Merged Now What?

[Hlafordlaes]

I tend to agree which is why I wonder what the final outcome of all this will actually be. We can't identify a purely UK economy so we have no real view on its dependencies and key probability factors, we have no idea demographically how much immigration the nation needs, we don't know which trade deals will suit us best and replace what may be lost by Brexit. Moving a market further away to Africa or India etc will cause companies extra costs in logistics and many of the smaller companies who trade well in the EU do not have the necessary skills to trade in emerging markets. in addition, we don't even know what steps will need to be taken to protect the interests of our own citizens working in Europe, this is all based on some political aspiration without facts and on some arrogant assumption that the rest of the world really needs the UK. You can only suggest that anyone who started this project without already a planned exit approach was and is completely idiotic.

The last time I saw a statistic quoted, The City and related financial industry as a whole accounted for 20% of the economy. From what I read these days, depending on the attitude of the EU, this could literally evaporate in short order, and contingency plans are ready and standing by to be triggered in the industry.

You do not lose 20% of any economy and do well. That sort of hit alone, plus the devastating psychology/impact of plummeting real estate prices in London, could prove rather deadly.

In other news: If May gets in, it seems she would push for delay tactics wrt triggering Art 50. My short reaction: it sounds, tactically, like an interesting option, thinking only from the British perspective. It is, however, stoopid, not to mince words. This is the one thing guaranteed to piss the EU off to no end, especially if the Austrian reelection goes the wrong way.

Delaying Art 50 dangles a Damocles sword over everyone, the UK included. Not a good idea to make ambivalent gestures. Brexiters should exit, Remainers push for early declaration, then use 2 years to show exit is worse, and find a way to bail before 24 months are up. This is the honest and fair way to proceed. It will likely not take long, IMO, for public opinion to strongly go back to remain after Art 50 is triggered and The City starts to implement at least the first stages of financial jobs transfers, and other sorts of rumblings begin around the country.

Remain can count on one thing in its clear favor: the negative impact of Brexit will be far more immediate and politically sonorous than any purported new dawn of growth from free trade down the road. Time to push things to their logical extreme and take the immediate hit, which will be the least of all evils.

 

[MikeG]

The last time I saw a statistic quoted, The City and related financial industry as a whole accounted for 20% of the economy. From what I read these days, depending on the attitude of the EU, this could literally evaporate in short order, and contingency plans are ready and standing by to be triggered in the industry.

You do not lose 20% of any economy and do well.........

Can you point to single commentator anywhere in the world who thinks that the entirety........100%.........of the UK financial services industry will "evaporate" (never mind "literally")? In the light of this enormous exaggeration, would you like to do your maths again?

 

[Lothian]

With a caveat, it was in error.

The caveat is that whilst there is an EU agreement enabling the market, said market, as per the article I linked to, is virtually non-functional.

So (included to allow you to attempt to deflect with a pathetic 'rule of so' comment) Axa Insurance is the world's largest insurance company. It is a French company. It must be really struggling to make any sales in Europe outside France..... But wait...... Axa's revenues from other EU countries are as high as it's it's sales from France. How can that be if the market is virtually non-functional?
Perhaps it is because you are talking bollocks.

 

[MCel58]

My point is actually even more simple, how much of that 20% of financial markets is dependent on things like the Euro clearance and the EU financial passport ? What % of trade do we need to replace under new trade deals? What % of UK companies are ready to trade elsewhere in the world? Have companies already got the correct logistics infrastructure, production facilities, Intellectual Property protection and investment strategies to trade in new markets. Does anyone actually have any of these facts to help understand what challenges companies might be facing?

 

[Castro]

Some would find that preferable to spending the rest of their careers dealing with the Exit and its repurcussions. Making the grand statement as a voice of reason before going off to spend more time with the family and non-executive directorships sounds much more appealing.

Call me cynical but I am not sure that these kinds of things happen in real life ( plus, after the referendum, ignoring its result would be another gift for UKIP imho).

 

[Hlafordlaes]

My point is actually even more simple, how much of that 20% of financial markets is dependent on things like the Euro clearance and the EU financial passport ? What % of trade do we need to replace under new trade deals? What % of UK companies are ready to trade elsewhere in the world? Have companies already got the correct logistics infrastructure, production facilities, Intellectual Property protection and investment strategies to trade in new markets. Does anyone actually have any of these facts to help understand what challenges companies might be facing?

There is a creek. Britain has navigated up it with Brexit, but without a paddle. There is such a thing as critical mass, and that is what will be lost. Once it becomes clear the herd is moving, it will all go. There is no longer any advantage to London, except for local business. The talent pool, the real asset (knowledge is always the forgotten component in these calculations), is going to be somewhere else. I hear a big sucking sound from NYC already for the talent pool, plus pretenders on the continent for the business.

 

[McHrozni]

Can you point to single commentator anywhere in the world who thinks that the entirety........100%.........of the UK financial services industry will "evaporate" (never mind "literally")? In the light of this enormous exaggeration, would you like to do your maths again?

That's clearly an exaggaration. Obviously UK will not lose all of it's financial services.

Realistically it stands to lose about 3/4, or 15% of the economy, with London becoming the new Dublin. That's about as bad as Ukraine last year. Meditate on that for a minute, if you will.

McHrozni

 

[MikeG]

That's clearly an exaggaration. Obviously UK will not lose all of it's financial services.

Realistically it stands to lose about 3/4, or 15% of the economy, with London becoming the new Dublin. That's about as bad as Ukraine last year. Meditate on that for a minute, if you will.

McHrozni

Back that up, if you can.

 

[GlennB]

So (included to allow you to attempt to deflect with a pathetic 'rule of so' comment) Axa Insurance is the world's largest insurance company. It is a French company. It must be really struggling to make any sales in Europe outside France..... But wait...... Axa's revenues from other EU countries are as high as it's it's sales from France. How can that be if the market is virtually non-functional?
Perhaps it is because you are talking bollocks.

Perhaps they overtook the British company Aon (Man Utd's sponsors, last time I looked), In 2011, Aon was ranked as the largest insurance broker in the world based on revenue

Funnily enough, before we switched to Intasure, our broker here in Greece was Aon. Aon does a vast amount of business throughout Europe and elsewhere. Or do they? Perhaps it's all a mirage and cross-border insurance brokerage in Europe is worth just a trifling sum?

 

[Lothian]

Perhaps they overtook the British company Aon (Man Utd's sponsors, last time I looked), In 2011, Aon was ranked as the largest insurance broker in the world based on revenue

Funnily enough, before we switched to Intasure, our broker here in Greece was Aon. Aon does a vast amount of business throughout Europe and elsewhere. Or do they? Perhaps it's all a mirage and cross-border insurance brokerage in Europe is worth just a trifling sum?

There seem to be a few different lists. Axa is second on this. Aon is a broker rather than an insurer.

Looking at that list I am reminded of

It is worth pointing out that there isn't a free market in financial services in the EU.

Such a shame that Spanish Banks like Santander can't trade in the UK due to the lack of a free market.

 

[MCel58]

Do you really think that anyone started this project at all? This isn't one person's agenda, and the rest dragged along kicking and screaming. This is, finally, pressure from the voting public for politicians to listen to them, bearing fruit (for better or for worse). There have been precious few advocates for Brexit in public life over the last 2 or 3 decades as the EU has morphed into something unrecognisable, and a sizeable number of the public have become more and more uncomfortable. The idiocy, if there was any, was in politicians (all politicians) underestimating how seriously hosed off with Europe that so many people had (demonstrably) become.........but not in any Brexit campaigner reflecting that reality.

I don't think people actually had enough facts on the EU. I think they have had the worst type of news and information and as a result they are annoyed at lack of jobs, houses, education, healthcare and money and they blame it on immigration, on the EU and on lying politicians. However, is it really the EU or is that just the scapegoat for decades of no-one caring about jobs and houses and the standard of living for anyone outside of the South East. Will they be less annoyed when there is no more money for the NHS, or when the immigration figures don't get any lower, when there is still no affordable housing, or more importantly when their is still no replacement for the skilled employment lost in these areas from steel, shipbuilding, manufacturing or mining. We have created a divided nation in the past 30 years and told everyone that it is someone else's fault, we blame everything on outside influences, the EU, immigration, public sector spending, the market and not on our own policies. People are told that we have a strong economy but most of the people voting leave do not feel part of that. Look at where the leave vote came from and it's everywhere that we have cut these industries and also public services. I think the referendum should have been held after the UK had decided what its negotiating stance might be with very clear factual descriptions of exactly what options a Brexit could deliver.

 

[GlennB]

There seem to be a few different lists. Axa is second on this. Aon is a broker rather than an insurer.

Ah yes, the difference always confused me a bit. A broker just deals with clients and quotes but farms out the actual insurance to insurers? As long as they're not cross-border in Europe, of course, as that's really hard?

 

[MikeG]

........Look at where the leave vote came from and it's everywhere that we have cut these industries and also public services..........

This is too simplistic. I live in East Anglia, where there was a really strong Leave vote. We've never had industry, nor any great public service cuts. We've got the highest employment rates in the country.

Your post doesn't address the fundamental point of mine: the anti EU sentiment has been bubbling for decades, unrepresented by any major political party. It is undeniable that people were fed up with the EU, and there is no way that can be blamed on the campaign, on Boris, or on simply a frustration that the public policy wasn't working for them. Don't forget we have record levels of employment at the moment, too. Instead of looking for reasons people "got it wrong", look for reasons why mainstream politicians didn't represent this strand of thinking, and why they didn't anticipate this outcome.

 

[GlennB]

It is undeniable that people were fed up ...

(a generic 'fed up' if you ask me)

... and were easily led into expressing their discontent in a certain direction, anti-EU in this case.

(my take on it)

 

[Ambrosia]

no sane people

I'll add this to my sweeping Generalisation folder.

Pretty much all analyst , economist or people to try to assess it come to the conclusion it can only have a net negative economic effect.

"it is difficult to get a man to understand something, when his salary depends upon him not understanding it" - Upton Sinclair.

I continue to make the point that people who claim that Brexit will only harm the UK economy are only thinking about short to medium term. I think that in the long run (20+years time) our economy will be stronger, because we are not part of the EU.

Basically you got bamboozled by murdock, the sun, farage, and a few others which wanted to gain power.

I was planning to vote Leave from the day Cameron announced the referendum, I saw nothing in the concessions he got pre vote, or any of the
campaigning from the Remain side to make me change my mind.

I don't read newspapers, or watch TV news as a general rule. It's hard to get bamboozled by Murdoch if you don't read or watch any of his output.

 

[CapelDodger]

Call me cynical but I am not sure that these kinds of things happen in real life ...

As we've been reminded recently, life is full of surprises.

( plus, after the referendum, ignoring its result would be another gift for UKIP imho).

They've already got the gift they want unless it gets taken away from them.

 

[Ambrosia]

This is the lie* that was peddled by the Leave campaign. The correct* statement of fact was that being in the EU prevented Theresa May treating EU citizens the same horrible way she treated non-EU ones. There was no reason for her having stringent controls on non-EU immigration other than that she wanted them. Had we not been in the EU she would have treated Germans and French the same way no doubt.

*Your mileage may vary

My mileage does indeed vary. Lets wait and see what happens. I think that if we do leave the EU "proper" and don't wind up with a Norwayesque kind of deal that we'll end up with a single immigration system that's applied equally to all migrants, whether they were born in Belgium or Bolivia.

If the system is open then a mix will come naturally. It's only when you start to set rules and barriers that things get out of whack.

Really?

We only have so much space and so many resources. We can't completely open our borders and give everyone a visa, so we do have to pick and choose somewhere. If you accept that is true, then the rest of it is arguing over where and how to draw the line.

If a points system is terrible, then what system would you implement in it's place?

 

[The Shank]

This is too simplistic. I live in East Anglia, where there was a really strong Leave vote. We've never had industry, nor any great public service cuts. We've got the highest employment rates in the country.

Your post doesn't address the fundamental point of mine: the anti EU sentiment has been bubbling for decades, unrepresented by any major political party. It is undeniable that people were fed up with the EU, and there is no way that can be blamed on the campaign, on Boris, or on simply a frustration that the public policy wasn't working for them. Don't forget we have record levels of employment at the moment, too. Instead of looking for reasons people "got it wrong", look for reasons why mainstream politicians didn't represent this strand of thinking, and why they didn't anticipate this outcome.

This guy gets it.

 

[Castro]

They've already got the gift they want unless it gets taken away from them.

The conservative party ignoring the result of this referendum (promised and organized by its own leader...) would be a bigger gift for UKIP than the referendum itself (imo).

 

[McHrozni]

Back that up, if you can.

France has about 4% of GDP in financial services, so I figure after the deluge, UK can still do about 50% better than that (the GDP falls enough to make it ~6% of the remaining GDP).

The estimate therefore assumes UK keeps some financial services above and beyond what one would expect if it never had the London City to begin with. It's not a particularly pessimistic scenario, more of a run of the mill kind of thing.

It's probably one of the reasons why EU won't negotiate until UK invokes A50. The uncertainty will drive bankers to other shores well before the 2 year deadline. France would certainly welcome 3-5% of British GDP, even if it meant a few thousand extra expats

UK could do better of course, but at what price? It would probably need to ensure Bank passporting remains intact within 6 months or so of invoking A50. That does mean offering the EU a deal it can't possibly refuse - Norway model with Shengen, perhaps - that likely wouldn't solve any outstanding issues presented by Brexitards while following the 'will of the people'.

McHrozni