Not true. It is the reverse because the UK runs a gigantic trade deficit: in 2014 they exported 472 billion USD, but imported 663 billion USD¹. In fact the UK is the second country in the world with the largest trade deficit (behind the US). A huge portions of UK's export go to Europe, therefore the EU has definitely more say when it comes to negotiating trade deals with the UK. I would be very worried for my economic future if I were a UK citizen...
Let's do some math. UK exports to the EU amount to approximately 300 billion USD. Assuming 1 worker produces 200 000 USD worth of goods, then the UK-EU trade is linked to 1.5 million jobs in the EU, or 0.3% of the EU population.
For comparison the UK-EU trade is linked to over 3.3 million jobs in the UK,¹ or 5.1% of the UK population.
0.3% vs 5.1% → the UK needs EU more than the EU needs the UK.
Not in this particular case. Like others have pointed out, it is not in the best interest of EU to give UK a sweet deal and it is not that hard to understand why. UK has had a sweet deal with the EU full of exceptional treatments. It can veto anything it wants and frequently exercises its right to do so but does not contribute much to the common piggy bank. But now UK wants to leave altogether, will not contribute financially at all but will have an even better trade deal? What message does it send to those who are loyal members of EU? That they will be financially penalized for their loyalty? There is no way Britain gets a decent deal at all.
I read that about 5% of EU's trade is with UK. It's not insignificant but it's not the end of the world if it goes down to 0.5%. We will fuck UK over, good riddance, we will be stronger without UK, now we will finally pursue tighter integration without fear UK will sabotage such attempts.
This is just a ridiculous brinkmanship issue all the way around the table. The current situation with the exit vote wouldn't have been necessary if the concerns of the Leave side had been taken seriously by EU leadership (more local governance, for instance).
Now we're in a sorry situation where each party's incentive is the opposite of what is required for a healthy economy, and the important decisions require referendums and take a very long time. The fact that the vote to leave was mostly supported by older voters is a tragedy for the future generation, who do not have a straightforward way of having their concerns heard in the coming decades.
no, now incentives in EU are to have healthy EU economy, without caring about UK one. this means rest of states will stay together for example. which could mean punishing UK financially for this silliness. you express UK-centric view, this is EU-centric one that goes beyond individual state/industry. UK goods become more expensive? well then some intern EU ones might become more interesting.
We are tired of your exceptionalism. You had a great (unfair for the rest) deal, and you were still complaining. We do not care one bit about the “concerns of the leave side“. Just go.
This is the reason why I think losing the UK may not be all that bad for the EU. The UK got a very sweet deal, and was very obstructionist in return. Leaving and getting a reasonable deal outside the EU may be better for the EU, and maybe the UK will be happier there.
I think vindictive sanctions or refusing new trade deals with the UK would be stupid, childish and harmful for the EU. I hope they work together on a reasonable and fair deal. And then maybe the EU can move forward towards a closer union, and maybe also address some of the problems with the EU, because it's hardly perfect.
That's not a "deal"... and not how things work in real life.
There'll be negotiation and both the EU and the UK will get less than they want. There'll be free trade for sure, ironically there'll most likely free movement too.
More importantly, the UK will get less than they currently have. There's no possible way a new deal is going to be better than the already very sweet deal they currently have. A fair and reasonable deal will probably be something like that Norway and Switzerland have, which is very similar to what the UK currently has, but loses them their vote in the EU, and doesn't give them most of the things the Leave camp promised. A deal that gets them everything the Leave camp promised is impossible.
It is possible that the UK gets a slightly better deal than what Switzerland and Norway have, because the UK is bigger, but it's still not going to be a lot better. Certainly not in the current climate.
- they have taken everything from the EU, and given little in return.
- they have dragged their feet for 40 years, preventing EU progress
- they have forced on the EU expansion to the East (which I welcome), and then complained that too many poles are migrating to the UK
- they have prevented political integration and shoved down our throats a neo-liberal EU
- they have been treated excepcionally well by the rest of the EU, with excemptions and rebates. How have they thanked us? By continuing to blame all their problems on the EU.
And now they leave.
But I do not loathe them (my personal experience with british people is excellent). I think that you, as a country, have been extremely unfair with your EU partners, and basically betrayed the European project, and the trust that we have deposited in you.
So, the only thing left now is just to accept things as they are: you have chosen to leave, so please do it immediately. Do not burden us with your petty politics. We are not interested in knowing if the next prime minister is going to have the majority to invoke article 50 or not, or if you will have a new referendum, or if Scotland will split from the UK. We do not want to wait for 6 motnhs, or 2 years, or 10 years until you get your house in order. We do not want this uncertainty anymore. We have respectfully waited the last two years (?) for your referendum to be held, but now we have had enough. David Cameron has organized this mess, and he should bear responsibility for making it legally binding.
The strange thing about this for me, is that you had an excellent experience with the British people but now you are effectively calling for them to be crushed by this, at least, the 48.1% who voted remain, plus all the young people who couldn't vote but would have voted for remain.
I do not want to crush anybody. I want to salvage what is left of the EU. We can not allow for uncertainty, since now we'll get 20 more referenda all around the EU.
YOU have decided, and must take responsibility. We can not wait for years while your jonsons, farages and whoever sort their internal politics.
Cameron called the referendum and assured in case of defeat he would activate article 50 immediately. He must deliver. You have two years time to negotiate anyway.
I am sorry for the UK, I really am. I think you were an important partner, even though a bit unfair. But we must respect your decission: we can not pretend this is business as usual. The british people have voted, and we must respect that.
Specially sorry for the remainers, but this is something you need to sort out internally.
As in your other comment, it's true also that despite 'paying more into the EU than receiving' directly, the benefits have been large. In fact the whole argument that the UK will be better off financially leaving is missing the point. The UK received big benefits from being in the EU and trying to calculate some in/out net contribution is again, missing the point entirely.
However, and I know this will grate horribly, but the EU might have to wait, whether it likes it or not. If article 50 is not invoked, no one can force the UK out. What's more, there are gathering suspicions that the UK could consider a second vote in some months' time. Only by waiting could this happen.
For context: I am British and do not want to leave the EU, despite my best efforts to find the positives in my other comments. I think that the UK had a good deal before and was able to influence policy from within. Now we will be punished by the EU and break up internally.
But beyond all of this, I don't want to live in a country where people have voted so stupidly, and so nastily. One
of the leave campaign's biggest claims has been proven to be false. Actually proven to be false. And people voted on that. This in my view is almost grounds for a voiding of the entire process. I feel ashamed of my country and I'm a "true" Brit by their standards. I consider myself lucky in that I can leave and live somewhere else, and this is what I intend to do. I no longer feel a part of the country of my family and of my life so far. And I didn't see such a strong feeling coming until it hit me with the leave vote.
I see your point of view, and I'll try to explain mine:
This has been a big blow and, unless we act united and fast, the EU is going to crumble. You say that, due to how the referendum has played out, it would be better to repeat it in some months time. What happens in those months? Nobody knows, but probably very big damage for the EU and for European countries, while financial havoc paralizes the economy.
And afterwards? You vote again? Leave again? Why wait more then? Remain? Can the EU really deal with such unstability, a partner which does not accept a role alongside the rest of EU members, constantly complaining, penny pinching and accusing the EU of all imaginable problems? We have frankly had enough. I understand this is not your personal stance, but that is the UK's attitude.
I think that “what is done can not be undone“. Lets try to craft a deal which suits both parties. It could be that lots of EU agreements can be salvaged for EU-UK cooperation.
If we were talking about this last week, I would support you, but reality has kicked in, and you wanted leave. This is not a game you get to play again and again. This was a one-man bet, and the whole country played along. What a disaster!
Yeah, the damage to the EU is also a huge issue. It's terrible it's come to this.
There is precedent for a second referendum - Ireland did so in 2009 on accepting the 28th Amendment. I admit, this is a lot bigger.
I think the context here which may help this to make more sense to those outside: a lot of British people voted for leave on false claims. Ok, lots of elections have false claims. But these were enormously misleading and widely spread. It seems like there are a lot who regret their decision, though I'm not sure what % they represent. If there is a general election called early with a party that explicitly backs EU membership winning, then there's no way we can leave without another referendum. And if we vote to stay, I think there would be grounds for the EU to get us to accept a lot of things which we might not have before.
But yes, it's a totally miserable situation for everyone.. you know what, I'd even say it's miserable for the politicians who 'won'.
Crazy isn't it.. again, I'm just ashamed my country can come to this point. The leave side didn't even have a plan as to what to do.
Johnson doesn't look like he wants to go through with it. He looks like he just woke up and found that he got some girl pregnant that he doesn't even like.
But did they campaign on facts? Did they have a plan? Are they going to use this plan for brexit? Where is the plan?
I understand that the plan is maybe not detailed, but I assume they have some kind of detailed roadmap on how to proceed? The Scotland independence referendum had a very detailed plan, hundreds of pages long.
The other issue is the British government: that Cameron did in fact not prepare for losing is his biggest blunder, and history will judge him for that.
Thats because (overall)you are richer: the EU works at the region level. Besides, the EU is not only money, there are also intangibles.
Besides, you are counting only EU related expenditures. Are you counting indirect benefits? How much money makes london operating EUR finantial center? And lots of other indirect benefits.
There are no circumstances whatsoever that the EU will give the UK a trade deal like Norway / Switzerland / Iceland / etc. without the UK paying for the EU budget and allowing free movement of people, for example. All the things that the UK population voted against are exactly what prevents them from getting a trade deal. Something will have to give.
If you want to go with the rationalist perspective you seem to be advocating, then the UK government will have to be anti-democratic and strike a deal explicitly against their citizen's declared interests.
(This vote is particularly vexing for me since I'm Irish (voted stay) and now will have to sell my house in order to leave. Quite upsetting, overall.)
People in the North are UK citizens already (and free to also get Irish citizenship). I believe they mean they're an Irish citizen living in the UK (maybe England itself) and they're worried that they might not be able to stay living there.
This is pure bullshit. Lot of the illegals cannot even read and write. They don't know the language. Most of them are also not refugees. They will be liabilities. The skilled labour from the Eastern-European countries is an asset on the other hand.
Actually robots will take away lots of jobs. Why do we need more unskilled people in our lands, when soon even the skilled labour will be automatized, and unemployment will grow further?
> Lots of the illegals cannot even read and write.
Except they can. Many Syrian refugees are proficient in English, and many even speak German. There was strong collaboration between German and Syrian universities historically.
(I'm not saying that everyone can read and write, but then again, Western societies have a surprising number of total and functional analphabets.)
And re the automation argument: Automation only takes away medium-skilled jobs. Jobs are for unskilled people because they don't require training, and that's also why they are a poor fit for robots. (Robots don't like irregular situations and need programming for new tasks, whereas you can easily explain a new task to a human worker in a few sentences.)
I always laugh at how people equate more people in a country with growing unemployment rates. If this really worried you, you would move to outlaw procreation, since procreation produces new workers to compete with you about 18 years from now.
> If this really worried you, you would move to outlaw procreation, since procreation produces new workers to compete with you about 18 years from now.
Only if the birth rate is above replacement which it isn't in any developed western country.
> The rest of Europe's countries does not have delusions of grandeur and feel disenfranchised by foreign workers making minimum wage.
There are many reasons to leave the EU, other than "delusions of grandeur" (the US seems to do pretty well..) and xenophoia. Perhaps the UK wanted to make choices without being slandered like this.
What choice? You can wish that the refugee crisis would not exist, but the choice has been made when deciding whether or not to be the 6th largest weapon exporter.
Acting like an overrun victim now is a bit schizophrenic and it's sad to see 52 percent small minded bigots pulling down a country in this way.
Riiiiiight. And in NATO, all NATO members are "equal" too, right? The US is just as important as Bulgaria, they're just "members"? Germany, where the ECB is, which is the most powerful economy in Europe, which basically controls the single European currency, is "just another country" in the EU, with an opinion that matters just as much as that of Portugal?
Yes. I am German and pro-European and I would happily take a deal that our GDP will be cut 20% if UK's GP is cut even 10% in return. Not to punish the UK, but to firmly establish the principle that leaving the EU is painful. While this might not be the optimum from an economics point of view, it serves to keep the European Union alive - which is much more important in the long run (no more war etc...).
I suspect you will find that your enjoyment of self harm is not shared by most Germans.
Not to punish the UK, but to firmly establish the principle that leaving the EU is painful
Do you realise how crazy you people sound? "There's no punishment for leaving the Mafia, you just have to understand the principle that it will be as painful as possible".
The EU has warped into an ideological disease that sees European people's turned against one another by an absolutist religion that sees diversity as a flaw to be fixed and believes its own hype about stopping wars.
The EU does nothing to stop war. If turning Europe into a single country could stop war, there'd be no civil wars, but today the only wars are civil wars.
It does not matter much if it is shared by most Germans - what matters is if it is shared by a small elite of German, French, and EU Commission/Parliament leaders. Do you really think the German population will rise up if you tell them "Hold up, discriminating against the UK in derivatives clearing rules will cost you 0.0x% of your GDP!" And to most people (outside of the UK), it is quite obvious anyway that contracts negotiated between friends cannot be transposed 1:1 into a relationship between entities who are not friends.
"We will fuck UK over"
"Now we will finally pursue tighter integration"
I have to say, with this kind of attitude, I am even more glad that the UK has left the EU. Who would want to be partners with this kind of spite and hatred?
"the EU" can speak only in treaties, and so has not spoken yet.
But yes, multiple people connected with the EU government have been making statements to this effect: out means out. It is not in the EU's interest to give the UK a more favourable deal than it had before, because that signals to other member countries that leaving has financial benefits.
A more favourable deal than the UK already had is indeed unlikely, because the UK already had an unreasonably sweet deal. But I really do hope the EU will give the UK a fair deal in the coming negotiations. There's no point in needless hostility. Unless they want to make good on that World War 3 scare.
Be able to set immigration to points based - like the US, Canada, Australia. Why should we discriminate against Indians, Chinese, Bangladeshis, Africans for the EU? I like immigrants and I think they help our economy, but I want this to be run better.
I don't agree with how the EU subsidizes e.g. French farmers at the expense of e.g. African farmers.
To not be a part of what seems to be a failing system and having to answer to the un-elected European Commission, and to therefore avoid being swept along in integration which isn't so good.
It might sound odd, but I didn't vote for leave. But I can see that now that this is what we have, maybe there are some reasons to be positive.
> Be able to set immigration to points based - like the US, Canada, Australia. Why should we discriminate against Indians,
Because EU people are not immigrants. That's the whole point. They are citizens, which happen to be born 1000 km to the east and in a different historic region - but they are citizens. There is no discrimination here because you're comparing apples and oranges.
One day, if globalization advances far enough, we will have the exact same conditions for all (or most) of the world, in some form or another. But brexit is a step back from this, not forward.
> I don't agree with how the EU subsidizes e.g. French farmers at the expense of e.g. African farmers.
Don't you think not having enough local food production to feed the population is a liability of any sovereign nation? Personally, I think there are "strategically important" industries (like food, steel, weapons) that countries need to protect to remain sovereign, by subsidies or other means.
EU state aid laws make it illegal to prop up industries, though. The only reason it works for farmers is because..well...who knows? The UK would really, really like to give some state aid to a few steel companies right now but it blocked from doing so by the EU.
The protection of badly run farms is a shocker. They are hopelessly ineffective. New Zealander here - NZ dairy facing tariffs because of European inefficiencies annoys me.
I can actually understand, to some degree, the fear of refugees, of Muslims, etc. But your fear of other European citizens boggles my effing mind, it really does. You're so worried about Polish people somehow destroying your "Britishness", but Bangladeshis and Africans - totes ok? No problem there for you?
Why are you scared of refugees and Muslims? Doesn't writing it down show you the insanity of that statement? They are fleeing horror and have a different narrow minded book to that which the locals subscribe. It seems to me that looking different is the key problem.
I'm not scared of refugees and Muslims. The people that vote UKIP are. But they're scared of Europeans it seems. Sorry, I'm liberal and all that as well, but in all honesty, somebody from Poland is less likely to be a strain on your social safety net, is more likely to be educated and be able to hold a job than an illiterate goat-farmer from Timbuktu. Just thinking about it logically, right?
So why are UK's xenophobes more afraid of the Polish Plumber than the Bangladeshi Goat Farmer??? That's what makes no sense to me. If you're going to be scared that your "Britishness" is disappearing, fine - but at least be logical about it. Who's more a danger to your way of life? Someone from 400 kilometers away or someone from 10,000?
This comment breaks the HN guidelines by calling names and being uncivil. We ban accounts that do this, so please don't do it. Comments on HN need to be civil and substantive.
It's 5% for Europe on average, but for Germany and the Netherlands it's much higher (15% for the Netherlands). No politician in his right mind is going to risk that to spite the British.
Leaders of EU countries are generally not in their right mind though. Merkel has flat out said that the EU for them is an emotional issue not a logical one.
This vote will set in motion a chain of events that can reshape politics across the continent. The EU leaders who have little to lose will use their votes to force the UK's main trading partners (Germany, Netherlands, Sweden etc) to start a trade war with the UK, at the same time as the UK is wanting to sign trade deals. This will piss off the populations in those countries. Referendums may well follow there too.
Note that "deal" will have to replace the existing decades' worth of detailed regulation argued over by many government workers ad infinitum, on a thousand topics. And the treaty says that such a deal is only accepted by a unanymous vote of all EU members.
If the UK leaves this decade, it will be without any deal in place.
"As of date X, all existing EU regulations remain in force. Changes to UK law that overlap with existing areas of EU regulation will result in a notification to the Commission".
Done. There is no need to 'replace' detailed regulation on a thousand topics when, as you observe, it is already implemented in UK law.
Tarrifs, sure, but tariffs are the boring part. What about freedom of movement? What – most importantly – about unified regulation?
Differing regulations create trade barriers and much of the work the EU did was unifying exactly those myriad different and sometimes contradictory regulations. That way someone making something in Germany only has to adhere to one set of regulations (and not, in the worst case, maybe even open different production lines for different countries) if they want to sell something anywhere in the EU.
How does the UK plan to be involved there? Realistically they can't if they are outside. So it's adhere or be out of the common market … this is the UK losing some of their power because they are unwilling to cooperate. Not even ill will involved
This is not the EU trying to do something harmful. If you don't cooperate and participate in something complex like unifying regulation you obviously lose power. It couldn't even be any other way!
I mean, what do you even expect the EU to do here?! Roll over and say that the whole EU will adhere to all UK regulation from now on? Accepting that the UK unilaterally gets to dictate regulation? That’s obviously not fair. The EU cannot give that kind of power to the UK. That would be monumentally unfair to all members of the EU.
It's already fucking hard to unify regulation and it's hard to find a way to somehow respect everyone's interests. How should the EU even react to the UK saying that they don't want to play ball anymore? There is no way except to give the UK an unfair amount of power or less power than they have inside the EU.
And the second solution is the only plausible one to me.
You should look into the reasons why people wanted to leave. I for one accept there will be a period of economic uncertainty, but consider it worth it in order to remove ourselves from an undemocratic institution that has power to set the laws of its members. I'd be for a democratic union, but I'll not be losing sleep over leaving an undemocratic one, even if it's a messy divorce.
Completely undemocratic, with representatives chosen in democratic ways, membership proportional to population (with UK getting the break there), laws voted in a democratic way.
The European Parliament isn't the central body of power in the EU. Only the European Commission can propose new laws.
To give you a quick introduction to the EU's legislative process... There are three main groups involved in putting together new EU legislation: the European Commission, the European Parliament and the European Council. In terms of democratic debate, the European Parliament is where the bulk of elected representatives sit, with the Council being the 'upper house' (equivalent to the House of Lords in the UK). However, neither the Parliament nor the Council have the power to propose new laws, they can only discuss proposed laws put forward by the Commission. Therefore, it is the Commission that controls the agenda for the EU.
EU Commissioners are not elected democratically. Furthermore, they are required to take an oath to put the interests of the EU first, and not take any instructions from the countries they are from.
In addition to all that, the Commission has very close ties to big business. There are reasons why TTIP and CETA are being pushed forward even with resistance from MEPs. I'd recommend checking out the documentary The Brussels Business for a look into the ways the Commission and big business work together.
> EU Commissioners are not elected democratically.
Well, they are suggested by the democratically elected governments of the member states and either accepted or rejected by the democratically elected European Parliament.
> Furthermore, they are required to take an oath to put the interests of the EU first, and not take any instructions from the countries they are from.
As they should, they are to work in the interests of the EU, not a single member state. German ministers are also required to serve the whole federal republic appealing to individual states is not looked upon very favorably.
> In addition to all that, the Commission has very close ties to big business.
Hopefully we can solve at least some of the issues with corruption and lobbying when the most corrupt country in the world[1], which has worked against workers’ rights and increased regulation to ensure public health and safety in the EU for the last four decades, leaves.
> "Well, they are suggested by the democratically elected governments of the member states and either accepted or rejected by the democratically elected European Parliament."
We're not talking about some inconsequential civil servants, we're talking about the leaders of the EU. If you want to call the EU a democratic entity, you should at least be able to vote for who runs it.
> "As they should, they are to work in the interests of the EU, not a single member state. German ministers are also required to serve the whole federal republic appealing to individual states is not looked upon very favorably."
The point I was making is that they aren't placed to represent the will of the people that put them in power. They represent whatever pushes the agenda of the EU forward, regardless of whether that serves the member states or not.
> "Hopefully we can solve at least some of the issues with corruption and lobbying when the most corrupt country in the world[1], which has worked against workers’ rights and increased regulation to ensure public health and safety in the EU for the last four decades, leaves."
Best of luck with that, with the lobbying machinery that exists in the EU you're going to need it. There are over 30,000 lobbyists in Brussels, in terms of volume it's second only to Washington DC.
> We're not talking about some inconsequential civil servants, we're talking about the leaders of the EU. If you want to call the EU a democratic entity, you should at least be able to vote for who runs it.
The UK and German cabinet (including prime minister/chancellor) are also not elected. Should we not call these democratic entities either?
> "The UK and German cabinet (including prime minister/chancellor) are also not elected. Should we not call these democratic entities either?"
I'm not aware of the situation in Germany, but I can tell you that in the UK they are elected.
First of all, the leader of each party is elected. There's due to be a Conservative leadership election soon due to the resignation of David Cameron, so you can follow the build up to this election if you're interested in how it works.
Secondly, whilst the positions in a cabinet are selected by the leader of the party, the available pool of people that can be part of that cabinet are all voted for democratically. Therefore, if they do a poor job, they can be voted out at the next election.
In contrast, you have no power to vote out Commissioners who do a poor job, and without that you basically have no power over the decisions they make.
On the other hand, the President of the European Commission is elected not by a popular vote, but by the popularly elected European Parliament. The members of the cabinet (the commissioners) are proposed by the democratic governments of the member states, and the cabinet as a whole is approved or disapproved by the popularly elected parliament. The same parliament can remove the commission.
In short, the Commission is not directly elected, but selected and approved or vetoed by elected officials, and can be removed if it loses the confidence of the democratically elected legislature.
Not over everything. And the system is democratic, but it does decide against the UK vote more frequently than most other countries. In that sense you can claim that the EU does not represent the UK very well.
HoL can't stop legislation, only delay it, and by convention they never delay manifesto pledges.
If the HoL stopped being anything more than a handbrake on laws it'd be abolished too. And as for the monarchy, well, nobody cares whilst the Queen is so disciplined about staying out of politics. If she dies and is replaced by Charles, and he doesn't change his ways, expect a constitutional change soon after.
And still it's unable to e.g. abolish the travesty of European Parliament's monthly travel to Strasbourg. Is that according to democratic will of European people? Hardly not.
It's not a hugely significant thing - maybe costs just a hundred million € per year, or a bit more, not a lot in EU context - but its symbolic nature about the essence of European Union is telling.
All democratic polities have weird little quirks which are unpopular but never remotely likely to become an election defining issue
I mean, the UK has a House of Lords...
All in good time. The push for elected peers in the House of Lords is not off the cards. To me the next big push for greater democracy is to go for proportional representation in the House of Commons.
If you look at the continued sanctions against Russia, it's definitely possible. Never underestimate political demonstrations of power regardless of money involved, just remember the Berlin Air Lift...
That's the whole point. Politicians send messages of their power rather than of their economy.
Well, the people have sent their message.
The North of England has seen their manufacturing base migrate to the cheaper countries of the EU while the SE reaps the rewards of the service economy.
yes, we already have the far right in france and the netherlands calling for their own referendum, the EU can't risk losing these countries and others as well, so they are willing to go to great lengths to not give these countries more reasons to leave
However, the UK economy is relatively small compared to other EU export markets. Specifically, this means that as a percentage of the total, it's not going to move the needle nearly as much as it will in the UK.
It's definitely going to hurt, but it's nothing like the pressure that will be on the UK.
Tariffs aren't the only factor in the assumed business losses, and they're probably not the biggest.
It's the loss of things like financial services companies based in London being able to readily "passport" their services into other EU countries without relying on local branch offices somewhere in the EU that will really hurt.
When it comes to passporting rights, it's very much in the interests of the EU to tell the UK to bugger off, and let the London HQs relocate a whole bunch of jobs to Frankfurt or Paris or Tallinn if they want to carry on doing business with EU nationals. This is likely bad if you work in some London-based back office role for a big European bank; really bad if you're a London-based fintech startup aiming to serve most European markets.
So the net "winner" for financial services might be Germany? If I were looking for a new financial head office, I would be inclined to locate it in the EU's largest and most stable economy, right?
London is only the financial powerhouse it is because of its dubious status as the least regulated economy with access to the EU market. If they lose said access, that role naturally goes to Luxembourg, the next-least-regulated economy, and that's where these services will move to.
just as an aside, Luxembourg is not really an unregulated economy. it's very popular for fin companies because in addition to access to EU, the regulators (so I hear from my peers in legal) are very proactive speaking to companies to make it easier to set up there, and are quite prompt and more flexible than other countries in assisting companies on ambiguity in interpretation of regulations.
The city may lose up to 30% (google Euro clearing and ECB. I was always a big issue). It will move to Luxembourg, Frankfurt, Paris and Dublin. Possibly Scotland if Scotland decides to secede - a vague possibility.
The optimum strategy would be to create a regional organization with standardized trade rules, tariffs and other co-ordination structures.
Since it is clear that the optimal economic outcome is not being selected, the optimal Political outcome will win.
EDIT: to elaborate on what I mean. I think that this event has more to do with political points being earned, and poor leadership than it has to do with actual good economic sense.
In such an arena, most of what the HN crowd tends to be focused is less applicable.
What I expect to happen is that life will continue as normal. Any premium which was built into the Pound due to reduced transaction costs with the EU will be priced in very quickly.
What matters is what penalties the EU decides to apply on the UK, in order to set a precedent. I expect the precedent to be onerous - sufficient for the UK to pay with its larger economy, but much harder to cover for any smaller state planning to leave.
Unfortunately this is the worst kind of conjecture - guesswork by someone not currently in the market.
That’s a lie. The EU was never intended to be solely a free trade area, it was conceived as an ‘ever closer union’ and a lot of work has been put into it becoming one since 1952.
De Gaulle certainly was right in vetoing the UK application repeatedly, given how much harm they have done to the common European project and long-time peace and prosperity on the continent.
Who is talking about ceasing all trade with the UK? The biggest changes will not come for net trade volume but more through a shift in supply chains. Politicians on either side will now have to make very bold promises so that businesses don't feel things are too much in limbo and pull the plug on their investments into the UK (factories, headquarters, ...).
the OP's proposition implied that it is the EU's dominant strategy to cut the U.K. a punitive deal that trades off short-term pain for the long-term pain of dissolving by attrition due to other nations leaving.
Tarrifs are not the problem. Even without tarrifs there are additional costs involved, mainly because both sides can't trust the other sides' regulations.
Yeah, so what? UK will keep importing after brexit even if trade agreements change... UK will import at higher prices maybe. Else, where will they get the merchendise from?
On the other hand, EU could import less from UK, since (probable) taxes will increase the price => EU will consume more from it's own production and have less imports from UK. So to me, if it's about jobs, UK jobs are at risk, not EU.
Transportation and smaller market will keep import prices from these oversease sources pretty high. EU only has to sell a little under (but more than what it's selling now, with the internal trade agreements) to keep it's upper hand.
Of course, EU would be ratarded to have some silly new agreements to throw the trade prices over the roof. But this is a situation which can be exploited in EU advantage and in no way in UK advantage.
"Shipping freight rates for transporting containers from ports in Asia to Northern Europe fell 17.8 percent to $540 per 20-foot container (TEU) in the week ended on Friday, a source with access to data from the Shanghai Containerized Freight Index told Reuters."
You generally have 40 foot containers, not 20. But then double above freight. With how much you can fit in there, it is nothing. You can fit 3 cars in a 40-foot container (though normally you'd use special vessels for cars).
Japan has trade deals with the EU making this possible. The UK will have to renegotiate all those deals themselves (or just copy and paste the old ones? what was the point of independence then?). What happens in the mean time? Is the UK going to remain part of the EU until all those deals with China, Japan, the US - to name a few - are made? It's a huge endeavor and a lot of question marks. I do not envy your position.
There is no free trade agreement yet. There are, however, a number of agreements that cover bureaucracy regarding import and export, as well as other relationships. Maybe most of the UK's non-EU import regulations are negotiated partner for partner by the UK government. In that case, nothing would change. But I doubt that ongoing relationships between global partners and the EU do not have any effect on the UK. See http://ec.europa.eu/trade/policy/countries-and-regions/count... for an overview.
Maybe it's possible for the UK to get custom tailored agreements that are more beneficial. But I'm afraid that until all of that is settled, a lot of time will have passed. Negotiation about the FTA between EU and Japan has been going on for about four years now. Other fora of exchange have been established decades ago. Until the UK can benefit from their own negotiation efforts, the EU might look more attractive to Japanese investments and trade.
International trade is complicated and takes time but the Leave campaign made it look like everything's going to be fine in just a few years.
Hopefully, since that would have the least negative fallout. The untangling of connections across the Channel will take some time.
OTOH, looking at other possible referendums across Europe, I would like it to be clear what an exit from the EU entails as soon as possible. I don't think leave voters will get what they had hoped for, vide https://amp.twimg.com/v/6ca5195b-a8a5-4b20-b209-92440b9a25d6
Honda threatened before to move it's Swindon plant to the continent. They also buy many assambley parts from EU countries. Let's see what happens next.
It is convenint for them to have a plant in UK while UK is part of EU (because they sell UK made cars to EU countries with the current trade agreement) but if agreements change and imported goods from UK to EU get higher price:
- Will Honda keep UK plant to sell higher priced cars to UK (due to higher priced of imported parts from EU)?
- Will Honda move the plant to an EU country to have better prices to a larget market?
How how does this work in the UK advantage, again?
You can't avoid losses because you can't let goods cross borders without oversight.
The EU has vital interests in controlling the consumer goods available in its market. If we don't have a say in, for example, how they control their food production, we can't just take their word on it.
If you now think, let's just assume the British government does its job correctly in that regard, and we'll be fine, you're wrong. Companies often know which of their products are going to end up in exports, so they know where they don't need to follow the rules.
EU as a whole perhaps. But not individual countries. For individual countries (e.g. Netherlands) political games will just increase the amount of people wanting to leave.
Source? Also poorer areas of the country(like Wales, which inexplicably voted to leave) received majority of their help from EU,not British government - and now can they expect the British government will match those contributions? How and with which money?
It's widely known we're a net contributor to the EU, it's not disputed at all. Money doesn't magically appear in the EU coffers, as the UK is one of the strongest economies in the EU, of course it's a net contributor.
The exact figure is disputed, leave were saying £450 million per week, remain were saying it's £150million per week.
To avoid larger losses later on. Tarrif prevent relocation if industry to cheaper working environments. Why would the EU want cheaper business in the UK ti compete with an advantage?
It goes both ways. New trade barriers will be bad for the UK and for the EU. Worse for the UK of course, because it's smaller. It's a larger percentage of UK trade than it is for the EU.
The same economic theories that lead to the conclusion that low tariffs are good place the same importance on the free exchange of goods as the free exchange of labour. The treaty of Rome is the governing treaty in the EU in this respect and it has provisions on both. Since it is precisely the free exchange of labour that the UK wants to eliminate, they will need to violate the treaty and lose the free exchange of goods. How this will affect the application in the UK of existing trade agreements between external countries and the EU is another question. Since the bureaucratic process of bringing goods to the UK will be different than bringing it to the EU, foreign countries will likely take the stance that those trade agreements no longer apply to the UK.
That's not true. It's only true if both sides can compete on equal terms. The EU guarantees that. Without Britain in the EU, there will be situations where tariffs are beneficial for one side.
"Generally" strongly assumes equal or even perfect competition.
For example say Country A and B trade coal and agree to no tariffs. Country A now cuts back on worker protection and wages, such that their coal is cheaper. Country B's only other chance than doing the same would be to raise a tariff to keep its own coal competitive. That's why Country B wants a say in Country A's labor laws.
And this is exactly the reason for a supra-national body that comes in with annoying regulations and red tape that stops you from competing with Johnny Foreigner in the full-blooded way you want to.
You're confusing economic theory with reality. There were already plenty of conflicts in many sectors (eg fishing) and now each EU country that think they can gain something in any sensitive sector by having tariffs on UK products will push in that direction.
When talking about trade deficits, I always like to remember what one of my econ professors said about treating them as scorecards, which is usually misleading.
Exports are things we sell, imports are things we get to keep.
For real. Any time I hear popular macroeconomic metrics, I become deeply skeptical of whether there's gonna be anything worth listening to.
It's like taking your temperature. Sure, it could mean you're going to die. Could also mean you've got a healthy immune system fighting off a disease. Could mean it's time to stop wanking in the sauna.
Another way to view it is as the difference between a country's production and consumption. A trade deficit implies that the country consumes more than it produces, while a trade surplus is the other way round.
Specifically the Euro (rather than the EU) stops the German currency from appreciating massively and making their exports more expensive. That has been a massive boost to the German economy over the years.
Not only has it been a massive boost to the German economy, it has been at the explicit expense of the economies of Greece, Italy, Spain, etc. And how people can see that and be ok with it, I don't understand.
The EU under the Euro is the Fourth Reich. Nothing more, nothing less.
Which is what Greece, Italy etc would be doing if they weren't in the Euro. Germany wouldn't devalue as that involves increasing money supply which would drive inflation, the German post war banking system is built to have a massive fear of inflation.
True, but... other countries around the world are producing the very same things, even cheaper, but they are taxed in the EU. China has no major deal with the EU for this reason. UK leaving would open to that possibility that Switzerland decided to open in 2010, balancing what comes in and what goes out and both countries got a major boost in respective goods. Swiss got access to the manufacturing in China for Swiss high tech companies and China got access to the major luxury good produced here, plus bank services, med techs and collaborations with universities like ETHZ.
Not really. Germany has a large surplus because of the Euro. The common currency means Germany's currency is weaker than it would be otherwise thus it's exports more attractive. And countries like Greece and Spain have strong currencies than they otherwise would have. Thus their industries and workers compete at a disadvantage.
I agree that the eurozone economies are very different, and I can't see how that will be resolved without dismantling the Euro or kicking some of the weaker economies out
The US has a real central bank, automatic stabilizers, and large federal transfer payments to compensate economically weaker states for having to trade in dollars.
This is partly true but it is also a question of price. German does not pay her engineers and can just undercut competitors. Also, what do they get in exchange? Lehman certificates and Greek government bonds.
Germany has always exported a lot but also imported a lot. The crazy export started just in the 90ies. It has been very unhealthy.
But they benefit massively from being in the Euro currency. Imagine how high the Deutschmark would be. The German exporting machine wouldn't be half as effective.
I find the whole argument X needs Y foolish. It is so much similar to Donald Trump's China hatred.
Members of EU benefit every-time they export something to a large market such as UK (e.g. Cars). Members of EU benefit each time they willingly import something from UK (e.g. Tea). Either ways if EU wants to protect interests of its members it makes sense to trade with UK just the way it did in past. Any "revenge" is likely to hurt EU members whether or not it hurts UK.
UK survived before EU and will continue to survive beyond EU too. In fact I think with better immigration policies and freedom from red tape of EU, UK will be better off economically. The very presence of EU in my opinion is against principles of democracy. People of England basically accepted restrictions coming from Brussels who were not voted for by them.
>In exchange for access to the common market, Britain had to accept an external tariff and, over time, a deluge of regulations from power-hungry Brussels. The former makes imports more expensive in Britain, while the latter makes British exports less competitive globally.
> Jean-Claude Juncker, the current president of the EU Commission, summed up the decision-making behind the introduction of the single currency thusly: "We decide on something, leave it lying around and wait and see what happens. If no one kicks up a fuss, because most people don't understand what has been decided, we continue step by step until there is no turning back." [1]
Why do most Brits still assume the UK is a large market compared to the rest of the EU? The UK is no longer the empire it used to be, it is weak on it's own. The UK GDP is about ~$2.5 trillion, the EU GDP (sans UK) is ~$12 trillion. The UK economy is puny compared to the mainland Europe. I very much agree that a good trade deal would be beneficial for both sides, at this point the EU is under strong pressure to make an example out of the UK secessionist tendencies and the power is squarely on the European side.
> at this point the EU is under strong pressure to make an example out of the UK secessionist tendencies and the power is squarely on the European side.
If that is indeed true then I think every other country should leave EU with the urgency of a man whose hair are set on fire. It clearly shows that EU is not something that protects the interest of its members but a bureaucratic agency who is interested in expanding authority.
If UK wants to trade with EU, UK still has to follow all EU regulations. If UK wants to trade with EU, UK still has to follow EU immigration policies. If they want to avoid those things, they don't get access to the single market, there's no way around that.
If you're so sure the UK will be better off economically, you should put your money where your mouth is and trade against the overwhelming deluge of financial analysts who say the exact opposite. Last I checked the UK banks were down ~30-35% today, sounds like a cheap deal for you.
How is that in my way different to how laws are drawn up in any other country? If I, as a Londoner, voted for a labour mp but am then forced to accept laws imposed by a majority Tory government, then what's the difference?
I am quite certain the exports will still go there, but to say its not true ignores the true financial impact which is other countries will consider leaving. That is the big bugaboo and cannot be under estimated.
The ideals of the union certainly haven't been held up with what has actually occurred. The fear factor being put out about doom and gloom for UK people's is mostly engineered by those who profit off the union and don't see the same margins with a separate UK or worse other drop outs. With a union marginal countries can be propped up to great profit for the financial groups but without one, who knows.
I don't know how you come to that conclusion. The UK has a trade deficit with the EU, which means we buy more from the EU than we sell to it. From the EU perspective, the UK is a good customer. Like it or not that counts for something.
Wherever the UK citizens choose to, just like it's up to EU citizens whether they want to buy from the UK. We have a global market, (for the most part) anyone can buy anything from anyone else. The UK is likely to experience price rises for EU goods, and the EU is likely to experience price rises for UK goods, but if customers still want a particular product and can afford it even with the price rise then they'll continue to buy it.
> "Apparently the pound just fell to a century-wide low..."
That's just the markets reacting to uncertainty. The future is indeed more uncertain, so it's to be expected, but uncertainty does not necessarily mean a downturn in the long run.
Not true. It is the reverse because the UK runs a gigantic trade deficit: in 2014 they exported 472 billion USD, but imported 663 billion USD¹. In fact the UK is the second country in the world with the largest trade deficit (behind the US). A huge portions of UK's export go to Europe, therefore the EU has definitely more say when it comes to negotiating trade deals with the UK. I would be very worried for my economic future if I were a UK citizen...
¹ http://atlas.media.mit.edu/en/profile/country/gbr/