Nick Hubble – Capital and Conflict (Great Britain) –
Prime Minister Theresa May has the all clear from everyone to get Brexit negotiations started. So why does she wait?
The prime minister was roundly criticised by her supporters for not getting a move on. It’s all about momentum, Lord Jones of Birmingham told The Telegraph. And we’ve missed the opportunity to push Brexit into the 6 April meeting of the EU says Nigel Farage.
But May has it spot on. The slower the negotiations go, the better the deal will be. Patience is going to be a virtue that serves the UK very well in coming years. There are several reasons.
European anger at the British vote will slowly turn to fear. Any uncertainty over Brexit needs to be felt in trade numbers before the Europeans realise how important the UK is to them. Once the big business lobbyists get on to the European politicians they own, it’ll be the Europeans pushing for a deal.
The EU politicians can’t maintain their population’s anger over Brexit for long. Eventually the role of responsible compromiser emerges for some enterprising politician. The longer the negotiations take, the more that view will take hold. We’ll be left with a decent negotiation partner and a good start to relations for the future. A deal made in haste will be full of spite.
And perhaps most important of all, the longer the negotiations take, the less stable Europe looks. The Dutch begin voting today. The French soon. At every election Europe’s negotiation position weakens. The moderate voters who have cottoned on that the EU is a shemozzle will look to politicians that reflect this. Exactly as they did in the UK, where May shifted from the politically correct position to the one that reflects her nation’s views.
As time passes, Britain’s position strengthens and the EU’s weakens. Jealousy at Britain’s ability to seek trade deals, control its monetary policy and manage its borders will grow. The Europeans will want the EU to change, or they’ll want to leave the union too.
We need to keep stumbling towards Brexit.
The city needs Brexit to survive
During the Brexit campaign, only one argument was absurd enough to seriously aggravate me. It goes a little something like this: if we leave the EU, London’s role as a financial centre will be at risk. The city needs to be in the EU to get the EU’s business.
This is so preposterously stupid it beggars belief. It’s the sort of total nincompoopery that made me leave the financial industry and become a flying trapeze artist in Phuket. These days you can get away with saying anything if you’re a financial commentator or politician. Try that attitude 11 metres above the ground and someone gets hurt.
Financial centres prosper specifically because they are outside of places like the EU. Singapore boomed while Kuala Lumpur lagged. Hong Kong flourished while its surrounding nations floundered. Switzerland continues its run of wealth specifically because it avoids political nonsense despite being surrounded by it. Iceland is in the middle of the bloody Atlantic and it became a vast financial centre for European funds.
Even financial centres inside the EU and eurozone only prosper by breaking the rules. Ireland gets in trouble regularly for the very pro-business policies which made it a financial centre. Cyprus, Luxembourg, Lichtenstein, Malta and other tax havens and banking centres inside Europe are losing their status thanks to EU policies to change them.
And linked to Europe we have the biggest evidence of all. London is Europe’s financial centre despite not even having the euro. Eurodollar futures are linked to Libor – the London Interbank Offer Rate. Every degree of separation we managed to keep from the EU has served the city well.
And what makes the City so ideal as a financial centre?
Specifically the reasons we need to leave the EU for. The British legal system is excellent when it comes to high finance. British politics is far more stable and predictable than the EU’s. Britain is set to have excellent trade links with nations the EU is having trouble with. All of these things are at risk inside the EU. All the opportunities are outside it.
The European Central Bank has tried to stop countries from outside the eurozone trading euros already. It failed thanks to a court ruling of the EU’s highest court. The more the EU clamps down on financial trade, the more London will get EU business. Just take a look at the EU’s policy plans. It wants a transaction tax on financial flows. Nothing could be more stupid if there is to be a financial centre inside the EU.
What about all those whizz bank foreign employees who can’t live in the UK anymore after Brexit? Well, if the UK is dumb enough to make life difficult for skilled immigrants, then we deserve to be outdone by Paris. The real question is whether Europe will let them leave. If they do, finance professionals will continue to escape the EU. Instead of going to Singapore and Hong Kong, they’ll come to London once more.
Until next time,