July 18, 2019
The Times reported yesterday that the team around Boris Johnson is preparing for early elections. We think this is a plausible story, but it does not mean that elections will necessarily happen. Our sense is that a discussion is going on within the Johnson camp. The perception of those within the Johnson team who argue in favour of an early election is that they stand a good chance to win it while Jeremy Corbyn is still around. The article also mentions that the Conservatives were planning a recruitment drive next week to put their party on an election footing.
We have argued before that an immediate election would be the least risky of all options for Johnson. It is the only scenario in which he could conceivably win an election before having delivered Brexit. An election right after a no-deal Brexit could be potentially catastrophic. We would expect Johnson to fight on a Brexit-delivery theme, nailing the 31-October leaving date to his mast. We would agree with the Times' assertion that Labour in its current state is unlikely to do well at an election.
There were also more signs of a hardening approach to Brexit. Johnson appointed a no-deal advocate as senior adviser to his EU team. Daniel Moylan is a former aide to Johnson when he was mayor of London. Again, we would not overplay the significance of the appointment on its own, but it is consistent with a hardening of Johnson’s Brexit position. After Johnson’s clear rejection of Theresa May’s withdrawal agreement, we see few obstacles now to a no-deal Brexit in October. However, Johnson may find it expedient to call elections beforehand to avoid an open confrontation with the House of Commons.
We also found it interesting to read an article in Buzzfeed about the disarray of the second-referendum campaign. Their most senior staff are divided over whether the should keep neutral, or whether they should openly back Remain. We think this is a storm in a very small teacup. Everybody knows that the second-referendum campaign is a Remain project. This is about tactics - a battle based on different perceptions of the gullibility of voters. Those who argue in favour of neutrality say this would increase the chances of success for their campaign, and the early-election chances of parliamentary candidates supporting a second referendum. We have argued consistently that a second referendum is unlikely to happen, except in a case of a Labour-led government. Even in that case, we would expect voters to endorse Brexit again.
We also have stories on the European Commission announcing a new rule-of-law regime a day after von der Leyen won with the help of the PiS; on North Atlantic imbalances; on Mitsotakis’ tax pledges and the cautious scrutiny of creditors; on further signs of a broadening of the economic slowdown; and on why Dijsselbloem, not Carney, is the front-runner to be the European candidate for the IMF job.