1. We are currently staring over the precipice of no deal. Everyone, including many of those who argued for Brexit, understand the damage it would do, especially at the same time as the Covid economic crisis and the end of the transition period. We are facing a perfect storm.

Been a lot of discussion recently around services trade in the deal between the UK and EU. Having read through the agreement over the past couple of days, my impressions👇

First off, services is definitely included. Question for service providers, is will it be enough?

1/N

My overall impression is that the EU has offered among the best in class for its FTAs similar to Canada and Japan.

But this access is a far cry from access to the Single Market and how is constructed as part of a trade agreement for the EU reflects that.

2/n

Unlike for goods trade, once you've got a product through all the customs and regulatory procedures into the EU, it can be sold anywhere in the EU, or its "entered circulation".

For services trade, that isn't the case. Its still done on a member state by member state level.

3/n

This is even true in the trade agreement itself where although the provisions set out in the Services and Investment chapter sounds awfully good - lots of principles about the freedom to establish and allowing the cross-border trade in services.

It's only when...

4/n

You get to the annexes and you realise both the EU and individual member states have put entry conditions across huge areas of different services sectors both now (existing measures) & in the future. Don't worry too much about the future reservations, it's the existing ones.

5/n

Amid all the announcements today, it's easy to overlook that the OBR has updated its scenario on a no-deal Brexit. It exposes an undeniably hard reality for the Govt that claims that the UK would "prosper mightily" under no-deal next year.

(Short thread)

1. Key chart: a no-deal/WTO/Australia-style Brexit would delay the point at which econ output regains its pre-virus peak by "almost a year to the third quarter of 2023."

In the upside scenario, this cross-over point could be at the start of 2022; in the downside, in 2025. Grim.

2. Next year, a no deal Brexit would reduce real GDP by around a further 2% - as a result of immediate disruption to the border and uncertainty facing businesses. That's on top of the Covid-related contraction.

3. While there's some short-term border disruption, most of the costs come in the medium term: from lost employment; productivity losses; lower business investment.

Exactly the opposite of what the Chancellor said to @AndrewMarr9 on Sunday.

4. Underneath these numbers, output would fall *below* the Covid levels for several key sectors: Manufacturing, professional services, financial services, retail, energy.

All trade intensive sectors that have been spared the same drop in output as the non-tradables this year.

🚨🚨🚨🇪🇺🇬🇧🚛🚒🇪🇺🇬🇧🚨🚨🚨 serious #brexit story alert - companies now starting to see penny drop on what rules of origin does to supply chains (food for example) but Brussels seems deaf to both EU & U.K. pleading. A bellwether? 😬 Stay with me. 1/


So first the problem: its a tad complicated but basically goods that are imported into UK and then 'hubbed' onwards into Ireland or other parts of the EU are facing full EU tariffs - this is particularly bad for food stuffs, which attract high tariffs. Why is this? /2

It's a function of the Rules of Origin clauses that mean that goods have to sufficiently "originate" in the UK to qualify for zero-tariff entry to EU (and vice versa).

But to qualify, you have to do something to the goods - process them or add value - not just punt them on /3

The brilliant @AnnaJerzewska does a better job than me of explaining, but the important thing is that this is a nightmare for companies that 'hub' /distribute products through the UK - and that's both EU and UK companies /4

So both the @Foodanddrinkfed and EU groups like @CAOBISCO_EU (chocs etc) say they want the EU Commission to fix this with a derogation/waiver that takes into account proximity and interdependence of EU/UK supply chains. /5

On March 17, the Netherlands will have general elections.

Two parties - PVV & FVD - want a Nexit, a departure from the EU, in line with Brexit.

As the reality of the EU-UK trade agreement kicks in, let's take a look at what these parties

Firstly, good to note, here is their recent polling,

PVV: 14% - 23 seats (currently 20 seats)
FVD: 2.5% - 4 seats (currently 2 seats)

A government needs 76 seats to govern.

Give or take, these parties appeal to about 20% of the electorate.

/2

FVD wants a so-called "intelligent Nexit" because - arguably - they think the UK's departure was not-so-intelligent.

"Intelligent" Nexit. Lots of nodding

But FVD doesn't want to leave the EU, they want an end to the EU.

/3

They want a "different cooperation model among sovereign states" based around free trade, conveniently assuming that the EU will automatically cease to exist once the Dutch vote 'Leave'.

And EFTA should be the basis for the new model.

/4

It's full-on 'magical thinking'.

If you want to join EFTA, sure, make the case.

But be truthful about what it means.

The FVD decides to disregard the EEA agreement, which governs trade between the EFTA-4 and the EU27, and the EU rules and regs that EFTA countries follow.

/5