The unravelling of the international order

Tensions over China and trade didn’t start with Trump. As the reality of the West’s economic atrophy has become harder to disguise, particularly in the aftermath of the 2007-2009 financial crisis, rivalries both within the West, and also between the West and the rest, have sharpened. The West is in material decline relative to the expanding parts of the world in Asia. And so it can no longer justify imposing its own geopolitical agenda on everyone else. The old order cannot continue forever, and recognition of this fact is growing. Read the full article here.

Tariffs are a distraction

An odd feature of the Brexit saga is that so many people have become preoccupied with the supposed economic effects of trade. Recently the particular focus has been the impact of tariffs. Tariff levels are being hotly debated, both in terms of what level is desirable and what level will be possible in a post-Brexit Britain.Three years ago, talk about trade agreements, tariff levels and quota restrictions would mostly have raised mild bemusement, or more likely a yawn. Now we have trade ‘experts’ popping up all over the place with firm views on the form and significance of trading arrangements.

Read the full article here.

 

No Deal is no threat to business

More and more businesses and business groups have been getting vocal about the supposedly dire consequences of a No Deal Brexit. Having to deal with new border controls, many are saying, would be a disaster for the economy and for jobs.

Business leaders have as good reason as the rest of us to be irritated with our timid politicians and their delays in implementing the referendum decision. The government’s incoherent messages on preparing for Brexit have also not made life easier for them. While half the cabinet have been saying there is no chance of a No Deal Brexit, others have been telling business, rather late in the day, that they should really be doing more to prepare for one, including building up stockpiles of essential supplies. In practice, a lot of well-run businesses will have drawn up effective contingency plans months ago. But, unfortunately, the government’s lack of decisiveness will have given others an excuse to procrastinate, thereby creating more disruption than would have been necessary.

Genuine frustration, though, is no excuse for business leaders to be telling us stories that are as much Project Fairyland as Project Fear.

Read the full article here

Time to bust the No Deal myths

Leaving the EU without a formal Withdrawal Agreement does not mean ‘crashing out’ or ‘jumping off a cliff’, or any of the other pejorative phrases about the possible economic consequences. All leaving means, economically speaking, is that Britain will no longer be trading with, and its businesses connecting with, other EU countries on the terms set by the rules of the EU Single Market and Customs Union. This was always going to be the consequence of implementing the Brexit vote.

Government and businesses, as well as individuals, could and should have been preparing for that change ever since 24 June 2016. If, in places, this has not happened yet, that cannot be blamed on the Leave vote itself. It comes from the paralysis engendered by a collective fear of change. Since the 1980s a profound attachment to the status quo has taken hold in the Western world, which has taken many forms: in this instance, it is an attachment to the supposed comfort blanket of EU membership.

Read the full article here

Trade wars cause real wars? It’s not that simple

President Trump’s imposition of steel and aluminium tariffs is counterproductive for the US economy in several ways. It will increase import costs and hit US businesses and consumers. It will cause tariff retaliation from other countries, thus restricting America’s export sales. But, more importantly, it will inhibit economic advancement. Tariffs are anti-growth and hold back economic renewal at home. They shield domestic companies from engaging in the long-term investments needed to grow productivity. And in today’s depressed conditions, they act to reinforce stagnation.

Read the full article here

The truth about the Single Market

With Brexit negotiations about to get underway, one area that continues to get a lot of attention is Britain’s future trading relationship with the European Union. People still opposed to exiting emphasise the economic costs they fear from leaving the Single Market. Many fret that the two-year limit for Article 50 negotiations is too short a time to come up with a replacement trade deal. Moreover, if one is eventually agreed, possibly after some interim arrangement beyond the two years, they say it is bound to be a poor substitute for the advantages of full membership. Even many Brexit supporters seem to accept that more expensive and reduced levels of trade with the EU would be costly for the British economy, depicting this as a necessary, if unfortunate, expense of regaining sovereignty.

We should all be less negative about the economic consequences of changing Britain’s trading relationships.

The full article is here.