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Brexit Splits A Nation Now In Deep Denial By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

We are told that factory production is currently running at record level, that we have record employment and that foreign investment is pouring into the UK – the latter if true, presumably because with sterling having fallen so sharply against the Euro it doesn’t cost a lot to by a Pound these days, and yet increasingly this nation of ours is being further split because of Brexit. But even if the bulk of this may well be true, for how much longer I wonder?

I have over the past few months attempted to steer clear of commenting in relation to the Brexit ‘negotiations’ now taking place between the UK and Brussels and while I have always been quick to admit that I did not vote for Brexit I have, up to now at any rate, accepted the need to go with the flow meaning acceptance of voters decision that the UK will leave the EU is final. Well, I used to be decisive but now I am not quite so sure!

Shocked as I and many who had expressed great concern in relation to how business might react and how this would in turn translate to the future UK economy, were at the decisions by voters that the UK should leave the EU I had suspected that the prevalence of those still opposing the Brexit decision post the actual vote decision were mainly left-wing leaning Guardian readers and media determined to stir up trouble. But increasingly I note that despite all the reassurance from our politicians to the contrary, not only are Brexit negotiations going nowhere in our favour very slowly, the voices of those that would challenge the very decision made by voters is getting louder and harder to ignore. While it is hardly surprising that the new Lib-Dem leader, Vince Cable should put his head above the parapet hinting that we may not leave the EU fully after all, it is surprising that rather than an increasingly discredited Labour Party making the running on the side of so-called ‘Remainers’ it is a growing band of disgruntled Tory MP’s that are castigating the Brexit decision and working hard to find a way out of the current impasse.

As if by cue, up pops Father of the House of Commons, Ken Clarke suggesting that he is bewildered by Britain’s “mad” political landscape. Interviewed by the Financial Times, Clarke said that he especially deplored how the public had been assured before the EU referendum that Britain’s trading relationships would be relatively unchanged after Brexit. “I think the public will expect the political class to deal in a serious way with the complexities of the issue,” adding that “I do think most of them also expect that the government and the political class will diminish the economic damage that they have caused by Brexit” and that widening political polarisation had in part driven the Brexit vote, saying: “I’ve just never seen anything like this present mad situation.”

Mr Clarke said a “wave of anger and frustration” had swept away the “liberal economic and social establishment” of both the centre-left and the centre-right, despite a recent period of relative prosperity. “Membership of the EU” he said “was part of that – we’ve abandoned that now. It’s difficult to see what will replace it.”

Speaking personally, I make no bones for sharing my view of utter disgust at the way that the ‘remain’ campaign was handled by David Cameron and poacher turned gamekeeper chancellor of his, George Osborne. Those that live by fear die by fear and not for no good reason did Franklin Delano Roosevelt say that “the greatest thing to fear was fear itself”. I hope that they are ashamed of what they did and how they played the campaign out, damaging the future of the so many in the process.

There are those that will not thank me one little bit for today’s words but I fear that they still have to be said. Indeed, I readily admit from views that I have received that there are those who receive ‘commentary’ who just cannot understand why I have chosen to sit on the shelf for so long. Yes, I have implied where I would like to sit occasionally but truth is that I have rarely said anything of real substance on the debate about our self-inflicted obsolescence. Neither have I talked much about the potentially large economic hole that we appear to be digging ourselves into!

In the process of saying little I have deservedly received the ‘wrath’ of old friends who cite my own failure to chide the failure of politicians to tell the truth, to walk through and criticise some of the nonsense patriotic arguments put forward by Brexiteers, the conditioning language assuaged by the Prime Minister and some of the Cabinet that the nation is coming together when it clearly is going in the opposite direction. And I am reminded too that leaders can run but they cannot hide from a bad decision. When all is said and done monumental mistakes happen – Arnhem, Dardanelles, Gallipoli, Iraq weapons of mass destruction, underestimating Japan in WW2 and so on.

None of this has been helped by Mrs May’s acceptance of ridiculous advice to call and election earlier this year and effectively throw away a majority that had been hard won by Cameron in 2015, partly on the grounds of the his bad decision to give the people a vote on Brexit in the first place and secondly because Labour failed to show that it was a credible party to lead.

Diplomacy aimed at preventing war aside, Brexit is the single most important UK based political event in my lifetime. It is, apart from perhaps being indicative of what could happen to other member countries if the EU doesn’t get its act together soon, not important for the EU in the great scheme of things. Kid yourselves not that we have a strong hand – we don’t! Kid yourselves not that we will still be paying the cost of leaving the EU fifty years from now because we will! Kid yourselves not that by voting to leave we have damaged the lives and future careers of so many of our young people – because that is exactly what we have done! Kid yourselves not that by leaving the EU we are doing the patriotic thing and that on our own our industries will thrive – because they won’t. Kid yourselves not that migration to the UK will be stopped when we are back in charge of our pre-supposed own destiny – because it won’t be stopped.

I could go on but I’ll leave you with one example a couple of industry examples. First, the automotive industry which despite fewer cars being bought at home as the economy slips in the face of Brexit, we are still exporting in their many thousands. Of course, everyone knows that apart from Jaguar Land Rover and specialist niche producers, most of the component parts required for the likes of Nissan, Honda, Toyota and Vauxhall cars assembled here in the UK are imported from abroad. A lower pound means that the cost of importing components will rise exponentially pushing up the price of cars albeit that they will be cheaper to export. Something tells me that there may be a problem of margin attainability in the above argument meaning why on earth would those car companies wish to invest in the UK when they can go elsewhere in the EU?

Lastly there is the valuable commercial aerospace industry by which in this case I mean Airbus. The wings plant at Broughton near Chester is not only the most significant and important wing manufacturing plant in Europe but vital for us to maintain and grow in the UK if we are to continue to maintain our massive strength in this industry globally. Make no mistake, the UK is in the nicest possible way being punished by Airbus for the decision it has made to leave the EU. Those of us who known and follow the industry closely can recite chapter and verse the excellent speeches made by Airbus CEO, Tom Enders and the now former President of Airbus UK, Paul Kahn imploring Britain’s to see the light and recognise the need to stay in the EU.

Back in June when the Brexit negotiations began I said that suffice to say that if and until some or all of the many genuine concerns can be allayed, the UK commercial aerospace industry was stuck between a rock and a hard place. Understandably, the EU will see its overall strength in the commercial aerospace industry as being a strategic capability. To achieve and maintain this, Governments protect strategic capability in various ways such as those in the research and development (R&D) category and the same applies too in military aerospace related defence product development. Just as the US does, the EU will no doubt seek to secure the benefits of investing within aerospace industries of those countries within the EU. We don’t know anything officially of course, but you have to ask yourself why on earth would the EU wish to invest in UK manufacturing capability and future new wing developments here when it can support EU member states and their respective aerospace companies by investing in them? Of course, it could sometimes be argued that there can be off-shore advantage for producing outside of the Euro area but I am not sure that argument stacks up here.

The other side of the debate is that geo-political and trade aspirations can mean that it is prudent to invest in country. Airbus for example has invested in aircraft assembly facilities in both China and the US. Likewise, fast growing countries and economies such as India and China are investing in the UK and elsewhere just as Japan and America have also done and continue to so do.

The point though for the commercial aerospace industry is that it is going to be an uphill struggle for Britain to achieve a fraction of what it will need to be able to guarantee a strong future of its economy in a post Brexit arena. We do not have ability to manufacture or produce a fractions of what we need and nether do we have the materials required to do it either. Because Brexit is seen to be an inherent risk for industry and commerce the willingness to invest ahead of being clearer about the outcomes just isn’t there and neither will it be.

So, does the old adage ‘you made your bed so you must lie on it’ still apply or is there just maybe a better way perhaps? While my faith in the 100 or so UK civil servants negotiating Brexit is sound enough my faith in our ability to achieve anything other than a very hard landing is diminishing by the day.

Divided we are – perhaps it is time to be honest with ourselves, recognise that now the realities have come out of the woodwork it may now be time to reconsider our options.

CHW (London 7th August 2017)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon





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