Brexit stalwarts have regularly espoused the idea that the UK can obtain restrictions on immigration, one of the top priorities of Leave voters, while still having unfettered access to the EU for trade purposes. as we said in our post, EU to UK on Brexit: “What About ‘Nein’ Don’t You Understand?”, EU leaders felt compelled to issue a firm statement after a European Parliament meeting at the end of June because it was clear that the British side wasn’t listening to what they were saying. As we wrote:
As we described yesterday, it was evident when British Prime Minister Cameron spoke at a regularly scheduled session of the European Parliament that Cameron’s demand for what amounted to a special deal as part of a Brexit, in terms of concessions on immigration, was a non-starter as far as the Europeans were concerned. We inferred from the write-ups of the meeting in what is effectively the house organ of the Conservative party, the Telegraph, that the Tories were ignoring the message.
Apparently it was so clear at the European Parliament meeting itself that the UK representatives were in their own bubble that European officials took the atypical step of not simply reiterating their position, but stating it even more firmly in an effort to puncture the delusion. From EU leaders harden stance against Brexit concessions in the Financial Times:
Europe’s leaders have dug in their heels over uncontrolled migration in the single market, scotching UK hopes for a favourable deal in a direct snub to prime minister David Cameron’s plea to recognise British voters’ concerns..
“There will be no single market à la carte,” said Donald Tusk, the EU Council president, as the group met to set out the terms of engagement for any divorce talks following the Brexit referendum.
Diplomats said the joint statement was deliberately toughened up after Mr Cameron said he would have avoided Brexit if European leaders had let him control migration.
With the explicit consent of German chancellor Angela Merkel, a sentence was unexpectedly added to the statement yesterday saying that “access to the single market requires acceptance of all four freedoms”, a reference to EU principles on the free movement of capital, labour, services and goods.
“That was our response to Cameron,” said one senior EU diplomat, who added that leaders were not expected to go into policy issues at this stage.
This is very significant from a negotiating perspective. Details can always be horse-traded but principles are another matter entirely, and the EU members are taking a unified position.
Back to the current post. The statements over the last few weeks by Theresa May, other senior Government officials, and the Tory press, suggest that the message from EU leaders has yet to penetrate the British reality-distortion sphere.
The think tank Bruegel yesterday released two posts which throw yet more cold water on British optimism about its glorious Brexit. One compares key elements of the deals that some of the countries that the UK is looking to as possible models for its post-departure relationship. Its devastating finding is that all the nations examined, (Iceland, Liechtenstein and Norway, which are part of the European Economic Area, and Switzerland , which has entered into bilateral agreements), take more immigrants as as percentage of their populations than the UK does now, as shown by the blue bars in this chart:
Germany also takes more immigrants than the UK does. That’s one reason the idea of cutting Britain any slack in the Brexit negotiations is so unpopular with German voters. The chart also shows something we’ve mentioned previously, that the UK takes in more non-EU immigrants than ones from the EU. Has any pro-Brexit policy maker suggested curbing their numbers? They presumably do not want to acknowledge that some were recruited to fill skill gaps, like NHS nurses. But presumably many others are deemed to be economically valuable….and that may be due to how they help suppress wages.
The concluding remarks:
While the UK’s strategy toward access of the EU single market after Brexit is unclear, the experience of the four non-EU countries having access to it suggests that the conditions of access may involve:
- Sizeable net financial contribution to the EU budget (Norway pays similar amounts to current UK payments in relative terms, though Switzerland and Liechtenstein pay surprisingly small amounts.);
- Sizeable net inflow of EU workers and their families (relative to population, all four non-EU countries received about twice as many EU immigrants as the UK);
- The adoption of a very large share of EU regulations – without a voice in influencing them.
None of these elements may look attractive to those who campaigned for Brexit.
And before Brexit fans get hopeful about Switzerland’s low contribution, bear in mind that despite being a bank-dominated economy, Switzerland does not have passporting rights with the EU for banks, but only for insurance companies. So the Swiss arrangements aren’t a ready template.
The other post, by the director of Bruegel, Guntram Wolff, is clearly meant to send a warning, admittedly in bureaucratese, that the UK side needs to lower its expectations. He says explicitly that a Noway or Switzerland-style deal is unlikely. From his post:
UK voters’ decision on June 23 to leave the EU raises profound questions about the future relationship between the UK and Europe. But a Norway- or Switzerland-style deal would not suit the UK. Negotiators will find it hard to define a solution that satisfies both parties.
With the announcement of Theresa May as conservative leader and prime minister, it looks like the UK will seek an agreement that limits the movement of labour. May, who has a tough stance on migration and a softer stance on the single market, has declared that “Brexit means Brexit.” But negotiating a special deal that is materially different to any existing models will be a long and difficult undertaking…
There are several conceivable models for the future economic relationship. But arguably none of them is satisfactory. If the UK follows the Norwegian model, it would be subject to EU rules but have little influence over them. The UK would have to fully accept all EU regulation, EU competition policy, EU jurisprudence on single-market matters and almost full payment into the EU budget. It would still have to accept the free movement of labor.
This option would indeed be very favourable to British and European business compared to leaving the single market. But it would break promises made during the referendum and it would diminish, not strengthen, the UK’s sovereignty, compared to the UK being a member of the EU.
The Swiss model is equally under pressure. Switzerland also wants to restrict worker mobility, and may in fact become the first “victim” of the Brexit negotiations as the European Commission seeks to make it clear that no country can expect to be in the single market without also accepting the free movement of labor.
So neither of these options would work for the U.K..
But the more isolationist the approach taken by the UK, and the more punitive the mood on the continent, the bigger the economic losses will be for both. A cooperative solution would be advantageous. Still, some may fear this would lead to other countries following the UK example and cherry-picking the union they want. Energy would be better spent on showing the benefits of membership.
The conundrum of defining a new deal will last for quite some time.
Wolff’s “cherry-picking” comment is an allusion to the warning Angela Merkel gave to the UK on June 28:
We’ll ensure that negotiations don’t take place according to the principle of cherry-picking … It must and will make a noticeable difference whether a country wants to be a member of the family of the European Union or not…Whoever wants to leave this family can’t expect to do away with all of its responsibilities while keeping the privileges.
In other words, there does not appear to be any overlap between both side’s bargaining positions. The Europeans perceive this clearly, yet the British appear to believe that the EU will relent on what the E regards as basis principles despite consistent warnings to the contrary. Needless to say, this is not a good foundation for productive negotiations.
66 comments
Comments are closed.
I suppose it all depends on expectations: Whoever expected all to be perfect at once was and is delusional. If Brexit happens, then the process is likely to be in more than one step. My guess is that the first step might be an EEA-style agreement (based on the agreement for Norway) and then further negotiations on what the next step will be.
As for the massive amount of regulations….. Before the vote it was said that EU does not regulate that much at all. Now it seems that the EU is regulating a lot? I suppose the critics of EU will pick up on the now admitted statement that the EU has a massive amount of top-down regulations.
The interesting bit on Norway like agreement is that UK would likely pay into EU MORE than it does now, as Thatcher’s rebate would not be in…
The delusion is massive, and unfortunately things like Aussies offering “delete and replace” deal doesn’t help – because it makes the deluded to think this is how it’s going to work, but Australia/UK trade is trivial (both ways) – it doesn’t even make it to top 15 (half of which are EU countries).
I’m a hybrid; English born and roughly American raised. The plaints I’ve heard from the “homefolks” have been, over the years, in more of a class war based nature. “The rich are getting richer and the poor…” Certainly, the Eurocrats are convenient scapegoats for nativism of all sorts. However, the basic complaints are internal and econo-social in nature. Thus, the supposed ‘magical thinking’ of the Tories is understandable as a diversionary tactic for domestic consumption. Using the plainly onerous conditions about to bedevil the Brits, the Tories could conceivably ram through a super austerity regime under the guise of “buckle down and tug up on our bootstraps.” Right now, my monies on the Government putting forward a budget including steep cuts in social services “to insure British competitiveness.” Even if not a “cunning plan,” this will be a classic case of “not letting a disaster go to waste.”
I’m tempted to create a Sockie and call it Ambrex.
Much Love!
> there does not appear to be any overlap between both side’s bargaining positions. The Europeans perceive this clearly, yet the British appear to believe that the EU will relent
Sentence makes no sense. I perceive clearly that Bob does not see things my way but I believe he will come around once he stews on it a bit — what’s unusual and unprecedented about that? Sounds like every marriage* ever.
Like I think I said before, this has reduced our entire intellectual class to gibberish.
Something that has not been explored that could be interesting on a Economics web site: Minimal tariffs and low immigration seem to be perfectly the opposite of how to improve your country, right? High tariffs and con the talented or at least hard-working people to come and work in your country would make more sense, no? Isn’t that how we (America) did it?
*And this marriage is so bad I think the argument that it should be broken up regardless is not easily dismissable (and also am still standing firm in my belief that it won’t at least this time) but for the vast majority of former couples that go thru it both suffer a long downturn in multiple ways – financial, social, work – and that’s why everybody tells them not to do it. So I understand, and I can seriously say that the arguments here against Brexit are very solid but feel the ones for it are simply better when one views the long run. The principle reason being is that this isn’t a marriage, nobody loves or has ever loved each other and thus all they will do is paper the problems over enough to swing the vote back the other way, but not really ever see things thru the other’s eyes. And the problems will resurface.
Heh, I just noticed how well this tracks with vlade’s comment with a slight tweak:
>The delusion is massive, and unfortunately things like (cute co-worker) offering…
Huh? Go read any basic text on negotiations; If the walk-away positions of the two sides do not overlap, the negotiations will fail. Joe has an asking price of $240,000 for his house but will accept no less than $210,000. Terry will pay no more than $200,000 and there are no concessions that Joe can offer, like closing whenever he wants to or painting the house, that can induce him to pay more.
In addition, these are international negotiations. These are not interpersonal negotiations. Both sides have constraints that don’t operate in personal negotiations.
And negotiations fail all the time.. Winding up in bankruptcy court is almost always a failure of cutting a deal with private creditors. Trade deals have failed (see Doha round for a recent example). And we had a recent negotiation where the two sides’ positions did not overlap: Greece v the Troika.
The point of the post is that the two sides are at odds and the Brexit camp royally assumes that it is the EU camp that will make concessions. The Brexit camp has also put itself in a bind by making promises to UK voters that it won’t be able to meet.
Now I have contacts who swear that the resolution of this outtrade is the UK won’t go through Brexit. That is inconsistent with May’s posture but five plus months is a very long time in political time.
Right now, I deeply appreciate that I started reading NC at the beginning of 2015. Watching what happened in and to Greece and your prescient pessimism is helping me now brace for what’s coming.
If I was the Tories (and, full disclosure, I feel faintly nauseous just typing the phrase) I’d delay a bit and then throw up my hands and say because of the mean meanie Germans Brexit is impossible. They’d be basically daring the fundamentally conservative population of England to vote for Jeremy Corbyn’s Labour Party, wouldn’t they? I would love to see Corbyn win, but wouldn’t that be a more reasonable gamble than trying to Brexit without losing either domestic political power or international financial power? Either they keep power and wash Brexit away with Cameron, or Labour takes power under incredibly difficult circumstances, and presumably they get to take power back in a few years and Brexit is never talked of again. Given that calling a snap is hard now, it seems to me this has better odds than, say, a tasteful Holocaust movie getting Oscar nominations (hint: they almost ALWAYS get Oscar nominations). I would think the conventional wisdom-meisters in the British leadership class can’t envision Corbyn winning or succeeding.
What am I missing? I like this scenario because I like the idea of Corbyn taking power, and this seems like the best, albeit still difficult scenario for him. But it seems like the best pathway for the Tories, as well. The party isn’t actually run by passionate Little Englanders, is it? If they don’t want to really leave, it’s just a question of managing the anger of their voters. I hear there’s a whole political theory where one can crap all over a huge portion of one’s base because they have nowhere else to go…
Parties opposing the Tories might begin to cooperate with each other. There’s a description here:
http://www.newstatesman.com/politics/staggers/2016/07/budding-progressive-alliance-wants-take-back-brexit-heartlands
The idea would be to field only one candidate in each constituency, against the Tories. This takes advantage of the first past the post system to push the Tories out of power. The resultant government would change the British electoral system to one of proportional representation (PR). Then, it would dissolve, and a new election would take place under PR.
Previously, a change to PR could never have gone through, because Labour would have opposed it. However, there seems little for Labour to lose now. Labour have already lost Scotland to the SNP, and have little hope of forming a government where they aren’t in an electoral alliance with the SNP. They might as well formalise this arrangement under a PR system, and stymie the Tories at the same time.
I think that if the Tories want to obviate Brexit, they will find less risky ways than calling a general election.
The problem with this is UKIP – will it go with it, or will it field its own candidates? Who will those take votes from?
UKIP can’t very well be part of a progressive alliance. But, UKIP would benefit from PR. So, UKIP could be counted on to vote for PR if there was a commons motion to change UK general election voting from FPTP to PR.
UKIP candidates in the next general election can take votes from any party. At the moment, they’re targeting Labour seats. For the progressive alliance plan to work, it’s not disastrous if UKIP win some of those Labour seats. That’s because UKIP would vote for PR. However, UKIP competing strongly against Labour could split the non-Tory vote, and hand some seats to the Tories which may otherwise have gone to UKIP or Labour.
At the moment, UKIP have only one MP, so it doesn’t seem to matter much. It will matter, though, if recent voting trends continue, and UKIP (or whatever a successor party is named) look to become a more prominent force in UK politics.
The bolstering of UKIP would be one of the more regrettable aspects of a move to PR in the UK. That said, I find it difficult to complain about more democracy, even when it goes in a way I don’t like.
I misunderstood the post – my bad.
That’s interesting, but I wasn’t assuming that they would call an election. It’s hard to do now, right? I was thinking more of how it seems like it could work well for them to just go through a brief charade of trying to Brexit, and then backing out. Then the WORST case scenario is a snap election that they might lose, to a party I presume they don’t see as a real threat — or your alternative, that requires a lot of discipline and cooperation on the part of their opposition. Again, I’d LOVE to see that, but if I was making odds on it, I’d bet on the Tories in that case. The best case scenario is no snap election, and years for their base to get over their rage. They did this because of the threat of UKIP, didn’t they? Wouldn’t UKIP also be weakened by the failure to Brexit? Farage stepped down, didn’t he? I realize that’s not forever, but again, doesn’t that argue for slapping a band-aid on that gaping wound sooner rather than later? Betray your voters now while there’s time for them to cool down, and their alternatives are in disarray.
My money is on the Conservatives using the make-up of the UK to stall Brexit. Scotland and NI voted to remain, and May could suggest that this needs to be worked through in more detail.
Actual constitutional changes to the UK could take years. For example, if the UK changed to a federal system, or if there were some other increased devolution powers. If there’s a compelling reason for these to take precedence over Brexit (how about: preventing an resumption of violence on the NI border?) then May can signpost internationally that Brexit will have to wait until the necessary reviews, and constitutional changes to the UK, have been completed. This could easily be spun out for 10 years. At that point, a future government could cancel Brexit.
So you’re suggesting the exact opposite tack: just keep delaying and delaying (please, please NOT by triggering a breakdown of the Good Friday Agreement), without admitting it won’t happen.
But the EU wouldn’t allow that, would it? Wouldn’t finance organizations start pulling out of London as a precaution anyway? I thought the country lives or dies now as a finance hub. This seems like a worst case economically to me: finance shrivels, but nothing else can flourish to take its place. And wouldn’t all those angry voters just get more angry, as they became even more impoverished?
Huh.
@Yves Smith
Thanks. Excellent post.
I was convinced Brexit would be repudiated but now I am not so sure, such is the apparent commitment of the present Government and the Establishment (more reluctantly) to pursue it.
As it stands, assuming Brexit, the British are going to be disappointed either by lack of access to Single Market or acceptance of the four freedoms, larger contributions and less influence.
Both outcomes look significantly worse than that which they will replace, something the British people (including the political elites) have yet to grasp.
Moreover, the Brexiteers forget one of their own criticisms of the EU, that it is a highly political organisation and institution, not just an economic one. The Brexiteers said the EU was economically irrational due to political interference etc.
Yet the Brexiteers expect the self-interest of German and French economies to continue their export trade with UK to overwhelm the political needs of the EU to ensure membership has benefits whilst withdrawal has significant penalties.
Such assumptions contradict the Brexiteers’ wider view of EU.
Unless they really do believe the Continentals are a bit stupid. They surely do believe it……
Britain surely has a big shock coming – and some even bigger problems. Madness.
Your excellent graphic shows that, reweighted for population size, the 3 major destinations for internal migration in the EU are Germany, England, and Switzerland.
Both England and Switzerland have voted to restrict migration, and may leave.
Freedom of movement is empty without places to move to, no?
Germany has a catastrophically falling native population. OTOH England has a strongly growing population and a housing crisis.
Perhaps it is the EU that needs to think again about whether a Nein should mean Ja.
It’s not England. It’s the United Kingdom.
England is a nation within the United Kingdom. As is Scotland. As is Wales. As is Northern Ireland.
Things continue in turmoil until the profit in the arrangement is firmly understood.
When the profit or loss comes into focus, then the British will proceed in the manner that maximizes the Aristocracy’s profit, or imposes any loss, with significant profit, down upon the unwashed masses.
I’m baffled by the anti-Brexit sentiment constantly purported on this site. Forget whether or not Brexit is going to be good or bad economically for just a minute.
Here we have, for the first time in a while, the masses telling the politicians what to do. And somehow, all of a sudden, it’s the “worst idea ever” and will somehow “destroy Britain”.
The chart illustrating “annual net immigration” is for years when Britain was in the EU. What does this data even show? I’m seriously asking. EU immigration policy extended well beyond just EU citizens and established quotas of refugees, etc. In addition, it’s laughable to compare the immigration of Britain to Iceland or Norway…by percentage. First, Britain is 10x more diverse than most any country listed in this graph besides Italy and France, which actually had LESS immigrants by percentage. Obviously, a more diverse country means that at least in the past had much HIGHER immigration. Therefore, it’s pretty obvious to conclude Britain had less immigration BY PERCENTAGE because Italy, Britain, and France have much larger populations, and in previous years had large numbers of immigrants. Norway, Iceland, and Germany always had more strict immigration policies: until now.
So once again, what is this graph evens showing? A single year in Britain’s immigration compared to relatively small homogenous countries by population percentage? Ridiculous. If you looked at “immigrant per square mile of land” then Britain would automatically zip right up to the top. Useless input = useless output.
Secondly, the idea that the EU somehow has any clout amidst the imminent devastation of Deutshe bank, the bailout of the Italian banks, rising civil unrest, fracturing politics, etc is hilarious. Britain is the 4th largest importer in the EU. That means several things:
1). Keeping Britain’s trade healthy is in the benefit of the EU
2). Knocking down Britain will only result in further disintegration of the EU, which is currently fighting civil unrest, splintering political fronts, rise of extremist rhetoric, and trillions in exposed derivatives nicely connected to the rest of the global financial structure INCLUDING Britain.
Every single time I read about high level overviews of financial and political structures and how Brexit somehow disrupted these to some unforgivable extent, its as if the writers decided that the rest of the world is isolated and removed. In this article, Yves quotes this paragraph:
“With the explicit consent of German chancellor Angela Merkel, a sentence was unexpectedly added to the statement yesterday saying that “access to the single market requires acceptance of all four freedoms”, a reference to EU principles on the free movement of capital, labour, services and goods.”
First of all, if you want to get any sort of realistic perspective of the EU, you probably don’t want to listen to Angela Merkel. Its akin to trying to describe the condition of the US economy by listening to Obama.
First off, free movement of labor is a myth. Try to look at it from a multinationals point of view: labor is overhead, and therefore always minimized. Thus, free movement of labor would indicate that a country has no control over the influx of people and that multinationals would be perpetually hunting for countries with low labor costs, which would be constantly changing as people look for a better life, and thus move to countries with better labor laws. Obviously, that is not how the world works.
The EU, by and large, is a multinational corporation in itself. Everything they claim, everything they say has a hidden double meaning. I wouldn’t use anything, any data, political commentary, etc. from prominent members of the EU to come to any conclusion. Just look at Junckers political statements following the speech from Czech Prime Minister Vaclav Havel: “The EU stands for freedom and democracy”. He says this right after Havel gives a speech about the return of totalitarianism in the EU!
I’m not at all baffled given all those contracts — on taxpayer coin — let by the US government (State, DoD, CIA, etc.) to manufacture consensus with false comments and stories on Web sites, especially given whom Brexit will impact most negatively (the super-rich).
Pages 67 to 83 of Nicholas Shaxson’s book, Treasure Islands, explains this most lucidly (even though it wasn’t written pertaining to Brexit).
Inflating financial assets, to profit the bankers, hedge funds and their super-rich investors/owners.
Three simple words which explain everything:
inflating financial assets
The American Left relies heavily on “look at how they do things in Europe” in its rhetoric. So they struggle to understand when Europeans aren’t as enamored of the EU as they are. Their vision of the EU is a childish fantasy but they don’t tell them that. They have maternity leave in the EU! And paid holidays! And so we get ‘Amerisplaining’ articles like this one.
We’ve had maternity leave in Britain since 1911. In fact the origins of most European welfare states predate the Second World War. The EU didn’t give us our workers’ rights – the workers won them.
The idea that there is going to be an EU to negotiate with in a couple of years’ time is the real delusion. Good luck playing the big butch single market bully boy when Le Pen and Wilders are elected next year.
> Has any pro-Brexit policy maker suggested curbing their numbers?
Politicians call for curbs on the numbers of non-EU migrants all the time.
Your comment should be required reading for American liberals who are still in love with the EU. I have lived in Germany for 9 years, and have watched the whole economic crisis unfold here from the beginning.
For most working class and even lower middle-class people in Europe, the EU has simply meant falling wages and rising prices. In countries like Greece and Spain, the difference was, for a time, made up for with debt, but you see where that has lead.
The Germans still do a decent export business, so they have escaped the worst of it. But even here, the same trends as elsewhere are visible, if somewhat less severe.
The EU, in any recognizable form, is doomed.
Absent the EU it could easily have been worse.
We have facts about the history of the EU but we have only our imagination to tell us what might have happened without it.
If, absent the EU, Europe had fallen into economic depression and conflict, sparking World War 3 and nuclear armageddon then there’d be nobody around to even make the argument.
In such a case, depressed levels of youth employment might be a very welcome alternative.
Inhibi – great post.
It is noticeable that although this site constantly rails against the depredations of blind neoliberalism, whenever an electorate tries to fight back – as in Greece and the UK – out come all the reasons why change is impossible. Curious indeed.
You’ve only given two examples.
Greece couldn’t leave the Eurozone because it wouldn’t have been able to make payments. It couldn’t make payments by virtue of not having control of its own currency. This was very effectively demonstrated by the extended bank holiday last year.
http://www.ibtimes.com/greek-debt-crisis-update-banks-remain-closed-through-friday-uncertainty-over-bailout-1999517
Britain isn’t part of the Eurozone, and could leave the EU if it wanted to. However, it’s not clear that leaving the EU is actually in Britain’s interests. For example, the cost of rewriting trade agreements and legislation would depress the UK economy for at least 5-10 years. What’s more, it’s apparent that none of the politicians campaigning for the UK to leave the EU were actually expecting the referendum result to go in their favour. It’s more likely that many of the politicians were expecting to campaign and lose, with the intention of bolstering their own careers. As such, the UK is left without any coherent plan vis-a-vis the EU. This is an unusual position for a large economy, and so does merit some speculation.
I’d suggest you display a bit more curiosity. Neither of your examples is any good at all.
You’re completely misconstruing the argument. Yves, for example, isn’t arguing that countries shouldn’t leave the EU. She’s arguing that the way the banking and political systems have been set up make it impossible to do without inflicting brutal harm to the population, as has happened in Greece. Blaming NC for correctly understanding and describing how the EU works and what its controlling bankers and bureaucrats can and will do to European citizens and nations is just shooting the messenger.
Here’s what I have learned from Naked Capitalism. Bankers are arguably the worst human predators, worse than warlords, who at least have some incentive to keep their human capital alive. Greece was able to fight off the Nazis, but has been broken by men in suits wielding proprietary accounting systems.
I like this quote from the article:
“Energy would be better spent on showing the benefits of membership.” Of course, that’s the ultimate point: Gexits and Brexits etc are largely the result of an EU elite that has consistently and overwhelmingly acted in its own 1% interests.
Whatever the economic costs and benefits of membership there should be little doubt that socially, politically, and indeed, morally is a toxic entity, probably beyond meaningful reform. In this sense “exit” is an obligation and a necessity.
It’s very easy for armchair generals to opine, particularly when you don’t have to live with the consequences.
You seem to forget that Boris Johnson pursued the Brexit referendum SOLELY as Tory leadership ploy. No one in the Leave campaign seriously expected the dog to catch the car. They’ve done nada in the way of serious consideration of what it would mean for the UK and its citizens in practical terms. Nor have they given any though to what replacement deals might look like or what it would take to get them in place.
We’ve only done a small amount of work and it is apparent a Brexit would be a train wreck for the UK. It will NOT be able to get access to EU markets and restrict EU immigration. EU officials (save Poland, and Poland won’t change the outcome) are unified on this position.
We are describing reality. You are shooting the messenger.
And the costs will fall overwhelmingly on low wage, low education workers who were sold a bill of goods by Farage and Johnson.
Sorry, Yves. I should have read further down before leaping (unnecessarily and duplicatively) to your defense.
I liked your defense, and the more help the better!
No harm no foul!
My comment was neither pro nor anti brexit. It was a somewhat cynical, or realistic, depending our your personal outlook, on what the conditions required to make progress on brexit or bremain.
Personally I regard the brexit vote as a large brick thrown into the neo-liberal pond, and I’m enjoying watching the waves.
Yves writes:
I’m positive May is a politician. Thus I carefully weigh the possible steadfastness of her position. See profit in my above comment).
Yevs also contents there can be no agreement without an overlap of positions. This too is true. However, I’m also positive that initial positions are as firmly fixed as Bill Clinton’s zipper.
There is some indication of how the British will approach Brexit in the writings of David Davis. Davis is the minister in charge of Brexit negotiations.
http://www.conservativehome.com/platform/2016/02/david-davis-britain-would-be-better-off-out-of-the-eu-and-heres-why.html
http://www.daviddavismp.com/david-davis-mp-delivers-speech-on-the-opportunities-for-a-referendum-on-europe/
Davis makes some valid points about problems with the EU, and with the Eurozone in particular. However, some of his ideas (e.g. about the “indigenous” UK car industry) seem unrealistic. Overall, Davis’s ideas about trade post-Brexit come across as very optimistic. There’s a takedown of some of Davis’s ideas here:
http://blogs.lse.ac.uk/europpblog/2016/07/18/david-davis-brexit-trade-agreements/
There were rumours floated in PMQs today (which May neither confirmed nor denied) that Davis has hired lawyers at £5,000 per day. May is visiting Merkel now, and the indications appear to be that neither lady is in a rush to trigger Article 50.
What I think will happen is that Davis will have several months to find a way to make Brexit work. Davis will get whatever resources he asks for, and May will try to buy time for him. Who knows, perhaps Davis will find a solution everyone else has overlooked.
If Davis can’t find a way through, then I expect May will try to abandon Brexit.
It’s possible that the rest of the EU will put so much pressure on the UK that May and Davis don’t get the time they want. It’s also possible that the rest of the Conservative party won’t let May backtrack on Brexit. The next six months should be interesting.
5k a day may seem a lot, but in reality suggests quite a few junior lawyers, unless you’re getting a very substantial discounts. Partners fees are usually > 1k/hour. A relatively junior lawyer from a top notch law partnership comes at about 400/hour (which at 8 hours is 3200/day).
It’s bupkos. Ex McKinsey people (non-partners with small/solo practices, as in no brand name) get that and more. The last I heard was McKinsey directors bill at $15,000 a day, but it’s not broken out and that’s a levered rate. They charge double for unlevered work.
$650 an hour is a pretty standard rate for a small firm but respected law boutique partner in NY or Washington. I’m way out of date on what partners at prestigious firms make, but it is clearly more.
You are more optimistic than I am about David Davis’ intellectual capacity.
This is a man who resigned his own seat just to get a few headlines, and then was denied any serious coverage when the opposition parties ignored him and refused to field candidates. The only thing he appears to be good at is spending taxpayer’s money.
I didn’t say that I thought Davis would be successful. I don’t think he will be.
However, there is little doubt that Davis is going to at least attempt to draw up a plan. And, that he will have the full resources of the UK Government at his disposal to do so. This is hardly a guarantee of success, but it also isn’t to be sniffed at. The outcome might be surprising. For example, the Conservatives may see a strategic advantage to leaving the EU entirely, including the single market and all the trade negotiations and rewriting of UK law that it will entail. Just because I can’t see a way to make that work, doesn’t mean others won’t ;-)
I think it’s more likely, though, that as the year draws to a close and Davis plus the rest of the Brexit team have come up with nothing that isn’t high risk, the Conservatives en bloc will decide that Brexit isn’t for them after all.
Results are now in from the May-Merkel meeting. Merkel isn’t pressing for Brexit this year:
http://www.theguardian.com/politics/2016/jul/20/angela-merkel-backs-theresa-mays-plan-not-to-trigger-brexit-this-year
May is meeting Hollande on Thursday. That may not work out so well for May as her meeting with Merkel has done.
1. He’s in the correct place.
2. He has much company in the spending arena.
the guardian has this report, citing merkel:
http://www.theguardian.com/politics/2016/jul/20/angela-merkel-backs-theresa-mays-plan-not-to-trigger-brexit-this-year
cr
The press in the UK is propaganda for the masses. They have a left wing social movement building up in the Labour Party, and the right wing liberals need to keep a lid on things. It would not surprise me in the least that what is being discussed in the corridors of power is very different from what is reported in the press. The EU politicians are also having difficulties with their own electorates. I expect all the politicians are waiting for the coming recession so that they can make unpopular deals with less electoral risk. They managed to sell ‘austerity’ as a sacrifice to the nation for years now. I imagine they are all arrogant enough to believe they (EU and UK politicians) can sell an EU deal that undermines voters intentions re Brexit.
Merkel just folded. Previously insisted the the UK must file Article 50 immediately. Now she is fine with more time, presumably next year.
Germany as a EuroZone country has no maneuvering room. If Germany fights, other Euro currency countries will go into depression. Immediately rebounding on Germany.
Today’s lesson to the UK. Keep the pressure on and receive “almost” everything you want.
No, she did not fold. Merkel reiterated her previous position ONLY re the timing of Article 50, that the UK could have time but not take too much time. Juncker, Schauble, and senior German MPs, among others, were much more aggressive regarding wanting Article 50 to be invoked immediately. And this is the ONLY place where the UK holds all the cards. The UK is totally in control of when to invoke Article 50. The EU may be upset that the UK is taking so long, and they do have some ways they can retaliate. but it would be poison the negotiating dynamics, which are already poor to being with. This is completely consistent with what Merkel has said previously:
Merkel gave a gracious non-concession. She has always been the most accommodating of all EU leaders on this issue and she has not changed her stance. Reaffirming it was a no-cost gesture to try to put the relationship with the UK on a better footing and keep the negotiations from being unduly acrimonious. Merkel hasn’t given an inch on any of the substantive issues mentioned in this post, as well as on another issue the British have pressed repeatedly: no talks of any sort, formal or informal, before Article 50 is invoked.
If you call this “folded”, then you have no idea of how negotiations work.
Merkel was demanding something that she knew she has absolutely no way of getting (which you do, coz, you know, stuff happens and the other side may not realize it..). When it became clear that the other side is not going to fold, she graciously made a concession – which wasn’t really a concession at all (because she hadn’t it in her gift to start with). But because she was gracious about it, and because May doesn’t want to antagonize her, she couldn’t call Merkel’s bluff and say it wasn’t a concession at all, it was UK’s right from the word go. Merkel-May — 1:0. In meanwhile, Merkel also held her position of “no negotiations until A50”, which limits UK’s leverage of (non-invoking) A50.
Compare and contrast with Hollande, who keeps getting into ties about firing off A50. All it will get is May’s position hardening, and Hollande WILL lose it (because there’s no way how he can win). The best thing for him would be to shut up, say UK will invoke when it invokes it, but side with Merkel on non-negotiations.
For better or worse, Merkel seems to be the only one who knows how to play the diplomatic game in EU.
If May is serious about Brexit, about the only thing she can do now (I believe) is to start running around EU and break the “we will not negotiate” stance via influencing the minors. Dutch, Danes, Nordics and Irish may well be willing to listen, as well as some Central/Eastern Europeans (especially since say defense ties are NOT in EU’s gift).
She can also start talking to Swiss and Norwegians, pointing out to them that if they get together, they all can get a better deal from EU/EEA (swiss + UK would be very much harder not to listen to, and their interest overlap). Indeed, as CE has Schengen, Norway, UK and Swiss could form their own club to stop EU from bullying them.
This + minors may give UK some leverage, but it will take time and won’t happen overnight.
The ironic thing in this is that if UK was thinking long term before, and building such an alliances for a while, it could have had what it wanted within EU.. So I’m very doubtful of whether we will even try it (because they are minnows, and we talk only to the important people), not to mention succeed.
Its a sign of the times that one comes to Yves site to discover easily what is shrouded in London.
The political establishment at Westminster understand but the London Editors have never previously been denied and cannot give-up without a loud fight. I fear, as usual, the tabloid readership are being / will be misled.
” the British side wasn’t listening to what they were saying.”
Isn’t that a bargaining position?
Someone, a day or two ago, suggested that the Brits should be utterly hard nosed, following the precedent the EU set with Greece (my gloss on the comment). I think that’s probably right, in that it’s about all they’ve got.
I have some questions, mostly involving “trade agreements.” If memory serves, those pretty much started with the WTO in the 90s (gee, thanks,
Bill). People carried on trade for thousands of years without them – and we usually say they’re really about corporate power, not trade. So why is it so critical that Britain have them? Might be a good thing, at least for British workers, if they don’t. Wouldn’t that serve the Tories right!
Next, more technical: I get the impression that, without a specific agreement, everything falls back on the WTO baseline. Is Britain a signatory to the WTO on its own? If not, what prevents them from becoming one – even BEFORE actually leaving the EU, if they want to be hard nosed about this? It’s an existing agreement that hasn’t changed in years; you sign up or you don’t. Could the EU veto that? (I honestly have no idea.) Would they?
Transitions are expensive, and a lot of City banking is going to migrate to the Continent, so there’s that; but otherwise, I think I smell smoke in some of the panic attacks we’re hearing about. They aren’t in the Euro, so they don’t have to deal with that. The biggest single question is what happens to EU citizens residing in Britain, and there, the EU has a lot to lose. Fairness says they get grandfathered; but then, how fair was the EU to Greece?
No it isn’t. You can’t bargain if you put your fingers in your ears and refuse to listen. This goes beyond being non-negotiable as a posture. The Brits are really in their own echo chamber. The EU has said “Nein” and there’s no way for the UK to force the EU to relent. Access to the single market means accepting a free flow of EU immigrants. Merkel has said repeatedly that this is her position and she have what is effectively the full backing of EU leaders. And Merkel is always very measured and careful re the positions she stakes out.
Plus as we said, the German public is rabidly opposed to giving the UK any special breaks (only 9% of the public supports it, an astonishingly small position in polls). It would be political suicide for any German political leader (save of a niche party) to buck that view.
We’ve written about this at length and you are basically asking me to summarize posts. The UK runs a massive trade deficit with the EU already. It would get worse because its biggest export is services, meaning the City of London. Finance workers would not be allowed “passporting” meaning the right to live in London and sell services in the EU. All the face to face business would need to be conducted by people licensed to do business somewhere in the Continent, which also means residing in the Continent. Euroclearing would also move to the Continent. Trading, particularly FX trading, could stay in London, as would $ denominated businesses. But the City would take a hit.
All imports from the EU would cost more. And not only would the EU face tariff walls in and out, but any UK goods sold into the Continent would be subject to checks at the border to assure the tariffs were correct (and that is not trivial, for complex goods with parts coming form other countries, the process of assigning the tariff is onerous). UK firms would also have to put down VAT deposits, which an international tax maven tells me would have a nasty impact on cash flow.
The UK has a large business of manufacturing car parts and also doing final assembly of vehicles for German and Japanese car makers for export to the EU. The sole reason it is there is to be in the EU but take advantage of the UK’s looser labor rules. That production (save the part for making cars and trucks for UK final sale) would migrate to the EU.
Trade agreements existed WELL before the WTO. I don’t begin to have the history, but for instance, the German plan in 1933 to form a customs union with Austria led French bankers (the big buyers of barely back in the market German bonds) to stop buying them in retaliation. That led to the Creditandtalt banking crisis.
And no, the UK does not default to the WTO. The WTO has made that loud and clear. See here for details:
http://www.nakedcapitalism.com/2016/07/brexit-huge-spanner-in-the-works-negotiation-of-new-uk-trade-deals-verboten-till-exit-complete.html
Please don’t do this again. I am far too time stressed to rehash posts you could have found yourself by clicking on the Brexit category.
WTO option was thoroughly debunked a number of times. This is a very good one (because it looks at the MRAs, which lots of people just ignore if they even know about). And, it’s written by Leave camp, so hard to accuse it of scaremongering.
http://leavehq.com/blogview.aspx?blogno=128
And this is what the blog post ends with
“Such is the importance of agreements such as the MRAs that the UK would have no option but to seek a deal with the EU, for which there is a facility within Article 50. But, the moment it sought such deals, it would no longer be relying exclusively on WTO rules. It would now be seeking bilateral agreements along the lines of the so-called “Swiss option”. This comes with as many problems as the WTO Option, if not more, not least the length of time it would take to agree a Swiss-type arrangement (10 years or more?)…And that’s assuming the EU wants another complex Swiss-type arrangement, which it doesn’t.
One can say, unequivocally, that the UK could not survive as a trading nation by relying on the WTO Option. It would be an unmitigated disaster, and no responsible government would allow it. If, on the other hand, the official Leave campaign adopts it, the Remain side will be counting its blessings.
Initially, we will be looking at a slow burn. In what is an arcane field, pro-EU analysts are almost as much in the dark as our own, often more so. And there is always a possibility that mutual ignorance would cancel out pro- and anti-EU campaigns. But, with this ticking time bomb at the heart of the Leave campaign, it would be unwise to assume that real trade experts will not brief the opposition on the implications of the WTO Option. If that happens, we can expect the FUD to be lethal.
The chances of the Leave side winning would quickly recede to nil, especially if the demolition took place in the last weeks of the campaign. That is why the WTO Option should be rejected.”
@Oregoncharles
The Brits are resource poor and as all can see the pound is at mid 80s levels, not a strong bargaining position imo.
Disheveled Marsupial…. remember trade shocks are a precursor to all kinds of social and economic – monetary nastys…. history is unkind in this regard… no matter the ideological bent…
“The Brits are resource poor”…
well, maybe, if you ignore the people…
I would hope you understood what I meant without further clarification, that said, what can they do that people in the EU can’t or worse the periphery where un-under employment has been persistent – especially with the RE dramas…
You won’t believe it, a vulgarian said to me today, and I quote –
“It’s not me you rotting carcass of road kill stupidity – the quote is from Mervyn King, ex-Governor of the BOE and probably one of the more enlighten members of your generation.”
The rancor only got better when I pointed out all gory details e.g. you mean Mervyn King who was Greenspans doppelganger to the other side of the pond…. and his setting up all the dramas during his chair.
So whats he doing now…. Former Bank of England head Mervyn King joins Alan Greenspan in advocating gold ownership
http://www.usagold.com/cpmforum/2016/06/07/former-bank-of-england-head-mervyn-king-joins-alan-greenspan-in-advocating-gold-ownership/
Phew and after all that…. King entered the House of Lords on 22 July 2013 as a crossbencher, taking the title Baron King of Lothbury.
Disheveled Marsupial…. you can’t make this stuff up…. its like the old NC post on the Westboro Baptist Church vs. Anonymous… now look at the Tories and right wing labour…
The words ‘Brexit means Brexit’ will come to seen as the phrase that ended the use of the form of “No means no”, if not killed the expression outright.
Is EU really a free-trade union or primarely a market for members only? Compare that to China´s early free-trade zones where foreign goods and capital were free to enter. Not labour though as I recall. The cornerstones within EU are free movement of capital, goods&services but also labour. As a member the main privelege is and should be about decision-making regarding i.e. harmonizing markets etc. Not restricting trade with non-members. Retorics by i.e. EU-elites(neoliberals) is free-trade in it´s true sense. Still WTO-politics is not sticking by it´s main goal, namely First Nation Status in all trade-deals. WTO-rules in it´s true sense is full of exeptions a.k.a protection of national/internal business-interests. If UK leaves the union it will no longer have the right to take part of the decision-making which is the main benefit from being a member. But why restrict external trade? As a non-member in Europe UK solely have to adapt the common market rules. Not paying extra custom-fees or being subject to quotas etc. On the other hand UK should not be in a new position to i.e under-price re-selling their own imports to EU. Self-determination concerning immigration is not a question about free-trade. In the EU it is about federalizing Europe. Paying increasing yearly fees to a EU-budget manifests such a process. In the western continent including the EU investments are stagnating. Why then restrict movement of capital after a Brexit? It will be stupid thing to do of cource. Maybe I am a bit naive but as I see it EU-elites are afraid that a Brexit undermines their “non-democratic” ambition to a federalize Europe. UK has to be “punished” to set an example for other members. Exactly what happened during th Euro-crises(not over by the way).
Trade experts told us lately that UK can not start third-country trade negotiations while they are still a member. What a phony treat. The UK has already started trade talks with Canada and Australia. Why loose time? Further countries will be contacted. Will UK be sued for this in front of the WTO or/and will a sour EU-elite in a childish manor punish UK later? New trade-deals are in everybodies interests!
I don´t see an obvios contradiction between UK access to the single market on the same or fair conditions while self-controlling immigration. But the UK of cource has to comply to some restrictions regarding their own movement of labour to the EU.
Commenting on the link above(Yves 3:12 AM Juli 21):
“But the BBC interview with the EU’s most senior trade official reveals it’s even worse than that. The negotiations of the UK’s departure from the EU and new EU trade arrangements cannot take place in parallel. They must be sequential. No new deal talks with the EU until the exit is completed. ”
There is someting very wrong here. Out of all logic!
“Under EU law, the bloc cannot negotiate a separate trade deal with one of its own members, hence the commissioner’s insistence that the UK must first leave.
It is also against EU law for a member to negotiate its own trade deals with outsiders, which means the UK cannot start doing this until after it has left the EU.”
One must wonder why such a law is implemented? No one has yet published the formal law-paragraphs!
All logic says you negotiate from one set to the next. Not from one set of rules to a WTO-void while re-negotiating a second trade-agreement with the same trade partner. Logic says the UK should negotiate third-country trade deals while perhaps not implementing them until agreements are reached with the EU. Leaving a trade-union should not be different than any other trade-agreement.
This kind of Moment 22 could lead to escalating trade-wars, EU-disintegration, WTO-crash and a tumbling world economy. Finally war? Why risking such an outcome. Bad laws has to be re-written.
No, you are misinterpreting the media reports. The UK is not negotiating with Canada or Australia. These are what we would call in the deal business “indications of interest.”
And it doesn’t matter whether you see an contradiction or not on immigration restrictions while having access to the single market. The rest of the EU won’t go along and it is their game, their ball, their rules.
@Yves;
Well you are right. Media can not be trusted.
Yes of cource I understand the ballgame. But does all EU-businesses?
The key to Brexit will be whether Trump wins the election in November. If he loses, then most likely Brexit will never happen and the British political elite will just muddle along, making sure there are no parties on the ballet in 2020 that could hurt them.
But if Trump wins then we have a much different story. The key to any negotiation is power. Right now Britain has a large trade deficit with both France and Germany. But will German industry take the short term gain of maintaining that imbalance at the long term cost of putting in question the principle of the free movement of cheap labor? Maybe, with Britain not tapping into the flows of cheap labor means more of those flows come to Germany, driving down wages and pumping up profits?
But all in all, the trade deficit is not really that much leverage for Britain. But with a President Trump, things change radically. Trump hates Merkel and will do everything to undermine her. Germany took in a million Merkeljugend migrants and now are in the situation that instead of helping the US out with military costs in Europe, Germany will be spending billions on internal security and lessons on the correct treatment of women – not to mention feeding and housing the migrants.
With Trump wanting to rip up NAFTA, one obvious free trade alignment would be an Anglo-Saxon Free Trade Area with the US, UK, Canada, New Zealand, and Australia. This idea would give the British government just a little more leverage in talks with Germany.
But the real power will come when Trump proposes limiting NATO to Canada, the US, and the UK. The rest of Europe is not carrying its weight in NATO and in a dangerous way are totally dependent on the US for military power. Why should American working class kids go fight and die so that progressive European kids can hang out at train stations with “Migrants Welcome” posters? If Trump starts rattling the NATO cage, suddenly the tiny issue of Britain wanting to limit the flows of cheap labor will seem a trifle to German decision makers.
Now just for the record, Britain’s problems are NOT the fault of the EU. Limits on Eastern European immigration were possible when these countries joined but Tony Blair refused to limit any flows of East. European cheap labor. And since most Eastern Europeans and their decedents would eventually be voting for the Right (due to their unpleasant experience with Communism), the powers that be allowed Blair to import plenty of Muslim and 3rd world immigrants who will end up voting Labour for generations to come (unless a Houellebecq –ian Islamic party rises) just to balance things out.
British elites love having the EU to blame for problems they themselves all too willingly created. But because of internal Tory party tomfoolery, British working class voters were given a once in a lifetime chance to kick the ruling elite in the nuts and they would have been fools to not follow through. And the fate of these working class voters is now in the hands of American voters who in the person of Trump have been gifted an even greater chance to viciously castrate America’s ruling class.
Commenting on the link above(Yves 3:12 AM Juli 21):
“But the BBC interview with the EU’s most senior trade official reveals it’s even worse than that. The negotiations of the UK’s departure from the EU and new EU trade arrangements cannot take place in parallel. They must be sequential. No new deal talks with the EU until the exit is completed. ”
There is someting very wrong here. Out of all logic!
“Under EU law, the bloc cannot negotiate a separate trade deal with one of its own members, hence the commissioner’s insistence that the UK must first leave.
It is also against EU law for a member to negotiate its own trade deals with outsiders, which means the UK cannot start doing this until after it has left the EU.”
One must wonder why such a law is implemented? No one has yet published the formal law-paragraphs!
All logic says you negotiate from one set to the next. Not from one set of rules to a WTO-void while re-negotiating a second trade-agreement with the same trade partner. Logic says the UK should negotiate third-country trade deals while perhaps not implementing them until agreements are reached with the EU. Leaving a trade-union should not be different than any other trade-agreement.
This kind of Moment 22 could lead to escalating trade-wars, EU-disintegration, WTO-crash and a tumbling world economy. Finally war? Why risking such an outcome. Bad laws has to be re-written.
Commenting on the link above(Yves 3:12 AM Juli 21):
“But the BBC interview with the EU’s most senior trade official reveals it’s even worse than that. The negotiations of the UK’s departure from the EU and new EU trade arrangements cannot take place in parallel. They must be sequential. No new deal talks with the EU until the exit is completed. ”
There is someting very wrong here. Out of all logic!
“Under EU law, the bloc cannot negotiate a separate trade deal with one of its own members, hence the commissioner’s insistence that the UK must first leave.
It is also against EU law for a member to negotiate its own trade deals with outsiders, which means the UK cannot start doing this until after it has left the EU.”
One must wonder why such a law is implemented? No one has yet published the formal law-paragraphs!
All logic says you negotiate from one set to the next. Not from one set of rules to a WTO-void while re-negotiating a second trade-agreement with the same trade partner. Logic says the UK should negotiate third-country trade deals while perhaps not implementing them until agreements are reached with the EU. Leaving a trade-union should not be different than any other trade-agreement.
This kind of Moment 22 could lead to escalating trade-wars, EU-disintegration, WTO-crash and a tumbling world economy. Finally war? Why risking such an outcome. Bad laws has to be re-written.
This is not true. Article 50 of the Lisbon Treaty says:
Article 218 refers to EU negotiations with third party countries. 218(3) specifically says:
So the process is clearly that Britain must first launch an Article 50 withdrawal and then negotiations start. When Britain finally leaves the EU, the new agreement immediately takes effect.
@The Trumpening;
Thanks but as I see it the above referenced Art 50 is not explicitly forbidding parallell (UK) trade negotiations with third party countries while negotiating Brexit with EU. On the other hand it state (2);
“… the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.”
Is not “future relationsship” the same as a new trade agreement or at least negotiations without conclusion?
I’d add one more thing, which seems to be very much ignored by Brexiters.
In Feb 2014, Swiss held a referendum, which authorized the government to put limits on EU immigration. (note that while Swiss operate referendums a lot, but it’s actually quite a complex system).
EU refused to negotiate, and basically told Swiss – if limits, the guillotine clause (ending all EU treaties with Swiss) kicks in. No negotiations, we will not sit down, you cannot cherry-pick. Plan refusal to negotiate – it’s a package, take it or leave it.
So the precedent is there for all to see. According to what I heard, EU is now even more keen to use Swiss as a precedent to basically show UK – if you don’t believe us, look to Swiss.
The British public voted for Brexit DESPITE being warned it would be expensive. In fact, part of the attraction may have been that it would be more expensive for the elites than for the “man in the Clapham Omnibus”.
Living in the UK, I am expecting a two-shot deal: first a quickie move into the EEA (of which the UK is already a member) accompanied by an increase in the UK contribution — someone has to pay for the costs of upheaval and renegotiation and it seems right that this should be Britain. Diplomatically this hands Brussels a face-saving “win” over Boris Johnson’s infamous bus advert.
However since, as the article points out, such a “Norway” arrangement is worse than membership in the longer term, so the second, real negotiation should aim at a 2023 (say) pullout from the EEA as well. This allows companies that bank on EU access some time for business-as-usual while planning the future, and also avoids undue expectation for speedy negotiations.
The migration issue challenges the whole of the EU irrespective of Brexit and needs some calming measures from Brussels; intra-EU migration could easily be absorbed if it were not compounded by the looming problems of job insecurity and of potential non-EU migration. These are in turn being driven by a whole gamut of well-known forces: failed states, climate change, financialization and demographic or welfare imbalances.
The long-term issue for Brexiteers is not negotiating details on tomato trade or even work permits with the Eurocrats but whether the UK can thrive politically, economically and militarily as a small island state outside a protective ‘bloc’. How do they avoid going ex-growth like Japan?
I agree they were told there would be an economic hit, but it came from economists who have little cred after missing the crisis and people in the City, who were no doubt seen as talking their book. And the cost estimates were ludicrously precise. But one thing that was promised was an end or at least a reduction in EU immigration, which is a big (but not only) contributor to pressure on wages and housing prices. So the Leave voters wanted to tell the toffs off about austerity and other economic mismanagement, and also probably felt the gains from reducing immigration would offset the costs to them, maybe not in full, but at least to some degree.
Re the idea of a “quick” move into the EEA, I hate to tell you but there is no such thing as a “quick” trade deal. The fastest anyone estimates a new trade deal could be negotiated is 5 years. And that’s before you allow for the fact that the UK, per treaty, is not allowed to negotiate any trade deals until it has left the EU.
See here for more details:
http://www.nakedcapitalism.com/2016/07/brexit-huge-spanner-in-the-works-negotiation-of-new-uk-trade-deals-verboten-till-exit-complete.html
I think you are missing the point that the UK is ALREADY in the EEA, and that a decision to leave the EU does not legally or necessarily imply quitting the EEA, so the only thing left to negotiate is the price tag…
But see, it’s unlikely that it will be costlier for elites than Clapham bus passenger. The reason being, the elites are generally much more mobile and have considerably more options than the bussers. It may irritate them, but it’s truly cutting off your nose to spite your face.
IF UK voters really wanted to show it to the elites, they had a much better opportunity in 2011, when they were presented with a chance to change the voting system to something much fairer than first-past-post. UK voters happily ignored it, because few cared to understand it – and it was in interest of none in the elites to try to explain it well.
Brexit was very much in the interest of some elites, including some of the ones the voters might want to spite.
This is something I’ve also found…interesting in the debates about the referendum. Do any EU rules prohibit the UK from reducing the number of immigrants admitted from non-EU countries?
No.
As an aside, the immigration fears were being stoked by “polish plumber” – but in reality, the A8 immigration into UK plateaued quite a few years back and the major sources of internal EU migration were two – Romania/Bulgaria (which I’d expect to pleateu shortly, similar to A8), and “old Europe”. Basically, UK was the place to go and look for a better future for all those unemployed Spanish, Portugese, Italian, French (and Greek) youth.