1/ I told myself I wasn't going to do any more long Brexit threads, but this from billionaire phones4u founder John Caudwell is so pants-wettingly stupid, I can't even https://twitter.com/sturdyAlex/status/1336597612145815552

2/ Caudwell claims - as Brexiters have throughout - that the EU's £80bn trade surplus with us puts them at our mercy when it comes to negotiating trade deals. If there's no deal, he says, they risk losing £80bn cash money.

3/ Right, quick reminder for those of us not previously watching this closely - you calculate trade surpluses/deficits like this:
In one column you put everything your country sells to the other country/ies. In the other column you put everything they sell you.

4/ Then you compare the two columns.
If your number is bigger, because you sell them more than they sell you, you have a trade surplus. If you sell them less, it's a deficit. It's a deficit for you, but a surplus for them, right?
Right.

5/ The UK has a deficit with the EU in goods, but a surplus in services. You'll need an economist to tell you whether any of this even matters, which I'm not, but anyway, on to Caudwell's claim.

6/ Caudwell's supposition is that, in the event of no-deal, that deficit - a surplus from the EU's point of view - would vanish. So the EU would risk no longer getting that £80bn cash money.

7/ But... and here's where you wonder whether it's possible for somebody to be a billionaire and be so ignorant, *why* should it vanish?

8/ Do we suddenly stop needing those goods we were buying? Were they things we didn't actually need, and therefore we can - out of spite - suddenly stop buying them?

9/ Or are they in fact goods or services we still need, and will still have to buy, just at whatever increased cost and inconvenience we now have to endure?

10/ We still need to eat. The UK hasn't produced all its own food for 200 years. We still need to import raw materials we don't have here. We still need electrical goods, and cars and...

11/ (I'll come back to cars in a minute.)
Aha, you say, but the UK can get all those things elsewhere.
Okay, I rejoind, assuming that's true, and we're not talking about a VW or a part you can only get from the EU, it'll always be more expensive to get goods from further away.

12/ And some good you practically can't get from further away. Try getting your fresh food, as cost-effectively, from Brazil, or Australia, or China.

13/ So even if you *can* say "aha, EU, I'm going to go and buy my olive oil elsewhere, and flick you the V-sign as I'm doing it," all you're doing is shifting your trade deficit around, you're not reducing it.

14/ If anything, you're increasing it, because the goods are more expensive. You might spite the EU, but you're spiting yourself worse.

15/ And if you really wanted to do that, there's nothing stopping you doing it right now. You don't need to break your trade deal with the EU to be able to go and buy stuff more expensively somewhere else. Knock yourself out, sport.

16/ But all this isn't even the only massive hole in Caudwell's stupid stupid argument. And it's because his argument rests on the EU losing its trade surplus with the UK, and that being a bargaining point. It's the surplus that matters to him.

17/ For that to work, not only has the EU got to lose imports to the UK in no-deal, the UK has to maintain its exports or increase them, otherwise the gap between the UK and EU won't close.

18/ He assumes we will still export all that we currently export. There's every reason to expect that is not going to be true, and everything that does disappear from our column - the stuff we export - is going to widen our trade deficit with the EU.

19/ So - services first. The UK has a surplus in services. We sell more services to the EU than we buy from them.

20/ So when we realise that the trade deals being discussed with the EU barely touch on services, and if there is no deal then they are not covered at all, we realise that our service exports are definitely going to fall whatever happens now.

21/ And some services are tied with goods. They are maintenance and support contracts for stuff we sell. If the amount of stuff we sell falls, so do the service contracts tied to them.

22/ So, goods then. Are goods exports going to fall? If tariffs are introduced, then yes, everybody expects they will. If barriers, such as paperwork and long border queues, appear (and they definitely are), then yes exports will fall.

23/ So goods and services exports will both inevitably fall.
But I'm also here to tell you imports may rise at the same time. As manufacturing in the UK falls, imports may have to rise to fill the gap.
Let's look at cars.

24/ The Society of Motor Manufacturers and Traders' 2020 report says 1.3m cars were built in the UK in 2019. 1.05m of those were exported, nearly 0.6m of which went to the EU.
So we send the EU nearly half the cars we make.
https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Motor-Industry-Facts-Nov-2020.pdf

25/ Car bosses say they expect the introduction of tariffs to reduce UK car production by 0.5-0.8m cars. https://twitter.com/faisalislam/status/1336462372186304514

26/ Let's take the most optimistic figure there, 0.5m. And let's assume the fall in production is distributed evenly among cars intended for export and cars intended for domestic use.
(Although we may suspect exports could be hit harder.)

27/ That's 230,000 cars we're no longer exporting. Those no longer appear on the positive side of our trade figures.
It gets worse.
The remaining cars - the ones destined for UK buyers - the other 270,000 cars we're no longer making ourselves, they still need to be bought.

28/ So where are we getting those 270,000 cars from?
We'll have to import them, the vast majority from the EU. They've just moved across from our trade figures to the EU's side of the totals.

29/ So what this means is that any reduction of production in the UK either reduces our export figures, or increases our import figures, or both.

30/ The only cars that disappear are ones we decide not to buy because we can no longer afford them at the higher prices now being charged for them. (See VW's recent notifications to customers ordering by Dec 31st.)

31/ I mean, saying the deficit figures aren't so bad as they might have been because we can't afford to buy shit any more anyway is a look, I grant you, but it's not a very attractive one. You wouldn't put it on a bus, is what I'm saying.

32/ And that's just whole cars. We haven't looked at the parts chain. The UK produces more than 2m engines a year, nearly 1.6m of them being exported, most to the EU. All these chains are expected to be strained or break outright.

33/ Look at INEOS for a worked example.
Really, look at them. Billionaire Brexiter bastard says he's going to build the Land Rover's spiritual successor in Bridgend.

34/ He's chosen the Land Rover because he doesn't have to pay anyone to design it or build a brand, he can just pick up somebody else's hard work and profit from it without giving anything back.

35/ He's harking back to an imagined golden period of 60 years ago, and conveniently forgetting how primitive and unreliable the thing was. Can you get any more emblematically Brexit?

36/ So when he decides to build it in France instead of Wales, that shifts the UK trade balance. Every INEOS Defender not built in the UK and exported is one that doesn't go on our trade figures.

37/ Every INEOS Défendeur built in France and then imported to the UK, to the only people who have affection for a 60-year old classic that really ought to remain a fond memory, it goes on the EU's trade figures.

38/ And so it goes. We still need to buy stuff. We still need to import it. It will still be on the negative part of our trade figures somewhere. It's just that there will be a lot more negative in future.

39/ So the £80bn deficit doesn't vanish in the event of a no-deal, it grows massively. We will be spending far more money in the EU than they spend with us. It'll maybe cushion the blow for them of having to relocate all those factories from the UK to the EU.

40/ And John Caudwell is a dick. Don't even get me started about his other argument about sovereignty.

No, really, don't.