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Thursday 12 March 2020

Transition period delay?

Boris is facing mounting pressure to request yet another extension to the transition period in response to the coronavirus outbreak.

“We have just started. It’s important to pursue these negotiations in good spirit and mutual respect,” Said David McAllister, who chairs the chamber’s Brexit committee.

Currently, the second round of trade talks is scheduled to take place in London next week.

Sunak’s spending spree

Yesterday’s budget was dominated by the looming recession coronavirus will bring about, but it was always going to be a big one.

The Tories may have moved to the right on social issues and common sense politics at the last election, but their spending plans were further to the left, helping them to conquer the infamous red wall.

The liberal media chose to ignore that it wouldn’t be an austerity government under the Tories. After new chancellor Rishi Sunak delivered the first Boris budget yesterday there’s no denying this is a free-spending government now.

Like any budget, there are a ton of stats and facts to eat through, but the basic shape of the deal is clear for all to see, Labour-style spending – a £30bn stimulus package – with signature Tory limits on taxes – the fuel duty freeze stays in place, duties on alcohol won’t budge, only the second time that’s happened in 20 years.

All of which means big borrowing as the government sets off on its levelling-up mission, £27 billion on roads, tunnels, junctions and potholes around the country. Super-speed broadband will be installed in rural and hard-to-reach areas, a longstanding clarion call of Tory backbenchers, spending: £5 billion.

Had it not been for coronavirus, the stimulus would have been limited to these infrastructure projects. The fact is, the government was required to throw a hell of a lot of money, £12 billion to be precise, at the economy to keeping it ticking along. The Bank of England has played its part by cutting interest rates to a record low.

Small businesses, particularly those in hospitality and entertainment that will be hit hardest by the virus will receive the most support. A loan guarantee scheme is being set up, business rates for vulnerable firms are being abolished for the first year, and the first 14 days of sick pay will be refunded by the Treasury. The 0.5% interest rate cut, down to 0.25%, will also unlock billions in lending.

“Sunak’s instant £30bn fiscal package and copious support measures for business to fight the coronavirus are worth 1.5pc of GDP – front-loaded and highly-concentrated – and amount to the most radical move taken so far in any western country,” wrote the Telegraph’s international business editor, Ambrose Evans Pritchard (see tweet above).

Remarkable to the think, these are the radical measures Brexit was expected to provoke. Instead, it took a global epidemic that will bring the global economy, particularly continental Europe, into recession.

Correction, pandemic, Covid-19 was redesignated by the WHO yesterday.

Trump issues brave ban, EU floundering

It’s no accident that the EU is flagging while others are acting, particularly the United States.

While the death rate in Italy tragically soars, the EU has proved itself completely incapable of coordinating any kind of response even though it’s a common travel area.

Meanwhile, President Trump has issued a swift ban on travel from continental Europe – the UK and Ireland are exempt. Naturally, a few exceptions apply: US citizens, family members and travelers holding residency permits. The restriction will initially apply for 30 days.

That’s how you do it.

Back home, the government’s practical response, budget-excepted, has been heavily criticized. Only today will health secretary Matt Hancock announce the delay phase is over, we are now entering Italy-style containment.

Nevertheless, the EU is a complete disaster by comparison. The Eurozone’s spending restrictions, designed to stop Greek-style overspending and debt crises are now going to cause real harm as EU capitals are blocked from rescuing business that under normal circumstances wouldn’t be in any danger.

Even Germany, which has billions in spare cash it can spend freely is showing no willingness to support its economy – which was struggling even before coronavirus.

As for coordination, Italy’s ambassador to the EU wrote a furious piece in Politico yesterday, slamming the EU for not offering help. China has provided aid, other EU states have not. Germany has even refused to sell anti-virus masks and medical equipment.

This blog would never lambast a national government for putting its own people first, but the whole European project is dependent on solidarity between EU nations, even though they rarely share the same language, social norms, economic model or even vision of democracy.  

All we’ve heard from Brussels is the ridiculous claim from European Commission president Ursula von der Leyen that “member states are asking for more Europe”. They certainly aren’t.

Will this pandemic finally expose the critical flaw in European integration? The unarguable truth is the nation comes first, blocking any prospect of workable political union.  

Immigration numbers set to tumble

According to official forecasts published yesterday, Boris Johnson’s points-based immigration system will cut the numbers arriving in the UK by almost half in five years. The Government’s independent spending watchdog, the Office for Budget Responsibility predicted the new system will reduce net immigration to the UK to 129,000 by 2025.

“Successful implementation of the new regime by the January deadline looks challenging,” Said the OBR.