The 7th anniversary of the Brexit referendum is a good time to remember the most egregious lies told by HM Government in 2016. The Government produced two major reports on the immediate and projected long-term impact of Brexit and a glossy pamphlet sent to all homes in the UK. These predicted an immediate recession, a worst-case 6% fall in GDP and a 500,000 rise in unemployment. None of this remotely occurred, in fact just the opposite. The Government was criticised by the National Audit Office but no apology has been issued for these distortions of constitutional importance.
7 years on, falsehoods still abound. Briefings co-editor Graham Gudgin has published a paper with Saite Lu exposing the critical flaws of widely-cited Brexit impact studies. The article was published by research council-funded UK In A Changing Europe alongside a weak rebuttal from UKICE economist Jonathan Portes.
A chaotic few days in Russia saw Russian mercenary leader Prigozhin occupy Rostov-on-Don and begin a march on Moscow only to call it all off and travel to Belarus in return for an end to the criminal investigation into his suspected insubordination. The effect this has on the war in Ukraine is yet to be seen, but some see it as the beginning of the end for the ‘special military operation’.
The Bank of England has raised its Bank Rate to 5%, after inflation figures for May showed no change from April. Initial market reactions showed investors predicting high interest rates until at least summer 2024. Commentators have started asking questions about the competency of the Monetary Policy Committee and Governor Andrew Bailey. In response, banks have agreed to limited mortgage relief after pressure from the Chancellor.
Out of his depth?
The UK signed a Memorandum of Understanding with the state of Utah covering cross-Atlantic trade. It is the fifth such deal since the UK left the EU. The deal includes fintech, aerospace, supply chain resilience and life sciences as priority sectors.
President Biden has reportedly blocked Ben Wallace’s candidacy to be the next NATO Secretary General, and is said to favour Dutch PM Mark Rutte, despite Britain leading efforts to support Ukraine. It is being seen by some as another sign of the US President’s anti-British bias. Britain is one of the few countries in the alliance which meets its defence spending pledges.
Finland’s new centre-right government has made a clear stand against surrendering more powers to Brussels, saying that “Finland advocates for a clear division of competences between the Union and the member states, which should not be expanded with a new interpretation of the treaties.” The administration also expressed its intentions to “maintain and deepen” ties with the UK. Meanwhile, Poland’s ruling party has expressed opposition to the new EU Immigration rules and is insisting the deal be put to the people in a referendum.
Briefings contributor Julian Jessop asks “how much higher will interest rates go?”. You can read the article here via Capx.
Briefings co-editor Robert Tombs has written for the Telegraph about Putin’s ongoing trouble in Russia. You can read the article here.
Nation-building starts at home by Philip Cunliffe
If we are to constitute a new nation, then we need new representative structures – new parties, new laws and a new political system. Taking back control has failed, because restoring the legal supremacy of parliament has meant simply thrusting forward an unrepresentative and feckless political elite, so used to taking directives from Brussels that they are incapable of representing the nation.
On the seventh anniversary of the Brexit referendum, it is clear that many Remainers are feeling increasingly confident and increasingly optimistic that they may be able to re-attach Britain to the European Union, if not formally re-join the organisation in due course. They take heart from polls that seem to show that those who were too young to have voted in 2016 are firmly set against Brexit, and that even Leave voters filled with disappointment and regret.
Three cheers for Tony Blair – the unsung hero of Brexit by Catherine McBride
The spectacular miscalculation by the Blair Government of how many Eastern EU immigrants would move to the UK after 2004, left the UK with a service economy run by underpaid workers whose living costs must be subsidized by taxpayers. Brexit is finally turning this around, with growth in average pay up 7.2% (Feb-Apr 23). But like a pantomime villain – Lord Hammond has suddenly reappeared and is trying to stop this.
Watching Alastair Campbell smarting about Brexit on the BBC’s Question Time panel last night made me smile. He can carry on about lying politicians, but if it weren’t for a massive miscalculation by his old boss, I am not sure that Leave would have won the 2016 Referendum. It was Tony Blair’s decision to allow immigrants from the former Soviet bloc countries (A8) which joined the EU in 2004, to move to and work in the UK, that drove many working people to vote to leave the EU.
EU jam tomorrow? by Catherine McBride
According to a report in The Telegraph, the EU is proposing to change the fruit content requirements for products labelled as ‘Jam’. Its technocrats seem to believe they are the world’s rule setters even though jam is an English word. A similar substance made from fruit and sugar is called Confiture by the French. The Spanish call their version mermelada. The Italians marmellata. The Greeks μαρμελάδα, the Dannes syltetøj, the Swedes sylt, the Polish Konfitura, the Czechs džem, the Estonians moos, while the Americans call it Jelly.
But the main point is that shoppers must be allowed to decide for themselves if they like set jam or runny jam or extra fruity jam or expensive jam or cheap jam. The information is already on the label, but this will mainly be a personal preference. Most certainly the EU should have nothing to do with determining UK standards, especially of a product it hardly imports from any country outside its customs block, including the UK.
Why Mark Carney is wrong (again) by Julian Jessop
Economist Julian Jessop accuses former Bank of England Governor, Mark Carney, of going too far in blaming high inflation on Brexit. The helpful correction to an over-valued pound, which occurred immediately after the 206 Referendum could not possibly be held responsible for high inflation in 2023
True to form, Mark Carney has made another unhelpful intervention in the Brexit debate. This time his remarks have generated more heat than light on the impact that the vote to leave the EU might have had on UK inflation. And by appearing to validate fears that UK interest rates have a lot further to rise, he has added to the worries facing homeowners.
In a time of high inflation, is mortgage relief a counterproductive response to a rise in interest rates? It is a popular opinion, even in the Treasury, but it is not straightforward.
Critics of mortgage relief point out that interest rate rises are intended to stop excessive price increases. Mortgage relief, however, would leave households with more expendable income, meaning more demand for consumption goods, meaning higher prices. So, they say, the policy is counterproductive.
This makes two assumptions. First, that the Bank of England curbs inflation by trying to reduce demand for goods. Second, that whatever other deflationary effects a rise in interest rates might have, they match the inflationary pressure of mortgage relief.
The former is dubious. The primary effect of rising interest rates is a fall in the holding cost of excess reserves for banks. This disincentivises lending, which the Bank of England acknowledges as a driving force behind the creation of money. So, when targeting inflation, it is the supply of money that the Bank influences directly when it raises interest rates, and not consumer behaviour. Mortgage relief might sustain rising demand, but this is more a symptom of the real problem than the cause – excess money creation.
Of course, government spending is another way to create money, so subsidising mortgages from government coffers will counteract at least some of the deflationary pressure on the money supply of higher interest rates. (Perhaps that is why the government is leaning on banks to implement their own relief schemes.) Quite how the two would balance out is difficult to judge, but that only 1 in 20 households will be affected in the next two years by rising mortgage costs gives some reason to think the overall effect would still be deflationary.
Besides, if the objection is a reluctance towards higher overall government spending, there are perhaps less worthy public expenditures which could be redirected towards mortgage relief. There is, after all, a strong fairness argument to be made for mortgage relief in times of rising interest rates: why should a small cohort of mortgage-holders bear a far bigger burden than the rest of society for a problem they did nothing to cause?
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A Cambridge Philosophy Graduate