What to expect from a no-deal Brexit
economist.com
economist.com
And actually, this is the reason why some remainers are voting no to the brexit deal, and it's not even a secret.
> What to expect from a no-deal Brexit
>The terrifying consequences if nothing is sorted
The title and subtitle should be enough to get the gist
* All our manufacturing exports to Europe would suffer tariffs. 10% on cars for example.
* All our agricultural exports would be hit by tariffs.
* The legal basis for many of our financial services provided to Europe would disappear. Clearing for example.
* Imports and exports would suddenly be subject to customs inspections, introducing delays. No arrangements are in place for this.
* Many goods manufactured in Europe only count if a certain % of value comes from Europe. Parts made in the UK would not count anymore so European manufacturers using our parts would have to find alternatives. Cars are another big example, but there are many more.
* We would lose access to all the trade deals with non EU countries negotiated through the EU, which is (almost) all of them. E.g. the big new trade deal negotiated with Canada would no longer apply. Some minor trade deals through the commonwealth might survive, but it’s not much.
* We would probably end up defaulting on our €38bn obligations to the EU. Not as bad as a sovereign debt default, but not by much.
* Oh, and we’d probably also be in violation of our treaty obligations under the Good Friday Agreement, with unanticipatable consequences in Northern Ireland, except it wouldn’t be good.
So high end manufacturing and agriculture devastated, remaining trade (globally) obstructed, financial services crippled, debt default, political instability in NI. Some of those might be cushioned, but there’s no way it can all be significantly mitigated in a few months.
My hope is some sort of keep-it-as-it-is-for-now deal could be worked out. But that’s basically the May plan anyway.
But you are painting this as a binary situation of 'The Deal' vs No deal. There is a third option, withdrawing notice to leave.
Parliament can choose to remain without any kind of referendum. In fact there was a case heard by the ECJ today to clarify this very fact. The UK's option to remain was undisputed, and the remaining legal arguments are simply over whether the remaining 27 states have to agree or not. The ruling is due at a later date.
Again? The UK never joined the EU through a membership process, the EU evolved around it.
The terms would be different if the UK joined the EU by proper mechanism, but perhaps we shouldn't want to be in a club which has different rules for old vs new anyway?
I mean, if it was 3 weeks later and no laws had changed maybe not, but past a certain point regulations would have diverged etc
Followed by no examination of the experience of Hong Kong, Macao, and Singapore. Instead bemoans the "huge effects" on protected industries.
One could be forgiven for making the mistake of assuming that a magazine called The Economist would understand the benefits of free trade beyond the EU and the harms of corporate welfare.
Of course the protected industries benefit from protectionism, the argument against protectionism is that everyone else loses.
There is no reason that a transaction with a counterparty in Shanghai should incur any more taxes than an equivalent transaction with a counterparty in Manchester.
Net benefit to who? Global capital efficiency, people?
Jobs going overeseas to countries with lower wages and less safty/environmental/etc. regulation has been a net loss for humanity... but it has been a major win for capitol!
Also the wages thing, but I understand that is a more nuanced issue, so let’s set it aside for a moment.
Not sure if it's a net benefit. And neither are you. But there are certainly winners and losers.
Protectionism for European agriculture has made Europe a positively lovely place to live. Have you seen it? I recommend the south of France.
> Of course the protected industries benefit from protectionism, the argument against protectionism is that everyone else loses.
I have a degree in economics, the concept hasn't escaped me.
Noticing that having protections evaporate overnight could have massive negative consequences for many is pretty relevant.
> There is no reason that a transaction with a counterparty in Shanghai should incur any more taxes than an equivalent transaction with a counterparty in Manchester.
If it just happens to turn Manchester into an economic wasteland where the daughters of England are sold into prostitution and working men beg for scraps of food in the street, then those are two reasons.
I get the argument you're making. It's a style of economic conversation where you assume frictionless perfect markets and rational allocations of resources. Those of us that actually understand how economic systems work moved on from that sort of simplistic line of thinking generations ago.
Depends on what you define as net benefit... Self-sufficiency, especially regarding basic supplies like food, is hugely important for any independent nation. Personally, tariffs on/protectionism of food industry are what I support the most.
Broader picture, net benefit doesn't mean just economic benefit. I support Trump's tariffs on China and hope EU would do the same, tax the hell out of all polluting and tax-evading countries - that would definitely be a net benefit for the planet.
Simply sanctioning bad countries isn't good in itself, unless it forces them to become better.
"Sure it will personally suck for you the British farmer, but think about the benefit to the avocado farmers in Chile. Brexit for Chile!"
Stopping 5% of people from stealing other people's money is a good thing, but might easily be confused with the first thing.
And it illustrates a basic concept, which is that redistributing money isn't value-neutral. Some distributions are better for society than others.
You can't just say free trade takes money from this group and gives it to that group and perhaps ekes out a modest efficiency gain and conclude your analysis there.
It matters who wins and who loses, and by how much.
https://metro.co.uk/2018/09/25/brexit-mps-tweet-about-foreig...
It is complete FUD
Protectionism is the wrong word when you are talking about food supplies. Tariffs are applied selectively to food imports in most countries, to protect farming for food security. Food matters more to people than watered down Randian ideology, once there is a shortage.
A more useful example would be New Zealand:
> “You had a system dictated by government programs that was thrown out the window overnight,” Hausman adds in a recent interview with The Daily Signal. “But the farmers kind of reinvented themselves and now New Zealand is a powerhouse when it comes to agricultural production on the world stage.” https://www.dailysignal.com/2016/09/22/what-happened-when-ne...
But HONG kong is of different scale and no major industry. Part of UK will be ok but other part like car,airbus... may be not. Not sure about clearance but you can be a Euro centre not in Eu as Rmb is very active here. Hence it is a shift not impossible.
May be a total zero tariff is an option. may say the other side is not. But then a lot of tourist will come to shop.
It is the change that is hard.
This reduces costs, and therefore reduces prices (through competition). Everybody is a winner (apart from the previously-protected businesses who now have to compete on a level playing field).
Some of those places that are more efficient are more efficient because, hey, they don't regulate emissions. Or they don't have strict safety standards. Or they don't require employers to take care of injured workers.
Clearly, not everybody is a winner.
This is only true when all actors play by the same rules. Without this requirement the most efficient places to operate are where there are the fewest labor and environmental protections. I would 100% be in favor of eliminating tariffs to countries that meet the same standards but its silly to say that we're better off exploiting not-quite-slave labor.
That’s the current situation with the EU. Turns out the UK is not happy with that.
Thank God the Brits have such a taste for irony. They'll be feasting on this one for the better part of a decade.
The world is not a first year economics class on comparative advantage.
Switching to a different model in a controlled way has a reasonable chance to be beneficial in the long run. Switching off the conditions under which the current system operates would be guaranteed to be catastrophic immediately.
I agree a no deal brexit would be a mess. If you were going to switch to a HK system you'd want to plan it over some years.
Let's agree that if everybody wanted Brexit, we should have Brexit. And if everybody wanted to remain, we should have remain. Then, start with everyone wanting Brexit, and flip opinions towards remain, one by one. At some point the group decision flips. Political decisions are just like that. Majority rule is not to blame.
The big problem we have is that Brexit was not the policy of any political party, so who is responsible for implementing it? May is our legal, rightful Prime Minister selected by due process, but she was a remainer.
The only right way to do this would be for the people to elect a party with implementing brexit as policy, and have a referendum to ratify the decision. That’s how we got in and that’s how we should have left. What we got instead was a muddled tangle of lack of responsibility, recrimination and disagreement of what brexit even is.
To this day nobody on the brexit side has ever put forward a clear, comprehensive plan for how to implement brexit. All we get is platitudes about a European Singapore, vague half-ideas like magical goods tracking systems that don’t exist, and red lines of what they won’t accept. No real credible plan of how to actually do it, because it’s never actually been anybody’s policy. May’s is the only plan on the table. Everybody else won’t shut up, but won’t put up either.
Cameron, when he called the referendum, never beleived it would go Leave. All the polls at that time said Remain would win easily. He believed it would be a clear Remain and we would all move on.
That's basically the reason why Boris Johnson didn't "run" for Prime Minister on the election after the referendum. And he was the main representative of the Brexit campaign that had just won. He knew whoever was going to be PM would only be able to get a bad deal and would be fiercely criticized.
Pretty hypocritical to keep spouting anti-immigrant ant--EU rhetoric when you have different plans for your own kids.
Why do it? That question ceased being relevant a long time ago, when the process was irreversibly started. The linked article is suggesting a least-bad path forward. People may or may not agree with their assessment.
If it's not framed that way, it amounts to buying the outcome of a risky multi-year process with a lot of downside risk and tens of billions in costs sight unseen.
It is not antidemocratic to have a referendum on "Were the negotiations a success?"
Nor does it make sense that if the UK parliament rejects the exit deal that "no deal Brexit" is the only outcome. The UK can withdraw the notification they will exit and remain and continue to negotiate. It adds some lead-time to an eventual exit if that ever makes sense and can be negotiated before the earliest date the UK can leave. But, in no way is it antidemocratic.
Some EU leaders have eliminated that as an option.
There is some dispute over whether they can do it unilaterally, but we will find out when the ruling from todays case comes out.
Very true.
Many people thought voting for `leave` meant making the immigrants leave. They were interviewing people on BBC and people on the streets were approaching non-white people and saying `We voted leave, so you guys leave now.`
The vote should have been framed as `UK should remain in the EU`, `UK should exit the EU`.
That would have probably worked better than framing it as `Should the immigrants remain`, `Should the immigrant leave`.
1. Take the deal on offer.
2. Stall for more time to get a better deal.
3. Cancel the whole thing.
4. Bail out with no-deal.
(There's also a non-orthogonal option of hold a second referendum to let voters decide which option to do, the results of this are likely to depend heavily on what options are actually on the ballot.)
It's not at all clear that a better deal is forthcoming, given more time. Indeed, the current deal on offer is already kicking most of the hard contentious decisions down the road. So the general preference for what should be done amounts to, in decreasing order of desirability, 3, 1, 4, 2 or 1, 3, 4, 2, depending on how people view the EU. But that preference isn't the same preference that's going on for the vocal Brexiteer politician population.
For those people, the EU has been an ideological punching bag for quite some time, which means that admitting that leaving now is not the appropriate action amounts to discrediting their views. So to them, option 3 is the absolute worst option. Similarly, the current deal on offer commits the UK to maintaining a lot of the EU's provisions without a strong say on them, which is still pretty anathema to those who want nothing less than a hard Brexit, making option 1 nearly as bad. This means that the remaining option are to walk away from the current deal and hope that brinkmanship causes the EU to sweeten the deal, or to believe that the worst effects of a no-deal Brexit simply won't happen. So for these politicians, their order of preference is basically the reverse of what it is for everybody.
Essentially, that is the issue. Brexit was sold on a pack of fantasy and lies, and the people in power have the choice of committing to their fantasies are admitting that they've lied. It's rare to find the politician who would admit that the worldview they've committed to for decades is a lie, and you shouldn't be surprised that the Brexiteers are the same way.
To me it seemed like people hypnotizing themselves to sleepwalk into (IMO) pointless, useless harm, and that also came from people who said they were against Brexit. "This really sucks, but there's no going back now". Most of the (online) discussion (I saw) was about whether a Brexit would be good or bad, but that it would happen seemed a foregone conclusion.
Apart from the "ever closer union" of the EU (which frankly has to have fiscal union once it has monetary union), Brexit has highlighted the unresolved "states" or kingdoms of the UK - an English majority of voters is driving a decision that every other state chose not to do. We don't have a balancing Senate to defend smaller states (hell we don't have an elected second chamber - in fact we have more unelected members of parliament than we do elected!!)
We do have a need to look at a constitution and upper chamber again - we have a lot of things to sort out whatever happens with brexit
(basically brexit vote was the bit in the awkward family gathering where one person shouts out "i never liked your ex husband" and suddenly all the disagreements come tumbling out.
It's not like one side benefits - say the EU has a tariff on UK goods, who wins? Neither. People in the EU pay more for UK goods and people in the UK can't sell things to the EU. Same thing for the movement of peopole - Europeans "lose" because they can't visit the UK - the UK "loses" because they don't have people from the EU visiting.
The real action on this to my point of mind isn't economic that, in my view, is simple. The action is political - in terms of how much sovereignty the UK wants to hold on to and how eager the EU is to discourage other members from leaving.
I think this is her exist strategy from the PM role in the UK.
Look into this for even a few minutes and you'll come to a conclusion that leaving the EU is a ridiculous idea.
- The Good Friday agreement gives the UK the obligation to maintain an open border with the Republic of Ireland
- An open border with Ireland brings the UK into the EU customs union
- The only compromise solution here is to include Northern Ireland in the EU customs union but not the rest of the UK. In essence this puts a border between the UK and Northern Ireland.
- The DUP, who are now an essential part of the Conservative majority in Westminster will fight tooth and nail any separation from the UK as they see this as leading to an inevitable (and undesired, by the Protestants at least) reunification with Ireland.
- The UK wants to have their cake and eat it too when it comes to freedom of movement in that they want UK citizens to have freedom of movement but not have to allow EU citizens freedom of the movement in the UK. The EU has made it pretty clear that they don't want to set this precedent and that any freedom of movement needs to be reciprocal.
- The UK wants a deal like Norway or Switzerland. The EU, who wants to not encourage further separation, will fight against this. The UK will get a deal but it won't be as good.
- Being a non-voting member of the EU in the Norway/Switzerland model will give the UK all of the negatives (primarily the outflow of money to fund the EU) with none of the benefits (they lose voting rights). This is really a worst of both worlds type scenario.
Honestly I see a hard exit as probably being the best outcome (short of calling this whole thing off, which I don't think will happen).
Sadly, this whole affair has kind of shown just how useless the UK media is as pretty much everything written about this is blatantly opinionated on whatever the editorial position of the paper is. It doesn't even matter if the article that someone like the Guardian or the Economist produces is good in isolation. You just know that the Guardian isn't going to publish anything positive or even neutral on Brexit. As a result you really can't trust anything they say. They aren't alone in this.
There are some positive outcomes that would come out of a hard Brexit:
- Not handing over 50B+ euros to the EU. It's true that when the UK pays into the EU budget they get some of that money back but the net position is a deficit.
- The UK regaining sovereignty over territorial waters for fishing purposes. These waters have been heavily overfished and the tragedy of the commons has definitely applied here. Ironically when the EC was originally formed the UK refused to join. Had they done so they would've maintained sovereignty over territorial waters. When they later joined they didn't.
- The UK is no longer under EU jurisdiction and could go the route of Switzerland and become a financial haven.
- The UK would no longer be on the hook for the bailouts for precarious economies (Greece, Portugal, Italy). It's true that the UK isn't in the eurozone so there's some separation already but this is still more insulation.
Sadly I think efforts like Scotland remaining in or rejoining the EU are doomed as they would present the same border issues that plague Northern Ireland.
I don't think this is going to happen at all. Most fish landed in the UK are exported to the EU. Kicking out their fisherman and then selling them the fish sounds like a very unlikely outcome to me. Macron has already flagged this
What's most terrifying is the knock on affects of one of the largest economies on the planet going into reverse for 5+ years.
I believe there have been other examples where the Irish fishing quota was expanded by the exact amount of tonnage as whatever new supertrawler just got built.
It's also true that the British government have had their own issues when it comes to fishing policy but I still believe that the end result in total will be better with a single government (the UK) managing those waters rather than them falling under the EU's fishing policy.
I don't understand that argument. The EU is a voluntary-membership organisation. There should be no consideration of 'punishment' in the face of leaving.
It's the little "text document" icon in the address bar.
The Economist still has good analysis on the happenings of the world that many people continue to pay for.
I got the article page directly. Clean, readable, no ads all over the place.
You get what you pay for.