Mr Brightside, 20th December 2024: A Letter to Santa 

 

“Being an island
Shying from trying
Seems the easy way” 

 
Dear Santa, 

I have been well behaved this year, and following is my Christmas list: 
 

• A case of Brunello di Montalcino Riserva 1969 or 1971. Failing that, whatever vintage you can find! 
• A case of 2016 Cepparello, Isole e Olena 
• A case of  2016 Tignanello by Antinori 
• F P Journe Octa in platinum, or 
• F P Journe Chronometre Bleu 
• For Brexit to be reversed, or at least the UK rejoining the Single Market 

 
Now, all jokes aside, readers will know that this column was born out of the Brexit referendum and the ensuing political turmoil. Something else you can blame Brexit for! 

I decided to see what positives could be found as a result of us leaving the EU. The following was the best I could source, which, given that it is endorsed by Kemi Badenoch, can hardly be described as unbiased: 

“UK exports are growing – reaching £870 billion in the 12 months to November 2023, and services exports are at an all-time high. Since the referendum, the UK economy has grown faster than Germany, Italy, and Japan and at a similar rate to France (end-Q2 2016 – Q3 2023).” 

Source: https://assets.publishing.service.gov.uk/media/65ba6d52f51b1000136a7e3d/brexit-4th-anniversary-accessible-version.pdf 

Mussolini, my Mother, delights in telling me that we are growing faster than our European contemporaries, but if we could export and import more efficiently would be doing better still? 
 

‘Mussolini, my Mother, delights in telling me that we are growing faster than our European contemporaries’

 
The OBR seems to agree with me, saying: “The post-Brexit trading relationship between the UK and EU, as set out in the ‘Trade and Cooperation Agreement’ (TCA) that came into effect on 1 January 2021, will reduce long-run productivity by 4 per cent relative to remaining in the EU. 

“Both exports and imports will be around 15 per cent lower in the long run than if the UK had remained in the EU.” 

Source: https://obr.uk/forecasts-in-depth/the-economy-forecast/brexit-analysis/#assumptions 

Brexit was sold to the electorate as the answer to all of the country’s problems, transforming our economic prospects, making us all richer. It would free up money to spend on the country’s public services, most notably the NHS. It would restore control over the country’s immigration system, helping to reduce migration levels. 

In February this year, the Department for Business and Trade published some propaganda a report which was designed to highlight how the UK’s economy has been re-engineered for the better because of a collection of free trade deals, the vast majority of which simply replace those the UK had access to via the EU anyway.  

The report championed our joining the trans-pacific partnership, which the government estimates will be worth only 0.06% of GDP by 2040; and a handful of “global trade wins”, including greater access to the Mexico market for pork producers, and improved access to the Chinese. 
 

‘the Vote Leave campaign was based on half-truths and lies’

 
The document only reflects that the Tories haven’t moved on, and that the Vote Leave campaign was based on half-truths and lies. 

“Leave” told us there would be no painful trade-offs, engaged in a “clear misuse of official statistics” claiming that leaving the EU would free up £350m a week for the NHS, and suggested that staying in the EU would mean sharing a border with Syria and Iraq.  

Of course, we cannot forget immigration, which, instead of declining has accelerated as I highlighted in “Reflections” and “What Do I Get”. 

The polls speak for themselves; Johnson, basking in the aftermath of “getting it done” in 2019, delivered the Tories a sweeping majority, largely driven by the Brexit supporting “red wall”.  

By 2024 it had all unravelled; a poll in February showed that 57% of people think Brexit has been more of a failure; just 13% think it has been more of a success.  

In May, just prior to the election, Statista found that 55% thought that it was wrong to leave the EU, with 31% supporting the decision 

In June, the Tories were thrashed in the election, falling to a record low 121 seats. 
 

‘Statista found that 55% thought that it was wrong to leave the EU, with 31% supporting the decision‘

 
In July, NatCen Opinion Panel, found that 51% think there should be a new referendum within the next 5-years. 29% believe there ‘definitely’ should be a vote, while 23% say there ‘probably’ should be one. 

In September, a YouGov survey found that public support for rejoining in a hypothetical new referendum stands at 59%, with 41% saying they would be against joining the EU. 

The poll also showed voters supportive of closer relationship with the EU that does not involve rejoining the bloc, or its single market or customs union. 

45% felt Starmer had a mandate to seek this compared to 21 percent who said he didn’t. 2016 Brexit voters were tied on 36%. 

Last week, Chancellor Reeves, said she was hoping talks in the new year could lead to an extensive “reset” of post-Brexit relations. 

Labour has ruled out re-joining the trade bloc, but farm and food export barriers could be removed and help provided to firms with complex supply chains while European leaders want to put youth mobility back on the table. 

Reeves expects negotiations to begin “in the new year“. 

In a speech to Eurogroup finance ministers in Brussels, Reeves repeated that the UK would not rejoin the single market and customs union or Freedom of Movement, as outlined in the Labour manifesto. But she did not rule out keeping UK laws in line with EU regulations for farm, food and goods exports, a policy known as “dynamic alignment“. 
 

“we must export more” but UK firms “are struggling under huge regulatory and paperwork burdens”

 
As part of this, there could be a veterinary agreement, which could mean meat, fish, dairy, and live animals face fewer checks when crossing a UK-EU border, and an extension of a soon-to-expire fisheries deal is likely to be a condition for any wider reset. 

The British Chambers of Commerce, which represents about 50,000 businesses, said that in order for the economy to grow “we must export more” but UK firms “are struggling under huge regulatory and paperwork burdens”. 

Tom Bradshaw, president of the NFU, which represents 46,000 farming and growing businesses said: “We welcome the government pursuing a relationship between the UK and the EU that enables a better trading position with the aim of reducing friction at a time of global instability”. 

Sean McGuire, Confederation of British Industry director for Europe and international, said: “We welcome the UK government’s commitment to take meaningful action to ‘reset’ the EU-UK relationship. The chancellor’s meeting with EU finance ministers is an important milestone on this journey”. 

 

We finish with a brief look at the two elections most relevant to the UK. Our own, which produced a sweeping victory for the centre -left (sort of!) Labour party, and in the US which delivered the opposite, a hard-right administration. 

Bizarrely, given that the results are diametrically opposite, there are similarities. Both Tories and Democrats lost the election, as much as Labour and Republican’s won, primarily because both electorates saw the vanquished as tired, bereft of ideas, and maybe slightly corrupt. 
 

‘both electorates saw the vanquished as tired, bereft of ideas, and maybe slightly corrupt’

 
Trump’s supporters, in-line with the current hard-right Tories and Reform, have a dislike for what they regard as the stupidity and intrusiveness of woke, and their perceived excesses of “big state”. 

For them the state has become a “nanny”, they see the “Lockdowns ”imposed during Covid as a consequence of this intrusiveness. 

By contrast, Sweden was among the few countries that did not enforce strict lockdown measures. Instead, the country relied on its citizens’ voluntary behavioural changes, considering them to be more sustainable, and creating herd immunity. 

Now people are entitled to their opinions on this, but I regard Covid, along with the GFC, as an example of government, big state, providing solutions. 

Sweden was able to practise herd immunity because their population density allowed them too. Had we have tried something similar the result could have been even more catastrophic than the C.227,000 victims. 
 
For completeness: 

• Sweden measures 447,430 km2 compared to the UK’s 243,610 km2 of surface area.  

• The UK has a population of 68.35m people compared to Sweden’s 10,537,000.  

• As a result we have a far greater density of population; 280.6 people per km2 compared to 23.5 

 
Whilst QE went on far too long, and central banks should have been stronger when they tried to begin normalising interest rates in 2015, this was another example of stockmarkets being the tail that wagged the dog. 

The same can be said of the GFC; bankers and traders wanted smaller government, less regulation. There were several attempts by US bodies to try and regulate the swaps market prior to the crisis. Within this were the fabled credit default swaps that helped turn the mortgage market into a casino. In each instance, ISDA, the industry trade body, prevailed leaving the market self-governed. 

As a result, it is estimated that in 2007, the notional value of CDS worldwide peaked at US$61.2trn. Armageddon time! 

It wasn’t a case of “government knows best” it was a case of all hands to the pumps! 

Brexit, is just another example of populists driving their own nationalistic ambitions, using “Johnny foreigner” as the scapegoat, whilst we play the plucky victim. 
 

‘populists driving their own nationalistic ambitions, using “Johnny foreigner” as the scapegoat’

 
Shrinking the state is part of that, libertarian, markets know best, an unregulated free-for-all. We don’t need government until we do! 

The great irony is that, whilst the Tories have, in-part, fallen on their Brexit sword, the main protagonist, Nigel Farage is riding high. His new hobby horse, immigration, has been one of the many spectacular failures of his Brexit.     

Small wonder, we are going nowhere fast…… 

To finish I would like to take the opportunity to wish all of you and your families a wonder Christmas, and healthy and prosperous 2025. 

As always, I have to end with special thanks to my editor and good friend, Steve, for allowing me to indulge my thoughts on an ongoing basis.
 
 

“Takin’ that ride to nowhere
We’ll take that ride” 

 
 
As the curtain comes down on another year, I took the opportunity to revisit Philip’s columns at either end of each of the eight years of his ‘reign’ – all back catalogue can be found here >   

What struck me was not only the accuracy of his predictions, but also the total insanity of incurring any amount of unnecessary harm, because it is just too difficult to find an alternative, or an acceptable solution.

Those that have a memory that stretches back to the Young Ones, may recall the sage words of Monk d’Wally de Honk – ‘if ten pints you do sup, rest assured you will throw up’.

Flounce out of the EU and try to paper over the cracks with a trade deal to supply horseradish to Vanuatu, you’re going to be worse off; you just are.

However, as I contemplate another pig substitute in an environmentally responsible tofu blanket, I wonder if the relentless march of the right, Trump’s thumping victory, Musk’s arrival as a king maker, Farage becoming acceptable in polite circles and ‘Keir who…? Quite’ topping the Christmas Cracker novelty joke ratings, I wonder if this year wasn’t a stretch even for Philip’s dystopian crystal ball.

One of the pillars of Philip’s excellent column has been that of inequality, and in that regard it seems we are going backward at a rate of knots.

Philip’s preamble sets the scene for his Christmas Wrap column more eloquently that I could ever hope, so it is published in full here and leaves me only to offer him our heartfelt thanks for his valuable contribution and support; grazie amico mio.

Have a safe and happy holiday, and whatever New Year you would wish for.

Philip writes:

‘As another year comes to an end it’s a time for friends, family and reflections.

In the 8-yrs I have been writing these columns, the main themes; inequality, the rise of the hard-right, and Brexit are still as relevant, if not more so.

Inequality and poverty are becoming an increasing issue in the UK, and I see little being done to overcome this.

The hard-right have had a very good year. Much of eastern Europe is falling to politicians of that sort, as is Austria, Germany, Holland, France and Italy. In the US, Trump was triumphant and brought with him a new wave of influencers, the tech moguls. Their interest is self-interest, small government, light to non-existent regulation enabling them to exert more power, influence and increase their already obscene wealth.

Brexit will continue to damage the UK. The main protagonist, Nigel Farage, is going from strength-to-strength. He is no longer the elephant in the room….

When I look at Trump and the US, there are distinct parallels between us and them.

A rump of the electorate feeling let down by mainstream politicians, and economic policy that had done nothing but make them poorer. And, that is the key. People don’t feel well off. Stock Markets go up, GDP goes up, but they are still poor.

Trump succeeded because he spoke to those people, just like Farage does. Starmer has little personality, which can’t be helped. Perhaps it is better to have none than an unpleasant one?

There are signs that Starmer is starting to “get it”. This week I saw reports that he wanted to put money into the pockets of those that need it. There appeared to be an understanding that people need to feel well off, and that indicators such as the FTSE and GDP are meaningless to many.

Now he needs to communicate. He is never going to have the benefit of friendly media, so he needs to go round them and use social media.

Can he? Who knows, but we have 4-yrs to find out.

Lyrically, we start with “Open Your Heart” by the Human League, and end with “Road to Nowhere” by Talking Heads.

Enjoy!

Philip.’

 

@coldwarsteve
 

 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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