Brexit’s gone West

The French and the Germans are doing their best to dissuade the UK from leaving the EU.

The French and the Germans are doing their best to dissuade the UK from leaving the EU. To put it bluntly, this is because it’s in the interests of German industry and French agriculture to keep us in the club. There’s huge concern that once we’re unchained from the European project we’ll run off and do things without their permission – hence the EU is doing nothing to help arrive at an amicable arrangement for our orderly exit, but is putting a great deal of effort into stirring up pro-EU histrionics amongst our political class. The latest is the totally ludicrous suggestion that all our aircraft will be grounded. Even the prime minister is falling for this rubbish. No explanation for why this is ludicrous has been offered by the government.

It’s time to get back to basics on the Brexit question, now that the vast majority of the voting public are completely baffled as to why it’s clearly not actually going to happen. I am certain that had I stood in the street on referendum day and asked random punters what they were voting for, no matter whether leaver or remainer, none of the voxpop would have replied ‘because I’m for/against remaining in a customs union with the EU so that I can worry more/less about the tariff situation on bananas and German machine tools.’ Any readers who would have said this, hands up please. I thought so. Why are we even concerned about it?

The EU is a protectionist bloc, the purpose of which is to essentially provide a protected marketplace for German manufacturers and French farmers. German exports to other member states of the EU in 2016 were valued at 706 billion Euros, around 4 times the value of UK exports to the EU (176 Bn) and more or less twice that of the Netherlands. So Germany is the manufacturing hub of Europe. In the other direction, in 2016 (and probably right now), every country in the EU listed Germany as one of its top three export destinations in the block. On the whole, though, Germany exports more than it imports. It sells more than it buys. Now I’m no economic genius but this probably means that in theory the Germans should be better off than us, and indeed, I’ve never met a poor German, so this theory is probably correct. My wife’s German. I spend time there and frankly they have more cash than us.

The UK on the other hand buys more goods from the EU than it sells. This is because we don’t make stuff and ship it to customers on anything like the German scale. This can be explained by successive Labour governments wrecking our manufacturing industries in order to demonstrate how effective a welfare state can be, but that’s another story. The consequence of this is that, in contrast to the Germans who can still afford to send workers for an annual three week sauna and massage at Bad Kohlgrub (other kurbereichs are available) in a massive state-tolerated scam known as the ‘kur’, our NHS is currently working out how best it can fund itself via ludicrous car parking charges. No matter, we’ll figure it out somehow.

Anyway, back to the point. Germany is obviously concerned that if we don’t spend our 115 Billion Euro trade deficit in the EU, that we’ll spend it somewhere else, like America or China. If you ran a corner shop, this is the sort of stuff you’d figure out in no time. So naturally, it’s important that all EU ‘negotiation’ strategies concerning Brexit are geared to ensuring that whatever happens we are locked into the German export market. Frankly, they’re probably not bothered about what we export to them – they can always get this cheap somewhere else, like the Czech Republic, which is coming up fast on the oustide.

So that’s the Germans. Now for the French. Apparently, I am at least partially French, so “Je ne prêche pas pour ma paroisse”. Of the 28 EU countries, by far the biggest beneficiary of the Common Agricultural Policy are the French. In the same year as the Germans exported over 700 Bn Euros of super-efficiently manufactured Ausrüstung to their captive trading partners, the super-inefficient French farming sector fertilised their economy with over 7 Bn Euros of CAP cash. Over 107,000 French farmers were subsided with grants between 20,000 and 50,000 Euros. A huge number of French farmers got more than this, whilst the unfortunate few who haven’t yet figured out how to fill in the forms, more than 200,000 of them, were rewarded with lesser figures adding up to billions of Euros. Obviously the French are keen not to have any source of funding for their belligerent farmers (see ‘Tractor Protests: Champs de Elysee: Paris’ for evidence) cut off because the Brits have decided we’ve had enough of their cheese and tortured geese and realised we can grow own own veg. C’est la vie.

Now for services. Nearly 40% of the UK’s total global trade in services is trade with the EU. That’s a big proportion, but it’s still less than 25 other EU countries, who all trade over 50% of their total service sectors inside the EU. Only Ireland and Malta trade a smaller proportion than the UK. So our service sector is clearly not as dependent on trade with the rest of the EU as is Germany’s (over 50%) or France’s (nearly 60%). In 2016, we generated a 17 Billion Euro surplus in services traded with the rest of the EU, third behind Germany and France, but the British trade surplus in services with the rest of the world was enormous in comparison – over 118 Billion Euros, the benefits of imagination and creativity worth over 189 Billion Euros with the rest of the world. Not surprisingly, this was over 70 Billion Euros more than the Germans (thereby reinforcing a few stereotypes).

Now the Germans and the French could say that they’ll simply go elsewhere for services. Consider the logic of this when we have a services surplus with the rest of the world which is so huge. It would be like driving 20 miles to Tesco for baked beans when the same ones are available in Waitrose round the corner for the same price (NB Own brand, fact checked).

So consider the facts. A massive trade deficit with Germany in goods, ergo, Brits are propping up the German economy. A massive trade surplus in services, ergo, people come to the Brits because we know what we’re talking about. French farmers ready to block a few roads with their tractors. And 25 other countries which don’t really care one or way the other.