It’s not jusr the UK that will benefit from Brexit. The EU will too

The commencement of Brexit negotiations this week is good news for the UK and the EU. It is in the interests of both parties to agree a great new relationship. After all those years of the UK dragging its heels, refusing to join in, seeking to delay progress to political union and declining to be part of the euro, we can at last sort out a strong and positive relationship that works for us both.

Under Conservative, Labour and coalition governments the UK was never willing to accept all the moves to union or all the requirements of the EU. We kept our difficult relationship going with a series of opt-outs from the currency, the borders, from full freedom of movement, from defence union and from parts of the foreign policy and criminal justice arrangements. This held up the EU’s wish to complete its union and caused ill feelings about the UK as the reluctant European.

The EU knows that the UK electorate voted by a majority to leave the EU, that our parliament voted by overwhelming majority to send the article 50 letter as formal notice that we will leave.

In the recent election the two main parties shared 82% of the vote, with both affirming the intention to leave, and to leave the single market and customs union as well. The UK’s letter to the EU said we accepted its view that you cannot be in the single market if not a member of the EU. The Labour manifesto looked forward to negotiating a series of good trade deals with non-EU countries, which you can only do if you leave the customs union.

Britain and the other 27 states have a common interest in agreeing that citizens living in each other’s territory should be able to remain and are welcome to stay. The UK government has been keen to get an early agreement reassuring anyone in this position, and now it appears the EU too wishes to press on with this matter. The EU wants the UK to pay some money. The UK has always said it will pay what it owes under the treaty, which comprises our regular membership contributions up to the date of leaving. There is no treaty provision for one-off leaving payments or continuing contributions once out.

The UK is keen to get on with discussing its future trading arrangements. The EU is not so keen, as it seems to think this offers it some leverage over the UK. This is a strange idea given that it runs a huge trade surplus with us and has an interest in tariff-free smooth trade after we have left, just as we do. The EU does wish to talk quite soon about the question of the one land border the UK will have with the EU, on the island of Ireland. To do so we will clearly need to talk about trade as well, as the border issues include how goods will move across the frontier. If they continue to move tariff-free it makes it easier.

I hope the EU will come to see this as an opportunity for it as well as for us. It will be freed of UK arguments and votes restraining the full development of its union. The UK will be free to negotiate more positive relationships with countries across the rest of the world. We will still want to do a lot with our European partners, but it will be done when both sides want to do it, not because we have lost a vote in the council. I find it difficult to believe the EU will want to spend the next two years trying to impose tariffs and other barriers to its trade with us, while staying compliant with WTO rules. That would be a form of self-harm for it. The good news is it does not have to, as the UK is happy to offer it continued tariff-free access to our markets despite the large deficit we run.

Unit 2. Economy

HOW ‘BREXIT’ COULD
CHANGE BUSINESS IN BRITAIN

The issue of “Brexit” remains divisive in Britain, with little agreement on how it will affect the country’s economy.

Britain will almost certainly be out of the bloc by the end of March 2019, and Prime Minister Theresa May wants it to be a clean break.

But companies are reassessing their long-term investments in Britain, fearful of how Brexit might affect trade across the European Union. And while Britain and Europe are negotiating over what happens to European Union citizens who now work in Britain (as well as Britons who work in other European Union countries), no one is sure how those talks will go.

Here is how the Brexit vote has shaped business thus far:

The British economy appeared to weather the negative forecasts that followed the referendum. But signs are emerging that the country could be feeling the effects.

The FTSE 100 index has gone up about 17 percent since the close just before the referendum vote on June 23.

The impact of the vote has been felt most sharply in the markets.

The pound has dropped 10 percent since it was valued at $1.47 just before the decision to leave the European Union. In fact, it has plummeted, at one point reaching its lowest level in 31 years against the dollar. In the aftermath of the referendum, mutual funds dependent on Britain’s property sector felt the strain and blocked panicked investors from withdrawing their cash en masse.

For Britons, there are worries about inflation as a cheaper pound increases the cost of imports. The currency’s decline set off a brief price dispute involving a supermarket chain and the consumer goods giant Unilever, which threatened to take some staples – including Marmite, a divisive yeast-based spread – off grocery shelves. The cost of products from Apple and Microsoft has also spiked.

Inflation has accelerated to its fastest pace in four years, and economic growth has slowed, as well. Wages are not keeping pace with price increases, and Britons are increasingly feeling the pinch.

The Bank of England has sought to respond: After the referendum, it cut interest rates to the lowest level in its 322-year history. The central bank may soon move to cut its stimulus program, though.

Amid the uncertainty, businesses are preparing as best they can.

More than a quarter of major financial companies in Britain say they will move staff members or operations overseas, or are reviewing their domicile status, according to a survey. Major investment banks like Goldman Sachs, JPMorgan and Morgan Stanley say they will move jobs to the Continent in the coming years to mitigate risks.

Even Lloyd’s of London, a centuries-old insurance market, is opening a Brussels subsidiary.

The plans are just a few examples of moves that some fear could harm the health of London’s financial center, known as the City, which represents a big chunk of the British economy and contributes a disproportionately large slice of the country’s tax revenue.

Other crucial sectors like scientific research and automotive manufacturing are also worried, and even restaurant chains are hiring more British staff members in case foreign workers have to leave. Major ratings agencies have warned that they could could downgrade Britain’s credit rating if it emerges from negotiations on leaving the bloc with a poor deal.