Brexiting in an Earthquake Zone.

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Summary: the route towards Brexit is much more complicated and fraught than most of the public and much of the media realise. Negotiations are not with the EU but with 27 separate nation states, all with their own views on Brexit and the future of the EU. The political landscape across Europe is changing and the UK will be faced with negotiating with a rapidly changing EU and countries with significant political upheavals internally. The probability is that only a hard-Brexit is possible in the time available. Economic damage caused by the threat of Brexit will become even more obvious to UK citizens as time goes on. Clamours for a second referendum will become irresistible.

The path for the government negotiating Brexit over the next two years or so is fraught with difficulties and uncertainties. We will ignore the fact that the government by all reports simply has no realistic or plausible plan for what it wants to do. There is no shortage of difficulties coming from the other side. The impression given by the Leave campaign is that we deal with a single entity, the European Union, to agree leaving terms. In fact we have to negotiate with each and every one of the 27 other members of the EU. Those negotiations are very complex, covering everything from fisheries, defence, policing, security, financial services, food and agriculture subsidies, scientific research and many other aspects. We do not need 100% agreement of the countries (67% is plenty). However we do need to have the agreement of the European Parliament and in particular the Council with a majority of at least 72% of council members comprising at least 65% of the EU’s population.

Along the way we have parliamentary elections in 2017 for the Czech Republic, France, Luxembourg, Netherlands and Germany. In 2018 we have Austria Bulgaria, Cyprus, Italy, Romania and Sweden. In 2019, before the end of the two-year negotiating period there are further elections in Belgium, Finland and probably Poland. All the evidence is that the popular mood in the EU is evolving. We can be confident that by the end of the negotiations the political views of MEPs and many European governments will have changed quite significantly. Finally, if the Article 50 notification cannot be given before May 2017 as seems increasingly likely, then just before MEPs are asked for their view on the Brexit arrangements this evolution will be visible following European Parliament elections in May 2019. Each of these elections has the potential to produce significant tremors across Europe. Some may be full blown earthquakes, with a number of European political parties already campaigning on an anti-EU ticket.

The consequence for all this will most likely be that no conclusive agreement can be reached. The choice will then be a hard Brexit or not leaving the EU at all. One recent development is the realisation that leaving the EU is something that does not automatically lead to leaving the European Economic Area. The EEA was set up to provide non-EU countries access to the European single market. At present the non-EU members are Iceland, Lichtenstein and Norway. It provides for free movement of goods, capital, services and PEOPLE between member states. Being in the EEA would not allow the UK to block immigration from other EEA states, even if the UK is no longer a member of the EU. It is increasingly clear that leaving the EEA would also require a formal notification (Article 127 of the EEA agreement requiring 12 months notice of quitting the EEA). Leaving the EEA would inevitably be challenged by the Remain side, in the courts and by the Lords, as being something that was not addressed by the referendum.

What do those who want to Remain in the EU, like the author of this piece, do about all this? Probably sit tight and wait for the inevitable unravelling. Within a couple of years the economic effect of threatening to leave the EU will become more apparent in terms of significantly rising prices probably combined with a small drop in employment. We will also see the substantial cuts to benefits and public services already forced on the government to compensate for the costs of leaving. The great majority of the population will feel a marked tightening of the belt and a realisation that things are going pretty badly for most people. It is unlikely the government could go ahead with a hard-Brexit, resorting to WTO trade rules without a general election.

The Leave campaign are adamant that a second referendum should not be held. They realise the lies they told about the EU-free paradise we were heading towards are already unravelling. They are concerned that if another was held they might well lose it. That risk will increase in the future. However, if there is a significant popular opinion against a hard-Brexit that second referendum might become irresistible.

That would be the final major earthquake in this whole sorry business. A major distraction for the UK (and for the EU), for no productive benefit, delaying the return to real growth in the standard of living for the vast majority of citizens here.

One Reply to “Brexiting in an Earthquake Zone.”

  1. Members of the conservative party and the government of the day has embarked on a process of Creative Destruction. Simply and usually this is an economical term which is applied to an industry, an evolutionary process which brings about change in an industry or in markets. For those of us who are not involved in such thinking because we are occupied in daily life, bring up a family, paying bills, working, saving and caring for family members or running a business, I use the following example to explain in the normal circumstances what Creative Destruction is and does.

    The retail market has gone through a period of Creative Destruction. How we purchase goods and services for our family or ourselves took place physically on the high street. That changed because innovation was taking place in the form of the internet. The internet changed the way we shop, changed logistics, banking and how money transfers, even how we access or purchase music and visual art. So in addition to the retail market a whole host of other industries changed the way they did business and indeed evolution is still taking place.

    The Conservative Party started the Creative Destruction of the United Kingdom by holding the referendum to leave the EU. The government and leave voters embrace this destruction and want confidence from the population in adapting to the change, there is a new way of working, a new future. There will be more control of our affairs, control over laws and who lives in our country. None of this is unreasonable. What is unreasonable is to embark on a process which affects every industry in the country, affects every single person’s way of live with no visible innovation influencing the change. For those who voted to stay in the EU the government’s approach in the back drop of the much discussed lack of a plan for leaving the EU amounts to nothing less than internal economic terror(ism) on business, families and a generation of our youth. Leaving the EU does not provide innovation in the form of any tangible asset, method, or strategy to replace what we have at the moment.

    As wife, mother, a very ordinary individual and not a member of any particular party. I am in a state of terror, why?

    There is no innovation supporting this creative destruction, there has been no success in establishing inclusive political and economic institutions that encourage participation in our exit and there is no level playing field for the majority of our people. The conservative party and the government have had time before the vote and 5 months after to create innovation. The arrogance of stating it can’t declare it’s hand regarding negotiations begs believe. Do they think the EU does not know what the UK wants. Free market trading, at no cost, and no freedom of movement into the UK. The UK is looking for a set of circumstances which the EU and international institutions cannot give. Creative Destruction is needed to evolve industry, markets, economic growth and redistribute wealth. When it fails, the nation fails.

    Creative Destruction has happened without innovation being present. The government and EU leavers want the political institutions to agree to adopt a vicious extraction of the whole of the UK population from EU markets and immigration. There are no other political or economic institutions proving an acceptable alternative outcome. We have for sometime been a part of a political and economical environment were the working population didn’t prosper because both the political and economic institutions have been extractive in their activities. The democratic vote outcome also provides fuel for the political extractive position and exit from the EU. Everyone knows the result, it is what you do with it is the matter at hand. The reasons for it’s outcome is what is being peddled as all important and is now creating our own bird cage for our economy and little hope of even a bigger cage for the the economy to grow. The extractive politics of the government is removing all the other elected politicians and the majority of the population from participation in the political or economic effects of our departure. This approach will also promote the elite leaving the majority behind. Throughout history, extractive institutions only lead to stagnant economic growth. Creative Destruction require political and economic inclusive institutions, allowing the population to participate in the political and economic systems of the country. The direction the government has taken is leaving the country void of this element and why this approach as opposed to others available it is best described as internal economic terrorism.

    As a scot with a vote that goes down the drain each time I use it, I ask the question. For the love of god when is another party going to announce an inclusive plan that people can buy into even if start the debate? Treat it as a manifesto and leave an open invitation for other inclusive political parties to amend or suggest. The country will thank you for it. Don’t leave the tory party setting the agenda for an EU exit.

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