The country voted (overall) to leave, and yet the four horsemen of the financial apocalypse seem to have decided (thus far - granted that *might* change) to loiter in the bar for a couple of more rounds of drinks, rather than to ride out laying waste to the economy.Just curious, do you know for a fact that British companies are going to be able to maintain their financial passports to the EU economy?
Currently, it's estimated that a firm that wants to relocate to Brussels, Paris, Frankfurt or Stockholm will have to spend roughly €50 million. That's per firm. Yet this will still end up being cheaper than staying in London after a mere 3-4 years once the passporting of financial services ends.
Not being in the EU will cost London based financial firms somewhere around €10-20 million every year, in addition to having lowered revenue due to not having access to certain clients. For example, financial firms will no longer be able to make corporate loans.
The UK gets about £65.6 billion in tax revenue from the financial services sector, or about 11.5% of all tax revenue. That number is going to go down significantly as firms either aren't able to do business across the channel, or have to relocate altogether.
The apocalypse hasn't happened yet, I agree. But right now, these businesses can still do business. Once the Brexit happens, if that's no longer true, the UK government is going to find it's lost a serious amount of revenue. How much of that £65.6 billion? I don't know for sure, but if it's more than ~£5 billion, it'll be more than the UK was paying into the EU.
I imagine that France, Germany, Belgium and Sweden are all going to vote in favor of cutting off the UK's financial passporting, because it means they all get a bigger slice of that pie and increase their own internal tax revenues.
Brexit means that all of these questions are up in the air. They're subject to what the UK and the EU negotiate at the bargaining table. The EU has a major incentive to go pretty hard on the UK, if for no other reason than to discourage other nations from bailing out.
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That Drah, and the fact no one in the EU feels bad for a guy that decided to choose his political career over the country he supposedly loves or the people in the EU that supported him.
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London based EU financial services won't just fall off, they're going to end.
Non-EU based financial institutions aren't allowed to make corporate loans in the EU. Corporate loans make up a HUGE amount of the world financial system. For example, if a bank were denied access to that part of the market in the US, that bank would essentially cease to exist. Not over night, but suddenly a massive portion of their day to day operations would be over and their ability to support or make use of their other operations would end. Imagine a football player with no spinal column. Sure, they still have arms, legs, a torso and head... but none of it works right.
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I'm not on anyone's negotiating team (and I'd probably be under non-disclosure if I were) so I have no idea what positions are being taken up. What I was commenting on was that George Osbourne and company seemed to be predicting *instant* financial armageddon if the UK voted 'Leave' (including stuff that George Osbourne himself would immediately implement.
That's probably bad reportage.
The leaving process will take two years, and the process hasn't even started yet.
The problem is that the fuse is already burning. Or, if you prefer, the pebbles are already starting to fall at the beginning of what will be an avalanche.
I posted upthread some articles about how the UK is already losing a substantial number of jobs that the relevant corporate officials have openly attributed to Brexit.
Think of it this way. You are a successful grocer, and you want to open a new store in the Smithfield area, either in the town of West Smithfield (which is generally a better location), or in East Smithfield. Opening the store will require buying land, getting zoning permission, building an actual store, hiring people, and so forth -- it's about an 18 month process from the day you greenlight the process, and the expenses only get greater as you go along. (Just because you bought the land doesn't mean you have to build on it; you could simply sell it to someone else, for example.)
Now, the West Springfield town council has just announced a new grocery tax. If the tax goes through, then, effective two years from the date of enactment, all grocery stores will be charged an additional 10% tax on the gross sales. This will make it impossible for you to operate at a profit.
They are also announcing a new bridge tax. Anyone crossing the river between West Springfield and East Springfield (which is twice as large) will need to pay a toll; this is intended to prevent East Springfield residents from coming over and taking jobs in West Springfield, but will also keep East Springfielders from shopping in West Springfield. Again, this is only planned and will not take effect for several years.
.... but you need to make a decision this week about which patch of land to buy.
Where are you buying?
The apocalypse has already started, and in fact, started almost instantly. But it will take a while for the apocalypse to complete.
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Interesting. Looking at the EU side of things, is there sufficient slack on the corporate lenders front inside the EU (minus the UK) to completely make up for the removal of London from the EU's corporate loans market?London based EU financial services won't just fall off, they're going to end.
Non-EU based financial institutions aren't allowed to make corporate loans in the EU. Corporate loans make up a HUGE amount of the world financial system. For example, if a bank were denied access to that part of the market in the US, that bank would essentially cease to exist. Not over night, but suddenly a massive portion of their day to day operations would be over and their ability to support or make use of their other operations would end. Imagine a football player with no spinal column. Sure, they still have arms, legs, a torso and head... but none of it works right.
I have no special knowledge of such things, but I assume that UK based companies that would be hit by this are already contingency planning a move to Paris, Frankfurt, or Amsterdam, if whatever deal is hashed out does not include financial passporting. What worries me is that if the uncertainty stretches on too long, they may get to the point in the planning where it is worth executing anyway.
Interesting. Looking at the EU side of things, is there sufficient slack on the corporate lenders front inside the EU (minus the UK) to completely make up for the removal of London from the EU's corporate loans market?London based EU financial services won't just fall off, they're going to end.
Non-EU based financial institutions aren't allowed to make corporate loans in the EU. Corporate loans make up a HUGE amount of the world financial system. For example, if a bank were denied access to that part of the market in the US, that bank would essentially cease to exist. Not over night, but suddenly a massive portion of their day to day operations would be over and their ability to support or make use of their other operations would end. Imagine a football player with no spinal column. Sure, they still have arms, legs, a torso and head... but none of it works right.
The only thing stopping a company from moving it's operations is the logistics or opening/moving an office. A company that moves right now from London to Paris and then operates from Paris, will see no interruption to the flow of their business (other than not having UK customers once the actual invocation of article 50 is complete).
It costs money to set up new offices, but it's not ridiculous for these companies. All told, it might cost $5-10 billion to relocate all of the businesses, but the industry in the UK generates over $70 billion in just tax revenue (meaning they're worth several times that in yearly GDP).
Currently, London trades in nearly $2 trillion every day, or about 1/3 of all trading of US currency. That's set to go up as an EU-US Free Trade agreement is currently under negotiation. London does more trading of the Euro than all other European cities combined.
While London will still be a significant place for trading, they won't be part of the EU-US Free Trade market.
Think about it this way, if you're the French minister who's negotiating this deal, how much of it do you want to give to London? Wouldn't you rather take a big bite out of this pie for Paris? What would you force the UK to give up in exchange for being allowed to still participate in these markets?
Germany, France, Belgium and Sweden all stand to divide roughly 500,000 high paying jobs between them if they shut the UK out of the financial markets, plus increasing the activity in their financial markets, giving them more clout on the world stage.
Think about it this way, if you're the French minister who's negotiating this deal, how much of it do you want to give to London? Wouldn't you rather take a big bite out of this pie for Paris? What would you force the UK to give up in exchange for being allowed to still participate in these markets?
Germany, France, Belgium and Sweden all stand to divide roughly 500,000 high paying jobs between them if they shut the UK out of the financial markets, plus increasing the activity in their financial markets, giving them more clout on the world stage.
Worse than that : how could EU give away to UK all of the advantages of being in (read, Financial passport) now that it has none of the drawbacks ?
It would sink all the Financial industry that other EU countries still have (think about letting a no-regulation country like Bermuda or Panama into your financial system, toll free).
It was already a good deal, that UK could do trade in euros while keeping the pound.
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That's probably bad reportage.
I'm not on anyone's negotiating team (and I'd probably be under non-disclosure if I were) so I have no idea what positions are being taken up. What I was commenting on was that George Osbourne and company seemed to be predicting *instant* financial armageddon if the UK voted 'Leave' (including stuff that George Osbourne himself would immediately implement.
You think?
Seems pretty clear to me.
Of course, as it happens George is in no position to implement anything. Which is a small crumb of comfort, I suppose.
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Typical Remain stupidity, calling it an emergency budget. Yes, if Article 50 had been triggered immediately and it was clear that we were going to lose the financial passport, then that style of emergency budget would have been necessary. Phrasing it in the terms he did though just made it seem like scaremongering.
Really, this situation is utterly shambolic. There are good reasons to consider, at some point, a planned and measured exit from the EU, if necessary. This isn't the way to do it, and this is not the time to do it.
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Looks like Ms. May isn't going to risk allowing Parliament any chance at revisiting the decision.
UK court says only Parliament can approve Brexit
I'm a little surprised as I'd have thought Parliament delegated their authority on this matter to the public when they set up the referendum... but apparently it doesn't work that way under UK law.
Of course, conservatives control Parliament and there won't be another election until 2020. So Brexit still seems more likely than not, but if this ruling isn't over-turned I'd say it puts a clock on May's chances of getting it done. If she can't 'pull the trigger' before 2020, which now requires Parliament to approve whatever plan she works out with the E.U., then a new parliament might well argue that public opinion has changed and call for another referendum.
Looks like Ms. May isn't going to risk allowing Parliament any chance at revisiting the decision.UK court says only Parliament can approve Brexit
I'm a little surprised as I'd have thought Parliament delegated their authority on this matter to the public when they set up the referendum... but apparently it doesn't work that way under UK law.
Parliament could have made the referendum self enacting, but chose not to.
Ms. May is in trouble. The EU will not negotiate exit terms until she triggers Article 50. (And there is no reason they should.). But once she invokes that article, the Brexit is irrevocable. Parliament can disapprove the terms if it likes, but cannot prevent the dissolution.
Whatever happens, Britain's cozy little deal -- we are in the EU but still use the pound and secure our own borders, because we are such a special snowflake -- is dead.
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The EU will not negotiate exit terms until she triggers Article 50. (And there is no reason they should.). But once she invokes that article, the Brexit is irrevocable. Parliament can disapprove the terms if it likes, but cannot prevent the dissolution.
My understanding is that she cannot invoke the article without Parliament's approval. So... once that happens the dissolution can't be prevented... but, if this ruling holds, she can't do it without them.
Which means they can demand a deal with acceptable exit terms be worked out before article 50 is triggered... while the EU can refuse to settle on exit terms until after article 50 is triggered. Leaving May stuck in the middle trying to get the EU to sorta kinda agree to 'broad strokes provisional exit terms' that would satisfy Parliament.
Whatever happens, Britain's cozy little deal -- we are in the EU but still use the pound and secure our own borders, because we are such a special snowflake -- is dead.
Yeah, whether you are part of the EU or not you'll still be part of Europe and need to make similar arrangements... which is why Brexit always seemed like a plan to negotiate away all the advantages you currently enjoy.
The EU needs to agree on nothing. Once triggered, the negotiations can begin.
The EU doesn't decide crap I thought. It's like a less effective UN, which is pretty low in that ladder already.
Everyone except Theresa May would be happy. As I understand it.
Everyone except Theresa May would be happy. As I understand it.
Everyone except Ms. May -- and the >50% of the English population that voted for Leave, yes.
Even Ms. May was actually a Remain campaigner, but she's unfortunately been handed a loaded gun and told to take the soldier's way out.
Well, I wouldn't bet on more than 50%, Orfamay. I suspect a significant part of those who voted leave would be rather happy if it wasn't triggered.
As for Ms May, she knew what she was doing.
Well, I wouldn't bet on more than 50%, Orfamay. I suspect a significant part of those who voted leave would be rather happy if it wasn't triggered.
I'd take that bet -- please note that I specified "English" voters, not "British" or "UK" voters. The vote in England alone was 53% to 47%; I don't think that 6% of the electorate cast protest votes.
First off, it is quite possible that they did. Even if they didn't, it is enough that more than 3% did - which is quite possible.
All I know is Brexit was all David Cameron's fault and he has NO ONE to blame for this crap pie but himself. He traded long term stability for short term political gains. That to me is the height of idiocy. But then again I guess it was too much to hope that the British Government would want more stability.
Looks like Ms. May isn't going to risk allowing Parliament any chance at revisiting the decision.UK court says only Parliament can approve Brexit
I'm a little surprised as I'd have thought Parliament delegated their authority on this matter to the public when they set up the referendum... but apparently it doesn't work that way under UK law.
Or rather, nobody bothered to sit down beforehand and write down what Brexit actually entailed, and how it was going to be done in the event of a leave vote.
It's the mother of all RAW vs RAI arguments.
Interesting news for those who insisted that the pound devaluing wasn't connected the the referendum results. Dunkerson's link and this one both indicate that the pound regained some lost ground when the ruling was announced. Correlation, not causation, but I still think that's a pretty good case.
Good thing the news dropped after I left london a few days ago!
The EU doesn't decide crap I thought. It's like a less effective UN, which is pretty low in that ladder already.
Er, no. The European Union has ultimate economic control and significant legal and legislative power over its 28 member states, which total half a billion people in several of the richest and militarily powerful countries on Earth, two of which have nukes (which, in the event of Trump winning and taking the US out of NATO, will be the sole thing preventing Vladimir Putin from driving into eastern Europe). The EU is, economically, the richest and most powerful force on Earth, dwarfing even the United States. Apart maybe from China, it's the only entity on the planet which can ring up Washington DC to talk money and have them take the call instantly.
The EU's power to get stuff done is comprehensively superior to the UN's. Which isn't saying very much, to be fair.
On another note, Labour have just announced that they will oppose an Article 50 act which does not guarantee access to the European single market and a continuation of EU workplace law. The first is only possible if the Government can convince the EU to allow single access to the market without free movement, but the EU has cheerfully already told them to sod off on that front. That means that a total Labour opposition vote to the bill, in addition to the Lib Dem and SNP vote, would be inevitable. They'd only need to convince 14 Tory MPs to join them to block May's plan, which is easily achievable if May's position on a "hard Brexit" remains unchanged.
Calling a snap election - which would only take 6-12 weeks - with Article 50 as Manifesto Commitment #1 would give the Tories a firmer legal basis to launch Article 50. Based on the polls, the Tories would win a General Election in the short term, possibly even with an increased majority. That would also put the next general election back to early 2022, which has to be very tempting for May at the moment. The danger is that the Tory majority is small enough that even a slight shift to Labour or to any of the other opposition parties will destroy the Conservative majority and allows a left-leaning coalition to form. If the Labour Party makes it a manifesto commitment to agree to a soft Brexit with single market access, that result superscedes the referendum and gives Corbyn the mandate to negotiate Brexit on that basis.
It's a risk that May really does not want to take. She doesn't want to go down in history as the shortest-serving Prime Minister since Bonar Law ("the Forgotten Prime Minister") in 1922-23.
Wert,
She might not have a choice if this thing happens the way it seems to be playing out...
Not surprised in the slightest, Scythia.
Seems Ms. May has no idea how to do article 50...
I don't think anyone really does. There is no going back, either the UK will get it's act together, or the EU will do it for them.
Seems Ms. May has no idea how to do article 50...I don't think anyone really does. There is no going back, either the UK will get it's act together, or the EU will do it for them.I suspect the EU would be just fine if the UK decided to go back and give up on the whole silly idea.
Whether they can find a way to do so or not is another question.
I'm a cynic, I am, and I'm not that sanguine. Unfortunately, Article 50 does not include a "just kidding" clause, so unless the EU-as-a-whole agrees to allow the UK to abandon the Brexit process, the UK has committed to leaving once they invoke it. And Article 50 is also fairly clear about what happens if the EU and the UK cannot come to an agreement; absent such an agreement, the terms become "don't let the door hit you on the ass on the way out." (More formally, "The Treaties shall cease to apply to the State in question," but nothing will replace the treaties.)
So Article 50 puts the EU in the driver's seat; it doesn't take many states (45% of the states, which right now would be 13) or much of the population (France, Germany, and Italy together would do it) to keep the UK from being able to stop the process. And a lot of Europeans right now are really annoyed at all of the UK's special-snowflake rules (e.g., why the hell do they get to keep the pound, to stay out of the Schengen zone, etc.?).
So even if May tried to invoke Article 50 and then uninvoke it, she might not be permitted.
Seems Ms. May has no idea how to do article 50...I don't think anyone really does. There is no going back, either the UK will get it's act together, or the EU will do it for them.I suspect the EU would be just fine if the UK decided to go back and give up on the whole silly idea.
Whether they can find a way to do so or not is another question.
At some point though the EU is going to get fed up with the UK waffling on the point, and demanding that they get to have their cake in open trade, yet eat it in closed borders.
At some point though the EU is going to get fed up with the UK waffling on the point, and demanding that they get to have their cake in open trade, yet eat it in closed borders.Seems Ms. May has no idea how to do article 50...I don't think anyone really does. There is no going back, either the UK will get it's act together, or the EU will do it for them.I suspect the EU would be just fine if the UK decided to go back and give up on the whole silly idea.
Whether they can find a way to do so or not is another question.
I'm not sure they have the authority to do that, though. There's no way in the EU treaty to force a country to leave, and the process of rewriting the treaties between the EU and the UK to remove the special status would need the UK's consent.
My understanding is that much of the EU is already fed up with the UK's waffling (and has been since well before the actual Brexit referendum) but recognizes that there's nothing they can do. That said, as soon as May mentions the words "Article 50," they're ready to pounce.
Exactly. Once Article 50 is invoked, there's no stopping it, but Article 50 hasn't been invoked and it's strictly an internal UK matter whether it will be or not. That's what I meant by "if the UK decided to go back and give up on the whole silly idea".At some point though the EU is going to get fed up with the UK waffling on the point, and demanding that they get to have their cake in open trade, yet eat it in closed borders.Seems Ms. May has no idea how to do article 50...I don't think anyone really does. There is no going back, either the UK will get it's act together, or the EU will do it for them.I suspect the EU would be just fine if the UK decided to go back and give up on the whole silly idea.
Whether they can find a way to do so or not is another question.
I'm not sure they have the authority to do that, though. There's no way in the EU treaty to force a country to leave, and the process of rewriting the treaties between the EU and the UK to remove the special status would need the UK's consent.
My understanding is that much of the EU is already fed up with the UK's waffling (and has been since well before the actual Brexit referendum) but recognizes that there's nothing they can do. That said, as soon as May mentions the words "Article 50," they're ready to pounce.
They could have a meeting to change the EU's charter and wind up invoking 50 FOR them. The UK's waffling on this issue not trivial, it puts a lot of financial, labor, and political considerations on an intolerable level of uncertainty... and the EU will be forced eventually to take matters into it's own hands if the UK insists on leaving the matter in limbo. The UK made it clear that it voted for Brexit, it's head of state is a Brexit advocate, it's DONE. Now it's time to move on with it.
I really hope so. We're feeling the pinch pretty heavily just from the Leave vote. Not only that, but Nigel Farage's undying ghost keeps showing up and pretending he's an actual politician, and he's managed to convince one major idiot it's actually true.
Of course, they are both orange, so...
I'd say take a second referendum now that people understand the the entire Leave campaign was pretty much lies and we've felt it in the pocket a little, but this seems to be a year for terrible voter decisions.
They could have a meeting to change the EU's charter and wind up invoking 50 FOR them.Exactly. Once Article 50 is invoked, there's no stopping it, but Article 50 hasn't been invoked and it's strictly an internal UK matter whether it will be or not. That's what I meant by "if the UK decided to go back and give up on the whole silly idea".At some point though the EU is going to get fed up with the UK waffling on the point, and demanding that they get to have their cake in open trade, yet eat it in closed borders.Seems Ms. May has no idea how to do article 50...I don't think anyone really does. There is no going back, either the UK will get it's act together, or the EU will do it for them.I suspect the EU would be just fine if the UK decided to go back and give up on the whole silly idea.
Whether they can find a way to do so or not is another question.
I'm not sure they have the authority to do that, though. There's no way in the EU treaty to force a country to leave, and the process of rewriting the treaties between the EU and the UK to remove the special status would need the UK's consent.
My understanding is that much of the EU is already fed up with the UK's waffling (and has been since well before the actual Brexit referendum) but recognizes that there's nothing they can do. That said, as soon as May mentions the words "Article 50," they're ready to pounce.
I'm not sure I understand what you mean. The "EU's Charter" is a specific document that has nothing to do with the membership and procedures of the EU; it's a statement about human rights. I think that the document you're talking about would be the Treaty of Lisbon, the same treaty from which Article 50 comes.
And the problem is that, well, they could't "have a meeting to change" that particular document; there's no procedure for amending the Treaty of Lisbon, and they couldn't amend it to put one in. (And if "they" had tried, back in the day, to create a treaty by which a group of nations could unilaterally change the conditions under which other countries had signed that particular treaty, there's a very good chance that no one would have actually accepted it. The Lisbon treaty was negotiated only after the previous Constitutional Treaty failed in 2005, so this kind of issue was taken quite seriously.)
ETA: Let me be a little more precise. There is an amendment procedure in Article 48, but it requires unanimous consent. So the UK would have to agree to the amendment to allow the EU to kick it out, which essentially means there's no way to make this amendment.
There are, as far as I can tell, two ways for the EU to try to unilaterally change the terms of the Lisbon treaty. One is to bring a case under the EU court arguing that the terms under which the UK operates are a violation of human rights, which is basically a nonstarter. The second is to create a new treaty, superceding the Lisbon treaty, that redefines terms for EU membership, and then have every one of the existing EU members repudiate the Lisbon treaty and ratify the new one. That's also a nonstarter.
Which brings me back to my main point. My understanding is that much of the EU is already fed up with the UK's waffling (and has been since well before the actual Brexit referendum) but recognizes that there's nothing they can do. There's no practical way to force Britain out of the EU.
There are, as far as I can tell, two ways for the EU to try to unilaterally change the terms of the Lisbon treaty. One is to bring a case under the EU court arguing that the terms under which the UK operates are a violation of human rights, which is basically a nonstarter. The second is to create a new treaty, superceding the Lisbon treaty, that redefines terms for EU membership, and then have every one of the existing EU members repudiate the Lisbon treaty and ratify the new one. That's also a nonstarter.
Which brings me back to my main point. My understanding is that much of the EU is already fed up with the UK's waffling (and has been since well before the actual Brexit referendum) but recognizes that there's nothing they can do. There's no practical way to force Britain out of the EU.
The EU can have a meeting in which they declare that the UK has in effect already invoked Article 50. I'm pretty sure at some point push WILL come to shove and the EU will simply get to the breaking point as far as London holding the rest of the continent hostage to it's inability to follow through on a decision it's already made.
If there is one relevant thing to learn from history, is that there is no such thing as a treaty that can't be broken.
I doubt it. Article 50 is not going to happen on its own. There are procedures to follow, written in the Lisbon treaty. It will happen as written or not at all.
Look, this is not a treaty anyone wants to break. If Britain decided today to not act with the EU at all, there would be nothing anyone could do to force them. Sovereign nations and all that. That option is always available - but it is precisely what the UK doesn't want. No access to the common market is a massive loss for them. It's why things are not happening right now. It is even less in the interest of the rest of the EU to break the treaty, simply because as it stands, that treaty is the only thing holding the EU together. When the winds blow, as they are now, that is when treaties and the words thereof become important.
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The UK made it clear that it voted for Brexit, it's head of state is a Brexit advocate, it's DONE. Now it's time to move on with it.
Except that the UK courts have (thus far) said that none of that matters.
The Prime Minister theoretically acts on behalf of the crown (the titular head of state), but the crown may not over-turn any act of Parliament... in this case the agreement to join the EU. Only Parliament may do so. I thought they had ceded their authority on that to the public with the referendum vote, but apparently that isn't how it works.
In short, by the laws of the country, article 50 can't be invoked unless Parliament says so... and they haven't.