What now? EU

ILW

MacMickster wrote: »

The EU are not going to simply abandon all their rules on health and safety, worker protection etc, and will almost certainly act in the next few years to give businesses operating within their market at least a level playing field with businesses outside who are not following the same rules.

That appears to assume that the EU will refuse to trade with the rest of the world. If that is the case then surely it would be better not to be tied to them.

MacMickster

I don't think that the EU will refuse to trade with the rest of the world, but I think that they will certainly move to protect businesses operating within the EU from what is seen as unfair competition from those outside who are more exploitative of their labour force.

I have just read Robert Peston's latest blog on the BBC website, and it appears that business leaders are equally concerned about the UK's future if it were to leave the EU.
http://www.bbc.co.uk/news/business-16133286

As for our biggest companies, well the bosses of three of them (none of whom would be seen as pro-European zealots) have all said to me that they are unhappy about the prime minister removing himself from the negotiating table not only on the future of the eurozone but also - potentially - on other issues of huge importance to the UK.
Here is what one said to me: "Margaret Thatcher was a constant thorn in the side of European leaders, but she never vacated the negotiating table; I am anxious by the implications of what the prime minister has done."
Also, John Cridland, the director general of the CBI, concedes to me that his members are worried. He says the prime minister needs to spell out in detail - in his Commons statement tomorrow - why he couldn't sign up for the proposed treaty reforms, or what (if anything) the French president and German chancellor did to make that impossible.
Because, as Mr Cridland says, it is not obvious that Mr Cameron made it easier to protect the interests of the City of London - which is what the prime minister said he was trying to do - by forcing the eurozone's members to design new institutional arrangements to manage their affairs.
Erosion
In fact, as all the business leaders to whom I spoke were quick to point out, the decision by the 17 eurozone nations - plus as many as nine other EU states - to opt for an intergovernmental agreement that excludes the UK raises the prospect of this group becoming (explicitly or implicitly) the decision-making body for all EU economic and business issues, especially those relating to the single market.
So, as the influential head of a major multinational said to me, if you are a Chinese or Indian multinational, and you have a choice between investing in Germany, the Netherlands or the UK, and you fear that the UK's influence in the single market has been eroded - and you also see some of the right wing of the governing Tory party seemingly in favour of the UK leaving the EU altogether - you probably won't put your incremental investment in the UK.
Over the past 25 years, inward investment has become more and more important to the UK. And the UK is relatively more dependent on big multinationals - in finance, pharmaceuticals, media and so on - than almost all rival economies.
'No, nay, never'
Now the thing about multinationals is that they are citizens of the world, rather than any particular country. They can base their respective HQs and invest their cash where the climate is most propitious. And if they begin to see the UK as an isolated island, they will not wish to stay.
So it would really matter if the UK's place in the world's biggest market, the European single market, were somehow in doubt. Which is why having done his "no, nay, never" in the early hours of Friday morning, businesses are now desperate to hear a positive statement from Mr Cameron about how the UK's position in the single market can somehow be buttressed.

ILW

MacMickster wrote: »

I don't think that the EU will refuse to trade with the rest of the world, but I think that they will certainly move to protect businesses operating within the EU from what is seen as unfair competition from those outside who are more exploitative of their labour force.

]

So in that case they would just refuse to trade with China, India, Brazil, Russia, most of the middle East, etc
Sounds like commercial suicide to me.
Would open up massive opportunities for those "outside", not having to compete with the EU.

DVardysShadow

ILW wrote: »

So in that case they would just refuse to trade with China, India, Brazil, Russia, most of the middle East, etc
Sounds like commercial suicide to me.
Would open up massive opportunities for those "outside", not having to compete with the EU.

No, the barriers will be far more subtle and indirectly targetted.

For example, one of the moves I did see a fleeting reference to is for Euro transactions to be done within the Eurozone. Part of the reasoning for the Financial Transaction tax is that it penalises esoteric financial products such as derivatives and therefore helps with stability. And as I see it, if the Eurozone wants that stability for its currency, we have no grounds to whinge if the Euro transactions are domiciled in the Eurozone.

So, very subtly our bankers would be cut out of Euro transactions between Eurozone centres.

As an aside, this suggests to me that the very reasonable compromise which Cameron should have sought would have been to apply the Financial Transaction tax to Euro transactions only. It is totally out of order for our bankers to trade away on Euro transactions without applying a tax which the Eurozone want applied to their transactions. I reckon that compromise would have been thought totally satisfactory.

Rather than this being a spat where Cameron got one over on Brussels telling us what to do, it is a spat where Cameron got put in his place for trying to tell the Eurozone that we were going to transact in their currency in a way that they are not happy about.

ILW

DVardysShadow wrote: »

No, the barriers will be far more subtle and indirectly targetted.

For example, one of the moves I did see a fleeting reference to is for Euro transactions to be done within the Eurozone. Part of the reasoning for the Financial Transaction tax is that it penalises esoteric financial products such as derivatives and therefore helps with stability. And as I see it, if the Eurozone wants that stability for its currency, we have no grounds to whinge if the Euro transactions are domiciled in the Eurozone.

So, very subtly our bankers would be cut out of Euro transactions between Eurozone centres.

As an aside, this suggests to me that the very reasonable compromise which Cameron should have sought would have been to apply the Financial Transaction tax to Euro transactions only. It is totally out of order for our bankers to trade away on Euro transactions without applying a tax which the Eurozone want applied to their transactions. I reckon that compromise would have been thought totally satisfactory.

Rather than this being a spat where Cameron got one over on Brussels telling us what to do, it is a spat where Cameron got put in his place for trying to tell the Eurozone that we were going to transact in their currency in a way that they are not happy about.

That does sound like the EU closing in on itself, which can only lead to a contraction over time.

IronWolf

DVardysShadow wrote: »

No, the barriers will be far more subtle and indirectly targetted.

For example, one of the moves I did see a fleeting reference to is for Euro transactions to be done within the Eurozone. Part of the reasoning for the Financial Transaction tax is that it penalises esoteric financial products such as derivatives and therefore helps with stability. And as I see it, if the Eurozone wants that stability for its currency, we have no grounds to whinge if the Euro transactions are domiciled in the Eurozone.

So, very subtly our bankers would be cut out of Euro transactions between Eurozone centres.

As an aside, this suggests to me that the very reasonable compromise which Cameron should have sought would have been to apply the Financial Transaction tax to Euro transactions only. It is totally out of order for our bankers to trade away on Euro transactions without applying a tax which the Eurozone want applied to their transactions. I reckon that compromise would have been thought totally satisfactory.

Rather than this being a spat where Cameron got one over on Brussels telling us what to do, it is a spat where Cameron got put in his place for trying to tell the Eurozone that we were going to transact in their currency in a way that they are not happy about.

Oh come off it, the EU wants to bend us over a f!!k us. They know damn well that more financial transactions go through London than any other city in the world, and several times that of other EU countries. It is just a tax on the UK and Cameron quite rightly told them to !!!! off.

If the EU decides to tax their own banks when dealing in Euros, then they will suffer for it, the Chinese, US and UK banks aren't going to let them pass on that tax to the rest of us. The EU banks are nothing compared to the financial giants in the rest of the world, they wont be pushed around by them.

DVardysShadow

ILW wrote: »

That does sound like the EU closing in on itself, which can only lead to a contraction over time.

When you think of the amount us housebuyers pay in stamp duty, the Financial Transaction Tax will be trivial at 0.1%, but enough to discourage excessive repackaging of products. I don't see this as closing in on itself so much as keeping things damped for the sake of stability. It might hamper growth a little - but obviously they are prepared to trade a little growth to retain stability.

DVardysShadow

IronWolf wrote: »

Oh come off it, the EU wants to bend us over a f!!k us. They know damn well that more financial transactions go through London than any other city in the world, and several times that of other EU countries. It is just a tax on the UK and Cameron quite rightly told them to !!!! off.

If the EU decides to tax their own banks when dealing in Euros, then they will suffer for it, the Chinese, US and UK banks aren't going to let them pass on that tax to the rest of us. The EU banks are nothing compared to the financial giants in the rest of the world, they wont be pushed around by them.

Iron Wolf tells Brussels what to do.

If the Eurozone don't want their currency to be traded without a Tax, who the hell are you to tell them different? Remember, you want nothing to do with the Euro, so why should you be upset about a tax on Euro transactions?

London this, London that. Cameron never asked, but I bet that our former partners would have been well satisfied with a tax on Euro transactions alone.

An insistence that London could do Euro trades without a Transaction Tax would rightly be seen as us wanting to !!!! them over as you so eloquently put it.

A._Badger

DVardysShadow wrote: »

Iron Wolf tells Brussels what to do.

If the Eurozone don't want their currency to be traded without a Tax, who the hell are you to tell them different? Remember, you want nothing to do with the Euro, so why should you be upset about a tax on Euro transactions?

London this, London that. Cameron never asked, but I bet that our former partners would have been well satisfied with a tax on Euro transactions alone.

An insistence that London could do Euro trades without a Transaction Tax would rightly be seen as us wanting to !!!! them over as you so eloquently put it.

Have you stopped to consider how any such thing could possibly operate?

While one is wearily familiar with the EU pursuing impossible goals and utterly impractical ideas with a passion, the concept of trying to control third parties trading in a currency is bizarre, to say the least.

Europhiles really need to come to terms with the dwindling relevance of 'Europe' in terms of world trade.

Eurosceptics used to be described as 'little Englanders' - how more apt would be the term 'Little Europeans' as the rest of the world outpaces the sclerotic monster.

IronWolf

DVardysShadow wrote: »

Iron Wolf tells Brussels what to do.

If the Eurozone don't want their currency to be traded without a Tax, who the hell are you to tell them different? Remember, you want nothing to do with the Euro, so why should you be upset about a tax on Euro transactions?

London this, London that. Cameron never asked, but I bet that our former partners would have been well satisfied with a tax on Euro transactions alone.

An insistence that London could do Euro trades without a Transaction Tax would rightly be seen as us wanting to !!!! them over as you so eloquently put it.

And exactly how do you enforce a tax on a transaction completed in another sovereign nation pray tell? Either you have to force banks to trade euros only in the eurozone with eurozone banks, in which case the tax will fall on them, or you have to get the country to agree to handing over this tax to you, cant see that happening.