With the exception of the overseas French territory of Saint Barthélemy, no country has ever left the European Union. Greenland left its predecessor, the European Economic Community, in 1985. Exit negotiations, in that case, took more than 100 meetings over three years. Given that the EEC was a slimmer organisation than the EU, that negotiations were mainly over one subject – fish – and that Greenland has a population smaller than Bracknell or Bury, this should set alarm bells ringing for the UK.
One of the men who has said to have written Article 50, Giulano Amato, says that it was written thinking it would never be used:
My intention was that it should be a classic safety valve that was there, but never used. It is like having a fire extinguisher that should never have to be used. Instead, the fire happened.
Once we invoke Article 50, we then have a clock ticking for a two year period. It seems obvious that the EU could just play for time. It could be rather like a football team being surprised to find themselves one goal up, and pulling all its players back into defence and passing the ball around between each other. So, yes, they’ll consider allowing us a measure of control over immigration while we remain in the single market or with “tarrif-free access” to the single market. And then they’ll consider and consider. Meetings will follow meetings. Obfuscation will follow obfuscation. Any one of the 27 remaining members of the EU or the four members of EFTA could veto such a deal. And then we find the two years is nearly up. And we don’t have a good deal on offer.
What do we do? Take the bad deal on offer? Allow the UK to default to non-membership – to “hard Brexit” and more negotiations to put in place “WTO rules”?
Or do we revoke Article 50 or hold a general election or referendum to somehow find a way out of the impasse?
Our negotiating position will be very weak.
I’m reminded of the comments on an FT article recently written by Conservative MP, Bernard Jenkin, where he argued that the UK should exit the EU as swiftly and simply as possible:
The only danger with Brexit is that we are too fearful of it. We should embrace it and aim to leave in months rather than years. This will put the UK in the strongest position, and we will secure the freedom to develop trade with non-EU countries much more quickly.
It’s worth reading the “Most recommended” comments beneath this article. The top such comment from “Peter” presents a withering condemnation of Mr Jenkin’s view:
A hard Brexit is inevitable if Article 50 is invoked.
Europe knows it stands to make a nett gain of anywhere and perhaps more of between £250 to $500 billion in transferred trade, manufacturing and services in under 5 years after a hard Brexit. Set aside the quiet pleasure of watching us slide into a black hole dragged down by our $1.5 trillion plus deficit. All the EU will lose on a nett commercial basis is our goodwill, and of course a tiny £8 billion annual nett social contribution.
I do not see anyone in Europe missing a minute’s sleep over the loss of British goodwill.
The EU negotiating stance is completely harmonised: “No negotiation, get out now.” The WTO stance is equally clear – maybe you get in 5 or even 10 years after you Brexit, but negotiate with and accept the rules of 159 nations, or you are on your own. Anyone here for US GMO food and hormone fed T bone steaks landed Folkestone at half the UK wholesale price? Perhaps Mr Jenkins can explain this to the NFU annual general meeting in person.
Only a fool of a businessman would assume there is a great deal to be struck. How much insight do you have to demonstrate to become Chair of a select committee these days?
Mr Jenkins ignorance of international trade and his pathological hatred of the EU make him a classic Brexiteer. No rational insights, no sensible analysis of the facts, no analysis, just “Fire up the Spitfire Biggles, hurrah!”
It’s worth reading the comment in full here.
* Paul Walter is a Liberal Democrat activist. He is one of the Liberal Democrat Voice team. He blogs at Liberal Burblings.
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59 Comments
One of the men who has said to have written Article 50, Giulano Amato, says that it was written thinking it would never be used
I remember being told, during the debate, that it was silly to have concerns over sovereignty because of course the UK was sovereign as it was only int he EU because it chose to be and it could choose to leave at any time.
Is this now an admission that that was false, that this ‘choice’ we had to leave was at best theoretical and at worst illusory?
Because to say that article 50 was never meant to be used, well, it’s a bit like kidnapping someone and then telling them they are not a prisoner because here, there’s the key to the door. And then when they open it and find a sheer drop to crocodile-infested waters and complain that they in fact still appear to be being held prisoner, saying, ‘Well I never expected you to use the key! It wasn’t really there to give you a way out, it was just supposed to make you feel better about being trapped here by imagining that could leave at any time — you didn’t really think I would ever actually let you go, did you?’
In which case, it seems that we definitely made the right decision and the sooner we exit this club, whose membership appears to be based on threats about the awful things they will do to anyone who tries to leave, the better — if at all possible on a basis whihc is best for all concerned, but if they want (against their own economic interests, and entirely out of spite) to make it hard, then showing them that we can play just as hard as they can.
We have a few options and a few things we must do:
1. Anyone sympathetic to the idea Britain should be punished for brexit needs to be kept away from the negotiations.
2. Make it clear the Lib Dems are standing for the national interest and stop saying ‘the EU said this is a red line so that means we must accept it’. A red line isn’t always a red line. Ask Obama.
3. Refuse to issue article 50 until we have informal talks or negotiations first.
4. If they put tariffs on our goods then we are definitely putting them on theirs.
It’s high time we started addressing the root causes underlying the Brexit result, and not just dumbly heading for the car crash. The issues which pushed people to vote leave are mostly the result of dreadful Westminster policies over several decades (pursued despite the best efforts of the Lib-Dems to mitigate the damage). It has suited British politicians to blame the EU for failings which are entirely caused by our sovereign policies, and this came home to roost big-time on June 23rd. Let’s not compound the failings by a suicidal Brexit which will only make the real problems far worse.
We urgently need to address issues such as housing and jobs, not to mention a welfare and benefits system that is byzantine, slow, error-prone, inefficient and hostile to those it is supposed to be helping. Do that and the pressure to Brexit will dissipate like morning mist on a hot summer day.
Britain is a large economy and after Germany the largest financial contributor to the EU. We also import a lot. It is vital to play hardball and point out that National self-interest means that there is no chance of folding under threats.
As a strong Remainer I have to say I’m thoroughly bored of the endless doom-mongering here. The proposition that any organisation would be better off if one of its richest and biggest contributing members leaves is patently absurd. If it was true, no supra-national organisations would ever form in the first place as it wouldn’t be in the interests of the main players.
The EU is better off with the UK in it, and the UK is better off in the EU, we all know that, and the petulance of now arguing that the EU will be better off without the UK is no different to the petulance of arguing that the UK will be better off without the EU.
Of course, some individual countries in the EU might be better off if they (e.g. France) can persuade the rest to throw up big trade barriers against one of their closest allies, but why on earth would a club that’s currently trying to negotiate lower trade barriers with the USA, and other major players, suddenly want to do that? Oh yes, petulance.
Can we have some more sensible articles about the best way forward, rather than endless hysteria and petulance?
And I agree with the first two posters – I’m pro EU but I wouldn’t ever want to be a part of a club that tries to destroy any member that leaves. If Scotland voted for independence and people started arguing that we should deliberately wreck the economy of Scotland as a punishment, all right-thinking liberals would be outraged. Rather than cheering every time petulant idiots in the EU Commission (Juncker, et al) talk up vindictive retaliation, we should be outraged at them.
And while I’m here, read this and weep:
“48% of Brits secretly hoping the economy will turn to shit”
http://newsthump.com/2016/08/05/48-of-brits-secretly-hoping-the-economy-will-turn-to-shit/
Personally I am just thankful that the Liberal Democrats will have absolutely no influence over Brexit.
Paul Walter
The referendum outcome seems to have passed you by. The majority of people have already voted to LEAVE the EU.
I must thank Bernard Jenkin for making me a Liberal Democrat. In the run up to the invasion of Iraq, I heard him give a barnstorming speech in which he condemned France and Germany for refusing to join Britain and America in invading.
His punch line? When the contracts for rebuilding Iraq (remember them?) were awarded after Saddam had been dethroned, they should go to British and American companies because of the sacrifice their troops had made. France and Germany, he thundered, should be excluded from tendering. He was neatly linking euroscepticism and neo-conservatism.
An interesting topic to consider is how many of the Tory Brexiteers were avid advocates of the invasion of Iraq: Michael Gove and IDS spring to mind, as well as Berrnard Jenkin. Oh, and Murdoch, the Telegraph, Spectator, Daily Mail et al urged them on.
@Kim Spence-Jones
I have a massive problem with your reasoning.
Housing and jobs may be a problem, but then you advocate the same conditions that have created those problems. How many houses are you willing to build to keep the status quo going?
My city has become a congested hell hole, with people’s jobs and wages under threat – where is the benefit to our environment and quality of life?
And if your answer is to make benefits easier, aren’t we adding to the problem by encouraging people in to take advantage of them?
Yes leaving the EU will have adverse consequences: we know that. We tried to convince people and lost.
If there is a GE before Brexit then people who want to stay in can vote LD -I hope they do. But now lets think about how we can minimise the effects.
There’s no ‘could’ about this. Invoking article 50 would trigger national economic disaster. And the brexit voters would blame everyone and everything but their own idiotic decision. That’s the problem for May. They’d blame her for their loss in jobs and living standards.
‘There’s no ‘could’ about this. Invoking article 50 would trigger national economic disaster.’
There wasn’t any doubt either that if we didn’t join the euro we would lose 3 million jobs & most of our remaining industry would move to continental Europe.
I suspect most EU countries will come to the negotiating table with a sensible business-like approach. The point here is that in part because of the process and in part because there are 27 of them and one of us, they hold a lot of the cards in any negotiation whether we like it or not. If we don’t accept that then we can’t work out the best way to counter it. I think Theresa May has started to grasp some of this – hence delaying article 50 – but it may yet be an impossible puzzle to solve. Bluster and bravado is not a negotiating strategy.
Because of this triggering article 50 is likely to have a further impact on the economy and we also need to be prepared to mitigate that – hence dropping the deficit reduction target. We will then need to turn the machinery of government towards a complex negotiating process with the EU. At the same time we will need to develop negotiating positions to begin talks with the WTO and let’s say a top 10 of other countries who we will want deals with quickly. We will need red lines and we will also need to know what we are willing to concede if we are to get deals in a time-frame that will minimise the impact on the economy. Unfortunately the man currently in charge of that is Liam Fox who has already embarrassed himself with the US and may yet be involved in another scandal.
In the meantime we will also need to do the work of picking through the impact of Brexit on 40 years of EU legislation. The domestic political agenda will be consumed by this for a long time. Estimates on this vary but 5-10 years of legislative wrangling is not unlikely.
We have chosen this in a referendum, we could still stop it. But if we choose not to then we take the consequences – good and bad. There may be some good down the line but at the moment it is a big pile of challenges that we need to address in a clear headed way.
The best way out of this would be to go for an off the shelf ‘Norway option’, perhaps with some increased controls on migration but at the moment Norway are potentially looking to block this – which highlights some of the problems you get into once you start complex by-lateral negotiations. You can maybe bribe one partner by buying their cars but another partner may want something equal or greater in order to not to exercise their veto – especially if they see they could be disadvantaged.
The hyperbolic predictions aren’t helpful and don’t help us win over floating voters or gain credibility. Leaving the EU will be bad for the economy – we know that, and it’s part of why we opposed it strongly. There *may* be a shallow recession this year, and/or there *may* be the same when/if we trigger A50. But even it is happens, a shallow recession and a period of lower than usual growth is hardly “national economic disaster”, unless you seriously subscribe to the notion that there have been a dozen national economic disasters since the 50s, which rather devalues the term.
“Anyone sympathetic to the idea Britain should be punished for brexit needs to be kept away from the negotiations.”
Er, how does anyone suppose that Britain can pick and choose the EU negotiating team they would prefer to talk to?
“48% of Brits secretly hoping the economy will turn to shit”
It really just is not about whether Remain voters will decide to say “Let’s make the best of a bad job” or “Told you so!”. They are bound to be split between those two feelings, and you know what? It doesn’t matter a fig which emotion dominates. Because this isn’t about narky questions about the emotional maturity of Remainers. It’s about the facts.
Two things come together for the EU side. One, the more they look at it objectively, the more they will see that they could screw us, really screw us. Two, the more they talk amongst themselves, the more the logic will favour those amongst them who want to take a hard Machiavellian line.
Hard times are coming. May and Corbyn will unite in putting a brave face on it, an electorally dangerous thing to do. If we also decide to put on a brave face, and shy away from the facts, then we shall display an uncanny ability to turn everything into political defeat!
There’s just too much at risk. Brexit could be beneficial if all the deals and negotiations in the coming years go more or less totally the way we want them to go. But if they don’t, there’s good chances a lot of things could get worse.
For me, one of the biggest issues is that if we leave the EU we will leave a position of power in its decision making. Up to now we’ve been able to guide the rules slightly by our very presence, and by our strong and well-known scepticism of the European project. When we leave, our opinion will count for little in the decision-making. So even if we remain members of the EFTA or in the single market or whatever the options may or may not be, there’s every chance that the remaining EU will continue to change in such a way as to make things less and less viable for us. British interests as a whole are best represented in the EU, whether a few fishermen have to move to other industries or not.
Greenland left Denmark. Denmark remained in and continued to subsidise Greenland. There is, or was, a NATO base in the north of Greenland at Thule. http://www.nytimes.com/2004/08/07/world/greenland-base-to-be-upgraded-as-part-of-missile-shield-plan.html?_r=0
Cllr Mark Wright: The phrase “right thinking” contrasts with “wrong thinking” or “left thinking” and can be used ambiguously by Tories.
http://www.bristol-libdems.org.uk/in-the-council/mark-wright/
As a non-member but sympathiser of the LibDems I will be watching with interest the debates on the EU at the forthcoming Brighton conference. I might even pop along.
First: under what terms would we rejoin? Cameron’s package that he got pre-referendum looks good to me now, but that was rejected by the public and anyway wouldn’t be offered to us again.
Second: what policy will cover the eventuality (surely high) that the EU is in a worse state at the time of the next GE than it is now? Will LibDems argue to rejoin a declining and crisis ridden EU?
Third: what happens if leaving turns out to be technically and legally near-impossible, or at least the work of a generation? LibDems would probably benefit in that scenario on a ‘told you so’ basis, but what would LibDems actually argue for during the ongoing confusion?
Coming up with a coherent policy in this open, fluid and unprecedented situation looks impossible to me right now. I guess bland generalities will win the day. But here is what I would like to see: a vision of a new EU that takes account of popular worries across the continent. Then LibDems could argue for the future, not a return to the rejected past.
Kim, I agree with you.
Hopefully the EU will take a constructive stance and not seek to punish the UK. Here in France, however, hardly anyone is talking of special provisions to satisfy Britain. Granted, some contenders for next year’s elections have adopted a less punitive tone than the current President; but both the strong Gaullist tendency on the right and the FN are instinctively protectionist and keen to seek competitive advantage from the British debacle. Almost everyone agrees that if the UK were to refuse Free Movement, it should face trading restrictions; above all on the financial sector and the City. Those who say that EU manufacturers will lobby for zero trade barriers should take note of Peugeot-Citroën’s recent announcement. Specifically because of Brexit, it is cutting production due for the UK market with concomitant short-time working. But there’s no hint of the company asking the government to go easy on the British.
Having worked close to the top of major foreign corporations, I have no doubt they will redirect long-term investment initially planned for the UK. I do not agree that the resulting recession will merely be mild with only less than usual growth. Seen from abroad, I believe the shock to the economy will be dramatic. Britain’s economy is fuelled by consumption which will hardly be encouraged by the sharp price rises to come. The government will probably increase its borrowing requirement, but to fund what? Major infrastructure projects are already planned and mostly funded; finding more will take a long time. In practice, it is more likely borrowing will go to supplement decreasing tax receipts to pay for current expenditure. Moreover, the country has not the skills, culture, or installed capital base suddenly to become a productive economy able to compete alone with the rest of the world.
Paul Walter quotes withering comments to Bernard Jenkin’s piece in the FT. What is also interesting is the apparent consensus amongst FT commentators that the only way to avoid the nation’s wholesale impoverishment is to remain in the single market, along EEA, EFTA or similar lines. And that an understanding with the EU in that direction must be arrived at before triggering Article 50.
Now is the time to see how far negotiations will take us.What deals can be achieved to continue our relationship with the EU ? Will fresh trading and diplomatic agreements be acceptable ? This will take time . No use jumping out of a plane without being certain that parachutes work. Once the British people know what is involved Parliament need to approve and it would be only fair to have another vote because it is, when all is said and done, the future of the people of Britain that is at stake.
David Allen, I meant people on our negotiating team.
Asking for restrictions on inward migration should mean we receive restrictions on outward migration. It shouldn’t mean we also receive trade barriers.
I’m glad Cllr Mark Wright and some others agree about getting outraged over our punishment. Personally the way the UK commentariat has been making excuses for our punishment makes me not have much faith in our country.
I’m not optimistic for our country or Europe. I’d be making the same negotiating position if I was from a different European country, but it seems Europe is determined to harm itself and Britain in these negotiations.
Peugeot-Citröen may not be asking the government to go soft on Britain, but we know European farmers have been calling for the end of sanctions against Russia (or at least a cut in them).
Like many realists here I know the economy was bad and getting worse while within the EU – as alluded to by the writer of that letter – and that this Brexit fear-mongering is just a distraction from the real problems we face.
Whether the economy gets better in or out of Europe is sheer guesswork but it makes no sense if we have a trade deficit with Europe that we might be worse off. We get the opportunity to add a tariff to them and they can do the same to us. If the gov.uk reduces other taxes to keep our products the same price then UK goods stay the same price but there is still more money coming into the treasury thanks to the trade deficit. Only if we had a trade surplus with the EU could it be otherwise. Germany should be more worried about Brexit. And btw these WTO tariffs are miniscule so even if the WTO is an ass about the UK rejoining separately (a stupendously silly notion btw) it makes no bleedin difference. China, USA, India manage to trade fine with the EU with no agreements.
As for the EU itself, remember the majority in Brussels still blame the City of London for foisting all that toxic debt onto Europe that caused all the trouble so some of them will indeed be glad to see the back of us – though in fact it was their own silly fault for believing UK bankers. Others will miss the money (about 12% of their budget).
CQ
‘The best way out of this would be to go for an off the shelf ‘Norway option’, perhaps with some increased controls on migration but at the moment Norway are potentially looking to block this –’
Can you please advise your source for this claim.
I think the poster Dav is right. If article 50 was written in order to give the illusion that a state could leave but was ever actually meant to be used or useable then clearly that was dishonest and in the long run we are better off out of such a dishonest institution.
And we are leaving. The next general election isn’t scheduled until 2020, out will be the status quo by then. Rejoining after 2020 would mean joining the euro, Schengen, no rebates and no opt outs. 48% voted to remain when remain was the status quo and we had the pound and weren’t in Schengen. Rejoining on those terms when out is the status quo probably wouldn’t even have 38% in favor of it come 2020. Certain lib dems do not seem to have faced the fact that the will of the people is going to be enacted. We are leaving the EU and highly unlikely to be going back. My advice is face it and move on. The most constructive thing the lib dems could do would be campaign for the type of exit they want rather than trying to turn back the tide.
If it means that we are off, I expect liberal politicians to accept my point of view.
JamesG- Tariffs are a small obstacle to international trading. Far more important are non-tariff barriers; such as different standards, excessive paperwork and many protectionist devices, not covered by WTO rules, which in any case do not cover financial services.
Also, Brussels does not blame the City for foisting toxic debt onto Europe. Only Spain and Ireland suffered the same sort of problems as did the UK and US. Other states, though not all, suffered from the separate Euro crisis which was due in large part to irresponsible French, German and Italian bank lending to Greece.
You missed the best line of Peter’s retort:
“Another know nothing, say nothing, Brexit mantra chanting lemming, or worse a pied piper. ”
In most political debates of my lifetime there have been intellectual arguments on both sides, with thought provoking contributions on both sides. And yet in this, the biggest political crisis since 1945, there is no-one on the other side but Brexit shrills with loud voices but no words.
Reality is breaking out, even in the Telegraph (10/8/16 page 30). Arch-Leaver Daniel Hannan MEP said on Newsnight on the day of the referendum result that it was a narrow victory and those on the winning side had to be mindful of the extent to which opinion was divided. “We have to try to carry Remain voters with us, and that may well mean that quite a lot of the existing arrangements remain in place as we try and find a status that both Remainers and Leavers can live with.” Those who voted for Brexit in the hope of reduced immigration might, he said, be disappointed.
Richard, Hannan has been saying that since the moment the Leave win was announced.
It isn’t new.
(about to watch :-))
“Brexit: The Battle for Britain
Laura Kuenssberg tells the inside story of how David Cameron’s referendum plan backfired – and Vote Leave won. How will this political revolution reshape Britain’s politics?”
http://www.bbc.co.uk/iplayer/episode/b07nsx8g/brexit-the-battle-for-britain
i just watched that program and was very disappointed.
it focused almost exclusively on the ‘left-behind’, labour’s lost electorate.
maybe 10% of the vote leave total.
i understand the fascination, as it was these people that tipped the balance from 52:48 to 48:52.
but it said nothing about the 60% in the broad tory leaning end of the spectrum, nor too the 10% that were lib-dems. there was a brief hat-tip to the 20% of labour leavers, but only in the context of the left-behinds.
very disappointing.
Jedi….etc., “these people that tipped the balance from 52:48 to 48:52.”
= 101%
That’s must be a foul up in the counting…… I demand a recount and we’ll have to do it all over again.
– “very disappointing.” Or do you blame the BBC ?
Jedi
I was also very disappointed – I had expected Laura to attempt a real “magnum opus” to convince people she is worthy of the job. However all she did was to recycle her familiar old prejudices, merely backed by news clips. Not good enough.
Dav says that since Leaving will be disastrous, “a sheer drop to crocodile-infested waters” to quote his words, it follows that we simply must Leave.
I won’t comment!
Alan Depauw
I don’t think you can ever have ever traded with or worked in Europe. Those other impediments to trade you mention are there all the time whether in or out of the EU. The EU does not enable or encourage trade – it restricts it directly, adds pettifogging contradictory rules to hamper it mightily and above all delays it.
Also you clearly have no idea about how much US toxic debt was foisted on Europe by London or about the fury in the EU against London bankers. Maybe you should read a little beyond the self-serving London press. Such as…
http://www.theatlantic.com/business/archive/2015/07/greece-crisis-banks-greedy/398603/
“In 2008, when the U.S. housing market collapsed, the European banks lost big. ”
http://www.telegraph.co.uk/finance/economics/9577166/Europe-blames-UK-for-the-eurozone-debt-crisis-says-MEP-Sharon-Bowles.html
“Lib Dem MEP Sharon Bowles explains why eurozone countries seems dead set on crushing the City – they blame Britain for the eurozone crisis.”
David, you’ll have to explain both the relevance of your obscure maths revelation, and why seem you seem so perpetually salty of late.
Jamesg’s first link, about the collapse of the US housing market, sets out how US toxic debt was foisted on European banks by Wall Street.
Maybe so Jo Hayes, but don’t think there aren’t corrupt European banks too. Deutsche Bank, the German investment bank Saajid Javid used to work for, for instance, was fined for Libor rigging.
Jamesg’s second link, referring to comments from Sharon Bowles, has a Telegraph spin on it. As I read it, she was putting her own interpretation on Eurozone countries’ annoyance that Osborne was blocking reforms to banking regulation some years after the financial crisis itself. That was indeed very annoying. But an alternative account of where Eurozone countries’ blame over the Eurozone crisis was directed (i.e. against US policies) is given here.
https://www.theguardian.com/world/2012/jun/18/g20-summit-barroso-eurozone-crisis
Dav says that since Leaving will be disastrous, “a sheer drop to crocodile-infested waters” to quote his words, it follows that we simply must Leave.
Absolutely — because to stay a prisoner out of fear of the difficulties of escape is no kind of life.
“……….slide into a black hole dragged down by our $1.5 trillion plus deficit”
Hang on a minute! Where does this figure come from? Is this a deficit in trade or a Government deficit?
In either case the annual figures are nowhere near this big!
“The most constructive thing the lib dems could do would be campaign for the type of exit they want rather than trying to turn back the tide.”
That’s a fantasy. Brexit is a train wreck, and we ain’t seen nothing yet.
There is a gulf of incomprehension between the Brexiteers and the EU. The Brexiteers believe they should be able to demand a Common Market with free movement of goods and services but not people. The EU simply say that that’s not how it is, and that they are not going to change everything to suit a nation that has just decided to kick them in the teeth.
The debate between these irreconcilables is predictable. One, each side lectures the other as to why their world view is correct and the other’s world view is wrong. Two, each side gradually gets more and more peeved that the other side is being too thick to understand. Then it kicks off.
Here’s one scenario. En EU spokesman says something which comes across as insufferably arrogant. Some UK (UKIP?) maverick responds with a semi-racial slur. The EU rise up and demand Theresa condemn the slur. Theresa says something along the lines that both sides should be apologising. Then Boris weighs in.
Brexit turns hard, and gets harder, as the two sides polarise apart. The EU tell the Lib Dems to give up on any notion of staying or re-entering, because the EU have had a belly-full of the Brits. Lobbying for a softer Brexit stands about as much chance as saying in 1914 “Come on, one dead Serbian Archduke shouldn’t divide us, let’s all calm down and sit around a table….”
The only way we’ll stop it, is to stop it.
Jo Hayes
You abjectly fail to appreciate that London has acted as the Wall Street conduit to Europe. However I am not bashing London as much as bankers in general. It just so happens though that London is the financial capital of Europe and therefore surely has to take the brunt of the blame for the bad banking practises that led to both crises. Many big EU banks, encouraged by such bad practices, actively circumvented their own countries rules in order to get an illegal share of the immoral action. European financial centres are now pressing their case to replace London but I suspect that EU financial reforms make that unlikely. Banks don’t want no stinkin rules!
As for the comments by Sharon Bowles – who was quoted directly and extensively – since she is at the heart of the EU and was dealing with such issues daily, it would be more informative to contact her directly rather than seeking the sound-proof comfort zone of the Guardian.
There is no denying US is the foundation of all the infamous ‘vampire squids’ which caused the crises while the City was acting largely as a toked-up cheerleader. Alas the UKs main economic policy throughout the Thatcher and Blair years was to slavishly copy the USA policy in the child-like belief that they knew what they were doing.
JamesG I am never abject. I have not worked with mortgage lenders for 30+ years without learning a thing or two about wise and unwise lending. You fail to appreciate that the banks are multinationals with operations in many countries. Subprime (I.e. not reliably secured on real estate) mortgage lending in the US was repackaged and divided up into “collateralised” debt which bore no direct relation to the assets on which it was secured. These securities were traded and retraded, as well as imitated, across the world, incurring complex chains of debt. The traders loved it because they earned commission. But the careless lending got out of line with the real economy, with what people could really afford, as easy credit inflated the prices and valuations of the underlying security, the real estate. So the debt was in practice unsecured. The only way to get it back was by personal obligations of the original borrowers, but they hadn’t enough money. Once a bank had purchased chunks of these irrecoverable loans, any other bank which became its creditor (which happened all the time because of the huge volume of transactions daily) might as well have given its money away. If the debt ever became irrecoverable, the creditor bank would face a dead loss. Thus virtually the whole banking system became infected. Banks used off balance sheet devices to conceal the extent of their exposure from public view. It became like pass the parcel with all of them hoping they would not be left holding the bad debt when the music stopped. Eventually Bear Stearns failed and the whole line of dominoes began to topple. The EU banks were in on this. BTW Sharon Bowles
BTW Sharon Bowles stood down from the European Parliament in 2014.
Jo
I am struggling to see where we actually disagree apart from Lehman brothers, not Bear Stearns. Similarly I was stressing the attitude of EU individuals rather than the wider reality, which we seem to agree is a general and highly human problem of too many people being buoyed by the over-confidence of the ‘consensus’ of their peers while leaving basic book-keeping at the other side of the looking glass. However the EU seem quite self-effacing here:
http://ec.europa.eu/economy_finance/explained/the_financial_and_economic_crisis/why_did_the_crisis_happen/index_en.htm
I wonder though with that 30+ experience if you actually predicted the financial crisis as a few of us maverick investors did. Hindsight is certainly 20-20 but what is fascinating is that those ‘experts’ who collectively failed to predict the last crisis (or the recent oil price slump) feel quite unabashed at making predictions of doom about a Brexit which still hasn’t happened. Of course…
“•The strength of the euro and its increasing use in international trade gives the euro area a strong voice in international financial institutions and organisations, such as the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and the World Bank. While the EU countries are often directly represented on these bodies, the Ecofin Council, the Commission, and the ECB take part separately, or as part of an EU delegation, in relevant meetings of these international organisations.”
Gee not exactly independent, unbiased ‘experts’ after all!
(Me): “Dav says that since Leaving will be disastrous, “a sheer drop to crocodile-infested waters” to quote his words, it follows that we simply must Leave.”
(Dav): “Absolutely — because to stay a prisoner out of fear of the difficulties of escape is no kind of life.”
OK – I do kind of understand that point of view. It would however have been better if the Leave campaign had told the nation a little more about the “crocodile-infested waters” during the course of the referendum. Then, voters might have been better equipped to decide whether or not to face the crocodiles!
The EU point of view was not to install the crocodile-infested moat simply for the sake of creating shock and awe. It was far more rational than that. Simply, the EU has invested a huge amount of time and trouble in creating a European economic and political alliance for the benefit of all who live there. For any country to abandon that alliance puts the stability of the EU at some risk, and threatens to undo all the good work. Therefore, the EU acted in simple self-preservation to make it difficult to leave. It’s not precisely the same, but think how NATO might have reacted if, say, the UK had suddenly announced a decision to swap over to the Warsaw Pact!
I’m not gloating about how hard this is going to be for us, I’m not relishing the prospect of Brexit “turning to shit”. I want it stopped before it ruins us.
JamesG:
You answer what was a considered comment based on some knowledge by saying ‘I don’t think you can ever have ever traded with or worked in Europe’.
On behalf of French corporations I helped acquire and integrate several British companies including a very large one. I was responsible for all international personnel. I also advised the Board of a major French bank on ways to internationalise. I have lived and worked on the continent for more than half my career.
Within the EU, outside the defence sector we experience very few institutional barriers to conventional trade. The financial and service sectors are a different matter and represent work in progress.
It was up to banks within the member states whether to adopt US and UK type of asset acquisition. Spanish and Irish ones did so with gusto, investing in CDOs and fuelling dangerous housing bubbles. Other banks did not. For example, in France and Germany, strict rules have always controlled the multiple of income that can be lent for a mortgage.
However, French and German banks took on massive Greek debt and as a result faced near-collapse; which is why the Greek rescue packages are designed to bail out not so much Greece, but the banks.
Governments, banks and business across Europe have different views of the City. Many admire it. However, with some notable exceptions on the Right, most French believe both that capitalism should be subordinate to government policy; and that it is unfair for some states to set personal and corporate taxes much lower than others. So they are very keen to clip Britain and its City’s wings and better, to attract financial institutions to France.
Surely, in any negotiation, it is critical to understand the stance taken by the other side. The ‘other side’, represents of course a coalition. It happens that France, backed by other states probably including Italy and Belgium, will block any attempt to give the UK more than it has today. At the very least, they will insist on ‘no Free Movement, no passporting rights’. And they will argue for other restrictions to avoid what they call ‘disloyal competition’ and ‘social dumping’.
Which is why I reiterate the point made in my comment above: the only way to avoid the nation’s wholesale impoverishment is to remain in the single market along EEA, EFTA or similar lines. And that an understanding with the EU in that direction must be arrived at before triggering Article 50.
@petermartin2001 I am afraid that Paul Walter has got muddled between deficit and debt. However even the deficit is alarming as this graph from the ONS shows:
https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/aa6h/pb
Essentially, we are spending abroad more than we earn from abroad by 5% of our GDP and the last time our balance of payments was roughly in balance was at the beginning of the Blair years, when Brown was still following Tory economic guidelines. Since then it has been been getting steadily worse. Seeing a major UK technology company like ARM sold, or having to rely on the French to build Hinckley Point C and the Chinese to fund it is just a symptom of a deeper malaise.
Personally, I wish our Party leadership was thinking about this rather than the EU.
Well, I enjoyed it :-).
“Brexit: The Battle for Britain
Laura Kuenssberg tells the inside story of how David Cameron’s referendum plan backfired – and Vote Leave won. How will this political revolution reshape Britain’s politics?”
http://www.bbc.co.uk/iplayer/episode/b07nsx8g/brexit-the-battle-for-britain
“Within the EU, outside the defence sector we experience very few institutional barriers to conventional trade”
Well I apologize for leaping to unwarranted conclusions and I’m very happy that your business has received little EU interference. However I have currently been working through very costly solutions to a rank stupid EU directive to ban SF6 gas despite it having an absolutely miniscule effect on climate and despite there being no adequate replacement for it. I am also concerned about the imminent prospect effect of another rank stupid EU ban on Roundup herbicide which will absolutely certainly impoverish Britain’s agricultural sector if we stay in the EU. In the banking sector I find it astonishing that are not concerned about new rules coming down the pipe – or perhaps you welcome them because you cannot trust yourselves to self-govern?
“French and German banks took on massive Greek debt and as a result faced near-collapse”
Yes, whilst British banks were much worse off for the same reason. What is the point being made here? If it is that bankers generally seem to be either a) dumb as a post and/or b) only interested in bonuses and to heck with the economy then I have to agree. That doesn’t encourage me to listen to any bankers on the best way forward for the rest of the country.
The situations you describe of France and other countries being ready to clip Britain’s wings to the detriment of everyone is only a sign to Brexiters that we are better off out of such a parochial gang of reptiles. However I have a much better opinion of the French having also lived, worked and partied with them for many years. Outside of the EU and Hollande’s shambolic, unpopular and happily soon-to-end government we are still friends and neighbours who depend on each other and hence will most certainly reach a compromise in all our interests.
Laurence Cox,
Well done! Excellent!
I thought I was the only one in the 67 million of us who cared about the financial catastrophe we are rushing towards.
At least there are two us. Thank you.
Yet another in the interminable series of the end of the world is nigh articles. As a Remainer, like Mark Wright I am thoroughly bored with all the negativity and people who seem to want the country to fail. It’s time for Liberal Democrats to put the country ahead of the regrets and get on with identifying opportunities. Until we see the shape of Brexit no-one can predict which direction the economy will go so why not try and influence that shape for the better. But carry on blowing raspberries and sulking in the corner and you can forget 8 seats in the Commons; we’d be lucky to keep any come 2020.
What is Paul Walter saying, that because Article 50 is a stitch up designed to override a democratic mandate we should just meekly accept that we can never leave? I am glad you weren’t around in 1939 mate, you’d probably be wringing your hands about all the trade opportunities that would be lost if we fell out with Hitler.
@ Martin As someone whose father underwent a very traumatic time which affected him for the rest of his shortened life in the Royal Air Force responding to Hitler, I find your post more than a tad trivial and immature. And… I don’t suppose you will ever be Paul Walter’s mate, mate.
(FYI, in case anyone who wants to and did not enjoy the official Brexit announcememnt by Jenny Watson of the Electoral Commission: https://www.youtube.com/watch?v=jaigq_p2bt0 :-). )
Invoking article 50 will lead to the loss of the UK rebate. It is uncertain as to what terms can be negotioted but if we want acccess to EU market them Britain will have to make a contribution related to GBP. However it will be without any rebate. Parliament should vote before atricle 50 is invoked.