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But speaking of Brexit… August 10, 2016

Posted by WorldbyStorm in Uncategorized.
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…here’s a fascinating snippet from the Observer at the weekend which notes in its business editorial that while the situation within the UK isn’t great – to put it mildly, outside it… well… 

…here is one prediction that has not yet come true: that a vote for Brexit would send shockwaves through the global economy.

So said the International Monetary Fund, so warned the Bank of England. Yet now it seems these observers fell into the trap of overestimating the UK’s role on the world stage. Global fallout from the vote has yet to transpire.

If accurate, if there has been an actual overestimation of the UK’s role on the world stage that would seem to – almost paradoxically – be as one with the, what seemed to some, massive over-exaggeration of the economic importance of the UK on the part of some Leave proponents.

Of course, this should come hedged in caveats. It’s early days yet. But then again, logic alone suggests that a smaller economic entity is going to find absorbing the impact of significant economic dislocation a greater challenge than larger economic entities. Nonetheless, apart from everything else, this is fascinating. And the piece in the Observer notes:

None of that is to say that a global economy that was febrile before the UK’s referendum is out of the woods. European banks, notably in Italy, still look vulnerable. China’s debt-fuelled economy continues its struggle to rebalance. The US faces its own uncertainties as the election nears.

Brexit contagion comes low down on this list of global risks. So far it seems the UK is taking the big hit. Britain voted to stand alone, and now it does.

 

Comments»

1. sonofstan - August 10, 2016

Yeah, even from Remainers, I got the ‘this will teach the EU a lesson’ story afterwards. May be turning into the real world equivalent of a social media flounce.

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2. Michael Carley - August 10, 2016

“massive over-exaggeration of the economic importance of the UK on the part of some Leave proponents”

Every now and again, I wonder if English people, especially the liberals, will ever realize that they’re not that important. The UK is not a major economic power in ways that matter, it’s not the major cultural force some people think it is (it just benefits from the US being English speaking), it’s not `respected’ for its `values’. The self-delusion is crippling and reality won’t be driven home until the rest of the UK departs, and even then somebody will be talking about the country’s special part to play in X.

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WorldbyStorm - August 10, 2016

I was a bit worried reading this back at lunch that I should have qualified the comment very slightly in relation by saying economic importance (to the rest of the world) so I’m really glad people have picked it up as intended.

Anyhow +1 to both your comments. It’s only when I got to thinking about it that it made sense to me – that it’s as if say New York seceded from the US (actually that may not be the best comparison because the US is a lot more tightly integrated than the EU is or likely will be). It would be very very problematic but it wouldn’t – economically at least – destroy the US. And with a looser arrangement like the EU it’s even more true.

I think that has other implications in the political field.

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3. irishelectionliterature - August 11, 2016

As a Brexit aside ….. I haven’t heard one reference to that awful phrase “The Great British Public” post Brexit.
No doubt the UK think they play a bigger role in the world than they do, presumably harking back to Empire and the Wars.
I’ve no idea if there are stats on it ,but with immigration a big issue it appeared to me that Germany rather than the UK was the preferred destination of many of the migrants attempting to get to Europe.

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4. FergusD - August 11, 2016

Yes the Brits (or English?) have a massively inflated sense of their own importance and a view that the world sees the UK as a beacon of virtue and morality (rather than perfidious albion). However the City of London financial services are still pretty important wordlwide. Manufacturing much less so, the UK buys stuff mostly, rather than selling it. I bet EU countries would like to, and could, make Airbus wings. Maybe not engines though.

It will be really interesting to see how the City survives Brexit. Much muttering by France, and to some extent Germany, about UK banks losing their “passports” to trade in euros. EU banks and govts are looking at that market and asking “why not us now?”. Could it be the begining of the decline of the City? Part of the long decline of the former imperial power? If so, what the f**k will the UK do for revenue??

Maybe, in part, the rise of Scottish nationalism is a consequence of the end of empire? After all, the support of the Scots elite, and arguably subsequently the support of Scottish workers, for the union was bought by the promise of the spoils of empire.

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5. Gewerkschaftler - August 11, 2016

+1 on the overestimation of the importance of Britain & Brexit globally. It’s more a symptom of a general set of problems with capitalism and its governance than a cause.

And it is indeed very early days.

No one with power has much interest in making Brexit a reality other than a minority (probably) in the English/Welsh Tory Party. Certainly few with political and economic power outside of those jurisdictions have any interest in hurrying the thing along – excepting those in the financial sector who see an opening to grab business and power from the City of London.

I can see the invoking of Article 50 being put on the long finger at least until next year, and then quite possibly fudged out of meaningful existence.

But who knows – the only one can really predict on the basis of experience in this context is unpredictability.

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