Richard North, 02/01/2020  
 


It's almost getting to the point where almost everything that needs to be said has been said. Until we get more "fresh meat" into the debate, there is not a lot more can be added to the torrent of noise.

The 31 January as a leaving date has already been discounted so there is no advantage in trawling over this event, especially as the transition period means that there will be very little substantive change to observe. The great event will be the non-event, as we will no longer be sending MEPs to Brussels or Strasbourg.

As to the subsequent negotiations, there are too many uncertainties – political and practical – to make any sensible predictions. The only expectation, set out with brutal clarity by Pete, is that a Johnson-led administration will inflict enormous damage on our economy by way of an overnight departure from the single market next year.

But, despite the waffle of the commentariat about the risks of a new no-deal scenario, it is a given that the UK will walk away with a treaty to mark the end of the transition period. But, so minimal are the results that we can take away, it is a matter of certainty that the end of this phase of negotiations will simply signal the start of the next.

It is at this point that the cracks will begin to show, but without the great crises that we were schooled to expect from the earlier no-deal Brexit scenarios. Instead, the most likely outcome will be a slow-motion deterioration of our trade position, as overseas contracts dry up and replacements remain elusive.

If commercial enterprises prove adept at making adjustments to deal with the new realities – many having already made plans to ship parts of their operations out of the UK – we will see an economic death by a thousand cuts, obscured by a government so skilled at manipulating statistics that it will be difficult to make sense out of the data provided.

Already, it is extremely hard to come away with an accurate or reliable picture of the UK economy, and I was much taken by the commenter yesterday who pointed out a puzzling discrepancy in our trade statistics with the United States. Currently, the ONS figure (Pink Book) for 2018 put our total trade in good and services with the US at £182 billion, with our exports standing at £112 billion and imports at £70 billion. That, according to these figures, produces a surplus on account of about £42 billion.

Referring to US-derived figures for the same period and ostensibly the same trade, however, gives a startlingly different picture. The US Government tells us that, in 2018, we exported goods and services worth about £92 billion ($121.5bn) to the US and imported about £106 billion ($140.4bn) in return.

On a trade volume of approximately £198 billion ($261.9bn), therefore, the US Government would have it that we had a trade deficit of £19 billion ($18.9bn), as opposed to the UK claim that we enjoyed a £42 billion surplus. Similar discrepancies appear in earlier years, although direct comparisons between dollar and sterling figures become increasingly difficult over time, as year-by-year currency fluctuations are substantial.

Nevertheless, the differences between US and UK-originated figures are not only staggeringly large, but present a drastic conflict in the perception of the relative benefits of trading with the US. British figures suggest that the overall advantage lies with us, while the US figures leave readers in no doubt that the United states is the net beneficiary from trading with the UK.

I have no explanation for the discrepancies, but to find differences between datasets is by no means uncommon. Go to the World Bank website, or the IMF, or consult Eurostat, and you will find a bewildering array of variations, with no one source offering the same set of figures.

As between the US and the UK datasets, it is entirely possible that both sets of figures are entirely correct, reflecting differences in the way trade incomes are defined, and in the methodology of the calculations. Should that be so, it would serve to underline that fact that statistics can often be employed to deliver the desired outcome, whatever that might be.

Certainly, with trade deficits in the United States being a politically sensitive subject under the Trump administration, it is very convenient for the official US government website to show that it has a surplus on account with the UK, and this might even help us with trade negotiations, if US legislators believe they have the balance of advantage.

Similarly, since the Johnson administration puts such a great store on an early trade deal with the United States, it is doubly convenient for ONS figures to show a healthy surplus in our trade with that country. One could hardly see such enthusiasm for a deal if increased trade simply meant a larger deficit.

It has long been my experience, though, that whenever any particular set of statistics become an important or potentially embarrassing indicator of government performance, a way is found to change their basis of their calculation or change them in such a way as to make comparisons with earlier sets almost impossible.

Failing that, we see selective quoting and extravagant use of "spin", compounded by the willingness of the legacy media uncritically to report government propaganda. But, if we are to attempt a dispassionate view of where we are going, Johnson's New Year's message gives some important clues.

With hubris to the fore, the prime minister wants to "turn the page on the division, rancour and uncertainty which has dominated public life" which he avers, has "held us back for far too long".

Presenting as the first item on his agenda, taking us out of the European Union, he cast this as "finishing the job", whence "at long last we will take back control of our laws, borders, money and trade".

According to the Johnson mantra, that will allow his government to "finally spend 2020 getting on with delivering on the people’s priorities: boosting the NHS with the biggest cash injection in its history, renewing schools, backing scientists, building better infrastructure, controlling immigration, making our streets safer, cleaning up our environment, and making our Union stronger".

Painting a picture of his version of the "sunlit uplands", Johnson aims to have his government pass a bill enshrining in law "a record funding settlement for the NHS, providing an extra £34 billion a year", undertaking the largest hospital building programme in living memory, delivering 40 new hospitals and 20 upgrades.

But this, of course, presupposes that his government is able to afford its extravagance and that, surely, must depend on the state of the economy. And, if the intention is to trim back the trade deal at the end of December to the bare minimum, then the very last thing we can expect is a booming economy.

Johnson's "fantastically exciting agenda", therefore, is unlikely ever to materialise. And that is going to be the point to watch. Politics these days is more a matter of expectation management, making sure that policies are not oversold.

In his peroration, Johnson encourages us "together" to make the 2020s "a decade of prosperity and opportunity". Yet, as 2020 itself unfolds, we will begin to see nemesis emerge. We just need to bide our time and let the commentariat catch up.






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