Tag Archive: freedom of movement

Brexit: 4.7+ million lives at stake

Brexit will directly or indirectly influence 65 million people in the UK, but it will fundamentally affect the lives of 4.7 million people: the 3.5 million European Union (EU) citizens in the UK and the 1.2 million Britons in the 27 EU countries. This is more than the population of 9 of the 28 countries in the EU, namely Malta, Luxemburg, Cyprus, Estonia, Latvia, Slovenia, Lithuania, Croatia and Ireland. There are a lot of lives a stake. In fact, the numbers involved are much larger. For example, I am a Briton in Germany but my family are German, so do not count among the 4.7 million. There will be many cases of mixed nationalities, so the true number of lives affected is higher.

4.7+ million is a statistic. People´s families, hopes and futures are not. Brexit puts lives at stake.

The epitome of personal freedom: gone with the wind

These people migrated to the UK/EU in good faith. There are four fundamental rights at the heart of the EU. Of those, the freedom of movement of people to work, travel, study, retire, etc. anywhere within the 28 countries of the EU is fundamentally important. 4.7+ million EU/UK citizens migrated in good faith, created new lives for themselves and put down roots. In doing so, they automatically acquiring the same rights as their fellow citizens in the countries that they are living in.

It is the epitome of personal freedom across 28 nations. 508 million people currently have this right and nothing of the sort exists anywhere in the world. But a year ago, 52% of eligible British voters voted to unilaterally turn their back on this and the other fundamental freedoms of the EU (i.e. freedom of moment of goods, services and capital).  To be fair, only 37% of eligible voters voted Leave, which means that 63% of eligible voters did not vote to leave the EU. It is a pity that the government chose a simple majority, rather than setting a higher threshold for a decision with enormous implications. I was not one of the voters and many other adult Brits living in other EU countries were similarly denied a vote because of the so-called “15-year rule”. As I have previously written, “Britain has taken away my right to vote (and I want it back).”

Is it fair and reasonable to simply cut-off 4.7+ million from all the rights and benefits that they are currently entitled to because of a margin of 2% of the eligible British voters decided that they “wanted their country back” and were willing to play fast and loose with the rights that the EU confers? Can we reasonably expect people to simply pack-up and “go home”? What about the uncertainty, stress and distress involved for them, some of whom have been informed by the Home Office to prepare to go home at the same time as it makes it as difficult and complicated as possible to apply for UK citizenship?

We are talking about ordinary people who legally took-up their rights and who are now uncertain about their homes, jobs, education, pensions, health provision, families and indeed their futures.

Brexit before People

Small wonder then, that the EU has prioritised sorting out the future of these 4.7+ million people who are caught in the cross-fire of Britain´s decision to leave the EU supposedly in order to control their own border, laws and destiny.

Only, it is not just its own destiny that is affected by Brexit.

It is also the destiny of people who had no vote (both EU nationals in the UK and Britons like myself) and no say on their own future. A Conservative government called an unnecessary EU Referendum primarily in a calculated and cynical effort to save its political skin from the threat of the UK Independence Party (UKIP). Its gamble backfired, delivering political chaos and threatening the long-term economic decline of the UK. This humongous miscalculation has the potential to divide the Conservative party and consign it to the dustbin of history. It has already split the country asunder at multiple levels and a very uncertain future awaits the country as a result.

The EU has made it clear that it has three absolute priorities before it is anywhere near being ready to negotiate the only thing that really seems to matter to the UK government, namely a trade deal. These include the Brexit financial settlement, the Republic of Ireland / Northern Ireland border and the rights of EU/UK citizens. The EU Guidelines for Brexit Negotiations makes it clear that the rights of citizens matter above all else:

“The right for every EU citizen, and of his or her family members, to live, to work or to study in any EU Member State is a fundamental aspect of the European Union. Along with other rights provided under EU law, it has shaped the lives and choices of millions of people.  Agreeing reciprocal guarantees to safeguard the status and rights derived from EU law at the date of withdrawal of EU and UK citizens, and their families, affected by the United Kingdom’s withdrawal from the Union will be the first priority for the negotiations. Such guarantees must be effective, enforceable, non-discriminatory and comprehensive, including the right to acquire permanent residence after a continuous period of five years of legal residence. Citizens should be able to exercise their rights through smooth and simple administrative procedures.”

The nationalities most affected are Britons (about 1.2 million) and Poles (about 900,000). Needless-to-say, it should be the UK´s absolute priority to regulate the situation of so many British lives living in EU countries ASAP. Only it is not.

Theresa May and her merry band of Europhobic Brexiteers have chosen to play fast and loose with people´s lives. For over a year, they have made a point of perpetuating the uncertainties. They have chosen to play a coy game of waiting and seeing, using the lives of 4.7+ million people like so many pawns to be positioned and/or sacrificed in their callous and atrociously incompetent game of Brexit chess. Shameful is the word that readily springs to mind.

Interestingly, Mr George Osborne, the former Chancellor of the Exchequer and now Editor of the Evening Standard, has just alleged that, in fact, the former Prime Minister, David Cameron, had tried to settle the issue of EU citizens’ rights unilaterally immediately after the EU Referendum. However, this was vetoed by one member of the cabinet. This person was none other than the ex-Home Secretary, as it enhanced her prospects of becoming Prime Minister. We are, of course, talking about none other than Mrs Theresa May. If true, this indicates that she thought nothing of toying with people´s lives in order to better position herself to become Prime Minister. The list of wooden, robotic, crude, calculating, incompetent and downright cruel decisions keeps growing. At some point, bad luck or circumstance can no longer account for the black marks. They cast an increasingly unflattering light on her past, present and future legacy as a politician, if not as a person.

The official Brexit negotiations finally got going on the 19 June 2017, though the emphasis was on “talks about talks” and the UK´s wishful thinking was immediately exposed. On the 23 of June 2017, Mrs May travelled to an EU summit in Brussels and presented her opening offer on EU citizen rights, having let the issue hang for so long. What did she come-up with? Was it perhaps to do the simplest thing to put an end to the uncertainty for 4.7+ million lives by matching the EU offer? Not on your nelly. Why would the British government immediately end the uncertainties hanging over the future of 4.7+ million people, 25% of whom are Britons, in one fell swoop when it can continue to play politics with so many people´s lives?

Unfair and Unserious

Our beloved Maybot chose instead to continue to play the immigration card and prolong the uncertainty for short term political gain: at least she is strong and stable in this respect. She presented her vision of a “fair and serious” offer to protect EU citizen rights by offering them a new “UK settled status” for EU migrants who had lived in the UK for five years with rights to stay and access health, education and other unspecified benefits, subject to the EU27 states guaranteeing Britons the same rights. Rather than determining whether these would also apply to dependents and setting the date at which the 5 years qualifying starts, she chose to be vague about this (sometime between March 2017, when Article 50 was triggered and March 2019, when the 2-year period of Brexit ends), thereby creating another source of uncertainty for many people who have been in the country for less than the qualifying period. Furthermore, she circumvented the EU´s position that EU citizens´ rights be enforceable by the European Court of Justice, which is a sticking point among Europhobes.

This falls well short of the EU´s negotiating position which is basically that EU citizens living in the UK should retain all EU rights in perpetuity, with the same applying to Britons living in the EU27. This is a simple, transparent and fair position that people can relate to. This is what fair and serious looks like as compared a British government persisting in using EU citizen as bargaining chips in Brexit negotiations.

The EU was quick to point out that EU summits are not the place to initiate negotiations. The British Prime Minister does not appear to understand that two teams have been selected with the mandate to negotiate the terms of Brexit. Various EU, German and French politicians have stressed that the so-called fair and serious offer was “below expectation”, but a “good start” even if “no breakthrough” and that “there was a long way to go.” In other words, the offer was not taken to be either fair or serious and crashed like a lead balloon. It could have been predicted, had Mrs May and the Europhobes not been so isolated and deluded. The official UK offer will be presented on 26 June 2017; we all await it with bated breath.

Grown-up Politics Overdue

The Maybot and the Europhobes continue to try to be “bloody awkward”, rather to focus on normalising the lives of 4.7+ million people. So here are three questions for the UK government:

  • What is so difficult about understanding that millions of people are fearing for their homes, families, livelihoods, education, health arrangements, pensions, etc.?
  • Are you blind to the stress, frustration, disappointment, resentment and anger caused by the uncertainty?
  • Are you incapable of feeling empathy for such people 12 months after the Brexit vote?

4.7+ million lives are not so many bargaining chips to be used to try to extract EU concessions.

4.7+ million lives call for adult politics and truly fair and serious solutions.

Tomorrow, I expect my government to stop mucking about and sort it out.

By that, I do not mean begrudging, half-hearted solutions but the real deal.

We and our families are entitled for the rest of our lives to whatever rights existed before the EU Referendum unilaterally threatened to take them away from us.

We entitled to no more and certainly no less.

© Ricardo Pinto, 2017, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Brexit means hard Brexit: the UK is running out of options

The 8th of June 2017 is a landmark that I shall always remember. Against all expectations, the British General Election delivered a hung Parliament as well as a bloody nose for the incumbent Conservative government. Their expectation of a 100+ majority in Parliament is in ruins and, with this unexpected development, the tide of history may have turned but it is far from clear. Perversely, it could well be that Brexit means Brexit has been superseded by Brexit means hard Brexit.

Since the EU Referendum on 23 June 2016, the Conservative government under the leadership of Prime Minister Theresa May has been marching remorselessly towards “hard” Brexit. This means not just leaving the European Union (EU), as required by the referendum outcome, but also exiting the European Single Market, the European Customs Union and the European Court of Justice to boot. By contrast, keeping all three yet still exiting the EU would be “soft” Brexit and would carry the least amount of risk for the UK and the EU-27 countries.

Although the option of hard Brexit was never part of the referendum (it was a straight “in” or “out” choice), this is exactly what a Conservative Government stuffed to the gills with Brexiteers such as Boris Johnson, David Davies, Liam Fox, etc. has been working towards. Mrs Theresa May, a former (albeit reluctant) Remainer, quickly became the conductor-in-chief of this process. A hard Brexit would have been difficult to achieve with a small majority in Parliament, so Mrs May decided to ask the country for a mandate for hard Brexit (having previously strenuously denied the need for another General Election), the terms of which was hardwired into the Conservative manifesto.

The expectation among the political establishment and media pundits alike, was that the Conservative Party would increase its working majority from 13 to possible as many as 100-200, some predicting the evisceration of Jeremy Corbyn´s Labour, the second largest party in the country. With a predicted crushing majority and thus a crystal-clear mandate from the electorate, hard Brexit would have been as good as guaranteed. Theresa May´s political calculation was that the House of Commons would no longer be an obstacle to the process and that the House of Lords would not dare to stand in the way of the will of the electorate. Traditionally, the Salisbury Doctrine/Convention dictates that the House of Lords does not oppose the second or third reading of any government legislation promised in an election manifesto. The previous General Election in 2015 had enshrined a commitment to hold an EU Referendum but given no guidance on the type of Brexit to follow, no doubt assuming that this just would not happen. Obviously, the Conservative government was not sufficiently convinced that it was capable of ramming the necessary Brexit legislation through Parliament, so it felt the need to go back to the country for a hard Brexit mandate.

But it turns out that the British electorate had other ideas and decided not to give any party any meaningful mandate at all. Instead of rubber-stamping a one-way ticket to hard Brexit, it delivered an enigma. A hung Parliament means that instead of a majority of 12, the Tories have no majority at all (317 seats, 13 fewer than before), even with its unexpected gains in Scotland, where the number of Conservative MPs increased from 1 to 13. Interestingly, since the Scots are extremely pro-Remain, these new Scottish Tories are unlikely to toe the party line and support hard Brexit. Indeed, it is conceivable that their leader, Ruth Davidson, could seek to defy the Conservative´s plans for a hard Brexit and even create a separate party.

If that was not bad enough, the only way the Tories can cobble together a slim majority in Parliament is via some sort of coalition with the Democratic Unionist Party (DUP) from Northern Ireland. The Eurosceptic DUP is willing to enter into a confidence and supply arrangement and Theresa May announced on 09 June 2017 her opportunistic intention to form a new government with support from the DUP, the potential King Makers.

There are only two flies in Theresa May´s DUP soup:

  • This goes against the grain of most Tories, since the DUP are considered to be a sectarian, nationalistic, militantly Protestant party which is known to be anti-same sex marriage, anti-abortion, in favour of creationist teaching at schools, etc. In other words, “taking back control” from Brussels apparently means passing it straight off to a bunch of swivel eyed-loons (as term applied by David Cameron, the former Conservative Prime Minister to Conservative activists) from Belfast. Moreover, the DUP will insist upon a soft border in Ireland, which effectively means that the Conservative mantra of hard Brexit/”no deal is better than a bad deal” is impossible to maintain with the DUP on-board. In any case, it is still far from clear that any sort of agreement can be reached between the two parties;
  • Everyone, except for the Mrs May and her new government, which is actually pretty much the old government except for the addition to the charming, dependable and loyal Mr Michael Gove, is warning that it is not credible for the Conservatives to enter into either a formal coalition or a confidence and supply arrangement without endangering the Good Friday Agreement. Under the terms of the latter, the UK government must demonstrate “rigorous impartiality” but, as has been pointed out by several people, including IRA representatives and various former Conservative Prime Ministers, it is far from clear how this could work if the Conservative government were to invited the DUP to prop it-up in gaining a working majority in Parliament. You can bet your bottom Euro, sorry Pound Sterling, that DUP support will come at the price of a pound of flesh (politically and financially) to the Conservative party. Undeterred, Mrs May(hem) ploughs on in her cynical determination to create the most shamefully incoherent British government that I can recall. It is far from clear that she will succeed, in which case she will (surely) have no choice but to resign post-haste.

Clearly, the general election result threw a huge spanner into the Brexit works.

With one fell swoop, all the certainties of the past year have been overturned, starting with whether there will be a working majority in Parliament, let alone a workable one with the new Scottish Tories and the DUP in a rudderless boat. Moreover, the certainty that the country was heading straight for hard Brexit has been blown out of the water. By far the most likely course correction to be set, assuming the Tories manage to cobble together a working government, is for the DUP and the new Scottish Tories (together with the majority of the rest of the Conservative MPs, Labour and the Lords) to push for a soft Brexit. Rather than the General Election eviscerating the Labour Party as a political force, it is a reinvigorated party, despite defeat. Instead the most likely bet is that adjusting the course from hard to soft Brexit will be the catalyst for a schism in the Conservative party.

Hallelujah; a deliberately engineered and catastrophic hard Brexit is off the cards.

But do not rejoice too soon.

None of this necessarily means that hard Brexit will not occur. The chances of a deliberately engineered hard Brexit may have gone but is still remains the most likely witting or unwitting outcome, rather than soft Brexit. The reason that hard Brexit will probably occur, regardless of a hung parliament and the new political dynamic, is not hard to divine.

The 2-year deadline post invocation of Article 50 is ticking away and the UK has just fritted away 3 months of it holding a totally unnecessary General Election that has delivered an outcome that has totally muddied the Brexit waters.

Even the 2-year period is not what it seems; all commentators agree that, in reality, only 14-18 months are available for “negotiations”, followed by at least 6-8 months of ratifications by 28 governments, as well as others, such as EU Parliament and regional governments.

Moreover, whereas the EU-27 have been ready for negotiations for months, the UK is not even close to being prepared for hard, soft or any other type of Brexit. So far, there has been little but empty bluster of the “Brexit means Brexit”, “Red, Blue and White Brexit” and “No deal is better than a bad deal” variety emanating from the British government. Even a General Election ostensibly about the biggest challenge facing the country since the Second World War, namely Brexit, brought precious little debate let alone any more clarity about the government´s intentions.

The EU´s Guidelines for Brexit Negotiations have been submitted to the UK, the UK has not yet reciprocated, though the “talks about talks” started on 19 June 2017. The only thing that exists is the UK´s official letter triggering Article 50, which is vague and is effectively superseded by the new reality since the General Election. Following the one-day talks about talks, the Brexit Minister, Mr David Davies, promptly caved in to the EU´s demands, for example to settle the broad terms of the “separation” (i.e. citizens’ rights, financial settlement and the Irish border) before trying to negotiate a future trade deal. The key plank of the UK´s negotiations has been removed before the real negotiations even start.

This reinforces the point that while the 27-EU countries have agreed a unified negotiating position in a relatively short period of time, the UK government has not been able to agree a negotiating position of any description one year since the EU referendum. This speaks volumes about the parlous state that Britain finds itself in as the negotiations starts. There is not a single good omen that bodes well for the UK. The best Brexit cards are firmly in the EU´s hands, starting with the fact that time is on their hands. All the waffle, bluster and wishful thinking will be remorselessly blown away by the more experienced EU team.

This parlous state of affairs is not in the least bit surprising. Although the Brexit game has been in play for a year, the only strategy there ever was, namely hard Brexit, has been scotched by the electorate. A coalition / supply and confidence arrangement has not yet been negotiated and may fail to materialise.

The Conservative party is in total disarray and is increasingly split. The Chancellor of the Exchequer, Mr Philip Hammond has recently stated the failure of talks would be “very, very bad” for Britain in direct contravention of what the Conservative party has been claiming (“no deal is better than a bad deal”) for the last year.  Whichever way the Brexit cookie crumbles, the mother of all internal wars will break-out within the Conservative ranks if they start back-pedalling towards soft Brexit.

To add fuel to the fire, the Grenfell Tower fire fall-out is occupying much of Theresa May´s attention and could lead to her downfall. If she came across as being wooden and robotic (the Maybot) during the General Election, she now comes across as callous and heartless on top. If Grenfell Tower does not do it, her own party will topple her sooner rather than later: May is not just damaged goods, she is toxic political goods. The steady stream of concessions since the General Elections will not save her. A downfall is only a matter of time for a leader who is patently neither a strong nor a stable leader. Everyone can see that the reality is in direct contravention of the facile PR.

What a mess for a country (previously) admired for its pragmatism to find itself in.

The real danger is not that the imminent implosion of the Conservative party. It is that the EU has been deprived of a meaningful negotiating counterpart, let alone one that can deliver whatever is negotiated and agreed. This is as far removed from a “strong and stable” leadership as it is possible to imagine and poses major risks for the UK as well as the EU-27.

One option is for the British government to withdraw Article 50, but this will not happen. Both leading parties are committed to some form of Brexit in response to the EU referendum. There is no way to close Pandora´s Box without holding another referendum and that is an option that neither major party is willing to countenance at the moment. Voter fatigue is palpable in the UK and a general election is in the air. At this rate, the UK is in danger or rivalling Italy and Greece for the title of re-elections champion. But even if this option were somehow to occur, it would still be to Britain´s disadvantage. Senior EU members are on record that nothing will ever be the same again for Britain, not least its generous EU rebate and the opt-outs that it now enjoys. There may be a way to row back from Brexit, an option left open by Germany and France, but it would come at a heavy political price in the UK, apart from the sheer humiliation of such a U-turn.

Another option is for the UK government to accept the Norway option (European Economic Area), which means leaving the EU yet being part of the common market, making a financial contribution to the EU and accepting freedom of movement of people. At the moment, it is hard to see how either the Conservatives or Labour could square this with the sentiment of the UK electorate, where the continuing desire to stop EU immigration remains a red line. It is interesting that here, too, Mr Hammond is querying Mrs May´s target of reducing new migration to the tens rather than hundreds of thousands by wondering whether post-Brexit immigration controls would apply to EU workers who are highly skilled and highly paid.

If it proves impossible to opt for a ready-made solution (e.g. withdraw from Brexit or Norway Option) and a fragmented government cannot negotiate an alternative within the 2-year timeline for Brexit, the UK will automatically crash out of everything connected with the EU. Unless the EU-27 unanimously agree to an extension of the 2-year separation period (assuming the UK requests it), the economy and much else will fall off the cliff and experience the most brutal possible form of hard Brexit.

No one seriously wants to witness the latter scenario, other than hard-core Eurosceptics. But at the moment, it appears not only that Brexit means Brexit, but that, actually, Brexit means hard Brexit.

© Ricardo Pinto, 2017, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Brexit post-Article 50: between a rock and a hard place

Anyone who reads my blog knows that I strongly supported Remain in the lead up to the Referendum on whether to remain or leave the European Union (EU) on 23 June 2016. However, a very small majority (52% of the 72.2% of the electorate that voted) was in favour of leaving the EU. I have accepted that Brexit will happen and, indeed, that it should happen.

I am neither a Remoaner (a blend of remain and moan) nor a doomster in terms of the UK´s economic prospects post-Brexit, but I do remain as convinced as ever that the future will not be as bright outside the EU and could turn out to be catastrophic for the country. Whether the UK should remain a part of the Common Market, Customs Union, etc. was not debated in the lead-up to the Referendum. The British electorate was not asked whether it preferred to be better/worse off because of the specific Brexit route selected by the government.

The British Parliament has now passed the Brexit Bill and the Prime Minister, Theresa May, has signed the notification to leave the EU and triggered Article 50 on 29 March 2016, about 9 months after the outcome of the EU Referendum decision. So, it is worth pausing to consider the next stage of Brexit, following the official notification to leave the EU.

Below, I review the UK´s and the EU´s respective negotiating position before the political horse trading begins.  The starting pistol for the official part of the Brexit process has stated, but it is increasingly evident that Britain is between a rock and a hard place.

Stage 1: The Negotiation Positions

UK Position (after 9 months)

Prior to the 29th of March, the UK´s position was strangely vague. For far too long, it amounted to little more than facile slogans, such as Theresa May´s “Brexit Means Brexit” and that Britain wanted to secure a “red, white and blue” Brexit.

I have previously argued (“Brexit and the Politics of Wishful Thinking” and “Muddling Through Brexit”) that the British government, led by Theresa May and her merry band of Brexiteers (David Davies, Boris Johnson and Liam Fox) were totally deluded in imagining that they could have their Brexit “cake and eat is at the same time”, namely that the deal to be negotiated with the EU would be “at least as good as the current situation” and that “a bad deal would be worse than no deal at all”. Instead:

The likelihood of actually securing a deal that is at least as favourable as the status quo is nigh on impossible (though the EU is first and foremost a political construct and since politics trumps everything else, the possibility cannot be completely excluded). The prospect of the UK having its Brexit cake and eating it at the same time appears to be a load of wishful thinking and delusion. Everyone but the Brexiteers can clearly see the writing on the EU wall… in capital letters, underlined and bold.”

We have witnessed about 9 months of the Conservative Party primarily holding an internal discussion between its two main factions (Eurosceptics and the rest), while paying close attention to the editorial views of the more conservative right-wing press. This has been in stark contrast with the half-hearted efforts that the government has made to listen to the concerns of the 48% that voted to Remain, as well as the Scots and Northern Irish, let alone paying heed to the clear and consistent messages emanating from its EU negotiating partners.

Therefore, it was a relief that the letter sent by the Government on 29 March 2017 officially invoking Article 50, had a semblance of reality about it.

It insisted that Britain was the EU’s “closest friend and neighbour”, which raised a few eyebrows, and stressed multiple times that the UK government seeks “a deep and special partnership” with the EU, something that most observers could be forgiven for thinking had previously existed but that Brexit was intending to achieve the very opposite. But the letter showed that the government has also backtracked from the more nonsensical positions that has been floated:

  • Away from curtailing the freedom of movement of people (while seeking the opposite for the perceived good bits, such as freedom of movement of goods, services and capital) before from 29th March 2017 rather than from 2019;
  • Away from maintaining that a bad Brexit deal is better than no deal at all, suggesting some appreciation of the damage that would be wrought on the UK´s economy from the “falling off the cliff” scenario.

It still left open the possibility of a “transitional agreement” or “implementation period” being negotiated if no trade deal is struck within the short period of time available: there are only 12-18 months of negotiations, followed by 6 months required for its ratification by “super qualified majority” representing 72% of member states and 65% of the EU’s population.

It was also judiciously silent on areas which has been subject to much speculation in the UK, such as:

  • The role of the European Court of Justice in the future, which will almost certainly be needed in a future trade relationship or if a transition agreement/implementation period is needed, even if the Eurosceptics insist that it must go as soon as possible;
  • The Brexit bill for leaving the EU (i.e. the divorce settlement), which the EU estimates to be in the region of Euro 60 billion, but which the hard Brexiteers insist should be close to zero or even involve a refund to the UK. Like all divorce settlements, it could be an explosive issue.

But the document only partially reflects reality. The muddled, wishful thinking in the UK´s negotiating position continues in some important respects, such as:

  • An ongoing lack of recognition that access to the EU´s internal market requires accepting all four freedoms of movement, including of people;
  • An ongoing belief that it is possible to negotiate sector-by-sector deals, such for the financial and automotive sectors;
  • A continuing call for negotiation everything in parallel, which would represent a risk. If the aim is to do everything at the same time, it is possible that nothing will be agreed at all;
  • A strong linkage of Britain’s security responsibilities towards the rest of Europe with its desire to attain advantageous economic / trade terms. This aspiration was a political miscalculation that was immediately and comprehensively rejected by the EU, forcing the UK government to backtrack very fast from this particular “negotiation position.”
EU Position (more or less from the beginning)

Upon receipt of the official British letter, the President of the European Council of 27 national leaders, Donald Tusk, counteracted with its own draft negotiating guidelines. It showed that the EU 27 could move at least as fast as the EU 1 (UK). There is a consultation exercise at present involving all 27 Parliaments, which demonstrates the extend of the democratic process which the EU is following, as compared with what the British government sought to do, before being forced by the British courts to seek its own Parliament´s approval for Brexit.

This degree of unanimity combined with the speed of the EU 27´s response is an ominous sign for the UK, but is hardly surprising given the remarkably consistent messages emanating from the EC, Germany, France and every other EU head of state since June 2016. The most important elements of the EU´s draft Guidelines for Negotiation are:

  • The EU 27 insists upon the rights of EU nationals being fully respected until April 2019 or until any future transition arrangement comes to an end;
  • The EU 27 insists upon the European Court of Justice maintaining its role until April 2019 or until any future transition arrangement comes to an end;
  • The EU 27 will not tolerate a UK attempt to divide and conquer through individual approaches to EU member countries;
  • There must be a phased approach to the negotiations, rather than everything in parallel;
  • The UK must agree to the Brexit bill, at least in broad terms, before other discussions begin;
  • The negotiations must prioritise the future of the EU residents in the UK and vice versa;
  • The negotiations must avert a hard border between Northern Ireland and the Republic of Ireland, something which is easier to say than to do;
  • The UK can forget pipedreams such as cherry picking what it likes and ditching the rest;
  • The EU 27 will prepare itself for the possibility that the negotiations might fail.

In a nutshell: no sector-by-sector deals, no bi-lateral negotiations, no negotiations until the Brexit divorce bill is agreed, full freedom of movement during negotiations and any transition arrangement and no trade deal until the end of the Brexit negotiations (though I imagine the latter position may change).

These positions have been stated repeatedly and the discussions over 9 months carried out by May, Johnson, Davies and Fox should have made it abundantly clear what was in store, whatever the messages they may have been putting out to their own party, the right-wing media and country.

The only element which seems to have caught the UK government by surprise is the EU´s position towards Gibraltar. The guidelines say: “After the United Kingdom leaves the union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom.” which, roughly translated means that Spain will have a strong role in deciding the treatment of Gibraltar.

But should this part of the draft negotiation guidelines have come as a surprise? The facts are: we live in a post-colonial world; Gibraltar is a geographical part of the Spain (though this does raise the issue of Spain´s own bits of North Africa, namely Ceuta and Melillia); the UK is well on the way to being an ex-EU-member, which results in a repositioning on the issue of Gibraltar; not surprisingly, the Spaniards have been lobbying behind the scenes, just as Britons have; and the EU cannot be expected to continue to maintain a neutral position towards Spain/UK in relation to Gibraltar.

Let there be no uncertainly about this: from now on, if the EU must choose between the UK and Spain, Spain it will be. ´Twas ever thus is an expression that Britons should be familiar with, despite the ludicrously injudicious sabre rattling by Michael Howard, a hard Brexiteer Conservative MP who suggested that the UK might go to war over Gibraltar in the same way as it went to war over the Falkland Islands. This is not just nonsense. It is irresponsible, dangerous tosh. The EU and British government moved quickly to dampen this explosive development, but the tension has just started.

The European Parliament has also had its say on the matter. On 05 April 2017, is voted overwhelmingly in favour of its own red lines for the Brexit negotiations, which amounted to a tough negotiating stance on Brexit. By a large majority, it voted to:

  • Back the EU 27 position of “phased negotiations” in the Brexit divorce proceedings, rather than exit talks and discussions of a future trade arrangement to happen in parallel;
  • Oppose any piecemeal economic relationships based on sector-specific deals, such as a special deal for the City of London;
  • Insist that any transition arrangements to cushion the UK’s departure, such as tariff-free access to the single market, can only last a maximum of three years;
  • Stress the importance of securing equal and fair treatment for EU citizens living in the UK and British citizens living in the EU;
  • Open the possibility that UK citizens might be able to individually apply to keep the rights they currently enjoy, etc.

The European Parliament will have to approve any agreement regarding the UK’s withdrawal from the EU and will check whether its red lines have been complied with. Again, there is a bit of a contrast between how democratically the EU is treating the issue of Brexit as compared with the British government. For all the talk of a supposed EU democratic deficit, this seems like a pretty good process to me, unlike the UK being forced, kicking and screaming, by the British courts to allow Parliamentary scrutiny of Brexit. It is still unclear whether the UK Parliament will be given the opportunity to accept or reject the final Brexit deal.

Of Rocks and Hard Places

The empty internal talk within the Conservative party, the delusions of its Brexiteers over the last 9 months and the substance of much of the official letter sent by the British Government invoking Article 50 have been stripped away by the EU 27 and European Parliament.

The dynamics of the relationship between the EU and the UK changed the moment May came out with “Brexit means Brexit” and it is far from evident that we will witness a “red, white and blue” Brexit. It is as plain as day that the UK is the one with the cap in hand, asking for EU favours, just as it was in 1973, when it finally joined the EU, having had its application vetoed twice by the French. The UK was in a weak position joining the club and is in an even weaker position leaving the EU.

The British government is now between a hard rock and a hard place in respect to Brexit, even if it is a situation of its electorate´s own choosing.

Internal rocks

The UK rocks that need to be circumnavigated are ones with the Brexiteers have placed themselves. These include but are not limited to the following:

  • An insistence to the public that Brexit will be painless: all the evidence before the government shows the opposite. During the Referendum, the much-maligned experts were derided by the Brexiteers for concluding that the country would be poorer because of Brexit. The experts are almost unanimously of the view that Britain will be even poorer if a hard Brexit takes place (i.e. without a trade deal with the EU and dependence on World Trade Organisation rules), something which is a distinct possibility;
  • An insistence that Brexit will save money: the distortions and downright lies about spending the annual contribution to the EU on the NHS were broken immediately after the Referendum. Worse still, no one mentioned to the electorate that there would be a whopping Brexit bill. This will not go down well, especially with prominent Brexiteers insisting that Britain will not pay a penny more and might even get a refund from the EU;
  • A suggestion that immigration will be controlled: the idea of an immigration points system was shelved by the leading lights of the Leave campaign shortly after the Referendum (just like the NHS dividend). Now, as it becomes increasingly apparent just how reliant the NHS and various other segments of the private and public sectors are on EU migration, the Brexiteers have already started to beat a retreat. Only it will be hard, if not impossible, to put the tiger that they have unleashed back in the cage. It will not be a pretty sight when the racist and bigoted segment that voted for Brexit (I am not suggesting that this is all, let alone most those that voted Leave) realise that their dreams of splendid nativist isolation will not be brought about by Brexit;
  • Restive Eurosceptics: The Conservative party has a working majority of 17 Members of Parliament but a boat load of Eurosceptics who would like nothing better than a cathartic, hard Brexit. These MPs have been a thorn on the side of the Conservatives since the John Major days and they will continue to push Theresa May towards the exit door until the bitter end. Any compromise (after all, to negotiate is to compromise, especially if all the cards are staked in the favour of the EU) will be seized upon and the slim majority in Parliament will be threatened;
  • British Parliament: the government has had to accept the courts´ rulings that it cannot initiate Brexit without scrutiny by both Houses of Parliament. Parliament has voted the Brexit Bill through but it is not likely to be so amenable once the final terms of Brexit are known. There will be growing pressure to allow Parliament to take the final decision on Brexit and if it happens, no one can predict how the voting will go;
  • The most complex negotiations since World War II: there is agreement that the scale, complexity and multi-dimensionality of Brexit represents the greatest challenge since WWII. However, all the indications are the British are unprepared. The PM is new, the Brexit ministers relatively inexperienced and the Brexit and Trade ministries are understaffed and underqualified in terms of trade, as the past 9 months show. This does not exactly inspire confidence;
  • Fair weather press friends: the influential diehard Brexit bloodhounds (Times, Telegraph, Daily Mail, Sun and Express) will be sniffing around for any signs of slacking by the UK government in the negotiations. They can be relied upon to whip-up a nationalist fervour and to viciously turn on Theresa May´s government at the first sign of perceived weakness;
  • A disunited kingdom: the Scots are insisting on a second independence Referendum, once the terms of the Brexit divorce are known. The Brexiteers´ arguments to justify Brexit will come back to haunt them: sovereignty, control of own borders and all the rest will be used against The Union and it is hard to see the counter arguments to avert a break-up, other than the economic one. Scare tactics worked in the first Scottish Referendum but failed to stop Brexit and will almost certainly fail to prevent Scotix (Scottish exit) second time around. This is especially so because the Spanish government´s confirmation that it would not veto a Scotland application for EU membership. It could also lead to the same development in Northern Ireland (Irexit), since a bad Brexit deal could spur the reunification of the Republic of Ireland and Northern Ireland. Unlike Scotix, Irexit would lead to automatic EU membership of the EU, since the Republic is already a member. I will not speculate about Wales or Gibraltar for now, but the prospect of a rather DisUnited Kingdom emerging cannot be entirely discounted.

So there are, to put it mildly, quite a lot of potential internal Brexit rocks for the Conservative boat to circumnavigate, even if the Labour Party is shamefully incapable of presenting any sort of meaningful opposition in Parliament at present.

External hard places

The external or EU Brexit hard places have been well-known since mid-2016. These include the following:

  • The house always wins: it is the EU 27 that will determine the rules of negotiation (draft Negotiation Guidelines and Red Lines). Moreover, the EC (Jean-Claude Juncker), the EU Council (Tusk) and the Parliament (Guy Verhofstadt) must agree to the terms of Brexit and/or a future trade deal. Not only that, but there will also be multiple opportunities for EU member states (Sangria anyone?) to derail any potential deals, not to mention the quirky regional parliaments, such as in Belgium, which almost scotched the EU-Canada Trade Deal. Whatever the Brexiteers may imply, the UK really has much more to lose from the failure of negotiations than the EU. There is no doubt whatsoever that the EU holds all the aces in this Brexit game of cards;
  • United by Brexit: for all the Eurosceptic allegations that the EU is fragmented, incapable of action, sclerotic, etc., one thing is clear: there is absolute unanimity in respect to the stance on Brexit. This is coupled with a steely determination among the EU 27 not to allow the UK to divide and conquer, not to allow the UK to cherry pick what it likes and drop the rest and not to allow the UK to secure anywhere as good a deal as that conferred on its club members. The Brexiteers and their right-wing press buddies will undoubtedly foam at the mouth, rant and rave as the negotiations get underway, but this will only foment even greater division in the UK itself (48% voted to remain and this chasm in British society can only grow and become more bitter), as well as between the EU and UK. It will be of no use: the EU 27 will remain united and firm in its resolve. Anything else would be tantamount to the end of the EU itself;
  • A hard deadline (12 – 18 months): there is very little time to agree the terms of Brexit: the French and German elections will result in delays and when the real negotiations start, the EU will insist on settling the key issues first, including the Brexit divorce bill, status of EU national in the UK and vice versa and the Northern Ireland border. Any of these could result in significant delays before the real horse trading begins, let alone trade negotiations. It will take 6 months for any deal to be ratified. The longer the Brexit negotiation game goes on, the stronger the EU cards will become. This does not bode well for the UK´s ability to have its Brexit cake and eat it as well;
  • EU members are more important than outgoing members: the EU appears to have handed Spain a big stick to beat the UK with. This is not just the apparent Gibraltar veto, based on the draft negotiating guidelines. Even if this is negotiated away (something that the British government will go all guns blazing for, as it were), the Spanish Parliament will have to approve the overall Brexit deal. This is a pretty large stick to beat the UK into submission with. Many national and regional government have the same capacity. Put simply, if they wish to, they have got the UK over a barrel;
  • Experienced and hardnosed negotiating team: The EC´s Chief Brexit Negotiator is the highly experience Michel Barnier, combined with his Deputy, Sabine Weyand, a trade expert and behind them stands Jean-Claude Juncker. The EU Council have the highly experienced ex-Polish Prime Minister, Donald Tusk. And finally, the EU Parliament have an old hand at negotiations, namely Guy Verhofstadt. This amounts to a formidable team of EU negotiators. By contrast, UK has Theresa May, David Davies, Liam Fox and Boris Johnson. There is no UK civil servant that is of the same calibre or experience in trade matters as the EC officials. Which side would you bet on to get the best Brexit deal?

Brexit Countdown

The UK has 12-18 months to agree Brexit and a trade deal (highly unlikely) with the EU.

The countdown has started and there is very little time, given the multiplicity, multidimensionality and complexity of the issues involved. The process of EU accession can take 10 years. The process of EU divorce will be a lot faster but after 44 years, whether the Brits realise it or not, the EU is interwoven into the very fabric of British life, economy and law.

The Brexit clock is ticking louder by the second. Any disagreements, delays, posturing, prevarication, haggling, intransigence, etc. in the negotiations favour the EU 27, rather than the soon-to-be-ex-EU 1.

This means that it is likely that the UK will have to repeatedly compromise or risk “falling off the cliff edge” of a hard Brexit, since it cannot count on any extensions in the timetable, unless the EU 27 agree to it. This is not likely to be achieved unless the EU 27 feel that sufficient progress is being made and, even then, is likely to be limited to 3 years.  Trade deals can last a decade to hammer out.

On the other hand, the UK has become decreasingly influential in the EU. It has either voluntarily removed itself from active engagement or was not able to engage because it is outside the Eurozone. Following Brexit, this has reached a point where the UK is irrelevant to the future of the EU, except in the short-term context of the Brexit divorce settlement. It was not even part of the recent low-key celebration of 60 years of the Treaty of Rome.

This is the new reality for Britain and for Britons in Europe. The British government is caught between a rock and a hard place. So are British citizens and the rights and benefits accumulated over almost half a century, whatever the UK government may claim about preserving them.

No matter how often the letter triggering Article 50 repeats the desire for a “deep and special partnership” with the EU, that was in the past. The future is nothing of the sort and may deteriorate further, once the serious negotiations start in earnest. This will be doubly so, once the hard Brexiteers and the English right-wing newspapers begin to see their long-held delusions crushed between the rock of EU determination that ex-EU members cannot have the same benefits as current EU members and the hard place of ensuring that Britain does not fall off the Brexit cliff edge.

The outcome of this dreary process will be the final Brexit. The jubilant Eurosceptics will have regained the prize of the UK´s sovereignty and full control over the island. It will come at a heavy price to the rest of society and the economy. But they will undoubtedly consider it a cost well worth paying.

The only crumb of comfort (if such it is), is that the UK government will thereafter no longer be able to pin the blame for anything and everything that is wrong with Britain and its welfare state on “Europe”, the whipping boy of choice, or EU immigrants, the scapegoats for all the UK´s long-standing social policy failures.

What happens next is certain to be interesting, but it will not be a pretty sight.

© Ricardo Pinto, 2017, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Brexit and the Politics of Wishful Thinking

It has been a little while since I last posted something on the AngloDeutsch Blog.

The reason is simple: the UK´s referendum decision in favour of Brexit was not entirely a surprise but it still came as a shock that the majority of my fellow Britons voted to leave the European Union (EU), a club that they had been part and parcel of for over four decades (Britain joined in 1973), even if it has always been a less than wholehearted member.

Since 23 June 2016 I have observed the unfolding UK-EU divorce while trying to come to terms with that it means for Britons, for Europeans and of course for me personally, a Briton who has lived in various parts of the EU and is a resident of Germany.

I remain as shocked as ever but unlike many Remainers who retain dim hopes that Brexit might somehow be averted, that Parliament could override the outcome of the referendum or that a second referendum could be held when the actual terms and conditions of Brexit have been negotiated, I am expecting Brexit to occur. Not only that, but I do strongly believe that having voted for Brexit, it must happen. The referendum was a democratic process, the decision was clear and democracy would be undermined, perhaps fatally, by anything other than Brexit.

Slow-burning Brexit fuse

This is not to say that I think Brexit is a good thing for either the UK or the EU, as I have made clear in my blog. I remain as convinced as ever of the opposite, even if a growing number of people are jumping on the bandwagon to claim that there has been no crisis post-Brexit. This is hardly surprising since Article 50 triggering the process of withdrawal from the EU has not yet been invoked, Brexit has not yet happened and the Bank of England has been very active in pre-empting a possible crisis by launching an aggressive “sledgehammer” stimulus package. The real Brexit impact will be medium- to long-erm in nature; it will have a slow burning fuse but it will eventually be more keenly felt in terms of investment, jobs, real wages and wealth.

The most notable thing about the three months since the referendum is how little progress has actually been made in terms of defining what Brexit actually means. Since there have been no notable decisions made, investors have not had anything substantive, positive or negative, to react to and are keeping a watching brief on what happens. This in itself is a negative, albeit not one that the Brexiteers would acknowledge.

The extent of the current policy position of the new British Prime Minister, Theresa May, boils down to a political soundbite: “… Brexit means Brexit, and we’re going to make a success of it.”

Beyond this, very little is clear about the British Government´s Brexit position in respect to fundamental issues such as:

  • When Article 50 will be triggered to officially start the Brexit negotiations (sometime in 2017);
  • Whether Parliament will have a vote on Brexit;
  • If the aim is to stay in the common market or not (hard vs soft Brexit);
  • When Britain will actually leave the EU;
  • How long it will take to sign new trade agreements with the EU and other countries;
  • What the rights and responsibilities of the EU citizens living and working in the UK;
  • What does Brexit mean for Scotland and Northern Ireland;
  • The same for the Britons living in EU countries, etc.

The only firm policy position is that the UK will not accept one of the EU´s fundamental requirements, namely the freedom of movement of people, and insists upon taking full control of the borders in terms of who is let into the country. These are non-negotiable for the government.

Wishful thinking

Theresa May said in advance of her first cabinet meeting as Prime Minister: “So we will not allow the country to be defined by Brexit; but instead build the education, skills, and social mobility to allow everyone to prosper from the opportunities of leaving the EU.”

However, Brexit will undoubtedly define her government´s work for the current political term. Not only that, it will involve nigh on Herculean efforts to unpick over 4 decades of close legislative, economic, trade, cultural, financial, environmental and other ties. Without a doubt, Brexit will define the next 2-3 UK governments´ policy agenda and thus the country´s destiny. Whatever the Prime Minister may suggest, Britain has already been defined by Brexit, certainly for the other 27 countries, and this will only intensify in period until 2019 when the divorce proceedings are likely to conclude.

The wishful thinking does not stop there.

The Eurosceptic knives are out and being sharpened; the Government already stands accused of not doing enough to bring about Brexit, as if it such a complex and critical issue in terms of Britain´s future economic wellbeing is something that could be decided upon at the drop of a hat. The Brexiteers may have gone into the referendum in a blithe manner in terms of their complete lack of post-referendum plan but at least they are being consistent.

The headlong rush towards Brexit is irresponsible. To be sure, Britain has the right to unilaterally withdraw from the EU at any point of its choosing but there is broad consensus that this would be disastrous for all concerned. The default position is thus the negotiated route to Brexit, despite the unrest among the hard core Brexiteers. However, choosing to enter complex Brexit negotiations without adequate analysis, preparation and forethought in respect to Britain´s long term interests would be the equivalent of tying both Britain´s metaphorical hands behind its back in the forthcoming marathon negotiations with the EU. Just as in the case of unilateral withdrawal, there would only be losers from such a process. The Brexiteers have won the debate, so whatever their ideological desire to head for the exit door host-haste, they will just have to rein their horses in the interests of their country.

There is a school of thought that Mrs May has made a strategic mistake by offering key ministerial positions to leading Brexiteers as Boris Johnson (Foreign Office), David Davis (Brexit Negotiations) and Liam Fox (International Trade). I think it has actually been a strategic masterstroke on her part. The political onus has been neatly shifted to the Three Brexiteers, who must now take responsibility for preparatory work, negotiations and whatever outcome Britain is able to negotiate with the EU. The Brexiteers cannot claim to have been undermined by the Remainers if the critical political posts are all held by the Three Brexiteers.

Row, row your boat…

The advantages of this approach are already becoming evident. Among the chaos and obfuscation (which might be characterised as Project Lies or Project Fear, depending on which side of the fence you sit on) evident during the referendum campaign, there were a few concrete promises made by the Leave Campaign, though the Brexiteers are busily rowing away from them:

  1. GBP 350 million per week will be invested in the NHS: Nigel Farage (UKIP) admitted that it was a mistake to make such a claim and that the NHS would not get the extra funds.
  2. Article 50 to leave EU will be immediately triggered: Liam Fox (Conservatives) has admitted that Britain is nowhere near being prepared to begin negotiating Brexit and that this will take time.
  3. Brexit is a relatively straightforward process that can proceed quickly: David Davis (Conservatives) admitted that the Brexit negotiations may be the most complicated negotiation ever and that they will start sometime in 2017, followed by two years of negotiations.
  4. Introduction of a points based immigration system to take back control of the borders: Boris Johnson (Conservatives) has abandoned the plan for a points based immigration system promised during the election campaign stating that what matters is taking control of the borders.
  5. A favourably UK-EU free trade agreement will be negotiated as the EU has more to lose than the UK: David Davis (Conservatives) admitted that it might not happen and that the UK might exit without a trade agreement, thus having to revert to less favourable WTO tariffs instead.

The above can be interpreted in one way: the loud and clear sound of retreat can be heard and the buglers are none other than the Three Brexiteers.

For her part, Theresa May is keeping her cards close to her chest, holding bilateral preparatory meetings with the French, Germans, EU, etc. and repeating her “Brexit means Brexit” mantra. The three leading Brexiteers are the ones having to do all the running, carry the weight of political expectation and toil under the pressure to come up with a coherent plan for Brexit.

They are not giving the impression having much of a clue about what they are doing, let alone being capable of coordinating the process among themselves in a manner which inspires confidence about an outcome that will be at least as much in Britain´s interest as is the case today. Their fellow Eurosceptics in the Conservative Party are increasingly restless and if the current state of affairs continues, Mrs May might just be tempted in the future to relieve the Three Brexiteers of their duties. If she were then to appoint more capable replacements, whether Brexiteers or not, that might not be such a bad outcome and the Brexiteers would only have themselves to blame.

Choppy waters ahead

It takes two to do the Brexit tango, so how is the EU preparing for it?

Firstly, the rest of the EU insists upon Article 50 being triggered as soon as possible for the simple reason that an indeterminate period of uncertainty can only be negative for Britain and for the other EU countries. Ironically, the EU is pushing much harder for a quick Brexit than the Three Brexiteers and the rest of the government. However, since it cannot do anything about it, the rest of the EU is resigned to the likelihood that the UK will not invoke Article 50 and enter the negotiation phase until sometime in 2017, possibly later 2017 once the French and German General Elections are safely out of the way. Furthermore, the EU is firm about the fact that it will not start Brexit negotiations, formal or informal, until Article 50 is triggered by the UK. The hard core Brexiteers must be as bitterly disappointed about this likely delay as the rest of the EU, but at least they have finally one thing in common.

Secondly, it is not feasible for Britain to remain in the Common Market or join the European Economic Area (assuming the existing EEA members do not veto the UK from joining this club – the early indications are that these relatively small countries might not appreciate the prospect of being joined by what would become the dominant country, resulting in very different political dynamics) unless freedom of movement of people is guaranteed. Since this is a Rubicon that will not be crossed by the Brexiteers and/or the British Government, this option appears to be out of the question. The EU is inflexible on this fundamental issue, as illustrated by its handling of the Swiss referendum and the failed attempt to restrict freedom of movement while remaining in the EEA / common market. The omens are not good and the implication would be “hard” Brexit – leaving the EU and single market altogether without a free trade agreement with the EU.

The EU members are also unusually strong and consistent on other important issues.

Firstly, to make the UK divorce too easy would be to encourage other EU countries to consider leaving the EU club. Put simply, this is the very last thing that the other leading EU countries want. The negotiations will not be a stroll in the park, whatever the Brexiteers may claim. This is wishful thinking on their part and is misleading to it.

Secondly, it is entirely out of the question for the UK to expect to have its Brexit cake and eat it too. In other words, whatever is negotiated with the UK cannot possibly be as good as the current situation as a full and (formerly) leading member of the EU, something that the three Brexiteers continue to imply. Forget that sort of wishful thinking; it simply does not add up. If you join a club, you pay your membership fees, live by the rules and reap the benefits. If you choose to leave the club, you do not pay the fees, do not abide by the rules but do not get the benefits either. Period.

Thirdly, Angela Merkel has made Germany´s view unusually clear by stressing that Brexit is irrevocable (a one way ticket and Britons cannot expect otherwise) and that it is not feasible for the UK to be part of the common market without the EU´s four freedoms, one of which is freedom of movement. She has also stressed that Brexit negotiations cannot be a “cherry picking exercise” of keeping the good economic, trade and finance bits and ditching the rest. For someone renowned for mincing her words, this is as clear a statement as the Three Brexiteers will ever hear; not that they are paying any attention in their delusion.

The British government will also wish to factor in other important considerations in securing a Brexit deal. Whatever it turns out to be good, bad or indifferent, it can be vetoed by any of the remaining 27 countries. Any marginal hopes that Britain might harbour to somehow remain in the Common Market while avoiding the freedom of movement of people can and most probably will be vetoed by Visigrad nations such as Poland.

Loaded dice

There is thus a whole series of pitfalls to be avoided and the reality is that it will be very hard for a deal to be agreed within the maximum prescribed period. The negotiations are loaded in favour of the EU due to the time limit to finalise negotiations once Article 50 is triggered. Two years (unless there is a unanimous agreement by 27 nations to extend the negotiating period) does not sound like ample time to complete “…the most complicated negotiation ever” (David Davis) and do so in Britain´s favour while also securing a qualified majority of the EU leaders and the 27 Parliaments across the EU (as well as the European Parliament – see below).

As if that little lot was not enough to give the Three Brexiteers and their ilk food for thought, the EU has just appointed its team of Brexit negotiators and no one can claim that the intention is to give the UK and easy ride. The European Commission (EC) has put a Frenchman and former EU commissioner, Michel Barnier, in charge. The UK media was pretty clear about the possible implications. The Sun branded him “anti-British” and the Evening Standard called him the “scourge of the City”, with important implications given the significance of the financial sector and the sensitive issue of the UK retaining financial “passporting rights” without which a chunk of the financial sector concentrated in London could shift to Frankfurt, Paris and other EU cities.

Furthermore, the European Parliament has selected the MEP and former Belgian PM Guy Verhofstadt as the lead Brexit negotiator, since any deal agreed by EU Leaders will have to be ratified by the European Parliament, an institution which has often been in the crosshairs of the leading Brexiteers. The media immediately branded Verhofstadt a “diehard European federalist,” the worst possible insult that could ever be levelled by a Brexiteer. Without approval by the majority of the European Parliament, there will not be a Brexit deal. Perhaps Nigel Farage was a little unwise to gloat about Brexit at the European Parliament while still holding on to his seat and salary as a MEP (17 years and counting). Some might have concluded that Brexit was mission accomplished, but obviously not our Nigel.

Dream on

So the Brexit battle lines are being drawn.

It is evident that the EU´s position is a lot clearer than that of the UK, where pretty much everything is still up in the air, other than the intention to control its borders (despite being an island and not being part of the Schengen area) and avoiding freedom of movement of people (despite having almost as many Britons living in other EU countries, benefiting economically from EU migration and receiving the majority of its immigration from non-EU countries such as the Commonwealth).

The UK has yet to come up with the semblance of a cogent Brexit plan (“soft” or “hard” for a start), let alone one which unites the leading Brexiteers (a substantial minority of the Conservative Party) while also satisfying the majority Remainers in the same party. This is going to be tricky in the extreme: the Conservative Party has a slim overall majority of 16 in Parliament and UKIP will continue to breathe down the Conservatives´ political neck (the Labour Party is even worth mentioning, given its ongoing chaos and disarray).

Britain will need uncommon diplomatic and negotiating skills (eh hem! – yes, I am thinking of our Foreign Secretary), as well as a hefty dose of luck in navigating through the choppy waters coming up in 2017 and still coming out of with a Brexit deal, let alone a favourable one, whatever the Three Brexiteers and the British government may claim.

The likelihood of actually securing a deal that is at least as favourable as the status quo is nigh on impossible (though the EU is first and foremost a political construct and since politics trumps everything else, the possibility cannot be completely excluded). The prospect of the UK having its Brexit cake and eating it at the same time appears to be a load of wishful thinking and delusion. Everyone but the Brexiteers can clearly see the writing on the EU wall… in capital letters, underlined and bold.

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


What has the EU ever done for us anyway?

Britons will be voting on the EU referendum tomorrow. The vote will determine Brexit whether Brexit will happen or not. This is actually Britain´s second great Brexit debate, the first being the referendum of 1975, which the Remain side won comfortably. There is a different scenario now and the vote could go either way on the 23 June 2016. In this divisive and intemperate debate about whether to Remain or Leave, the emphasis has been on the negative. Fear is the name of the game: if we stay/leave, the UK will retain/lose x, therefore, vote to leave/remain. It is rare to read a positive set of reasons which connects up with people are interested in the things that affect our day-to-day lives.

This is the focus of this article. This one is written from the perspective of a citizen who happens to be British, has a German partner and has friends and family scattered all over Europe. It is the view of someone who has created a business in another EU country and who is active in EU nations as well as EU Candidate Countries and other nations.

The thing I love most of all is the freedom of movement of people. It is the greatest gift to be able to travel, work, live, study, au pair, retire, etc. wherever we like, whenever we like, as often as we like in any of 28 countries. This is the epitome of freedom and we lucky enough to have it.

If the climate in one country does not suit you, go to another. If the costs of living, such as housing, are too high, go somewhere else. If you cannot find a job in one place, try somewhere else. Britain is booming today but it might not tomorrow; this is when Britons will begin to appreciate it. Remember Norman Tebbit´s “on your bike Speech? If you can move freely within one country, to be able to do so in 28 / 508 million people is absolutely amazing.

And the beauty of it all, is that no one has the right to question or hinder you. You can study or work abroad, alone or taking your family, without applying for visas or other waiting at the borders for hours, paying any fees or being dependent on any bureaucrat´s whims. Once the freedom of movement of people is lost, life will never be the same again.

Not only that, the EU directives mean that I cannot be discriminated in any of the EU 28 countries on the basis of nationality, language, gender, religion, ethnicity, etc. This is priceless within the 28 countries, as well as between them all. This makes us the most advanced region in the planet – by far.

Despite the fears being put about by the Leave Campaign, only 5% of the 508 million EU citizens take-up the freedom of movement of people. Most people are quite happy to live where they are, but use the other benefits of the EU. What are those?

I love the fact that I can go on holiday whenever I like, wherever I like. I take for granted the fact that I can book a journey and set-off without delays due to visa requirements, border controls and other factors which transfer power from me, as a citizen, to others. The bureaucrats in 28 countries all have to apply the same rules to everyone from the EU. This increases transparency and freedom.

It also makes for cheaper, faster, more efficient travel. And since there is a group of 28 countries involved, it is much harder for telecom operators, travel agencies, airlines, commercial banks, etc. to divide and conquer customers, ripping us off by imposing the highest prices they can for no reason.

I now pay low mobile roaming charges and in 2017, I shall pay none because of the EU´s competition policy. I have an EU wide airline policy to ensure that I am compensated if my plane in unreasonably delayed, something that I have made use of. I can buy anything I like in other EU nations or via the internet and still have my consumer rights protected, regardless of where I live or which country I purchased something in – and I do not need to return to that country in order to make a claim. This is a great, even though I do not even think about it.

I particularly like the fact that if I fall ill in any of the EU countries, I shall be treated without having first bought a private insurance policy, thus saving me money, time and hassle. That is great when I am on business. When I am on holiday, especially with my family, this is wonderful. I don’t think about it anymore, but it is a saving and it is very welcome. Britons cannot benefit from this yet begrudge others of the same rights in Britain. Ask the British pensions living in Spain and France.

I am only too aware that the Eurozone, comprising 19 countries, is unfinished business, as the situation in Greece and other countries continues to show. On the other hand, even more countries are joining over time, which shows that others do not share the British newspapers´ Euroscepticism. They keep pronouncing the Euro dead: read the archives of any of the top journalists of the Mail, Sun and Telegraph and you will see how many times the Euro has been written off since 2007. Yet it is still here and is the world´s second reserve currency, not Sterling. Those journalists should occasionally re-read their previous articles and learn to a bit of humility.

I love the fact that I do not have to pay a provision to exchange money every time I go to another country and to pay again to change it back if I do not want have tons of useless coins and notes in a box somewhere. I transfer money between Germany and other countries freely or for a pittance, yet still pay through my nose to transfer money to and from Britain.

I can, if I wished to, buy a holiday / retirement home in any place I like, etc. If I fall ill and my health system forces me to wait years for an operation, I can just go to another EU country that can do it faster; it is up to the health systems to sort out the payment amongst themselves. I get treated faster and my quality of life improves immeasurably. I am empowered by the EU´s capacity to make this happen for 508 million citizens. Bureaucracies such as restrictive health systems lose. I gain.

I know my children can study anywhere they choose to at primary, secondary and university level. Mobility is increasing and Europe will be their oyster in terms of studying, living and working. Should they, like me, wish get married to someone from another European country, I know their spouse will not be disadvantaged and they can live and work where ever they desire. Families will not be split.

The EU regulations are often vilified. But the rights that they assign over 28 countries mean that my children will not be discriminated. Their health and safety will be protected. They will also have at least 1 day off a week, 20 minutes break if they work more than 6 hours, 11 hours´ rest from work each day, not work more than 48 hours per week if they don’t want to, get at least 4 weeks´ paid holiday a year, etc. They will get the minimum package across all 28 countries: this means that employers across 28 nations have the same basis deal and they cannot screw the employees in a race to the bottom. Why would anyone, other than unscrupulous employers or politicians, turn down a package that upholds human dignity and protects health and well-being?

There are other things that I love but which are harder to pin down.

I know the mankind is flirting with disaster unless we do something about climate change. 28 countries doing nothing or perhaps something about climate change is not the same as all EU doing it together: working in concert is the only way to tackled the “tragedy of the commons” across the whole of Europe. This applies to the water I drink, the rivers and beaches I enjoy, the air I breathe and the birds, animals and habitats that I interact with and depend upon. I know that Britain did not take these things all that seriously until it joined in 1973 but that the EU rules apply to all: this is the reason why fish stocks are being preserved and renewed and is the reason why British beaches have become clean. I am glad the EU steps-in because I know for sure that some countries would otherwise just ignore environmental issues. Not all government care equally about what we leave behind for future generations and one that does today may change its mind tomorrow.

But it also applies to other abstract issues. I remain stricken by Europe and NATO´s inability to deal with the collapse of the former Yugoslav Republic. The war may be over, but there are still issues festering in parts of the Balkans and now, the situation in Ukraine/Russia threatens to spill into the rest of Europe.

I have lived through a civil war and I am only too aware of its consequences, even if my fellow Britons may not be. So I say this: Britain may be an island but it is not immune to what happens beyond its coastline. Two World Wars should make that abundantly clear. Even when Britain won, Britain lost big time in people, trade, wealth, empire and much more. I would rather live with the EU´s flaws and cost (as a German tax payer I contribute more than any other nation) than with the unquantifiable cost of possible future conflicts in Europe.

Criminal and terrorist activities are nothing new to Britain (I remember plenty about the IRA´s previous campaigns), Germany and the rest of Europe, though the nature and origin have changed over time. A terrorist is a terrorist is a terrorist regardless of nationality, race, religion or gender. My safety is enhanced when 28 nations share information, coordinate activities and act in unison. Going it alone is not my view of how to deal with a globalising world that brings new threats to every nation and every doorstep. If asylum seekers can find their way into Britain, so can a determined criminal or a terrorist, even if Britain does not have open borders as the Leave campaign wrongly claims.

Working in concert, working with 27 other EU nations, carries a lot more weight in terms of health, environment, defence, counter terrorism, international relations, trade, crime prevention, fraud prevention, consumer protection, research and development, education, etc. etc. etc.

This is a small sub-set of the benefits of being in the EU, as I see them.

So, what has the EU ever done for Britons? Plenty since 1973, I would say.

Is it worth paying less than 1% of GDP into the EU budget for and pooling parts of our sovereignty with the EU? Yup! Every single time.

Is the EU, perfect? Hardly. But neither it the UK now, let alone when it is on its own.

Would I want to give up the above on the 23 June 2016? The answer is obvious.

So the question to my fellow Britons who are undecided is: why would you want to?

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


The crisis in school places: is Brexit the quick fix?

With about a month to go before the EU referendum scheduled to take place on 23 June 2016, high-profile Brexiteers keep pushing the line or argument that it is because of the European Union´s (EU) freedom of movement of people that Britain has major problems with its public services, not least health (EU health tourism), housing (being priced out by EU migrants), benefits (EU benefit tourism), education (too few places due to EU immigrant families), etc.

I have already discussed some of the arguments (see links above), so now attention turns to another major public policy concern in the Brexit: education. If it true that the education system is under pressure specifically because of immigration from the EU, then this could be a reason for considering leaving Brexit from the EU.

On the other hand, if the pressures for educational places predate 2004, when the EU immigration to the UK started in earnest, or if EU migration is only one factor among others that are causing the particular problem of pressures for school places, then it is also reasonable to discuss those other issues, thus putting EU immigration in context.

After all, everyone knows that government has ultimate responsibility for securing public goods which the market cannot deliver on its own: where an important public policy gap is diagnosed, it is for government to devote the necessary public funds to correct the market failure. No one is suggesting that Brussels is responsible for education (or housing construction, funding hospitals and clinics, etc.), not even the Brexiteers.

My kingdom for a school place!

In a clear echo of their diagnosis of the nature of the crisis in the health sector (i.e. the NHS is at breaking point because of EU health tourism and similar), the Brexiteers they are once again pressing the crisis button and pointing in the direction of Brussels: the school system is under “huge and unsustainable pressure” from a dramatic rise in the number of children from European migrants’ families. Ms Priti Patel, the pro Leave Employment Minister, echoing her now familiar anti-EU immigration refrain, keeps making comments such as: „These figures show how the EU’s open borders policies, and the uncontrolled immigration that stems from that, is leading to huge and unsustainable pressures on our schools.“

This possibility is deeply troubling for the average British family, so let us try to unpack this issue.

First of all, it is clear that Ms Patel and her bedfellows are not making allegations about the performance of the school system. There, it is clear that educational performance is a long running concern that cannot be pinned on the EU: Britain is responsible for the national curriculum, the schools and the teachers, not the EU. In any case, Britain has a long and proud history of accepting children whose mother tongue is not English and turning them into integrated citizens. Furthermore, the experience of EU migrant’s children has generally been positive in pushing up standards, especially in the urban areas where EU and other migrants tend to concentrate. So instead, the Brexiteers are focusing on the issue of insufficient school places (i.e. the unsustainable pressure bit) and pointing to EU immigration as the reason for the crisis.

So the central question to be asked is: are there sufficient places for school age children in the UK?

The answer is a clear and unequivocal “yes”. At the national level there is a notable surplus of both primary and secondary school places.

While Ms Patel and other Brexiteers are pointing the accusing finger of blame in the direction of EU immigrants, even Migration Watch, an initiative that maintains that immigration is neither properly managed nor sustainable and thus has an impeccable Brexit pedigree, says otherwise:

“There are currently 4.416 million primary school places in England and 4.011 million pupils on school rolls which means there are 434,000 unfilled places. At the moment the number of unfilled places as a percentage of total places is 9.8%…  The current number of secondary school places in England is 3.637 million while the current number of pupils is 3.191 million. This means that there are over 450,000 places currently unfilled. The number of unfilled place as a percentage of total places is currently 12.9%.” (emphasis added, 2014 data).

The real issue is that Britain’s fertility rate combined with immigration has resulted in a projected increase in school age children, which will feed into the school system from 2018 to 2020, as illustrated in the chart below.

So the point is not that there are currently unsustainable pressures but that in the future there might be unsustainable pressures if the British government fails to act. Perhaps this is what Ms Patel actually means, as opposed to what she and the rest of the Leave campaign are implying. Either way, the effect on the average voter can be imagined.

Responding to present or future school place demand is categorically not the responsibility of the EU or of EU citizens who choose lo live in Britain, as is their right to do.

It would be absurd to blame the large numbers of Britons living in France and Spain for causing unsustainable health / housing / education, etc. pressures there. Relatively little of the projected increase in demand for UK school places can possibly be attributed to EU immigrants. Generally speaking, they tend to be younger, better educated and single, factors which tend not to be correlated with large families and thus disproportionate number of school age children. As far as I can tell Britons, including Ms Priti Patel and Mr Nigel Farage, as well non-EU migrants who make-up the majority of the annual immigration to the UK, also find the time to make babies. British children clearly and unequivocally make-up vast majority of the children taking-up places in the schools.

When it comes to forecasts about future school places, it is the responsibility of Ms Priti Patel, Mr Boris Johnson, Mr Michael Gove (former Secretary of State for Education (2010-2014) and previously Shadow Secretary of State for Children, Schools and Families (2007 – 2010)), Mr David Cameron, Mr David Osborne, etc. to ensure that resources are allocated to meet those needs. Since politicians keep on about our children being our future, one would expect them to get on with funding the necessary school places, so as to avoid any future unsustainable pressure from a well-documented surge in school age children. Is this too much to expect of a responsible government and its leading ministers?

Bread today, not tomorrow

It would not be appropriate to suggest that the problem of school places is only about the future: it is also about today. The point is that demand for school places varies from location to location. Some schools are much more attractive than others for the simple reason that some perform much better academically than others. Most parents want to send their children not just to the nearest local school but to the best performing nearest school, since this is likely to affect their educational performance and thus their chances of getting to university and land a good job. That is a perfectly rational desire on their part.

But the result is that in high demand locations/schools, the parents’ first choice of school may or may not work out. The issue is thus not one of not getting a school place, whatever the Brexiteers may imply (though it may come to that in the future), but of getting a place in the school that the parents would prefer their child to attend. The better schools will always attract more demand for school places than they can possibly satisfy. In this context, available primary and secondary school places may not match demand for specific schools in particular parts of the country, especially in urban areas. In some places, it is possible that simply not enough school places are available to cope with demand.

None of this is new, unusual or driven by EU immigration.

Since demand and supply vary across time and space, it is up to central and local government to meet that future demand (based on population projections), as well as current demand in hot spots. This is at the core of governance, which includes taking into account the fact that EU migration not only happens, but has been happening since even before the UK joined in 1973. Nothing new there, though the scale of EU immigration has increased since 2004.  That is nothing new either, so the responsible individuals have had more than enough time to factor it into their planning.

It is up to each local authority not only to ensure that there are sufficient school places, but also to promote parental choice, diversity and fair access.

If there are access hot spots in particular locations, would you blame the parents for choosing to live in those parts of the country or wanting to send their kids to be best possible schools? If there are particular areas with insufficient school places, would you blame people for still wanting and expecting their children to get a school place? If there are problems, I would point to central and local government for failing to act according to the population forecasts and patterns of demand. There is absolutely no rocket science and there are no sudden unexpected factors involved. The nationality of the children or parents involved is irrelevant, except if some choose to make a political issue out of it.

The Department for Education is tasked with making capital funding available to establish new schools and maintain existing ones. For their part, local authorities argue that they cannot cope with the funding pressures: in 2014, 3 out of 4 claimed that capital funding for new places was insufficient. The National Union of Teachers argues that where there is a school places crisis, it is caused by the curtailment of local authorities’ powers and the centralisation of decisions over where to build new schools.

I can see that a problem exists in the policy nexus between the Department of Education, local authorities and the National Union of Teachers. What I fail to see is how Ms Priti Patel can attribute blame to EU immigrants when she and her fellow Brexiteers, such as Mr Gove, have systematically failed to perform their day job. It is British politicians and ministers who are paid to assess, plan and fund school places (and housing and health services and infrastructure and all the rest of public goods that only government policy can deliver) according to changing patterns of national, regional, local and micro demand. This applies equally to all public services.

Surely Ms Patel and Mr Gove can understand this point and their own role in the future availability or otherwise of primary and secondary school places? But fear not, it is not too late. There are still a few years before the looming school place crisis hits the school system (see chart above), so they may as well just get on with building the necessary schools, rather than blaming all and sundry for national and local politicians’ own policy failings. It is not just a bit too convenient to push the blame for public policy failures to someone else?

Scapegoating immigrants is never a pretty sight and can be downright dangerous.

With her background, Ms Priti Patel should understand this point much better than most even if the EU referendum, so dear to her ideological heart, may be at stake. I acknowledge that for someone with an immigration background in theReferendum Party and now the Conservative Party, talking tough about EU immigration may be some sort of mark of distinction, but she has to be  fair and reasonable in apportioning blame for the problem. As far as I am concerned, that particular bar is set even higher for senior members of the British government with constant access to the media. With power should come at least a sense of proportion, if not responsibility. The longer the Brexit debate goes on and the more the polls shift slowly towards Remaining, the more shrill the Brexit case become. The same could be said about the Remain campaign to some extent, though the focus is different.

One is tenuous and based on the premise that EU immigrants are to blame for almost all the public policy problems (housing, education, health, etc.). The other talks principally about the economic consequences of leaving on taxes, wages, pensions, house prices, jobs, etc.  This claim and counter claims muddy the waters and confuse the public prior to what will undoubtedly be the most important vote for a generation. However, this decision cannot possibly be reduced to just the issue of EU immigration, no matter how emotive it may be. Apart from anything else, British people returning home to the UK, together with non-EU immigration, constitute a larger portion of annual net migration than does EU immigration.

Returning to the issues of school places, let us keep things simple: any way you choose to look at it, Brexit cannot possibly be a quick fix for the forthcoming crisis in school places at primary and secondary school level. The surge in school age children is coming because of fertility rates: that means first and foremost Britons, as well as non-EU immigrants and EU immigrants. Why single out the least important contributing factor that is dwarfed by the impact of Britons themselves? Leaving the EU will change little in this respect, not least because EU migrants are attracted by work, are younger, are better educated and are more mobile, all of which tend to reduce fertility levels compared to the UK average.

Neither will Brexit affect well-established and long-standing local patterns of demand for the better performing schools. That is, unless Brexit is to be combined with forcing non-native Britons back to the other EU-27 countries. This is something which has been ruled out by everyone, even UKIP, since it would prompt a retaliatory reverse flow of almost as many Britons back to the UK. Apart from unleashing unpredictable forces in Europe (there are enough of those around at the moment) for very little gain, it would be one heck of a mess to sort out.

Blaming is easy, solving is not

So if Brexit is not the answer to the coming surge in school age children, as well as the high local demand for certain schools in particular locations, what would improve matters? There no prizes for guessing the answers:

  • The UK government (Department of Education and Chancellor of the Exchequer) should take its responsibility seriously and allocate the capital funding today in order to create the necessary new school places tomorrow and relieve localised pressure for school places.
  • Local government should ensure that public funds result in schools being built in the right locations, especially in high demand urban areas, while also ensuring fair access in demand hot spots so as to avoid accentuating social segregation.
  • Ms Priti Patel and the rest of the Brexiteers, not least Mr Michael Gove, should acquire a bit of humility and refrain from pinning their and their fellow British politicians’ own long-standing public policy failings (e.g. housing provision, NHS funding, capital funding for school, etc.) on the EU and scapegoating EU immigrants at the same time.

Now that would be a nice start in actually trying to solve at least one of Britain´s public policy challenges.

Will it happen? Fat chance.

It is much easier and politically rewarding to keep pointing the finger at EU immigrants. In the past, that finger was pointed at any old immigrant. These days, in the lead-up to the EU referendum, it is no coincidence that it is EU immigrants that are singled out.

And what happens after the 23rd of June 2016, when it has become normal and acceptable to blame Britain´s long-standing public policy ills (e.g. access to housing, access to education, access to health, benefits abuse, etc.) on foreigners, rather than the Britons who are responsible for policy-making, planning and funding? Will Britons wake-up and find that those public services have miraculously improved? Scapegoating is far too easy; trying to understand the problems and then solving them is much, much harder.

“It’s too easy to criticize a man when he’s out of favour, and to make him shoulder the blame for everybody else’s mistakes.” ― Leo Tolstoy, War and Peace

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


The Big Brexit Risk? It’s the trade, stupid!

When I have discussions with my fellow Britons about the Britain, the European Union (EU) and Brexit, sooner or later, I hear a complaint that runs along the following lines:

“We thought we were joining for trade reasons, but it has evolved into something completely different. We did not agree to that.”

The implication of course is that in making the decision to join in the mid-1970s, the British public had somehow misled about the true nature of what was then the European Economic Community (EEC) and is now the European Union (EU). There is also a strong sense that the main reason for joining, trade and commerce, has become less important over time.

The simple answer is that all institutions, the EU included, must evolve or become irrelevant. This applies to NATO, the UN and this certainly applies to the EU. Still, there is a sense of Britons having being “sold a pig in a poke”. That somehow they got into something without knowing its true nature. This sense of Britons having got in bed with an EEC trading relationship in 1973 and waking up in 2016 with the EU, with all its imperfections, is important to the outcome of the EU referendum to be held in Britain on the 23 June 2016.

Therefore, this post delves into history to examine the debates that were held in Britain in the mid-1970s and to unpack whether joining the EU was just about trade. It also addresses the extent to which trade remains important to any decision about whether to remain in the EU or not.

Brexit Referendums I and II

To put it bluntly, the UK joined the European Economic Community (EEC) in 1973 without the British voter being asked. The Labour Party’s general election manifesto of October 1974 committed Labour to allow Britons the opportunity to decide whether Britain should remain in the Common Market on renegotiated terms or leave it entirely. In 1975, the first referendum covering the whole of Britain was held. One could say that 2 years after joining the EEC, the first Brexit referendum took place. The result was clear-cut: 67% of voters supported the campaign to stay in the EEC.

If the clear result was meant to put an end the debate about Britain in the EU, it failed. On 23 June 2016, we shall have the second Brexit debate, 43 years after joining the EEC. You can be sure that it will still not end the debate either, regardless of which way the vote goes.

A reading of what took place then shows that commerce/trade was a focus of the debate on the pros and cons of remaining in the EEC or, put another way, an evident desire to ensure that Britain´s relative economic decline compared with its EEC neighbours was put to an end. It is not unusual for a particular topic to predominate in elections and referendums. But it would not be correct to suggest that commerce/trade was the only topic of discussion at the time or indeed that the political nature of the EU project was not clear to Britons at the time. Labour figures of the day, such as Simon Jenkins, Michael Foot and Barbara Castle, as well as Enoch Powell on the Conservative side engaged in a debate about the possible effects on British sovereignty, among other issues. The deep fissures that were created in the Conservative Party (and to some degree the Labour Party) were not the result of a simply a debate on the commercial/trade pros and cons of Brexit. At the core of the heated difference of opinion was a possible loss of sovereignty and Britain´s place in the world, be it at the side of our European neighbours or facing towards the Anglophone / Commonwealth world. Today, there is an equally fractious debate where immigration is the leitmotif, connected with a discourse about health tourism, benefit tourism, access to housing, trade prospects and loss of sovereignty to Brussels.

The polling in the mid-1970s illustrated voters’ wider concerns, including defence, Britain’s voice, avoiding future wars, etc., though trade/commerce/economy was undoubtedly a major issue. By then, Britain had lost the empire and replaced it with the Commonwealth. The “special relationship” with the USA was stronger, not least because the Cold War was still raging. The Anglosphere relations in general (USA, Australia, New Zealand, Canada, etc.) was in much better shape than today.

And yet, in 1973 the British Government under the Conservative Party still decided that it was in UK’s best interests to join the EEC after a decade of persistently trying to join the club and being vetoed by the French under Charles de Gaulle on two separate occasions. This was no spur of the moment decision on the part of the British government, but a clear recognition that it was in the country’s long term interest to do so. On 5 June 1975, a clear majority (over 67% of voters) reinforced the situation by voting to remain in the EEC, rather than going it alone again.

Those decisions were made at a time when Britain was much more dominant in global trade, prior to the rise of China and India, and before the dawn of full on globalisation. If it was the right decision then, there is no obvious reason for presuming that Britain would be better off on its own today, when the world is so much more interconnected. This is especially so because regional trade aggregations are increasingly common so as to maximise negotiation power, rather than bilateral arrangements. Examples of such regional trade blocs, apart from the EU itself, include the North American Free Trade Agreement (NAFTA), the Association of Southeast Asian Nations (ASEAN), perhaps soon the Free Trade Area of the Americas (FTAA), etc.

I do not subscribe to the view that a future outside the EU will be bleak for Britain. This argument is overdone by the Remain campaign and backfires because Britons do not believe it and resent those seeing to make use of the fear factor to “bounce” them into voting accordingly. Britain has an amazing economy, with dense infrastructure and packed with exceptional human capital. This is a fantastic foundation for future competitiveness. Britain is and will remain a key international economy and will continue to be a wealthy nation with quality of life and standards of living for the foreseeable future, regardless of the Brexit outcome.

So the real issue is: will Brexit help or hinder Britain´s future prosperity, since trade will play a key role in its future development.

EU and UK after Brexit: lose — lose

The EU area is the largest trade block by a considerable margin. Although trade patterns do shift over time, the simple fact is that the EU is by far the UK´s largest market: around 44% of exports went to the EU in 2014. British firms sold around £500 billion worth of goods and services to foreign buyers, according to the Office for National Statistics, and almost half (£230 billion) of those earnings came from the EU. The EU´s dominant role in the UK trade position is hardly surprising: our 27 EU trading partners are geographically close, there are no tariffs, close proximity means low transportation cost, etc. To reinforce the point, exports to the faster growing BRICS countries (Brazil, Russia, India, China, and South Africa) accounted for only 10% of exports in 2014 according to Full Fact.

Furthermore, Britain´s trade balance is directly connected with the 50 trade agreements which the EU has signed with approximately 120 countries around the world. It is hard to foresee exactly what will happen immediately upon Brexit. What is clear for starters though is that Britain will have to negotiate a new trade deal with the 27 countries of the EU. It is wishful thinking to imagine that the EU will be willing to agree a trade agreement with the UK on a comparable basis to what pertains now. Furthermore, a trade agreement similar to the one that applies to the European Economic Area (EEA) is also extremely unlikely, since this would require Britain to accept the EU’s freedom of movement of people, paying into the EU budget and other concessions which would be impossible to justify. Such concessions would cause the British public (and everyone else) to question why they were asked to vote for Brexit in the first place.

Whatever trade agreement is reached with the EU, you can be certain that it will not be as advantageous to Britain as the above two scenarios (EU or EEA). It is also certain that the trade negotiations will take years to reach a conclusion — they always do. Moreover, it is unavoidable that the costs of export will increase for British firms. Several years to negotiation means uncertainty which in turn increases risk and thus raises the costs for British firms. This third scenario cannot possibly be an advantage to the British economy and the same applies to the remainder of the EU: Brexit will be a “lose — lose” scenario. Both the EU and Britain itself will lose in the short-term. The medium to long-term effect could go either way, including a continuation of the “lose — lose” scenario. This cannot possibly be good for the UK’s economy. After all, the Britain´s trade balance has been in deficit more or less permanently since 1990. This will only make things worse since the EU accounts for 44% of the current exports.

The Anglophone Zone: hopes dashed

The Brexiteers are well aware that in the short-term both Britain and the EU will lose out. This is precisely the reason why they have emphasised that it is in the EU´s own interest to negotiate a good deal with Britain. Perhaps, but I would not hold my breath on that account. What sounds too good to be true, usually is. There will be a price to pay for Britain undermining the “European project”. There is such a thing as vindictiveness in human nature and the leaders of the EU nation states are only too human.

Whatever they may say in public, the Brexiteers are also aware of this, which is why their pin their main hopes and expectations on other countries, not least the key Anglophone ones, to step into the breech and sign-up bilateral trade agreements with Britain.

So it came as a bitter blow to them when Barack Obama came to the UK and highlighted a few points, including:

  • The priority for the USA is the EU as it covers 28 countries and 500+ million people;
  • Britain will need to go to the “back of the queue” for a trade agreement;
  • It will take years for a trade agreement to be negotiated with Britain;
  • Being part of the EU does not moderate British influence in the world, it magnifies it.

With this, the Brexiteer Emperors (Boris Johnston, Michael Gove, Iain Duncan Smith, Nigel Farage, etc.) were left without any trade clothes. They went ballistic in their attempts to discredit the President´s statement of fact, for that is exactly what it is. Any country would prioritize trade negotiation with the largest trade block in the world over a nation of 65 million people. The Brexiteers´ fragile trade hopes were dashed and predictably there was an unprecedented outpouring of vitriol, verging on racism, against the outgoing President of the USA, the country that Britain stresses it has a long-standing “special relationship” with. But obviously this does not extend to trade matters.

Should Brexit occur in June 2016, Britain would need to negotiate some or all of the EU´s 50 trade agreements with 120 countries, not counting the EU and EEA countries, if it expects to continue trading with them on a similar basis to today. Since it is impossible to negotiate all of those trade agreements in parallel, it will take decades to go through the trade negotiations just to end-up with the same situation as is currently the case within the EU. The UK does not have a Department of Trade but you rest assured that not only will one be created immediately upon Brexit, since the current trade competences lie with the EU. The institutional needs would arise in other areas where the EU currently has competences. The future Department of Trade will be large, it will be costly and it will be under tremendous pressure to get bilateral trade agreements done, and sharpish. When pressure exists to get things done quickly, bad deals are struck. Ask any salesman.

There is no evidence that either the Anglosphere (USA, India, Australia, Canada, New Zealand, South Africa, etc.) or other major countries such as China, Japan, Brazil, etc. will be willing to negotiate trade deals with Britain as quickly or as favourably as with the EU: the size and potential EU market is so much larger. Britain only constitutes 13% of the EU´s population but will be under pressure from enterprises to negotiate the new trade deals, pronto. Consequently, there is absolutely no reason for the future bilateral trade agreements to be as generous to the UK as to the regional block of EU countries.

If we accept the assumption that delays, uncertainty and risk add to the costs to doing business, then British exporting firms will experience higher costs for the years and/or decades that the negotiation process will last in replacing the existing EU trade agreements. The firms´ higher cost base will affect the level of British exports, probably negatively, though the magnitude and duration are not possible to predict without economic modelling.

The likely post-Brexit trade scenario does not look rosy for Britain… but the bad news is that it is probably the best case scenario.

A worse scenario is that the EU will not rush and/or wish to punish the UK for Brexit. The worst case scenario though is that, in addition, some of the 120+ countries covered by the EU agreements that Britain is currently part of, may close their markets to British enterprises until bilateral trade agreements are negotiated and signed. If this were to happen to any extent, British firms will automatically lose market share. In this scenario, British exporting enterprises would almost certainly suffer a major contraction until they are able to replace the (hopefully) temporarily lost markets.

It does not take genius to work out the possible consequences for British firms and thus for the British economy, in terms of the loss in competitiveness, export, employment, wages, tax revenue, public expenditure, etc. There are other interpretations though, such as by those bankrolling the Brexit campaign. Peter Hargreaves has acknowledged the insecurity that would result from Brexit and stressed that “It would be the biggest stimulus to get our butts in gear that we have ever had”“We will get out there and we will be become incredibly successful because we will be insecure again. And insecurity is fantastic.” Maybe so for a billionaire stockbroker but I am doubtful that the average Briton will see perceive insecurity in quite the same manner.

Is the Brexit trade risk worth it?

The above analysis is not based on economic modelling or other statistical analysis: it is based on the application of logic to the likely consequences of British exit from the EU and thus no longer being part of the Single Market. Voters must make a decision about whether the risk of Brexit is worth it. The facts relating to trade are not complex, even if the exact process, duration and impacts are:

  • Brexit means Britain turning its back on (in the sense of no longer being part of) the largest single trading block in the world in terms of population (500 million) and/or purchasing power;
  • British withdrawal from the EU means no longer being part of the 50+ trade agreements with 120+ countries;
  • EU countries are extremely unlikely to react immediately and offer Britain the same trade terms as the current one, which means uncertainly, risk and greater cost for British enterprises, rendering them, all other things being equal, less competitive in terms of export;
  • Britain will also have to negotiate new trade deals with non-EU countries, all of which will take years or probably decades to achieve;
  • Britain already has advantageous trade relations with the Commonwealth countries dating back to 1949, so cannot expect to greatly expand in its traditional markets;
  • The Anglosphere will not necessarily offer the UK preferential treatment. The USA has stated that Britain will “go to the back of the queue” in trade negotiations. None of the other Anglophone or any other countries has offered Britain accelerated trade agreements for the simple reason that they are complex and take a long time to negotiate to mutual satisfaction;
  • Even if the UK goes through a process of negotiating the current 50+ trade agreements with 120+ countries on its own (it lacks people and skills since it has relied on the EU to perform this role for decades), it will take years or decades to achieve and a nation of 65 million cannot negotiate trade agreements on a comparable let alone more advantageous basis than the EU;
  • Whether the Brexiteers care to admit it or not, Brexit will not be good for Britain´s trade in the short term. It will be bad for the EU too but it is not as reliant on the UK market as the UK is dependent on its market (44%of exports in 2014). On the other hand, Brexit could have catastrophic economic consequences if key countries refuse to make their markets accessible during the period until bilateral trade agreements are signed, which could last quite a while.

Is Brexit a risk worth taking in terms of the possible consequences for trade, export and potentially unemployment and wages? To paraphrase the well/known USA electoral saying, “It´s still the trade, stupid!”

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


The British housing crisis: is EU migration also responsible?

Let us get down to brass tacks: Britain has a serious housing crisis. When demand for housing (people wanting to rent or buy) exceeds supply (the stock of housing) the effects are not good for society. House prices and rents rise, making it difficult for people to pay for their accommodation. This reduces the net income available for other things, makes people anxious and directly affects their quality of life.

If people migrate to the UK or wealthy foreigners invest in the housing market, this reduces the housing supply for the domestic population unless construction goes up. This drives-up house prices and the levels of frustration, especially when people have to share their homes with their parents/children, are priced out of living in their communities or see empty houses that are investments, rather than homes. This is especially so in Britain, a nation of home owners and this state of affairs leads some to conclude that the housing crisis is caused by the EU and its freedom of movement principle. It leads to a perception that perhaps EU mobility results in a lack of housing for the native population. This is powerful argument during the period leading up to the EU referendum in June 2016; it connects with the EU immigration and EU benefit tourism, topics I have previously written about, and is presented as another reason for Britons to vote to Leave the EU (i.e. Brexit). So it is important to address the nature of the British housing crisis and the EU’s role in it.

The first thing to be said is that there is no shortage of analysis of either the housing problems or the possible solutions, but the latter basically boil down to balancing housing demand and supply, together with the political will to solve the crisis.

My home is my castle: demand for housing

Numerous factors influence housing demand. A critical factor is price: at higher prices, real incomes fall and people will reduce their demand while alternatives to owning a property, such as renting, become more attractive. There is a multitude of other factors that are important, such as population dynamics (population size, migration, birth and death rates, age structure, etc.), incomes of households (some may shift from renting to buying, move to a bigger property, buy a second property, a holiday home, etc.), social and lifestyle trends (e.g. late marriages, divorce rates, decisions to remain single, etc. all increase single households and thus demand), availability of credit and interest rates (higher rates make ownership less affordable while lower ones achieve the opposite and restriction in the supply of credit reduces demand for housing and can lead to a fall in house prices) and other influences such as government incentives (to buy, to rent or to buy to rent) and expectations in terms of house /land price developments (speculation).

Since all the above influence housing demand, estimating future demand is a complex process. What is simple though is that immigration, whether from the EU or elsewhere, is only one factor among many others, the majority of which are more influential in terms of stimulating demand for housing in the UK.

Nevertheless, as far as the EU’s freedom of movement of people is concerned, there are two further issues to consider:

  • EU migrants are a sub-set of the migrants to the UK. In a separate post, I showed that of the 498,040 people who migrated to Britain in 2012, 80,196 or 16.1% were Brits returning home, 157,554 (31.6%) were from the EU and 260,290 (52.2%) were from the Commonwealth and other countries that Britain is entirely responsible for, rather than the EU;
  • EU migration is not a one way street and not all roads lead to London and the South East. In the same year, 321,000 people left the UK, a proportion of which migrated to other countries in the EU.

Consequently, even if EU migration was the only issue affecting demand for housing, which is clearly far from being the case, EU migrants do not constitute the majority of immigrants to the UK. Furthermore, the same process is happening in other EU countries that receive Britons.

A number of housing demand studies demonstrate the same trend in the UK: housing demand is increasing significantly and the government and the rest of the housing system, not least the planning system and the construction industry, need to respond in order to ensure that the supply covers the future demand. After all, it is not unusual for populations to increase and housing policy and system must respond in order to deliver affordable, quality housing. The public has the right to expect this irrespective of the particular set of factors that may drive housing demand (i.e. whether immigration is an issue or indeed whether it is from the EU or elsewhere) at a particular point in time.

A comprehensive estimate of housing need and demand in England was published by the Town and Country Planning Association. It estimated that England alone required 240,000 – 245,000 additional homes each year until 2031 in order to meet rising demand. Many similar projections have been made long before EU migration to the UK became an issue of debate post-2007.

Housing supply: decades of neglect = housing crisis

The issue then is how much housing is being built and is it sufficient to meet the demand for 245,000 new units per annum? The UK housing construction data (supply) are presented in the Table below.

Table 1 UK Housing Construction

Source: Gov.uk, Live tables on house building, Table 209

A few points are worth noting based on the Table:

  • Housing construction (permanent dwellings completed) in England have fluctuated between a peak of 170,610 in 2007/8 and 108,870 in 2011/11;
  • The point during which it was perceived that there was an acute housing crisis was around 2005 but since then, the trend in terms of housing supply, albeit fluctuating slightly, has actually been downwards;
  • By definition if the target for England is 245,000 new units per annum, the equivalent for the UK will be much higher. The last year of housing construction data (2014-5) shows a gap of 93,000 even against the lower target for England;
  • In a well-functioning housing market where the citizens, planning authorities, construction industry and the government jointly perceive a housing crisis, the normal response would be for housing supply to increase to reach the target of 245,000 new housing units per annum for England. If this does not happen, it adds to the affordability pressures experienced;
  • If here is such a systematic lack of construction, then surely the respective people in charge of housing policy, finance, planning, construction, etc. are responsible.

To Scapegoat or not to scapegoat (or holding a mirror to British policy makers)

A considerate British voter in the forthcoming EU referendum might reflect on the following issues:

  • The EU has no control in the housing sphere: this is exclusively the remit of national governments, in this case successive UK governments;
  • There are many factors affecting demand for housing, of which EU migration is only a secondary factor;
  • The EU related migration accounted for 31.6% of the migrants to the UK in 2012, but the UK also sent its migrants to EU countries – the EU freedom of movement cuts both ways;
  • The UK has systematically produced fewer housing units than it needs for a period of decades despite projections of massive unmet demand for housing ;
  • The UK, including its politicians, its construction industry and its planning system (local authorities) are responsible for ensuring that supply keeps-up with demand and that housing is affordable. This requires responding to changes in housing circumstances, regardless of what is driving them (e.g. prices, birth rates, speculation, constrained land release, immigration, interest rates, tax incentives, etc.);
  • Despite mounting pressure, regular public outcries, evidence of shortage and affordability problems, etc., the UK only managed to build a paltry 150,000 housing units in 2014-5. This is a damning indictment of Britain, not least its politicians, policy-makers and industry.

It is up to each individual to form their own opinion of where the blame for Britain’s chronic housing crisis should rest. Scapegoating EU migration (which took off from 2004) for problems which have been systematically neglected in the UK amounts to a disgraceful attempt to blame others for issues which Britons have failed to tackle over and over again and are still doing a miserably bad job with.

In this context, it is worth addressing two issues which policy-makers, politicians and the Leave the EU campaign will almost certainly raise in defence of the indefensible: the lack of adequate and affordable housing in the UK, which is a basic human right.

Clutching at straws 1: the crowded island myth

Many, if not most, Britons appear to be convinced that the UK is a very crowded island and that there is simply no space left for housing construction, let alone to accommodate migrants from the EU or anyone else. Certain segments of the media that are biased against the EU, as well as the general Leave campaign, including populist political parties, are keen to emphasize this argument, so let us examine the claim.

The most comprehensive analysis of this issue (UK National Ecosystem Assessment) concluded that only 6.8% of the total land area of the UK is urban (10.6% of England, 1.9% of Scotland, 3.6% of Northern Ireland and 4.1% of Wales). But being urban does not necessarily mean that it is built upon since such areas also contain gardens, lakes, etc. The most detailed analysis ever conducted found that only 2.3% of England is built upon, the rest is natural. Elsewhere in the UK, the figure is less than 1%. Contrary to popular misconception, only a tiny fraction of Britain has been concreted over. Britain is not a crowded island. It can and must build more housing for the benefit of its citizens.

Clutching at straws 2: EU preferential treatment in accessing social housing myth

Another common perception is that EU citizens are benefit tourists, and that they strain the welfare state by having a higher demand for social housing. But the data show that about 17% of UK-born and 18% of foreign-born individuals live in social housing. That means that foreigners are on par with native Britons when it comes to access to social housing. However, when it comes specifically to EU migrants, the popular perception is even more incorrect. Studies demonstrate that citizens of EU-8 countries who arrived in the UK after accession are 57% less likely to live in social housing than native residents. More recent studies indicate that over 90% of immigrants in the UK are in households that are eligible to apply for social housing (p.3) and confirm that EU (and EEA) citizens are less likely to be in social housing than Britons.  The research also shows that, once factors like the demographic structure, location and economic circumstances are taken into consideration, immigrant households are significantly less likely to be in social housing than equivalent native households. Another popular myth bites the dust.

Build, Build, Build

The housing crisis is fundamentally a matter of demand and supply and the policy choices each country makes about how to prioritize public investment and other policy decisions. For decades Britain has emphasized home ownership as the one and only housing policy priority. It has constrained social housing construction for ideological and financial reasons, while at the same time forcing social housing to be sold at discount. Its recent policies have stimulated a boom in buy-to-rent, which has increased private renting but also boosted house prices and exacerbated the affordability problem.  At the same time, policy makers have not stimulated the planning system to release sufficient land for housing construction, mainly due to the NIMBY (Not In My Back Yard) syndrome. In the meant time, the construction industry has shown much more readiness to speculate in order to accumulate, rather than increase construction efficiency, productivity and quality. None of this has stimulated housing supply greatly while housing affordability has declined.

Housing is a matter for each of the 28 nation states of the EU. Some countries, like Germany, build enough housing to meet the needs of their citizens whose quality of life is significantly improved by having sufficient, high quality, affordable homes to rent and/or buy (the recent refugee crisis could not have been planned for in advance. By definition, a surge of 1.1 million asylum seekers in 2015 was not part of the housing forecast). Others, like Britain, do not build enough housing. This is not because of insufficient land, EU freedom of movement of people or other handy excuses for systemic failures on the part of British politicians and their policies, the British planning system and the British construction industry. Any such interpretation amounts to the politics of scapegoating others for one’s own glaring failures and I, for one, will have no truck with it.

  • Is the EU responsible for the British housing crisis: The British housing crisis has been decades in the making. Strong EU immigration is a relatively recent phenomenon.
  • Is the British government responsible for the state of British housing: Its policies have focused almost entirely on housing ownership (tenure), rather than housing construction.
  • Should I vote to leave the EU because of the state of British housing: Britain alone is responsible for regulating demand and supply to deliver sufficient and affordable housing.

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


How extensive is EU benefit tourism in the UK anyway?

A cursory reading of Britain’s most popular newspapers might leave the distinct impression that immigrants, especially from the European Union (EU), are beating a path to the UK specifically in order to take-up welfare benefits, live in social housing, avail themselves of the health system and generally live the high life on the back of the hard-working citizens of the UK (i.e. benefit tourism) who actually pay taxes and thus subsidise the lives of such EU citizens.

 Immigration generally is “the” issue of the forthcoming EU referendum and if the above characterisation of the situation remotely reflects the truth, I would be campaigning to leave the EU too. Not surprisingly this is one of the key arguments of Eurosceptics and Brexiteers in the debate over the future of the UK in the EU. So this post examines the extent to which the EU freedom of movement of people contributes to benefit tourism in the UK. 

EU migrants sponging off Britons?

There are four fundamental freedoms in the EU which are designed to create a common market in Europe, namely to: sell goods, sell services, invest and work anywhere in the EU. Britons have no issues with the first three freedoms but remain deeply concerned about the fourth. 

The first point to note, as discussed in the previous post on EU immigration, is that the freedom of movement of people is not possible for seven years upon joining the EU, unless a nation chooses to opt-out as the UK did (together with Ireland and Sweden) in 2004. So, for example, the Croats will not be able to work in the UK until 2020 unless a country, such as Germany, decides otherwise. This is to ensure that there is not a rush out of a country that joins the EU. The second point to note is that out of the 508 million people in the EU, only 2.2% of them chose to live in another country of the EU. There is clearly no mass exodus of people from one EU country to another. The third point is that though the UK is indeed a very attractive country to move to, it by no means the only one or even the main one in the EU.

In terms of net migration (those arriving minus those leaving), the countries with the largest net inflows of foreign nationals were Germany (452,000), UK (267,000), Italy (235,000) and France (71,000) in 2013. The reality is that the more economically dynamic a country is, the more it is likely to attract people looking for work or to improve their lives.

Turning specifically to the issue of benefit tourism, the evident suggests that EU citizens come to the UK to study, work or to join their families, rather than because of the allure of the UK’s social benefits. This is illustrated in the graphic below, which shows that family reunion used to be the dominant entry route. Student inflows became the main reason for entry, but this has fallen significantly in recent years, something which is connected with the Conservative government’s drive to cap net migration at 100,000 per annum. Most immigration from the EU is for work-related reasons, whereas most immigration from outside the EU is for study-related reasons.

Figure 1: Annual Inflows of Migrants by Reason

Figure 1 Annual Inflow of Migrants by Reason

 

 

 

 

 

 

 

 

 

 

Source: Immigration and the UK Labour Market, Jonathan Wadsworth, CEP, 2015

Furthermore, the same study shows that immigrants are better educated than their UK-born counterparts and that the educational gap is actually increasing over time over time. The “old” Europe or EU-15 migrants are twice as likely to be graduates and the “new” Europe or EU-8 migrants (the 8 Central and East European countries that joined the EU in 2004) are also more likely to be graduates than the UK-born, and most others have intermediate levels of education.

The conclusion of the research is unequivocal:

“There is still no evidence of an overall negative impact of immigration on jobs, wages, housing or the crowding out of public services. Any negative impacts on wages of less skilled groups are small. One of the largest impacts of immigration seems to be on public perception.” (2015, p.1).

But even if there is little or no evidence that EU immigrants to the UK reduce jobs and wages, housing or other public services (housing and health services are discussed in subsequent chapters), this cuts little ice with the Leave campaigners. They maintain the “benefit tourism” rhetoric in relation to EU migration, stressing that an unspecified proportion of EU migrants come to Britain specifically to take advantage of its generous welfare state.

To be fair, such belief is not unique to Britain. In Germany, similar pronouncements are regularly made by the CDU/CSU, the mainstream right of centre parties, as well as the Alternative für Deutschland (AfD), a fast growing populist party. The AfD is the equivalent of UKIP. It wants to leave the Euro, rather than the EU, while also stopping benefit tourism and the flow of refugees to Germany. Both parties are aided and abetted by segments of the media in driving a general notion that EU benefit tourism is pervasive, unfair and must be stopped forthwith.

What exactly is the scale of EU benefit tourism?

A detailed report (ICF GHK and Milieu Ltd, 2013) concluded that non-active EU migrants represent a very small share (0.7% – 1.0%) of the total population in EU Member States. The evidence is that non-contributory benefit payments to immigrants account for between 1% – 5% of all benefits paid in France, Sweden, the Netherlands, etc. and above 5% in Belgium and Ireland. However, the share of non-active EU migrants is very small, both in the UK (1.2%) and in Germany (1.1%).

Other research examining recent EU immigrants to the UK of working age who are not students, not in employment and not in receipt of state benefit, estimates that this group amounted to 39,000 people received any benefit, including child benefit. To put this in perspective, this is only 1% of all recent EU nationals in the UK who are of working age, not students, not in employment but in receipt of some kind of state benefit. Since non-EU immigrants typically cannot access benefits until they have been resident in the UK for five years, it is unlikely that they would migrate with the intention of accessing state benefits.

The latest official government information (February 2015) reinforces the previously mentioned studies:

  • 371,220 working-age claimants of UK benefits (7.2% of total claimants) were non-UK nationals. Of these 113,960 were EU nationals, representing 30.7% of non-UK claimants and only 2.2% of all claimants;
  • In terms of the people who are out of work and claiming benefits, 287,300 were non-UK nationals claiming out-of-work benefits or 7.4% of total claimants. Of these 91,700 or 2.4% of total claimants were EU nationals;
  • People born outside the UK comprised 16.2% of the working-age population but only 7.7% of working-age individuals receiving key out-of-work benefits were non-UK nationals;
  • 19,579 families had Child Benefit awarded for 32,408 children living in EEA states, around two-thirds of whom were in Poland. 7,026 families had Child Tax Credit granted in respect of 11,762 children in EEA member states.

The Government’s own authoritative Balances of Competences review on the Single Market Free Movement of Persons (2014, paragraph 2.55) observed that:

“… none of the evidence we received was able to point to specific research or analysis on the importance of access to social security benefits in the decision to migrate.”

Whatever the Leave EU faction and segments of the media may claim, EU benefit tourism, to the extent that it exists, is much lower than the native population’s own use of such benefits. This reinforces the point that EU nationals come to the UK to work, not to sponge off Britons. Benefit tourism is not worth getting worked-up about, unless it is for cynical political reasons.

A storm in an English tea-cup

People generally emigrate due to the prospect of employment and better wages, rather because of the lure of welfare benefits. The EU migrant population is younger and better educated than the average Briton; the unemployment rate among EU migrants is also lower than that of the average Briton. When the figures for both non-EU and EU migrants are analysed, it is hard to avoid the conclusion that the benefits tourism hysteria affects very people from the EU living in the UK. This is a storm in a tea-cup whipped-up by those that seek to pander to popular misconceptions rather than standing-up to them.

Benefit tourism, whether from the EU or elsewhere is largely a myth. It is not only that not many migrants are eligible to get benefits in the UK. It is that the great majority of EU migrants actually pay more than their share and take very little out in the form of benefits of any sort. EU migration is good for the tax man and for the welfare state in Britain.

  • Is the EU responsible for the level of benefit tourism in the UK: No. It only guarantees freedom of movement and equal treatment of all EU nationals.
  • Is the British government responsible for benefits eligibility in the UK: Yes. For UK and non-EU nationals; partly for EU nationals, but the recent renegotiation has resulted in a decision to tighten-up eligibility rules for EU nationals living in Britain.
  • Should I vote to leave the EU because of EU benefit tourism: No. The numbers of people involved are small and proportionately much lower than the native British population claiming benefits.

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Is EU immigation so negative for the UK and is it out of control?

EU immigration has been possibly the single most topical issue in Britain since 2004, when Britain allowed various new members of the European Union (EU) such as Poland to come and live and work in the UK. When the economic and financial crises hit, the views on immigration hardened noticeably in Britain, with an accent on immigration from central European countries. The discourse evolved into “British Jobs for British Workers” under the Labour Party. Under the Conservative Party, the debate intensified further, partly due to the impact of the UK Independence Party (UKIP), resulting in a “cap” on annual net immigration at 100,000 and concern over Britain’s “uncontrolled borders” due to the EU’s freedom of movement of people. Attention then shifted to Bulgarian and Romanian migrants and EU “benefit tourism.” Lately, the surge of refugees and asylum seekers to the EU in 2015, on-going tensions in the “jungle camp” in Calais and the possibility of jihadist terrorist sneaking through EU borders have elevated anxiety to peak levels.

This is a very potent mix of issues to discuss. In the context of the British referendum on whether to remain in the EU or not, the key issue boils down to this question: to what extent is the EU and its freedom of movement of people the reason for the current level of immigration in the UK and it is good or not for Britain??

Is the level of foreign born population much higher than the EU average?

The first issue to address is whether Britain is somehow exceptional and has disproportionately higher levels of foreign born population living in the country. The answer is an unequivocal no. The UK and Germany had very similar levels of foreign-born inhabitants (12.3% and 12.4% respectively) as a percentage of the overall population in 2013. The latest figures would probably be around 14% for the UK but larger for Germany, following the entry of over 1 million refugees in 2015, an issue which I have written about.

The percentage of foreign-born populations in the UK is relatively modest compared with many EU countries such as Luxemburg (42.4%) and Cyprus (23.2%), well as others such as Belgium (15.7%), Ireland (16%), Austria (16.1%), Sweden (15.4%), etc. Indeed, given Britain’s not so distant colonial past, the level of foreign born population in the UK could have been a lot higher. At the same time, it is not only foreigners that have been beating a path to the UK. Historically speaking, a very large number of Britons emigrated to the rest of the world, especially the Commonwealth countries, though there is far less concern about British emigration as about immigration into the UK.

Focusing on the role of the EU migration and thus on the freedom of movement of people, the EU cannot be held responsible for any migration to Britain prior to joining the European Economic Community (EEC) in 1973. Until then, Britain was entirely in charge of its immigration policies and the pattern of immigration reflected its colonial past and the rules established by successive British administrations.

The freedom of movement of people is one of the four economic freedoms that form the basis of the EU: free movement of goods, services, labour and capital. By voting in a referendum in 1975 to join what is now the EU, the British people accepted these four economic freedoms. The freedom of movement and residence for persons in the EU as one of the cornerstones of the EU was established by the Treaty of Maastricht in 1992 but the data show that the flow of EU citizens to the UK was a trickle until 2004, when larger numbers started to come to the UK.

Are Britain’s Borders out of control because of the EU?

Over time, the EU has grown to 28 member countries, a process that successive British governments have supported enthusiastically until recently. There is always a possibility that people will flow from lower income/employment economies to higher income/employment ones. This is the very reason why EU transitional provisions exist to restrict the flow of people from new member countries to the rest of the EU for a period of up to 7 years. This applied to Spain, Portugal, Ireland, etc. when they joined to the EU then Poland, Slovakia, etc. then Bulgaria and Romania (until 01 January 2014) and it applies to Croatia, the latest country to join the EU, until 2020. Each member country has a choice of either sticking with the 7 year transition or not. Thereafter the EU freedom of movement of people and workers applies in full to the new EU member countries.

The evidence shows that there was not a significant flow of people from the EU to the UK until 2004. Until that point the overwhelming majority of immigration to the UK reflected the policy of the British government, which in turn reflected Britain’s colonial heritage and its agreements with Commonwealth countries, as well as a strong flow of students to the country. These are not something which the EU interferes with. They are national decisions that Britain makes.

Furthermore, two issues reinforced the UK’s ability to influence migratory flows to the UK:

  • Schengen Agreement: this created the EU’s borderless space, enabling passport-free movement across most of the EU bloc. However, the UK opted out of the Schengen Agreement and unlike most EU countries, its borders remain intact and passports are essential to gain entry;
  • Britain is an island: unlike most other EU countries which have no internal borders and thus people can cross former borders unimpeded (this is changing following the 2015 refugee crisis), this is not the case in the UK. As an island, it has defensible natural and other borders. There are few entry points and every person seeking entry is checked by the UK authorities.

Therefore, the notion often repeated by the media and “Leave” politicians that Britain has “uncontrolled borders” because of the EU and its freedom of movement of people is little more than a fib. It has opted out of Schengen, it has natural borders and migrants can only come in via three routes: the Channel tunnel, the harbours and the airports, all of which under the exclusive control of the UK Border Force. It is only the people that are allowed in (or manage to sneak in) that get through.  This is the exclusive preserve of the British government. What it cannot hinder is the freedom of movement of EU citizens (once the transition period is over). However, this cuts both ways: Britons can and do leave the EU to other EU countries in large numbers.

If Britain is an island and is able to check every single passport of every single person coming into the country, you might well pause to ask what is so uncontrollable about the UK’s borders, other than EU related migration? Whose fault is that and is the EU element a reason to leave the EU?

Why did EU migration increase and is it detrimental to Britons?

The UK government (and Ireland and Sweden) chose to forego the EU transition arrangements and opted to remove the restrictions on labour market access from the onset of the EU enlargement in 2004. Other nations gradually followed suit, but like the UK, did not have to for 7 years. Germany and Austria restricted labour market access to the maximum period allowed.

EU-8 is the term used to denote the 10 countries that joined the EU in 2004 (Czech Republic, Estonia, Hungary, Lithuania, Latvia, Malta, Poland, Slovenia, Slovakia), excluding Cyprus and Malta. The UK decided of its own volition and with its national interests in mind, to allow the citizens of the EU-8 countries to live and work in Britain immediately. The rationale at the time was clear: Britain’s economy was booming and both the government and the private sector were concerned about a possible overheating labour market. The problem was solved by suspending the EU’s 7 year rule. Citizens from the EU-8 responded to the invitation to come to the UK, exactly as hoped by British authorities and industry. The key issue, however, was that neither foresaw just how many would choose to take-up the offer to come and work in the UK and Ireland.

But this was not an issue as the economy kept growing and all boats kept rising with the tide of employment and wealth being generated. British companies, British tax payers and British citizens benefited from the contribution of a young, healthy, educated, willing and industrious new source of labour.  When the double-whammy of deep recession and financial crisis hit, leading to unemployment and reductions in wages, the gear was thrown into reverse. History has a habit of repeating itself. The call for “British Jobs for British Workers!” was soon be heard, as well as increasing levels of criticism of Central European migrants, which then transmuted into criticism of the EU, the freedom of movement of people, Britain’s uncontrolled borders, etc. This was followed swiftly by the rise of UKIP as a political force, leading to a decision by the Conservative Party to cap net immigration at 100,000 per annum and culminating in the decision to hold a referendum on whether to remain in the EU or not on 23 June 2016.

The hardening of public attitudes in respect to EU immigration specifically since 2008/9 only makes sense if the EU migrants, and more especially the recent arrivals from the EU-8 countries, have been taking-up jobs which the British population would have otherwise have had, thus leading to higher levels of unemployment among the native population, as well as depressing their wages.

The evidence is that there are two types of EU migrant: those from “old” Europe (EU-15 such as France, Germany and Italy) who are slightly younger and more highly educated than the average Brit and those from “new” Europe (EU-8) who are much younger and also better educated than the average Briton. The old Europe migrants tend to find more highly skilled work than the average Briton. However, the new Europe migrants, partly because of the lack of language skills, found work mainly in low-skill, low-paid jobs such as skilled trades, construction and services jobs.

The evidence is that neither the “old” nor the “new” EU migrants put pressure on the wage and job prospects of the native British population. A review of various UK studies shows that there has been no, a small negative or a small positive labour market effect (wages, unemployment, etc.) in destination countries such as UK, while the long run impact is thought to be very small or none. By contrast, “old” EU migration has resulted in an increase in human capital, leading to higher productivity while also having a positive effect on British GDP.

The consistent conclusion from research into the labour market effects is that migration from the EU has been beneficial to the UK economy.

Is the EU freedom of movement a one way street?

It might be quite hard for some to comprehend this, but not all roads lead to London and the south east. The EU’s freedom of movement of people (as well as goods, services, capital) is a remarkable gift: it allows all EU citizens to travel across 28 countries (31 when Switzerland, Luxemburg and Lichtenstein are counted) to study, work, retire, au pair or just enjoy the richness of Europe whenever and as often as they like without “let or hindrance”, something which Britons should appreciate since these very words are engraved in our passports.

Many, if not most Britons, enjoy some or all of these freedoms in one way or another, not least in terms of their holidays. Indeed, 2.2 million Britons, such as me, have chosen to work, study, invest (e.g. holiday and retirement homes and pension funds) or retire in EU countries not least Spain (just over 1 million), France (330,000), Ireland (329,000), Germany (107,000), Cyprus (65,000), the Netherlands (48,000), Greece (45,000), Portugal (39,000) and Italy (37,000). It is not possible to claim anything other than that the UK and its citizens have taken full advantage of the freedom of movement of people in the EU: the numbers of Britons living in the EU almost balances the EU citizens living in the UK (2.3 million). Despite the somewhat hypocritical stance of many Britons towards the EU freedom of movement of people, this right is something which is taken for granted by a very large number of them, especially the elites that control the British media and the political parties (it would be good to know just how many of them own a holiday home and/or how frequently they holiday in the rest of the EU). Leaving the EU would be a double-edged sword for Britain.

Is the level of EU migration to the UK unstoppable?

Chart 1 Migration 1991 - 2014

 

 

 

 

 

 

 

 

 

 

Source: Migration Statistics, House of Commons Library, Briefing Paper, 2015

Chart 1 shows immigration, emigration and net migration in the UK. During 1991 – 2014 immigration increased rapidly from 329,000 to 632,000. Emigration also increased from 285,000 to 319,000. Net migration (those arriving minus those leaving), increased from an annual average of 37,000 during 1991 – 1995 to an annual average of 232,000 during 2010 – 2014; this represented a significant and sustained increase in the level of migration.

However, the majority of immigration is not from EU countries, as the Table illustrates for 2014.

Table 1 Immigration 2014

Source: Migration Statistics, House of Commons Library, Briefing Paper, 2015

Historically, EU migration to the UK has been relatively low: during the period before the British government chose to allow EU-8 countries to enter Britain in advance of the 7 year transition period, EU migration accounted for 12.9% of all migration.

By 2014, 41.8% of annual immigration was attributable to the EU’s freedom of movement of people. However, the majority of migrants to the UK remain Brits returning home (12.8%) or non-EU nationals (45.4%). The decision by the UK to allow close to 60% of migrants to enter is not to do with the EU in any way, shape or form.

Of the 41.8% of the EU nationals entering the UK in 2014, almost half (20.4%) were from the EU-15 or “old” Europe such as Germany, Italy and France. As previously discussed, these are typically extremely well-educated, professional individuals who the British economy relies on to succeed and thrive. 12.7% of EU migrants were from the EU-8 such as Poland and Slovakia. The rest, 8.7% are from the rest of the EU, which is mostly Romania and Bulgaria. These are less well educated but still outperform the British average.

On this basis, although EU migration to the UK is undoubtedly significant, it is beneficial to the economy and only 21.4% of overall migration is from countries that Britons have become sensitive to in recent years. The UK could reduce the levels of migration from non-EU countries (45.4%) overnight, if it chose to do so, without reference to the EU or anyone else. Presumably it prefers not to hinder Britons from returning home, students paying pretty good money into the British higher education system or close-off access by Commonwealth countries (or presumably cut-off the supply of highly skilled employees from “old” Europe).

The rest (from the EU-8 and EU-2) amounts to 21.4% of the immigration experienced in 2014 or about 1 in five of the migrants entering the country. Is this worth leaving the EU in order to stop this group from the EU entering the country? And is it worth doing so despite the evidence that such migration does not depress wages and does not reduce the employment prospects of native Britons? I don’t think so, despite the media negativity and the claims of UKIP and Leave faction.

However, it might possibly be worth it if the EU citizens, whether from old or new Europe, were in the UK specifically to take-up the social benefits, rather than coming to work and thus contribute to the British economy. I shall address the issue of EU “benefit tourism” in the next post.

The EU immigration debate – much heat, little light

Migration from the EU was relatively low until 2004 when the UK decided, in its own interest, to allow immigration from the EU-8 accession countries such as Poland a full 7 years before the EU transition period officially required it. The UK benefited greatly from this decision, as did the many migrants that responded to the UK’s invitation: they did not come illegally to Britain. When the economic and financial crises struck, the mood turn ugly in the UK towards migrants generally, and those from the EU specifically. The freedom of movement of people is routinely criticised but the facts are that Britain has opted out of the Schengen Agreement, is an island and is in full charge of policing its own borders and deciding who comes into the country, not the EU. The latest information shows that immigration is running high but 12.8% are either Britons returning home or non-EU nationals (45.4%), mostly from the Commonwealth countries, over which the UK has full control of but rightly, chooses not to stop.

This means that less than half (41.8%) of the UK immigration originates from the EU. But even here, the situation is not as simple as UKIP and the Leave campaign pretend. Almost half (20.4%) are from the “old” Europe comprising top professionals which the British economy depends upon. Only 12.7% are from the EU-8 such as Poland and Slovakia and 8.7% are from EU-2, namely Romania and Bulgaria. However, in both cases, the evidence is that they are neither reducing the wages nor the employment prospects of native Britons.

Furthermore 2.2 million Britons benefit from the EU freedom of movement of people compared with 2.3 million EU citizens living in the UK. A decision to leave the EU would be a double edged sword for Britain, since it not only benefits economically from EU immigration, but also exports pensioners, student and workers to other parts of the EU.

Is this a case of the British media and populists politicians eating the EU cake and having it too? Form your own opinion.

  • Is the EU responsible for the overall level of foreign born population in the UK: No
  • Is the British government responsible for its own borders and the majority of migration in the UK: Yes
  • Should I vote to leave the EU because of the EU freedom of movement: No

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU