EU Faces Two Ugly Realities: Johnson Will Deliver Brexit, Eurozone In Recession

Authored by Mike Shedlock: Hello EU. Meet Boris Johnson and his negotiating team. While doing so, think about recession. 

Johnson Will Deliver Brexit 

Eurointelligence has finally come around to my long-held four-point stance.

1. Boris Johnson is not bluffing.
   
2. He will deliver Brexit.
   
3. The EU would be wise to make a deal.
   
4. Germany and the Eurozone will be in a world of hurt if they don't.
   

From Eurointelligence

Forget the cabinet reshuffle. The one single appointment we take very seriously is that of Dominic Cummings. The head of the Vote Leave campaign has been given the position of special adviser to the PM, with responsibility for Brexit and the civil service. He is essentially the CEO of Number 10, Downing Street.
Cummings has been immortalised by the Cumberbatch movie The Uncivil War, in which he was portrayed as the mastermind behind the Vote Leave victory. We rate him as probably the smartest political operator in the UK right now, somebody who often works outside the policy consensus. He was the first campaign manager to use modern Big Data methods in political polling and campaigning. His elevation underlines our expectation that Boris Johnson will do his utmost to deliver Brexit by the end of October. And that he is getting ready for an election at some point in the autumn.
We don’t know what Cummings is plotting, but we do know that this a guy who is gaming the scenarios in a way that Theresa May’s people didn’t. And we know that he will be operating from different data sets than those of most pollsters.
The strategy will be to take the negotiations with the EU to the brink, and then either agree a deal at the last minute or walk away. We have argued from the beginning that the UK parliament massively overestimates its own role in being able to micro-manage the stages of the Art. 50 process. Its ability to force an extension is far more limited than is widely acknowledged in the UK. A no-deal Brexit will be a consequence of the EU not agreeing to a deal, or of the UK parliament not voting in favour of a deal that Johnson presents. At no point will he advocate no deal himself. All he needs to do is not to seek an extension.
This is a dynamic process. MPs will think twice before openly rebelling against Johnson if only because the result of any rebellion is highly uncertain. We suspect that the much-predicted Tory rebellion of 10-20 MPs voting against the government in a no-confidence motion is going to wither - especially once Remain MPs start to think it through, which they have not done yet.

Key Points

1. Rise of Dominic Cummings
   
2. UK parliament massively overestimates its own role in being able to micro-manage the stages of the Art. 50 process.
   
3. Johnson is getting ready for an election at some point in the autumn.
   

Who is Dominic Cummings?

To better understand the role of Dominic Cummings and his role to date, please consider Who is Dominic Cummings and was he really responsible for Brexit?

Boris Johnson has caused a major stir with his one of his first appointments as the new Conservative leader, after asking the highly controversial "mastermind of Brexit" to be his senior adviser in government.
Cummings is seen by many as the evil genius who delivered Brexit, a role that became the basis of Channel 4 drama The Uncivil War about the referendum campaign. To others, he is a brilliant thinker with a record of driving through radical policy changes.
Cummings was the brains behind the notorious “£350m-a-week for the NHS” claim emblazoned on bright red buses, despite it being proven to be false, and the winning “take back control” slogan.
As the head of Vote Leave, he also made a show of refusing to work with Brexit bad boys Nigel Farage and Arron Banks – while admitting his campaign relied on their toxic anti-immigration messages.
Intriguingly, just one year after the referendum that turned Britain on its head, he was branding it a “dumb idea” and admitting that future generations might well view leaving the EU as “an error”.
Cummings was found in contempt of parliament in 2018 after MPs said he had refused to appear in part of a Commons committee to give evidence about Vote Leave campaign as part of an investigation into fake news.

With that explanation out of the way, let's return to my four-point stance.
It's not that Euroiintelligence ever strongly disagreed with any of my points.
Rather, Eurointelligence wavered greatly and never strongly endorsed that set of viewpoints until now.
In addition, there is one more point below that is a huge change in their stance.

What Should the EU Do?

It is no secret that Boris Johnson is held in contempt by the chancelleries of Europe. But, whatever EU leaders think of him personally, they will soon be confronted with a formal request to re-open negotiations on the withdrawal treaty.
EU unity has held up extraordinarily well during the entire Brexit negotiations, but this is because the EU was confronted by a weak negotiator. Olly Robbins gave the game away when he said that either the Commons would vote for the treaty, or Brexit would be postponed for a long time. From the EU’s perspective, this was a game of head-I-win, tails-you-lose.
But, when confronted with a partner willing to accept a no-deal Brexit, the situation changes. The EU will need to consider, for the first time in earnest, the political dynamics in the European Council in the days and hours before a no-deal Brexit. Are they really prepared for it as they say? Politically and technically?
We don’t think so. The German media has spent the last two years in denial that Brexit is happening, focusing much of its reporting on the second-referendum campaign. Lately they switched to portraying Johnson as a buffoon or, in the case of Spiegel, as a madman. But what will happen once they realise that Germany is about to face tariffs in the two largest export markets for its cars, the US and the UK? We think that complacency will turn to panic overnight, as it so often does in European politics. The EU will need a strategy to deal with the Johnson administration. EU leaders will need to explore among themselves how far they will go in opening up the discussion on the Irish backstop. And they will need a no-deal strategy that goes beyond the regulatory preparations of the European Commission.

"We Don't Think So"

Eurointelligence fully expected Theresa May would deliver her pathetic deal. I didn't.
But what is most striking is this Q&A:

Q: Are they [the EU] really prepared for it as they say? Politically and technically?
A: We think that complacency will turn to panic overnight, as it so often does in European politics.

Complacency Will Turn to Panic

A prediction of "panic" is one heck of a change in stance from a publication that repeated at every turn the EU would never make any changes or even consider them.
And perhaps the EU won't. But the EU will hold serious closed door discussions despite what they say they will do.
And that has been my position from the moment Theresa May was outed.

EU in Recession

Germany is in recession right now. That's my call but it is a minority view.
By October 31, the entire Eurozone is likely to be in recession.
To understand recession chances and the potential for EU panic, please see US, Germany, Japan in Manufacturing Recessions: Full-Blown Recessions Coming Up.

Pretending Period is Over

The pretending period is now over.
Johnson will deliver Brexit. And there is not a damn thing the UK parliament can do about it.

Trigger elections? So what?

Labour leader Jeremy Corbyn threatens trigger elections via a motion of no confidence. But he doesn't have the votes or her would have done so already.
Johnson is likely to call for elections himself. For details, please see Early Elections Coming, But How Early?
I am sticking with my assessment that Johnson or Parliament will trigger elections in September and they will be held shortly after Brexit is delivered.
October 31, a Thursday, would be fitting. But I opt for November 7 as the most likely date.

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