Dear Subscribers,
For all of the problems in the West, we are in the midst of an important success against aggressive Putinism. The Ukrainian counter-attack in the south-west is underway. Without overwhelming numbers it will make slow progress but will push Putin back. Meanwhile the EU has secured enough gas, albeit at huge cost, to avoid an energy disaster this winter. Soon Russia will lose its entire oil and gas markets in Western Europe. Even his Russian supporters must eventually wake up to Putin’s costly failures.
Presiding over Pandemonium
Despite this optimism, the Ukraine crisis reveals the issues with the deeper EU security co-operation pushed by commentators like Peter Ricketts. At present, EU nations have such diverging views of their strategic interests that the idea of a common military front seems fanciful. No wonder Putin was supposedly unfazed about the prospect of Ukrainian membership of the EU.
In the UK, the next Prime Minister is shortly to be announced. Overhanging that election, however, is the looming energy crisis. Energy price caps (like that suggested by Scottish Power) are increasingly being discussed as a means of limiting the damage to businesses and households, both in the UK and the EU.
The contrast with the US could not be sharper: while prices there have also been increasing, a full-blown energy crisis will be probably be avoided. Partly, this stems from the short-sighted decision to refuse fracking permission in the UK, which technology has greatly increased natural gas output in the US. Yet it also highlights consistent failures in the UK’s broader energy strategy, which has prioritised de-carbonisation above almost all else.
All-American Gas
Much of this incompetence comes from central planners. The coalition government stalled on commissioning replacement nuclear plants, while gas storage facilities were likewise run down by central decree. Planning authorities have also been reluctant to license necessary infrastructure, a pattern seen more broadly with water and housebuilding. In the worst cases, individuals and groups who agitate for such Nimbyism are actively linked to Russian funding.
Media
Briefings has written on the need for an energy price cap – his piece appearing for the website below. Editors Robert Tombs and Graham Gudgin echo is arguments in this week’s Spectator. Robert has also written an article on the decline of the West for the Daily Telegraph.
In media news more generally, Derrick Berthelsen wrote a follow-up piece to his previous one for The Critic analysing the anti-Brexit bias of the Financial Times, which we’ve previously mentioned in this Newsletter.
Blogs
Drastic action is needed to deal with the energy emergency, by Harry Western
The new government will need to take drastic – and in some ways, ‘un-conservative’, steps to prevent the surge in energy prices leading to a deep recession. Some form of cap on wholesale prices now looks inevitable, alongside other measures to tackle dysfunctional elements of the UK’s energy markets and boost the UK’s domestic energy supply over the medium term. This will be expensive, but there are recent precedents including the response to the global financial crisis and the alternatives are worse and risk generating profound social and political costs.
“Any policy or set of policies that will have a serious impact will carry a heavy fiscal cost. It is likely that the necessary cost over the next two years might be in the region of £100 billion. This sounds terrifying but more was spent during the pandemic, and it amounts to only 4% of UK GDP of £2.5 trillion. If funded over 20 years via government long-term bond issuance, the additional interest costs per year would be around £3 billion or 0.12% of UK GDP at current rates.”
Why all the panic over international students?, by Joanna Williams
The much-feared ‘Brexodus’ of Britain’s universities has failed to materialise. The truth is clear: there has been no decline in the number of international students in UK universities. Not even a tiny dip. In fact, the exact opposite has occurred. At the same time the number of UK students has also risen.
“Back in 2016, there were just over 450,000 overseas students in the UK. And by 2020, this had risen to 605,000. In the academic year just ended, more study visas were granted than ever before.”
Key Points
Two more optimistic economy stories to close out this week’s Newsletter. The first is the performance of the British red meat industry. Remain supporters predicted that the industry would be decimated by the introduction of Byzantine controls on food safety, which would make exports to the EU difficult or impossible. Instead, the sector has posted record profits – with most exports going to EU markets. The performance suggests that the impact of non-tariff barriers, much trumpeted by pro-Single Market commentators, is much less substantial than assumed.
The second comes from Northern Ireland. Readers may remember a raft of stories from 2021, where the province appeared to show higher growth figures compared to the rest of the UK outside London. This faster recovery from the troughs of lockdown, it was suggested, was connected to the access to EU markets provided by the Protocol.
Those data have changed. Revisions to those estimates suggest that Northern Ireland’s performance was more middling in Quarter 3 of 2021, on par with North East England and slightly worse than other English regions. Worse is the news from Q4. Both quarter-on-quarter growth, and growth from a year previous, were the weakest in the four nations (Wales being the strongest).
Advocates of the Protocol argue that this comes from uncertainty, caused by the UK’s attacks on the NIP, which has led to businesses choosing to delay investment. This should have kicked in from mid/late-2021 at the earliest, when the government advanced the Internal Market Bill. Yet according to the Purchasing Managers’ Index data series, the province’s underperformance stretches well back into 2020.
As we’ve argued before, the Protocol is the likely culprit for this underperformance. It is an amusing irony that Remainers affirm that the UK is harming itself by erecting trade barriers with its biggest market – but maintain that in Northern Ireland, erecting barriers with the UK is somehow counterbalanced by access to an EU market with which the province trades much less.
We are also on Twitter, posting articles and retweeting the daily events that bring Brexit to the fore in the national news.
Discussion also continues over on Facebook.
How you can help
There is much about Britain’s relationship with Europe that remains to be decided. Our MPs listen to their constituents. Do continue to send them links to our articles, especially on matters relevant to your constituency – for example, in rural areas, articles on the threat to British agriculture. Alternatively, make an appointment to speak to them at their next surgery. Let them know what you want post-Brexit Britain to look like.
As Boris Johnson said in in his post-election address, it is also time for unity and reconciliation. Keep reading our posts and share links to our quality content to help others understand how leaving the EU benefits the UK economy and our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.
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Yours Sincerely,
Newsletter Editor
A Cambridge PhD Student
Economist, Centre for Business Research, Judge Business School University of Cambridge
Emeritus Professor of French History, University of Cambridge
