005: BREXIT - THE AFTERMATH
What I really wanted to do was the play the instrumental to 2pac's "Hit Em Up" and write a diss track for you people that voted leave. Unfortunately, that wouldn’t be as productive as it would be enjoyable! As you should know, the UK has voted to leave the EU, which has sent everybody into a frenzy. We have politicians resigning, markets crashing, heck, even England’s football team voted leave! Nobody seems to know what is going on; we have so many questions, and it seems like even those in power don’t have a clue! So the purpose of this post is to help answer some of the questions I have seen flung about social media and the news.
The electorate voted 52% to 48% in favour of leave. Somehow, the Vote Leave campaign, spearheaded by Boris Johnson, Nigel Farage and Michael Gove, managed to finesse (colloquialism for con) the public into believing leaving the EU was in the best interests of the nation. Farage and Boris then promptly RESIGNED. It seems that the fundamental incentives for voting leave is the apparent ability to reduce immigration and a 100% reallocation of the EU budget contribution to the NHS. I stayed up all night watching my fellow countrymen disgrace ourselves to the rest of the world as we voted leave (no, actually - my country is London, and we voted to remain). I tweeted my shock and what the implications of this decision will be. That was roughly between the hours of 3am-5am. I kid you not, by 8.30am that very day, not only was the reallocation of the EU budget to the NHS retracted by Nigel Farage, but Michael Gove also confirmed what I knew already: immigration isn’t likely to be reduced anyway. I laughed my head off out of pure shock and pain. We have torpedoed our future on the basis of lies. We had people who were key figureheads in the Vote Leave campaign tell reporters that they DON’T HAVE A PLAN for Brexit, and that they expected David Cameron to have one. David Cameron would have a plan…the very same man who said he would resign if he lost the vote …. 2016 ladies and gentlemen.
Swiftly after, the coke can of chaos was popped open. The Pound nose-dived to it’s lowest value since 1985; I wasn’t even born then! Our stock markets were also taking a serious hammering as investors started dumping all their shares; we had Barclays down 22% by the close of business. Imagine having 1/5th wiped off just like that! On the political side, we had mass resignations; Labour’s shadow cabinet were dropping out one by one like it was a game of Call of Duty. The Labour party, the Conservative party, banks, The EU, heck, everybody was in turmoil. Every interview I watched just reconfirmed what I’ve been yelling at vote Leavians (they are a race now, they must be grouped together). EU officials were telling the press they will make an example of the UK; Vote Leave had no plan of action, The United States rebuffed any talk of a US-UK trade agreement, the markets reacted badly and, most enjoyably, people who voted leave started to regret their idiotic decision. I wasn’t sure if I should have sympathy, take some sort of responsibility or verbally massage people’s brains with lavish insults.
• I had sympathy because not everybody is an economist so it’s difficult for the average person to be aware of the implications of any decision (hence why it shouldn’t have been offered for referendum Mr. Cameron, you legacy chasing merchant)
• I felt like those who actually know better have let the public down. Ever since the 2008 financial apocalypse many people in this country have struggled more than ever before. It has not been accurately communicated that this is because our economy is in recovery mode and that, previous to that, we were operating in an unsustainable environment. Our government was borrowing and borrowing to fund initiatives to get people into higher education, make going to school easier and various other welfare packages. Once the financial crisis was upon us, credit (borrowing) became more scarce and expensive. The government had to cut back on expenditures. Add that to the job losses and lower investment, the average person was hit hard. NOBODY communicated this message, and the right wing side of the political world capitalised. It is no coincidence that UKIP never won a seat anywhere until after 2008. Couple this with David Cameron becoming Prime Minister in 2010; we should have been made aware of what the people have been thinking. The people didn’t understand why things suddenly became exponentially more difficult. Furthermore, the inbuilt British belt of entitlement meant that people did not STRIVE to work harder and adapt. They needed somebody to blame, and the right suggested the perfect scapegoat - immigrants!!!! Immigrants…even though 28million members of the UK labour force are UK NATIONALS and a WHOPPING 254,000 are Non-UK nationals. That’s right people, 254,000 people are taking all our jobs!!!!!!
• Why I don’t have sympathy is because this nation of ours breeds entitlement. How on earth are people complaining that people come from foreign nations to come and open shops and provide you goods and services? Do they have two heads? Surely being here already gives us the advantage to do the same? So what if ‘Eastern European migrants do the jobs cheaper’, that is how the economy works. You either adapt or keep very quiet. It’s all well and good for you to travel an extra 10 minutes to get your kids' school uniform £10 cheaper, but not for businesses to employ cheaper staff? Laughable. Also, reading several comments and watching and listening to post EU referendum interviews, I was mortified at the lack of information some of us had before voting. Some of us will spend two weeks researching the family holiday to Marbella to see if we can save a couple hundred quid, but when it comes to a decision that affects your kids and/or your own future you couldn’t spare a couple hours on Google? Fantastic fools –I am sorry, you need to be told! X
Where do we go from here?
Well, firstly, the UK by any means necessary needs to negotiate access to the $14trillion single market. A lot of the Vote Leavians (remember they are a race now) were sprouting a lot of nonsense about obtaining new trade deals with the rest of the world. Why is it stupid? Well why would we have a trade deal with China? Germany trades THREE times as much with China than we do. Last time I checked, they were in the same EU as us. What does that mean? It means that we don’t have enough comparative advantages to massively increase our trade volume with China. Our businesses will get head-butted by the far cheaper Chinese goods. We also had the President of the United States of America tell us they have NO interest in trading with the UK, only with big blocks. Vote Leavian Boris Johnson even confirmed last week before his resignation that the UK must remain in the single market. A massive U-turn. As I said on www.disunomics.com/blog/002, there is no way the EU will allow the UK to be part of the single market and not adhere to the same EU laws. This means we have to follow the laws set by the European Commission, which the UK used to have a part in (not anymore), including Freedom of movement … hence why Michael Gove backtracked about immigration. So, best-case scenario is adapting a similar model to Norway. Norway, Iceland and Liechtenstein are all part of the EEA, as well as the EU nations. This basically means they have access to the single market (trade for free with the EU), but don’t have any decision-making influence, and they will have to adhere to EU regulation and make budget contributions. In essence, we would be worse off than we were previously as a member of the EU. We had decision-making influence, now we have none - yay! Alternatively, the UK could formulate a new deal with the EU altogether. The UK could attempt to obtain free trade agreements with the remaining twenty-seven EU member states, but this will likely be long-winded and difficult. The president of the European Council, Donald Tusk, has already stated that any deal could take seven years to negotiate “without any guarantee of success”. Jean –Claude Piris, who was a former Head of European Council legal service, likened the possibility of access to the single market without budget contributions and freedom of movement to “believing in Father Christmas”. Then again, I did tell you guys this would happen. The final option would be to break off all together and try to formulate trade deals ourselves with the rest of the world. This option is so daft that I’m not even going to delve into it.
How does this affect us?
For businesses, it’s a troubled time period. Uncertainty is rife, nobody knows exactly how much the pound will drop, nobody knows how long negotiations will take, heck, nobody even knows who exactly will be negotiating with the EU yet. We have had Richard Branson claiming he had to cancel a deal that was worth 3000 jobs. For businesses and workers this is a tough time. Roughly 75% of London’s hospitality workforce is foreign-born. The industry depends heavily on EU migrants, and this is likely to halt recruitment drives in hospitality and in most industries. If the UK leaves the single market this is very bad for businesses. £223billion worth of exports are distributed to the EU. What happens if we leave the single market, causing a trade tariff on top of that? That figure reduces. That in turn reduces revenue for businesses, which reduces profit, which means lower growth and fewer jobs - recessionary pressures. For those who are currently living in the UK as a EU migrant, nothing will change until the separation is formalised. However, it may be best advised to obtain British citizenship. If you or a relative/friend have already been granted a permanent residency card, it is probably wise to apply for citizenship. It is, however, important to note that not all EU nations permit dual nationality. Nations like the Netherlands and Estonia have certain restrictions, so it’s best to check before you make any decisions!
In conclusion, we are DOOMED! I'm kidding (not really), but things are likely to be volatile for the foreseeable future. Thankfully, we have a government full of responsible, selfless, trustworthy men and women that will strive to obtain us the best deal! P.S. You Vote Leavians owe me £1.00 each; the GBP:EUR has dropped significantly, and I fear I won’t have enough € for my holiday to survive. Thanks people of the UK, I will have to eat sand and free WiFi for lunch on my vacation.
Any further questions tweet me! @DISUNOMICS x