Brexit Bake Off

I, like many, was shocked and dismayed to learn that the “Great British Bake Off” was exiting the BBC. It would seem the show’s producers; Love Productions had enacted their own “Article 50”. There were to be no more “soggy bottom” comments from the nation’s favourite cake expert, Mary Berry – a modern day Mrs Beeton. Probably the less said about her side kick – Paul Hollywood – the better! However I am sure the show will go on, and soggy bottoms will no doubt reappear – to the dismay of some hapless baker.

I must admit I was also slightly shocked about the Brexit vote – although in favour of it; given the increasing influence Brussels was having to varying degrees on our lives. I was surprised that despite “Project Fear”, the people feared increasing EU regulation more – with the obvious exception of the Scots and Northern Irish. The “Project Fear” predictions of doom and gloom post an exit vote have however as yet failed to materialise. House prices are still unbelievably high – well in London anyway; the stock market crash only lasted a morning until it bounced back and is now at year highs, unemployment levels haven’t fallen rather employment levels have risen; and the sky has not fallen in. We even enjoyed a reasonable summer. Those Nostradamus economists have gone strangely quiet – they didn’t “predict” the 2008 financial crisis and their predictions for a post brexit crisis seem also to have fallen flat – with perhaps, in my eyes, the notable exception of Dr Pippa Malmgren and Dr Gerard Lyons, both economists who forecast a positive post-brexit future for the UK.

The “new” UK Prime Minister Teresa May has publically stated that “Brexit means Brexit” nobody is quite sure what she means – including it would seem a number of her own Minsters. The FTSE 100 despite a nervous first morning start is now reaching year highs, Boris is winning new “friends” around the world, after all who wouldn’t want to have a trade agreement with one of the largest economies in the world? And the task of extracting the UK from the EU regulation spaghetti maze has begun – although no sign yet of the decision to start the firing pistol, the so called “Article 50”.

Much was made, pre the vote, of the length of time it can take to negotiate a trade deal. Of course as a member of the EU, the UK was unable to negotiate independent trade deals for over 40 years and therefore now lacks the civil service infrastructure to undertake such a task. I have no doubt it will take a large number of civil servants and no doubt many more lawyers and “consultants” to undertake this task. It was reported that over 50 EU trade deals would need to be negotiated. But wasn’t that what Microsoft’s Word’s `Copy and Paste` function was designed for? And let us not forget that the UK and France have a fine tradition of concluding trade agreements. Why in 1859 the Cobden-Chevalier Treaty was negotiated, written and signed within 3 months – thus allowing free trade of British Coal in return for French wine and brandy – a very equitable trade deal then and probably now. I am sure when clearer heads prevail and the UK have, once again, a representative at the World Trade Organisation – a role it had to abandon in deference to the EU – the task of asserting the benefits of free trade will prevail. There is of course the vexed problem of trading with Europe and the remaining 27 countries that will encompass it. The EU’s current insistent on free movement is at odds with other trade agreements they have concluded – I don’t recall that this was a precondition of the EU trade agreements with the US or Canada – or indeed any other trade agreement?

Of course it really is early days, the EU bureaucrats could make sure that the UK’s access to the EU markets is difficult. No doubt cutting off their nose to spite their face – but not their generous salaries, benefits and pensions. The issue of financial service passporting rights is another potential sticking point. However let us not forget this is also a two way street. The FCA has point to the 5,500 UK firms with EU financial service passporting rights – who may or may not be using them, against the 8,000 European firms with passporting rights into the UK. The City of London hosts many fine European financial institutions, Banco Santander, BBVA, BNP Paribas, Commerzbank, Credit Agricole, Deutsche Bank and Societe Generale, to name just a few. And of course lets us not forget that it was HSBC that only recently was looking to relocate its headquarters to Hong Kong – to avoid potentially punitive EU capital resource requirements.

So like the Great British Bake Off move to Channel 4 it is really too soon to call whether Brexit will prove to be a success for the UK. The early signs are however very encouraging. Let’s hope – like Channel 4 – we are not simply left with a big tent – and Paul Hollywood.