Realist, not conformist analysis of the latest financial, business and political news

Government’s Extra £100 Million For Brexit Ferries – We’re Up £12.9 Billion On The Deal, Maybe £8.8 Billion

Much shock and horror as it is revealed that the government has splashed out £100 million on extra ferries to deal with Brexit – no one quite noting that we appear to be some £12.9 billion up on the deal in just the first year. Quite why we require more ferry space is uncertain unless it’s all about being able to carry the floods of Europeans too scared to stay in a country regaining its civil and other liberties. All those Poles hungry for the wages of Krakow, those French lusting after Parisian tax rates – yes, undoubtedly, that’s it, we’ll need the space to take them on their way.

Or even, we might expect varied customs and passport officers in lesser lands to start playing silly buggers and therefore it’s a useful enough idea to have a bit more ship time available to deal with those delays. We’re still going to be hugely up on the deal:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] The UK has spent more than £100m to charter ferries and ease “severe congestion” at Dover in the event of a no-deal Brexit, as the government ramps up its multi-bullion contingency plans. Increased border checks at ports after Brexit could “cause delivery of critical goods to be delayed” if the UK leaves with no deal, according to documents outlining the £107.7m agreements to secure extra lorry capacity. [/perfectpullquote]

So, currently we pay in £13 billion a year to the EU budget. We would seem to be £12.9 billion up – for pendants, £12.893, OK, £12.8923 billion – up on the exchange. We get to keep our money but have to spend a fraction on contingency plans if the foreigners – as foreigners are wont to be – become stupid in their truculence.

It’s possible to wibble a bit about this saving for some of that tax money forked over does come back:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]In 2017 the UK made an estimated gross contribution (after the rebate) of £13.0 billion. The UK received £4.1 billion of public sector receipts from the EU, so the UK’s net public sector contribution to the EU was an estimated £8.9 billion.[/perfectpullquote]

OK, so we’re only £8.8 billion up.

But do note that’s only in this first year. We’ve this one, single, cost in this first year. And we save that £8.9 billion every year thereafter. Capitalise that over, well, over what period? Well, we had the first EU referendum in 1975, the second in 2016. That would mean that, logically enough, we go revisit this decision in 41 years from then, 2057 say? And we capitalise the £8.9 billion over that 41 year period and just because it’s the weekend we’ll ignore net present values*. That’s 41 x £8.9 which is £365 billion. Thus the costs now are 0.03% of the long term savings – one hell of a bargain all will be able agree.

If only all political decisions were a easy as Brexit – spend a tad now to gain a cornucopia in the future.

*It’s also true that our net contribution isn’t going to be going down over this period now, is it?

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Rhoda Klapp
Rhoda Klapp
5 years ago

Can we keep on counting the money saved from not being in it after it collapses from internal strains exacerbated by us not being in it?

5 years ago

The ferries are being hired from where? If they are floating around Europe anyway then the owners would have cashed in on any extra demand anyway. Unless extra ferries have been built this doesn’t alter the availability of ferries at all, it just gives government control over a portion of the fleet.

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