Wednesday, 12 October 2016

Hard Brexit


The panickers are panicking. We are going to leave the single market and the panickers are scared. There is no need. A fall in Sterling will more than cushion the potential blow from potential tariffs. In the global currency wars, the UK has stolen a march. The Eurozone of course will bear the main brunt of any UK-rEU trade war, as it simply cannot adapt as well as Britain can.

And that is before we start on the potential upsides of leaving the regulatory jurisdiction of the single market.

18 comments:

CityUnslicker said...

Also, despite what all the Business people think; it is not up to us.

The reason the Govt are saying hard brexit is that is what they have been told by Junker etc. No deal within two years is a hard brexit and the only offer on the table is basically status quo re immigration and single currency.

Hard Brexit is NOT the choice of the Government, it is the choice of EU.

Anonymous said...

Hard Brexit is NOT the choice of the Government, it is the choice of EU.

There used to be some sense on this site but that has gone out the window with this mass hysteria over two letters E and U.

We don't escape the EU's regulatory control in the same way we don't escape China, the US or any country in which we trade.

As for clipping the coinage, wouldn't even wish to start on that as the arguments are so bizarre.

Nick Drew said...

It's (yet) another demonstration of the mulish incompetence of Junker et al: they trumpet "bend over, this is gonna hurt, we gotta make sure you get punished" from the roof-tops, thereby (a) pricing that in and (b) ensuring HMG explores the full range of other options very thoroughly indeed

the hiatus for German elections can be used nicely, as well: during that period nothing will get progressed with the EC, again making it 100% certain we will be very active on other fronts

when the continentals all come back from their enforced hiatus - and all the 'events' that will have happened between then and now - they may find a rather different tilt to the playingfield than the one they currently envisage

(or May might screw it up as badly as Hinkley ...)

Steven_L said...

Is there really a 'global currency war' or does it just make a good headline to say there is?

Surely if there really was a 'global currency war' the USA - by virtue of having the most political capital - would win easily? But they seem quite happy with a strong dollar / lower commodity prices to me.

The 'global currency war' meme implies that BofE monetary actions are really about fx rate management. Are they? Is it just one big lie that they are trying to manage interest rates and CPI inflation?

E-K said...

Anonymous - I take Hard Brexit to mean Difficult, which I'm sure the EU will make it.

I fail to see why trade should mean giving control of law and borders away. Neither the Americans nor Chinese would put up with it.

andrew said...

ND
(or May might screw it up as badly as Hinkley ...)

We are indeed dependant on the competence of our leaders.
Are they amber rudd or talleyrand?

Our negotiators only need to be less incompetent than the cream of the eu negotiators
Where our negotiators have been in a box for the last 40 years and theirs have been working/practicing full time.

... which is why not negotiating may be a good plan.

Nick Drew said...

not negotiating may be a good plan

agreed, Andrew - Cameron's 2015 experience shows there's no point

Blue Eyes said...

Glad to see that some people are cottoning on!

The choice is between staying in the EEA with all the features of the EU which people voted to leave, or to leave.

The Remoaners are now saying we should take the Norway option because staying in the single market is paramount, which is the opposite of what they said during the campaign.

Ideally I imagine some sort of hybrid setup where certain sectors have their standards set by the EU/EEA, such as cars or drugs where we don't really care where the rules are set. But as several sensible people note, that ain't gonna happen because too much French pride is at stake.

Steven_L said...

If the French kick off too much we just de-regulate of all the protected geographical food names and spirit drinks etc.

Sussex Champagne, Somerset Calvados, Armagnac de Kent etc.

Anonymous said...

Another BE piece I'm wholly in agreement with! I think I'll go and lie down.

AE-P pointed out today that the fall in sterling against the euro puts it back to 2008 levels. We survived that. More importantly for me, it's *only* 15% down this year against the rupee, so our one-off holiday trip to India next year is still on.

After that it's Pembrokeshire and Scotland for the foreseeable!

Blue Eyes said...

Anon, you are welcome any time. Enjoy India. I went about a year ago and experienced what it felt like to be properly rich. As in, not really caring how much things cost and ooh I think I'll get a rickshaw rather than walking for five minutes. Almost as good as Argentina in 2002.

SL the non-tariff barriers that the French are so good at. Better than ensnaring everyone in more rules, we could just impose the standard WTO tariff on EU wines. I think it is 26%. Most of us could probably slum it on Chilean for a few years. Why do you think the Argies are suddenly sounding more positive towards Britain?

Everyone should read AEP in today's Graph http://www.telegraph.co.uk/business/2016/10/12/if-europe-insists-on-a-hard-brexit-so-be-it/

Anonymous said...

Yes, anon@11:21pm, don't know why everyone is pretending to have forgotten that GBPEUR is still better than it was in 2008. That was the first time I went to the eurozone with my own money and it was expensive. UK prices did not drop when GBP appreciated back to 1.6 USD and 1.3 EUR, but for some reason they are all going to rise massively now.

I'm trying to find for a graph of GBPUSD since 1792. In 1900 one US dollar was 20p (or 4s if you like) and it has steadily risen since then. The present rise is only part of a very long-term trend.

Blue Eyes said...

I will never forget a phonecall from a Swiss client the last time the £ was so low. He asked for a quote for a fairly straightforward piece of work. I told him the price and he literally exclaimed "but that iz zo CHEAP!".

Nick Drew said...

BE - that AEP piece is indeed a gem

Anonymous said...

@BE - the Graph piece is a good read.

Listening to many, you'd think we're just going to turn up with a list of demands and the EU are going to smile and hand us a lovely soft, purring Brexit on a shiny silver platter. Perhaps Ed Miliband thinks it's just going to be a bunch of wonks, a whiteboard and a blue-sky, out-of-the-box thinking process, where the biggest bugbear is just where the board rubber has gone, and who went and used a permanent marker to make a smiley face.

One of my current concerns is the messages from the Government are distinctly xenophobic. Rudd's rowback on company's having to supply details of foreign employees, whilst a welcome rowback, should never have got out of a room, let alone be floated as an actual policy idea.

We should be sending the message that we want the worlds best heading our way, not our best heading for the nearest airport.

Brexit should be a chance for the UK to shine, not to turn into a Nick Griffin theme park. I'm not sure May and Co have quite grasped that yet.

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