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Brexit: Why Cameron and BoJo remain arrogant

In Uncategorized on 30/06/2016 at 1:29 pm

The Times says Mr Cameron delivered a “migration ultimatum”, saying EU leaders must allow it to be curbed if they want a future deal with Britain over the single market.

What arrogance. True a strong Uk is in the EU’s interest, but conventional wisdom is that UK needs EU more than EU needs UK.

Here’s an American perspective that shows why conventional wisdom may be wrong again. NYT Dealbook reports:

There is still enormous uncertainty about how Britain’s exit will play out, but if you consider the absolute worst-case scenarios, it could just be the first domino, Andrew Ross Sorkin writes in DealBook. And the next ones to fall would matter more.

Italy’s government is already considering pumping money into its banking systems as bank stocks were pummelled after the vote. Italy’s banks would suffer if Britain’s vote to leave the European Union created a material economic slowdown. If Italy’s economy faltered later on and the European Union offered help only with tough conditions, we could witness the secession of Italy, Mr. Sorkin writes.

There is a decent chance that another country could try to follow Britain on its way out before then. Geert Wilders, the populist leader of the anti-immigrant Party for Freedom in the Netherlands, has already called for a Dutch referendum.

James Pethokoukis, a commentator at the American Enterprise Institute, recently found a memorandum written in 2011 during the euro crisis by Willem Buiter, the global chief economist at Citigroup, that imagined the destruction of the European Union. It compared it to the movie “War of the Roses” – disruptive, destructive and without any winners.

“Exit, partial or full, would likely be precipitated by disorderly sovereign defaults in the fiscally weak and uncompetitive member states, whose currencies would weaken dramatically and whose banks would fail,” Mr. Buiter wrote at the time. “If Spain and Italy were to exit, there would be a collapse of systemically important financial institutions throughout the European Union and North America and years of global depression.”

Hopefully, these are just worst-case scenarios. Unfortunately, as Neil Irwin explains in The Upshot, Britain’s exit actually accentuates global forces that have been building for years that governments have been unable to limit.

These self-reinforcing dimensions make it a particularly perilous time for the global economy. The dollar is likely to strengthen with the value of the pound collapsing. The result of the referendum could drag down growth even further.

And political environments around the world are getting more toxic,driving greater polarization and a greater range of possible outcomes. These and other changes do not stand in isolation, and no one yet knows where the cycle ends.

In essence, the Britexiters are planning a game of chicken: Give us what we want or see the end of the EU and a global recession. And never mind what happens to the UK. That’s arrogance. Sadly, they may have a point.

Meanwhile, UKIP leader Nigel Farage’s appearance at an emergency session of the European Parliament to discuss Brexit – at which he told fellow MEPs they were in denial over EU failings – attracted plenty of column inches.

Patrick Kidd, writing in the Times, says: “Nigel Farage went to Brussels and did what he has done so admirably for 17 years: got right up the noses of his fellow MEPs.

“He was as welcome as a fart in a lift.

A “triumphant” Nigel Farage was heckled and booed as he “heralded the nation’s Brexit decision” and taunted EU bosses, the Daily Star reports.

BBC report.

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