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Reality cheque

Reality cheque

James Horniman, Partner, Portfolio Manager
James Horniman, Partner and Portfolio Manager, James Hambro & Partners

James Horniman, Portfolio Manager

The news that Britain and the rest of the EU have found an agreement to release them from the negotiation deadlock is welcome.

Some will be surprised at the terms. This stage was about issues of principle – an open border between Northern Ireland and the Republic, preservation of the rights of European residents in Britain and UK citizens in Europe and, crucially, the money.

It’s still not clear exactly how much we have promised the European Union but let’s just say it will be some time before we see £350m a week extra going to the NHS.

This was a hard negotiation and the agreement is probably full of enough fudges to kick start a sweet shop – and plenty of intra- and inter-party wrangling for months to come.

The next stage is hard in a different way. To understand how hard, try to have a look at some international terms for import and export of products.

Here’s an example – Pigs’, hogs’ or boars’ bristles and hair; badger hair and other brush making hair; waste of such bristles or hair.

It shows in turgid detail the certification requirements for export of waste and the VAT requirements on sale of said product. It’s interminably dull and this is for a bit of hair.

There are no import tariffs on these products but dig further around the rules and you’ll see that importing live asses from outside the EU is subject to duty of 7.7%, melons an 8.8% tariff, pickled gherkins 12%, cigarettes at least 26% and bagpipes 3.2% (let’s hope the Scots never leave us!). Wine has dozens of sub-sections and is one of the most detailed entries.

These sorts of complex – unnecessarily complex? – arrangements are the product of years of negotiation by civil servant mandarins. And this is the phase we have now reached. It’s time for the technocrats to step up to the negotiating table and somehow they have to reach agreement in more or less 12 months.

Tough times lie ahead. But let’s enjoy today’s progress at the end of a difficult year. Hopefully it is the start of a more co-operative approach and a sign that possibly, just possibly, we can all find the required compromises for a divorce that meets the needs of all parties.

James Horniman

Posted 8 December 2017

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