July 05, 2016
May vs Leadsom
There were two important developments in the ongoing Brexit debates that we should note. Andrea Leadsom, the energy junior minister, is now emerging as another potential challenger to Theresa May, and has even overtaken her in a poll of Conservative supporters. Leadsom is the most conservative of the candidates. With a background in finance, she used to be pro-EU many years ago, but later turned into one of the strongest eurosceptics in the Tory party. Yesterday she managed to get the support of Boris Johnson. Her presentation to Conservative MPs last night did not go down too well, we hear. Many found her lacking in experience. Unlike May and Michael Gove, she is not a minister of cabinet rank. The hurdle for her is that she needs to emerge as one of the remaining contenders in the pre-selection process by Tory MPs before the vote is put to the membership. That's a fight between her and Michael Gove.
There are two issues in her campaign that make her potentially interesting to Conservatives, other than her strong Leave credentials. The first is that, unlike May, she proposes giving an unconditional guarantee to EU nationals who currently live in the UK that they could stay in the UK whatever happens. May instead would use the EU nationals as a bargaining chip to extract symmetrical treatment of British citizens in the EU. And Leadsom pledged to invoke Art 50 immediately, though we hear that she apparently pulled back from that promise in the House of Commons yesterday.
The second development taking place yesterday was Chancellor George Osborne's promise to cut corporation tax to 15% in order to discourage companies from leaving the UK, and presumably to prepare the UK for its new offshore business model. Frankfurter Allgemeine approves of those measures, noting that the threats of tax increases in case of a Brexit are now turning into tax cuts.
Gideon Rachman notes that, once the new government realises that the EU will play hardball, the current hopes for a good deal could give way to bitterness and anger. If the UK suddenly found itself outside the single market, facing tariffs, the government would need to adopt some rather radical strategies - those of an offshore island. This is where the low company taxes come in. This, in turn, would be considered an unfriendly act in Brussels, and the cycle of antagonism between the EU and the UK would escalate.
And, finally, we note a comment by Paul Krugman who, like us, doubts the exaggerated economic claims of those who had argued for Remain. He says he is not in favour of leaving either, but there has been a lowering of intellectual standards in the debate. He acknowledges the economic risks, but notes that if GDP stalls because people wait to make investment, they would presumably make the investment later, once the uncertainty goes. He makes a comparison to trade negotiations. Here, too, people might want to wait until the negotiations are concluded. So, why are those same economists not condemning trade deals in the way the condemned Brexit?