New Prime Minister Theresa May (voted to remain) has appointed her cabinet. The key appointments relating to Brexit look encouraging:
- Chancellor Philip Hammond (voted to remain);
- Foreign Secretary Boris Johnson (voted to leave);
- Leaving the European Union Secretary David Davis (voted to leave);
- Home Secretary Amber Rudd (voted to remain);
- International Trade Secretary Liam Fox (voted to leave);
Overview and political environment
For policy choices, this looks like a cabinet that looks set to hedge its bets.
May has given Brexiteers their best chance to make Brexit happen in everybody’s interests, with the Eurineers ready to over-ride the referendum result on a whim (most likely at the first sign of panic).
On the UK political spectrum, May has moved the Tory party substantially to the left-wing, occupying the core centrist ground that Blair once occupied, and would normally be occupied by the now-invisible Liberal Democrats.
Meanwhile, the Labour Party is heading further leftwards, so much so that a fight for control of the Labour Party is in full swing. Crucially, the fight is between:
- the left-wing non-parliamentary party, a faction called Momentum;
- against the centrist/right-wing parliamentary party.
Davis and Fox are credible appointments to their respective briefs (notwithstanding Fox’s prior use of taxpayers’ money to fund an income for Adam Werritty). Davis is a good choice, because his strong stance in favour of civil liberties is the best hedge that May has in her cabinet. Hammond and Rudd should provide some sort of check-and-balance against Davis and Fox, to ensure that they are sufficiently challenged and don’t cut corners.
The appointment of Davis and Fox also re-assures Steven Woolfe, a candidate for leadership of UKIP. [This link also gives another list of cabinet members]. Woolfe describes himself as mixed-race, which is noteworthy: it is imperative for UKIP to ensure that it never represents a ‘one-race’ party.
Meanwhile, in Europe, Italy wants to bail-out its banks, contrary to rules that require a bail-in to happen first [a bail-out is where taxpayers subsidise private losses; a bail-in is a pre-insolvency movement, whereby the bank’s creditors write-down or write-off their claims against the bank]. This matter could come to a head before Italy’s referendum about a constitutional matter in October 2016.
On 14Jul2016, a terrorist used a truck to murder dozens of innocent people in Nice as they celebrated Bastille Day, giving rise to questions about the competence of the dirigiste French state. On 15Jul2016, the Turkish government suppressed a small ‘attempted coup’ by some elements of the military who want Turkey to return to a secular democratic state that respects human rights, away from the authoritarian Islamist/Sharia state that Turkey is becoming.
No mention yet from the May cabinet about the abandonment of 0% interest rate monetary policy, the root cause of all of our problems. On 14Jul2017, the Bank of England chose to keep interest rates unchanged (the blogosfear - including the City - expected a cut, because the blogosfear is still peddling Project Fear; actually, there’s no credible data yet to make any rational choice to change interest rates, even though the policy choice to keep base rates ultra-low is irrational anyway).
As at 16Jul2016, for all of my grumbling about the competence of UKGov, I think the May cabinet has the right ingredients in place. I just feel uncomfortable about trusting them to calculate, to pick and to implement the optimum policies to enact the referendum result.
BoJo as ForSec? Really?!
The appointment of Boris Johnson as Foreign Secretary is an odd choice.
Johnson is blunt and sensationalist to be a conventional diplomat - by trade, he’s a journalist - so how long he’s going to last is an open question.
At a guess, Johnson is probably staged for a fall, i.e. his expected “failure” as Foreign Secretary could be plausibly deniable political device by which May allows the Brexit process to unravel, giving May the chance to say “Oh well, it all looks impossible, let’s stay in the EU after all.”
That said, Johnson is, fundamentally, an internationalist - not at all a Fortress Britain Little Englander - so has the correct outlook on life, even if his bluster looks set to upset just about everybody. His opinions on policy choices could upset the Americans and Europeans in equal measure, given that he approaches policy matters without accounting for present vested interests and appears actively to consider nuances (unlike most human beings, who see choices as pure binary) [the link is a good summary of Johnson’s foreign policy pronouncements]. The establishment would consider Johnson to be a maverick, for which Johnson gets my support.
Which is not to over-state the case. The Foreign Office is less important today than it was decades ago, offering only opinion leadership outside UK borders than actually doing stuff. In any event, Johnson is merely the mouthpiece, one of many implementors: a Foreign Secretary does not single-handedly devise UKGov foreign policy. Used wisely, Johnson’s bluster can be very effective for Britain, and a very useful tool for Brexit negotiations.
Will Brexit happen?
May said that Brexit means Brexit.
So, on the face of it, Brexit as a principle is probably beyond debate. Even so, the manner of the departure and the scope of UKGov’s relationship with the residual EU are wide open to speculation. In this latter link, note Redwood’s preferred priority of repealing the Europan Communities Act 1972 first, then invoking Article 50 effectively as a tidy-up exercise.
However, May has not yet publicly investigated the nuances of the referendum results, i.e. for Scotland and for Northern Ireland, remain means remain. May’s current position is to remain open to suggestions for Scotland.
May visited Sturgeon on 15Jul2016, a week since May’s appointment as Prime Minister. I think this means that May takes Sturgeon seriously. This feels like good politics, but I can’t yet see what useful policy choices could emerge from it.
As at today, it is inconceivable that May would consider the breakup of the UK to enable Scotland to go independent and immediately surrender its independence to whatever is left of the Europe Union. On this one, only time will tell. I think Sturgeon is smart: she’ll play the independence card to the media, but behind closed doors, she’ll be hoping that she won’t be in the position of having to negotiate Scotland’s accession into [whatever is left of] the European Union.
Industrial policy re-appears
May appears to have launched an industrial policy. This is a typical policy choice of left-wing Tories, the most famed of whom was Michael Heseltine, the immediately-previous minister who last operated an industrial policy in the 1980s. An industrial policy is by definition interventionist, typically resulting in some sort of state aid, which is illegal under EU law. One could interpret this as evidence that perhaps the May cabinet really does want Brexit, and can see the advantages of Brexiting. On the other hand, it might be equally likely that the cabinet is just as illiterate in law as its predecessors, i.e. that the cabinet hasn’t realised an industrial policy typically leads to EU-illegal outcomes.
A second problem with industrial policies is that they put governments in the position of gambling with taxpayers’ money, as if the government were an active, private investor. And, of course, governments typically being stupid, governments normally end up backing losers, and then continue to pour taxpayers’ money into the losses (whereas a private investor would cut losses and get out).
The trigger factor for this policy appears to be energy security and decarbonisation, effectively taking a strategy out of the hands of the market (which arguably doesn’t know how to invest, partly because 0% interest rates makes the value of long-term future revenue streams unforecastable, and partly because of UKGov’s lack of policy leadership, itself following the lack of leadership of European Union energy policy).