Thanks to Richard’s North excellent Euroreferendum blog I was alerted to an ‘open letter‘ John Redwood wrote to his swivel eyed loony friends in #ukip to make the peace after the Tories routed them in the May 2015 UK parliamentary elections.
The most extraordinary deluded sentence in the Redwood letter is:
“A vote to leave would trigger a negotiation of a trade based relationship which the rest of the EU will of course wish to have, given how much they export to us”
In common with ‘has been’ ukip economist Ruth Lea, Redwood seems to think “They’ll trade” because Volkswagen AG, Mercedes Benz etc. must have the EU parliament in their pockets. Because our City bankers spend so much of their grotesque annual bonuses on buying German performance cars, rather than buying Range Rovers, Jaguars or Bentleys, the Porsche and Piëch families will just snap their fingers and say to Mr Juncker: “Please give the Brits a Free Trade Agreement and make it pronto!
Hang on, these German quality cars are not like the Seventies ‘ugly as sin’ butt of many jokes ‘Austin Allegro’ that nobody in the world beside the Brits would touch with a barge pole. I would say there’s plenty of other markets for them besides Nigel Farage’s banker friends, as anyone that ever visited China will have quickly spotted at any Beijing or Shanghai traffic light.
This whole idea that the rest of Europe is somehow at the beck and call of the mighty British pound sterling is ridiculous. Many currency traders only see one way for Stirling after a Brexit and that is the way of the Zimbabwean dollar. That is because successful trading countries in the EU like Germany and the Netherlands manage to make a profit trading with the rest of the World, not run a structural deficit for decades, while selling off the family silver to pay for their spending habits. Tory Eurosceptics call this closing down sale of Britain FDI by the way, which is short for Foreign Direct Investment.
Let’s go back to one of the core reasons why the EU Common Market was created in the first place. After WWII the United Stated of America clearly emerged as the dominant industrial power and economic world trade power house. Economists studying the success of US companies growing so quickly from mom & pop stores into multimillion dollar corporations, noted that in the USA business start-ups immediately had access to a huge single market. Having a common currency, the absence of state borders and tariffs and a common language helped them grow rapidly. Having achieved economies of scale in their domestic market, US companies then naturally became internationally competitive on price and productivity, even when faced with competition of often lower wage economies. While the language barrier will of course remain an issue in the EU, by creating a common Euro currency and a single common EU regulatory trade frame work for goods and services, the EU has copied the success factors that made the US the No. 1 global economy. The fact that English is also in the EU the most spoken ‘second’ language only adds an extra advantage to the UK’s EU membership. After a brexit, there is no way that the other 27 EU nations are going to just give the UK unfettered access to the largest and richest unified consumer market in the world ‘for free’. ‘They’ll trade alright, but any post brexit EU trade agreement will have a stiff price attached as Norway will testify.
Beside the single market, this whole side show of ever closer union people get so hot under the collar about, quite frankly is something nobody in Europe besides a few career politicians gives a damn about. In view of the low turn-out at GE2015 it seems not many in the UK do either.