A Good Deal of Brexit

The Irish media were full of Brexit last week, as are the British newspapers this weekend. The prospect of Theresa May’s daft (Shurely ‘draft’? Ed. ) deal being agreed caused a brief spasm of optimism in the currency markets during which the pound soared to the dizzying heights of €1.15 but when it became apparent what a dog’s breakfast the deal is, the £ came right back down again:

Notice that the BBC website article grabbed above (which was published on Thursday evening, 15th November) bears no relation to the reality revealed by the actual data. No change there then.

Anyway, regular readers of this blog will know that I’ve long considered it inevitable that the UK will depart the EU without a formal agreement having been put in place. The last couple of weeks have only strengthened my belief.

Given this, my only hope is that there is another period of false hope during which the pound rises just long enough for me to get a ‘Good Deal’ allowing me to move my savings to Ireland at a decent exchange rate. I missed the blip on Wednesday. I hope there’s another…

19 Responses to “A Good Deal of Brexit”

  1. Anton Garrett Says:

    I’ve long considered it inevitable that the UK will depart the EU without a formal agreement having been put in place. The last couple of weeks have only strengthened my belief.

    You’ve cheered me up!

    A weak pound would enable Britain to boost exports and become less reliant on the spivs in the City. The regions could then flourish and the grotesque London imbalance be alleviated.

    • telescoper Says:

      I wonder what the UK will be exporting in this dream scenario, and to whom.

      • Anton Garrett Says:

        Under WTO rules tariffs can be little more than the pound is likely to drop, so no change in costs to customers. you surely would be glad to see the City depowered a bit compared to manufacturing in the regions?

      • telescoper Says:

        Tariffs are not really the issue. I just wonder what the manufacturing base will be when overseas investment goes elsewhere as EU companies write UK companies out of their supply chains.

      • Anton Garrett Says:

        Why would they do that? Unlike Brussels, companies are motivated by economics, not politics. We were once told that the same would be true if we did not join the euro.

      • telescoper Says:

        It’s already happening. In JIT manufacturing one can’t afford to wait for deliveries held for customs checks. Far better to find a supplier inside the EU.

        The ‘implementation period’ in the draft withdrawal agreement is primarily to allow EU companies to detach themselves from UK businesses. Naturally the EU will want to make as much as possible for its businesses out of the opportunities the UK is removing from its companies.

      • Anton Garrett Says:

        The amount of trade that Norway does with the EU suggests that this is not a problem.

      • telescoper Says:

        Ahem. Norway is in the Single Market.

        Also Norway’s main exports to the EU are energy products, not manufactured items.

      • Anton Garrett Says:

        We can negotiate a Norway deal if we choose with better terms than the present, or a Canada+ one. There is plenty of trade across the EU’s borders. Part of the fun with economic arguments is that both sides make correct qualitative points but are unable to go quantitative and it is the balance of numbers which matters.

      • telescoper Says:

        Well Norway is in the Schengen Area and the main factor in Brexit was keeping the “forrins” out so that’s a non-starter. Which leaves a Canada-type arrangement as the only option.

      • “We can negotiate a Norway deal if we choose with better terms than the present, or a Canada+ one.”

        Why should that be possible? Consider the countries in Europe which are not in the EU: Albania, Macedonia, Serbia, Kosovo, Bosnia and Herzegovina, Montenegro, Vatican City, Monaco, San Marino, Liechtenstein, Andorra, Switzerland, Norway, Iceland. The first 6 are considerably poorer than the UK and most would like to join the EU as soon as possible. The next 5 are very small and relatively rich. Switzerland and Norway are normal-sized countries and also very rich. Iceland is a special case: geographically isolated, small population, etc. The UK is clearly not similar to any of these countries, so using any of them as a role model is a non-starter.

        What the UK don’t seem to realize is that it doesn’t call the shots. To avoid a precedent, the EU, like it or not, cannot afford a deal where the situation in the country which leaves is better than before.

    • Many manufacturers rely on JIT supply chains – with no deal, UK factories will simply be removed from them. Of course one can try to make an argument we will generate new industries to replace these, but it is a leap of faith to claim the benefit from that will outweigh all the job losses coming our way.

      Something the politicians don’t seem to get when they quote “the will of the people” is that those same voters will soon turn on them once they lose their jobs.

    • A weaker pound has very little impact on most exports, as we tend to import raw materials for those exports first.

      Services might become more desirable, but leaving the single market cripples the ability to export there. And besides, that would enrich the City even further.

  2. Phillip Helbig Says:

    There is an agreed text now. The EU states have said OK. The EU parliament probably will as well. It depends on what the UK parliament says. If they don’t ratify it, there is the hard Brexit. If they do, then the agreement says that during a transitionary phase, which can be extended until the end of 2022 at the latest, the the UK will remain in the customs union (i.e. has to play by the rules but cannot influence said rules). After that, the “backstop” clause says that this will remain the case after 2020, unless some solution is found for Ireland.

    I can’t see the UK agreeing to stay in the customs union long term. I don’t really see why, but apparently a border between the EU and Northern Ireland is a no-go. So what will happen? I can see Northern Ireland leaving the UK and joining the Republic of Ireland and the EU, possibly accompanied by Scotland. I predict that this will happen by 2027.

    • telescoper Says:

      It’s very difficult to predict what will happen in Ireland, largely because the `political declaration’ on the future relationship between the UK and EU is so vague.

      More surprisingly, perhaps, the UK has effectively ceded sovereignty over Gibraltar, No doubt the PM doesn’t care enough to mind throwing Gibraltar under a bus to save her precious deal.

      • Phillip Helbig Says:

        I think the wording is deliberately vague in order to allow maximum flexibility for what is probably the most important, or at least most difficult, part of the entire Brexit deal.

        I haven’t looked at Gibraltar in detail. Apparently May agreed to let Spain have a say. This is a practical matter, involving commuters etc, like the border in Ireland. Sovereignty was not given up, though.

        Spain claims Gibraltar. It is difficult to say what historical changes of ownership of lands are in some sense valid and which are not. However, it seems to me that Gibraltar is in essentially the same position as the two parts of Spain which lie in Africa.

      • telescoper Says:

        My point was that the Brexiters’s rallying cry of `sovereignty’ is clearly phony: the UK will have no more sovereignty over anything (including Gibraltar) than it had when in the EU, and in many ways a lot less.

      • Phillip Helbig Says:

        Indeed: part of the customs union, but having no say in the rules.

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