Thursday, 27 October 2016
Nissan to stay - but we are not out of the woods
Nissan is to remain in the North East after assurances from the government. We do not know what kind of assurances. What we can probably say is that there will be no special subsidies. I suspect such moves would not be permitted under WTO rules. If there has been any detailed conversation between Number 10 and Nissan it has been to address concerns over customs and non tariff measures. Mrs May will have assured them that she seeks the maximum continuity for business.
So for all the confirmation seeking Brexiteers this is good news. But what that most likely means is that we either stay in the single market or forge a trading arrangement very similar to the EEA. At the very least it means that Brexiteers can wave goodbye to their deregulation fantasies.
Meanwhile, though figures show that we have avoided a recession in the technical sense of the word, we have yet to experience the cumulative underlying pressures caused by the vote to leave and the full consequences will not be known until we do leave. It is wrong to say we will walk away unscathed. There is no sunlit uplands Brexit in the short to medium term.
Even if we do avoid a technical recession the effects of Brexit will manifest themselves in ways that actual recessions have not. All we can say for certain is that we will avoid the worst case scenarios and a few pretty bad scenarios.
There is only one way to avoid extensive economic damage and that is to seek the maximum possible continuity as per the existing arrangements. This is what I believe Mrs May will seek and the EU, out of pragmatism, will seek to accommodate her. That means, as per the long held view of this blog, that headbanger Brexiteers will have little to celebrate. They won't get their budget savings, they won't get their deregulation and they won't see much movement on immigration. They will then have to answer to an inquisitive public wondering what it was all for.
On the whole I take today's news as just noise. Nobody really expects Nissan to up sticks and move and most of what we have seen is idle threats. It's not the headline issues we need focus on. It's the slow cumulative bleed we need to keep tabs on. The news today may confound the catastrophisers and those who said merely the act of voting to leave would plunge us into a real recession but nobody took them seriously anyway.
It is not the intention of this blog to pour cold water on what is clearly a good signal that should help the pound recover a little, but when either side is crowing they were right all along it is best to take a measured middle view. There is much still to be done, there are major technical hurdles to overcome and we still stand to lose a lot. That Nissan will continue to inflict their ghastly rotboxes on UK roads is neither here nor there. If it is a victory, it is mainly symbolic.