Deal or no deal, Brexit won’t disappear so soon. The only thing that will be decided in the coming days is the difference between very hard or hard brexite.
For the United Kingdom, this means trade distortions, higher costs and more bureaucracy for exporters and importers, fewer jobs, fewer taxes for chancellors and much more. Ireland is not very useful, although an agreement would be welcome.
All this is, of course, familiar, along with the idea that the Brexit economy did not matter much during the referendum and today it does not matter at all.
Brexit grew and metastasized as an incurable tumor. The ruling Conservative party is only one victim: its transformation into a fundamentalist version of the Brexit party is almost complete. All that is missing is Nigel Farage as a PM.
Political scientist Robert Peston this week released a chart showing the occurrence of Covid-19 during the lock-in, which correlates with UKIP votes in the 2015 general election.
I think it was a joke about correlation versus cause. If you are an anti-vaxxer, we can probably predict which side of the Brexit partition you are lying on. Brexit defines almost everything.
I repeat: this has nothing to do with the economy. Brexit has economic implications, but these are not relevant to the debate; Their impact on people’s lives is another matter.
The best example is the line about fishing and the mysterious absence of financial services.
The fishing industry directly employs around 12,000 people, of whom around 20 percent are part-time.
Another 2,000 are employed in fish processing, a company with a turnover of GBP 3.1 billion (EUR 3.4 billion). More than 60 percent of the employees in processing are immigrants.
Fisheries (and aquaculture) account for about 0.02 percent of the United Kingdom. economy, measured in gross value added, or GBP 466 million. (Almost every media report on the Brexit talks says the number is 0.1 percent. I have no idea why. Either way, we are not talking about a large sector of the British economy).
Most fish caught by British boats are exported – obviously the wrong kind of fish for British tastes. Most fish consumed in the UK are imported.
Trade duties, especially agreements without an agreement, would destroy these exports and imports. There are not enough boats or processing facilities in the UK to handle all the fish caught in British waters.
Britain wants to keep more fish caught around the coast. For this reason, the importance of fish during the Brexit negotiations. The total absence of financial services from the negotiations reveals, as is expected, British indifference to the consequences for banking and insurance.
Financial services employ approximately 1.1 million people. This is about 34 times more than for employees employed in fishing. Funding is 7 percent of the economy and is close to a contribution of GBP 140 billion.
Under this measure, funding is 300 times greater than fishing. The significantly higher economic value of the multiple – compared to the employment multiple – is evidence of the relative productivity of financial services.
The added value per person in finances is an order of magnitude greater than in fisheries. In today’s Covid-19 budget deficits, that’s not much, but financial services also contribute around GBP 30 billion a year in taxes.
Estimates vary, but according to Brexit, 7,500 jobs have already been transferred from the British banking sector to the EU. There will be more. We will not know this for a long time, but we could end up losing more financial jobs than there are currently in the fishing industry.
Accompanying these jobs is an exodus of real business. Many activities that rarely make headlines are being moved, thanks in large part to the EU’s uncompromising stance on doing business in London.
We may not know much about swaps and the clearing of OTC derivatives, but a lot of money moves, as does these jobs.
It is not for nothing that some people wonder if the beginning of next month will witness some kind of anti-big bang for the City of London.
The original Big Bang was inspired by the Thatcherite market reforms of 1986, which resulted in an explosion of financial activities and jobs. Is this revolution going to turn around now?
It’s a weird, great innovation inspired by Thatcher – as a single market – buried by her descendants Tora.
Anyone who thinks that the Brexit negotiations should depend on the economy will wonder how it all happened. Anyone who realizes the importance of the economy will understand.
You can be emotional when fishing. It’s hard to get a warm vague feeling from bankers.
Maybe it is finally a punishment for the sins of the financial crisis. It doesn’t help that most financial services companies are in London, where voting remains, a place where the Conservative government despises it.
Official estimates of the cost of no trade are at 2% of GDP next year and 1.75% in 2025. That is a hit of GBP 40 billion in 2021.
Whether they make a deal or not, the fact that they were willing to take these risks for fishing speaks to today’s policy.
It depends on the economy, but only in terms of politics. Will the consequences ever go back into politics? Only when cancer can be cured. It does not exist for this vaccine.