The regular poll from Opinium for the Observer came out this weekend. Topline figures are CON 43%(+3), LAB 39%(-1), LDEM 6%(-1). Fieldwork was on Tuesday and Wednesday and changes are since last month. This is the largest Conservative lead Opinium have shown since the election, following the trend we’ve seen from other pollsters of a modest improvement in the government’s position in the polls.

The rest of the survey had a numnber of questions on Brexit. More of the public disapprove (44%) than approve (32%) of Theresa May’s handling of Brexit, but it’s less negative than their perception of how Jeremy Corbyn has handled it (19% approve, 48% disapprove) and they would trust the Conservatives more than Labour to handle Brexit negotiations by 33% to 20% (though a chunky 32% say either none or don’t know).

In a forced choice question between the staying in the single market and ending free movement of Labour, 40% would prefer the single market, 34% would prefer ending free movement, 26% don’t know. As you’d expect, this break is overwhelmingly down Remain/Leave lines – by 70% to 8%, remainers would prefer to stay in the single market; by 60% to 14% leavers would prefer to limit freedom of movement. A more interesting question asks what people think the position of the political parties is, underlying that a large proportion of the public don’t know what the parties stand for – 38% don’t know if the Conservatives prefer the single market or ending freedom of movement, 44% don’t know what Labour think, 48% don’t know what the Lib Dems think (and some that do get it wrong – 21% of people think the Conservative’s favour staying in the single market.

On a second referendum, 37% of people said there should be a second referendum on whether to accept the terms agreed or remain in the EU after all, 49% think there should not (as regular readers will know, this is one of those questions that produce quite varied responses depending on how the question is worded – other polling questions show a narrower split, probably because this question is quite explict about the referendum containing the option of staying in the EU after all, resulting in overwhelming opposition from Leavers).

Full tables are here.


344 Responses to “Opinium/Observer – CON 43, LAB 39, LDEM 6”

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  1. @ALE
    “In light of this, I believe it is simply unfair and illogical to continually suggest the forecasts were wrong.”

    I don’t agree. It’s perfectly logical to suggest the forecasts were wrong. As forecasts they were wrong. They failed to match future reality.

    Your argument is that they were wrong as their assumptions about events were wrong not necessarily because their models were.

    Maybe. But they were still wrong.

  2. TW

    It’s as I believe you’ve said in the past – garbage in, garbage out. Ashcroft and Hanretty’s models might have performed perfectly well, if the opinion polls which they were using for their input data hadn’t been so wide of the mark. The genius of YouGov’s model was the way in which they constructed a novel method of interpreting the raw polling data which differed enormously from the method traditionally used by polling firms.

    Speaking of that traditional method, it doesn’t have a great track record; follwing the 1992 debacle they did, on the face of things, appear to call ’97, ’01, ’05 and ’10 correctly. When you drill down a bit, though, it’s not so clear; in ’97 most pollsters overstated the scale of the Labour victory by a good 5 points, they did the same again in ’01, were still out by 3 points or so in ’05, got it more or less right in ’10 (but overstated the Lib Dems by 4), and then we’re into the mistakes of ’15, Brexit, and ’17. Overall it’s a pretty poor showing, superficially saved through the Labour victories by calling the winning party correctly while getting the margin wrong. In the last 8 national elections (if we count Brexit among them) final polling averages have only come within a few percent of the victors’ actual lead once.

    The YouGov model may offer a new, more accurate, polling methodology which will come to replace one which has not exactly covered itself in glory. We’re only talking about a sample size of one though, it’ll take a few more correct calls to say that with any certainty.

  3. @Davwel

    Thanks muchly for your reply. Yes, I am aware I am very much on the foothills with this conservation stuff, and there is much complexity you and Colin will be aware of that currently eludes me. Hence I like to run stuff by you experts. Alec used to school me quite often in environmental stuff and still does sometimes!

    It’s still quite dramatic though, even with the caveats, and it ticks certain boxes for me: the somewhat counter-intuitive nature of the solution, and the knock on effect in terms of greenhouse gases.

    I think most might be surprised that reversing desertification might have such a massive impact on the amount of carbon in the atmosphere, dwarfing some other more familiar impacts.

  4. @Davwel

    Thanks muchly for your reply. Yes, I am aware I am very much on the foothills with this conservation stuff, and there is much complexity you and Colin will be aware of that currently eludes me. Hence I like to run stuff by you experts. Alec used to school me quite often in environmental stuff and still does sometimes!

    It’s still quite dramatic though, even with the caveats, and it ticks certain boxes for me: the somewhat counter-intuitive nature of the solution, and the knock on effect in terms of greenhouse gases.

    I think most might be surprised that reversing desertification might have such a massive impact on the amount of carbon in the atmosphere, dwarfing some other more well-known impacts.

  5. @Trevor Warne – “I do remember you go at some length to justify the 3.6% hit to GDP (which was HM Treasury’s central case).”

    In which case you’ll remember the references too.

    In any event, you’re wrong – the 3.6% wasn’t the central case, it was the low margin of their outcomes.

  6. Part of the slow softening up – https://www.theguardian.com/politics/2018/may/23/uk-might-have-to-pay-39bn-brexit-bill-before-trade-deal-agreed

    “A Brexit minister has admitted there are no plans for a legally enforceable link between Britain’s £39bn divorce bill for leaving the European Union and future trade.”

    “[Suella] Braverman responded: “The withdrawal agreement text has been nearly finalised and agreed, that contains issues relating the financial settlement. At present, it doesn’t contain aspects you talk about on conditionality.

    “There is agreed a duty of good faith and that is an important aspect of the withdrawal agreement which obliges both parties to cooperate in a way, which means we are working constructively towards a future framework which is mutually beneficial and meets our objectives.”

    She added: “The prime minister has made very clear that the offer on the financial settlement is made as part of a broader package relating, and in the spirit of our future partnership the two will be connected when we vote in October.”

    Braverman suggested that if a trade deal with Brussels was not agreed then there was a “very clear possibility” that a renegotiation would take place and “those payments would not be owed”.

    MPs pointed out that parliament would have already voted on paying the Brexit bill by that point. Britain’s financial obligations are also understood to be heavily front-loaded so the money could already have been paid. ”

    It’s very clear that HMG know that the WA is not contingent of the trade deal (that’s obvious – just read the text) and they have been maintaining this fiction to try and keep people happy.

    The closer we get the finalising the leaving deal, the more obvious this becomes, and in this case, a minister doesn’t want to be caught misleading parliament, so is wriggling around trying to avoid either telling the truth or be caught fibbing.

  7. Many posters here like to knock the eurozone – here’s looking at you, TW and TOH – but maintaining a separate currency costs UK businesses and consumers £6bn a year:

    “Capital Economics estimate that individuals and businesses are being charged nearly £6bn a year in fees without realising it. ”

    Full story here:

    http://www.bbc.com/news/business-44215758

    (Of course, not the whole £6bn is for GDP-euro transaction costs, but a big chunk is. One reason why we underperform in EU markets, compared with intra-eurozone competitors, perhaps).

  8. @ ALEC – I don’t actually get a kick from seeing goldfish flapping for air so please save yourself some embarrassment and read the HM Treasury immediate impact.

    As for being legal commitment to paying the WA if and when we sign the WA then yes – I’m curious was that you or TOH who said that is why we won’t be signing the WA until we know more about the deal!?!? Claim the credit if you like.

    Another interpretation of course is that with a clean-exit we might be able to save ourselves 20bn of the 39bn if we leave without signing the WA – see you in court as they say! You can call that preparation for a hardening up Brexit if you like

    @ SJ – Pretty sure Brits don’t want to join the Euro. Shall I repost the 2000-2017 GDP of European countries in EZ v EU v non-EU?
    However, if we have to reapply under A49 then we might lose our veto on joining the Euro and be forced to join the Euro! Somehow I doubt Umunna or Cable will be mentioning that.

    @ GARJ – The issue for mere punters like us is that the YouGov model requires a huge amount of data. The more ‘multi’ you put in ‘multiple regression’ the more data you need.
    Ashcroft also collects a lot of data but put very low stress testing only it – IMHO this was his mistake.
    My background is risk taking in the City and they typically use a combination of methods – albeit for different reasons!
    I certainly think ‘scenario analysis’ in some form has merits for predicting seat numbers but it is certainly a work in progress and it does rely on highly subjective measures – I call these ‘motivation to vote’ – instead of shy Tories we had complacent Tories?

    I can see how YouGov’s model can spot that potential LDEM voters in Uni seats might have been inclined to vote LAB and potential CON voters in rich retiree seats might have been inclined to vote LDEM (something I spotted when digging into specific seats in there model) but I’m still unconvinced about:
    1/ actual voting (ie motivation to vote v LTV)
    2/ ‘pulled candidate’
    3/ tactical voting.

  9. @ COLIN – UK corporate balance sheets are certainly in good shape (on average) but it’s getting them to spend the cash that is the problem.

    Two good articles:
    https://www.wsj.com/articles/amid-an-investment-bust-britain-may-be-turning-japanese-1517528044

    with partial rebuttal:
    https://www.spectator.co.uk/2018/03/brexit-isnt-driving-uk-business-stagnation/

    I’d also mention QE, drop in bond yields and subsequent pension fund issues as a UK idiosyncratic issue that has harmed corporate investment – fixing pension black holes made worse by crowding out the bond market removes cash for investment. QE is doing more harm than good IMHO! It was supposed to be a short-sharp boost.

    Since the Great Recession the hard work has been done entirely by the UK consumer (no Swabian or Tokyo housewife’s in debt junky UK!!). The govt balance sheet is pretty much back to reasonable shape and corporate balance sheets are in rude health. I think Keynes would turn in his grave! It is certainly time to give the consumer a break and incentivise the corporate sector to invest mostly via the tax code but a short-sharp burst of Keynes from public sector and ending the distortion of the bond market wouldn’t go amiss!

  10. @Alec:

    I wonder if Pat McFadden MP ever criticised the EU for demanding that the money be agreed first?

    Remainers faithfully backed the EU’s demands for money and its refusal to do trade talks until after exit.

    Had May rejected those demands, those now criticising would have sided with the EU. Could May have counted on the Commons had she resisted the demands? No. So it is a bit rich to be appalled at government surrenders having done their best to undermine the government.

    The government should, of course, have stood firm on the sequencing issue. At least the Remainers would have had to own the concession rather than blaming the government.

    I expect we shall get a lot on this line. It is imperative for Remainers that a bad deal is seen as the result of Brexit incompetence. If it is seen as a result of their own machinations, it will be decidly awkward.

  11. @Trevor Warne – “As for being legal commitment to paying the WA if and when we sign the WA then yes – I’m curious was that you or TOH who said that is why we won’t be signing the WA until we know more about the deal!?!? Claim the credit if you like.”

    Just to remind you, both you and @TOH insisted that the WA would be signed without there being a legal commitment to paying the agreed sums, with this apparently being based on the mention of the ‘future framework’ within the WA. You argued that the payment would be contingent on agreeing a future trade deal.

    I said that this was not true, and that, once signed, we could start detailed talks about the trade deal, but that we would be legally committed to paying the agreed sums as per the agreed schedule, regardless of the timing or outcome of trade talks.

    You then started talking about whether or not the WA is signed, which wasn’t what we were talking about, so, as ever, I am a little bemused by your post.

    It’s also worth bearing in mind that May has repeated her adherence to the Joint report, and has signed a further letter committing HMG to agree legally binding text for all of the joint report.

    As for not signing it, nothing in life is certain, but I very strongly believe that this is a non starter. Without the WA, there is no transition period, which means the hardest of hard Brexits in less than 10 months time.

    This would be deeply destabilizing for the UK economy (you would really find out then whether or not the forecasts were accurate or not!) and it is not in Brexiters interests to do this anyway.

    The one thing almost guaranteed to stop Brexit is to have hard Brexiters pull out of the transition and then see lots of UK companies move out in preparation in a scramble to adjust with just weeks to go. That would be just daft.

  12. @Joseph1832 – “The government should, of course, have stood firm on the sequencing issue.”

    No – you misunderstand A50 and the negotiation process.

    HMG couldn’t insist on anything. There are two years to negotiate leaving, and then we leave. That’s what A50 does. We had no choice, which is why May dropped this at the very first negotiating meeting.

    There was never any credible path by which the EU would have allowed payments to be tied to a future trade deal.

  13. @ ALEC – so, have we signed the WA yet (ie are we legally committed to the divorce bill yet?).

    Here’s this week’s schedule of Brexit talks:
    https://www.gov.uk/government/news/programme-eu-uk-article-50-negotiations-brussels-22-24-may-2018

    ‘Future Relationship’ is being discussed on all three days but the WA is still DRAFT and ‘nothing is agreed until everything is agreed’, etc. etc.

    Transition deal could be a stand alone agreement – we’ve had this out before as well (it is mentioned in the draft WA but not in A50 – which is the only legal commitment). IMHO it will probably be a stand alone mini-deal no matter what happens (ie even in a WTO future relationship) it would be chaos for both sides to crash-out. EP elections are in May’19!

    I’m not very keen on the high stakes poker game both sides are playing but Leavers repeatedly pointed out we would not hand over the money until we got on to future relationship – the framework for which would need to be quite detailed. Since no deal is better than a bad deal it is great to see the divorce bill back in the news. Paying 39bn for a very bad deal is going to make the default WTO look amazing (if we get a new ref or a GE to break HoC deadlock in the Autumn).

  14. Quick follow up on the damaging side effects of QE.

    https://www.sharingpensions.co.uk/annuity-rates-chart-latest.htm
    Annuity rates have recovered slightly but are still very low. Hence the attraction of buy-to-let and the problems for company pension schemes. Although most companies have moved old and new money away from ‘Defined Benefits’ to ‘Defined Contributions’ that simply reallocates a portion of the company’s problem onto individuals – the problem itself doesn’t go away – more money has to go into pensions and for companies that is a drain on cashflow).

    due to:
    https://tradingeconomics.com/united-kingdom/30-year-bond-yield
    (click on 10Y to compare with above and then Max for longer term)

    The UK’s debt junky consumer luckily didn’t ‘go Japanese’ and chase bond yields even lower. A raging argument I used to have with Economics Profs was that the ‘marginal propensity to save’ could go above 1 which implies the multiplier effect of QE is below 1 (ie every 1 Yen that was pumped into buying bonds made Tokyo housewives save more than 1 Yen into their retirement fund).

    Anyway, back to Brexit and ALEC’s latest refusal to admit he’s wrong or has ever made an error ;)

  15. @trevor Warne – “@ ALEC – so, have we signed the WA yet (ie are we legally committed to the divorce bill yet?).”

    Here we go again. This question is not relevant to the point. The point is what are our legal obligations once the WA is signed.

    “‘Future Relationship’ is being discussed on all three days but the WA is still DRAFT and ‘nothing is agreed until everything is agreed’, etc. etc.”

    Again, ‘future relationship’ is simply the framework we wish to adopt after we leave. It is not a trade deal. This is where we define whether we are in the SM, a customs union, on WTO terms, a favoured third nation etc. It won’t be a detailed trade deal.

    Again, ‘nothing is agreed until everything is agreed’ does not appear in the legal text for the WA (why would it?) and refers only and exclusively to the WA, which, once signed, will be agreed. There is no contingency in either the Joint report or the legal text version that makes the agreement subject to trade talks.

    “Transition deal could be a stand alone agreement – we’ve had this out before as well (it is mentioned in the draft WA but not in A50 – which is the only legal commitment). IMHO it will probably be a stand alone mini-deal no matter what happens (ie even in a WTO future relationship)”

    Almost certainly not (like, 99.99999999% no chance)

    The EU have no negotiating mandate to agree a transition without the WA being signed. The transition period wording of the legal text WA has already been agreed, and numerous clauses within the text (all agreed) mention the transition period. The WA won’t be split up – the transition agreement will be included in the WA.

    “Since no deal is better than a bad deal it is great to see the divorce bill back in the news. Paying 39bn for a very bad deal is going to make the default WTO look amazing”

    No it won’t. HMG has already agreed the legal text for the payments. Negotiations on this are closed.

    We sign the WA, we pay the agreed sums. That’s what May has committed the government to, repeatedly. There is no way back from this, except calling off Brexit.

  16. Apparently the head of HMRC reckons that the max-fax plan will cost UK businesses around twice the projected net contribution to the EU – http://www.bbc.co.uk/news/uk-politics-44229606

    He’s just an expert though – what does he know about it?

  17. Have people seen HMRC’s estimate for the cost to Business of MaxFac…..£20n a year…

    http://www.bbc.co.uk/news/uk-politics-44229606

    Hey that works out as just a bit over £375m a week….

    Now where have we heard a figure like that before; I seem to remember seeing it on the side of a Bus!!!!

    Peter.

  18. @peter cairns – need to add to that the cost of the 5,000 new civil servants HMRC are currently recruiting to handle new border issues…..

  19. Boris shows his ignorance again*

    “Article 50 makes it absolutely clear that the terms of the withdrawal have to be seen in the context of the future relationship. I just remind you of the basic fact of negotiations, which is that nothing is agreed until everything is agreed.”

    *This is a little unfair. He isn’t stupid – he just didn’t answer the question, because he knows that if he did, and gave a meaningful answer, he would let slip the big secret.

  20. TW

    Instead of articles, why don’t you actually look up the data for UK corporate balance sheets (Compustat, London stock exchange figures, HMRC would help you to aggregate). There is about 15% who are flying high, about 50% getting on and 35% deteriorating.

    It might be fine normally, but you have 60% of listed companies whose balance sheets are quite vulnerable.

  21. Alec’

    “Boris shows his ignorance again*”

    And again…

    https://www.theguardian.com/politics/2018/may/22/boris-johnson-foreign-office-own-plane-voyager

    “And also, why does it have to be grey?”

    So that they are hard to see and don’t get shot down….
    The man really is beyond parody!

    Peter.

  22. Of course the other thing that helped Corbyn and Labour was not going on endlessly about Brexit and instead focusing on issues that people could see impacting their day to day lives. There’s an interesting contrast in the latest two polls. The YouGov has its usual tracker question Which of the following do you think are the most important issues facing the country at this time? Please tick up to three:

    https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/8vbs3n6auc/TimesResults_180521_VI_Trackers.pdf#page=3

    As usual this shows “Britain leaving the EU” in first place, with 57% (it usually hovers around 60%) with Health second at 42%. You might say this shows the importance of Brexit, but it’s also a reminder that 40% of people didn’t even put it in their top three concerns.

    But in contrast, the Opinium being discussed has a section headed “Important issues”:

    http://opinium.co.uk/wp-content/uploads/2018/05/VI-15-05-2018-Tables.xlsx

    (see tab Vis1), though the exact wording of the question is unclear – maybe it was along the lines of “What do you think the important issues are at the moment?”. The totals suggest most people gave three at most. But it is ‘Health/NHS’ that tops the agenda with 66% while ‘European Union and Brexit’ is second with 47%. Health leads in every main demographic except UKIP voters (and then only just) and oddly enough SNP voters. The later may be linked to Health getting a lower score in Scotland (56%), though it is a lot higher in Wales (78%).

    What seems to be happening with YouGov is that many people are seeing Brexit as the acceptable answer they ought to give as what is most in the news and so seen as most important. You always used to see this with the Economy, when YouGov ran a similar tracker up to 2015. It usually got around a score of low 50s and yet now is only around half that.

    The economy is still as important as ever, but is no longer what is being discussed in the media. But when people are asked what is important without feeling the need to give an answer ‘for the country’ they no longer feel obliged to trot out what is seem as most important, and instead may reply with what is important to them.

  23. TREVOR WARNE

    @”UK corporate balance sheets are certainly in good shape (on average) but it’s getting them to spend the cash that is the problem.”

    Yep-it certainly seems that way:-

    https://www.icaew.com/en/about-icaew/news/press-release-archive/2017-press-releases/businesses-continue-to-increase-cash-reserves

    Uncertainty over Brexit outcomes has been a major cause of the pause on investment.

    I think Carney is right about that-and therefore correct in predicting a spending phase if certainty is provided.

    I see no certainty whatsoever yet. I am really surprised that UK plc isn’t making more noise on this.

  24. “I see no certainty whatsoever yet. I am really surprised that UK plc isn’t making more noise on this.“

    ———

    Well a fair few might have a plan B, across the channel. Which leaves the question, what do you suggest can the Uk offer them, to compete with being in the EU? Is certainty sufficient?

  25. ALEC, PETER

    The HMRC bod has stated that the cost of max-fac declarations to business could be £20 billion, a whopping 8% of the value of the UK’s trade with Europe. Is that a remotely credible claim to make? For a bit of context, that would put the cost to business of making declarations within a highly streamlined comprehensive free trade agreement as higher than most estimates of the total impact of NTBs between nations trading on WTO terms (of which customs paperwork makes up a small fraction). It would suggest that the costs of this system would be higher than the government’s estimates of the impact of all NTBs if we crashed out onto the hardest of Brexits.

    In the next breath, meanwhile, he says that the customs partnership would be cost neutral because businesses would decide not to go through with the rigmarole if it were too difficult. I guess we know who cooked up that idea then.

  26. @ LASZLO – can you provide a link please. I would fully agree that many companies are still having issue with pension fund liabilities (a balance sheet issue) and I apologies for mixing cashflow with balance sheet – they are quite different and I should have stated ‘cashflow’

    @ ALEC – The colour coded DRAFT WA is here:
    https://ec.europa.eu/commission/sites/beta-political/files/draft_agreement_coloured.pdf

    I fully agree with “We sign the WA, we pay the agreed sums” with the one huge caveat of putting an IF at the beginning of that statement.

    @ ALEC / PETER – I’ll fully admit to being shocked by Jon Thompson’s comments and numbers, especially given his previous testimony! Although I’d certainly like less trade with EU (from UK goods import perspective!) I wouldn’t go as far as saying NTB ‘friction’ is good or that we’d get a material multiplier effect from this particular aspect. The aim should be to make NTBs as low as possible and use tariffs/TRQs (in reciprocation if necessary and where appropriate) to correct the trade imbalance.

    In HM Treasuries analysis they have NTB (customs) as 1% in every scenario (EEA, FTA, WTO) which I had thought was odd at the time!?!?
    https://www.parliament.uk/documents/commons-committees/Exiting-the-European-Union/17-19/Cross-Whitehall-briefing/EU-Exit-Analysis-Cross-Whitehall-Briefing.pdf

    Of course services are different and that is where we do have a trade surplus with EU and rWorld. We also do seem to manage to trade goods with rWorld using the soon to be replaced CHIEF system, CDS should be cheaper and more efficient?!?

    Something seems wrong but I’ll have to ask around to find out why this info is only just coming out now – either a mistake has been made or we should have known this 2yrs ago, in which case why has no one mentioned that scale of impact before?!?!

  27. @garj – yes it does seem a great deal of money, but presumably in part that reflects the highly integrated nature of the EU/UK economy. Comparing it to WTO trade terms wouldn’t be reasonable, as many trades won’t be made as the costs are too high. I would imagine it’s likely that we export many more small value items in small shipments to the EU than would be the case to WTO countries, merely because we can.

    Without knowing how these costs have been calculated it’s very difficult to make a critique, but this does chime quite well with a post from a boss of an SME sports equipment retailer that was quoted on here some time ago.

    She exports a large proportion of her output to the EU, mainly in small amounts, and she said that she would need to employ an extra member of staff (with an existing workforce of 10) to manage the additional paperwork regarding declarations. An ~10% increase in salary costs would probably bring her close to the HMRC calculations, but as ever, the details remain opaque.

    Even if the HMRC figure is twice as big as it should be, that still means no Brexit bonus, and it’s not unreasonable to imagine significantly increased costs for exporting to a once free trade area that is now a separate customs jurisdiction.

  28. @ COLIN – thank for the link. I note it mentions confidence as well as clarity:

    “.. clarity on Brexit outcomes (55%), increased confidence in the UK (51%)”

    The two are to some extent linked or at least can both be tackled at the same time with a more proactive confident set of policies from HMG!

    Few people seem to mention the pension issue, yet:
    https://www.ipe.com/countries/uk/uk-pension-liabilities-grew-by-1trn-in-five-years/www.ipe.com/countries/uk/uk-pension-liabilities-grew-by-1trn-in-five-years/10023554.fullarticle

  29. Mike Smithson tweet

    Comres has CON & LAB level pegging

    Con 41(+1) Lab 41(+1) LD 7(-2) UKIP 3(-2) Grn 3(+1) SNP 3(-)

  30. ALEC

    The issue is that he’s seemingly put his finger in the air to come up with an average cost per declaration and stated figures which are a whole order of magnitude larger than those in previous detailed treasury estimates of the cost of customs NTBs. I don’t doubt that there will be substantial costs to business, but that number is just absolute fantasy. I’ve seen suggestions that the Swiss customs experience costs them about 0.1% of trade (rather than 8%). What about Norway? What are the impacts of customs declarations on trade with the US, for example? The fact that he’s then talking about how the customs partnership will be cost-free makes it pretty clear that he was using the opportunity to shill for his preferred option without an ounce of objectivity.

  31. Somerjohn,
    “, it will be the less obvious lack of new investment, and failure to expand existing facilities, that has the greater long-term effect.”

    yes, I think the number instantly pulling out will be the minority, though if things are mishandled this could become a flood. Rather, companies will use the working life of a production line, and then build its replacement wherever is now most cost effective.

    But I noticed todays news about max fac customs option, suggesting a charge of £32.50 for a consignment to the EU? Whatever you make of the headline £20bn annual cost, surely a one off customs charge like this will make any small orders unviable?

  32. @Trevor Warne – “I fully agree with “We sign the WA, we pay the agreed sums” ”

    Excellent. There was a time when you denied this, but that was always a bit daft.

    This might shed some light on the HMRC customs costs statements – https://www.nao.org.uk/wp-content/uploads/2017/07/The-Customs-Declaration-Service.pdf

    They think that the number of customs declarations regarding UK/EU exports will rise from 55m to 255m, with 180,000 businesses having to make customs declarations compared to the 141,000 who currently do so for rest of world trade.

    So in fact HMRC seem to be expecting the number of companies having to make customs declarations once we leave the EU to rise by 127% and the number of EU related declarations to rise by a factor of 5.

  33. ComRes polling was 16-17 May so predates the very different YouGov (Con42%/Lab38%/LD9%)

  34. Very informative slide from the European Commission on what customs controls are required at the EU border, and how only a small part of this is removed by a customs union.

    https://ec.europa.eu/commission/sites/beta-political/files/customs_controls_0.pdf

    I wonder when all of this will reach the general public. A week before it happens, maybe?

  35. @Garj – he quoted costs from studies carried out by Nottingham University Business School and KPMG, and took a mid point of those, apparently. There is data behind these, apparently, so it isn’t just a finger in the air. If there is a problem, presumably it’s with these figures.

    I would agree that the number seems high, and I’ll be honest and admit that this isn’t an area I know anything about, so I won’t discount wholesale the notion that this could be politicking by a civil servant.

    However, I would just come back to the point that we can’t compare oranges and apples. Costs of exporting to WTO and other areas with NTB’s will be high, compared to the EU SM area, so presumably many small trades aren’t made as they as much less viable. That’s rather the point of free trade agreements.

    It looks like HMRC is thinking that all existing trades with the EU continue, but with higher costs. In reality, if his costs are true, then many of these won’t be made, and the % costs will fall. But I’m guessing.

  36. @alec

    This is what the HMRC Chief Executive said:

    “We know that there were in 2016 almost 200m intra-EU consignments. So that is the base number. That has been audited by the NAO and is in a report on the customs declaration service.

    The question is, how much does it cost to complete a customs declaration? We’ve done some work ourselves. There have been at least two independent reports, one by the University of Nottingham business school and one by KPMG earlier in the year. The answer to that question is it’s between £20 and £55. You can’t average it out because of weighting but for ministers we’ve settled on £32.50 per customs declaration.

    So you’ve got 200m customs declarations at £32.50. That’s £6.5bn.

    [That’s on the UK side. There are declarations required on the EU side too] so you double that number, probably. That takes you then to £13bn.

    You’ve then got the question about what might be the requirements from the European Union on rules of origin. Is this cheese from Cheddar? It’s quite difficult to estimate that, but it would be reasonable to think that it is several billions pounds more.

    So you need to think about the highly streamlined customs arrangement costing businesses somewhere in the late teens of billions of pounds, somewhere between £17bn and £20bn. And the primary driver here is the fact that there are customs declarations.”

    So not plucked out of the air and not surprising thst the alternative which is closer to a customs union is less costly. He put those costs at up to £3.4bn but said they could be cost neutral to businesses in some circumstances as businesses would receive refunds for EU tariffs they collected.

  37. @HAL
    “Very informative slide from the European Commission on what customs controls are required at the EU border, and how only a small part of this is removed by a customs union.”

    Thank for that, as you say very informative, although rather depressing.

    As I read it, Customs Union is nowhere near a frictionless border.

    And Max-Fac is going to require some pretty clever tech.

  38. Reversing Thompson’s £13bn customs number.

    1/ Quickly divide by 2 (“payments on either side”) = £6.5bn for UK side*
    2/ Divide by 200million exports** = £32.50

    “Ministers had been advised a figure of £32.50 was plausible”

    http://www.bbc.co.uk/news/uk-politics-44229606

    * The first division should be more like 1/3 for UK v EU exports of goods but even at £4.3bn rather than £6.5bn the number still seems way off.

    ** UK exports of goods to EU were 168bn in 2017 (61% of goods+service exports) which divided by 200mn implies an average value of £840. Clearly there will be a very wide range around that (e.g. a shipment of Ford engines to US or EU versus a Scottish mom+pop biz selling small batches of Smoked Salmon to France or Asia)
    researchbriefings.files.parliament.uk/documents/CBP-7851/CBP-7851.pdf
    My first two responses from actual export companies about whether or not the “£32.50 for each customs declaration” was a mix of laughter and swearing (the Scottish anecdote focussed more on the swearing and drifted quickly onto Sturgeon wanting to leave the UK but I digress!)
    Obviously no need to ask service sector exporters ;)

  39. New thread

  40. However, “HMRC has repeated its position there will be no need for new infrastructure at the Irish border, whatever customs model the UK adopts after Brexit.”

    We have a modified buzzword “”additional facilitation”
    but since NI-RoI trade is tiny Thompson did point out: “the fiscal risks were not very significant and could be managed”
    (I’ve previously suggested we pay EU £100mn as a very rounded up number for small businesses exemption – and that generously covers both sides of the border!!)

    http://www.bbc.co.uk/news/uk-northern-ireland-44230523

    So 1-1 from Thompson’s testimony although the TMO needs to look further into that £13bn claim!

  41. Roger mexico,
    “You might say this shows the importance of Brexit, but it’s also a reminder that 40% of people didn’t even put it in their top three concerns.”

    It might be more coincidence than good sampling, but wouldnt that place it approximately in line with the referendum result, where about 1/3 were not interested enough in the result to actually vote? Those who are interested presumable divided between those opposed and those for.

    I have noticed before yougov under sample non-voters. Maybe understandably, but they are still potential voters who could turn out if motivated by something. Brexit has been one of those issues capable of motivating some.

    Colin,
    “Uncertainty over Brexit outcomes has been a major cause of the pause on investment.”

    This is certainly true, but I would remind people UK companies were also cash rich at the time of the 2007/8 crash. They stopped spending then. This started to unwind when we had some signs of recovery before Brexit got serious, and now their cash is firmly back in the bank. (although I seem to recall at the time of the BP oil spill crisis, that BP acted as a commercial bank to a lot of industry, so maybe these companies are not exactly banking with banks)

    “I think Carney is right about that-and therefore correct in predicting a spending phase if certainty is provided.”

    Surely it is misleading to suggest they have stopped spending because of uncertainty, but because they foresee a possible bad outcome where thy would lose their money? Certainty might mean they will invest, but it might also make these bad oucomes certain so investment will be fully cancelled rather than put on hold.

    A number of people think the latter more likely.

  42. garj,
    “For a bit of context, that would put the cost to business of making declarations within a highly streamlined comprehensive free trade agreement as higher than most estimates of the total impact of NTBs between nations trading on WTO terms (of which customs paperwork makes up a small fraction)”

    Perhaps the clue is in the name. The idea is to use technological solutions to speed up transit times. The customs work doesnt disappear, it just gets done differently, faster at the border but at higher cost.

    But another suggestion would be that our EU trade is based upon virtually seamless sales at the moment. It is likely much of that is only profitable because it is seamless, and it has grown up because the CU/SM makes it viable. Whereas trade with other countries not having such an open border has been tailored to the customs processes and costs.

    In other words, EU trade has a much bigger proportion which will now attract costs, and it shouldnt be surprising if these costs will be prohibitively expensive – the free market was intended to allow this to develop and it will be lost because it is too expensive once even normal barriers are imposed.

  43. garj,
    ” It would suggest that the costs of this system would be higher than the government’s estimates of the impact of all NTBs if we crashed out onto the hardest of Brexits.”

    Or this might suggest the government’s estimates on costs before have been woefully inadequate?

  44. Trevor Warne,
    “but since NI-RoI trade is tiny Thompson did point out: “the fiscal risks were not very significant and could be managed””

    But it wouldnt stay tiny if there was a competitive advantage to exploiting a customs loophole there. We could end with all Uk imports coming through the irish border and then being trucked to London! Channel tunnel going bust again! Thats the sort of craziness which happens if you create loopholes.

    “Annuity rates have recovered slightly but are still very low. Hence the attraction of buy-to-let and the problems for company pension schemes.”

    But the corollary of this must be withdrawing QE will push up investment returns, make property leass attractive and risk a collapse of the property market. While lower property prices would be a very good thing, a market crash to get there would not. Just the risk of this might justify maintaining QE. Someone in the Bof E probably wrote this in the benefits column.

    Hal,
    “Very informative slide from the European Commission on what customs controls are required at the EU border, and how only a small part of this is removed by a customs union.”

    Indeed. Plus the fact the Eu has alrady dismissed both the schemes the Uk is still pushing. One might wonder why so much public arguing about two schemes both of which are known to be inadequate?

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