No deal Brexit + Corbyn = OMG!

When 27 countries can maintain a united front and the one they are pitched against is in disarray, it’s never going to be an easy negotiation.

The footage from Salzburg told its own story. Cold-shouldered by those sitting next to her who huddled together conspiratorially, Theresa May was forced to make imaginary notes on her pad to avoid looking ridiculous. I confess I briefly felt sorry for her as she looked so totally alone.

When the referendum result was announced back in June 2016, a Treasury contact identified the key issue to me straight away. “The result is so unexpected that we just don’t have a team of experienced negotiators to get this deal done. Most of the civil servants this work will fall on are fresh-faced graduates in their mid-twenties who’ve never negotiated anything beyond a student loan”. So we’ve sent boys to do a man’s job. And the Prime Minister is now seeing the outcome.

Of course there’s more to it than that. The guardians of the ‘European Project’ are fiercely determined to see that Britain suffers for her treachery. More important, that she is seen to suffer pour encourager les autres.  No matter what plan had been proposed, it’s likely they would have grandstanded their opposition to it for the benefit of nationalist upstart governments like Italy who might be contemplating their own departure. (Itexit doesn’t really work, does it?)

What the EU rejection of the Chequers plan gives us is the worst of both worlds. A weakened PM and an emboldened Leader of the Opposition. Bizarrely, both may now contemplate a snap election. May in the hope of a proper majority that would empower her in the final phase of Brexit negotiations. Corbyn in the hope that an electorate thoroughly bored by Brexit and unimpressed by the warring Tories might be ready for a change.

Which begs the question, what would a Corbyn government do about Brexit? They’ve been so weak in opposition that the government has had a relatively easy ride when they could have been slaughtered for their incompetence and in-fighting. Does anyone really know what Labour’s Brexit policy is? There’s increasing pressure for a second referendum from the rank and file, but little indication of what would happen if Labour finds itself in government before the March 2019 deadline. You have to assume a request to extend Clause 50 and buy more time would be the immediate outcome.

The most worrying aspect of this whole debate is that we are even having it. That the prospect of a Corbyn government once again seems to be in touching distance. Board rooms seem more focused on Brexit, with BMW and Jaguar already using it as an excuse to put their factories on reduced working hours. Specialist city firms engaged in exotic derivatives like interest rate swaps are seeing German competitors taking a bite out of their trading volumes. President Macron is on a charm offensive to lure UK unicorns like Revolut to relocate to Paris. Business leaders would do well to turn their gaze from Brussels to Liverpool this week. Among the policies likely to be implemented by a Labour government are:

  • Forcing companies to hand over 10% of their equity to the workforce who would be able to vote on company policies
  • Corporation tax to be hiked from 19% to 26%
  • Companies with 250 or more staff being forced to have a third of the board made up of workers representatives elected by their peers

And it’s not just business owners who should pause and reflect. As I mentioned in the cover article of Elite Lifestyle earlier this year, Corbyn will twist the knife on high achievers with a new tax on second homes likely to be double the current level of Council Tax. Income tax will also be hiked for higher earners, with an effective rate of 73% for those earning between £100,000 and £123,000. Rent controls will hammer private landlords still reeling from years of Tory attacks, while new rules on property development will kill the construction sector.

So we find ourselves in the happy position of racing towards a No Deal Brexit and/or a Corbyn government. Maybe it’s time for me to start work on Grexit. And that’s nothing to do with Greece…

Until next time.