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The Divorce Battle has Finally Started

Mar
29
What a pity that Donald Trump is not residing in Downing Street No 10 but in the White House.
Otherwise there could be hope, that the execution of the mother of all divorces between the UK and the EU could still fail due to hasty, lousy or legally weak administrative action. But with the daughter of an Anglican priest at the helm of Britannia, there should be no doubt, that a clear and clean separation will be delivered at all cost for the family, or as she puts it: Brexit means Brexit!
For now, bullish stock markets and collective self-delusion, the illusion of regained independence and identity are keeping the spirits up. This will change rapidly.
Soon the public mudslinging will start and the hard numbers bite. Have a look at some very interesting numbers:
Time to hand over divorce papers 29/3: 1 Minute
Divorce Payment asked by EU: > 60.000.000.000 EUR
Annual Net UK Payment into EU so far: 11.000.000.000 EUR
Food Price Increase due to border controls: 8%
Number of Scots Against Brexit: 62%
UK Exports into EU of all Exports: 45%
Number of Trade Negotiators (pre Brexit) UK: 20
Hiring Gap New UK Trade Negotiators: 300
Number of Trade Negotiators (pre Brexit) EU: > 600
Number of EU Members in Top 10 UK Trading Partners: 8
For the rationale spectator, it is very hard to understand how the UK will be able to achieve in 18 months successful negotiations with the EU on terminating its membership and starting a new trade deal, with only a handful of experienced trade negotiators. And to make this job more difficult, Theresa May has raised high expectation for new trade deals with the US, China, India, Australia and many more. Btw. the EU is leading trade deal discussions with India for more than 10 years now, stalemating among others due to UK concerns on immigration.
Many fear the hard Brexit will end in a hard landing into reality. The financial services sector is already relocating, prices are increasing and will further do so, investment from EU countries into the UK has come to a standstill, political cohesion of the UK is rapidly eroding, the London real estate market is dead. Theresa May is well advised to call a general election and secure a comfortable majority before these effects will become visible.
In case that negotiations will turn sour, and if you look at the sheer numbers and the political significance for the UK and the EU, there will be a 80 % chance of just this happening, the relation between the EU and Great Britain will be seriously damaged, probably for a whole generation. This is the real danger for Europe and for each European, far worse than any economic downturn. Rapid lecture of Jane Austen’s „Pride and Prejudice“ should be mandatory for Liam Fox and the UK Trade Negotiators as „The Parable of the Lost Son“ for Michel Barnier and the EU Trade Team. Only a combination of less UK hybris and more EU generosity and tolerance, and a grand political gesture of good-will for the sake of the greater good can save us now from a centennial hangover. Probably we will first see a dramatic escalation and darkening of the negotiation process and results before any significant and productive process will gain ground.
The divorce battle has finally started. Let the mudslinging begin!

 

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2017/Q1 Ukraine Newsletter

Mar
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The Lower House of the Parliament of Canada has ratified the free trade agreement with Ukraine. After completion of all the ratification procedures, Canada will abolish duties on 99.9% of Ukrainian imports. In turn, Ukraine will cancel 86% of duties on imports from Canada.

Read more in our latest newsletter.

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