Brexit, Nissan, the Free Market, Protectionism and Government Insanity

Brexit, Nissan, the Free Market, Protectionism and Government Insanity October 28, 2016

A bit of a sidetrack here.

Brexit has happened and it looks increasingly likely that the UK will leave the European Single Market. Those on the Remain side have been lauding the issues (falling pound, the banks planning to pull out etc.) whilst the Leavers have been lauding the positives (better than expected UK growth, Nissan saying they will produce more vehicles at their plant in Sunderland etc.). All this and we haven’t actually left the EU yet! It must be noted that growth might have been even higher, or indeed lower given a non-Brexit. It is impossible to know.

We can guarantee, however, that Nissan would have been carrying on, business as usual, investing in the Sunderland area. This was put on hold after the referendum result. In the last few days, Nissan have announced that they will continue to invest and build new models in their Sunderland plant. Woo hoo! Brexit is a success, and massive corporations have faith in the UK going it alone.

Except the devil is in the details.

It turns out that the government wrote Nissan a letter promising that, no matter how hard the eventual Brexit will be (ie whether we leave the Single Market or not) Nissan will be a-okay. It promised post-Brexit competitiveness. listening to interviews today (for example, with Anna Soubery), it is apparent that the government had even before the referendum result been in talks with how to cope with being out of the Single Market. And underwriting the cost of the tariffs was one option considered. I can’t really think of how the UK government can allow a single corporation to remain as competitive post-Brexit unless it somehow:

  1. guaranteed to remain in theSingle Market
  2. promised some kind of compensation or equally valuable assistance

The problem is that (and this has already happened with other car manufacturers) the government will have to honour this preferential treatment across the whole automotive industry. And every other industry. Because they can’t be preferential. So the farmers, banking corporations, manufacturers, brewers, services industries – anyone who sells to the EU – would have to be financially assisted to the same value as the tariffs. I am not, here, being anti-free trade or anti-protectionist. I am pointing out the mad hypocrisy of the government who appear to be promising both.

This is taxpayer money.

This is protectionism.

This is anti-free trade.

This is not what Leavers promised.

This is hypocritical.

This is insane.

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