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Old 07-12-2016, 05:25 AM   #436
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I don't think the UK will enter the dark ages now. There is no reason why it would beyond that it has seemed to enter a period of political instability and business does not like instability. Months prior to the referendum companies already postponed possible investments in the UK. I don't see how that is going to change in the next couple of years with no insight in what Brexit is going to entail. Will the Brexit voters be satisfied with a deal similar to what Norway and Switzerland have which will achieve about 1% of what they were promised by the Leave Campaign? I don't know. But if I was deciding over funds of a major company I would look elsewhere to put my money.

Why UK would perform better outside than inside the EU, I still don't understand. Yes, if the entire EU explodes after UK has left (to be honest, if the EU is going to explode I reckon it's more likely to happen within the next 3 years while UK is still part of EU) than this would be the case. But otherwise, I don't see it.

A political climate can change in the course of a few years. I don't think it's even a question of whether or not the Brexit voters will be okay with economic deals similar to that of Switzerland or Norway. It's not only not a question, but highly inevitable. The UK needs Europe and similarly Europe needs the UK. Of course the UK is due for near term economic backlash, both now from a speculative standpoint and in two years when they actually Brexit and get a firm slap on the wrist as to be made an example of. Yes, their near term, < 5 year outlook isn't very bright. They're going to slow down growth. They're in for a recession. And, once they've been firmly made an example of and Europe is also suffering, it'll be like nothing never happened when they both come crawling back to each other all but in namesake.

The UK's potential long term though is volatile. It could be lower, the same as, or higher than what they would've been had they stayed in the UK. That's mostly because of the EU, not because of the UK. The EU hasn't exactly been working on a positive note as of recent history. But to the point... even if you think the only way an EU collapse could happen is within the next 3 years (which is reasonable to assume), the UK getting the head start absolutely makes a huge difference in terms of coming out of the other side fully prepared and in first place. Were the EU to begin to dismantle slowly, that's a sinking ship where you don't want to be the ones trying to hold it all together.
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Old 07-12-2016, 06:20 AM   #437
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I don't think it's even a question of whether or not the Brexit voters will be okay with economic deals similar to that of Switzerland or Norway. It's not only not a question, but highly inevitable.
Why would the Brexit voters be okay with a situation similar as Norway or Switzerland? That would not address many issues they were railing against (most notably, immigration from other EU countries).

I think the picture below gives a good overview of the different scenarios available to the UK:


As you can see, an absolute Brexit with full independence will close most of the opportunities for the UK. The City is highly services oriented, so a restriction on movement of services (and people) will have a huge impact on the British economy. But if they do want to have free trade of services and people, they'll also need to comply with many other regulations that would seem to clash with their Brexit stance.
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Old 07-12-2016, 07:46 AM   #438
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An even larger producer of science and technology
re. just one of many aspects... Brexit is going to be a huge problem for the British life sciences industry as the EMA (European Medicines Agency, equivalent to the FDA in the US) is set to leave London, possibly relocating to Sweden or Denmark, inevitably taking research scientists with it... the industry can't limit itself just to the UK, not when you sell one medical device per hospital and depend on European funding also, so the industry will have no choice but to move where the regulatory bodies and funding go... the whole thing is just so far reaching it's unreal... 40 years of legislation, treaties and agreements to unravel, negotiate and rewrite... insanity, unless Britain has at least 500 trade/legal specialists with nothing else to do for the next 10 years... but in the meantime?
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Old 07-12-2016, 07:55 AM   #439
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Why would the Brexit voters be okay with a situation similar as Norway or Switzerland? That would not address many issues they were railing against (most notably, immigration from other EU countries).

I think the picture below gives a good overview of the different scenarios available to the UK:


As you can see, an absolute Brexit with full independence will close most of the opportunities for the UK. The City is highly services oriented, so a restriction on movement of services (and people) will have a huge impact on the British economy. But if they do want to have free trade of services and people, they'll also need to comply with many other regulations that would seem to clash with their Brexit stance.
contingency plans are already underway re. relocating the financial services, and job losses have already been announced - financial sector just couldn't stay in Britain due to passporting requirements... lots of contenders (including France) currently rubbing their hands together with glee... they want Britain out as soon as possible
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Old 07-12-2016, 09:24 AM   #440
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But if I was deciding over funds of a major company I would look elsewhere to put my money.
Would you? It seems like the assumption in this thread is that the EU is a hell of a lot healthier and more stable than it really is. You already have three member states in full-blown crisis (Cyprus, Greece, Spain) with another one looking poised to follow in Italy, also apparently rumblings of major financial problems on the rise in France. You can talk about the Pound struggling as well, which distracts from the Euro being barely 1.10 vs the Dollar as we speak. Only five years ago it was 1.60 if I am remembering correctly, maybe even higher.

Re: the talk about Euro funding for various British institutions. The UK government can choose to fund those for themselves if they like - it's just a matter of priorities and of moving away from a conservative party that wants to cut everything. In my mind Brexit only becomes an economic disaster for the UK if its politicians make it so.
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Old 07-12-2016, 09:43 AM   #441
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Would you? It seems like the assumption in this thread is that the EU is a hell of a lot healthier and more stable than it really is. You already have three member states in full-blown crisis (Cyprus, Greece, Spain) with another one looking poised to follow in Italy, also apparently rumblings of major financial problems on the rise in France. You can talk about the Pound struggling as well, which distracts from the Euro being barely 1.10 vs the Dollar as we speak. Only five years ago it was 1.60 if I am remembering correctly, maybe even higher.
It is not an assumption that companies are postponing investments in UK.
It is what is actually happening.
Apparently they feel it's more likely that the EU will survive than that they feel that the UK can offer them the required stability.
And if the EU will blow up, the UK will blow up with it as they are part of the EU and will be so for at least another 2.5 years. At a minimum.
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Old 07-12-2016, 09:56 AM   #442
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And if the EU will blow up, the UK will blow up with it as they are part of the EU and will be so for at least another 2.5 years. At a minimum.
Not necessarily, because the UK has control of its own currency and can implement policy in that regard in response to external factors. France or Italy cannot do that. If the EU blows up, all the new currencies in those states will be huge question marks versus the Pound, which is a known quantity.

This is still the immediate short-term, far too early to extrapolate long-term economic consequences. All the political squabbling in the UK certainly isn't helping with investor fears; if the political situation stabilizes and investors/business are still tepid about the UK, then we can start talking about long-term complications.
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Old 07-12-2016, 10:44 AM   #443
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if the political situation stabilizes and investors/business are still tepid about the UK, then we can start talking about long-term complications.
I think Popmartijn's chart shows pretty accurately why it is doubtful the political situation will stabilize.
About half the voters who showed up voted quite passionately for a Brexit. They will find out they are not going to get what they thought they would.
Not even almost.
I don't see how this could lead to a stabilized political climate for years.
And years of no progress will have negative consequences for what follows.
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Old 07-12-2016, 11:42 AM   #444
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The UK government can choose to fund those for themselves if they like
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Old 07-12-2016, 11:53 AM   #445
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I think Popmartijn's chart shows pretty accurately why it is doubtful the political situation will stabilize.

About half the voters who showed up voted quite passionately for a Brexit. They will find out they are not going to get what they thought they would.

Not even almost.

I don't see how this could lead to a stabilized political climate for years.

And years of no progress will have negative consequences for what follows.

You keep saying this, but I fail to see how that chart says anything at all about political climate. It suggests next to nothing. Once both England and Europe are suffering enough, there's zero reason to believe the people won't step up (let's not forget, Brexit was a near 50-50 draw). In hard times, which are probably near for the UK, there's no reason to believe the Brexit voice will remain the majority.

To think the Brexit plan won't somehow be masked as "different" but end up being virtually the same as the UK being in the EU is silly. We are talking about the same UK which has always been the special exception in the EU. They're going to do what's best for the UK. Even Brexit leadership, which isn't even guaranteed to be around, will catch wind of the idea that it's what they need. All they have to do is mention "Britain has the freedom and independence to sign their own deals" blah blah blah and half the voters won't even think twice about it.
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Old 07-12-2016, 12:07 PM   #446
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contingency plans are already underway re. relocating the financial services, and job losses have already been announced - financial sector just couldn't stay in Britain due to passporting requirements... lots of contenders (including France) currently rubbing their hands together with glee... they want Britain out as soon as possible
And this (relocation of FS) can happen quickly and permanently.

Most people here are not Canadian and therefore probably not aware of the fact that Montreal was Canada's financial capital where nearly all financial services were concentrated in the 50s/60s/70s. Toronto was kind of like a provincial backwater. Then there was a lot of nationalist unrest in Quebec in the 1970s, threats of secession and so on. Well the banks had enough and basically uniformly relocated to Toronto in the late 70s/early 80s. There is now an enormous difference in how the cities have developed, where the wealth is concentrated, etc.
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Old 07-12-2016, 12:39 PM   #447
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To think the Brexit plan won't somehow be masked as "different" but end up being virtually the same as the UK being in the EU is silly.
This might be the eventual result (and I wouldn't be too surprised if it actually comes to this. I'll first need to see the Brexit actually happen.). But the thing is that many of the 'Leave' votes were specifically against issues (mainly immigration and complete independence) that will stay the same in such a situation.
Because in the Norway/Switzerland situation they will still need to comply with EU regulations. And they'll need to have free movement of people and services, if especially their financial sector wants to stay world-leading. But that'll also mean that other people and services can move freely to (and from) the UK.
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Old 07-12-2016, 12:41 PM   #448
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I think there is another dynamic to consider in UK financial relationships with the USA and also China and Southeast Asia. SE Asia especially is an important emerging market. I don't see why Brexit would harm British interests in those places. I get that the Eurozone is important to the British economy, but it's not the only major partner they have.
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Old 07-12-2016, 01:22 PM   #449
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I think there is another dynamic to consider in UK financial relationships with the USA and also China and Southeast Asia. SE Asia especially is an important emerging market. I don't see why Brexit would harm British interests in those places. I get that the Eurozone is important to the British economy, but it's not the only major partner they have.
a lot of trade with these other markets is thru existing agreements with the EU - they would need to enter into a whole load of new individual agreements...
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Old 07-12-2016, 01:26 PM   #450
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And this (relocation of FS) can happen quickly and permanently.

Most people here are not Canadian and therefore probably not aware of the fact that Montreal was Canada's financial capital where nearly all financial services were concentrated in the 50s/60s/70s. Toronto was kind of like a provincial backwater. Then there was a lot of nationalist unrest in Quebec in the 1970s, threats of secession and so on. Well the banks had enough and basically uniformly relocated to Toronto in the late 70s/early 80s. There is now an enormous difference in how the cities have developed, where the wealth is concentrated, etc.
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