Life at № 42
The FTSE saw losses yesterday worth a few hundred billion. Australia followed suit with losses of 50 billion in shares (AUD). The GBP is at a 40 year low. Moody’s has already downgraded the UK credit rating to negative. In total, 2 trillion were wiped off the markets worldwide. And this is just the beginning. The really ugly part is yet to come.
One of the issues the leave campaign hasn’t addressed and which Boris Johnson is already trying to skate around, is the practical side of a EU departure. Johnson is saying there’s no need to invoke article 50… that there’s no rush to leave. The problem is the leave campaign can’t have it both ways. No rush to leave means borders remain open- if borders remain open, that means their principal campaign promise on immigration was meaningless. On the other hand if they do try to close borders, that will trigger a response from the EU. In any event, they’re already admitting the “control the borders” slogan was more a slogan than an actual goal.
Economically, voting to leave has also backed the UK into a corner. The most obvious and immediate result is that London can no longer be the EU’s capital of finance. For the same reasons the Cayman Islands or Belize can’t be the EU’s capital of finance. They’re not part of Europe and are not subject to EU law.
I’m curious as to how the British public will react as they realize that nothing the leave campaign promised is viable, and that in fact all of the negative predictions on the economy were reasonably accurate.
In the end it’s a terrible price for a whole country to pay- but on the other hand it’s also an opportunity for the remaining EU members. The UK repeatedly blocked closer ties for EU countries and was staunchly opposed to any sort of fiscal union. They also opposed things like the Tobin tax (supported by almost every other EU country.) And they’re obviously a gateway to shady tax havens… So this is a chance to redesign Europe according to shared European principles.