The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Signalling a post-Brexit industrial strategy

Supporting Bombardier - Putting employment in Britain at the heart of economic policy.

Robert Oulds

25th September 2017

We are determined that Brexit, if when it eventually happens in earnest, delivers the change we need. One of these new approaches can be in defending British industry, along with its jobs and innovation from unfair actions. But why wait for Brexit? It can begin now!

 

Bombardier, a major employer in Britain, a new entrant in the plane market, is being threatened by a trade complaint brought by Boeing designed to keep it out of the US market.[i] Theresa May’s government must show that a post-Brexit Britain will use its new-found independence to stand up for UK jobs. A policy area where we would not have to live with pan-EU rules any more. British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country.


 

What should the Government do?


 

The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier his government will cancel its taxpayer-funded contracts with Boeing.[ii]


 

Theresa May should follow suit and review all taxpayer contracts with Boeing, until the company withdraws its threat to close British factories. This would be a real show of commitment to a UK-focused industrial strategy.


 

Some in a resurgent Labour Party at their conference in Brighton are attempting to undermine the spirit of the referendum by keeping the UK tied in as closely as possible to the EU for as long as possible. They seem to be pushing at an open door. The Government has accepted an EU transition with some of the obligations of membership, minus the influence, as proposed by our Prime Minister in her recent speech in Florence.


 

Taking such an approach to its extremes means not only accepting EU control over trade but also its undue influence over our industrial strategy and EU procurement rules and tendering.


 

Since the referendum progress has been made. The initial stages of Brexit have already been a boon to employment.[iii] British manufacturing has grown since the referendum.[iv] This has largely been driven by increasing export demand.[v] The rebalancing of the British economy should have little to fear from Brexit. The potential extra costs of tariffs placed on British exports to the EU is more than mitigated by the reduction in the value of the pound.[vi]


 

Despite this fear still pervade British politics, infecting some areas of business confidence.[vii] Steps were taken to alleviate the naysayers’ predictions of gloom if the UK was fully free to implement its own policies. Some supply side reforms were proposed. Yet, talk of a low tax UK alternative to the dilapidated EU (Franco-German model) has been muted of late. This backtracking away from boldness does little to restore confidence. The other approach now adopted by the Government is one making renewed concessions to the EU. This has problems of its own.


 

Any half-hearted Brexit, any postponement, any delay is a denial of the referendum result and just as importantly a rejection the opportunities that await UK plc after Brexit. If the rediscovery of Thatcherite classically liberal economic policies is no longer on the agenda then a new approach is needed.


 

We want to make sure Brexit is a success, but we are now further than before from being able to make the right choices for ourselves. Yet, the Government can show that despite some recent mixed messages, which fail to appreciate the opportunities that await us, there is still another way to signal that it will make Brexit a success.


 

The Government can restore confidence and outline a better tomorrow by showing that it will protect the employment gains that have recently been won and much more than that protect and enhance high-end manufacturing, creating well-paying jobs that add value to the economy. The government can signal that it will do what is necessary, taking back control must mean something.


 

To mitigate the fears and genuinely to secure the best outcomes for the British economy a self-governing country will have many decisions to make. Brexit has the potential to be a huge opportunity for many organisations, especially our excellent manufacturers. One of these threatened employers is Bombardier.


 

Defending a respected company – alongside Canada, a potential new global trading partner - will show that we have much to gain from Brexit. This must begin now and this is a real issue that needs to be addressed, not just for its totemic importance but also because jobs in this country depend upon it.


 

Bombardier is a well-known maker or trains, which has suffered before because of the UK’s over officious implementation of EU procurement rules awarding contracts to German rivals Siemens. [viii] There is now a new issue where the Government can step in to help its plane-making division in a dispute with American rivals Boeing. Bombardier is trying to break the duopoly of Boeing and Airbus in the production of smaller commercially sold planes. These pricing from there powerful rivals is having the effect of squeezing Bombardier.[ix] [x] What is worse, is that Boeing is trying to push Bombardier out of the US market altogether. The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier through the courts his government will cancel its contracts with Boeing.[xi] The British Government should follow suit and review all contracts with Boeing.


 

Of course, a real solution is only fully achievable when we ae outside of the EU but it can ward off Boeing’s aggressive action and make them think twice about the long term, implications of its legal action in the US courts. Through signalling such an approach the remoaners that fear change, even in the Labour Party will see, that Brexit can be a real opportunity.


 

British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country. Theresa May, stand up and support workers in the UK.


 

Its not just about defending Bombardier and the production of its C Series aircraft. There are also over 200 UK suppliers directly provide materials, hardware, equipment, and services for this planes production. The Belfast facility plays a critical role in C Series production and advanced composite wing assemblies.


 

Boeing’s petition to the US International Trade Commission (ITC) is a direct attack on innovation, competition, and development, which would ultimately harm the industry, consumers, and workers. Boeing’s petition would hinder future investment and domestic job growth in the UK. Northern Ireland leaders have asked Vice President Pence to interject. They fear peace in the region could be in jeopardy over job loss.[xii]


 

If Boeing is successful, Bombardier’s C-Series aircraft could be pushed out of the American market. The Times wrote “Boeing says it believes that "global trade only works if everyone plays by the same rules of the road. The company [Boeing] should heed its own advice before condemning others.”[xiii]

 

Theresa May announced that she phoned President Trump to raise concerns over Northern Ireland jobs.[xiv] Yet that is not enough. Theresa May knows what can be done and can follow Canada robust example. Justin Trudeau and Theresa May held a meeting to discuss the Boeing-Bombardier trade dispute in Ottawa on Monday 18th September.[xv]

Boeing’s protectionist complaint is unjustified. If successful, it would lead to job losses in this country, harming UK manufacturing. Taxpayer contracts with Boeing should be suspended until Boeing commits to withdrawing its complaint against Bombardier. The Government must use every weapon in its armoury to protect British workers.

 

This should be the message of what a post-Brexit Britain will be like. We will then see business confidence return.


[i] http://uk.businessinsider.com/bombardier-calls-boeing-trade-lawsuit-pure-hypocrisy-2017-9

[ii] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[iii] http://blog.fxpro.co.uk/daily-forex-outlook/14092017-uk-unemployment-at-42-year-low/

[iv] http://www.cityam.com/272260/british-manufacturing-now-eighth-largest-world

[v] https://www.theguardian.com/business/2017/sep/05/factory-and-retail-sales-climb-despite-fears-of-brexit-slump

[vi] http://www.brugesgroup.com/images/papers/whatitwilllooklike.pdf page 32

[vii] http://www.independent.co.uk/news/business/news/brexit-latest-news-uk-business-low-level-confidence-lloyds-bank-economy-a7920101.html

[viii] http://www.telegraph.co.uk/finance/newsbysector/transport/10119477/Bombardier-blow-as-Siemens-wins-1.6bn-Thameslink-deal.html

[ix] https://www.economist.com/news/business/21693188-wounded-canadian-planemaker-announces-big-losses-and-job-cuts-bombardier-course

[x] https://www.economist.com/news/business/21729469-row-between-planemakers-has-become-political-boeing-takes-flight-hypocrisy

[xi] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[xii] http://ca.reuters.com/article/topNews/idCAKCN1BO19Y-OCATP

[xiii] https://www.thetimes.co.uk/article/air-fair-55r92xlpl

[xiv] https://www.thetimes.co.uk/article/may-pleads-with-trump-to-help-save-british-jobs-boeing-bombardier-democratic-unionist-party-hw93jf3bn

[xv] https://globalnews.ca/news/3736751/boeing-bombardier-justin-trudeau-theresa-may/

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Financial Services and Brexit

​Project Fear scaremongered more about financial services than anything else during the EU referendum campaign and this scaremongering has unfortunately continued after the Brexit vote. Remoaners and soft Brexiteers (those who want us to remain members of the European single market after Brexit) now tell us that the reason why there was not an imme...
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The Shape of Gibraltar in the aftermath of Brexit

A Brexit-driven reconfiguration of the UK’s food and agricultural sector suggests that a period of significant transformation lies ahead; but if mapped successfully, can be a positive one.

George Macquisten

31st August 2017

Every civilization that has settled in Gibraltar has thrived, be it the Phoenicians, the Romans, the Ottomans, the Spanish and most recently, the British. Its strategic location and deep water harbour have been the reasons behind this, and enabled them to make it a vital trading hub.

Brexit represents a huge challenge to the future of Gibraltar as an economic centre, since it means losing membership of the biggest trading bloc in the world once the UK leaves in 2019. Gibraltar has experienced similar issues before in the various sieges mounted against it in the War of the Spanish Succession, and most recently during Franco’s blockade. There is certainly plenty to be cautious about, since the territory has become more dependent than ever on the land frontier remaining open to facilitate the movement of tourists, labour and imports.

However, the thriving financial services sector, which is closely aligned with that of the UK, means that the economic outlook is not as bleak as businesses and politicians initially feared, especially since the TiSA negotiations are proceeding well. The symbolic relationship Gibraltar shares with the neighbouring Spanish province of Andalucia means that they cannot function without the other.

Sense between the negotiating parties will prevail, especially since Madrid will not wish to sacrifice the economic well being of 10,000 Spaniards and forego the purchasing power of 30,000 comparatively wealthy Gibraltarians through causing difficulties at the border. If all sides can tone down the sometimes fiery rhetoric, there is every hope for creative solutions to keep the border with Spain open and flowing to the benefit of all.

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The Will to Act

In the referendum on 23 June 2016 the majority of British people voted Leave. In doing so, they placed the cornerstone of a new future for the U.K. beyond the E.U. Some politicians, mainstream media and many pollsters failed to remember how the will to act had built the British Empire, Commonwealth and NATO. The will to act against questionable ves...
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The Future is Another Country: Brexit, CAP and the Future of British Agriculture

A Brexit-driven reconfiguration of the UK’s food and agricultural sector suggests that a period of significant transformation lies ahead; but if mapped successfully, can be a positive one.

Richard Ferguson

21st June 2017

The possibility of a Brexit-driven reconfiguration of the UK’s food and agricultural sector suggests that a period of significant transformation and structural adjustment lies ahead. Set against an industry already in the midst of rapid technological displacement, value-chain disruption and regulatory change, a transformative event such as Brexit appears to add to existing uncertainty.


However, while the potential institutional, financial and operating frameworks that will arise from Brexit suggest a wide range of possible outcomes, the process, if mapped successfully, can be a positive one. The UK’s current position is not unique. In the 1980s, the government of New Zealand instigated a reform programme to transform the country’s food and agriculture sector, the results of which were immediate and painful as well as long-term and beneficial.


At the core of the transformation that shook New Zealand’s agriculture sector in the 1980s and 1990s was a pressing need to access new markets in the face of external economic shocks and structural adjustments, such as the UK’s decision to join the then European Economic Community (EEC) in 1973. While there are obvious direct parallels between the New Zealand case study and Brexit, both situations remain distinct and unique. The first section of this report “The past is another country” considers the New Zealand experience and argues that an agenda focused on long-term goals can deliver significant economic and social benefits, but may come with considerable short-term costs. The battle about to commence is set to be as brutal, complex and ideological as that which determined the direction of the British economy in the late-1970s and early 1980s.

 

The second part of this report “The here and now” considers the Common Agriculture Policy (CAP), the defining policy feature of the UK’s agriculture landscape over the past few decades. The design of any new policy-making framework has to begin with some macro considerations, not least: how relevant is a subsidy-based system of payments in the modern era? Moreover, what is the relevance of food security in a country with a structural trade deficit in food? We must also consider to what extent environmental considerations should influence the policy-making agenda. What is the role of government in terms of regulation, environmental compliance, bio-security and food trust? Alternatively, can a free-market, liberalisation agenda deliver wider social, political and environmental objectives as well as economic goals? Can the UK use its fledgling – and flourishing – agtech knowhow to raise productivity, build exports and deliver value added to the British economy?

 

The third part of this report “The future is another country” peers into the future, and presents some innovative and strategic thoughts. As a study it is neither exhaustive nor academic, but it does cover many of the key and very real issues that come up time and again in our daily work with clients. It simply considers some of the strategic directions that the UK should consider if it wishes its food and agriculture sector to prosper. A global imperative is: how do we feed a world of 10bn people within a generation when its current needs are delivered by an army of unsophisticated and undercapitalised smallholders? We contend that the Department for the Environment, Food & Rural Affairs (DEFRA) and the Department for International Development (DFID) need to shift their respective – and parallel – focuses on agriculture subsidies and development aid to collude with the Department for International Trade (DIT) and the Foreign & Commonwealth Office (FCO) to bring much of the UK’s technological, commercial, developmental and diplomatic ambitions in food and agriculture under a joint strategy.

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