That new role for the UK? January 27, 2017
Posted by WorldbyStorm in Uncategorized.trackback
The SPB editorial asks a question long raised on this site here, ‘is Britain aiming to become the new Ireland?’. The editorial shares the concern of many of us in relation to T. May’s speech last week. Her wish in regard to the CTA seems as much aspirational as anything. And then there’s the point she made about ‘changing Britain’s economic model’ in relation to ‘competitive tax rates and policies that would attract the world’s best companies and biggest investors to Britain’.
As the SBP notes:
The danger is clear. If Britain with its greater population, greater scale and greater congregation of skills – not to mention its greater name recognition and international outlook, – decides to imitate Ireland it will dwarf Ireland.
And yet I wonder if this overstates matters. The SPB notes that the situation with Trump in the White House changes the situation for Ireland. His express wish to pull jobs and companies back to the US has to be bad news for us. But if Britain tries to emulate the ROI will there be space for it to do so? Hammond was roundly mocked for his line that Britain might try to emulate Singapore, and rightly so – a small city state is simply not scaleable to a state the size of the UK. It seems to me that these different dynamics seem to impinge negatively on one another. A free trade UK hits the road just as the US pulls up the drawbridge. Furthermore an UK attempting to be ‘the new Ireland’ may find itself now that it is to lock itself outside the EU in a position where Ireland can claw some of its business and it has limited access to EU markets.
None of this is good news for Ireland, and I think the SBP is absolutely correct to suggest that ‘Ireland needs a new plan’. But the grim truth is that as with aspects of Brexit Irish leverage is very limited indeed.
Can the UK adopt an Irish economic model when it is outside the EU? Isn’t that a pretty crucial component of the model?
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No – especially, as is likely, the UK post-Brexit with have no trade agreements with the EU. And yes, it is.
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The idea that the UK can negotiate a favourable or even equitable trade agreement with the Trumpist US is another Brexiteer mirage as Naked Capitalism points out here.
Yves Smith notes:
Also it’s politically unlikely that Little Britain will be given an extension of the two-year deadline once May triggers Article 50.
The post lists further disadvantages for Brexit Britain:
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Will Brexit spell the end of the UK’s contribution to Airbus? Is Airbus not an independent entity, not part of EU structure? JUst wondering. A mess. Of course Rolls-Royce sell loads of engines to Airbus, while not being part of Airbus. I wonder how that will pan out?
Actually Wikipedia indicates that there are no UK members of the company, so BAe is just a supplier I suppose.
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Oh, and Airbus is a “Societas Europaea (SE)”, so incorporated as an EU commercial entity. A true multi-national (in ownership, not just scope). Interesting. An EU success story?
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Airbus is not part of the EU, but is a division of EADS. BAE Systems is not part of Airbus, having sold its stake about ten years ago. The `Airbus’ in the UK is part of the European Airbus and has remained in the UK even though there is no UK stake in the company.
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I think part of the point is that in building anything as complicated as a plane, parts go too and from various specialist manufacturing, finishing and testing outfits. Often located in different countries.
Once LB has left the EU these are crossing a customs barrier. The incentive will be to establish suppliers without extra costs and paperwork.
That said AFAIK there is no jet-engine builder as capable as RR in the EU. Any other parts and processes, would, I imagine, be up for grabs.
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A lot of Airbus suppliers and (risk-sharing) partners are outside the EU even now, for example, in the US:
http://www.airbus.com/company/americas/us/industrial-partners/
and they have final assembly lines in Europe, China, and the US:
http://www.airbus.com/company/
so they should have no trouble dealing with wings made outside the EU (large parts are already made outside Europe).
As for engines, they would have no trouble importing RR and they already offer PW and CFM engines on some models, so if they really did want to cut out RR, they probably could.
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With Britain outside the EU, Ireland will be a more attractive location for firms now based in Britain.
‘Japan sees Dublin as a source of intelligence on Brexit but also as a potential destination for its companies.’
http://www.irishtimes.com/news/politics/japan-seeks-closer-ties-with-ireland-after-brexit-1.2931719
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