We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

However, even if £40bn were enough for the EU, many would ask why the UK should stump up anything at all. This is a political judgement that can perhaps only be made by the people in the room. In favour, £40bn (or more) might be a small price to pay in return for a ‘good deal’ with economic benefits potentially lasting many decades. Looked at this way, £40bn could be thought of a one-off payment equivalent to only a few billion each year (and much better value than HS2!). What’s more, since the ‘divorce bill’ is money that the UK would have to pay anyway if it had remained a member, it would be wrong to regard it as an additional cost of Brexit.

Against this, what would the British taxpayer be getting in return, especially if the default position is that the UK could walk away without paying a penny and ‘no deal’ would not be the disaster many fear? ‘Goodwill’ alone is surely not enough, and should in any event be shown by both sides.

At the very least it seems reasonable to expect the EU to agree to fast-track talks on a comprehensive free trade deal, including an explicit agreement on a time-limited transition period where trade remains as frictionless as possible. The UK could then make some of the money conditional on the success of these talks – perhaps anything more than the €30bn (£27bn) or so required to cover the period until the end of 2020 and something for pensions.

This might just about be acceptable to the British public too. But I don’t envy the job of those trying to sell it.

Julian Jessop

Tweet about this on TwitterShare on FacebookShare on TumblrShare on RedditShare on Google+Share on VKEmail this to someone

31 comments to Samizdata quote of the day

  • I cannot think of a single trade deal anywhere in the world that is one-sided, they always end up being pretty even handed, since that is the way the trade negotiations process works. As I’ve said before, “How much did Canada have to pay for their EU trade deal?”

    Even when there are trade surpluses (such as between the EU and UK), the aim of the country in deficit is to achieve some measure of balance over the long term through the trade deal itself.

    The overall aim of trade deals being to make the process of buying and selling goods and services between the two countries / trade blocks easier and thereby increase the overall volume of trade, making everyone involved richer and in turn increasing tax revenues from having the same percentage slice of a larger pie.

    The fact that the EU is attempting to charge Britain for “access” to the EU market illustrates how screwed up their mentality is. Probably the only thing which is worse is the manner in which Theresa May has bent over backwards to accommodate these chancers.

    As for the pension liabilities, I presume these are for British citizens who have worked for the European Project over the 40+ years since we joined? I’d simply say to the EU that these are British citizens who will be paid an appropriate pension by the British government from March 2019 onwards. Suitably subject to UK pension restrictions, excess charges, taxation and an additional 100% deduction of the remainder for treason against the crown.

  • bobby b

    “As for the pension liabilities, I presume these are for British citizens who have worked for the European Project over the 40+ years since we joined?”

    My understanding (and, in the case of Brexit, “my understanding” is a phrase with striking similarities to “military intelligence” or “large shrimp”) is that the pension liabilities cover all EU pension liabilities for all countries involved who have had any role from back when the EU began.

    But doesn’t this argument admit that the EU, like many USA jurisdictions who now face pension shortfalls, has failed to make the yearly deposits into the pension funds that they agreed to make when bargaining with their employees over the decades? If the EU had been making reasonable statistical assumptions about gain and properly funding pensions, there would be no shortfall to make up – payments for each year’s current pension obligation would be made from each year’s current budget – and it’s this shortfall that the EU insists that the UK help pay off in order to leave.

    If nothing else, this argument ought to be triggering EU employee unions (or employees themselves, if there are no unions) to force their employer to stop reneging on pension funding responsibilities. The employees, when they start retiring in numbers, are going to be looking at empty pensions if they don’t. Imagine working for decades for the EU, believing that you would receive a pension of a certain size as a part of your compensation package that you bargain for each and every year, and then suddenly finding at retirement that the money was never set aside and you now need to convince government to pay your promised pension out of current money when you have no leverage to make them do so. Can you say “Chicago”?

    (Also – It still boggles me, when there remains a possibility of a simple two-year hard exit with no payment, that anyone can seriously argue that the UK must settle the question of “how much do we pay” before beginning the argument of “what do we get for it.” Anyone who thinks this through has to realize it’s a guarantee of a hard Brexit with no agreement at all.)

  • Brian Swisher

    *sotto voce* It’s jumbo shrimp, bobby. Jumbo shrimp.

  • Lee Moore

    1. As the chap explains, there’s no actual obligation to pay anything beyond our actual membership fee while we remain a member, so any payment now must be for “goodwill” or for specific quid pro quos on the future relationship

    2. But since the EU refuses to discuss the future relationship until the ‘divorce settlement” is agreed (though mysteriously the rights of EU folk to live in the UK, after we leave; and how the Irish border works, after we leave, somehow are part of “now” and not “the future.”) Consequently we’re left with goodwill.

    3. Is there any hint – even the teensy weensy weensiest hint that the EU has any even smidgeonly feelings of goodwill towards us ? How, if they maintain that we OWE them a pile of money, would paying it to them engender any “goodwill” ? You don’t feel that a debtor who eventually and after much negotiation pays his due deserves your goodwill. You think “that weasel finally coughed up.” So the goodwill argument is plainly cxxp.

    4. If – in the end – the money is really a quid pro quo, and we aren’t actually going to agree to pay anything until a trade agreement is signed then (assuming a trade agreement is worth having) paying a lump sum for future trade access would be insane. Nobody in their right mind would do anything other than dribble the money out over a long period, so that if the other side welshes on the trade agreement, you can withhold further payment. After all it’s not as if the UK has no experience with dealing with EU promises that are welshed on (see CAP reform and the British budget contribution.)

  • bobby b

    Damn, damn, damn. Proofread.

  • Thailover

    There’s no such thing as paying people to be rational and reasonable.

  • Mr Ed

    EU pensions are for service to the EU, and as it will still exist after British indepedence, and so will the good deeds of the former servants, why ahould the UK pay one penny towards future pensions? We paid towards pensions of those who served the then EEC and retired before we joined, surely its ‘current members’ only. And if you are British and lose your pension because of such a stance, try to sue the EU for breach of contract or discrimination, and see how far you get.

    British citizens losing their pensions would of course be free from the obligation imposed on them not to act against the EU’s interesrs which certainly some of them have as conditons of their pensions.

  • Mr Ecks

    All UK nationals receiving an EU pension need to be given a simple choice.

    Voluntarily give up the pension or keep it and be stripped of UK citizenship and be expelled from this country .

    The scum of the EU have NO intention of reaching any deal. We need to tell them to piss off double-quick.

  • Roué le Jour

    It reminds me of the old USSR trick of not allowing people to leave until they had refunded the state for all the wonderful benefits they had received.

  • Roué le Jour

    Ecks,
    If Mendelson, Clegg et al were repatriated to Brussels the EU would wash its hands of them as they were of no further use.

  • bobby b

    “EU pensions are for service to the EU, and as it will still exist after British indepedence, and so will the good deeds of the former servants, why ahould the UK pay one penny towards future pensions?”

    C’mon, you know the accounting process. Every year of service of an employee begets an obligation to that employee of some future pension benefit. You can say over and over that the obligations are paid from current dollars – i.e., that when someone retires, their pension payments come from each subsequent year’s budget – but the obligation – the debt – is incurred each year of work. The EU looks to have the UK fully fund those incurred obligations for all of the years the UK was in the EU.

    Which is another way of saying, again, that the EU is failing to set aside (or even invest for) sufficient monies to pay those obligations when they come due. If a private company did that in the USA, that would be problematic. Criminally problematic, in some circumstances.

    The tell is that, if the EU was funding its obligations, the UK could walk away tomorrow and its part of those obligations would be covered.

  • Alisa

    The overall aim of trade deals being to make the process of buying and selling goods and services between the two countries / trade blocks easier and thereby increase the overall volume of trade, making everyone involved richer and in turn increasing tax revenues from having the same percentage slice of a larger pie.

    That of course is the proclaimed aim, but to me it sounds way too optimistic as far as actual reality is concerned. I may well be missing something all along, but I see no reason why trade deals should be necessary for free trade – in fact, the two terms strike me as contradictory.

  • John B

    ‘ In favour, £40bn (or more) might be a small price to pay in return for a ‘good deal’…’

    Good deal for whom? The deal is to allow tariff and non-tariff free exports to the EU to benefit a few UK companies and their workers at the expense of the 82% of other UK companies which do not export at all and their workers, and 65 million consumers and of course those who pay tax.

    It will mean the UK will have to agree to continue with some tariff and non-tariffs on non-EU imports otherwise the UK would be an open gate into protectionist, fortress EU. This means UK consumers will be worse off, there being less choice, less competition and less downward pressure on prices as well as those imports costing more.

    So really, the ‘deal’ is about cronyism. When politicians talk about protecting jobs, the jobs they are protecting are their own; when they talk about protecting business they are protecting their mates in big business multinationals. The rest of us pay. Does nobody understand this?

  • Alisa

    What John B said.

  • bob sykes

    Why don’t you just close the English Channel to EU shipping? If your Navy is too pathetic to do so, you can at least float some mines in it. Blowing up one tanker would pretty much shut down all shipping in the Channel, as no ship owner would send his ships into a war zone.

  • John K

    I would point out that the “divorce bill” has nothing to do with access to the Single Market.

    The EU has said, and the UK government was stupid enough to accept, that before talks on trade could begin, the UK had to agree with the EU three things:

    1. The status of the border between the UK and Republic of Ireland;

    2. The status of EU citizens living in the UK post Brexit; and

    3. A resolution of the financial obligations which the UK owed the EU.

    So this last point is nothing to do with the putative Free Trade Agreement. It is an EU accounting exercise, whereby they deem that the UK has agreed to long term funding of various EU programmes and agencies, as well as pension liabilities. The EU expects the UK to put forward a figure to clear these so-called obligations, but the EU itself is not spelling out exactly what it is it wants. It prefers to torture the UK government by rejecting every offer. The EU does seem to have floated a figure of €60 billion, and I suspect that the pathetic May government may well end up offering this.

    The point is that even if all the three points are agreed to the EU’s satisfaction, and they graciously condescend to accept €60 billion from the UK, that only gets us to the stage of beginning talks on an FTA.

    It is now November 2017, and we are leaving the EU come what may in March 2019. An FTA will have to be ratified by all 27 remaining EU states before then, so should be ready by October 2018. There is a technical term for this: impossible.

    The pathetic May government has allowed itself to be locked into an EU negotiating system which is bound to fail. Even if we agree to pay them €60 billion we will not get an FTA in time. There is no “goodwill” at all from the EU in this matter, and certainly no acknowledgment that since joining in 1973 the UK has funded the EU to the tune of half a trillion pounds.

    The EU is deeply resentful that the UK should be leaving. Not only will that deprive the EU of income of €12 billion annually, but more importantly, it also gives the lie to the myth of “ever closer union”. If the EU is not on an inevitable and irreversible path towards ever closer union and a European State, what is it?

    This is why Empires fight to stay together, or else they dissolve. Once the Baltic states left the USSR, the myth of the USSR was broken, and it collapsed. As soon as India gained independence in 1947, the British Empire was obviously going to be dismantled.

    If Empires stop growing, they can fall apart surprisingly quickly. This helps explain the EU’s bizarre desire to incorporate Turkey into its ranks (although Mr Erdogan may finally have seen that madness off by his own insanity). It is also behind the EU’s desire for Ukraine to join it, which has led to a coup, civil war and Russian invasion.

    I truly believe we are at peak EU, and I think the European Commission knows it too. The Viesegrad Four are refusing to be bullied into accepting Muslim settlers. Without British money it will be much harder to pay them into acting against their own national interests. After Brexit, Macron wants to move towards a European Treasury, but the Germans see that as a way of making them pay other peoples’ debts, and besides it looks as if the long reign of Frau Merkel is finally coming to an end.

    So the point I am making is that the EU is probably facing an existential crisis, and they seem to be blaming Britain for it. They want us to pay, and they want us to suffer. It is about so much more than an FTA. If the British government really believes it is dealing with friends who want a fair outcome for both sides, they are seriously deluded.

    That is why I support continued free access to the European Economic Area through EFTA. It gets us out of the EU, but without economic turmoil. It thus shoots the Remainers’ fox. The key aim of the UK must be to get out without being bled dry by the EU, and suffering a punishment Brexit pour encourager les autres. The UK government does not seem to realise this. And that is why I fear for the future.

    The EU is a dying Empire, and Brexit may well finish it off. They hate us for this. That is why we need to get out without relying on goodwill or decency from our “partners”; they are not there. There is only the hatred of people whose entire belief system we are, as they see it, stupidly destroying. To expect fair and decent treatment in those circumstances is little short of delusion.

  • Johnnydub

    The EU “negotiations” can be summed up as:

    1) We have no legal obligation. The EU thinks we have a moral obligation.
    2) The EU wants us to commit to fulfilling our moral obligations whilst retaining the option to kick us in the balls afterwards.

    Well fuck that. No deal is has to be.

  • JadedLibertarian

    Very generally I would suggest just giving the £40bn to some random schmuck off the street would be better than giving it to the EU. The EU would just waste it. Your schmuck would provide employment to people in the supercar, house building, yacht building and fine food industries. If government expenditure doesn’t pass the “schmuck test” I would contend the money simply shouldn’t be spent at all.

    So for example your schmuck probably wouldn’t pay for a new warship. If we’re in a situation where we need one, such a government expenditure would pass the “schmuck test” since the government can spend that money better than a random moron.

    On the other hand, what contributes more value to the economy:

    A chav in a Ferrari

    Or several council “Equality and Diversity” officers?

    I’m going with the chav personally.

  • Alisa

    Your schmuck would provide employment to people in the supercar, house building, yacht building and fine food industries. If government expenditure doesn’t pass the “schmuck test” I would contend the money simply shouldn’t be spent at all.

    So for example your schmuck probably wouldn’t pay for a new warship. If we’re in a situation where we need one, such a government expenditure would pass the “schmuck test” since the government can spend that money better than a random moron.

    I hear you…

  • JadedLibertarian

    Yes I was aware of the obscene origins of that term Alisa. I did consider bowdlerizing it, but to be honest no matter what I did it didn’t affect my meaning. I’m happy to substitute the word for whatever helps the concept gain traction

    If a regression model can’t at least out perform the mean it’s no good. If government spending can’t at least out perform a random (whatever) in terms of minimising waste and maximising benefit, then it too is no good.

  • I am against paying any exit fee to the EU beyond what we owe as annual contributions prior to leaving and as future earmarked contributions for the UK’s continuing involvement in such things as collaborative R&D projects (ie solely to cover the UK’s own costs of joining in).

    It looks to me as if the whole issue is one of the EU being broke without the UK’s net contribution, and them using any and every conceivable rubbish argument to help partially plug their budget hole.

    Well, being occasionally kind-hearted (to say nothing of over-generous), I have a potential solution.

    Let the EU, as an impoverished and so deserving case (as much as the others), have the whole of the UK’s committed International Aid Budget for the 3 years from April 2019. This was over $17billion for 2013. Then let the EU make its own way – whether or not they have shown they cannot manage with less (particularly by not trying).

    And the rest of the ‘deserving’ cases, having managed without UK aid for 3 years, will have shown themselves actually managing with less subsidy (much folded wallet-wards by their own corrupt ‘elites’). So The UK can then totally phase out any commitment to any money whatsoever for international aid – including that unwise promise of not less than an annual 0.7% of UK GDP.

    Best regards

  • Alisa

    Hey, I’d be more than happy to try my hand at the Whatever Test.

  • Paul Marks

    Yes we must pay 40 billion Pounds, on top of the 100 billion Pounds we have already paid to the EEC-EU, in order to preserve our 70 billion Pound annual trade DEFICIT with the European Union. Yes the regulations are so favourable to us that we have an annual trade DEFICIT of 70 billion Pounds, we must pay the E.U. a 40 billion Pound bribe in order to preserve this annual trade DEFICIT of 70 billion Pounds.

    And what will the wonderful deal be? Let me guess – that we obey all E.U. regulations in our INTERNAL (domestic) affairs, which is what the “Single Market” actually is – the “Single Market” is the legal power of the European Union to impose regulations in our INTERNAL (domestic) affairs, in order to crush any potential competition for E.U. (often German) importers.

    What a wonderful situation – of course we must pay a bribe of some 40 billion Pounds to preserve our total submission to the legal power of the European Union to impose its regulations on our internal (domestic) affairs. Our trade DEFICIT must be preserved at all costs!

  • Stonyground

    I can see that we could be said to owe some money to the EU to cover those projects that are loudly trumpeted as being partly funded by the European Development Fund. Some of these were presumably started prior to the Brexit vote and we shouldn’t expect the EDF to partly fund them after we have left. No doubt there will be other instances involving money being sent to the UK prior to Brexit which is now no longer due. So then, let us know precisely how much is owed via properly audited accounts. The EU does have properly audited accounts I presume, surely that is the very least that we should expect.

  • The EU does have properly audited accounts I presume, surely that is the very least that we should expect.

    Stonyground (November 26, 2017 at 6:44 pm), you jest. See this comment and the three below it for the reality of EU accounting (mal)practice.

    Even if they had auditors, the idea of our owing a penny on existing projects is absurd. When we leave, the EU will no longer pay to finish any current UK-located projects and we will no longer pay for any non-UK ones. We will decide whether to finish any UK-located ones for ourselves.

  • Richard Thomas

    Roué le Jour, that UUSR trick must be a good one as the USA is adopting it too.

  • Roué le Jour

    Richard, good ideas for screwing the punters are quickly taken up. Remember the speed with which the airport tax spread around the world? Overnight Australia literaly put a trestle table in front of departures and demanded cash money to pass. Blatant highway robbery which is now folded into the ticket price.

  • Stonyground

    I was of course being sarcastic with regard to the EU accounts. With regard to the EU funded projects, I was sort of casting around for some kind of case where we could plausibly be said to owe them some kind of refund, providing that they could actually demonstrate that was actually the case. Since their financial controls are so sloppy and disorganised I would suspect that they wouldn’t be able to.

  • Deep Lurker

    Danegeld.
    Or perhaps the right term is “Brusselsgeld”

  • Phil B

    One of the most important things that everyone is either ignoring or dancing around the matter is that legally we do not owe them a penny once the departure date is reached.

    This article:

    http://brexitcentral.com/dont-owe-eu-money-fact-well-owed-e10-billion/

    Sets it out and the embedded link in the first paragraph takes you to a PDF document that explicitly examines each and every claim that the EU is making and dismisses them. For once I have to applaud the lawyers for their efforts on this.

    As Paul Marks points out, we are in deficit to the EU with regarding exports and when it comes to EU citizens here and Brits in the EU, the disparity is 3.5 million to 1.5 million. Again, we are in deficit to the EU regarding population. Let us suggest that the EU pay for their citizens healthcare, unemployment benefits, schooling etc. and we will do the same for our citizens. Or they could go home, eh?

    The point is, the EU WANT to make the exit as painful as possible to discourage others. They have repeatedly reneged on agreements (e.g. reform of the Common Agricultural Policy – repeatedly – despite Britain giving concessions to allow this) so what is to stop them getting the cash and again reneging on the deal? Possession being 90% of the law and all that …

    I am living in New Zealand and here they are salivating at the thought of reconnecting with the UK and exporting butter, cheese, apples, meat (lamb, beef and, if the Brits can overcome their Bambi fixation, venison – very big, is the venison farming and export effort, mainly to Germany) and other food products. You want cheap food? We have tons of the stuff. Just ask.

    However, we have the most incompetent lot in charge at the moment and I do not expect a sensible, fair or equitable solution. My only hope is that the negotiations break down or last beyond the departure date. That or someone overthrows the witless queen of the may …

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>