I recall when David Cameron went to a meeting of EU leaders in huge blaze of publicity stating that he was going to gain some concessions from the EU - although the cost itself was not specified.
He went there with a widely publicised position that included some changes to the freedom of movement rules - mainly centred around being able to deport individuals and denying entry to other (largely unspecified) individuals but the assumption was criminals and terrorism suspects - it was never really made all that clear.
He returned in a way that made it plain he got little, or nothing except a few words of ‘Maybe we will look at it and other issues’ type of language. My impression was that his requirements were not all that well defined or articulated. Alhtough he put a brave face on it, the UK public largely saw it as a humiliation - and his political opponents made sure to capitalise on that, and interviews with other EU leaders for UK tv revealed a lot of smugness.
The EU position was predictable, freedom of movement is a red line and any dilution was in turn a dilution of the whole EU concept and not the tiniest jot of it could be altered in any way - which for UK electorate who was rather too much - our leader humiliated when asking for what was perceived as very small changes.
Whatever your view on all this, the reality is that it absolutely energised the Leave element within the Rightist side of our poltical spectrum, and gave UKIP a significant level of support - that suppport was very largely drawn from the Right of centre political opinion and was splitting their vote such that they would massively lose the next election.
In order to calm down and placate the right and bring the cente right vote together David Cameron promised a Leave referendum - and we know what happened as a result.
Nigel Farage, leader of the UKIP party certainly nailed the whole sorry mess and the screw ups by both the EU and the mainstream Conservative party. He pointed out that had the EU moved even a little on restricting entry to the UK on the reasonable grounds of previous criminal history or the identification of possible terrorism associates, there would simply never have been a Leave referendum because UKIP would not have been able to garner support, and Cameron could have portrayed this minor change as a great success and concession wrested from the EU.
Certainly David Cameron put his party politics to the fore of his concerns
Leavers can be grateful that the EU was so intransigent and smug - of course you can argue ‘Well why shouldn’t they be that way?’
Well history has the answer, Leavers are prepared to accept the cost of their choice and I doubt that many believe that there will not be significant negative consequencies, Remainers seem to think Leavers were totally misled and conned, but you’ll find that most of them were not, and do expect things to become more difficult for a time. That is a price they have deemed acceptable. The cost of loss of sovereignty - as demonstrated of lack of border control policy is a price to great for them
However, the flip side of it is this, there will be significant negative consequencies for the EU - there will be a change in the poltical balance of the EU which is highly likely to lead both to a reduction in EU grants, increased burden of payment into the EU by fewer nations, a change in the outlook of the EU parliament such that more and larger spending bills will be proposed and passed.
As for trade - manufacturing does not run facilities on 100% profit, industry attempts to run above break even and in some industries that can be a high percentage of turnover - even a loss of 10% trade can have a devastating effect in some industries and can translate into large amounts in a short time.
Whist I have seen claims that the UK represents a relatively small amount of EU export, fact is that is a general figure, the EU consumes significant amounts of trade in specific outputs - look at the car industry. Increased tariffs for imports would be hugely damaging.
Now you’d think it works both ways, it does in a way - but - 20% extra EU import duty also means a 20% import duty on EU goods to UK. So now major EU industries are now competing in a world market to sell into the UK, and their cars are now 20% more expensive - whereas Japanese cars still cost the same. We can repeat that for many other products.
If leaving the EU zone fully is actually the disaster that the doom mongers claim, sterling will fall, and it will fall plenty - we will have inflation, but it will also mean that imports cost even more - especially from the EU - but not necassarily all that much for other world goods that attract EU importation duty. What will also happen is that the cost of UK goods will also fall - it will be cheaper to buy goods from the UK becuase of the devaluation.
At its most extreme you could imagine sterling collapse - with maybe a 20% drop, now your EU goods will cost up to 40% more to bring into the UK - and yet UK goods even with the EU 20% WTO rules will cost about the same in sterling.
Lots and lots of disruption to be sure, but it really is not in the interests of the EU to watch UK currency to fall due to massive loss of UK markets.To have a much cheaper cost high volume producer right on your own borders is going to be a problem.
This is why there simply will not be a UK-EU doomsday - our costs will increase but not all that much - but we will see.
Last caveat of course - we do not actually know the contents of the deal that has been negotiated, we don’t know if our parliament will support it, times and governments change both in the UK and the EU, it took 45 years to get to this point and I think that at most we will slowly drift away from EU institutions and even then there will be many areas of common interest. The deal, if it happens, is certainly not the final position or accommadation, and you can expect lots of arrangements and mini deals in the decades to come.
