Weekly news roundup – Cabinet cave in as May uses Budget to deflect divorce bill betrayal

If there was a week for the Prime Minister to betray the popular will and end it with her position intact, this was it, Budget week.

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On Sunday, rumours began to swirl of Theresa May’s intention to sweat out submission to her raging desire for yet another whopping payout from Leaver ministers. If we start saying that we’re going to give £40 to £50 billion to the EU, I think the public will go bananas, absolutely spare,” said Tory vice-chairman Robert Halfon on BBC Radio 4’s Westminster Hour that evening.

But Hammond and May were to get there way. At a Cabinet Brexit committee gathering on Monday, David Davis and Boris Johnson desperately tried to preserve a shred of dignity by insisting a slab of the cash be withheld unless the EU plays ball during the trade talks.

Fat chance of that, especially since they also gave May their blessing for continued ECJ jurisdiction over EU residents. Hours after the PM extracted acquiescence from all her Cabinet colleagues on the committee, quotes were pouring out of Brussels from EU diplomats claiming £40bn would not be enough.

On top of that, Michel Barnier said the rebate would not be deducted from the two years of membership fees promised by the Prime Minister in Florence speech, adding an extra £10bn to the notional £20bn.

Mrs May is now said to be desperate to get EU27 approval to move onto the trade negations at the next summit in December, hence today’s fringe meeting with Donald Tusk at another summit in Brussels, during which it is understood the Prime Minister pledged to honour our so-called financial commitments.

“There are still issues across the various matters that we are negotiating on to be resolved,” she told reporters.

Let us not forget that we have absolutely no legal obligation to hand out any cash at all, nor does it make any sense from a trade perspective. We are sitting on a £70bn trade surplus with the EU and yet we are the ones expected to pay into their coffers. Ludicrous in the extreme.

“The lack of spirit shown by the Eurosceptic wing of the Cabinet, and its refusal to stand its ground, is profoundly depressing and deeply humiliating. It is also totally unnecessary,” wrote Nigel Farage in his Telegraph column.

It looks increasingly like a fracture will shatter EU27 unity, helping to mitigate the abjectness of our government.  Germany was plunged into political chaos by Angela Merkel’s arrogance (see below) at the beginning of the week, leaving a preening France to take the lead. Meanwhile, Bulgaria, which will soon be leading the EU agenda as the holder of the bloc’s daft rotating presidency, has already gone rogue.

On the prospect of a no-deal, Bulgarian Prime Minister Boyko Borissov told reporters at today’s summit: “Regrettably, this possibility is more and more mentioned, that there would be no agreement. I am not saying it on behalf of the EU or of our presidency, and I don’t want to be misunderstood. But this is my sentiment”.

Borissov is a former bodyguard and coach to the national karate team. Maybe he’ll be the one to kick some sense into the Euro-elite.

Michel Barnier also said this week that the EU would immediately undo a comprehensive trade deal with the UK in the event we regulated our economy our own way. We’ve been warned. Whenever Switzerland exercises sovereignty over her borders, the EU retaliates disproportionately. They will treat us worse.

It’s encouraging therefore to hear reports the Prime Minister is fully behind Michael Gove and Boris’s drive to cut out EU red tape from the statute books, making life much easier for business as soon once we’ve left the EU – let us hope it ‘s not a PR ploy after Gove and Johnson’s shocking climbdown over the divorce bill.  It’ll be interesting to see how Barnier responds over the course of the trade negotiations.

As Wednesday’s Budget approached, the Prime Minister sought to deflect attention on the payout by indirectly briefing the press that Hammond was for the chop for his poor PR – Eeyore style – PR skills.

The Chancellor then successfully navigated the Budget tightrope without winning much applause from the editorial pages – an embarrassing pause on his prized deficit reduction plan apparently merited the minimum number of column inches. The Establishment were clearly looking out for their Remainer saviour at Number 11. Asked the next day whether Hammond would get the shove, Mrs May laughed and said: “Yes. The Chancellor did a very good job yesterday”.

“Balanced” is how the budget was mostly described, as it sought to swallow up some of the free-spending ground occupied by Jeremy Corbyn. Yet, it still carried strong traces of the Europhile Hammond.

Page 82 of the accompanying document reveals the Treasury’s intention to carry on paying into the EU up to and possibly beyond 2023. These monies, which amount to £3.5bn a year, will be drawn from the customs duties collected by HMRC.

Either the Chancellor plans to keep the UK in transition for a lot longer than two years, or he intends is to keep Britain locked in the EU’s asphyxiating Customs Union, which would deprive us of an independent trading policy. So much for Liam Fox’s new department.

As you might expect, the man to pick up on this “failing that I hope will be put right” was Jacob Rees-Mogg. Chief Secretary to the Treasury, Liz Truss unsatisfactorily passed the blame onto the Office for Budget Responsibility, which provided the forecasts.

The OBR was also responsible for deflecting attention away from Hammond with its grim productivity estimates. Low productivity is a well-known challenge, yet all of a sudden, the OBR seems to think it takes a British tradesman an hour to change a light-bulb and next year it will take him two. While the commentariat obsessed over the completely subjective forecasts, few bothered to consider the fact that services are the basis of our economy. Measuring the productivity of services is notoriously difficult, forecasting their onward trajectory is impossible.

Revealed at the very beginning of the Chancellor’s budget speech was the setting aside of an additional £3bn for Government departments to draw from for various Brexit scenarios. Up until now, £700m has already been spent. Hammond refuses to expand customs capacity at British ports, a much-needed measure if we are to keep EU trade as ‘frictionless’ as possible. But then he wouldn’t if he plans to keep us in the Single Market.

Beyond Britain’s borders, the Irish Government launched a daring offensive against the UK at the beginning of the week, threatening to use its veto at the December European Council summit to prevent negotiations from moving onto trade. DUP leader Arlene Foster described the move as “reckless”.

Dublin has been pushing the idea of retaining an open border between the North and South by keeping Northern Ireland in both Single Market and the Customs Union. That would leave the UK to somehow manage two different markets in the same country, the EU in reverse. “madness economically, never mind the political consequences”, was Foster’s colleague in the Commons, Nigel Dodds’ appraisal.

The truth is, the Irish Republic is in a desperate situation. Now that the British have bent over backwards to meet the EU’s two most important demands, it is likely to give ground on the thorny third. Residency rights and the divorce bill matter to all remaining 27 Member States, whereas only Ireland cares about Ireland. So much for that commons European spirit.

The government in Dublin is fighting the inevitable alone and resorting to desperate tactics. First the veto, and then on Thursday a leaked diplomatic cable revealing various European officials’ unflattering opinions of British ministers, David Davis and Boris Johnson in particular.

As of today though, Leo Varadkar’s government is in a whole new world of pain after emails by Deputy Prime Minister Frances Fitzgerald relating to the discrediting of a police whistleblower were uncovered. The opposition has tabled a no-confidence motion against Ms Fitzgerald. Prime Minister Varadkar refuses to give her the sack even though his minority government is teetering on a complex set of confidence and supply arrangements in the Irish Parliament where it possesses only a third of seats. Fresh elections are the most likely outcome.

But it’s not only Ireland facing trouble at home of course. Germany is undergoing its first major post-war political crisis, following an irreversible breakdown in coalition negotiations with the Thatcherite FDP Party.

Another general election looked like a dead cert. But fearing yet more seats going to the traditionalist Alternative für Deutschland, Merkel’s former coalition partners, the SDP are now calling for the alliance to be reforged.

The SDP may sit on the other side of the political spectrum to Merkel’s centre-right CDU, but they are liberal establishment globalists through and through. SDP leader, and former European Parliament President, Martin Schulz will surely want to keep the people at bay and enter into yet another cosy alliance with the Queen of Europe.

In economic news: The Bank of England turned uncharacteristically pro-Brexit – not to mention factual – in its appraisal of rapidly declining unemployment, which the Bank expects to apply much-need upward pressure on wages. A key reason behind the re-balancing of the British Labour market? reduced immigration of course. And while the commentariat sought to frighten everyone with subjective productivity data, Swiss banking giant UBS revised its forecasts upwards – and in case anyone failed to notice, the OBR’s downward UK growth visions were marginal. Car manufacturing is up and on track for a remarkable record by the end of the decade, exporters are bursting with optimism, while tourists are falling over one another to reach the UK.

Kind regards,
The Leave.EU Team