03/06/2017
Mrs May was in York University yesterday evening, alongside but not confronting Jeremy Corbyn as they continued with this charade that passes for a general election campaign.
Of what the Prime Minister did say, very little was memorable and, of that, we'd mostly heard it before, leaving the media thin pickings. The news agency
Reuters was thus left to reiterate Mrs May's defining position, telling us that she was confident that Britain could get a good deal in the forthcoming negotiations, but would be prepared to walk away without an accord on departure terms if necessary.
In terms of the precise quote, we have her saying: "I've said that I think no deal would be better than a bad deal. Now I'm confident we can get a good deal with the right plan for those negotiations, because I think a good deal is in our interests and in the interests of the rest of the EU".
She then adds the money quote, saying: "But we have to be prepared to stand up for Britain. We have to be prepared to go in there, recognising that we're not willing to accept a bad deal".
At this stage in the campaign, with less than a week to go, it is too late to expect any fundamental change in position so, for better or worse, we're stuck with this from the Conservatives â and this alone will be enough to induce some people not to vote for this party.
Not voting for the Conservatives, though, does not necessarily mean transferring to Labour, and some may even consider returning to Ukip â where there is a candidate standing.
I even briefly considered that possibility, until I saw the leaflet which came thought my letter box yesterday. It did not mention the European Union anywhere in the text, and there was only one short sentence devoted to Brexit: "Challenge the Tories on Brexit and demand that Brexit really does mean EXIT".
That simply isn't good enough for a party that came into being to fight for our withdrawal from the EU. It has lost its way and is no longer part of the fight.
Meanwhile, almost completely ignored by the legacy media (for the moment) is
a study on the effects of Brexit on the German and European economy, commissioned by the (German) Federal Ministry of Economics and Energy from the Ifo Institute in Munich.
One of the key findings suggests that Brexit "will definitely be much more expensive for the UK than for Germany", although the precise costs will vary according to the nature of the final agreement. In the event of an EU-Korea style of agreement, the Institute calculates that real GDP in the UK will decrease by 0.6 percent, compared with 0.1 percent in Germany and 0.11 percent in the EU 27.
In the worst-case scenario, losses in the United Kingdom would be 1.73 percent of GDP over the long term, Germany would lose 0.23 percent and the EU 27 would average a 0.26 percent loss. In four "hard" Brexit scenarios modelled, the UK's relative loss is at least five times the EU average. In the "soft" Brexit scenarios modelled, it is at least four times as high.
From the point of view of Germany, therefore, its economy is relatively untouched by Brexit, while the UK comes off worse across the board. One might suspect, therefore, that any attempt by UK negotiators to suggest that there will be equality of misery will not be taken seriously.
Nevertheless, there are distinct variations in effect throughout the EU. Among the large EU members, Germany is the country which suffers the largest losses in all scenarios, both in percentage and absolute terms.
Where Germany's GDP drops in one scenario by 0.24 percent, France gets away with a drop of 0.2 percent, while Italy and Spain take a maximum hit of 0.15 percent.
However, a number of smaller EU Member States who are relatively badly affected. In all scenarios, Ireland suffers slightly more negatively than the UK itself. Malta and Cyprus, two countries traditionally strongly united with the UK, would also lose significantly. The Scandinavian countries, and the Benelux countries, above all Luxembourg, would lose above average amounts.
Within different sectors, there are also graduations in effect. In Germany, pharmaceutical, motor vehicle and machinery industries would lose the most, in the worst case respectively by 2.9, 1.0 and 0.6 percent.
In the financial sector, Germany could gain slightly, but the potential value-added effects are small in all scenarios. In the best case, the increase is 0.7 percent (around â¬500 million). Other service sectors tend to be losers, although the negative effects are very close to zero.
In the UK, though, the Institute thinks that the industrial sector is likely to suffer long-term damage. In some sectors, such as in the motor vehicle or aircraft construction, these sectors might experience falls between two and ten percent. In the case of easily substitutable metal products or chemicals, the losses could be even more pronounced, in the worst case, up to 18 percent. In the food sector, losses of five percent can be expected.
The UK's service sector would also suffer from Brexit. Interestingly, though, the financial and insurance services would not suffer the most. These are protected by strong comparative advantages. In the wholesale sector, in the field of engineering, and in certain business services, losses could amount to seven percent in the worst case.
Through this study, though, the Germans are looking at long-term effects. And while these are bad enough, over the short-term they could be considerably worse.
Furthermore, the Institute deals with non-tariff barriers by attributing a notional 15 percent
ad valoram penalty. It does not factor in delays and disruption to trade, or the effects of regulatory barriers (such as in the pharmaceutical sector), which force relocation of enterprises, or which prevent trade altogether (as will be the case with meat exports from the UK unless there is substantial investment in Border Control Posts).
From this stance, therefore, the German study is under-estimating the effect of a "no deal" scenario, where the UK's "Team Brexit" walks away from the Article 50 talks.
Perhaps it is because of the unreality of such a scenario that there seems to be so much difficulty modelling it, and thus putting a realistic figure on the cost of walking away. But even from the current, limited survey, the EU can take assurances that they will be substantially less damaged than the UK.
That in itself could make the EU less responsive to the UK, and thereby make a "walk-away" that much more likely, as the EU negotiators fail to respond to UK pressure.
Certainly, the survey doesn't entirely support the argument that a "good deal" is necessarily in the interests of the rest of the EU. In fact, what the EU takes as a good deal may be very different from the UK's ideas, which means that the two sides could end up talking past each other.
On the other hand, if she took on board the survey, Mrs May might realise that she needs to step back from her facile mantra. The indications are that the EU will be entirely indifferent to her "walk-away" threats, and unconcerned by the prospect of the slight economic damage that might be caused.
"UK suffers most", needs to be her watch words. It would help better to shape the negotiations.
