Looking on the Bright Side of Brexit, 60 Days In

The hard Brexit has compounded pressures on many UK industries, but some key positives have started to emerge.

By Nick Corbishley for WOLF STREET:

This article is the second installment of a two-part series. The first installment explored some of the darker sides of Brexit that have emerged so far. This second part takes a look at a few of the bright spots that are beginning to shine through.

As British companies grapple with the fallout of Brexit, at the same time as having to contend with the economic pain of yet another lockdown, the benefits of Brexit remain largely elusive. This is to be expected: Brexit, it’s worth repeating, is a process, not an event. It will take time for many of the benefits of leaving the EU to materialize — or at least be felt by the companies or people on the ground in a tangible way. These benefits include being able to make one’s own laws, negotiate trade deals directly with other nations, control one’s own borders, and having greater leeway to support domestic industries.

The impact of these shifts will be huge over time. But for the moment it is outweighed and overshadowed by the combined negative toll of Brexit + Covid. That said, there are a few bright spots.

A Stronger Pound.

A few months ago, the consensus on sterling was decidedly negative. Goldman Sachs was forecasting that the pound would sink to parity against the euro, just as it had predicted it would reach parity with the dollar after the Brexit referendum. Neither has happened.

Instead it has rebounded against most currencies, including the euro and the dollar. On Wednesday February 24, the pound-to-dollar rate hit $1.42, a level not seen since April 18, 2018. Against the euro, it hit its highest level since February 2020. Even after correcting over the next two days, it is still stronger than many had thought.

One obvious reason for this is that the market had already priced in a much more disorderly Brexit than actually happened. When a deal was finally secured, the biggest fears evaporated, allowing the pound to regain some of the ground it had lost over the past year. Some big market players have turned a lot more bullish on both sterling and the UK economy in recent weeks, in part due to the UK government’s vaccine roll-out.

Of course, this sentiment could change over night. Plus, a stronger pound is not good for exporters as it makes exports more expensive, while imports drop in price. And exporters in the UK are already in a world of pain. But if faced with a choice between a crashing or a surging pound straight after Brexit, most would prefer the latter.

The City of London: Diminished But Still Important.

The UK’s all-important financial services sector lost its access to the EU market when the withdrawal agreement transition period came to an end on December 31, 2020. And Brussels appears to have little intention of granting the sector equivalence status any time soon. This came as a major blow to the City of London.

Now, the jewel in its crown — its clearing business — is up for grabs. The EU has allowed London-based firms to continue handling trades for European clients but only until June 2022. After that, banks and other traders could be forced to shift the bulk of their Euro-denominated business to the bloc. The Bank of England governor Andrew Bailey described any wholesale move on London’s clearing business as “very controversial,” adding: “I have to say that would be something we would have to, and want to, resist.”

Given the City’s time-tested ability to withstand and, when necessary, adapt to dramatically changing circumstances, one would be foolish to write off the Square Mile just yet. Brexit may have weakened the UK’s financial services industry but not nearly as much as many had predicted.

Almost five years in, Brexit-related job cuts have so far been minimal. Granted, job openings in the City halved in 2020, but that had a lot to do with the lockdowns. The sector contributed a record £75.6 billion in tax in the last financial year, which runs to March 2020 – a period covering significant uncertainty about the UK’s relationship with the European Union.

Certain markets have even boomed since the Brexit referendum. The UK’s domination of the global forex market has increased from 37% to 43% since 2017 and it is playing an increasing role in the trading of emerging market currencies. It also still accounts for half of the daily $6.5 trillion traded in interest rate derivatives.

London has several important advantages. Its location allows traders to catch the end of the Asian day and the opening on Wall Street. It has a greater concentration of international banks than any other city. It has the infrastructure required for state-of-the-art high-frequency trading, not least the transatlantic cabling landing stations and data centers.

It is also home to roughly 10% of the global fintech market, a sector now worth more than £11 billion a year to the UK economy, according to a new government report. Another benefit London has is the UK’s legal system. “English Law” underpins global financial market trading and is the foundation of many other legal systems around the world. For businesses it has certain key advantages over the civil law systems that predominate on Europe’s mainland, including its predictability, certainty, flexibility, and commerciality.

All of these factors should help to ensure that the City of London will continue to play a major role in global financial markets. But it will probably be a diminished one, which is perhaps not such a bad thing if it leads to a healthy rebalancing of the UK economy toward more productive sectors and away from its current outsized dependence on speculative finance.

Tiny Green Shoots of a New Economy.

Countless companies in the UK, as just about everywhere on planet Earth, are in a battle for survival, as lockdowns, travel restrictions, and social distancing measures have battered industries. A hard Brexit has hugely compounded these pressures. But some companies are actually doing quite well. For example, Liverpool, the UK’s fifth-largest container port has gained traffic from southern rivals as logistics firms try to avoid congestion at the busier Channel crossing points.

Logistics operators serving EU retailers who decided to hold more stock in the UK to ensure they can guarantee delivery times amid border delays have also benefited. They’re not the only ones to increase their investment in post-Brexit Britain. Nissan, which last year had threatened to close down its Sunderland plant — it exports 70% of its production to the EU — has decided instead to center its European car production at Sunderland and invest an additional £1 billion in it over the next few years, including for EV battery production.

In a similar vein, Coventry City Council has entered a Joint Venture partnership with Coventry Airport Ltd to develop plans for a large EV-battery production plant at Coventry Airport, which is ideally located to serve automotive manufacturers based in the West Midlands, including Jaguar Land Rover, Aston Martin Lagonda, BMW and LEVC. Building a “gigafactory” in the West Midlands is considered vital for the success of the EV industry, creating thousands of jobs and attracting up to £2 billion of investment.

The UK’s speedy vaccine roll-out shows that the country is capable of manufacturing and delivering high value-added goods that require complex supply chains. It’s a colossal logistical effort and the UK has managed it better than most other countries — including the 27 EU Member States, giving the UK a head start on other European countries when it comes to reopening the economy this Summer.

“Levelling Up Britain.”

One of the most important lessons of the Brexit referendum was that many of the regions beyond the comfortable confines of South East England were hurting economically. Now, the government has a chance to alleviate some of that pain. Before the 2019 election the government chose to commit wholeheartedly to the multi-billion pound HS2 project, linking London with new high-speed rail to Birmingham and the major Northern cities. This then became the cornerstone of its ‘levelling up’ agenda which helped to swing the election in its favour.

A somewhat diminished City of London could actually help in this effort. The government has already mobilized almost £5 billion to “level up every corner of the UK.”

If it fails in this huge task, the voters can always get rid of it at the next election. And that is one of the ultimate benefits of Brexit: it gives the people somewhat greater control over the political process. Plus, politicians in Westminster can no longer blame Brussels for their own failings.

The crucial services exports, manufacturing exports and imports, the arts & entertainment industry, fishing industry… it’s a mess. Read... The Growing Pains of Brexit, 50 Days In

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  84 comments for “Looking on the Bright Side of Brexit, 60 Days In

  1. buda atum says:

    Lots of benefits, but we the the voters could always easily get rid of the government at the next election, so that’s hardly one of them I’d a thought, unless I’m missing something, which is likely, so thanks for this and the flip side in part 1.

    • Nick Corbishley says:

      Staying in the EU as it continues to consolidate its power inevitably means losing more and more of your sovereignty to Brussels. You can still vote in Spain, Italy, Austria and Portugal but the big decisions are made elsewhere by people whom voters cannot replace.

      As the historian Robert Tomb writes in his review of the British philosopher Perry Anderson’s fascinating three-part critique of Brexit (link: https://braveneweurope.com/robert-tombs-percy-anderson-a-devastating-indictment-of-the-eu), what has been created in Europe is a system of interlocking oligarchies on a pre-democratic pattern:

      “The horizontal relations between governments of ‘member-states’ (no longer independent sovereign states) are more important than the vertical relations between those governments and their citizens, to whom political decisions are presented as faits accomplis unconnected with, and sometimes clearly opposed to, popular mandates.

      Who benefits? Certain countries (principally Germany) and certain economic interests. And of course, the oligarchy itself:

      It is enough to make a roll-call of its leading ornaments. Christine Lagarde, current president of the European Central Bank: suspected of complicity in fraud and malversation of public funds … Ursula von der Leyen …: charged in 2015 with plagiarism on 43 per cent of the pages of her 1990 doctorate at Hannover Medical School … Jean-Claude Juncker … survived repeated exposure of his involvement in the tax avoidance and policies facilitating money-laundering for which his country is famous … [The] high representative for foreign affairs and security, the Spaniard Josep Borrell: forced to resign as president of the European University Institute in Florence for concealing the annual salary of €300,000 he had been receiving from a Spanish energy company …”

      Suffice to say that they people cannot be removed by popular vote.

      The veteran Labour Party backbencher Tony Benn put it more succinctly in a speech to the House of Commons in 2001, which is arguably even more relevant to today’s world than it was back then:

      “The House will forgive me for quoting myself, but in the course of my life I have developed five little democratic questions. If one meets a powerful person–Adolf Hitler, Joe Stalin or Bill Gates–ask them five questions: “What power have you got? Where did you get it from? In whose interests do you exercise it? To whom are you accountable? And how can we get rid of you?” If you cannot get rid of the people who govern you, you do not live in a democratic system.”

      (Link: https://publications.parliament.uk/pa/cm200001/cmhansrd/vo010322/debtext/10322-13.htm)

      • wkevinw says:

        I’m no expert, but my European friends have always complained about the EU. They said that the original pitch was for mainly a trade framework, which they liked- less currency conversion issues, harmonized standards, easier shipment, etc.

        After it got a lot more power than that people started questioning Brussels. They have a lot of items that made people angry. The last big addendum to some law (~5 years ago), had a requirement that they did not allow the public to read it, only EU officials could get in to read it on paper, and they could not copy or photograph. That doesn’t sound very democratic, which is what they like to tout.

        A Dutch friend of mine knew his EU Rep and was always trashing them- nice perks, low workload, etc.

        • Argus says:

          The goal was always a sinister one – to remove sovereign rights from the people of Europe and place them in the hands of an unelected, all-powerful elite in Brussels. The aim is still to control the budgets of European countries as that would finally centralize power. The strategy was stealth and an economic union was the initial easy sell.
          Hopefully this profoundly undemocratic organization will disintegrate before it goes much further.

      • Harrold says:

        I predict Scotland, Wales, and Northern Ireland will leave the UK, quickly followed by London.

        Eventually, England will be a collection of small towns who are suspicious of each other.

        • Auldyin says:

          I predict Scotland will reject independence rather than re-enter the EU. Eire will leave the EU and co-operate with the UK. Wales doesn’t count it still votes Labour.
          Towns and cities will blossom as they used to, apart from Wales, if Boris & Co keep their noses out.
          How much did you want to bet Harrold?

        • Auldyin says:

          Actually Harrold
          I agree with you that Scotland would seek independance if only they didn’t have a dumb Government that wants to re-join the EU. I’ll drop the bet meantime!
          Ex- SNP member.

      • stan6565 says:

        Nick, your report above was the usual great job we all came to rely on.

        But the more detailed critique of the EU stratification as well as the key players you have listed just above, calls for another full series of reports.

        Don’t have us waiting. Give. Give.

      • char says:

        The choice is not Madrid/Vienna/Lissabon or Brussels but Brussels or the US (or China). And if i have to choose between Brussels or the US than i will choose Brussels. In that i have at least a vote and they are likelier to do what is best for Europe. The US will only do that by accident.

      • buda atum says:

        That’s me lessoned, Nick.

        It’s why you write and I read.

        Thanks.

      • robert says:

        That Tony Benn quote sounds much like the much-disparaged Nigel Farage, from the other side of the political fence, who for years delivered scathing speeches against the EU and especially its nomenklatura and apparatchiks. Junker was one of his favorite targets, among many.
        Whatever anyone thinks about him Nigel delivered clear concise and logical speeches, without notes, hardly taking a breath, a good old-fashioned orator, a rare bird in these times. And he was right about a lot of things, not least the intent of the EU program, a kind of USSR of Europe, with the member states not even suzerainties, which would at least imply they would have full domestic autonomy.
        In Britain, with the first past the post voting system, in 2015 UKIP got 12.6 percent of the votes, but just one seat in Parliament. Labour got 30 per cent of the vote, and 232 seats. No wonder the lesser parties wish for proportional representation, though it does end up with sometimes ridiculous coalitions, and governments in
        a constant state of paralysis and instability. That may be a good thing; they can do less damage if they’re constantly focused on survival.

        • Auldyin says:

          Spot on Robert
          Guy Fawkes wasn’t big in his day either but we celebrate him every year now. As in, bring him back.
          Do you think future gens will burn the ‘Nige’ or exalt him every year in 50yrs time?
          Pity Wolf won’t allow us to debate the absurd 1st past the post electoral system.
          Touchy subject for brother US at the moment?

      • Auldyin says:

        The way I see It, it’s a question of competing philosophies for the ‘best’ way to run human societies. The EU is predicated on the notion that centralisation, standardisation, harmonisation broadly collectivism, is the ‘best’ way to organize for the common good. This requires controls, standards, regulations, enforcement, etc to make it work. Inevitably, more and more citizens end up being beholden to ever growing government. Big government equals big overheads and big interference for citizens, paid for in taxes. ‘Best’ is an opinion not a fact. Human life is seen as largely an economic activity to be made as ‘efficient’ as possible.
        The competing philosophy of ‘small is beautiful’ is an entirely legitimate alternative choice of ‘best’ and entails free groups of individuals organizing voluntarily and locally to meet their local needs and wants as they see them, variety, freedom, choice, individuality, small scale environmental impacts. local small scale energy generation, etc
        The broad premise being that human life is more than just an economic activity alone and does not require direction by anything other than small scale local government and laws.
        It’s my own belief that the conflict between these basic philosophies is at the heart of Brexit and all the independence movements around the World. Big government is yesterday’s idea and will fall apart more and more rapidly as individual citizens share ideas of how to make viable free lives online. and co-operate voluntarily to assist each other in their aims. Blockchain and internet makes this possible for the first time in history.
        No big govt=no big wars. China will not attack us, neither will Russia, they’ll be following on behind us, learning as they go. What’s not to like? Unless you’re on £30+grand from Govt.
        Whether existing big government will allow this to happen peacefully is the huge question facing us all and how much of our money they will spend to defend themselves from us. Brexit was peaceful.
        Gobby but peaceful.

  2. Anthony A. says:

    Nice article, Nick! It looks like some good is actually coming out of Brexit. It will be interesting to see what transpires in the long run for the other EU countries if Britain comes out of this smelling like a rose.

    Goldman must have been short the currency with their early prediction. LOL

  3. WES says:

    So Britain isn’t sinking into the North Sea after all!

  4. Old school says:

    I would rather live in relative freedom with a lower standard of living than be governed by an elitist body out of Belgium.

    • Depth Charge says:

      And how. I’d love to get rid of the filth that’s running the US.

      • Jeremy says:

        And how I’d love to get rid of the filth that’s running the UK.

      • Mark says:

        You bet.

        That filthy one headed uniparty of multi-millionaire Demopublicans and Republicrats that have made America their personal piggy bank.

        • Paulo says:

          I thought this article was about Brexit and economic change in England?

          These political comments always remind me of, “Very interesting, now let’s talk about me”. For God’s sake, can’t we give the US political slant a frickin break for a change?

          As for the article, I was heartened to see there is a leveling plan to change the London focus on all things financial as opposed to the rest of the Country, namely, the mega EV battery factory proposed for the north. Hopefully there is more to come with real manufacturing production, development beyond finance, and jobs for regular folks.

          Curious Nick, do you see Scotland separating and/or any further fragmentation? And will Ireland continue to be cut out from N Ireland? Shouldn’t Ireland be just one country….perhaps with a ‘special relationship’ with England?

          And how will imports really be regulated going forward between N Ireland and EU Ireland? Do you see the vast land holdings in all Britain being broken up and redistributed for the citizens of each country? From what I understand wealth disparity is really increasing, and in a country that needs to import 1/3 of its food.

          thanks in advance

        • MiTurn says:

          Paulo wrote: “For God’s sake, can’t we give the US political slant a frickin break for a change?”

          Come on, Paulo, Wolfstreet is an American-based site with predominantly American readers. It’s natural and expected to have this ‘slant.’. And it’s okay.
          :)

    • Kaleberg says:

      The current government in England is pretty damned elitist all across the political spectrum. One of England’s major exports for the past several hundred years has been elitism. It isn’t clear that the typical Englishman pre- or post- Brexit is any more free than a typical Frenchman or German. If you throw in the power of the land owning aristocracy and the relatively weak regulation of large corporations, odds are the English come out behind on the freedom front.

      • LeanFIREQueen says:

        > One of England’s major exports for the past several hundred years has been elitism

        So true! not a fan.

        • WES says:

          In Canada we have the term “remittance man”!

          It means you have disgraced the family and as long as you stay in Canada and never return to sunny England, we will send you an annual remittance!

          Hence the Remittance Man!

        • Happy1 says:

          That and drunken tourists in Spain and soccer hooligans everywhere.

      • phusg says:

        Haha, indeed, how gracious of them to sacrifice the British working class on the frontline.

        More appropriate to thank all the Russian, American and British soldiers who sacrificed IMHO.

    • ian says:

      Here, here. It was never about the economy. It was clear there could be a short to medium term hit but in 10 to 20 years it will be looked back on as a very good decision. You only have to look at the spitefulness of the EU now as well as their utter incompetence on covid to wonder what on earth anybody would like about it.

      • Paulo says:

        Wes,

        I believe this arose from the practice of only the eldest son receiving any family inheritance, (land and tenant farmers). The 2nd son went into the clergy, 3rd the military (posts often paid/arranged for by the rich) and other sons given a stipend to go bye bye and and not cause trouble. The women were married off, of course.

        Except for the eldest everyone else got ‘dick’. This kept the vast estates and power source intact. Many of these estates remain whole, even today. This is known as male-line primogeniture.

        I don’t know what your will stipulates but in our house everything is broken up in thirds (two siblings and one nephew). One can buy out the others if they are able to do so. Or, property can be joint developed with proceeds divided up equally, or sold and also divided up. But the equal division holds.

        • NBay says:

          Yeah, that’s what my reading also confirms, (except extra sons all had the choice of military or clergy). Never heard of “remittance man”, but makes sense as an extra option.

    • Harrold says:

      As former Sec of Energy/Governor Rick Perry said – “Texans would rather freeze to death than give up their freedoms and join a national electrical grid”

      • NBay says:

        A great rallying cry, for sure, but just a copy of “give me liberty or give me death”, which, without specifics, means ABSOLUTELY NOTHING! And of course meant EXCLUSIVELY for the peasants, NOT the inventors/promoters/leaders using the slogans. (Just as they were in our own revolution, where, unlike the French, we basically just swapped out our private sector masters, and rearranged government to suit them, and which is why their revolution was very very messy and ours was smooth….except for the peasants, of course)

        I learned and saw these basic organizational “truths” in the Army. (and of course from reading history).

        SO.

        As a CA person, just what are these great “freedoms” Texans “enjoy” that I don’t? Perhaps I should be jealous?

        Nothing personal, more rhetorical than anything, but I’d still like to see a “list”.

        and as a peasant, I’ve always been partial to “Give me Librium or give me Meth” as a good battle slogan.

        • NBay says:

          PS: I have no idea in hell what is going on in Europe, or for that matter everything here, so I am unable to comment on the article, other than based on European history since Pax Romana, I tend to hope they can make this EU effort work.

        • Javert, Chip says:

          NBay

          “…As a CA person, just what are these great “freedoms” Texans “enjoy” that I don’t? Perhaps I should be jealous?”

          If at bottom you don’t already have a good fix on the difference between CA & Texas, having a bunch of Wolf Street readers enumerate them will be meaningless.

          You’ll quibble and trivialize anything anybody submits as items on the list. Of course, this is your prerogative. Different “freedoms” have different significance for different people.

          A lot of the rest of us already have a pretty good understanding of these concepts, and probably won’t spend a hell of a lot of time on this homework assignment.

        • NBay says:

          I think I’ll trivialize this one, thanks for the choice.

        • Happy1 says:

          I don’t live in TX, but the city of Houston has no zoning, you can literally do anything you want with your property. Bar, strip club, 40 story building, interstellar transit hub, whatever.

          Try to add an extra room onto your home in SF and you’ll quickly see the difference.

        • Happy1 says:

          Not to mention the vast differences in 2nd amendment related rights.

          TX just ended all restrictions on mask wearing and business capacity as well. CA can’t even get public schools open.

          Berkeley is attempting to outlaw gas heat in new buildings. There are renewable energy mandates that add cost to utilities and new home construction. Again, I don’t live in CA or TX, but if you don’t know these differences, then you don’t understand why CA hasa housing affordability crisis and massive long term outflow of the working class.

          Others probably have more.

    • Xabier says:

      I’m afraid the relative freedom in the UK is getting more relative by that day as we ALL drift into medicated Totalitarianism.

      One hardly recognises this country anymore.

      Utterly dismaying.

    • char says:

      So much worse than an elitist body out of London

  5. SpencerG says:

    Nice article… just like the last one. But I really think it is too soon to tell the plusses and minuses just yet. Plus the pandemic is altering the playing field for a LOT of issues in ways that are hard to separate for analysis.

    That said, your last paragraph is a real gem. The whole point of BREXIT (from this American’s eyes) was to restore accountability and sovereignty to Great Britain… not necessarily to make trade easier or bigger.

    • c_heale says:

      Given the way the UK is being governed at the moment, accountability is getting a lot worse. Johnson doesn’t like any kind of scrutiny and Labour is doing sweet f.a. to hold him to account.

      The UK was always a sovereign country while inside the EU. And given that it’s recently been showing the Queen and Royal family have been blocking laws where it affects them, sovereignty is not a good thing imo.

      • Peter says:

        “The UK was always a sovereign country while inside the EU. ”
        No. Ultimate ppower resides in the unelected EU Commission, and teh supreme legal authority is the ECJ.

        What influence did the Irish PM have over the recent EU threat to invoke article 16?

        Answer, None – he was’nt even consulted: power is from Brussels

  6. BuySome says:

    “Controlling one’s own borders”? Does that mean they can go ahead and flood that hole under the channel at will? Is it pre-chambered like bridges on the continent? Can you load and prime the charges before your trash cans are empty and the dog’s pregnant?

  7. Wisoot says:

    Jumble sale item Britain. Forex is on its way out. Bitcoin removal middleman. Brexit deal with EU is subject to change.

    Why you must ask is a council having to develop new EV industry? Doesnt bode well for this gov. Transparency can be opaque in councils.

  8. Ian says:

    The EU have shown their true colours with their inept handling of the vaccination program. The UK has vaccinated more than Germany, France, Holland and Spain combined. For Brussels it’s all about control, not saving lives. If the UK had stayed in we would have more dead people than we have now, and that’s a fact.

    • Russell says:

      Funny Ian, UK has the highest death rate (1810 / million) due to COVID per capita in the EU other than Belgium. Wouldn’t praise them too loudly. Germany’s death rate (847 / million) is less than half that of the UK.

      • SwissBrit says:

        How much of that death rate is due to underlying health problems that are more prevalent in the generally unfit UK than in our more healthy neighbour though?

        • Russell says:

          Either way it speaks to the overall health management of the country.

          I always laugh about the states that brag about how many tests are they have given when they have the highest death rates in the country.

          The bottom-line is the death rate. It doesn’t matter how you get there. One out of every 400 New Yorkers have died as a result of the crisis but everyone talks about how well they managed it. Finally coming home to roost for Cuomo.

  9. Chrislongs says:

    Nick,
    The problem with major change is that the losers know who they are and are very vocal. Winners are only apparent some time after and too busy making money to talk about it!

    • fajensen says:

      It does seem to me that the “winners” would have been much happier if Brexit had not happened and they could wallow in “Betrayal!” without any costs or inconvenience.

      Instead they won and are now relishing how every cost or inconvenience of Brexit be it, big, small, or imagined, means that they are being “Punished!” and therefore Brexit was “Justified!!”

      Brexiteers will always be angry. They will actively seek out thing to be angry and outraged about. The current UK government totally got their number and it will keep that anger stoked because it generates political support and ultimately votes.

      What that will not do, is making anyone interested in solving any of the problems and inconveniences. What would be the point of that? New grievances would immediately be found to keep the “griefers” stoked and Everything would just be back in the same place as it was before!

      Better, simpler, easier, more efficient, to keep the old program!

      I.O.W. The mess left by Brexit will be there for a decade or more.

      PS –

      Once the real winners emerge, those that get to work and moves things, Brexteers will be angry at them for somehow profiting at their expense.

      Maybe there will be a future opportunity for Labour to gain power on a program of punishing the “Brexit-profiteers”? Unless the Tory’s grab it, of course!

      • stan6565 says:

        @fajensen

        Man, you are *really* peeved about Brexit. What happened, did a bee sting ya?

        Relax.

        We voted to leave the abhorrent EU, we got out and we are very happy about it, We will even indulge in little schadenfreude in years to come when the unholy construct starts to unravel and all “member states” show how much they care of each other.

        We all had a little taste of the mess EU is running with Ursula’s attempted requisition of other countries (no names) vaccines supplies.

  10. Indistinguishable says:

    Yet another sterling (geddit!) article from our Nick.

    But too often missing from Brexit bonus discussions is any realisation that the UK is an advanced northern EU nation and in many ways fundamentally different to the ex-Maghreb southern EU.

    English Law for example, as theoretically also EU law – is predicated on Equality. Equality in justice. Ideally also Equal access to Justice. This is diametrically opposite to the ‘honour based’ Greco-Romans. Which, by definition rate the man or woman with more camels; ideally theirs but not always necessary, as more honourable. So getting more flexibility and less scrutiny from the also honour possessing judges, prosecutors and police.

    For example Portugal has an energetically used State crime of Defamation. So any claim of being offended (i.e a claim against the local for incompetence, theft or fraud) is supported by the State; the police and prosecution etc – not as in the UK – by the individual as a civil crime. Foreigners, their origin being officially unspecified, are automatically of lower honour to a local. (Although having camels as FDI may help until the lawyers have earned them away from you)

    For another concept of difference – compare ex-Portuguese Macao with ex-British Hong Kong. Which one is in the news and why?

  11. james wordsworth says:

    Still very early days. It will be even more interesting if Scotland leaves and Northern Ireland joins with the south.

    • George Cloonotney says:

      Even more interesting if Eire joins with UK and leaves the EU!

      • Auldyin says:

        Spot on Geo
        That was always the obvious solution to the Irish situation. I bet they’ll do it in the next 10yrs when they see us sail away from the EU. Covid is a great recruiting sergeant already.

      • char says:

        Why would Ireland join England?

        It is only slightly less likely to happen than Poland leaving the EU to join Russia and makes even less economic sense

        • Auldyin says:

          So the Irish people don’t have the same frustrations with the EU as the British had?
          They wouldn’t be joining THE UK, they would be leaving the EU as a free and independent nation and dumping all the current border Bullsh– in one go. Not to mention ag, fish,blah blah blah.
          If we had supported them post 2008 we would all have been out of it together for years.
          Are you saying Poland is comfortable with the EU?
          So you want to take my bet then?

        • char says:

          Their frustration with Brussels is minor with the frustration they had with London. Very minor.

          Ireland is making its money mostly from non-ag but export of ag to the EU for non-EU is very hard as seen with the British fish. EU,almost as much the US, likes free trade inside its borders. Outside not as much. UK should know this as former important member. They were one of those who were in favor of that policy.

          Poland, what can i say about Poland. It is like having Mexico be one of your states, but worse.

  12. MiTurn says:

    “Nissan, which last year had threatened to close down its Sunderland plant… decided instead to center its European car production at Sunderland.”

    This is good news and unexpected, assuming Nissan can stay in business. It has some challenging systemic issues.

  13. Lisa_Hooker says:

    They were wise enough to keep the pound and shun the euro. Then they were wise enough to see Brussels for what it was and shun the EU. My home may be modest, but it is MY home.

    • Edward Xylem says:

      God bless you Lisa_hooker.

    • Auldyin says:

      Spot on Lisa
      The only smart thing Brown ever did.
      Even then only to spoke his arch-enemy Blair?
      It was the people, not the politicians, who shunned the EU. The remoaners are vanishing like “sna aff a dyke”
      Things can only get better!

      • char says:

        The pound was massively overvalued at that time. Still is as seen in a lot of prices being equal in pounds or euro.

        • Auldyin says:

          £ v $ v euro v ruble v whatever is quoted every minute of every market day on foreign exchanges, The idea of any currency being over or undervalued is therefor a matter of opinion outside of the market and not a measurable fact. Currencies can be manipulated mainly by variations of interest rates by relevant central banks, but they all attend IMF and G7 etc conferences where agreements are made not to indulge in competitive de or revaluations. There is no such thing as a ‘free market’ with free price determination nowadays. Ask Wolf to give you Max Keiser’s web site. What would be really interesting is to see what would happen if somebody broke ranks, as I said re previous Nick report.
          The Euro was 1.16 ish to the pound today so somebody is cheating if you get the same item for one unit of either currency.
          It’s all smoke & mirrors with Govts.

        • char says:

          If everything in a semi third world country is more expensive than in its neighboring first world countries then i can say the currency is overvalued.

  14. C says:

    Great read…….I’ve always felt that the EU needed to make this as painful as possible with maximum prediction of doom and gloom. I’m very interested in how it all turns out as other nations may consider a similar path should we find England fairing better than predicted.

    C

    • char says:

      EU doesn’t have to make it painful. The Brits will do that on their own. Being out has costs, that is simply true.

      ps. The Brits wanted a divorce but still want the wife to do the cleaning up, dinner and the horizontal work-out. “strangely” the EU is not interested

  15. Auldyin says:

    As always, the EU is clearly fighting ‘dirty’ viz Irish Sea.etc. We Brits have always played ‘cricket’ but what if we turned ‘hardball’ for a change and broke the IMF cartel on super-low interest rates. If we did an open ended 10yr Treasury with a 5% yield. How high would the pound go? Could our banks handle the worldwide demand? How long would it take for every financial institution in the EU to go belly-up? What would we spend all the lovely money on? A bridge to Ireland, perhaps. Print the 5% like any other Ponzy scheme,
    It’s all smoke and mirrors with Governments, they’re in it together exploiting the plebs everywhere and always. Great articles Nick on the biggest subject of the age.

  16. intosh says:

    I’m a long-time customer of an online bike store in the UK. My recent orders have been stuck in their system for a month now, with no dispatch date in sight. Customer service told me because of Brexit, orders are stalled — many of the merchandise they sell are from the EU.

    Not sure if this business share the same optimism about Brexit.

    • fajensen says:

      In my experience, ordering from an EU-based supplier will generally go OK, even if the goods ordered comes from the UK. It is more expensive, about 10 EUR for books.

      I think it is because the business can order at least a pallet’s worth and have a logistics firm do the paperwork rather than have some individual run down to the post office with a package on each order.

      The UK-side will eventually have to contract with a logistics provider, I think. If they want to make things easy, they could have “a shelf” in a logistics center in the UK and one in the EU to handle the shipments.

  17. fajensen says:

    Don’t let your government sign any agreements that they can’t be bothered to read, don’t understand or intends to honour; Seems to be the unlearned lesson of Brexit!

    Treaty of Rome -> Whooosh!
    Boris “oven ready” turkey of a deal -> Double Whooosh!!

  18. SwissBrit says:

    A lot of the British upper classes, including the recently abdicated King Edward, were in thrall to H….

    [Rest of comment deleted by Wolf. See note below for explanation]

    • SwissBrit says:

      Not quite sure what happened exactly, but I replied to another comment claiming the British upper classes were to thank for Europe not speaking German, but now that comment and its replies have disappeared, leaving my above comment orphaned and completely out of context…

  19. Paul says:

    England is like China. A great place to live if you’re a monetary aggregate. Not so much if you’re a person.

    Brexit is just another example of a country that has never given a rats ass about their people. The UK has a population density of 279 per sq/km, the highest in the west and almost double China.

    Brexit has turned it into a prison. A Brit has to go through the same process to get a work visa in the Eurozone (or the US) as someone from Bostswana.

    I was in Germany for the final of the final of the final, seriuosly guys this one is final vote. I watched the blowhard Nigel Farage and an Army of nits disparage the EU, call Angela Merkel a Nazi and declare as usual Englands superiority.

    Earth to England. You are superior at nothing.

    One thing that’s always stunned me about my highly educated British friends was how dirt poor their families were. And that was England. The Welsh were as poor as Indians.

    Britain has never given rats ass about their population. Just funnel more money to the “betters.” (Royals.) It was reported that 40% of the Army that was send to fight the Boars was not healthy enough for combat BEFORE THEY LEFT ENGLAND. Add that to a long list of idiotic wars like the Gulf war, Gallipoli, Norway, promising to defend Poland during WW2.

    Now, as millions of young people are struggling to make a living in a country with no resources, high taxes, broken welfare systems, a breeathtakingly lazy workforce and a horrible education ssystem. (The UK’s other “secret)

    But hey. They still have 60% of the Forex maarket.

  20. rick m says:

    In the Seventies much of England’s green and pleasant land was economically stagnant and looked like a Smiths video, bombed out without explosives. The country benefited from the EU joining originally, but brusselcrats are the formosan termites of international cooperative trade in Europe. Germany was a wonderfully organized, safe, and prosperous childhood home to me, cheap travel to Italy, England, Austria. Free defense didn’t hurt. The relative homogeneity of the country meant that beneficial nepotism worked, because everyone was related to one another at a certain level. It meant also that when your successful economy brings immigrants, nobody’s ever had to learn how to deal with them and there’s trouble in paradise.
    Then Europe was one country, kind of, and became more uniformly expensive. Termite infestation has to be dealt with early, but the inspectors missed a few. Or, like Target-2 regulators, just not looking. And the bugs take over.
    The UK did well to take the initiative and the resulting hit, write down the losses and get them off the books, and move on, they will have company soon. None of the other issues are core, and will be settled amicably for self preservation by politicians. Since punitive measures from Brussels failed to prevent brexit, their future moves against the U.K. may be determined by how restive the other dissident client states become. Their influence is based on fear and reward, and their leverage is waning.
    England, Europe, and China are the cultural loci on earth, five out of six alien visitors agree.
    Liberty makes everything look better, after the mess is cleaned up.
    Thanks for two well-written articles

    • Auldyin says:

      Ah! Germany.
      I’ve heard some misguided souls call the EU the 4th Reich. I would never say a thing like that myself but we all know the wonderful US created the EU concept to hobble the productive “enthusiasm” of Germany and to avoid any repeats of “history”. In that context the EU has worked superbly. Trouble is, Germany also invented bureaucracy when it applied ‘military’ organisation to civil activities for the first time in it’s postal service. It was a wonder of the age and the technique was taken up actively by large corporations and governments in particular and it produced consistent results. It’s a great way to work and live if you like being in the ‘army’ and being told exactly what to do with every aspect of your life.
      Ah! the Brits
      We don’t like being told what to do. Our model is Robin Hood and his merry men ie a disparate bunch of craftsmen co-operating voluntarily under a charismatic leader and producing spectacular results when the motive was there.(we were GREAT Britain after all)
      For Brits the EU was always a project of our inept and absolutely non-charismatic politicians. They don’t understand the people who will tell them anything to be rid of them. There was no way the Brits would ever settle in the EU. Nobody tells us what to do, we’ll go along with stuff for a time, mainly because we’ve got better things to do, but eventually we’ll let you know what we think and want. ie Brexit. What is galling, as always, is the way the people who led Britain into a 40yr long cul-de-sac have slipped away from all culpability. Will the history books name them?

  21. Gordon says:

    If the examples given really are the bright side of Brexit, then it’s going to be a disaster. It really is a pretty sorry list. Taking the claims in turn.

    Stronger pound: I’m not sure what a comparison to the dollar is supposed to prove. The eurozone is a much bigger trading partner and against the euro, the pound dropped sharply at the referendum and has since traded in a relatively narrow band between 1.1 and 1.2. It is still in that band.

    City of London: The City will certainly survive and I agree that a diminished role is not a bad thing if it leads to a more balanced economy but Boris & Co don’t have any idea how to do that – nor any plan for replacing the lost tax revenue. Perhaps they will ask us peasants to suck it up.

    Green Shoots: Some always get lucky/do well whatever the circumstances so I’m not clear that Liverpool picking up some trade proves anything. As for Nissan, the company was in a bind over its Sunderland plant. It is an excellent plant, but the company has many challenges and relocating would almost certainly be a bridge too far. I suspect they’ve stuck the government for some sort of deal. Some think they hope to become a survivor of a downsized motor manufacturing sector. What’s for sure is that this is one of those times where we are told only what TPTB want us to know.

    Then there’s the proposed Coventry gigafactory JV. Umm – that’s just happy talk by a bunch of local authorities and a landowner looking at a large empty site where nothing much is happening.

    Vaccine rollout: yes, well done to a point because Boris got lucky – a leading Tory MP’s wife is a competent biochemist and venture capitalist and she put it together. Other MP’s wives and assorted cronies have been disastrous – but still managed to trouser fortunes.

    Levelling up: Umm, HS2 is a scam. Only by torturing the numbers could its backers justify it in the first place and those numbers have risen several-fold since then. One example: a small block of flats in North London right on the route was in the original costings for £100 (yes, you read that right). People in the north mostly want better intra-regional rail but somehow that never happens.

  22. c1ue says:

    Excellent article.
    i would note that a major issue for the UK is food – it is a major importer of it.
    And this is an issue because the EU has the protection of internal agriculture as a major platform due to France.
    Thus the power dynamics of Germany and France being the top influences in the EU has severe consequences for a food import dependent UK. This situation could be offset by the UK retaining its financial pre-eminence, but the likelihood of this occurring with a full UK integration into the EU is nonexistent particularly with the German dominance of the ECB (as evidenced by its policies).
    Energy policies in the EU are a second major issue. The UK was a net exporter of energy with the North Sea fields but this is no longer true.
    According to the UK government, net energy trade balance was +37.6 million tons of oil equivalent in 2001 but was -59.7 mmtoe in 2019.
    Thus the UK doesn’t have energy as either an economic or political prop anymore either.

    • char says:

      Food independence is not only a French but an EU hang up from WWII. Wont change.

      Energy is not only oil but also wind. UK should be an electric energy exporter in the future. That is why Scotland is so important

    • Auldyin says:

      Don’t give up on finance yet
      I read today the FCA is considering dumping the 2″ thick EU share prospectus which no normal human could ever read in favour of the 1960’s type 1/4″ document which was a great read.
      Purpose to make it easier for humans to invest rather than vast legal departments of institutions.
      Maybe 1000’s of corporate lawyer jobs will leave for the EU
      That would be a tragedy but for whom?

  23. Hamish says:

    Gordon is quite right. This is a sorry list indeed. And nowhere does the author come close to addressing the critically important point of whether any of this constitutes a genuine improvement over what would have been the case were the UK still in the EU. Things not being quite as bad as they might possibly be is scarcely a reason for jubilation. This may be a brighter side of Brexit, but more in a ‘marginally less dark’ way than a ‘happy sunny’ way.

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