Saturday, 10 December 2016


Terrible news: McDonald's is moving its non-US HQ to the UK. So not only will the original global corporation and face of American cultural imperialism be bringing yet more of its disappointing beef patties and sugary bread to our shores, it will bring misery to those who said that business would collapse moments after a vote for Leave was announced. George Osborne even went as far as predicting that bankers would be fired within hours of a Leave vote being declared. I wonder if he experiences embarrassment?

Sorer still are those who said that a Remain vote was vital for our service sector as a single EU market in services was just around the corner, meaning that Britain would be able to take its advantages and multiply them as we conquered formerly-protected French and German professionals. Services have been enjoying their strongest growth in a decade. Maybe David Cameron's "bomb" was a transcription error.

Having decided to leave dodgy old Luxembourg, McDs could have gone anywhere: Hong Kong, Singapore, Amsterdam and so on.  They will have wanted two main things: a place where contracts are readily made and enforced and a reasonable tax regime. Their business must surely be based hugely on legal rights and contracts. After all, the megacorp itself runs very few actual restaurants. The UK is therefore a good place to be based because our lawyers are for the most part excellent, our courts are trusted and we have competitive corporate tax rates. 

We can of course do much better. The courts could be more efficient and more available to small firms. Our tax rates could be simpler and lower. We could make sure that more people have the education and skills to take advantage of the opportunities that the McDonald's and the Facebooks and the Googles can offer. Now would be a good time to revisit our competition regime.

If other awful reports are to be believed it seems as though the trade deficit has been narrowing due to a nasty combination of higher exports and lower imports. Who would have predicted that? Worse still, the boom in export orders appears to be coming from non-EU countries. How can this be?

So the bits of the economy which have been doing pretty well "#DespiteBrexit" are also the bits which aren't dependent on the single market and the customs union. Our non-EU exports come under either bog-standard WTO rules and tariffs (e.g. UK-USA) or an existing EU-third-party agreement (e.g. EU-Korea). The word on the street is that the government is taking advantage of the hiatus in anything actually happening to make exactly the sort of continuity agreements with WTO members that we were told were utterly impossible by certain groups just a few months ago. Meanwhile services were never properly IN the single market, so how can they really be more OUT after we leave it? Are the French going to ban their firms from entering into contracts with British providers? It would be fun to watch them try.

So in summary:

- A more sensibly-priced pound is boosting trade and rebalancing the economy, especially towards countries with which there will be at worst no change in trading arrangements when we Leave.

- The sector which forms the bulk of our economy is growing at its fastest rate in years.

- International companies are choosing to relocate to Britain because of the rock solid reputation of our institutions, our skills base and our competitive tax system.

- All the bankers are relocating to Paris, which is where they are all from originally anyway, solving London's housing crisis and enabling Canary Wharf to be turned into a theme park.

This Brexit thing SUCKS. What's for lunch?


Steven_L said...

our lawyers are for the most part excellent ... We can of course do much better. The courts could be more efficient and more available to small firms.

What do you want? Excellent lawyers (and therefore a well paid legal profession full of competitive clever people) or efficient courts available to the little guy? Both? You want to have your cake and eat it?

Anonymous said...

Wonder what our excellent lawyers at the Supreme Court are going to make of Brexit. Reckon they will have to come down on the side of the High Court.

But it then seems the only people standing in the way of a smooth and successful transition are the MP's. May should call a General Election especially after Labour's poor showing.

Blue Eyes said...

Anon I am fairly sure the SCOTUK (see what I did there) will not overturn the HC's decision. This whole process just reinforces the robustness of our institutions.

Electro-Kevin said...

Great post.

What has made Britain relatively successful compared to most of the the EU is what she *doesn't* have in common with it. Namely the euro.

We might not always have the single market (actually I think we'll end up with the Norwegian deal but that aside) but we'll always have proximity, architecture, restaurants, the west end, history, good humour and (for god knows what reason) a reputation for fairness, honesty and stability.

Blue Eyes said...

Thanks EK

It is plausible to argue that the single market is a drag rather than a boon. Roger Bootle is interesting on that topic.

You may well be right. But we shouldn't be very happy at the Norway option as they still have to abide by the rules and decisions, pay a huge amount into various EU budgets and schemes and yet have no say on the decisions being made. They do of course have the advantages of being outside the CAP and CFP and are able to negotiate their own external trade deals.

Blue Eyes said...

On the Euro you are right. Italy's problems would vanish almost overnight if it switched to its own currency. It could even do so fairly smoothly because unlike Greece it has a trade surplus and large domestic saving culture so would not need to turn to external funding sources on day one.

Suff said...

When will the bad news ever end, said the head of the BBC

Electro-Kevin said...

Will Self got uppity on QT over the McDonald's HQ ingress. "Who wants to server burgers ?" he sneered.

I imagine the *HQ* will provide better jobs than burger flipping. Good news is not what Remainers want to hear, is it.

Blue Eyes said...

Will Self is the cartoon figurehead of all the pretentious wankery that I can't stand. I read one of his novels once. It was interesting and challenging but he insisted on making it borderline unreadable with his vocabulary. I think he does it to make his customers feel stupid.