UK exports are not what they seem. The EU will trade.

As usual the day arrives and more ham fisted discussions which affect our lives in the most profound way. The EU and the UK would have a deal by now if we stopped negotiating with ourselves.
If this was a normal negotiation then you would be comfortable that you have your cards, you have all members of your team rooting for a good outcome for your side. Your negotiation is focused only against those that you are negotiating with.  Here we are! We are negotiating with ourselves and then guiding the other party on how to gain the best situation and to know our weaknesses.  Further more we have members of our side guiding the other side.

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Let’s be clear.
Germany as we do wants/needs to maintain close ties with the U.K., and us with them for all the right reasons, security, intelligence, trade etc. They are rightly concerned in regard to Trump’s America.
The UK has a trade deficit with the EU of £91billion. Furthermore, the UK exports to the EU have declined over the last 10years.
These are all solid reasons why the EU will continue to trade and continue close ties with the UK.
In regard to the bigger EU picture:
I believe unless there is structural change the EU will have serious issues going forward which will inhibit growth. But worse undermine the very principles on which it exists. The Euro needs to split. It needs to give the southern states greater autonomy to manage their exchange rates and foster growth.  In short give hope to the vast numbers of unemployed youth.
Two events in our history where we were encouraged to stay with a system that was harming us. A bit like cognitive behaviour therapy.
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  1. In 1931 almost unanimously we were encouraged to stay with the gold standard. That is all but Keynes who encouraged us to leave. In September 1931 we broke with that standard. There were many cries of disaster. Immediately we were able to drop interest rates and this ushered in the fastest economic growth in British history.
  2. Another event was the joining of the ERM in 1992. Interest rates spiralled upwards. Unemployment rose sharply. On the face of it, it was easy to break the bank, not due to smart thinking, more because of the obvious political obsession of the EU project. The doom sayer predicted higher rates still and even higher unemployment. In reality the opposite was true.
The obsessive focus on the EU project will unwind it. Best we leave whilst we have a chance.
Indulge me the theme has moved to Economics:

  1. There are a number of reports that show with no deal the economic boost could be as much as 4% to the UK post Brexit.  Some of these reports have been produced in Whitehall. Others by eminent economists such as Roger Bootle.
  2. MPs are failing to back May’s deal, and they should not back it! March 29th will be fine.
  3. The one I like the most “One day the house of cards will collapse” Professor Otmar Issing Chief Economist of the ECB and chastened prophet of the Euro project.
His comments encapsulate: For weeks I have written about this. A few days ago the Telegraph carried an article discussing this very point. How the Euro is killing democracy across Europe. It is severely stifling growth to the point of extinguishing the economies of several countries. Destroying hope for Millions of young people!
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From 1970 to 1998 Germany’s average growth was 2.2%. Post Euro it has averaged 1%. The same period 70 -98 the current account surplus 0.8% of GDP, since 4.6%
The US 1999 onwards 42% growth in GDP, UK 40% Germany only 18%..
Next you start to see that individual Germans have not benefited – Consumer expenditure through this period US 53%, UK 44% – Germany 18%. Whilst the benefits of the Euro have migrated to Germany it has gone to corporate Germany not to the man or women on the street.
German exports are up, there is no mistake but the profits have gone to the employers who have sat on their hands.  If this is not stark enough then look to wage growth Finland up 30%, France up 18% – Germany a modest 14%.

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