this post, but I’ve just come away from a meeting of the Labour Party National Policy Forum (Economy, Business, Trade) where Anneliese Dodds is the leading member. She referred to her recent Mais Lecture and fiscal rules. I’ve met her a couple of times, the last time I asked her about MMT. So when I got to speak I referred to this, said something about Japan, asked her if she’d read Deficit Myth. She is very nice, admitted she didn’t understand MMT, but referred to a book behind her which had MMT on the cover, but I couldn’t see the author.
Anyway in the chat I asked if I could meet her and she said yes. So I’m wondering if it’s possible for me to arrange for you, Bill, to meet her – with little me in the way. I’ve not been able to establish who her advisors are, but she is no doubt listening to SWL.
Actually I think it would be better if Deborah joined the meeting with Anneliese – maybe a physical meeting would be possible.
Bill calls for a progressive working class movement, and argues that Brexit was a failure of Labour to listen to it’s working class vote.
The problem for Labour is that it has become divorced from its working class routes. It’s strength came from its massive membership, except that union membership is in decline in every profession except retail.
A similar story is true for the Conservative party. Both have to increasingly rely on appealing to a an electorate without any particular loyalty to an ideology.
The second issue is whether there is such a thing as a progressive working class movement. Those from the lowest socio economic incomes, are generally socially conservative. They also aren’t well organised or particularly politically motivated.
When we are talking about the working class just how are we talking about?
Take for instance, the rise in degree educated professionals who describe themselves as working class.
It’s not an homogenous group.
I notice that the Conservative Party do not overtly refer to themselves as representing any particular group. They are accused of acting only in the interests of the wealthy, but their messaging is directed at the average man/woman in the street.
Johnson, an Etonian toff, can pull off being an everyman of the people if he is hanging out at the pub. Something which Starker clearly struggles with. People can imagine themselves having a pint with Boris, I doubt many think the same about an evening with Keir.