Britain's Brexit Plan? Leaked Memo Says There Is No Plan

[Deleted]

The EU cannot afford to damage the UK economy substantially, as it would wreck Ireland and have a major negative impact on the economies of other EU member states.

And no UK politician is going to accept any outcome that bad.
Because to hurt the EU, the UK must feel much greater pain.
The EU derive 3% of its GDP from exporting things to the UK.
The UK derive 14% of its GDP exporting to the EU.

And that's ignoring the institutional reasons why the EU is more likely to be more inelastic.

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They won't all move to the mainland, they don't have the maturity of financial services market to cope with it on the continent. All that will happen for most is they open a European subsidiary and route EU business through there, which is exactly what American financial service companies do in London and vice versa, this isn't some new phenomenon.

You need to show that financial services companies are going to knowingly and willingly damage their own interests and you won't be able to, because they won't do so. So you are fear mongering.

Just out of interest, what operations are they doing in London, that they cant do in the US?

[Huehuecoyotl]

I work for one of the largest insurance companies in the world, and no-one among my clients, colleagues or fellow industry professionals has seriously contemplated relocating.


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https://www.ft.com/content/a3a92744-...5-82a9b15a8ee7

Banks already looking at moving their operations, way back in June. They looked pretty serious about it to me.

[Kalis]

And no UK politician is going to accept any outcome that bad.
Because to hurt the EU, the UK must feel much greater pain.
The EU derive 3% of its GDP from exporting things to the UK.
The UK derive 14% of its GDP exporting to the EU.

And that's ignoring the institutional reasons why the EU is more likely to be more inelastic.

Unless the EU wants to commit political suicide, then the EU is going to have to give the UK a fair deal.

Had this happened a decade ago, then the EU would have been in a stronger position, but we aren't living 10 years ago and they can't afford to give the likes of Le Pen, Wilders, etc. anti-EU ammunition by using Death Star tactics and showing the EU to be using threats to maintain unity.

The EU's political position is weak, Brexit happened at possibly the worst time it could have from the EU's view point.

[Valerean]

And no UK politician is going to accept any outcome that bad.
Because to hurt the EU, the UK must feel much greater pain.
The EU derive 3% of its GDP from exporting things to the UK.
The UK derive 14% of its GDP exporting to the EU.

And that's ignoring the institutional reasons why the EU is more likely to be more inelastic.

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Just out of interest, what operations are they doing in London, that they cant do in the US?

The City offers literally everything a modern financial services company needs to thrive. Cutting edge data links, physical proximity to other firms, employee services companies, business services companies, all next door to each other - and with two international airports that fly to every continent in the world a 30 minute train journey away.


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[Huehuecoyotl]

You need to show that financial services companies are going to knowingly and willingly damage their own interests and you won't be able to, because they won't do so. So you are fear mongering.

Staying in the UK will damage their own interests; they would have the expense of maintaining a second office in the UK as well. And for what purpose? The UK office wouldn't be able to do anything for the EU, and presumably longer term anything outside the UK would move to the EU office as well (where the bulk of the talent would reside).

Fear mongering? Sounds like a rational and logical extrapolation of a likely outcome to me.

[Kalis]

Just out of interest, what operations are they doing in London, that they cant do in the US?

I deal a lot with Lloyd's, which the US doesn't have an equivalent of and would take decades, if not longer, to create. Differing financial services have different specialities and focus.

Much of London's success is due to historic Commonwealth (ex-Empire) ties, maturity of the market, etc. It took London centuries to gain its current position, nobody is going to have the necessary resources to usurp it, just as New York and Hong Kong are safe with their corners of the market.

[Huehuecoyotl]

Unless the EU wants to commit political suicide, then the EU is going to have to give the UK a fair deal.

Had this happened a decade ago, then the EU would have been in a stronger position, but we aren't living 10 years ago and they can't afford to give the likes of Le Pen, Wilders, etc. anti-EU ammunition by using Death Star tactics and showing the EU to be using threats to maintain unity.

The EU's political position is weak, Brexit happened at possibly the worst time it could have from the EU's view point.

I can't even begin to make sense of what you are suggesting here. The EU will give a good deal, because if they make it hard to leave that will be ammunition to anti-EU factions? Utter nonsense. If anything it is the other way around; if they offer a generous deal to the UK, then all the countries in the EEA will be asking how the UK gets a better deal than them. Why pay, follow rules and allow movement of people if the UK doesn't have to do all those things? And if leaving becomes palatable and smooth, all the anti-EU factions will point to it and say "see, we can function outside the EU, we should leave as well".

Nothing would collapse the EU faster than giving the UK a good deal. There is zero political leverage for the EU doing this.

[Kalis]

Staying in the UK will damage their own interests; they would have the expense of maintaining a second office in the UK as well. And for what purpose? The UK office wouldn't be able to do anything for the EU, and presumably longer term anything outside the UK would move to the EU office as well (where the bulk of the talent would reside).

Fear mongering? Sounds like a rational and logical extrapolation of a likely outcome to me.

They don't need a huge office to do business in the EU, they just need to route business via it.

Where are you getting that the bulk of the talent would reside in the EU? It doesn't currently, there is no reason to believe that everyone who makes London tick would want or be prepared to move abroad, many aren't EU citizens and wouldn't be guaranteed to be able to work over there. You'd have to have a population shift and that involves mortgages, families, etc.

[Huehuecoyotl]

Where are you getting that the bulk of the talent would reside in the EU? It doesn't currently.

Err, I think you will find that London is still part of the EU, at the moment. So the talent DOES reside in the EU. And where it sits after Brexit would depend very much on the nature of the negotiations. Being able to say "all the EU financial services MUST reside in the EU" would be a very strong card to play in the discussions. How much would the UK have to give up to get them to agree to drop that?

The EU hold all the cards in the negotiations. They also own the table, and the building it sits in. They also get to decide if the UK gets dealt any cards. It won't end well for us.

[Kalis]

I can't even begin to make sense of what you are suggesting here. The EU will give a good deal, because if they make it hard to leave that will be ammunition to anti-EU factions? Utter nonsense. If anything it is the other way around; if they offer a generous deal to the UK, then all the countries in the EEA will be asking how the UK gets a better deal than them. Why pay, follow rules and allow movement of people if the UK doesn't have to do all those things? And if leaving becomes palatable and smooth, all the anti-EU factions will point to it and say "see, we can function outside the EU, we should leave as well".

Nothing would collapse the EU faster than giving the UK a good deal. There is zero political leverage for the EU doing this.

You have never heard of anti-EU sentiment within countries like France, Holland, Poland, etc.

Note how I didn't ask a question, that is a statement based on your post.

The EU is supposed to be a voluntary club, if you start threatening members who want to leave, then it stops looking like a voluntary club to members.

[Huehuecoyotl]

You have never heard of anti-EU sentiment within countries like France, Holland, Poland, etc.

Note how I didn't ask a question, that is a statement based on your post.

The EU is supposed to be a voluntary club, if you start threatening members who want to leave, then it stops looking like a voluntary club to members.

And if you start offering people that leave the club a better deal than the ones paying to be members, you won't have a club for very long. You don't understand how clubs work; that is a statement based on YOUR post.

I'm not suggesting that playing the negotiations tough won't be ammunition for the anti-EU people. I'm just stating that it will be less damaging than making it look like an easy option.

[Kalis]

Err, I think you will find that London is still part of the EU, at the moment. So the talent DOES reside in the EU. And where it sits after Brexit would depend very much on the nature of the negotiations. Being able to say "all the EU financial services MUST reside in the EU" would be a very strong card to play in the discussions. How much would the UK have to give up to get them to agree to drop that?

That is semantics, you know I was comparing London to the rest of the EU.

The EU hold all the cards in the negotiations. They also own the table, and the building it sits in. They also get to decide if the UK gets dealt any cards. It won't end well for us.

The EU does not hold all the cards - the UK economy is massive in EU terms, some EU member states have huge internal issues with anti-EU sentiment that they can't afford to fan, re-locating UK financial services is not something that the EU could cope with. The Irish economy is heavily dependent on the UK, other member states have large parts of their economies that rely on UK business.

As I said, this is the worst possible time for Brexit as far as the EU is concerned and as far as the UK is concerned it isn't all that bad.

[Valerean]

The EU hold all the cards in the negotiations. They also own the table, and the building it sits in. They also get to decide if the UK gets dealt any cards. It won't end well for us.

No they don't. A good deal for the UK is a good deal for the EU. You want your neighbours to be rich and stable so they can buy your stuff, and you can invest there.

If the EU starts waving the "punishment stick" around, it will both further risk alienating Eurosceptic populaces around Europe (i.e. France), and piss off major business interests in the process (while hurting its member-states own revenues).

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And if you start offering people that leave the club a better deal than the ones paying to be members, you won't have a club for very long. You don't understand how clubs work; that is a statement based on YOUR post.

I'm not suggesting that playing the negotiations tough won't be ammunition for the anti-EU people. I'm just stating that it will be less damaging than making it look like an easy option.

Why would people want to pay to be in a club if they can get a better deal outside it?

[Deleted]

Unless the EU wants to commit political suicide, then the EU is going to have to give the UK a fair deal.

No it doesn't - Sure it cannot go for some outright punitive (but the UK doesn't need to agree to that anyway), but from there does not follow that it has to be 'nice', More importantly, there are avenues that it cannot go down, because of legal and political reasons.
Whatever deal reached must be approved by the council, with qualified majority.
Then that deal must be approved by the MEP's.
Then of course this deal cannot breech existing treaties (so it must pass the ECJ).

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The City offers literally everything a modern financial services company needs to thrive. Cutting edge data links, physical proximity to other firms, employee services companies, business services companies, all next door to each other - and with two international airports that fly to every continent in the world a 30 minute train journey away.

you can replace the City with NY and that sentence is still true.
The fact is, most of the American offshoots, are 'only' there because of the current advantageous position of the UK being in the EU.

[Kalis]

And if you start offering people that leave the club a better deal than the ones paying to be members, you won't have a club for very long. You don't understand how clubs work; that is a statement based on YOUR post.

Who said it has to be a better deal? The UK doesn't want the same deal it has and will be more than willing to give up some things in exchange for others. The EU and UK can find a deal that suits both parties, whether they will do is another matter.

For example, the UK would jump at a deal that allowed manufacting exports to be penalised, if it meant financial services went largely unchanged and that would probably be agreeable to Germany, who would see one of their manufacturing competitors virtually eliminated from mainland Europe.

You are looking at everything in terms of 0% or 100%, but deals can be structured in numerous ways in between.

I'm not suggesting that playing the negotiations tough won't be ammunition for the anti-EU people. I'm just stating that it will be less damaging than making it look like an easy option.

When someone like Le Pen is currently one of two people likely to contest the French Presidency, they can't afford to make the EU look like the bad guy.

No it doesn't - Sure it cannot go for some outright punitive (but the UK doesn't need to agree to that anyway), but from there does not follow that it has to be 'nice', More importantly, there are avenues that it cannot go down, because of legal and political reasons.
Whatever deal reached must be approved by the council, with qualified majority.
Then that deal must be approved by the MEP's.
Then of course this deal cannot breech existing treaties (so it must pass the ECJ).

The EU will need to, as they can't afford bad press at this time. Hot on the heels of Greek economic woes, which damaged confidence in the EU and Euro, they have the migrant crisis and the rise of the more extreme right wing in Europe that followed it, almost all of which are anti-EU parties.

We saw it in Britain with UKIP and America with Trump, anti-EU/anti-globalism sentiment is out there, if parties can channel it then the EU is going to be up shit creek and the EU can't afford that, so it needs good press, not to pile on more bad press.

[Deleted]

No they don't.

Oh god yes they fucking do.
Article 50, wasn't written to be used, it was written because it had to be there to placate national courts, its 2 year eject clause places time on the side of the EU.
The fact that it needs approval from multiple entities, ensures that the EU is the most inelastic - What's worse, any deal has to pass the MEP's I.E Outside the remit of the nation states - As well as survive a ECJ challenge assuredly.
In short, the leaving state has to get a deal in a year, spend the next year begging and pleading for everyone to pass it and then hope it survives the ECJ - And if it doesn't do that, You are Guillotined.

We even have an example to look at - the Swizz voted 4 years ago or so to renegotiate their treaties to get rid of free movement of people.
They gave their negotiators five years to come to a deal.
The EU's initial and current position? - Non.
The Swizz also have a guillotine clause - Wonder when they will vote to change their mind from almost five years ago.

A good deal for the UK is a good deal for the EU.

No it isn't - A deal that is all unicorns and rainbows will fan the flames of every dissident party there is - An ongoing quagmire and clusterfuck won't.

You want your neighbours to be rich and stable so they can buy your stuff, and you can invest there.

Whatever pain the EU will feel, the UK will feel five times greater.

If the EU starts waving the "punishment stick" around,

It wont - Trust me, if the EU wanted, it could punish the UK very fast, very hard, Right now.

Why would people want to pay to be in a club if they can get a better deal outside it?

Precisely the argument why it would still be better to be seen as an evil monolith punishing the EU - In the other case, the EU no longer serves a purpose.

[Virulina]

How is that relevant? You said that not having a back up plan "seems foolishly prideful", but it was merely the sensible course to take.

I take it you didn't read the post I suggested.

Of course not!

[Valerean]

Precisely the argument why it would still be better to be seen as an evil monolith punishing the EU - In the other case, the EU no longer serves a purpose.

Sure the EU could "punish" the UK. But cutting off your nose to spite your face is as dumb as it sounds. The voices of major continental industry hold just as much clout within the EU as the Junckers and the Verhofstadts - and they have far more money.

It won't punish the UK because it would be political and economic idiocy to do so, and would endanger the rest of the European Project.

We can come back to this thread in two and a bit years and see what actually happened - if the EU is still around.

[Deleted]

It wont - Trust me, if the EU wanted, it could punish the UK very fast, very hard, Right now.

What is this, some internet tough guy act or something? Whats with this? 'Trust me - EU could punish UK very fast'.

What position within the EU do you hold to make such claims.

[AeneasBK]

For example, the UK would jump at a deal that allowed manufacting exports to be penalised, if it meant financial services went largely unchanged and that would probably be agreeable to Germany, who would see one of their manufacturing competitors virtually eliminated from mainland Europe.

I get that I'm pretty ignorant and all that but a deal like this would make me piss myself laughing. All those plebs voting brexit for a better deal only to get fucked over further to line Londons pockets some more