6. The Elephant in the Brexit Room (TEITBR) - The Way Forward

[Home]
So we have voted to leave the EU. What now? Lets start with what won't happen:

• Armageddon 
• You won't be banned from travelling in Europe.. tourism is as old as the hills, and they still want your money. You may have to carry a different passport as id, but that will be it.
• You won't be banned from trading with EU countries. Something will be worked out, as they want your money. Switzerland, Norway, Iceland still deal, and we did in the past.. but more on that later.
• World War III
• Joint security operations will still continue, like they did before. Its beneficial all round.
• The french will not dismantle the Severn Bridge and take it back home... at least it will be fun watching if they did.

Lets split this down, and look at what the benefits of being outside the EU are:

1. Geography and Transport
The Uk is ideally placed from a geographic standpoint. If you are in europe, and want to ship product over the atlantic, there are 2 ways to go:
- Through the channel
- Around the Uks northern coast
Either way, you have to hit Uk waters. We also have ports that can handle most cargo, and some passenger liners. 

Similarly, we have airports that are on the most efficient flight paths for East-West travel. We also have the most advanced air cargo terminal in the world, which saves companies time and money, for transhipment. Our investment in airways has been ongoing since  the start of the airplane.

We now have the channel tunnel, giving car and train routes direct access from London to Paris, Brussles, Marseille and other points in france. 

Essentially the UK has many transport links worldwide, making it a great place for companies to invest in.

2. Trade
The Uk has always been a trading nation. Its one of the many things we are good at. The issue with the EU, that didn't exist with the EEC, is that in order to set up trade deals, we have had to include all of the EU, and ever expanding group of countries, making it increasingly difficult to set up these deals. If, for example, Turkey joins, it is highly unlikely we could set up a trade deal with Israel... just would not happen.
Outside of the EU we will be able to set up deals with whoever the Uk wants to. This is already showing signs of happeneing, a matter of 3 weeks after the Referendum. In fact. ARM holdings, one of the UKs major Tech companies, has been sold to the Japanese, at a 50% uplift of a pre referendum price, with the promise of keeping it in this country with further investment in jobs, and infrastructure... a win win. Other countries are queueing up already to do free trade deals with us, when we eventually come out.     
Not only do we have the USA, we also have the old commonwealth countries,like Australia, India, New Zealand, even South Africa as potential people. The UK is the 5th largest economy in the world, people want to trade with us, and, largely, us with them. We have this ability open to us now, or will have once we are out.

As regards the 'single market'.. that will still be open in any different ways. 

• The old EFTA still exists, which already has a trade agreement between the EU and EFTA (Switzerland, Norway, Iceland, and Lichtenstein. We could join them, as we were one of the originators of EFTA, and we would have that access. 
• We could arrange our own deal, the EU will still want/meed to trade with us, but  I suspect the politicians will need to work their socks off for that.
• We could do our own deals individually. Especially as a lot of the countries are now considering what is best for them. This is less likely to happen, as it would be against the EU ruling, but we are now in uncharted territory.

Whatever happens with the EU side of things it is unlikely that, for example, Airbus will move the wing making to Europe from the UK in the near future. Current contracts require the building of one plane every 2 weeks. The wing is owned by Aerospace, they would need to come up with a totally new wing, and manufacture of the same, and fix that into the delivery schedules. Its not simple, or cost effective.
Similarly, we are not about to take back the Severn Bridges, they are managed under contract by a French company. Even when the current contract terminates, it is likely it will be renegotiated with the same organisation. Its just common sense.

3. Finance
Inside the EU, members are limited as to what they are allowed to change, to better their economies. Taxation limits are preset, borrowing is limited. It is very constraining on any country to have these limits put on, as Greece found out.  
Outside the EU we have our own controls. Essentially we can do what we like, in order to keep our economy afloat. 
So, for example, we can actually become a tax haven. This was hinted at by our outgoing Chancellor, but is an idea that would solve a lot of issues. Lets say that we dropped Corporation Tax to 10%, and Income tax to 10%. Sound silly? Nope... not really. This large carrot would need a stick as well, but it would remove a lot  of the reasons for capital, private or corporate, to go outside the Uk, and would probably see a lot pf capital repatriated, generating more investment in this country. We would also be able to remove a lot of the civil servants whose sole job is to chase up unpaid taxes.
By dropping income tax to 10%, companies could reduce costs, and give their employees an automatic raise, all at the same time. This would make the Uk a more attractive place to be as a company, and potential employee. It could even stop the whole Scottish seperatist argument at the same time.
The way taxation works, this would not reduce the amount the government receives, just slow down the rate at which they receive it. I believe that this slow down would be offset by the increased capital coming back into the country.

The other issue is the actual finance markets. One major revenue for the capitalist society has been the money trading markets. For every country joining the EU, and the Euro, that is one less currency out of the market, currently 19 of the 27/8 countries use the euro, and eventually all members will use the euro.  So one of the major money earners for the European countries, is being removed by the same organisation.
By being out of the EU, the Uk can maintain Sterling, and show the way to stopping the regulation of each countries actual currency. 

A secondary direct issue for the Uk and its financial markets, is the London Stock Exchange. This is about to be 'merged' into a new company with the Deutsche Bourse. However, this is not a 50/50 split, but a 51/49 split to the Deutsche Bourse. This will effectively take the oldest, and most active, share trading organisation out of the control of the United Kingdom. By leaving the EU, at worst, the LSE will be in a stronger bargaining position, allowing a 50/50 split to occur, and keep those jobs in the UK, and the revenue it produces, at best it would allow teh LSE to remain a UK organisation, providing much needed income and jobs within the UK, and the wider global community.

Finally, the actual contribution made by the Uk. Now it is hard to get actual figures out of anyone, but the UK is actually responsible for 1/3rd of the EU budget. We contribute £8.1Bn sterling per year (actually £18.1Bn, less the £6bn 'rebate' and ~£4bn in 'grants' giving £8Bn that we get back). This is the magic £370m  per week that was bandied about. This is not an insignificant amount. Effectively, if you look at the £18Bn, we could pay out what we normally get back, and still save £8-9Bn, so we would be ~£153m per week better off. That is a lot of public services/industrial / or infrastructure investment we can make... or simply use it to pay off debts to the rest of the world.


4. Industry  
All member states of the current EU are governed by a set of laws, effectively debarring local governments from supporting their industries. Now, it is arguable if this is adhered to by all members, but it is not necessarily a good thing. There comes a time when all industry may need to expand to meet demand, but is unable to do so, due to financial constraints. Governments can help out here. Now we are not talking the 'bad old days' of Nationalised Industries, and all the inefficiency that went with that, but a way in which Governments could guarantee loans to enable an industry to invest in infrastructure to satisfy demand. This would be a benefit to the whole country, and is doable outside of the confines of the EU.

It is also worth remembering the UK has a long history of innovation, which continues today, in many fields, especially engineering and tech, that we could fully mobilise to a fuller extent, selling that expertise to a wider global market, without constrictions brought on by the red tape involved in the EU. 

5. Social savings - NHS and Social Benefits
Since being a member of the wider EU, the UK has been forced, and mainly due to the weakness of our politicians, to provide benefits and health care to all comers. The Healthcare system is/was one of the best in the world, and we have a ruling that it should be 'free at point of delivery'. This was never designed to be a healthcare system that would be free for the whole world, which is what is happening at present. Essentially, anyone who can get an EU passport can come to the UK, get free healthcare, and go away again, never contributing to the system that provides it. This is palpably unmaintainable. Personally I have witnessed 2 cases of this, and am aware of many hundreds more. Yet again, this is not going 'against human rights.. nor is it xenophobia'... we are simply unable to supply free healthcare to those that do not reside, work or have any contact with the UK. It is paid for out of taxation, and has gone from being the best in the world, to somewhere a lot lower, due to the many non-contributors using the system....as well as a massive dollop of high charges made by Healthcare providers, and inefficient civil servants allowing payments to get out of control, so not solely down to 'misuse' of the system. 
The same can be said for our benefits system. Badly managed internally... plus.. being made available to anyone who claims to be from the EU. The simple fact of coming into teh UK from a EU country is normally enough to get you housing, weekly benefits, food... all gratis, and courtesy of the UK tax payer.

Both of these could be better controlled outside of the EU, when the laws stating we have to provide these services, without charging Brussels, could be done away with, and we could revert to providing solely to those who have contributed, or have lived in the UK for a given period of time, like the other major EU nations do.

There is so much more, if looked at in a positive light, and that may be published here later. All comments welcome, even though I am inviting more vitriol...but heck.. thats life :-)
   

[Home]