Brexit discussion thread II

johnnyskeleton · 29-08-2017 07:18PM

blanch152 wrote: »

That would be excellent news for big business.

However, the ordinary consumer, wanting to go buy imported goods, or go on holidays to Europe would be bearing a huge huge cost for Brexit.

As would the UK exchequer because the brexit cost will probably be calculated in Euro. So the cost in Sterling has effectively gone up by c. 30% since the vote.

Enzokk · 29-08-2017 07:27PM

solodeogloria wrote: »

I think challenging the EU's list is definitely the right strategy. Putting out a minimum isn't in the UK's national interest.

To your second question. I think at present the transition terms are probably overly optimistic. I think some amount of money needs to be paid. If nothing was paid I'd say this was wrong but it shouldn't go far beyond 3 years of contribution plus the UK's share of assets. If the Tories climbed down over regaining the ability to control trade policy, the role of the ECJ and immigration I'd be hugely disappointed. There are possible outcomes that I could disagree with. So far it's going very well in terms of what I agree with.

But they haven't been asked to put out a minimum, only what they think they need to pay. No amounts but where they have obligations to contribute. So I don't know why you are talking about minimum amounts when those are not on discussion.

I think it is going terribly for the UK. Their only goal so far seems to be to discuss trade with the EU as soon as possible. Jean-Claude Juncker seems to think the position papers from the UK, which you agree with, aren't worth much. Any comment on this?

“I would like to be clear that I did read with the requisite attention all the papers produced by Her Majesty’s government; I find none of them truly satisfactory,” he said. “So there are huge numbers of questions that need to be settled.”

He finds none of the papers satisfactory to move forward with the negotiations. I would be very worried about how this is playing out. Everyone but Brexiteers seems to see a disaster coming. Japan, a country known for not trying to offend their friends, are telling the UK they need to get their act together. It's a shambles at this moment and doesn't bode well for either the UK or us, which will feel the effects the most.

Jean-Claude Juncker pours scorn on UK’s Brexit documents

steddyeddy · 29-08-2017 07:32PM

solodeogloria wrote: »

Good evening!

The EU are claiming the British need to pay them for X, Y and Z. If the British feel they only owe them for X then they have every right to challenge everything beyond this.

The creditor always issues the invoice. I don't think the language of debt is helpful. It is about honouring budgetary commitments. I think they should do this. I'm willing to go a lot further than the majority of British people in fact if the polls are correct!

It's not friendly to rip a friend off either. I suspect the EU want to make an example of Britain but there are figures that should cause Britain to walk. What would make the UK agree a terrible deal?

Presenting a minimum figure is a bad negotiating strategy. Tearing into the EU's figure is much much better. I suspect that's why they don't like this approach. The numbers only go down this way. Not up.

Much thanks,
solodeogloria

So the UK shpuldn't even present a method for calculating the figure? Even if it precludes progression to trade deals.

Phonehead · 29-08-2017 07:42PM

Truly bizarre situation, it's amateur hour at the negotiating table! We are here to discuss final settlement but we won't put forward any calculations on what we think we owe.

Capt'n Midnight · 29-08-2017 07:51PM

blanch152 wrote: »

That would be excellent news for big business.

However, the ordinary consumer, wanting to go buy imported goods, or go on holidays to Europe would be bearing a huge huge cost for Brexit.

The average consumer can't avoid energy costs. And these have gone up a lot since the referendum.

29-08-2017 08:07PM

Capt'n Midnight wrote: »

The average consumer can't avoid energy costs. And these have gone up a lot since the referendum.

-off topic-
Not if you've made the switch to 100% renewables they haven't.

Happy to sort referrals for anyone looking to make a switch

-off topic-

steddyeddy · 29-08-2017 08:34PM

Junker says that the UK's papers are not good enough and do not come close to addressing the border problem.

Can we put one Brexiter myth behind us? That's the idea that the EU and countless countries will jump at the chance to do a trade deal with the UK. That's just not the case.

www.independent.co.uk/news/uk/politics/brexit-talks-eu-third-round-brussels-jean-claude-juncker-david-davis-not-good-enough-a7917746.html%3famp

Water John · 29-08-2017 08:39PM

TMK Dyson moved manufacturing to Malaysia years ago. This is the type of situation that will confound. What are UK made products?

Nody · 29-08-2017 08:48PM

Water John wrote: »

TMK Dyson moved manufacturing to Malaysia years ago. This is the type of situation that will confound. What are UK made products?

Cadbury chocolate do some in Bourneville (no clue which brands), some cars are partially UK made obviously, some military vehicles etc. but I'm struggling to think of any major UK manufacturing as such.

Capt'n Midnight · 29-08-2017 09:07PM

Water John wrote: »

TMK Dyson moved manufacturing to Malaysia years ago. This is the type of situation that will confound. What are UK made products?

The question is what are UK made products , that couldn't be made in Eastern Europe this time next year ?

Almost all of the car manufacturing is foreign owned. So apart from financial reasons like bribes from the government many have no fundamental attraction to the UK. Those that export to countries that don't have an EU trade arrangement would benefit from cheaper labour. The rest would be on tenterhooks.

Industries with low margins should be worried as they could get wiped by a tariff change.

Yes Rolls Royce are a UK world leader, there aren't that many places you can buy a jet engine if you want to build a new wide bodied jet.

ancapailldorcha · 29-08-2017 09:49PM

Capt'n Midnight wrote: »

The question is what are UK made products , that couldn't be made in Eastern Europe this time next year?

Very specialised manufacturing. For example, I recently did some analytical work with a company who've just started clinical trials with modified T cells. Though it is noteworthy that of the 9 members of the manufacturing team, 2 were British. The rest were from the EU.

Manufacturing, like anything else has evolved and now often requires highly skilled and educated employees when you're talking about Western nations. There is a reason why Dell left Limerick but Pharma firms stayed put. There's also a reason that so many startups originate in Oxford and Cambridge.

Capt'n Midnight wrote: »

Almost all of the car manufacturing is foreign owned. So apart from financial reasons like bribes from the government many have no fundamental attraction to the UK. Those that export to countries that don't have an EU trade arrangement would benefit from cheaper labour. The rest would be on tenterhooks.

Industries with low margins should be worried as they could get wiped by a tariff change.

Yes Rolls Royce are a UK world leader, there aren't that many places you can buy a jet engine if you want to build a new wide bodied jet.

Car manufacturers in the UK operate on a Just In Time basis. Basically, they operate on very low inventories so that when someone orders a new Nissan Qashqai, the components are ordered from across the EU where the customs union ensures swift and seamless delivery as if they were ordered from somewhere like Cornwall. Without this, the cost of staying in the UK will skyrocket.

murphaph · 29-08-2017 09:53PM

solodeogloria wrote: »

Good evening!

I think challenging the EU's list is definitely the right strategy. Putting out a minimum isn't in the UK's national interest.

To your second question. I think at present the transition terms are probably overly optimistic. I think some amount of money needs to be paid. If nothing was paid I'd say this was wrong but it shouldn't go far beyond 3 years of contribution plus the UK's share of assets. If the Tories climbed down over regaining the ability to control trade policy, the role of the ECJ and immigration I'd be hugely disappointed. There are possible outcomes that I could disagree with. So far it's going very well in terms of what I agree with.

Much thanks,
solodeogloria

3 years? What about the UK's share of pensions for the EU civil servants who have been working on the UK's behalf for 44 years?

murphaph · 29-08-2017 10:41PM

Capt'n Midnight wrote: »

The question is what are UK made products , that couldn't be made in Eastern Europe this time next year ?

Almost all of the car manufacturing is foreign owned. So apart from financial reasons like bribes from the government many have no fundamental attraction to the UK. Those that export to countries that don't have an EU trade arrangement would benefit from cheaper labour. The rest would be on tenterhooks.

Industries with low margins should be worried as they could get wiped by a tariff change.

Yes Rolls Royce are a UK world leader, there aren't that many places you can buy a jet engine if you want to build a new wide bodied jet.

I know several lads here in Berlin working for Rolls at their plant in Brandenburg. If it makes financial sense then RR will transfer more and more to here as time goes by.

Sam Russell · 29-08-2017 11:57PM

ancapailldorcha wrote: »

Car manufacturers in the UK operate on a Just In Time basis. Basically, they operate on very low inventories so that when someone orders a new Nissan Qashqai, the components are ordered from across the EU where the customs union ensures swift and seamless delivery as if they were ordered from somewhere like Cornwall. Without this, the cost of staying in the UK will skyrocket.

Vauxhall (Opel) currently manufacture (assemble) vans in Luton. They make Renault, Opel, Nissan, and Vauxhall badged versions of the identical vans. , etc. Opel has just been taken over by Peugot/Citroen. One can expect they will add those two badges as well.

Post Brexit, we can expect Nissan manufactured Renaults, Peugots and Citroens from Sunderland, fitted with Ford engines and gearboxes from Dagenham. (Think East Germany and Trabant).

Premium cars from Germany will sell no problem because they will be premium cars, and the well to do will have no problem paying any extra costs.

Its the rich what gets the pleasure, and the poor what gets the blame.

solodeogloria · 29-08-2017 11:57PM

murphaph wrote: »

3 years? What about the UK's share of pensions for the EU civil servants who have been working on the UK's behalf for 44 years?

Good evening!

The UK also has £10 billion in the European Investment Bank and probably more elsewhere. £10 billion is a good base for annuity based pensions. Actually, even if it was entirely based on cash. Let's say on average each would have a healthy pension of about a million pounds to cover their retirement. Divided by a million, £10bn would cover about 10,000 people.

To put that in perspective. 33,000 people work for the European Commission, 6,000 people work in the European Parliament and 3,500 people work in the European Council. 10,000 people would be nearly a quarter of this.

The EU could either keep that money in the European Investment Bank to keep making money for other member states or it could use it on priorities like pensions.

£36bn plus UK based assets would be easily enough to cover these sorts of priorities. If the EU want more, it's on them to explain the case for what they are asking for.

Much thanks,
solodeogloria

Sam Russell · 30-08-2017 12:04AM

solodeogloria wrote: »

Good evening!

The UK also has £10 billion in the European Investment Bank and probably more elsewhere. £10 billion is a good base for annuity based pensions. Actually, even if it was entirely based on cash. Let's say on average each would have a healthy pension of about a million pounds to cover their retirement. Divided by a million, £10bn would cover about 10,000 people.

To put that in perspective. 33,000 people work for the European Commission, 6,000 people work in the European Parliament and 3,500 people work in the European Council. 10,000 people would be nearly a quarter of this.

The EU could either keep that money in the European Investment Bank to keep making money for other member states or it could use it on priorities like pensions.

£36bn plus UK based assets would be easily enough to cover these sorts of priorities. If the EU want more, it's on them to explain the case for what they are asking for.

Much thanks,
solodeogloria

That is precisely the point of the negotiations - not plucking numbers from the air. The EU have spelt out the extent of the liabilities and said the UK assets would be taken into account. They also have added that the net cost to the EU for Brexit will be added to the account. The EU have not given an indication of the possible figure. That will be done post Brexit, when the numbers are known.

It is a bit like booking a hotel and asking for the bill on arrival, before going into the restaurant fr an expansive meal, or hitting the mini-bar at 3am.

Peregrinus · 30-08-2017 05:05AM

solodeogloria wrote: »

Good evening!

The UK also has £10 billion in the European Investment Bank and probably more elsewhere. £10 billion is a good base for annuity based pensions. Actually, even if it was entirely based on cash. Let's say on average each would have a healthy pension of about a million pounds to cover their retirement. Divided by a million, £10bn would cover about 10,000 people.

Well. is the UK offering to allow its 10 bn holdings in the EIB to be diverted in into the pension fund?

(Because, you know, that would surprise me.)

solodeogloria wrote: »

£36bn plus UK based assets would be easily enough to cover these sorts of priorities. If the EU want more, it's on them to explain the case for what they are asking for.

Certainly it is. But I think you have this discussion the wrong way around.

It's not for the EU to demand a figure that it wants, and then come up with a rationale for the figure. Nor is it for the UK to state a figure that it is willing to pay, and then come up with a rationale for that figure. Rather, it's for each party to propose how shared assets and liablities should be allocated, how obligations should be identified, capitalised and amortised, etc, etc and then, when they have agreed a set of principles, apply those principles and see what figure results. The UK's position is that it will pay what is owed, but neither side can simply pluck a figure out of the air and declare that that figure is what is owing, purely on the basis that that is the amount they would like to be owing.

solodeogloria · 30-08-2017 07:27AM

Peregrinus wrote: »

Well. is the UK offering to allow its 10 bn holdings in the EIB to be diverted in into the pension fund?

(Because, you know, that would surprise me.)

Certainly it is. But I think you have this discussion the wrong way around.

It's not for the EU to demand a figure that it wants, and then come up with a rationale for the figure. Nor is it for the UK to state a figure that it is willing to pay, and then come up with a rationale for that figure. Rather, it's for each party to propose how shared assets and liablities should be allocated, how obligations should be identified, capitalised and amortised, etc, etc and then, when they have agreed a set of principles, apply those principles and see what figure results. The UK's position is that it will pay what is owed, but neither side can simply pluck a figure out of the air and declare that that figure is what is owing, purely on the basis that that is the amount they would like to be owing.

Good morning!

£36bn net (after assets) is what I would personally be willing to accept.

The UK simply isn't going to accept an open ended liability from the EU. It is going to challenge each item line by line legally to find out what the justification is. The €100bn bandied around is in the no deal is better than a bad deal territory. The EU won't get the UK to accept a bad deal just to make the UK into an example.

It is for the EU to justify every item on their list. It isn't for the UK to provide them with a minimum. It's in the UK's best interests simply to challenge it and bring it down. Present a minimum and you're going up. Present a maximum and it's going down.

Not a penny should be paid without trading terms either. This assumes a beneficial trading arrangement after Brexit.

Much thanks,
solodeogloria

LeinsterDub · 30-08-2017 08:12AM

solodeogloria wrote: »

.

Not a penny should be paid without trading terms either. This assumes a beneficial trading arrangement after Brexit.

How would being given junk status help the UK economy post a no terms brexit?

solodeogloria · 30-08-2017 08:18AM

LeinsterDub wrote: »

How would being given junk status help the UK economy post a no terms brexit?

Good evening!

There's no reason to believe that the UK's economy would be junk status on WTO terms. You need to back up your claims. From what I can see it would mean 2.3% tariffs on average which could be directly refunded by the Government to manufacturers and producers.

It's the worst case scenario. There's no reason why the UK should pay anything until the EU provide beneficial trade terms. The UK needs to defend it's national interest. Handing over money without assurances on trade in return isn't right.

Some people on this thread think there's no scenario where the UK would say no deal. This isn't true. An extortionate figure without favourable trade terms would do it.

Much thanks,
solodeogloria

Calina · 30-08-2017 08:26AM

Solo, where is the 36 billion figure coming from? What is the rational basis for it? Where is the line by line calculation? And if the figure ends up being higher what do you think you are going to be able to do about it?

What you can or cannot accept is irrelevant. You have a bunch of negotiators on yoyr behalf and it is what they accept on your behalf that matters.

murphaph · 30-08-2017 08:38AM

solodeogloria wrote: »

Good evening!

There's no reason to believe that the UK's economy would be junk status on WTO terms. You need to back up your claims. From what I can see it would mean 2.3% tariffs on average which could be directly refunded by the Government to manufacturers and producers.

It's the worst case scenario. There's no reason why the UK should pay anything until the EU provide beneficial trade terms. The UK needs to defend it's national interest. Handing over money without assurances on trade in return isn't right.

Some people on this thread think there's no scenario where the UK would say no deal. This isn't true. An extortionate figure without favourable trade terms would do it.

Much thanks,
solodeogloria

70% service sector based economy. WTO does not govern services. UK wholly reliant on EU good will to allow UK services to be sold into EU market.

Jim2007 · 30-08-2017 08:45AM

solodeogloria wrote: »

There's no reason to believe that the UK's economy would be junk status on WTO terms. You need to back up your claims. From what I can see it would mean 2.3% tariffs on average which could be directly refunded by the Government to manufacturers and producers.

Except you don't pay average tariffs, you pay actual tariffs and if you look in the tariffs database you'll see that many are in double and triple digits. But that is only the beginning, many WTO agreements have what might be called tariff free quotas and they are fully allocated. And I doubt the Donald will make America Great by hand you part of his quota! And of course many of the EU export agreements have similar quotes, so you can bet that none of that will be handed over to the UK if they walk away from the talks either.

And of course there is the little matter of the fact that you are not even a full member of the WTO. And again you can bet walking away will have an impact on how the EU treats the application - they could tie it up for years with objections.

So it is not just a matter of paying tariffs, in come cases it will require acquiring a share of the quota.

Walking away is not an option, that is the only reason Davis and friends keep turning up for negotiations.

Peregrinus · 30-08-2017 08:47AM

solodeogloria wrote: »

Good morning!

£36bn net (after assets) is what I would personally be willing to accept.

I hate to break this to you, but I don't think anyone is going to offer you personally £36bn. Or indeed any amount at all.

solodeogloria wrote: »

The UK simply isn't going to accept an open ended liability from the EU. It is going to challenge each item line by line legally to find out what the justification is. The €100bn bandied around is in the no deal is better than a bad deal territory. The EU won't get the UK to accept a bad deal just to make the UK into an example.

It is for the EU to justify every item on their list. It isn't for the UK to provide them with a minimum. It's in the UK's best interests simply to challenge it and bring it down. Present a minimum and you're going up. Present a maximum and it's going down.

It's not going to be so one-sided a negotiation. You talk about the UK "challenging each item line by line legally", but that seems to assume that there are legal rules in place here, and the only issue is how to apply them to the facts of the case. But this situation has never arisen before and it isn't provided for in the Treaties, so there are no established rules or principles. The first step has to be establishing what the rules and principles are, and that can only be done by agreement between the parties. Only when you get to the point of having an agreed set of rules do you move on to working out what figure those rules will produce.

solodeogloria wrote: »

Not a penny should be paid without trading terms either. This assumes a beneficial trading arrangement after Brexit.

But that works both ways, obviously. In theory, the UK could be bolshie about this and simply refuse to agree that any sum at all is due, on the basis that there is no law to cover this situation, and the UK is not minded to agree to one. But obviously such a stance would put the kibosh on any prospect of a beneficial trade deal, so it's not in the UK's interest to adopt it.

Legally, the UK could walk away without paying a cent by way of exit fees, and become a third country with no trade deal as far as the EU is concerned. No law or treaty provision would breached by that. What stops the UK doing this is that it wouldn't produce a good outcome for the UK, economically or politically. So, yeah, the main point of paying an exit fee is to preserve goodwill, trust, friendly relations, etc, so that the UK can get a beneficial trade deal.

But, if you are minded to start drawing red lines around particular figures and saying "not a cent more", these considerations point to the basis on which you would choose that figure. If we fail to agree an exit fee and as a result lose a trade deal, how much will that cost us? Right, that sets the upper limit on what we should be prepared to pay as an exit fee. Obviously the UK would prefer a much lower fee than that, but the maximum which it would be rational to pay is lilmited by the projected benefit from a trade deal. You might bargain for a lower figure - you would bargain for a lower figure, in fact - and you might even publicly announce a lower maximum (though announcing a maximum at all would probably be a bad tactic) but it would be cutting off your nose to spite your face actually to apply a lower maximum. If you avoid an exit fee of X euros, and as a result lose a trade deal worth 3X euros, that's a bad outcome.

Fratton Fred · 30-08-2017 09:01AM

murphaph wrote: »

70% service sector based economy. WTO does not govern services. UK wholly reliant on EU good will to allow UK services to be sold into EU market.

How can the eu stop Uk services being sold there?

Will they suddenly ban radio stations from playing Ed Sheeran records, or ban tv channels from showing the Premier League?

You can't really stop services, that's why the WTO doesn't cover them.

steddyeddy · 30-08-2017 09:06AM

Fratton Fred wrote: »

How can the eu stop Uk services being sold there?

Will they suddenly ban radio stations from playing Ed Sheeran records, or ban tv channels from showing the Premier League?

You can't really stop services, that's why the WTO doesn't cover them.

You need passporting rights to engage in some services. Particularly financial.

Nody · 30-08-2017 09:17AM

Fratton Fred wrote: »

How can the eu stop Uk services being sold there?

Will they suddenly ban radio stations from playing Ed Sheeran records, or ban tv channels from showing the Premier League?

Already common in many countries; maximum percentage of foreign music/show on radio/TV. Legal requirements on services to be performed in EU country, data stored in EU country, not allowing data to be transferred to 3rd party country (goes live Jan 2018 with the new EU legislation). Requirement to have all euro transactions routed via an EU regulated country or to have significant securities etc. Not allow any bids on government/local contracts unless service is performed by a EU entity and EU regulated workers only.

There are plenty of ways to limit services and since they are not covered by the WTO there is sod all UK can do about it.

Peregrinus · 30-08-2017 09:29AM

Plus, lots of services are regulated, esp. many of the high-value services that the UK excels at. You can't sell banking, insurance, legal services, brokerage, investment advisory, etc, services into a foreign country without local authorisation. Your ability to sell educational services is severly limited if the degrees awarded by your universities aren't locally accredited for the purposes of professional qualifications, etc.

There has already been a sharp fall-off of EU applicants to UK universities, at both graduate and undergraduate level. That's an example of a UK service export being hit by Brexit. So far, of course, the hit is due to uncertainty about Brexit, rather than the terms of Brexit, which are not yet known. But, yeah, international trade in services can be impeded, or freed up, by government action just as much as international trade in goods.

LeinsterDub · 30-08-2017 09:30AM

solodeogloria wrote: »

Good evening!

There's no reason to believe that the UK's economy would be junk status on WTO terms. You need to back up your claims. From what I can see it would mean 2.3% tariffs on average which could be directly refunded by the Government to manufacturers and producers.

It's the worst case scenario. There's no reason why the UK should pay anything until the EU provide beneficial trade terms. The UK needs to defend it's national interest. Handing over money without assurances on trade in return isn't right.

Some people on this thread think there's no scenario where the UK would say no deal. This isn't true. An extortionate figure without favourable trade terms would do it.

Much thanks,
solodeogloria

You default on your debts you get junk status.

Peregrinus · 30-08-2017 09:32AM

LeinsterDub wrote: »

You default on your debts you get junk status.

Failure to agree an exit fee, with the result that no exit fee is paid, would not be a default by the UK. It might have very adverse consequences in other respects, including reputational consequences, but it wouldn't be viewed by the markets as a default.

Brexit discussion thread II

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