The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

EU will end like the Holy Roman Empire

By Niall McCrae

holyromanempireChief commissioner Michel Barnier wags his finger at the media conference. An uprising in a major European country has forced his hand, as attacks on police and politicians lead to desertions and defections. Unlike the British government, which was pummelled into submission over the Brexit deal, these plucky secessionists are undermining the authority of the formidable Eurocrat. So he threatens to send in the EU Army.

It’s 2027, and the EU is more powerful than ever, yet also more detached. It reigns supreme in the cosmopolitan cities, in the financial centres, and on university campuses: Berlin, Heidelberg, den Haag, Frankfurt-am-Main, Gothenburg, Barcelona, Fiorentina. These islands of the liberal intelligentsia look condescendingly on the masses, whose unpredictable and uninformed votes put progress in peril come each election. The provincial hinterlands are stifled by backwardness, with rising tension between nostalgic nationalism and expanding ethnic enclaves. Among the commoners, rule by Brussels is at best tolerated, at worst despised.

Consulting historians, political commentators begin to see what the EU has become: a latter-day Holy Roman Empire. And Barnier and fellow commissioners are behaving like the ‘enlightened despots’ of the European past.

The HRE was a revival of the old Roman Empire, but with papacy to the fore. Founded in AD 800 when the Pope crowned Charlemagne as emperor, its domain comprised France, Germany and most of modern-day Italy. After the French left in the tenth century, and the Italian parts were given away, the empire centred on Germany. Successive emperors looked east to expand their territory; the pagan Prussians, Slavs and Balts were suppressed by brute force, and fiefdoms were established in Hungary, Poland and Bohemia. But the intent to rule Europe was confronted by the forces of national identity, the Reformation and Thirty Years War, and the HRE gradually retreated to a federation of principalities.

Maintaining order over the many petty oligarchies of the HRE was awkward, but Joseph II, emperor of the late 18th century, had a master plan. He was an arch-centraliser, who cloaked his zeal for control in Enlightenment values. Determined to create a state apparatus that would banish feudalism, Joseph II levied taxes to pay for institutions and representative bodies operating under his jurisdiction.

Just as the European Union is becoming less united, the HRE was not really holy. The rich statelets presented themselves as hubs of intellectual enterprise and the arts, but as the princes sought to fortify their privileged status against popular rebellion, survival was prioritised over aesthetics or virtue. The Vatican with its papal bulls was a hindrance, and religious fervour was regarded from the castle ramparts as dangerous populism. With his Secularisation Decree, Joseph II banished the Jesuits, cut the number of saints’ days, and his anti-clerical stance led to a testy visit by Pope Pius VI. Joseph II didn’t care much for God: leave superstition to the ignorant plebs.

Joseph II overstretched himself. He signed a treaty with Russia and Prussia to divide Poland among the three, but faced serious revolts in Hungary and Belgium. The end came soon after Napoleon declared himself emperor of France. As la Grande Armée marched across Europe, German princes seceded from the HRE to accept Napoleon’s protection, and in 1806 Pope Francis formally rescinded the empire.

The HRE ended as an embarrassment of corrupted ideals, and the EU may be going the same way. It has extended beyond coherence, having incorporated the same parts of eastern Europe that caused so much trouble for the holy emperors. Economically it is stagnating, and it has created a cultural timebomb with its mass migration from Muslim lands. For now, the EU seems to have strength and resilience: the combined might of France and Germany, its neoliberal multiculturalism an inspiration to youth. But ten years on, and the view from Barnier’s bastion looks less assured.

Breaking news from a burning city: protesters surround the old parliament building, the EU flag is ripped off the pole. Inside, worried officials burst into a wordless rendition of Ode to Joy. The soldiers, experienced only in handing out food tokens to crowds of migrants, are refusing to fight. And this is how the most apparently impermeable and permanent regimes end: not with a bang but a whimper.

This article first appeared in Conservative Woman

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A History of Brexit

Managing the Brexit negotiations is merely one aspect of Brexit. In the coming years much will be written (presumably by both sides) as to the rights and wrongs of why the UK population by percentage voted to leave the EU on 23 June 2016. You know that books will be written examining why and how Brexit came about. Someone will try and lay the blame...
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Signalling a post-Brexit industrial strategy

Supporting Bombardier - Putting employment in Britain at the heart of economic policy.

Robert Oulds

25th September 2017

We are determined that Brexit, if when it eventually happens in earnest, delivers the change we need. One of these new approaches can be in defending British industry, along with its jobs and innovation from unfair actions. But why wait for Brexit? It can begin now!

 

Bombardier, a major employer in Britain, a new entrant in the plane market, is being threatened by a trade complaint brought by Boeing designed to keep it out of the US market.[i] Theresa May’s government must show that a post-Brexit Britain will use its new-found independence to stand up for UK jobs. A policy area where we would not have to live with pan-EU rules any more. British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country.


 

What should the Government do?


 

The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier his government will cancel its taxpayer-funded contracts with Boeing.[ii]


 

Theresa May should follow suit and review all taxpayer contracts with Boeing, until the company withdraws its threat to close British factories. This would be a real show of commitment to a UK-focused industrial strategy.


 

Some in a resurgent Labour Party at their conference in Brighton are attempting to undermine the spirit of the referendum by keeping the UK tied in as closely as possible to the EU for as long as possible. They seem to be pushing at an open door. The Government has accepted an EU transition with some of the obligations of membership, minus the influence, as proposed by our Prime Minister in her recent speech in Florence.


 

Taking such an approach to its extremes means not only accepting EU control over trade but also its undue influence over our industrial strategy and EU procurement rules and tendering.


 

Since the referendum progress has been made. The initial stages of Brexit have already been a boon to employment.[iii] British manufacturing has grown since the referendum.[iv] This has largely been driven by increasing export demand.[v] The rebalancing of the British economy should have little to fear from Brexit. The potential extra costs of tariffs placed on British exports to the EU is more than mitigated by the reduction in the value of the pound.[vi]


 

Despite this fear still pervade British politics, infecting some areas of business confidence.[vii] Steps were taken to alleviate the naysayers’ predictions of gloom if the UK was fully free to implement its own policies. Some supply side reforms were proposed. Yet, talk of a low tax UK alternative to the dilapidated EU (Franco-German model) has been muted of late. This backtracking away from boldness does little to restore confidence. The other approach now adopted by the Government is one making renewed concessions to the EU. This has problems of its own.


 

Any half-hearted Brexit, any postponement, any delay is a denial of the referendum result and just as importantly a rejection the opportunities that await UK plc after Brexit. If the rediscovery of Thatcherite classically liberal economic policies is no longer on the agenda then a new approach is needed.


 

We want to make sure Brexit is a success, but we are now further than before from being able to make the right choices for ourselves. Yet, the Government can show that despite some recent mixed messages, which fail to appreciate the opportunities that await us, there is still another way to signal that it will make Brexit a success.


 

The Government can restore confidence and outline a better tomorrow by showing that it will protect the employment gains that have recently been won and much more than that protect and enhance high-end manufacturing, creating well-paying jobs that add value to the economy. The government can signal that it will do what is necessary, taking back control must mean something.


 

To mitigate the fears and genuinely to secure the best outcomes for the British economy a self-governing country will have many decisions to make. Brexit has the potential to be a huge opportunity for many organisations, especially our excellent manufacturers. One of these threatened employers is Bombardier.


 

Defending a respected company – alongside Canada, a potential new global trading partner - will show that we have much to gain from Brexit. This must begin now and this is a real issue that needs to be addressed, not just for its totemic importance but also because jobs in this country depend upon it.


 

Bombardier is a well-known maker or trains, which has suffered before because of the UK’s over officious implementation of EU procurement rules awarding contracts to German rivals Siemens. [viii] There is now a new issue where the Government can step in to help its plane-making division in a dispute with American rivals Boeing. Bombardier is trying to break the duopoly of Boeing and Airbus in the production of smaller commercially sold planes. These pricing from there powerful rivals is having the effect of squeezing Bombardier.[ix] [x] What is worse, is that Boeing is trying to push Bombardier out of the US market altogether. The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier through the courts his government will cancel its contracts with Boeing.[xi] The British Government should follow suit and review all contracts with Boeing.


 

Of course, a real solution is only fully achievable when we ae outside of the EU but it can ward off Boeing’s aggressive action and make them think twice about the long term, implications of its legal action in the US courts. Through signalling such an approach the remoaners that fear change, even in the Labour Party will see, that Brexit can be a real opportunity.


 

British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country. Theresa May, stand up and support workers in the UK.


 

Its not just about defending Bombardier and the production of its C Series aircraft. There are also over 200 UK suppliers directly provide materials, hardware, equipment, and services for this planes production. The Belfast facility plays a critical role in C Series production and advanced composite wing assemblies.


 

Boeing’s petition to the US International Trade Commission (ITC) is a direct attack on innovation, competition, and development, which would ultimately harm the industry, consumers, and workers. Boeing’s petition would hinder future investment and domestic job growth in the UK. Northern Ireland leaders have asked Vice President Pence to interject. They fear peace in the region could be in jeopardy over job loss.[xii]


 

If Boeing is successful, Bombardier’s C-Series aircraft could be pushed out of the American market. The Times wrote “Boeing says it believes that "global trade only works if everyone plays by the same rules of the road. The company [Boeing] should heed its own advice before condemning others.”[xiii]

 

Theresa May announced that she phoned President Trump to raise concerns over Northern Ireland jobs.[xiv] Yet that is not enough. Theresa May knows what can be done and can follow Canada robust example. Justin Trudeau and Theresa May held a meeting to discuss the Boeing-Bombardier trade dispute in Ottawa on Monday 18th September.[xv]

Boeing’s protectionist complaint is unjustified. If successful, it would lead to job losses in this country, harming UK manufacturing. Taxpayer contracts with Boeing should be suspended until Boeing commits to withdrawing its complaint against Bombardier. The Government must use every weapon in its armoury to protect British workers.

 

This should be the message of what a post-Brexit Britain will be like. We will then see business confidence return.


[i] http://uk.businessinsider.com/bombardier-calls-boeing-trade-lawsuit-pure-hypocrisy-2017-9

[ii] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[iii] http://blog.fxpro.co.uk/daily-forex-outlook/14092017-uk-unemployment-at-42-year-low/

[iv] http://www.cityam.com/272260/british-manufacturing-now-eighth-largest-world

[v] https://www.theguardian.com/business/2017/sep/05/factory-and-retail-sales-climb-despite-fears-of-brexit-slump

[vi] http://www.brugesgroup.com/images/papers/whatitwilllooklike.pdf page 32

[vii] http://www.independent.co.uk/news/business/news/brexit-latest-news-uk-business-low-level-confidence-lloyds-bank-economy-a7920101.html

[viii] http://www.telegraph.co.uk/finance/newsbysector/transport/10119477/Bombardier-blow-as-Siemens-wins-1.6bn-Thameslink-deal.html

[ix] https://www.economist.com/news/business/21693188-wounded-canadian-planemaker-announces-big-losses-and-job-cuts-bombardier-course

[x] https://www.economist.com/news/business/21729469-row-between-planemakers-has-become-political-boeing-takes-flight-hypocrisy

[xi] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[xii] http://ca.reuters.com/article/topNews/idCAKCN1BO19Y-OCATP

[xiii] https://www.thetimes.co.uk/article/air-fair-55r92xlpl

[xiv] https://www.thetimes.co.uk/article/may-pleads-with-trump-to-help-save-british-jobs-boeing-bombardier-democratic-unionist-party-hw93jf3bn

[xv] https://globalnews.ca/news/3736751/boeing-bombardier-justin-trudeau-theresa-may/

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Financial Services and Brexit

​Project Fear scaremongered more about financial services than anything else during the EU referendum campaign and this scaremongering has unfortunately continued after the Brexit vote. Remoaners and soft Brexiteers (those who want us to remain members of the European single market after Brexit) now tell us that the reason why there was not an imme...
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The New Project Fear

John Bull280

Since Theresa May's Lancaster House Speech in January of this year, two new Project Fears have sprung up. The first (from The Labour Party, EFTA4UK, Liberal Leave, Leave HQ and Dr Richard North) states that “We need to remain members of the EU's internal market after we officially leave the EU”, even though there are over 50 countries outside of the single market which have free access to it via free trade agreements. The second (from Nick Boles, Lord Hague and Chancellor Philip Hammond) states that “We need to have a transitional period of up to four years during which time we would still be members of the single market and the customs union”.

 

Before we pay these campaigns and their claims any attention, we should bear in mind just how wrong the previous Project Fears, which were often run by the very same people, really were.

 

The first Project Fear said “We need to join the European Economic Community (EEC or so-called 'Common Market') and, if we do, we'll export more to the EU”. The exact opposite has happened – we've exported less and less to the EU and, in 2016, we had a record high trade deficit with the EU of £78.1 billion. The second said “We need to join the European Exchange Rate Mechanism (ERM)” but this was then a disaster for us and led to Black Wednesday. The third said “We need to join the Euro and, if we don't, London's business will grind to a halt”. The exact opposite has happened. The fourth said “We need to stay in the EU and, if we don't, there'll be a recession in the immediate aftermath of a leave vote”. We've instead had record levels of prosperity since the Brexit vote.

 

All of Project Fear's economic predictions were wrong except, I will admit, for their prediction about sterling. They correctly predicted that there would be a significant fall in the value of the pound sterling in the immediate aftermath of a leave vote and the pound has fallen in value by about 15% on average. However, remoaners seem to want to think that the value of the pound is the only, or at least the main, indicator of the strength of the UK economy. This is, as any economist will tell you, nonsense. There are other indicators such as the FTSE 100, the FTSE 250, our output, our exports, our unemployment rate, the amount of foreign direct investment we attract and the rate of our economic growth which are equally as important, if not more important, than the relative value of sterling. All of these factors must together be taken into account before a judgement can be made on the strength of the UK economy.

 

The FTSE 100 has hit four new record highs since the Brexit vote: in December 2016 (6 months after the Brexit vote), in January 2017 (7 months after the Brexit vote), on 1st March 2017 (9 months after the Brexit vote and 2 months after the Brexit plans' release) and on 17th March 2017 (9 months after the Brexit vote and 2 months after the plans' release). The FTSE 250, which is widely acknowledged as being the best gauge of domestic economic sentiment, also reached a record high on 15th February 2017 (8 months after the Brexit vote and a month after the revelation of the Brexit plans). I include the relative timings in brackets as remoaners constantly told us in the months after Brexit that the reason why there still hadn't been a recession due to Brexit was because the Government hadn't revealed its position on the single market and the customs union and as Article 50 hadn't been invoked yet. However, a year and three months after the Brexit vote, eight months after the Government revealed its Brexit plans in the Lancaster House speech and six months after the invoking of Article 50, we are still waiting for this recession.

 

We were told that, after a vote to leave, unemployment would rise by 9,000 per month for the rest of 2016 but unemployment has actually fallen by almost exactly that amount and is now at a record low of just 4.4% - the lowest level since 1975. We were told that we would experience two successive quarters of negative economic growth but we actually grew faster in the six months after the Brexit vote than we did in the six months leading up to the vote. At the end of 2016, we finished up as the most successful major economy in the entire world, the fastest growing economy in the entire of the western world and the fastest growing economy in the G7.

 

The Department for International Trade has attracted £15.8 billion of foreign direct investment (FDI) from August last year to January this year and the UK still attracts more FDI than any other country in the whole of Europe. Since the Brexit vote, we've seen a record increase in financial services trading figures and a record increase in service industries growth. As of 30th June 2017 the UK attracted more FDI in financial services than any other country in the whole of Europe. Developers have continued to press ahead with the construction of more office spaces in London, showing fears of a post-Brexit business exodus (a so-called “Brexodus”) to be yet more scaremongering. UK car sales increased by 3.3% and reached their highest level in 2016 after the Brexit vote. Cake and cheese exports have both increased by 25% since the Brexit vote and the UK now exports more food, drink, bread, cakes, pastries and biscuits than it ever has before. Over the last year UK exports increased by 11.5%. As of 31st July last year, 27 non-EU countries with a combined GDP of over £40 trillion reportedly already wanted to sign new trade deals with the UK once it has left the EU and this potential market rather dwarfs the EU’s internal market which is worth only about £12 trillion.

 

Even if we are to take the value of the pound sterling in isolation, the remoaners are far from telling the whole story. Firstly, they all just presume that they can *know* for certain that the devaluation was indeed *caused* by the Brexit vote alone. Correlation does not, however, prove causation - it could just be a coincidence or other factors could be involved. Jacob Rees-Mogg MP has pointed out that both the OECD and the IMF said before the referendum that the value of the pound was too high - even strong remainer Ken Clarke MP has admitted this. Lord (Mervyn) King, the former Governor of the Bank of England, has said that the devaluation is a welcome fact. Therefore, a devaluation was only a matter of time and the Brexit vote merely brought forward this already-inevitable devaluation. The columnist Peter Hitchens foresaw a devaluation way before the referendum and states that the devaluation has nothing to do with the Brexit vote and would have also happened if we had voted to remain.

 

However, remoaners go on to presume that this devaluation has only been a negative thing for the UK economy. This is false. It has not led to out of control inflation as many predicted - inflation actually fell in October of last year, 4 months after the Brexit vote. Jacob Rees-Mogg has pointed out that the last two significant devaluations before the Brexit vote (in 1931 and in the early 1990s) both resulted in lasting periods of prosperity and rising living standards. News of the devaluation has been happily received by UK exporters who have said that the value of the pound has been too high for too long. The devaluation has made their exports cheaper and more competitive relatively-speaking and has consequently increased demand for our exports overseas. In fact, in September of last year, UK exports reached their highest level in 20 years. Finally, remoaners are always negative and pessimistic about our chances of getting a good free trade agreement with the EU agreed by midnight on 29th March 2019. However, even in the most unlikely and worst-case scenario of there being no Brexit deal at all by then, the average ~15% devaluation would easily dwarf an average most-favoured nation (MFN) goods tariff with the EU of just 5%.

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