Graham Gudgin

Welcome to the wacky world of Irish national economic accounts. The official figures for Ireland’s tax-haven economy are so bizarre that they have been dubbed ‘leprechaun economics’ by Nobel Prize winning American economist Paul Krugman. And now the distorted figures which are used to measure Ireland's GDP could be coming back to bite Ireland in the form of contributions the country must make to Brussels. Could this lead to a rapid rise in Euroscepticism across the Irish Sea? GDP per head in Ireland is measured by the Irish government – and accepted by international organisations – as being 91 per cent higher than the UK. At face value, this appears to indicate that Ireland is almost twice as rich as the UK.

Whatever the outcome, the 2019 general election will be one of the most decisive polls in British history. Like the Liberal landslide of 1906 which led to the foundation of the welfare state, the Labour victory of 1945 or the 1979 election which introduced free-market Thatcherism, the 2019 election is likely to determine the nature of the UK for decades to come. The 2019 election is also highly uncertain, and few pollsters are confident of the likely outcome. There are several reasons for this. Although Boris Johnson’s Conservatives are well ahead in the polls, the memory of Theresa May's melting majority in the 2017 election looms large. A second important reason for the uncertain outcome is the presence of three or more parties with a substantial share of the vote.

For the third time, the UK government finds itself at odds with its allies, Northern Ireland’s Democratic Unionist Party. The DUP chose to vote against Boris Johnson’s deal on Saturday by supporting the Letwin amendment. They will surely do so again when the meaningful vote is finally taken this week. But this time there is less DUP animus against the government because relations between the DUP parliamentary group and the PM have been generally good. The Prime Minister spoke at last year’s DUP annual conference and was well received. Even though his promises at that conference are regarded by the DUP as having been broken, there can be no doubt of the strength of Boris’s Johnson’s sincere unionism.

Now that the Prime Minister’s withdrawal agreement has been decisively rejected by Parliament, the challenge, as Theresa May said last night, is to find an alternative way forward. But the reality is that the fall of the agreement is less important for the UK than widely assumed. It did not pin down any long-term trade arrangements. Even in the short term, the main gain to the UK was a transition period which now looks less essential than was the case when it was first mooted over a year ago. It is true that there is now a possibility of tariffs from March 30th but these tariffs are mostly small and the EU has stronger reasons for avoiding them than the UK. The EU exports £54.

Just when the Brexit talks were beginning to look humiliating for the UK, the position has begun to be reversed. The absurd EU negotiating framework has stretched the patience of the British side to close to breaking point and preparations are at last being made for the possibility of no deal with the EU. Australians with decades of experience in trade negotiations with the EU tell us that the EU always bargains ferociously and that the only sensible response is a tough one. A negotiating bottom-line of no-deal should have been the British position from the start but going along with the EU’s self-imposed constraints has at least exposed just how difficult the EU can be.