It wasn’t quite a Saint Valentine’s Day massacre, but Boris Johnson’s Cabinet reshuffle proved a brutal affair. The axe fell on Britain’s second most powerful politician, ex-Chancellor of the Exchequer Sajid Javid, forced out after refusing to sack his senior staff. That was a condition demanded by Johnson’s top aide Dominic Cummings—an unelected official pursuing what those in power covet above all else: control.

Why Did the Cabinet Shuffle Go Haywire?

The cabinet shuffle, in fact, was supposed to be a rather tame shake-up of the government’s top team. A few departures, nobody too senior, and a raft of new talent handed junior ministerial roles. And then the news broke: Javid, the man in charge of Britain’s economic strategy, had gone. 

For an hour he argued with Johnson and Cummings, making his case clear: no self-respecting minister could be expected to fire his entire team. He hoped, perhaps, that the prime minister might’ve buckled, realizing that he was asking too much. But Johnson’s faith in his pugilistic chief-of-staff was unwavering, so Javid had to go. 

It was a brutal beatdown for the Treasury man. He had had his differences with the prime minister—as all chancellors do—but few believed that his job was genuinely at risk. With a little over six months under his belt, Javid becomes Britain’s shortest-serving finance chief in fifty years, and one of very few not to deliver a budget.

Johnson Has Shown Himself to be a Ruthless Leader

That latter point is particularly cruel—Javid was just weeks away from announcing his economic plan. But Johnson has shown himself to be a ruthless leader. The man who ran against him for the Conservative leadership—Jeremy Hunt—was promptly removed from government after the election, as was Penny Mordaunt, one of his supporters. Both had been respected ministers, but their lack of loyalty to Johnson proved fatal.

An adviser to the former Chancellor was summarily dismissed by Cummings and Johnson shortly after and her boss was given no prior notice. And then, in September, twenty-one Tory MPs—some of the party’s best-loved among them—were sacked for failing to back No. 10’s Brexit strategy. In each case, the Johnson/Cummings duopoly sought to exert utter control—and succeeded.

Javid’s Impossible Choice

And so it was with the recent reshuffle. Javid could have stayed, but only if his most senior staff did not. Their removal was necessary to establish a new adviser unit jointly run by No. 10 and the Treasury—a group which would have been answerable to Cummings, insiders say.       

A departure from precedent, this would have seen the chancellor’s autonomy from the prime minister diminish markedly. This was entirely unpalatable for Javid; but his successor—rising star Rishi Sunak—seems to have swallowed the pill.

Sunak is nothing more than No 10’s “stooge,” Labour’s John McDonnell said as the news broke. Not likely. Well respected and a formidable operator, Sunak will want to make his own mark. But he owes his meteoric rise to the prime minister; that, he won’t be allowed to forget.

Johnson and Cummings’ fingerprints will be all over his first budget. They want something Javid wasn’t prepared to give: a bump in public spending to “level up” the UK. That means loosening the purse strings, increasing the national deficit, and investing in top-dollar public works. Those, Sunak will deliver. 

The Johnson Administration has Made a New Enemy in Javid

But dispatching a popular chancellor—as Javid was—to the backbenches is risky. Unbridled by Cabinet rules, he’s now free to criticize the government as he sees fit. And he’ll be among friends: other senior ministers let go in the clampdown. 

Julian Smith, the former Northern Ireland Secretary, is chief among these. Winning plaudits for his work restoring Belfast’s Stormont Assembly, Smith was respected and well liked, particularly in Ireland. “One of Britain’s finest politicians,” remarked a sombre Leo Varadkar, the Irish prime minister, soon after his dismissal. 

Where did it go wrong for him? Control, again, seems to have been the issue. The deal he helped broker was welcomed by No. 10, but he had communicated badly with the prime minister, reports suggest. Some might say that justifies his removal. After all, a government can’t function without robust interconnectedness. But a constant turnover of staff surely hampers progress.

Johnson and Cummings believe the opposite, presumably; that fresh, loyal blood must be brought in to ensure efficiency. They might be right. Control might garner results. But it also risks opening the door to illiberal rule. In a democracy, that’s rarely good news.

L'articolo UK Cabinet Reshuffle Shows Boris Johnson’s Iron Grip proviene da InsideOver.

UK Prime Minister Boris Johnson successfully pulled off a Brexit deal after several elections and deadline extensions. Ahead of the Jan. 31 exit date, the pressure is now on businesses, which are still forced to operate under considerable uncertainty. An inconsistent message from Chancellor Sajid Javid has only hindered corporate plans to adequately prepare. 

Not A ‘Ruletaker’

In a Feb. 17 interview with the Financial Times, Javid took a hard line on British businesses, which have pushed to maintain common regulatory policies with the EU.

“There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union—and we will do this by the end of the year,” he said.

Javid was unmistakably clear in his tone and words that British businesses would be affected. The show must go on, however, and neither Johnson nor Javid would entertain further arguments that EU rules should be maintained for the sake of businesses. The next week, Javid seemingly changed his stance. At the World Economic Forum in Davos, his message to business executives was more conciliatory. 

Although Brexit is inherently a self-interested undertaking designed to let the UK manage its affairs without the EU weighing it down, Javid said the government would not seek to change rules simply “for the sake of divergence. That would be complete nonsense.”

Changes at Every Turn

Businesses stand to lose the most amid Brexit due to increased costs, changes to rules, possible labor changes, and even differences in applying for intellectual property rights and website domain names. 

In a list of potential pitfalls identified by EU Reporter, supply chain regulations is the foremost consideration. Once the EU and the UK formally separate, there will be an 11-month grace period in which time the UK would be required to establish its own customs procedures, tariffs, and trade policies. Even so, businesses that rely on imports and exports must begin planning for a possible increase in production and distribution costs. Unfortunately, the lack of clarity on the exact cost increase will most likely leave costs pushed onto consumers. 

Companies may need to reconsider the nationalities of their workforces, too. As with tariffs and customs, these changes are also unpredictable, but companies can prepare by ensuring their employees have the right to work in the UK. Placing a preference on hiring UK nationals will naturally alleviate some of the burden.

A Digital Solution

To mitigate potential crises, companies are increasingly turning to digital firms, which provide constant tracking of the situation. These providers are often industry specific and, according to the Information Services Group, “help [businesses] with their digital transformation journeys.”

While the term suggests a focus on revamping a company’s internet presence—and indeed, that is part of it, particularly in regard to mobile apps—these firms offer a plethora of services beyond the traditional scope of tech firms. An ISG report highlighted artificial intelligence and analytics technologies as a benefit for businesses worried of an uncertain post-Brexit future. 

By partnering with digital firms, they receive up-to-date reports tracking both their industry and regulatory changes. These firms, such as Accenture, Atos, HCL, IBM, and Infosys, can introduce a layer of automation in lieu of manual labor, and train employees when necessary to prevent the need for hiring additional help. 

Most critically, digital firms provide a buffer for businesses in both time and logistics. Instead of being blindsided by changes that could affect workforce and profits, businesses receive ‘impact assessments’ and can adjust course accordingly.

The Future For Businesses Remains Shrouded In Brexit-Burdened Uncertainty

As the Brexit date approaches, the future for businesses remains shrouded in uncertainty. Chancellor Javid has indicated that the government is intent on taking a Britain-first approach, but only if it makes sense. Businesses will still be required to adjust, even relatively minor details such as relinquishing .eu domain names. Solutions will vary from one company to another, but there is still time for executives to plan ahead and avenues for them to do so.

L'articolo UK Businesses Prepare For Brexit Changes proviene da InsideOver.

Great Britain is leaving the European Union on January 31. However, the future relationship between the EU and the UK has yet to be negotiated. While many EU politicians consider the current schedule to be unrealistic, including EU Commission chief Ursula von der Leyen and chief negotiator Michel Barnier, the UK leadership continues to advance its plans diligently – particularly in terms of post-Brexit immigration.

Here, Boris Johnson has long-planned new restrictions on low-skilled immigrants, which ought to come into force just one day after the end of the Brexit transition phase at the end of December 2020. Home Secretary Priti Patel is expected to present corresponding proposals in the next few days as part of the new immigration regulations in the cabinet.

This plan would overturn Johnson’s commitment that his predecessor Theresa May had made to corporate groups and that after Brexit, there should have been a two-year deferral for new immigration regulations until 2023, however.

Johnson unveiled long-awaited details of his plans for an Australian-style points system a few days before his election victory. His three-tier system aims to accelerate the immigration of “highly skilled” workers and also allows a second tier of “skilled workers” to immigrate to the UK for employment.

The third tier of low-skilled workers could only obtain employment if either there were a shortage of staff or under an exception for sectors such as construction due to notorious high demands.

Already in December, Johnson had written on Twitter that the UK sought to encourage and welcome highly qualified immigrants in the UK while maintaining control in order to plan to pay for our public services accordingly.

Meanwhile, Labour described the Tories’ plan as ignorant and reactionary and warned that changes would affect the NHS and civil service staffing and key private-sector industries in particular.

Business associations, agriculture industry, the hospitality industry, construction and the care sector, in particular, have also criticized the government’s plans. All rely on workers from the EU.

No 10’s announcement was made after Chancellor of the Exchequer Javid had already indicated the Tories’ plan by advising companies to recant their call for continued close cooperation between the EU and England. Javid justified this by saying that the companies had already had three years to prepare for any Brexit labor consequences.

Javid said that “there will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year.”

In order to stimulate the UK’s economy post Brexit, Javid has pledged the government’s commitment to making substantial investments, especially in the infrastructure of the economically dependent regions in the Midlands and the north of the country. In the future, significantly more money should also be invested in the qualification of specialists. For this, Javid seeks to increase taxes in the medium term, he indicated. Javid hopes that this will kickstart the recently weak economic growth, and the continued low productivity rate in the country – through employment remains at a record level.

The UK government has long been trying to reduce the immigration surplus. The previous year the figure was estimated at 226,000 people by the British Statistics Service ONS. However, the numbers have declined since the referendum of 2015, even though not as significantly as anticipated.

EU citizens have so far been allowed to live and work in Great Britain without any issues. With the Brexit deadline looming, this may change, particularly for individuals who have not lived in the country for at least five years and are thus not eligible for settled status.

Skilled workers from all over the world are still attracted to the UK, which in turn forces the UK to restrict the movement of unskilled and unemployed individuals. Due to the urgency, this will very now likely happen before December 2020.

L'articolo Tories to Implement New Immigration Regulations by the End of 2020 proviene da InsideOver.

The Resolution Foundation produced a report suggesting that spending sprees intended to quell austerity are central to the Tories’ and Labour’s manifesto promises during this general election. The think-tank predicted that regardless of which party can form a government after December 12th, spending would increase to 37.4 per cent of GDP, levels not witnessed since the 2008 Recession.

The Chancellor, Sajid Javid, will increase the proportion of annual government spending to 41.3 per cent of GDP by 2023, which is likely to go further than the 42 per cent average recorded between 1966 and 1984 once NHS spending is taken into account.

Labour will increase spending by £48.6 billion. Furthermore, Shadow Chancellor John McDonnell has announced a £250 billion ten-year capital investment plan, which would cause government spending as a share of GDP to shoot to 43.3 per cent.

Increasing public spending has always been central to Labour’s beliefs, but the Conservatives have held office for nearly ten years. They have presided over austerity and following Corbyn’s electoral surge in 2017, they are keen to attract Labour voters who have felt squeezed by cuts. That is why they are aiming to appeal to the ‘Bolsover Brexiteer’- named after Labour MP Dennis Skinner’s famous constituency, these are voters who are patriotic but cherish the public sector. The Tories’ strategy is to deliver Brexit and ensure the UK has the best public services.

There is reason to be optimistic that public spending should increase. Since March 2018, the budget deficit, excluding net investment, has been eradicated for the first time since July 2002. The Office of Budget Responsibility received healthy tax receipts that year. This is a substantial achievement the Conservatives should be promoting during the general election considering the budget deficit stood at £100 billion in 2009-10, even though government debt is more than twice its pre-2008 level as a share of national income.

The Financial Times‘ Chris Giles argues that the NHS, social care, prisons and local government cannot meet public expectations whilst austerity remains. He adds that Brexit uncertainty and stress in public services means that the main parties cannot ignore the case for increased spending for much longer. Before he resigned as Chancellor, Philip Hammond admitted there is a case for a modest increase in public spending. But Javid’s recent announcements would lead the electorate to believe that austerity is over.

As Alberto Alesina, Carlo Favero, and Francesco Giavazzi explain in their book Austerity: When It Works And When It Doesn’t, austerity is effective when you only cut public spending and refuse to increase taxes.

The truth is, neither Labour nor the Tories can afford to increase public spending. The national debt continues to rise which can lead to an increase in the yields on the UK’s bonds and have a negative impact on economic growth. For example, borrowing can squeeze other investment as investors loan money to the government, rather than the private sector. Growth stagnates when nations witness their debt levels reach 90 per cent of GDP, with the median growth rate falling by 1 per cent and average growth dropping substantially.

A paper called On the Nominal Interest Rate Yield Response to Net Government Borrowing in the U.S.: An Empirical Analysis with Robustness Tests (2014) discovered that raising the federal deficit in the US has had an adverse effect on the economy by slashing private sector investment, economic growth, and employment between 1971-2008.

Both the Conservatives and Labour need to be careful when they promise 1970s-style spending sprees. A budget surplus and short-term electoral gain are not valid reasons to begin splashing out cash on public services as the national debt continues to rise. If either party pursues this path in government, it will be future generations that pick up the tab.

L'articolo Can the Tories and Labour afford their spending promises? proviene da InsideOver.

At the Conservative Party Conference, Chancellor Sajid Javid told delegates that this Government is prepared for all Brexit outcomes, including a no-deal. When Theresa May presided over the Brexit negotiations, she always stressed that ‘no deal is better than a bad deal.’ Whilst she was correct to argue that, her actions proved that she was never serious about concluding her discussions with the EU in such a manner. Leaving the bloc was continually delayed during her premiership, and without the adequate preparations for no-deal in place, Brussels was never going to take May’s threat seriously. Since Boris Johnson has become Prime Minister, that has changed.

Although both Parliament and the Supreme Court have consistently delayed a no-deal Brexit, all their plans have contained loopholes along the way. As The Spectator highlights, the Supreme Court’s judgement may assist the Government in achieving its objective of Britain leaving the EU by 31 October, without having to seek an extension to the Article 50 process. Paragraph 34 states that the Supreme Court’s proper function under Britain’s unwritten constitution is to give effect to the separation of powers. Paragraph 55 argues that the task of governing is for the executive and not for Parliament or the courts.

However, the Benn Act contradicts this principle. It determines how the Government must conduct negotiations with the EU to the extent of obliging the Prime Minister to write specifically worded letters and accept whatever extension it offers when specific conditions are not met (i.e. if Parliament has not voted for a deal or approved exit without a deal). Boris would then have no choice but to act as instructed, whether he wants to or not. In essence, he is not governing. Furthermore, this situation would leave the legislature adopting the executive’s functions without taking office. Then to whom is it accountable for its legislation? Would it have to report, explain and defend its actions to itself? If Dominic Cummings can seize upon this flaw in the Benn Act, then the Government can justify its no-deal position and it still gives them leverage in the remaining time to negotiate an adequate deal.

Regardless of MPs’ actions, the Chancellor and Michael Gove, the Duchy of Lancaster, have done the right thing by preparing for a no-deal Brexit. The prospect of leaving the EU without a deal is still likely. The Daily Express reports that France could veto an extension at the next European Council (EC) meeting on October 17th. Other Eurosceptic leaders, like Hungary’s Viktor Orban, could still do the same. Boris can use the next EC meeting to argue that a no-deal Brexit is in nobody’s best interest in the long-term, and that once Britain leaves under the WTO’s GATT, he will start preparing negotiations for a trade deal on November 1st. Gove assured delegates during a Policy Exchange meeting at this week’s Conservative Party Conference that the UK can still leave without a deal, and that they are ready in case we do. He also revealed that France has made its own arrangements to ensure the smooth delivery of goods across the Atlantic.

If what Javid and Gove say is true about the UK being ready to leave the EU without a deal, and if there are loopholes in the Benn Act they can exploit to their advantage, they must keep no-deal on the table. Leaving without a deal would bring immediate benefits to this country, like ending the UK’s annual EU payments. It would enable the Government to slash corporation tax and VAT to attract investors. Instead of attempting to amend the Withdrawal Agreement, the Prime Minister could offer Brussels a comprehensive free trade deal, and stress that no-deal would be a short-term solution to dealing with a Parliament vehemently opposed to Brexit. But businesses and voters should feel assured by the Chancellor’s words at conference either way.

L'articolo Sajid Javid Says The Government Is Ready For A No-Deal Brexit proviene da InsideOver.