The weak minded reporters on The Daily Express (see HERE) are reporting on Farage addressing his rally in Bolton to stop the Brexit "betrayal" and describing how he "BRILLIANTLY" outlined how Mrs May should negotiate with the EU. His BRILLIANT idea is to go for a Canadian style FTA like CETA (HERE). He is quoted: "We will leave all the political parts of the European project but we offer you in return a Canada-style trade deal where we buy and sell goods from each other without tariffs, without us paying money, without free movement of people, without jurisdiction of the European Court of Justice". Amazingly he seems to think WE should offer THEM something they offered us last December, nine long months ago.
A Canada type FTA is certainly one of the alternatives. We would be the only European country not in the EU, or an associate member or accession candidate and not in either the EEA or EFTA. Talk about being the odd one out. But we still need to agree a backstop in Ireland anyway and this is not a given. In the end I'm sure something will be agreed on the Irish border since the alternative, leaving without a deal, is just not feasible.
The transition will then be a period for the details to be negotiated. It will take a long time, far more than 21 months and the transition will have to be extended, perhaps more than once. During this time many companies will relocate. Those that rely on just-in-time manufacturing will certainly want to consider their options since border delays and paperwork will be inevitable. Since the EU is the bigger market with more suppliers and more customers they will gain. We will see a slow decline in our GDP and a rise in unemployment.
As the moment of truth approaches, UK export growth has fallen for the sixth successive quarter according to this report by BDO LLP (HERE) and I note they say the car industry is our largest goods exporters. This is the sector most at risk if we do not manage firstly to get frictionless trade with Europe and secondly to renegotiate some of the EU FTAs that we trade under at the moment to reduce the percentage of domestic parts used and still allow them to be defined as UK goods. Both seem unlikely at the moment.
On this topic I noted, again in The Sunday Times, a report about trading in financial instruments called euro-denominated derivatives (no me neither). London has a clearing house (LCH) which trades about €1trillion in derivatives per day. But Eurex, part of Deutsch Borse which handles derivative trades in Europe says they are now processing €64billion per day. Not much compared to LCH but here's the thing - a year ago it was €3.6 billion!. Some growth. The chief strategy officer at Eurex, Matthias Graulich said there was now no price advantage for LCH and he tweeted, "Can't wait to see how the market will continue to change over the next couple of months". Is this Brexit related? The article claims it is and that France and Germany plan to steal parts of the market and move them to Paris and Frankfurt.
I posted a very long time ago (HERE) that Brexit would turn compatriots into competitors and so it is proving. Are we ready for it? No. Look out for more complaining that business is being lost. Our sense of victim hood is set to grow even more.
