Brexit discussion thread II

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.

The posters above me have answered your post better than I could but suffice to say Ed Sheeran and super rich Premier League stars will be fine after Brexit. The ordinary Joe working for a UK insurance company that sells into the EU and the wider UK economy (where real people work) will not be (if the UK says no deal).

The UK is in a hopelessly weak negotiating position. It is only going to get more humiliating for a country I used to respect.

Solo; can you please, for the love of God, stop parroting that €100bn claim. The only people who EVER mentioned that figure worked for a British newspaper ...

Peregrinus wrote: »

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.

Yeah but as you have outlined yourself a no-deal scenario means no trade agreement with the UK and a decimation in UK exports. That would certainly be enough to see the ratings agencies junk the UK credit rating, even before the (inevitable) default came, right? It's not as if we even need the ratings agencies to do this for us. No deal for the UK is a disaster. The UK's junk status will be taken for granted. The ratings agencies will be busy trying to figure out the more subtle (but still very damaging) effects on EU economies.

solodeogloria wrote: »

Good morning!

All of this is unsubstantiated. Nobody has presented any good citations to show that this would actually happen.

I'm also unconvinced that UK exports would be decimated. A weaker pound is actually good in this regard. It allows for greater competitiveness in a global market. In a way it's similar to the benefits that Germany received with a weaker currency after joining the Euro.

No deal isn't an ideal scenario but I don't buy this talk of exports being decimated or defaulting on bondholders. The UK has never defaulted on gilts and I don't see any reason why it would start.

An ideal scenario is that we see a reasonable bill. The reason why I mention €100bn is because the Financial Times came up with this figure with European sources. That's worth walking away from.

Not one penny should be paid without trade terms. £36bn net seems like the maximum that should be paid. The pensions argument is moot if the £10bn+ in UK assets are considered.

There are scenarios where the UK should walk and of course no deal is better than a bad deal.

The people prophesying incredible accounts of armageddon need to start providing reasons for why they believe stuff like that because it looks fanciful.

Much thanks,
solodeogloria

It's not fanciful. UK is a 70% services economy. No deal means relying entirely on EU's good will to export these to the EU. WTO does not come into the equation for services.

solodeogloria wrote: »

All of this is unsubstantiated. Nobody has presented any good citations to show that this would actually happen.

I'm also unconvinced that UK exports would be decimated. A weaker pound is actually good in this regard. It allows for greater competitiveness in a global market. In a way it's similar to the benefits that Germany received with a weaker currency after joining the Euro.

I agree with you that talk of UK exports being “decimated” is excessive. But they would be adversely affected. And, while a weaker pound would help to offset that, the whole reason that the pound would be weakening in this scenario is the adverse effect on UK exports of existing the EU without a trad deal.

solodeogloria wrote: »

No deal isn't an ideal scenario but I don't buy this talk of exports being decimated or defaulting on bondholders. The UK has never defaulted on gilts and I don't see any reason why it would start.

I agree with all this. Brexit-without-a-deal wouldn’t be good for the UK national economy, but it wouldn’t imperil UK government finances to a point where default would be foreseeable.

The downside to no deal, from the UK’s point of view, is not government insolvency. I think it’s mainly two things. The first would be the adverse affect on the UK’s foreign trade of moving from having the world’s freest free trade deal with what is far and away your largest trading partner, and likely to remain so, to having no trade deal at all. UK exports wouldn’t be “decimated”, but they would be seriously adversely affected.

The other downside is that it would be a really, really bad start to the UK’s campaign to negotiate trade deals. If they can’t negotiate a trade deal with their closest and largest market that simply loves trade deals, and has the world’s largest network of trade deals, that really torpedoes below the waterline the Brexity claim that the UK will nimbly negotiate a really great, really super, network of trade deals that will herald a bright new future of taking control and a chicken in every pot. The EU trade deal with be far and away the most important trade deal that the UK will be negotiating post-Brexit, and if it turns out that they can’t negotiate it the Liam Fox strategy is in ruins. They’ll have no choice but to go all Patrick Minford, and that won’t end well.

(Just to be clear, I don’t see this happening. There will be a UK-EU deal, even if somebody has to take Teresa May out behind the barn and shoot her, politically speaking, to make this happen.)

solodeogloria wrote: »

An ideal scenario is that we see a reasonable bill. The reason why I mention €100bn is because the Financial Times came up with this figure with European sources. That's worth walking away from.

Not one penny should be paid without trade terms. £36bn net seems like the maximum that should be paid. The pensions argument is moot if the £10bn+ in UK assets are considered.

You keep quoting the £36bn figure, but I can’t see any rational basis for it. I think you explained it as a multiple of the UK’s annual contribution to the EU budget, but there is no reason why the UK’s net liabilities to the EU should be any particular multiple of their annual contribution to the budget.

I’ve said before that, in advance of any agreement as to what the liabilities are, any attempt to value the liabilities is meaningless. But if the UK is going to come up with a maximum figure they are willing to pay (and, FWIW, I don’t think they should do this, certainly not publicly) then, rationally, it should be related not to their annual budget contribution but to the benefit they hope to obtain from the trade deal which is dependent on agreeing an exit payment.

solodeogloria wrote: »

There are scenarios where the UK should walk and of course no deal is better than a bad deal.

Well, yes, but only in the sense that the only meaningful definition of “a bad deal” is one which leaves the UK worse off than if it had no deal. And, for the reasons pointed out, that would have to be a very bad deal indeed.

solodeogloria wrote: »

The people prophesying incredible accounts of armageddon need to start providing reasons for why they believe stuff like that because it looks fanciful.

Mmm. That cuts both ways, Solo. The people who produce arbitrary caps for the exit fee, or who blithely assert, with as far as I can see no evidence at all, the the UK will negotiate a better network of trade deals than the EU has been able to do, also need to start producing sound reasons for believing apparently fanciful stuff.

solodeogloria wrote: »

.
Caps are important because the UK isn't going to agree to an open ended sum like the EU want them to do.

There is an amount after which it becomes a much much better option to walk rather than stay in.

I'd really like to know why you think it would be so difficult for Britain to sign good progressive free trade deals with other countries. Theresa May has also said the UK are currently in discussions with many of the external EU trading partners to ensure continued free trade after Brexit. In theory they only need to sign them with those with substantial trade with the UK first. I actually agree with the idea of using the existing EU deals as a base for these.

But yes, I think there's every chance of expanding hood trade terms after Brexit. What I don't understand is why you think otherwise. Even America and China are a great opportunity in and of themselves.

Striking a deal with the EU is important but this isn't either or. It's both. Staying chained to EU trade policy isn't a good option.

Much thanks,
solodeogloria

Firstly the EU don't want an open ended sum that's nonsense. You know it.

Second of all the UK are going around now making awkward usherings of deals you only have to look at t Japan visit for that.

You seem to belief released from the supposed shackles of the EU that you will sort out all these amazing trades deals there is so far nothing of substance in that belief.

Nothing of substance just words

solodeogloria wrote: »

We do know that there is a ceiling beyond which we get no deal territory.

Negotiating methodology and line items which could cost a varying amount or even be subject to alleged hikes in costs over the next year is a strategy that favours the EU.

Presenting a minimum isn't a clever option for the UK. I don't think presenting a position paper is in the UK's national interest. Challenging the EU's items to reduce the final outcome is the right way to go. The EU are the ones insisting on the liability not the UK.

I'm behind the UK Government on this. Claiming that nobody knows what the cost is doesn't inspire confidence.

Once again, if it is such an important item that favours the EU maybe David Davis should have challenged it instead of just giving in when the negotiations started. I think you want to try and show how strong the UK negotiation team is but with every post you just show how incompetent they have been. They do not like the timeline of discussions or how the Brexit bill needs to be negotiated, but they gave in on both those items within a day.

You seem to miss the point, it doesn't matter what you want or what the UK wants, they agreed to this timeline with the EU and must now keep to it. Not doing so makes them look weak, untrustworthy and without ideas. It's no wonder Japan has called them out on this now.

Also, the free trade deals that the UK are talking about is basically just copying the EU trade deals and adding the UK instead of EU. So basically the UK wants the same trading terms with other countries as they had. Not better, but the same. So you have to question why they are leaving when they will have the same deals as they currently have. Are you happy with that? What happened to negotiating trade deals that will be to the benefit of the UK where before the EU trade deals didn't focus on the UK 100%?

solodeogloria wrote:

I quote it because it seems like a reasonable amount. The UK's commitments to EU programmes cannot exceed what would be the UK's membership fee for the amount of time they are for. The assets should more than cover aspects such as pensions. I suspect £10bn is more than the UK's share of the pension costs as a member state.

100bn, 36bn, 10bn there just numbers. Would you agree that the UK has obligations, such as future pension payments on their proportion of staff/time, but also legal binding contracts they may have signed up to. My understanding is this is the "bill". But it's not actually a bill at all. Neither is it a penalty for leaving. It's actually a means of ring-fencing the obligations the UK has made. No one can put a figure on that, the negotiation is all about agreeing what obligations are UK and which are EU.
It is also very logical to separate this obligation from future trade deals. Because they are totally separate. It doesn't matter if the UK get a great trade deal or a terrible trade deal. Their obligations are their obligations. Unless of course they decide to not honour these. Time will tell, but history can leave us to draw our own conclusions.

solodeogloria wrote: »

Liabilities will translate to numbers. Again the best approach is for the UK to examine the EU's proposed liabilities and challenge the ones that they seem dubious.

Negotiating a method of calculation? That's a good idea.

Nate

Capt'n Midnight wrote: »

The UK's ploy to divide and conquer may have finally gotten some results.

"Divide & Conquer" is a two-way street. Much of the shambles that is mistaken for current British political discourse completely ignores the fact that the other member states of the EU might have their own opinion or two regards Brexit. I doubt much will come of this particular statement of course, but if nothing else it should hopefully serve as a polite rattling of proverbial chains to focus some UK political minds on less playing games and more delivering of substance.

solodeogloria wrote: »

Good evening!




Sure, this is why I think the UK should challenge every line item on that bill rather than presenting a minimum. This idea is obviously another way of trying to weaken Britain's position in the negotiations. Davis shouldn't agree to it.



Caps are important because the UK isn't going to agree to an open ended sum like the EU want them to do.

There is an amount after which it becomes a much much better option to walk rather than stay in.

I'd really like to know why you think it would be so difficult for Britain to sign good progressive free trade deals with other countries. Theresa May has also said the UK are currently in discussions with many of the external EU trading partners to ensure continued free trade after Brexit. In theory they only need to sign them with those with substantial trade with the UK first. I actually agree with the idea of using the existing EU deals as a base for these.

But yes, I think there's every chance of expanding hood trade terms after Brexit. What I don't understand is why you think otherwise. Even America and China are a great opportunity in and of themselves.

Striking a deal with the EU is important but this isn't either or. It's both. Staying chained to EU trade policy isn't a good option.

Much thanks,
solodeogloria

First of all no one's trying to weaken Britain's position. It has no sensible negotiating position and it's already in a weak position.

Secondly I find it hard unlikely that Britain will sign a progressive deal with a developed economy because no one from a developed economy has made any concrete plans to do a deal with them.

Thirdly the type of deal the UK gets with the EU will dictate the type of deal they will get with other countries. Japan and India have already stated this.

Fourthly I can't believe you believe the last sentence you posted. It's contrary to you other posts.