DAVID Davis believes that German industry will pressurise Angela Markel into a granting Britain a good trade deal when the Brexit process concludes. He is wrong for at least three reasons.

Firstly, German industry is enthusiastically pro the single market, having set up many factories in other parts of the EU, including the more recent entrants where the wages are much lower than in Germany. Protecting that new growth within the single market is one of German industry’s main priorities as Brexit grinds on. They would love Britain to stay in the single market but they are at one with the politicians in the view that we simply cannot cherry-pick the best bits.

Secondly, the sales of German goods in the UK, while still very important, are less important than before because the EU is now a global economic giant. Take BMW. In 2016 it sold more than 2.5 million cars and just under one in 10 of those cars headed over the Channel to the UK. If Brexit flops and we end up with no trade deal, the cars will still come in smaller numbers here under World Trade Organization terms for those who can still afford them. The Bavarian company will simply look to market their SUVs, cars and motorbikes in rapidly developing global markets such as Asia and the Americas to take up the slack. They’ll be absolutely fine as the UK steps back about half a century to when only one car owner in a thousand or two thousand could afford a German luxury car.

The third reason why German industry won’t force Merkel’s hand is that across the EU there is virtually total unity on the point that the single market must not diluted by a bespoke type of trade deal that is largely beneficial to the UK. As chief EU negotiator Michel Barnier made clear the other day, you can only get access to the single market if you accept all of the four freedoms of goods, services, capital and labour. Many Brexiteers think of the last named freedom (labour) as a late addition – a kind of avoidable bit which can be ignored – and that we can just proceed to negotiate the other three. This is dangerous delusion, as Barnier so bluntly pointed out.

The UK is negotiating a trade deal with the EU from scratch, like most other countries did years ago. It has some strategic advantages. It has a large, though very unbalanced and indebted economy. It is geographically close. There are some disadvantages too. The UK will now be a competitor, albeit much smaller in terms of size, population and economic and political clout. The other global powers will exert pressure on the EU to ensure that the UK deal is not any better than their deals with the EU. But the biggest obstacle to a good trade deal is the fact that this is a deal which will be scrutinised so closely by each and every EU nation and their politically aware citizens to determine whether the UK has gained by voting to leave the EU. So, for all 27 countries and their citizens, it has to be a deal which serves the EU better than the UK. That is true even if there isn’t the slightest hint of vindictiveness or resentment towards the UK for having left the club.

The EU desires above all else to emerge from Brexit stronger, with the single market a continuing success. They almost have a vested interest in concentrating on boosting and promoting their single market at the same time as the Brexit negotiations stutter on with less than full EU attention. The UK has to pay for leaving in a much greater sense than the simple divorce bill of a one-off payment. The cost will be ongoing or the EU risks disintegration. Many supporters of Brexit quite openly desire and predict EU disintegration, but they are not going to get what they want.
David Crines


Prophecies of doom? Take them all with a pinch of salt

ALONG with many of your columnists and correspondents, I mightily enjoyed the Unionist discomfort over the recession that never happened. Economic growth four times as strong as the UK’s! Well, well, well!

In a very strong article in Friday’s National, Alex Salmond was sounding like his old aggressive self, lambasting the Fraser of Allander Institute and applying his “Fraser eraser” (Merchants of doom are wrong – again, July 7). Project Fear has been routed again. Lesley Riddoch joined the fun in her analysis of the previous day (Positive news for Scotland shows just how skewed the Unionist spin is, July 6).

But, hang on! The whole “official” Yes movement has since October last year cited as an endlessly repeated mantra that the Fraser of Allander Institute’s Brexit study is proof of the calamity which is going to engulf us over 10 years if we have to trade with the EU on World Trade Organisation (WTO) rules.

Oh, and 80,000 people will lose their jobs over the 10 years. Ochone, ochone mo chridhe! Fraser of Allander, it seems, now has zero credibility with short-term forecasting but they are still totally reliable on (very) long-term forecasting. I wonder why?

While I have a high respect for the professionalism of the Fraser of Allander Institute and Professor Roy in particular, I was disappointed in the Brexit paper. The WTO scenario took virtually no account of the economic positives of Brexit. Quite beyond that I just do not believe in long-range forecasts.

Coming back to the Brexit report, I note that it forecast a possible loss of 80,000 jobs. As Alex himself noted in Friday’s National, we lost 100,000 energy jobs in Scotland in two awful years. No-one seems to have noticed! We cannot control the oil price but we could show some realism about Brexit.

Like others among your columnists, Lesley Riddoch seems to be impatient about the disappointing lack of bad news on Brexit. She even comes up with the bizarre conspiracy theory that Brexit Armageddon is actually happening but “the UK press and media are suppressing or interpreting the results”.

I think Lesley needs a holiday. Beachside reading: Europe’s Last Chance by Guy Verhofstadt.

Meanwhile, Scottish exports are booming (I wonder why?) and foreign investment is increasing. Pile into the Brexit Titanic chaps, you can grab a nice port before the old girl goes down.
William Ross
Address supplied

WHILE some within the UK Government believed that it would still be possible for the UK to continue to host the EU agencies currently located in London post-Brexit, the process to move these is now under way.

The European Medicines Agency and the European Banking Authority, both located in Canary Wharf and employing more than 1000 people, will be looking for new homes after Brexit. Some eastern European countries are insisting they should be first in line for London’s lost prizes. The agencies are not only seen as prestigious, but the flow of visitors is a reliable boost for hotels and local businesses. The deadline for making an application to host an agency is the end of this month and a decision on location is expected in October.

While the Brexit department of David Davis naively claimed the agencies will be “subject to the exit negotiations”, the EU is unanimous on this point: it insists EU agencies must leave London, with the UK picking up the relocation bill.
Alex Orr

IN a week when UK manufactured exports saw a downturn against the expected increases based on the fall in the pound, what might be a few of the other imponderables behind Michel Barnier’s reported description of Brexit creating a loser/loser situation? Possible effects on existing reciprocal agreements over health insurance, passport control and driving in the EU, with the probable need to replace driving licences and passports. New arrangements potentially required for holiday homes and moving to Europe.

A transatlantic trade deal in the offing despite coming out of the EU, and immigration likely to form part of any agreement to retain access to the single market ... and there is still the bill to come.
Peter Gorrie