by Alasdair Macleod, GoldMoney:
Brexit will be done by the end of next month, when trade negotiations with the EU will begin. Importantly, Britain’s negotiating position has strengthened immeasurably, and the new government is not afraid to use it.
This Conservative government has a greater sense of political and economic direction than Britain has seen in a long time. Unbeknown to the public, not only will the establishment that obstructed Brexit be side-lined, but a slimmed-down post-Brexit cabinet through a network of special advisers lead by Dominic Cummings will revolutionise central government, reducing bureaucracy and refocusing resources on public service objectives instead of wasted on process.
But there is a dichotomy. While both the government and the new intake of MPs lean towards free markets, Cummings and Johnson will increase government intervention to secure their electoral advantage for the future, and to ensure a planned outcome in a world which in following decades will be dominated by new large Asian economies.
There are two wildcards which could trip the new government up. In the coming months there will almost certainly be a global credit and systemic crisis, which will have a profound impact on trade negotiations. And as far as we can tell, while this government is undoubtedly in favour of small government and free trade, there is no evidence it understands a cohesive theory of money and credit.
Boris and the Conservatives won the General Election with a very good majority. In truth, opposition parties stood little chance of success against the Tory strategists, who controlled the narrative despite a hostile media. At the centre of their slick operation was Dominic Cummings, who masterminded the Brexit leave vote, winning the referendum against all the betting in 2016. It was Cummings who arranged for the Tory Remainers to fall on their swords, which by removing the whip reduced the Tory ranks, making them appear vulnerable enough for the opposition parties to tear up the requirement for a supermajority and vote for a general election.
It was straight out of Sun Tzu’s playbook: “All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” The way the Remainers were removed was both brutal and public. On 3 September fifteen of them went for a meeting in Downing Street, obviously convinced, with Johnson only having a parliamentary majority of one, that they were in a very strong position to negotiate either for a second referendum or Brexit in name only. Dismissing them, Cummings was blunt to the point of rudeness: “I don’t know who any of you are”. And they left with nothing.
Observers at the time saw this as suicidal, but Cummings appears to have known what he was doing. The hapless rebels had no coherent plan other than to threaten, and their bluff was called. Better, it seems Cummings concluded, to purge the parliamentary party of serial rebels than to be beholden to them.
Much has been written in the last few days about how the election victory was won. About the focus groups, about listening to Labour voters. About the Get Brexit Done slogan. But Sun Tzu Cummings also encouraged Labour to hang themselves. The Tories kicked off addressing the number one concern of ordinary people, tackling crime. Then came the NHS – more nurses and hospitals. This was a carefully set trap, getting the Marxists in Labour to outbid the Tories on spending to patently ridiculous levels. Having set down that route, they added nationalising water, trains and broadband. Everyone then knew that Labour promises were not only a joke, but downright dangerous. The Conservative’s promises were just deliverable, particularly since they were prepared to sacrifice an earlier promise to cut corporation tax.
Obviously, Britain will leave the EU on or before 31 January next. All of 2020 subsequently is set to be taken up in trade negotiations with the EU, which will not be extended. The first post-Brexit negotiation of note will be over fisheries policies and the right of access to British waters for EU fishing vessels, due to be agreed by 1 July, to be implemented after the transition period.[i]
The hope initially expressed by establishment figures in both Westminster and Brussels was that with a thumping majority the Conservatives will soften their Brexit demands, because it is no longer beholden to the ERG, an alliance of free marketeers in the Conservative parliamentary party. This being the case, it was argued, British demands for a return to total sovereignty over British fishing waters can be compromised in the context of wider negotiations. This is what always happens in Brussels, and the establishment on both sides assume the British will continue to play that game. But the Remainers have not been paying attention: the way in which the Conservative rebels were dealt with is the new negotiating philosophy.
Far from taking the opportunity of a large Conservative majority for the British to soften their stance in negotiations, all the indications (for those that bother to look rather than just assume) are that the British will take a firmer negotiating stance. If the EU tries to blackmail the UK over fisheries – France being an obvious instigator given her powerful fishing lobby, and Spain over Gibraltar which has nothing to do with fisheries – the British will be prepared to walk away from negotiations, because at that point, the Political Declaration will be breeched, not by the British, but by the EU.
In truth, the negotiating power has shifted firmly to Britain from the EU. Brussels will be dealing with a new anti-establishment administration, unsympathetic with the Brussels bureaucratic administration and determined to free the UK from as much of it as possible. The Brits are now focused, and Sun Tzu strategically clever with it.
Dominic Cummings possesses an exceptional intellect. His tutor in ancient history at Oxford, Robin Lane-Fox, reckoned him to be altogether in a different league to Boris Johnson. But Johnson is no slouch either and with backgrounds in the classics the two work well together. Other notable brains are Jacob Rees-Mogg, Sajid Javid, Michael Gove, Dominic Raab and Priti Patel. Collectively, the leading lights in the Johnson cabinet stand head and shoulders intellectually above any other cabinet seen for a long time.