Brexit and the waning days of the United Kingdom

[Zanza]

Where is that rest of the world? Brazil and Russia have much worse economic problems than the Eurozone, India, Indonesia, Turkey and Middle East are unreliable, China's growth is still impressive but going south. You already trade a lot with the US and I don't see how that would massively increase outside the EU. So really, where is that legendary rest of the world you want to trade with? New Zealand?

Yeah those places. BRICS etc.

Of course the answer to that is that actually Germany has very high levels of trade with China so the issue may not just be trade barriers or to do with the EU

So their argument is that the EU is somehow hampering British extra-EU trade and that would stop when Britain leaves the EU?
Or that the negative effects of the Eurozone's existence and wrong policies would no longer affect Britain would just leave the EU?
If so, that's just silly.

[Valmy]

Yeah that is the thing. Unless the UK can teleport itself someplace else, and man would that surprise the Irish when a chunk of their island disappears, it seems just insane to think they can better defend their interests outside of the EU than inside it.

[Admiral Yi]

I can see how leaving the EU and ditching the ag tariffs that are part of CAP would free up a country to liberalize trade with ag exporting countries.

[celedhring]

Today, I went to the business school I sometimes work for. Before my meeting I browsed a few financial rags, and was surprised by the amount of "sell GBP now, buy Swiss Franks. Best rates!" ads they were running.

[Sheilbh]

The Left is imploding everywhere because it has won the ideological war decades ago. What were leftist rallying cries a generation ago are now firmly entrenched as the status quo, with nobody wanting to attack them.

On social issues, yes. Economically a generation ago the left was rallying to defend nationalised industries and mass unionisation.

And yes, one of my biggest issue with the Leave crowd is that when they talk about the economic future they sound EXACTLY like the Hungarian and other radicals who declare Europe is done for and we should align with Russia and China who are the future of the world. A notion that is already being proven as totally wrong.

But they're not. They're mostly libertarian right-wing Tories. They're firmly pro-American, pro-NATO, pro-Atlanticism they just want to trade with Russia and China.

3 years ago it would be a valid argument. Always 45% youth unemployment in greece! OMG doom!

Greek youth unemployment is currently just over 50%, they last saw 45% five years ago. Spanish youth unemployment is hovering around 45%, a mark they also crossed five years ago. It might not be doom for Greece and Spain in general (though I have literally no idea where the growth is meant to come from especially in Greece) but that's probably a doomed generation. They'll be skipped in terms of hiring. They'll never gain skills in work and that'll have a permanent knock on effect in terms of the economic potential of those countries.

BUT EVERYONE IS NOW RECOVERING.
Seriously. These people cant read simple numbers. Even Greece is posting better numbers these days than it was when it stood on the brink.

Everyone is recovering very slowly. The Eurozone  will recover the question is why is it recovering so much more slowly than other developed economies like the US, the UK, the rest of the EU or previous historical recession in Eurozone countries. See below from ECB executive Peter Praet's recent speech:



What's the theory behind the divergence within Scandinavia? Or that's seen the US have double the level of cumulative growth since 2000 that the Eurozone's had? Why has Italy flat-lined for the decade since the Euro was introduce when that wasn't its historic experience, despite similar issues? Why is the Eurozone becoming, to adapt Mark Carney, a low interest, low growth, low inflation, high unemployment zone?

As I say I think that a currency union without a single treasury is probably the cause. So either move to a full fiscal and banking union or end it.

I read an interesting paper on the theory of currency unions recently which said that classical theory was that there was a trade off. Members had to suffer a non-optimal monetary policy because that became one size fits all. The benefit was in increased trade due to a single currency. The stats from the Eurozone don't agree with that because they're suffering the cost, but there's no increase in trade that is higher than what you'd project for an EU country to begin with. So the writers suggested that the trade benefits of a currency union actually come from the customs union which is normally put in place more or less simultaneously. The EU on the other hand is already a customs union, so countries are just experiencing lower growth, crap monetary policy and now pro-cyclical fiscal policy without the benefit which they could get in the EU without the Euro.

I know the Euro is a political project - hence why Greece and Italy were admitted despite massaging the figures - but how much economic damage is that project worth? As a former leftie Europhile, even aside from my disagreements with the Eurozone's policies, what pisses me off is how much the time and energy of the EU has been spent on trying to make the Eurozone work that could have been spent building a better EU.

So their argument is that the EU is somehow hampering British extra-EU trade and that would stop when Britain leaves the EU?

This. Without the EU the UK could sign free trade agreements with China, Brazil, Russia, Canada etc. They often contrast the number of free trade agreements the EU has with the number that Switzerland or Norway has and talk about the length of time (I think it's over a decade) the EU has been negotiating with Canada.

I think this is an issue where there is a difference between the UK mindset and some European mindsets. There's other countries like us, like the Netherlands, but I think the UK is instinctively pro-trade and pro-free trade so I think what is perceived as protection in some parts of Europe is perceived as restriction here. A shallow example would be a pro-enlargement Youtube video released by the Commission a few years ago which showed a blonde woman in a Kill Bill suit in a warehouse. Then there was a Chinese man doing kung fu, then a levitating Indian with a sword, then a black Brazilian doing capoeira. The woman look threatened. Then she multiplied into 15 blonde women in yellow uniforms. Everyone sat down to chat and the women turned into EU stars. When this was release it was shared widely in the media here. It was seen as quite racist and lots of Eurosceptics were moaning about how China, India and Brazil were being portrayed as threats when they're the markets we should be trying to get into.

As I say the argument against is that Germany, for example, does a lot of trade with China so maybe the issue isn't the EU?

I can see how leaving the EU and ditching the ag tariffs that are part of CAP would free up a country to liberalize trade with ag exporting countries.

Dan Hannan does do a good turn of phrase even if it's almost always duplicitous bollocks. When he talks about CAP he says that if he set out to create the most corrupt, most immoral, most expensive bureaucratic system of agricultural support he wouldn't come close to CAP. 

I still think the vote will be like Scotland but, this is a worrying poll:


Also thought this Guardian piece was very interesting:
http://www.theguardian.com/politics/2016/jun/01/british-asians-views-eu-referendum-figures-brexit

[The Minsky Moment]

I wasn't aware CAP was an issue hanging up TTIP.  I thought the problem issues were GMOs and geographical indications ("champagne" etc).

[Zanza]

@Sheilbh: I get that you think the Eurozone is the worst thing ever, but what relevance does the Eurozone policy have for Brexit? Do you seriously think a Leave vote would have any impact on the Eurozone policy? If not and considering that you will not be able to move Britain anywhere else, you'll still be tied to this "sclerotic continent". It seems completely irrelevant to the decision. Hence my previous question why Brits seem to care so much about the Eurozone.

And what does the pure number of free trade agreement tell? Having a single comprehensive free trade agreement like the EU single market can't be compared to having one for citrus fruits with Guatemala. The idea that just by leaving the EU you can negotiate comprehensive free trade agreements on your own and massively benefit from that is naive.

[Tamas]

Zanza, that argument is regularly raised over here. Now I will take the effort to fully quote and show the detailed counter argument by Leave:

"That is fearmongering! We will make free trade deals with everyone and they will be AWESOME!"

[Sheilbh]

@Sheilbh: I get that you think the Eurozone is the worst thing ever, but what relevance does the Eurozone policy have for Brexit?

Two reasons. First is that, I think, unlike a lot of Europe we don't have any identity or sentiment tied into the EU. We joined because the EEC was growing faster. It was purely economic. The strongest argument that remain have is still the economic argument. The longer the Eurozone wallows in stagnation the weaker that argument becomes and the more the 'shackled to a corpse' line works.

Second is that since the 90s the strongest support for the EU has been on the left - arguably it's the biggest and most permanent shift achieved by Labour's modernisers. The current situation in the Eurozone has seriously undermined that. There have been a fair few prominent left-wing writers in the last five years who've come out in favour of Brexit because they think the most integrated bit of the EU has revealed its true face: anti-democratic and a right wing project about trade and 'neoliberalism'. Almost all of them have since walked that back since the election. If the Eurozone continues on its current path then I think next referendum there'll be a significant left-wing Brexit movement and I wouldn't be surprised if most Another Europe is Possible (roughly where I am) were involved.

It's a bit like Fico's comments. In terms of direct impact on Brits, they mean nothing. For British Muslims considering how to vote it causes them to wonder if this union is for them and can they support it.

Do you seriously think a Leave vote would have any impact on the Eurozone policy? If not and considering that you will not be able to move Britain anywhere else, you'll still be tied to this "sclerotic continent". It seems completely irrelevant to the decision. Hence my previous question why Brits seem to care so much about the Eurozone.

The argument of some of my Eurozone friends is that the EU is incapable of reform and it needs a crisis to do anything. To me that seems a little bit like the opposite of saying 'save yourself!' so I'm not keen

And what does the pure number of free trade agreement tell? Having a single comprehensive free trade agreement like the EU single market can't be compared to having one for citrus fruits with Guatemala. The idea that just by leaving the EU you can negotiate comprehensive free trade agreements on your own and massively benefit from that is naive.

A single customs union with 27 other countries (plus whoever else) versus free trade agreements with emerging economies, with the most rapidly growing and developing centres, which Leave point out is projected to account for around 10% of global demand in a decade's time.

As I say I think we have a slightly different attitude to trade than much of Europe, so there is genuine desire for free trade deals with China, Brazil, India etc. The EU is a market with the trade off of a restriction on our ability to negotiate deals with anyone else, I think for a lot of the rest of Europe the EU is valued in trade terms as a protection. So Leave will often point to the fact that the 2011 deal with South Korea was the EU's first ever free trade deal with a major developed economy and has none with any other top 10 non-European global economies (in fairness I think the South Koreans are just pipped by Mexico). But there are deals with the Seychelles and Guatemala.

What they're saying is that as a medium sized country we could, like Australia, Canada or the Swiss I think, negotiate and ratify deals with China, Japan and the US to start with and go from there.

Now I think they're being disingenuous here because I'm not convinced you can be an open, global trading country without being very open to immigration too - but I suppose that partly reflects the two big strands of right wing Brexitism and why they can't answer what the UK would look like afterwards.

[alfred russel]

I'm not convinced you can be an open, global trading country without being very open to immigration too

Japan?

[Sheilbh]

I'm not convinced you can be an open, global trading country without being very open to immigration too

Japan?

True

Okay, not with our productivity

[mongers]

Missed the Chancellor George Osborne doing his stand-up routine near here, at a former workplace of mine, JP Morgan* in Bournemouth.   





* though I didn't know it had been taken over by them, that's how switch on I am to the goings on in the financial world. 

[Admiral Yi]

You used to be a bankster mongers?

[mongers]

You used to be a bankster mongers?

The people bored me, so I left.



edit
obviously not JP, but Chase.

[Richard Hakluyt]

I'm not convinced you can be an open, global trading country without being very open to immigration too

Japan?

True

Okay, not with our productivity

Japanese productivity is even worse than the UK's :

https://www.theguardian.com/business/2015/sep/18/uks-poor-productivity-figures-show-challenge-for-government