Priti vacant

The Home Secretary, Priti Patel, sits on the right-wing of the Conservative Party and can best be described as socially illiberal (see this clip from one of the BBC’s flagship current affairs programmes in 2011 in which she quite clearly advocated the return of the death penalty). She also backed Theresa May’s hostile environment immigration policies, presented in the immigration bills of 2014 and 2016. But Patel is nothing if not entrepreneurial although her efforts to go off-piste by holding unauthorised meetings with Israeli politicians and businesspeople in 2017 did result in her being sacked from May’s government. Nonetheless, her voting record marks her out as an economic liberal, generally voting against policies such as higher taxes.

This week’s announcement by Patel that British businesses will effectively be barred from hiring “unskilled” workers from outside the UK after the Brexit transition process ends, is both socially and economically illiberal. The policy, which is outlined here, will bring in a points-based system “that will attract the high-skilled workers we need to contribute to our economy” whilst keeping out those the government presumably deems undesirable. Undoubtedly there is a preference amongst some voters for this kind of policy, as this clip reporting the views of a BBC Question Time audience member makes clear (the fact that it is both offensive and inaccurate is beside the point – this is what some people believe). However, the policy suffers from a number of theoretical and practical limitations that potentially threaten to introduce yet more economic disruption.

Starting with the macroeconomic implications, the fact that business investment has been so weak over recent years underlines the importance of labour input in driving growth. In Q4 2019, business fixed investment volumes were only 1.3% higher than mid-2016 levels – an annual increase of less than 0.4% per year. To put that into context, the average annual growth rate over the period 1966 to 2015 was 2.9% – and even that is widely considered to be too low in comparison to other European economies.

My calculations suggest that since 2015, the contribution of capital to potential GDP growth (currently estimated at around 1.5% per year) has fallen by 0.2 percentage points to 0.5 pp per annum largely due to a lack of investment which has resulted in a less efficient capital stock. Total factor productivity, which accounts for factors such as technical progress and other intangibles, has recorded a dreadful performance since 2008 and is currently not giving any boost to potential growth (chart). Thus the labour contribution accounts for a good one percentage point per annum. This can be broken down into the increase in the overall working population (0.2 pp); participation (0.2 pp); the employment rate (0.4 pp, defined as the extent to which available labour resources are being used) and hours worked (0.4 pp).

Other things being equal, measures that disrupt labour supply will act to curb the economy’s growth rate. As it is, the population is ageing and the retirement of the baby-boomers means that the working age population is growing at a slower rate than in the past. Moreover, the big boost derived in recent years from an increase in hours worked and the employment rate (number of employees relative to the total working age population) appears to be losing momentum (cf chart). Patel’s response to this problem was to suggest that any shortfalls can be met from the 8.5 million people currently classified as “economically inactive” which effectively means raising the employment rate. But of that figure, 2.3 million are classified as students; 1.9 million are looking after their family and 2.1 million are registered as long-term sick. Only 1.9 million are classified as looking for a job. This implies that the employment rate can only rise from current levels of 79.5% to a theoretical maximum of 81% – the 1.5 percentage point rise represents the amount by which it has increased over the past four years. There is a lot less slack in the labour market than the Home Secretary seems to think. 

As for a points-based system (PBS), the report from the government’s non-partisan Migration Advisory Committee (MAC) released last month was less than enthusiastic. The Committee chairman’s comments indicated that whilst he understood the government’s need to communicate complex issues to the electorate, PBS currently only represents a “soundbite” with no coherent plan as to how it would work (surprisingly enough, his contract as chairman of the MAC was not renewed). The biggest criticisms include the inconvenient fact that countries which do rely on a PBS, such as Canada and New Zealand, only use them in parts of their immigration system – it is not the bedrock. Moreover, when the UK experimented with such a system to recruit non-EU workers between 2002 and 2006, it did not attract the highly-skilled workers which the government hoped for. And as the MAC report notes, the current system to attract highly skilled workers from outside the EU “does not work well … [because] the skills bar for entry is set far too high, targeted at those at the very top of their field and is too risk averse.”

The government has accepted one of the MAC’s recommendations, to reduce the annual salary threshold from £30,000 to £25,600. Workers who do not meet the points requirement to qualify for entry must therefore meet this salary threshold – the idea being to dissuade “lower-skilled” workers from entering the UK (though as the government points out “under the points-based system for skilled workers, applicants will be able to ‘trade’ characteristics such as their specific job offer and qualifications against a lower salary”).  As if the other aspects were not contentious enough, this element threatens to open up a new can of worms. Many jobs in the health and social care area are not low-skilled at all, yet do not offer a salary which meets this threshold. A phlebotomist, for example, will struggle to earn £20,000. Full-time social care workers, of which around 20% are foreign nationals, earn around £19,500 per year – 24% below the recommended limit.

The government plans to introduce these new rules once the transition period with the EU expires at the end of this year. Not only is that not a lot of time to adjust but as Tom Hadley, director of policy at the Recruitment and Employment Confederation, said: “Jobs the government considers ‘low-skilled’ are vital to wellbeing and business growth. The announcement threatens to shut out the people we need to provide services the public rely on. We need access to workers that can help us look after the elderly, build homes and keep the economy strong.” What the policies amount to is an upgrade of the state-sponsored hostile environment which the Conservatives have pioneered over the past decade. Such an unwelcoming environment runs the risk that the UK is no longer the first port of call for talent in a world where other countries are desperate to import skills which are in short supply at home. If the government does go ahead with its introduction, my guess is that within a couple of years it will be forced to water down the restrictions.

And for all the contradictions inherent in the new rules, the biggest of them all is that Patel’s parents, who migrated to the UK from Uganda in the 1960s, would not have qualified for entry under the rules their daughter has drawn up. You could not make it up. Except that the government is indeed making it up as it goes along and runs the risk of strangling itself in a knot of contradictions.

As more evidence comes to light ...

Nigel Farage likes to claim that he is speaking for the ordinary citizen and has argued strongly against immigration, suggesting that the studies which show the benefits of immigration to be flawed because they fail to account for the cost of in-work benefits such as tax credits. But right-wing politicians are not the only ones to be concerned about free movement within the EU: One of Jeremy Corbyn’s key union supporters, Unite’s Len McCluskey, suggested this week that Labour should also take a tough line on free movement of workers. But the evidence clearly shows that both are ignoring the economic benefits of free movement to the UK and their opposition to immigration is based on a false premise.

Three months ago HMRC published data which showed the revenue and expenditure contribution of EU citizens to the UK’s tax and benefit system for fiscal 2016-17 which paints a very different picture to many of the claims made during the  EU referendum campaign. The figures show that EU and EEA citizens received around £3.2 billion in child benefit and tax credits. But they paid in £21.3 billion, meaning that they made a net contribution to the UK Exchequer of £18.1 billion. Although this figure does not include all tax and revenue streams, it is a safe bet that this these figures are a fair reflection of the overall fiscal contribution of EU citizens. To put it into context, a figure of £18.1bn is more than the current budget surplus for FY 2016-17 (£17.4bn). Without the fiscal contribution of EU and EEA nationals, the current balance on public finances would have been in deficit. 

Citizens of all EU countries made a positive exchequer contribution, with the largest net sums being paid by French (£2.9bn) and Irish (£2.2bn) nationals, with the Poles chipping in a net £2.1bn. On a per capita basis, the biggest contributors were Danish nationals, who paid an average of £25,090 followed by the French (£24,090, chart). The average European per capita contribution was £7,260 with the overall figure being depressed by the relatively low contributions made by central and eastern European nationals. The figures tell us two things: Most obviously European nationals come to the UK to work, not claim benefit as has often been claimed in the recent past. Second, the distribution of per capita contributions highlights the fact that western European nationals tend to be highly skilled and are therefore high earners whilst those from newer EU member states tend to be lower paid.

Even before the end of free movement, the UK is no longer an attractive destination

For all the fact that EU nationals make a significant contribution to the UK economy, there is clear evidence that fewer of them are entering the UK than was the case three years ago. Although the UK immigration data are subject to significant methodological flaws, they are all we have at present and they show that in the year to March 2019, a net 226k foreign nationals entered the UK compared to 311k in the year to June 2016. The net inflow of EU nationals has slowed to 59k versus 189k in the year prior to the referendum, with net outflows of EU8 citizens as many of the huge wave of migrants from Poland begin to return home. But the real kicker is that in the year to March, a net 219k non-EU nationals entered the UK compared to 171k in the year to June 2016. Recall that this is the part of immigration that the UK government can actually control, so if the electorate really does have a problem with immigration they are going to be mighty dumbfounded by the government’s current policy.

It has long been recognised that there are substantial costs associated with pulling up the drawbridge and the government appears to have quietly dropped its unrealistic pledge to reduce the net number of immigrants below 100k. But it might be too late: Large sections of the UK public sector rely on foreign labour input and there has been a 70% fall in the number of EU citizens coming to the UK to work. In the absence of a sudden surge in Brits willing and able to take on the tasks, these positions will have to be recruited from outside the EU, which may explain why the numbers arriving from outside the EU have increased.

Moreover, one of the flaws with the data is that it includes those coming to the UK to study and who make a net overall contribution to university coffers. Prior to the EU referendum roughly one-sixth of the net immigration figures was attributable to students – there has been a reduction of around 20k in new student numbers over the past three years with anecdotal evidence suggesting that many have been put off by the more hostile climate. This is certainly not a desirable outcome for universities which are seeking to expand their footprint in an increasingly competitive global education market.

Whatever one’s views on immigration, it is clear that a policy of restricting the flow of EU citizens into the UK will have economic consequences. This may only be evident initially at the margin. But it remains one of the potential underrated consequences, whose full effects will only become evident in the fullness of time.

EU may see it differently

Although the British government was given a bloody nose following last week’s Salzburg summit, events of the past few weeks act as a reminder that Brexit is one of the few issues on which the EU27 is able to present a united front, since almost all the leaders of the larger nations are facing mounting domestic difficulties. 

Nowhere is this more evident than in Germany where Angela Merkel is facing what looks to be a significant fracturing of the political consensus. In summer 2017, the CDU/CSU coalition was running at 39% in the opinion polls with the SPD polling 25% and the AfD 8%. Latest polls put the CDU/CSU at 28%, the SPD at 17% and the AfD at 16%. In the 20 years that the Emnid weekly poll has been running, the share of the CDU/CSU and SPD, which together represent the main German political factions, has never previously fallen below 50%. That the AfD and SPD are running neck-and-neck in the polls is an indication of how things have changed. The fact that the AfD has maintained its polling status even after the riots in Chemnitz is another illustration of that fact.

The ousting this week of a long-term Merkel ally as head of the conservative bloc's parliamentary group is an indication that her domestic opponents have been emboldened by apparent signs of political weakness. With Merkel already one year through her four-year term, and unlikely to stand as Chancellor at the next election, the beginning of the end of her time on the stage is apparently unfolding before us. 

Not that Emmanuel Macron has much to be satisfied with. According to latest polling data, only 28% of French voters are satisfied with his performance – down from 35% in July and compared with 60% in summer 2017. This puts him on a par with Francois Hollande’s polling ratings after a similar period in office, and way behind Nicolas Sarkozy. Macron’s problems are: (a) he does not enjoy as much support as his landslide election win suggested – many voters simply chose him because he was not the right wing Marine Le Pen; (b) he has been unable to deliver on his promise of a domestic political revolution, and (c) promises to cut taxes remain so far unfulfilled (see this BBC article for a closer look at Macron’s woes).

As I have noted previously (here), Italian politics has been in flux since the spring election as the League and Five Star parties continue to share an uneasy alliance. Current negotiations regarding the 2019 budget have been dragging on for weeks, with the technocratic finance minister Giovanni Tria under pressure to increase the budget deficit to accommodate the expensive election promises of the populist coalition government. There are concerns that a deficit in excess of 3% of GDP would be a problem for the European Commission, provoking a row over fiscal policy that would result in another general election next year. Whether or not this materialises is not the point: It is yet another distraction that Italian voters – and indeed the EU as a whole – can do without.

Factor in the ongoing problems between Brussels and the governments in Budapest and Warsaw, and the news that the Sweden’s  centre-left prime minister has been forced out by the centre-right bloc after an inconclusive election earlier this month, and the scale of the political problems facing EU leaders becomes evident.

Thus, when the British newspapers obsess about Brexit as if it were the only game in town, you can be sure that they have it all wrong. The trials and tribulations faced by Angela Merkel over recent months highlight the extent to which the old order is crumbling. When even the German Chancellor faces mounting domestic problems as a result of the EU migration crisis, it is pretty evident that something is wrong. The likes of Italy and Spain feel that they have been left alone to cope with the waves of migrants arriving on the EU’s doorstep whilst countries such as Austria, which are located on the main land route towards Germany, are concerned that migrants should exit their territory as quickly as possible.

Indeed, immigration is the fault line running through European politics. It was one of the key issues in the Brexit campaign – this was, after all the topic which most exercised UKIP under Nigel Farage – and played an important role in Dutch, French and Italian elections over the past 18 months. There is clearly no easy fix. Aside from any irrational prejudices that people may have, the economic issue is what effect will large migration numbers have on public finances, wages and per capita incomes. The UK evidence does not suggest that there has been any significant adverse impact on the economy. Indeed, much of the empirical work conducted over the last decade suggests that immigration has had no significant negative impact on the job prospects of UK natives. The evidence of its impact on productivity is less clear cut but due to the fact that the skill levels of those entering the UK are generally high – notably those coming from the EU – the empirical studies conclude that a 1 percentage point in the migrant share of the working age population raises productivity by anything between 0.4% and 2%.

But this cuts no ice with electorates which believes this all to be fake news. The fact that populists continue to squeeze the political centre is a concern for those politicians looking for traditional European solutions, involving compromise and rationality, to these 21^st century problems. Too many European politicians are fighting their own battles against populists to care too much about what the UK wants. If British politicians want to engage constructively with the EU27, it might help to recognise that the UK is not unique in any way – apart, that is, from being stupid enough to open a Pandora’s Box, in the form of a referendum, that will not easily be closed.

What have you got?

It is a well-known physical property that when heat is added to a substance the molecules vibrate faster and usually maintain a greater average separation. Ultimately the object expands in size and takes up more space. If we take away the heat source, the molecules move more slowly and if we were to freeze an object containing water, it would actually contract.

The Brexit debate feels a bit like that. The two years following the referendum have generated more heat than light and the whole issue has expanded to take up an increasing amount of media space. Politicians such as Jacob Rees-Mogg and Boris Johnson fan the flames by making outrageous claims as to how to achieve Brexit and what the benefits will be, generating a counter response which fills up a lot of column inches. If, however, we were to dial down the rhetoric a little and think about what the end game might be, we might be better served in terms of working out how to proceed. 

Basic premise: Neither side wants no deal 

We should start from the premise that neither the UK nor EU want a hard Brexit next March. It may not seem that way when we are assailed with stories telling us that the government recommends stockpiling essentials in the event that cross-border trade is about to come to a halt. It certainly does not seem that way when self-serving British politicians fly in the face of all the evidence to argue that “the UK has agreed to hand over £40 billion of taxpayers’ money for two thirds of diddly squat … In adopting the Chequers proposals, we have gone into battle with the white flag fluttering over our leading tank.” Boris Johnson may know how to pen a decent newspaper column but as a frontline politician with a track record of deliverance he has been found wanting and he is as guilty as anyone of pouring fuel on the raging Brexit fire.

What the Brexiteers fail to understand is that the EU has little choice but to act in the way it does. It has consistently been made clear to the British government that access to the single market is based on the four freedoms of goods, services, labour and capital. The EU cannot therefore allow the UK to pick and choose. And whilst both sides agree on the need to maintain an open Irish border, the British proposals to realise this outcome are either unnecessarily complex or unworkable. But with just over six months until the UK leaves the EU, we need to see more flexibility – ideally from both sides – in order to generate the breathing space which can keep negotiations alive.

The UK government’s Chequers Plan clearly does not satisfy anyone domestically, nor in its current form is it acceptable to the EU. But it is the only idea on the table at the moment so it is the point from which we have to start. There have been some reports suggesting that Michel Barnier believes the plan to be ”dead” whilst others indicate that he sees some possibilities. One of the biggest sticking points is that the UK is not prepared to accept free movement of labour. But it may be possible to form a basis in law for a compromise which satisfies both sides. 

A fix for the freedom of movement problem 

As it currently stands the law grants residency rights to EU citizens irrespective of whether they work. For periods of less than three months the only requirement is that they possess a valid identity document or passport (although they may be required to register with the authorities – a requirement never imposed in the UK). For longer stays EU citizens and their family members “must have sufficient resources and sickness insurance to ensure that they do not become a burden on the social services of the host Member State during their stay.” But what if we were to impose quasi-freedom of movement in which the only restriction is that EU citizens require an employment offer before taking up residency?

Admittedly, it is not free movement as envisaged by the Lisbon Treaty but it is a good compromise. Moreover, articles 48 and 49 of the Treaty of Rome make it clear that cross-border flows of people were originally supposed to be conditional on an offer of employment. To enhance the fiction of “taking back control” the government can give the illusion that EU citizens be required to register – as is the case in Germany – via an application for a National Insurance number. In that sense, EU citizens working in the UK experience no obvious changes in their circumstances but the government sells a message that it has stiffened up border controls. Granted, it is far from ideal but it is a far better option than simply throwing up the drawbridge and would at least show that the British are trying to find a solution. 

The government has already proposed a solution for the Irish border 

With regard to Ireland, the UK government has already proposed a solution: The backstop plan outlined in June calls for a "temporary customs arrangement" which keeps the UK in a customs union with the EU for a limited period after the end of the proposed Brexit transition period in December 2020. At the same time, the government proposes that the UK be able to sign and ratify trade agreements with the rest of the world during the temporary arrangement. There are a couple of problems with this: (i) The EU has not (yet) agreed to it and (ii) Brexiteers do not like the idea because they are sold on the idea of leaving the customs union (Theresa May has tried to pacify them by suggesting that such a solution would only need to remain in place until end-2021).

But imagine that the EU does agree. The UK will find it extremely difficult to ratify any meaningful trade deals by end-2021 and thus continues to extend its membership of this arrangement. The longer the UK remains in the customs union, the less likely it is to want to drop out, resulting in a BINO solution (Brexit in name only) which is probably the least damaging economic option. 

They may be bad ideas but show us something better 

There are all sorts of reasons why these are thoroughly bad ideas. Like the Chequers Plan, they will satisfy neither leavers nor remainers. But they represent an attempt to reconcile the demands of the EU with the apparent need to respect the referendum result. And yes, they are politically devious solutions but Brexit is nothing other than a political issue and it is going to require some chicanery to extract the UK from the mess it has created for itself. But if Johnson or any other of the Brexit zealots has a better plan, we are all ears, because all we have heard so far is what is wrong with the current set of options. C’mon, show us what you’ve got!

Immigration as a problem of time inconsistency

Time inconsistency is a much-used term in economics and describes a situation where a policymaker announces a policy option only to renege on it later when it is evident that the costs of adhering to the original policy are higher than the costs of cheating. It was originally popularised in the macro literature in the context of monetary policy whereby a central bank announces a target – a money supply growth rule for example – only to find that the costs of maintaining it are too high because it requires implementing a policy which is too tight (or loose) for overall economic conditions.

But it goes way beyond monetary policy and I was struck recently by how a couple of the big items on the UK government’s agenda can be described in terms of the time consistency problem. One is the decision to leave the EU. Given the closeness of the referendum vote and the degree of opposition to the decision, together with the fact that younger voters – tomorrow’s older generation – are generally in favour of remaining, it is possible to imagine a situation in which the UK either reneges on its commitment to leave or reapplies at some point in future. If that were to happen, it would render today’s shenanigans regarding Brexit negotiations a time inconsistent set of policies.

However, the time inconsistency issue particularly came to mind in the context of the recent scandal regarding the first generation of immigrants from the Caribbean in the late-1940s and 1950s. To recap, many thousands migrated to the UK seeking work – and let us not forget, this policy was welcomed as a way to alleviate post-1945 labour shortages. Crucially, they were entitled to come to the UK without having to give up their original nationality, thanks to the passing of the 1948 British Nationality Act, which granted UK citizenship to those from Commonwealth countries. Consequently, many people simply did not feel the need to formally apply for UK citizenship – it was conferred upon them. But the 1971 Immigration Act changed the law to grant only temporary residence to most people arriving from Commonwealth countries which came into force in 1973. However, people born in Commonwealth countries (and their dependents) who arrived before 1973 were given indefinite leave to remain.

So far, so uncontroversial. But the time inconsistent element of immigration policy can be dated to May 2012 when then-Home Secretary Theresa May declared: “the aim is to create here in Britain a really hostile environment for illegal migration.” She then steered the 2014 Immigration Act through parliament that gave new powers to help the Home Office and other government agencies make life difficult for illegal migrants. Amongst other things, this required people to have documentation to work, rent a property or access benefits. Just to complicate matters, the Home Office did not keep a record of those granted leave to remain under the 1971 legislation, or issue any paperwork confirming it. It also destroyed the landing cards (or registry slips) of first generation immigrants in 2010 as part of the drive to eliminate the huge pile of paper records in the archive.

Now you might say that this is simply incompetence on a massive scale, and I would not disagree. But what policy has done is to confer a set of legal rights on citizens only then to change the rules by insisting on a burden of proof which was never initially required. That is a classic example of time inconsistent policy. We find ourselves in this situation because of a change in the political climate – we can argue about whether government was responding to a change in voter preferences or whether it indeed fanned the flames. What we can say for certain is that government policy changed over the years, from welcoming immigrants as a source of labour to actively discouraging them.

Such time inconsistency issues are not confined to the UK. In France, for example, the Immigration Act of 2006 abolished the automatic right of immigrants to attain French nationality after having lived without authorisation in France for at least ten years (here for an overview of French immigration policy since 1945). This policy is officially designed to “restrict the immigration of unskilled workers and persons who would become a burden on the French State” but as in the UK, it is surely no coincidence that it followed a rise of popular discontent.

Whilst Germany has dealt relatively better with its Gastarbeiter policy introduced in the 1950s and 1960s, the longer term consequences of allowing in huge waves of migrants in 2015 have yet to unfold. There is no doubt that as a humanitarian gesture, it is without parallel in recent years. But the surge in support for the AfD in last September’s election suggests that not all voters share Angela Merkel’s view. The experience of the UK and France is that immigration policy – and indeed many other policy areas – can experience a 180 degree turn. Governments seeking re-election every 4-5 years may simply not be able to make promises that their successors are willing to keep and it is a reminder that nothing lasts forever – even what appear to be binding policy commitments.Jacob Rees-Mogg, Boris Johnson et al take note.

Plenty to (re)moan about

Events of recent days have confirmed what many of us thought all along: the UK government's original position on Brexit is untenable. And as we watch one red line after another being crossed, the credibility of its position is weakened further. This matters because in a negotiating environment, you only have a chance of achieving your goals if the other side believes in the strength of your position. Those of us derided as Remoaners have consistently highlighted that the idea of the UK threatening to walk away from negotiations was nonsense. The European Commission knows it too, so either we are headed for a car crash, or an exit on the EC's terms as I have long suspected. Of course, another alternative may be – and whisper it quietly – that the government realises the folly of the whole charade and is seeking to ensure that Brexit means "as little as possible, as slowly as possible" to quote Dan Roberts in The Guardian.

Where to start? I have already dealt with the Economists for Free Trade paper, which has been widely criticised for being at best a piece of wishful thinking (here). But for anyone interested in an alternative take, the view by Flipchart Rick is worth a read as he also lays into the latest piece by the Institute of Economic Affairs.

Another key event this week was the release of the government's position paper conceding that the European Court of Justice in Luxembourg could still play a key role in Britain after Brexit. This comes after Theresa May promised last year that “we are not leaving only to return to the jurisdiction of the European Court of Justice. That’s not going to happen.” But the government now recognises that some form of oversight body will be required to manage relations between the EU and UK and concedes that it will have to abide by many of the regulations passed down from the ECJ. Indeed, justice minister Dominic Raab noted that the UK would have to keep “half an eye” on ECJ rulings in future simply because it controls many of the non-tariff barriers which will be so crucial to any trade agreement between the UK and EU.

As the commentator Ian Dunt argued in a recent article, “the government's new Brexit position paper is actually pretty good” which as he acknowledges “isn't something I usually say.” He also makes the valid point that rather than criticise the government for adopting a course they have advocated all along, pro-Remain MPs should be “welcoming it and encouraging them to go further.” Indeed, as many people increasingly believe, there is an argument in favour of both sides engaging in more constructive dialogue rather than sniping at each other. I agree, but this is easier said than done given the blatant lies told by both sides during the referendum campaign, and the hardening of the rhetoric from the prime minister during last autumn’s party conference season.

Personally I have never understood the Brexiteers’ pathological hatred of the ECJ. I always thought they had bigger issues with the European Court of Human Rights, which did so much to block the extradition of convicted terrorists from the UK to the US. The ECJ has actually come down in the UK's favour in the recent past on the vexed issue of whether euro clearing could take place in London. I suspect that the two courts have simply become interlinked during the whole Brexit debate without anyone bothering to differentiate between the two.

The other issue which has enraged the Twittersphere this week is immigration. I will look more closely at the figures another time, but suffice to say that net migration to the UK was down to 246,000 in the year to March, from 327,000 12 months earlier, with most of the slowdown driven by a reduction in numbers from the EU (primarily the new accession countries). Those concerned about skill shortages in an economy running close to full employment – at least as measured by the unemployment rate – will take no comfort from that. Worse still, official figures revealed that fewer than 5,000 students a year stay on after their visa expires whereas the government repeatedly claimed the figure was around 100,000. As one wag put it on Twitter, it's a good thing we have not based a huge change in economic policy on figures which are so evidently flawed.

Just to round things off, 100 EU citizens this week received letters notifying them that “a decision has now been taken to remove you from the United Kingdom.” Clearly they were sent in error but as one of the recipients, a Finnish academic Eva Johanna Holmberg, noted "it shows the Home Office currently cannot function. It does not know how to obey the law or even its own rules. It is probably not able to deal with all the paperwork.” She added that this has made her "even less likely to trust anything Amber Rudd, Theresa May, or David Davis says to calm us EU nationals down". It certainly does nothing to promote the case of a Britain which is open to the world and in the long run could do a lot of reputational damage if these cases continue to arise.

Trust is indeed the key word here. Dysfunction seems to be endemic at the heart of government and it is hard to trust the current administration to manage Brexit properly. I have been accused of being a Remoaner but I prefer to think of myself as a realist. The complexity of Brexit was always far greater than either its proponents or the government acknowledged, and to waste part of the post Article 50 period with an unnecessary election campaign looks more ill-judged as time passes. I still find it hard to understand how the government can square the circle between what it promised and what it can deliver without doing great economic harm. The only way, surely, is to row back on some of the more unrealistic promises. That will undoubtedly enrage those elements of the Conservative Party that wish to see Brexit at any price. But it is time to make a stand based on economic rationality rather than ideology. And that is something else to which I will return in future posts.