Wednesday 27 July 2016

Brexit Pie - Recipe For Disaster.

Why did Sterling plummet following Brexit?

Perhaps it’s simply because the markets themselves and the fiscal powerhouses that quietly drive them, could deduce the situation into which Little Britain had just placed itself and thus adjusted accordingly.

Now the combined UK media that operated such a fervent anti-EU campaign finds itself in a situation which, in simple terms, means they daren’t explain the ramifications to its readership. Ditto the Westminster Government, of whatever shade.

Effectively this is what happened on June 23rd 2016.

While there are a lot more subtle flavours to the Brexit Pie, here are some of the main, basic ingredients listed on the tin. Some flavours were carefully hidden by ‘Brexiters’ before the vote. Somewhat paradoxically, neither could ‘Remainers’ reveal these rather toxic elements. It might well also explain why the ‘Remain’ camp ran such a god awful campaign – they’d no choice.

Ingredients:

1.    Over the last half century or so, Westminster’s policies have effectively taken a powerhouse of a manufacturing nation where 48% of its output and effectively its folk, were tied to manufacturing or the production of goods.

2.    By 2014 the Office for National Statistics(ONS) now has only 8% of the population and 12% of output tied to the  manufacturing sector. This arena has been effectively reduced by 75% under successive Westminster governments. In quite simplistic terms, the real wealth and lifeblood of the country has effectively been reduced by a like amount.

3.    Now look at the effect it’s had on historical exchange rates. In 1948, Sterling valued at over $4. Today, it is around $1.30 and tracking down. Overall, that loss of manufacturing capacity has tracked our loss of currency value quite nicely.

4.    Effectively the UK now has about one person in 12 in the manufacturing sector. In its bluntest terms this little Union is asking one person to carry the load of eleven more. That’s the real fundamental reason for Austerity.

5.    Between governmental economic and fiscal mismanagement at the UK level Westminster is rapidly leading us to a debt load which the UK is rather rapidly becoming unable to support.

6.    The markets are aware that the UK effectively just signed away it’s EU rebate and stimulus packages. Consequently, that’s billion’s a year added to the red ink on that national ledger, and not over decades.

7.    The markets also know that the UK just resigned from that fabled ‘seat at the top table’ in the worlds’ most significant trading block. Now Little Britain has no say in the most significant world around it. We will rely on the goodwill of our neighbours, goodwill we ourselves have strained to the breaking point.

8.    In order to retain access to the single market, the City of London knows that the British Nations will need to maintain somewhere close their current contribution level to the EU.

Method:

Deduct the losses and it’s shaping up to be a rather massive fiscal hole.
Worldwide finance is aware that these Islands will have to accept EU directives and EU laws which the EU insists upon, or we will lose or end up with restricted access to that single market.  
The United Kingdom voted for immigration control; The EU will not allow it, Little Britain must accept that, or lose free access to the single market.
Losing access to Europe’s single market is now effectively taking a basket case economy and flushing.
The EU holds all the aces, its member states the remaining cards, while the UK has effectively folded, walking away from the table.

Now let the negotiations begin.

2 comments:

  1. Scotland in Europe not the UK. Let's get on with it.

    ReplyDelete
  2. Was all this by accident, or design. There's only one group of people who are only going to get poorer as a result of this- and it's not the 1%

    ReplyDelete