The more I read into the arguments put forward by the leave campaign who are rejoicing over the “win” that they have just accomplished the more I compare them to the businessman running for the US presidency. Trump’s motto “lets make America great again” seems to have been copied by the leave campaigners who have a motto “lets make Britain great again”. What a role model to choose!
They propose to do so by having more control over their laws and to decide better on how to spend their money. This sort of “centre of world” and “us versus them” mentality seems to be coming from the disillusion of the older generation of the Brits who still dream of the glory days of the British Empire. In actual fact no state is ever totally independent nowadays since they all depend on one another to one extent or another. The more trading partners a state has, the more its economy will grow and the more its people will prosper. Whether the UK admits it or not it needs to trade with Europe as much as Europe needs to trade with the UK.
So ultimately the British will need to negotiate trade agreements that will most likely be as similar as possible to the current agreements in place. The main difference will be that it will cost the UK a lot of money to renegotiate everything. It seems like all of the world understood this concept except the older generation of the Brits who are still disillusioned by the British Empire mentality. Time will tell if it was a good move or not, what is clear is that the students and young generation who will have to deal with it all definitely did not agree that it would be better to be out.
The Financial Sector and Passporting Rights
The financial sector would definitely be one of the hardest hit sectors as a result of the Brexit. We saw this clearly with prices of the banking stocks around the world taking such a big hit on Friday 24th, the day the results were announced. London is a very important financial hub that is a gateway for many non-EU countries. A big advantage that the EU offers in the financial services sector is the right to passport a license. What this means is that an entity that is regulated in the UK can very easily acquire Passporting rights to operate in the other EU jurisdictions without needing to acquire full licensing in each member state. So for example, if Morgan Stanley has a fund licensed in the UK it can easily and cheaply get permission to promote and sell it in the other jurisdictions with the blessing of each jurisdictions’ regulator.
Since the UK has just voted to leave the EU the passporting right no longer applies to UK regulated entities and products. Thus sticking to our example, Morgan Stanley would have to go to another member state and get its product fully licensed there and then can passport it to the other states. What this means – London just became much less attractive to use as a hub and other jurisdictions will benefit from this.
The people who voted to leave the EU, who were mainly the older generation and people from the North might be thinking, we don’t care about the bankers and high earners working in London. Serves them right to lose their jobs after all we have done to bail them out in the crisis. This of course is the one of the most idiotic arguments one can make and again we see a likeness of the mentality of the leave campaign to Donald Trump. In simple terms: banking sector does bad = whole economy does bad = fall in purchasing power. Who will pay for this all? The tax payer as usual. So the hard working Brits (who either voted to leave the EU or who applied a little logic and voted to stay in) will pay the price for it all.
Who will gain most from Brexit?
First we have the politicians who have used the Brexit to their advantage. People like Nigel Farage and Boris Johnson who I am sure made a bucket load of money from all this and have gained more support that will see them advance in their political career. Then we have the consultancy firms who will be in high demand by both the private sector and the government entities themselves to see how the Brexit will actually affect them. Finally we have China. With a weaker union and a smaller EU block China gains in the long term by attracting more trade towards its jurisdiction and away from Europe. So congratulations to the Brits who voted to exit Europe – you have just made the politicians, lawyers, accountants, other consultants and the Chinese very happy indeed.
The Bottom Line
Ultimately billions of pounds will be spent in relation to the transition to the free “independent” UK. So most of the gains that the Brits thought they would save by not being an EU member would still be spent on new negotiations and added costs of trading. Animosity is clearly present within “great” Britain with speculation that Northern Ireland and Scotland might seek independence in order to remain in the EU. We even have petitioning for London to be declared a separate state and also remind in the EU. I will close the post on a light note however. In one of the interviews with Nigel Farage after the Brexit result in which he admitted that he had twisted words about NHS funding he also stated that Britain should consider more trade with the Commonwealth. Please check out this humorous clip in relation to the notion of the Commonwealth and “great” Britain: https://vimeo.com/131934966
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As much as I agree with the gist of your argument… Implying that Donald Trump is an orangutan sounds every bit as bad (and racist) as saying that Barak Obama is a chimpanzee…
Let us keep discussions fair, factual and free from personal digs at anyone. The fundamental basis of our free society is that anyone can subscribe to any political view whatsoever without fear of being personally vilified over it. Criticizing the politics should not extend to having the politician pilloried.
Agreed, I just couldn’t resist that time. I try to leave politics out of my writing as much as possible.
The UK has the means to survive, whether within or outside the EU(albeit working closely with it). For the time being the current economic fundamentals are unchanged, yet we are seeing a collapse in sterling and the markets.
What is missing at this time, is Leadership and Communication from within the UK Government and the heads of big businesses. Uncertainty is being allowed to thrive and until a clear way forward can be announced by the UK Government, the situation will not improve. The new leader of the Conservative party needs to be elected and empowered sooner rather than later, but in the interim the Cameron Government needs to govern and communicate.
I agree with your comment and I never had any doubt about the UK surviving without the EU. I just believe that both parties would benefit if the UK remained in the EU, since both depend a lot on one another for economic prosperity. As you said, we will now have a period of uncertainty which is never good for the markets and economic development for either the UK or the rest of the EU.