Brexit triggered

Source: GoldMoney, by Alasdair Macleod

And why Britain should succeed in the negotiations

This is the week that Article 50 of the Lisbon Treaty was triggered, and the two years of negotiation between the UK and the EU commenced. Following this period, the UK formally leaves the EU. It is the first time a member state is leaving the EU, so the procedures are untested and the outcome uncertain. But it is not the first Brexit, as historian David Starkey has pointed out. Henry VIII gave similar notice to Rome and through several Acts of Parliament between 1532-34, removed papal powers and tithes, and achieved his Brexit. The chief Remainers, his Chancellor Sir Thomas Moore and Cardinal John Fisher, were executed in 1535.

Today’s Remainers can expect kinder treatment. But Britain has never been entirely happy giving away the legal supremacy from Parliament won by Good King Hal. When Britain joined the Common Market in January 1973, it was a trade bloc that made some strategic sense. The fashion was to belong to trading blocs, in the belief that the General Agreement on Tariffs and Trade (GATT), the forerunner to the World Trade Organisation, was not strong enough protection from trade barriers.

This article cuts through the white noise surrounding Brexit to consider Britain’s negotiating position with respect to trade only, which is the paramount economic issue. It attempts to isolate the key negotiating points that matter with respect to trade, and for clarity ignores other important issues, such as immigration and residency rights. Leaving was always going to be tricky. Given the EU’s appalling track record of agreeing free trade agreements, there is a real concern that nothing can be negotiated with the EU within this time-scale. As an opening salvo, the EU establishment tried to threaten the UK with economic hell and damnation. The UK Government has sensibly refused to be provoked, keeping its powder dry. Events have moved in the UK’s favour since the referendum anyway, with the UK’s economy confounding the sceptics.

The feeling the British public was lied to by the Remainers has increased support for Brexit. Instead of the economy nose-diving as Messrs Osborne and Carney predicted, it has continued to progress strongly. Foreign multinationals have stopped threatening to withdraw investment, and have begun to increase it instead. UK-based manufacturers and service providers are now getting on with adapting to the new reality. Today’s Sir Thomas Moore, ex-Chancellor George Osborne, lost his office. Perhaps Cardinal Fisher’s equivalent in Mammon is Mark Carney, who has survived, but has lost credibility.

The British public is therefore prepared for Brexit, even though the Scottish government is still screaming foul. But Edinburgh is isolated, and the last thing it should want is the referendum for which Nicola Sturgeon clamours. Her problem is she is at “peak nationalism” and agitating accordingly. And the more she agitates, the more the English majority are likely to associate the Remainers with the Luddite past, not the progressive future. So, the British public has adjusted well, and is prepared to accept the worst-case deal. World Trade Organisation rules have not stopped Britain expanding her trade elsewhere. Theresa May has managed public expectations faultlessly, but will need to continue to do so.

Both politically and economically, Britain is now ready for the divorce. In the forthcoming negotiations, she holds a far stronger hand when it comes to the opportunities of free trade. The world has changed tremendously since Britain joined the Common Market back in 1973. Not only is the Commonwealth keen to trade freely with the UK again, but so are the new economic power-houses, such as China, Japan, South Korea and the whole of South East Asia. Donald Trump is fully supportive of Brexit, unlike his predecessor, and has promised a quick trade deal. So, given the US is significantly larger in GDP terms than the EU without Britain, she can, in theory, replace EU free trade with a trade alliance with the US.

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Categories: Financial/Societal Collapse and Dependence

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