No, we won’t have to join EFTA. What happens will be up for negotiation.
Of course it will depend if the UK is the one negotiating or the pieces of it that remain.
Although if a European state wants multilateral free trade with other European States, joining the European Free Trade Association does look very much like the way to go, doesn’t it? It does, after all, represent an existing, functioning model of European free trade, and it embodies the terms on which the other European states are known to be willing to engage in free trade.
Obviously, it’s always possible to reinvent the wheel, but a reinvented wheel is usually not perfectly round. The opening position from the EU/EFTA side in negotiations with the UK will be “This is how we currently do free trade. If you want to propose any variation in these terms, you’ll need to persuade us that the variation is in our interests; why, otherwise, would we agree to it?”
What the UK has to offer in these negotiations, obviously, is access to UK markets for EU exporters. But that is considerably less than what the EU has to offer the UK and, therefore, the EU’s negotiating position will be a much stronger one than the UK’s. Realistically, what the UK can hope to acheive is either:
(a) participation in the single market on terms pretty similar to those already enjoyed by non-EU participatants in the single market - some variations to meet particular UK circumstances, but nothing very radical - or
(b) a much more limited agreement, in which there are no tariff barriers, but UK goods and services are otherwise treated as imports from outside the single market.
This Guardian article argues convincingly that Article 50 may never be invoked:
Cameron has said he will resign in October, but so far it looks like he will not invoke article 50, instead leaving it to his successor. The EU is going to complain about this, but they can’t force the UK to invoke article 50 it has to be a formal request from the UK government. Over the next three months the true price of leaving will become more clear, so it may be untenable for the UK government to invoke article 50 at that point.
There is one word in that article that seems to sum up the whole mess: “stalemate”. The Leave side won but now someone has to actually do it even as the disastrous consequences become apparent. Cameron won’t, the EU is demanding immediate action, and in the background to all this the signatures demanding a second referendum that were impressively approaching close to 3 million yesterday are now over 3.5 million.
People on the Remain side keep saying there will be disastrous consequences. I don’t believe it. Global financial collapse and WW3 were predicted. You know what? We voted last Thursday and we’re still here. The UK stock markets took a tumble and made a recovery. The ability of UK economists and politicians to successfully predict the future is pretty near zero. I remember them trying to persuade us to join the Euro. Doom was predicted if we did not; look how well that turned out. Before that was the ERM. Not one of them publicly predicted the crash of 2007 / 8. Rinse and repeat.
It is indeed, the obvious choice, but there are, as you say, alternatives. A new trade-only bloc might be created. For instance, the North America Free Trade Agreement might become the North Atlantic Free Trade Agreement, adding Iceland, the UK (and the British dependencies), and Cuba to the mix. Or Iceland, the UK, and Norway, might form their won bloc, foreseeing the disintegration of the EU and the eventual joining of other Scandinavian and northern European countries.
The future is open.
I keep hearing this a lot from the leave side: “Economists have been wrong in the past.” Sure - they have predicted things that did not happen and have been surprised by things that did. So? What do you suggest as a consequence? Should the UK abandon the economic sciences altogether and instead adopt a policy of “go with your gut”?
To me economists are like meteorologists. They are not always right, but I still do not take my sailboat out to the sea, if they tell me there is a storm coming.
That’s not what I’m saying. I’m saying that there’s a signal lack of them being right in the past when it counted. They’ve completely blown major financial disasters. They’re good at analysing the past, but the future is another matter.
Name me senior economists who publicly predicted the disasters I mentioned.
ETA one thing you may be missing is that a lot of these people have vested interests - career, funding, political, etc - in their prognostications.
They recovered a little bit and are now dropping again. Meanwhile France passed you as the 5th largest economy in the world. The pound is still down and is expected to another 10 percent this year. And the worst effects won’t take effect until after the UK actually leaves the EU. 39% of the UK’s exports are financial services. Now google “financial passporting” and think about what effect this is going to have, hint “worst recession in UK history”.
You are kidding yourself if you think the EU will be willing to give the UK a deal where UK banks still get unrestricted access to the financial services sector in europe, why should they?
You have to remember a lot of economists have a vested interest. A chief economist at the RBS is hardly likely to go on national television and call for Brexit. The same goes for many others in the profession. Economists like stability and confidence, in fact they rely on it. This is especially true when the entire financial system has been fed steroids in the guise of QE and cheap credit.
Warren Buffet has a saying:* only when the tide goes out do we discover who is bathing naked*. Well, I suspect many economists are concerned their pet institutions have indeed been bathing naked. They are sh*t scared of the risk.
I also believe many economists are worried about political risk: that Brexit leads to a contagion of tit for tat trade barriers. If wise heads prevail this need not happen.
I did understand you the first time. But again: What does that mean? You clearly think that economists should not be listened to when shaping your country’s economic policy. So who would you rather listen to and why?
Clearly not.
No, I don’t. I just think that their lamentable track record should be borne in mind.
I’ll listen to anyone and everyone. Different people have different perspectives.
Leave supporters need to wake up and take a good hard slap of reality in the face. The sterling and the FTSE have continued to plummet today, engaging automatic trading breakers on many companies. This is NOT business as usual.
Now go and read Boris Johnson’s latest proclamations. He is sounding very luke warm about Brexit. Since Cameron has refused to invoke article 50 and Boris is widely assumed to be the next Tory leader it will come down to him. Boris although he acts like an idiot is not actually one. He was using the Leave cause to advance his own career, he actually has no desire for the UK to leave the EU.
When Boris takes over in October, he will never invoke article 50, the public opinion will have changed by then and the whole thing will be quietly forgotten as a rather embarrassing episode in the UK’s political history.
I think they need to get the Dowager Countess of Grantham to take control and straighten this whole mess out. She’d be kicking ass and taking names in no time!!
You make it sound like going for “stability and confidence” is some nefarious scheme. The reason why the vast majority of economists and business leaders have advised against the Brexit may indeed be that they would prefer Britain to remain stable and confident. It is good for business. So yes - they have a vested interest.
Now let’s assume you are right and Britains financial system is in a precarious balance, because it has been “fed steroids”. Given the fact that Britain’s economy to a large extend *depends *on the financial sector, do you really think that pushing it further towards the edge is a good idea?
No we just need Diana Rigg, ie the Queen of Thorn’s to give the entire country a stern talking to about what silly people they’ve been.
Either would do. But the QoT might leave a lot of dead bodies lying around!
Im neutral on the idea of pushing parts of Britain’s financial system to the brink. A few of our banks are little more than basket cases. Brexit would simply be a catalyst of their next set of problems not the cause.
Stability and confidence are fine. But if that stability is simply masking underlying problems then losing stability may be no bad thing.
Let me make mysef clear in case im accused of risking the UK’s financial well-being. Much of the UK(and indeed worlds) financial institutions are hiding some very real problems. These problems will show themselves after some event or other. It just so happens to be Brexit. A healthy, well run bank should not fall in value by 22% simply because the UK makes marginal changes to its trade policy.
You have just proved you have no idea what you are talking about. The loss of financial passporting into the EU for UK financial organisations will be devastating. 39% of the UK’s exports are financial services. They’ve just lost the ability to sell their services into a market of 700 million people. Note financial services is the most likely industry to NOT be covered by any free trade agreement and it’s 39% of the UK’s exports. Yeah let me say that again… 39%…