Dismantling the European Union and United Kingdom

by Diane Francis


The next major trade deal Stephen Harper will negotiate – in 2016 after he deservedly wins re-election – might just be with the old Mother Country Britain, or what’s left of it. This week’s Shock Election in the U.K. points to a tempestuous few months in Old Blighty as voters appear to have aligned into two viable, opposing separatist blocs.

Prime Minister David Cameron scored a majority, compliments of a growing coalition of English voters who want to separate, fully or partially, from the European Union. And the Scottish National Party scored a clean sweep, compliments of just about all the Scottish people who want to separate from England but stay in the European Union.

In essence, it appears as though this election represents an electoral positioning in advance of the main events in 2016: The Scottish elections and the anticipated yes-or-no vote on whether to leave the EU.

In January, a poll conducted by anti-EU Daily Express claimed 80 per cent support for leaving, and yet a Tory trounced the Independence Party leader, Nigel Farage, in his riding. But Farage’s strategy was clear: “We can be trade and economic allies with Canada and Australia, with India and Singapore. Of course we will still trade with all countries across Europe. EU membership is not necessary for access to the EU. Just ask Norway. Ask Switzerland.”

The fact is that Britain can and still does trade with Canada and the others, and should stay in the EU. Roughly 10 per cent of the country’s flagging GDP alone is based in London’s Square Mile, the storied City, one of the three most important financial capitals in the world, in part because of its inclusion in the EU. And the non-financial base of the country relies on the fact that London is the preferred location for foreign multinationals who want to trade with the European Union.

A “Brexit,” or departure from the EU, will result in a disastrous exit by foreign companies. Besides, it will guarantee a “Scoxit,” or exit of Scotland to the EU.

As The Economist pointed out last year, Britain has always been a “semi-detached” member of the EU, so why leave what’s really not broken?

Meanwhile, another Shock Election swept from power the Tories in Alberta following a string of mishaps and scandals involving former Tory Premier Alison Redford. The New Democrats won and will do three things: raise taxes, raise minimum wages to European levels of $15 an hour, and raise oil and gas royalties.

There is whinging and twisting in the wind on the part of the Calgary business community, as there was when Bob Rae took over Ontario. But their challenge going forward is oil prices and pipeline access, not whoever is occupying the premier’s seat in Edmonton. At $80 a barrel, the outlook will improve. At $100 a barrel, a collie dog as a premier would be just fine.

A more interesting question is: What does this Shock mean to Canada’s looming federal contest?

Firstly, this is no mandate for the New Democrats, even though Rachel Notley boasted that was the case. She won because she is a likeable, well-known Albertan whose family has served the public nicely for a couple of generations. Thomas Mulcair, by contrast, is not likeable in demeanour, is nationally unknown and an outlier who benefitted from a protest vote in Quebec.

Liberal Justin Trudeau is a non-starter, and this week he proposed a four-per-cent hike in income taxes on people earning more than $200,000. While there are no tag days for such folks, the fact is that this represents a psychological tipping point for Canada’s entrepreneurs, investors and professionals. He would raise federal income taxes to 33 per cent. When added to Ontario or other provincial sales taxes, that increases the rate paid to 53.53 per cent, or more than taxpayers are allowed to keep for themselves. This is a job-killer.

Another confiscatory four-per-cent grab by a Liberal is Premier Kathleen Wynne’s Ontario pension, which will take four per cent out of everyone’s payrolls, even when a private pension plan is in place. Employees will contribute two per cent and employers two per cent. This unnecessary pension notion is being trotted out at a time when provincial debt levels are frightening and Ontario’s economy is slowly sinking. Job-killer policy number two.

About the only positive in an otherwise grim leadership offering is that Canadian voters occasionally opt to vote for people who mind the economy and don’t abuse taxpayers. Hopefully, they will this fall.