Brexit and the waning days of the United Kingdom

[Sheilbh]

The next round of Brexit talks in London, at which the UK intended to produce a draft FTA () may be suspended due to coronavirus.

This is one of those things where I wonder why they need to do these face-to-face shuttle talks anyway. Rather than delaying it, couldn't they just do a video conference?

[Tamas]

The next round of Brexit talks in London, at which the UK intended to produce a draft FTA ()

"We, the UK and the EU, agree to maintain everything as it is now, except the UK won't pay a penny and will not keep to any regulations, and also the ECJ will have no jurisdiction over any debates of any kind, ever.

Signatures, date"

[mongers]

Damn, now that you mention it, I remember that Brexit thing , wasn't it a big who-ha last year?

[mongers]

The next round of Brexit talks in London, at which the UK intended to produce a draft FTA () may be suspended due to coronavirus.

This is one of those things where I wonder why they need to do these face-to-face shuttle talks anyway. Rather than delaying it, couldn't they just do a video conference?

[Johntrumpson/]

The art of the deal is to seal it with a manly handshake.

[/Johntrumpson]

[Sheilbh]

The next round of Brexit talks in London, at which the UK intended to produce a draft FTA ()

"We, the UK and the EU, agree to maintain everything as it is now, except the UK won't pay a penny and will not keep to any regulations, and also the ECJ will have no jurisdiction over any debates of any kind, ever.

Signatures, date"

I think - like VDL's comments - that's right circa 2017. The UK position is very clear now for all of its sins

[Josquius]

The UK hereby banishes all mention of the very word Europe from its shores but would still like full access to all your markets except in those areas where reciprocation is necessary.
Northern Ireland is not a place that exists. Those who claim it is shall be shot out of a cannon.
Signed
Alexander De Pfefil Johnson-Hitlahhh

[The Minsky Moment]

The UK position is very clear now for all of its sins

Quite so - the UK position now is the same Project Fear position from the referendum that Leave insisted would and could never happen because of course Britain held all the cards and choose any path it wanted.

[Sheilbh]

The UK position is very clear now for all of its sins

Quite so - the UK position now is the same Project Fear position from the referendum that Leave insisted would and could never happen because of course Britain held all the cards and choose any path it wanted.

Fair. But we've had two elections since the referendum and the current government won a solid majority after being fairly clear that they either wanted no deal or a very limited deal. The people have spoken, the bastards.

[The Minsky Moment]

Well sure.  Once you've burned the boats, there's not much to do other than push forward inland.  There's no fait like a fait accompli.

[The Brain]

Let's burn those bridges when we get there.

[Admiral Yi]

There's no fait like a fait accompli.

And you were ragging on Toto.

[The Minsky Moment]

There's no fait like a fait accompli.

And you were ragging on Toto.

I'm frightened of this thing that I've become

[Zoupa]

There's no fait like a fait accompli.

And you were ragging on Toto.

I'm frightened of this thing that I've become

[Sheilbh]

Also in British politics, the budget, where the Tories are basically trying to reverse 10 years of cuts to the budget implemented by the *checks notes* Tory party. It's shameless, opportunistic and utterly unprincipled but as Philip Collins points out that's probably the secret to why the Tories are one of the most successful political parties in the West. They change, they adapt to whatever's in front of them and very rarely get stuck in the sort of doctrinal debates that can paralyse the left. It also means that saying "but they believed x in the past and now they're doing y" is an attack that doesn't really land on the Tories. I hate them

Budget 2020: Rishi Sunak turns on taps with £30bn splurge
Chancellor announces £12bn to fight coronavirus and £18bn on 'levelling up' in reversal of Tory orthodoxy
Larry Elliott and Heather Stewart
Wed 11 Mar 2020 20.36 GMT
First published on Wed 11 Mar 2020 20.36 GMT

Rishi Sunak ditched a decade of Conservative economic orthodoxy on Wednesday and claimed the Tories were now "the party of public services," as he turned on the spending taps with a £30bn package that leaves Britain on course to have a bigger state than under Tony Blair's Labour governments.

On a day when the World Health Organization declared Covid-19 to be a global pandemic, the chancellor announced £12bn to buttress the economy against the immediate threat of recession and a further £18bn to deliver on Boris Johnson's election pledge to "level up" the UK.

Sunak said he knew how worried people were by the spread of Covid-19 since the crisis emerged in China at the start of the year and said £5bn of extra public spending and £7bn of support for households and businesses was "temporary, timely and targeted".

The chancellor's claim that he would do "whatever it takes" to see the economy though its most testing period since the 2008-09 financial crisis was was part of a coordinated day of action kicked off by a half-point cut in interest rates from the Bank of England. It was the UK's first emergency rate cut since 2008.

"The British people may be worried, but they are not daunted," he said. "We will protect our country and our people."

But doubts were raised about whether the budget's help for low-income workers was generous enough at a time when the government's own estimates suggest one in five people could be off work at any one time.

And there was criticism from Labour for the budget's failure to address social care, despite Johnson claiming during his leadership bid last summer that he had a plan to deal with the looming crisis.

Sunak said he was prepared to do more if necessary after announcing cash grants, credit guarantees and a business rates holiday for small and medium sized companies likely to be affected by a dramatic drop in consumer demand triggered by a Covid-19 slowdown.

The chancellor also announced an expansion of statutory sick pay and a relaxation of benefit rules designed to help vulnerable workers over what he admitted would be a tough period.

Torsten Bell, the chief executive of the Resolution Foundation thinktank, said: "Significant action to support firms affected by coronavirus is very welcome and should help ensure the temporary shock does not do them lasting damage. In contrast to significant help for firms, targeted support for families affected by coronavirus was less evident. Self-employed people becoming ill will see faster benefit payments, but the government has left two million low-paid employees ineligible for statutory sick pay."

The government's response to Covid-19 came too late to be included in the forecasts for growth and borrowing compiled by the independent Office for Budget Responsibility, which said there was a risk of recession in the event of "widespread economic disruption".

The tax and spending watchdog predicted that the largest sustained easing of policy by the Treasury since the pre-election budget of 1992 would fail to prevent growth over the next five years being even slower than in the decade following the financial crisis. The government will be responsible for half the economy's growth over the next two years, the OBR added.

Sunak's spending pledges were only partly funded by higher taxes and are mainly being financed by a decision to reverse the downward trend in borrowing seen since the economy emerged from the 2008-09 financial shock. Net borrowing, which hit £38.4bn in 2019, is planned to rise to £66.7bn in 2022.

Bell said: "For the years ahead, the chancellor has increased public spending significantly while being very reluctant to raise taxes to pay for it. While the Conservative government even a few years ago aimed for a smaller state and zero borrowing, these plans mean a bigger state than under Tony Blair paid for by more borrowing than Gordon Brown."

The Labour leader, Jeremy Corbyn, dismissed the chancellor's claim that his budget marked "the beginning of a new era in this country".

Corbyn said: "The government's boast of the biggest investment since the 1950s is, frankly, a sleight of hand. In fact, it is only the biggest since they began their slash-and-burn assault on our services, economic infrastructure and living standards in 2010. Having ruthlessly forced down the living standards and life chances of millions of our people for a decade, the talk of levelling up is a cruel joke."

With Boris Johnson and his de facto chief of staff Dominic Cummings chafing against any restraints on their costly plans for "levelling up" the economy, Sunak announced a review of the Treasury's fiscal rules – instead of adopting the spending framework announced by his predecessor, Sajid Javid, during the election campaign.

Most Tory MPs greeted Sunak's statement with delight, cheering enthusiastically as he listed Johnson's manifesto promises, and repeatedly chanted "this budget gets it done".

But Javid, who resigned just weeks before the budget rather than accept the wholesale sacking of his advisers, later warned against abandoning all spending rules.

And former prime minister Theresa May also sounded a note of caution, saying sound management of the public finances "has always been one of the unique selling points of the Conservative party". She added that her party should continue to exercise "restraint and caution".

Mujtaba Rahman of consultancy Eurasia Group said the spending splurge and lack of tax rises made this more like a pre-election budget than the first financial statement from a government with a majority of 80. "The dog that did not bark in this budget was tax rises. Sunak may have more to say about them in his autumn one," he said.

Alison McGovern, chair of Progress, the centrist Labour campaign group, said: "The women and men working round the clock in social care will wonder at a chancellor and prime minister who do not see them, or those that they care for. Today was the day to give them a boost. It is not just an opportunity missed, it is an insult to all families with a loved one who needs support - and those struggling through with low pay and now coronavirus making life hard."

Summary by the Guardian's economics editor which isn't so focused on just the coronavirus measures - though they indicate the government's expecting a serious and possibly prolonged recession:

Sunak's spend, spend, spend budget is tough for Labour to attack
Unusually generous £30bn stimulus package comes good on some Tory election pledges
Larry Elliott Economics editor
Wed 11 Mar 2020 15.23 GMT
Last modified on Wed 11 Mar 2020 19.30 GMT

It is a long time since a government came up with a giveaway budget on the scale of that presented to parliament by Rishi Sunak: a £30bn stimulus package designed to demonstrate that the age of austerity is well and truly over.

As the Office for Budget Responsibility pointed out, this was the largest sustained fiscal loosening since the package announced by Norman Lamont in March 1992.

But that was a budget a few weeks before a general election, the traditional time for a government to be generous. Sunak's spend, spend, spend approach was all the more extraordinary for coming in the first budget after a general election – usually the time when chancellors make unpopular decisions.

One crumb of comfort for Labour as it watched a Conservative chancellor steal its clothes was that it has won the intellectual – if not the political – argument. The days when the Tories believed that Britain could cut its way to higher growth – expansionary fiscal contraction, in the jargon of economists – are over.

The most savage attacks on Sunak's debut budget came from the free-market think tanks, who view Johnson and his cabinet as being a return to Ted Heath and the budgetary laxity of the early 1970s. Matthew Lesh of the Adam Smith Institute warned that "spending like a drunken sailor" was not the way to create a thriving entrepreneurial economy".

The other crumb of comfort for Labour is that the 1992 budget proved to be only a short-term fix. Within six months of its election victory, John Major's government was engulfed by a sterling crisis that culminated in the pound leaving the European exchange rate mechanism on Black Wednesday. Brutal tax increases swiftly followed, helping to create the conditions for Tony Blair to become prime minister in 1997. Covid-19 has the potential to bring Johnson's honeymoon to a rapid end.

The £12bn package of emergency help for households and businesses announced by Sunak is there to ensure that 2020 does not turn into 1992 redux. The measures announced by the chancellor – which dovetail with the Bank of England's announcement of lower interest rates and incentives for banks to borrow – will not lift the threat of recession in the first half of 2020, but should ensure that growth resumes from mid-year onwards. The chancellor described his assistance as "temporary, timely and targeted", although the public might take a different view if the UK is forced into an Italy-style lockdown.

But there was more to the budget than merely the government's response to a global epidemic. The intellectual climate has changed. Borrowing money to invest in public infrastructure and in research and development is no longer the taboo it once was – far from it. The International Monetary Fund and the European Central Bank – once bastions of fiscal rectitude – are now both urging governments to increase spending on long-term investment projects to boost growth potential.

The new mantra is that an era of permanently low interest rates makes it affordable and sensible for finance ministries to bolster spending. Sunak has certainly not held back on this score. Fiscal policy will be eased by 1.4% of national output next year, partly financed by higher taxes, but also by higher borrowing.

According to the Office for Budget Responsibility, the body that produces independent forecasts for the government, the state will borrow almost £100bn more over the next four years than was planned a year ago. Even so, the payoff will be relatively modest. Higher public investment – if sustained – will boost the supply potential of the economy, but only by around 2.5%

In part, that's because the OBR has a fairly traditional view of how the economy works. it thinks it will be hard for the government to spend as much as it is planning to without the UK running into bottlenecks that will result in upward pressure on wages, rising inflation and higher interest rates. There was, however, little sign initially of the City being spooked – an indication that financial markets expect interest rates to remain low for years to come.

Unusually for a Tory chancellor, Sunak brought his speech to a conclusion by announcing spending increases rather than tax cuts. That's because the prime minister was insistent that the government deliver immediately on its election promises, which accounts for the other £18bn of stimulus next year. As a result, there was a blizzard of nationwide investment announcements designed to show that that the "levelling up" agenda was under way. The imperative was to get spades in the ground early so that progress would be evident before the next election.

There were few obvious angles in the budget for Labour to attack, although there were scant measures for those on welfare, apart from the time-limited Covid-19 support for sick pay and benefit support.

This was not a redistributive budget, and nor, courtesy of the big investment in roads and yet another shelving of a fuel duty increase, was it a particularly green one.

But this budget was definitely more Maynard Keynes than Milton Friedman. It was a throwback not to Thatcherism, but to the days when governments of both left and right thought they could use expansionary fiscal policy to break the economy out of its low-growth, low-investment, low-productivity trap.

[The Larch]

I guess they finally found the tree where money grows!