Monday, June 26, 2017

ON BREXIT

The Brits have voted to leave the EU.    Currently all the talk appears to be directed at securing a 'soft' Brexit.  

Now someone will correct me if I'm wrong but my understanding is that a hard Brexit (favoured by the discredited UKIP and a rump of Tories) means the severing of the ties with Europe and going it alone whereas a soft Brexit is based around keeping the bits you like (say zero tariffs) and binning the bad ones (ergo open boarders) ... something akin to having your cake and eating it too.

Seems to me that many calling for a soft Brexit are missing the point completely ... namely that the EU holds many of the negotiating aces.   Why should they agree to the Brits keeping the good stuff and discarding the bits they don't like ... what advantage is there for them in that?    Surely and if the EU were to make major concessions this would work to strengthen the hand of the Euro-skeptic parties in other member states.  Why would the EU want to do that?.

Or am I missing something completely?   I look forward to Lord Egbut's take on this as a dedicated Europhile.


7 comments:

Ghost Of Greenwood said...

The EU will collapse under its own weight eventually, the Brexit vote was the first domino to fall. The eastern EU members are looking increasingly likely to cauterize themselves from the disastrous globalist, open boarders (sic) insanity favoured by Merkel and Juncker.

It won't happen overnight, but it will happen.

Anonymous said...

GoG...still reading from the Kremlin script I see and I do wish you lot would spell borders correctly.

Veteran....it is difficult for anyone to grips with what is happening by listening to sound bites from TV or radio. The online UK papers are impossible to read and form am opinion. All papers beginning with word DAILY are Pro Brexit and are insulting peoples intelligence with their rabid outpourings. Much to my disgust the Daily Telegraph is guilty of lying by omission and printing only news that is favourable to the Govt.

The only paper left that actually reports is the online Guardian. The only paper openly anti Brexit (and it shows) is the Independent.

There will be a second referendum as there is swing in the public mood because the public are now realising the catastrophic economic consequences of isolating the UK from Europe only 22 miles away. The EU is a family of 28 countries that from time to time squabble and fight over legislation, just like the US states but you never hear of Colorado senators slagging of those from Nebraska or California because of perceived favouritism that's because it's not news, but I can assure that the EU will not collapse in fact the recent sidelining of nationalist and very rightwing parties in Euro elections has proved the point. A recent poll of the European young showed that over 50% were unhappy with some of the administration but altogether 80% did not want the EU breakup.

Quite simply there will not be a hard border in Ireland, RoI doesn't want it, Ulster doesn't want it, the EU doesn't want it and the majority of UK MP's don't want it ergo no Brexit, just a tinkering of the rules as a face saving exercise.

When the UK PM fails in her negotiations she will lose the support of the Ulster MPs and there will be another General election which Corbyn will undoubtedly win through, the first time ever, the young flexing their muscles. It is their future that that the over 50's were destroying when they voted Brexit.

Lord Egbut Nobacon

Anonymous said...

My last post didn't really answer the question of the negotiating position which goes something like this......for every complex problem there is a simple answer...which is invariably wrong.

The UK is in a terrible position.

Despite what the EU say (they are playing a game and can lie too), the no-deal scenario would be a fantastic gift to the EU. The eurozone and the UK are both performing reasonably well economically at the moment.

Now, clearly the long-term EU goal is to take as much of the UK's profitable industries and services into (or back into, as they see it) the remaining EU27. Not a difficult task, as with the exception of Germany and France, the other 25 are cheaper than the UK, and in some cases vastly cheaper, as well as being geographically more accessible.

Now, the UK wants to leave the single market and customs union (itself a mad idea leaving the most powerfully trading bloc in the world!), so this gives the EU easy opportunity to relocate these industries back to the EU, and preferably into the eurozone. Eventually, at least, they will not need to trade with the UK to obtain these products, services, as they will be doing it themselves, which is vastly superior. Locating into the Eurozone also removes currency risk on supply chains, providing yet more efficiency and profit.

The UK wants a special FTA with the EU, something the vastly bigger (and promising) markets of China, Japan, India, Russia (with sanctions), even the USA, don't have. These countries basically trade to WTO rules, and the EU sell plenty of BMW luxury cars and Siemens white goods. So the UK argument that the EU will want a FTA (within two years) seems questionable, since the UK is a somewhat less important market. Note that trade will continue, it's just the rules will change to the disadvantage of both, but more so to the UK. The UK will be a country outside of the EU, like all those others. The UK will, indeed have an inferior deal, as required by the EU.

A similar scenario applies to the UK's golden goose, the financial sector. There is no trade deal here. Again, it's in the EU's interests to not grant the UK (or merely temporarily grant them) passporting rights as they can force these services to Frankfurt, Berlin, Paris, Dublin, Madrid, Amsterdam, Brussels, Warsaw. Note that, once the UK has left, they can legislate against the UK, and there is little that can be done to stop it, particularly if we are daft enough to leave the European Courts of Justice, and/ or ECHR. Note that the EU has never been happy about the way the UK has run this sector, and with good reason, many in the UK agree.

Then there's Euro-trading (no chance there for the UK).

Then there's pharmaceuticals after the European Medical Agency has left, which has strong connections to the industry. I won't mention farming here, but it's very bleak indeed as farming has to be heavily subsidised in any rich economy to compete against radically cheaper imports (even the USA subsidise farming).

So, I think the EU really doesn't care a fig if the UK doesn't reach a deal. And, if that isn't bad enough, the UK has an unstable minority Government as a result of the snap election and a deeply divided country.

Without a deal the UK will be in a desperate situation by 2019, as they will have no trade deals in place and will need to urgently agree new WTO schedules, quotas and tariffs with the whole world.

Yet the EU will be strong, having deterred any members for trying exit, not that they want to but it has stopped the nationalist parties and given the public of the 27 food for thought.

Lord Egbut


The Veteran said...

Egbut ... thank you for that analysis. I agree with your comment that the EU is unlikely to give a fig if there's no deal ... they can live with that. For the Brits it will be much harder ... and much harder still if, having 'Brexited', they do a volte-face and want back in. The 27 (or whatever) will screw them.

But there are opportunities for the UK in Brexit (if they decide to seize them) ... and the Brits have a relatively good track record in 'muddling through'.

Psycho Milt said...

Seems to me that many calling for a soft Brexit are missing the point completely ... namely that the EU holds many of the negotiating aces. Why should they agree to the Brits keeping the good stuff and discarding the bits they don't like ... what advantage is there for them in that?

It looks exactly the same to me. "Soft Brexit" seems to be a propaganda fantasy that Gove, Johnson et al sold to voters to persuade them to vote leave. It's on a par with imagining that getting a divorce will provide you with the opportunity to negotiate so you get to keep the features you enjoyed about your marriage while ditching the features you didn't. Well, it won't provide those things - it'll provide you with a divorce, and you get to start again from scratch. There seems to be a hell of a lot of wishful thinking involved on the British side.

Paulus said...

The EU has many financial failing Countries - if the UK Leave who is going to pay them what they think is their dues - Germany.
The UK financial contribution is second only to Germany and that will stop suddenly unless the EU compromise too.
Britain still has the fifth largest economy in the world.
Say that to the bankrupts like France, Spain, Portugal and Italy let alone Greece and many precarious eastern countries in the EU.

Anonymous said...

Paulus...."many financially failing countries"? by what criteria do you make that rather rash statement? The biggest debtor nation in the EU = Britain. The biggest debtor nation in the world = USA.

The UK is no longer the fifth biggest economy in the world, it has been overtaken by France. You know, the France that has the same population and all those state owned enterprises, rail, energy, health etc. that are just so efficient and deliver better results because there are no shareholders to pay. This the "bankrupt" France whose food prices and now housing that is cheaper than NZ but whose wage structure is generally higher

With 28 countries there are always going to be those doing better than others but unlike the rustbelt states in the US that have to fend for themselves the EU system of wealth distribution has dragged the poorest, usually ex Soviet, countries GDP and standard of living up from zero. This is work in progress. Self indulgent countries like Greece living beyond their means is not an EU failure but symptomatic of the corruption and political malaise blighting that country.

Lord Egbut