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The Saturday Economist - we always keep you in the picture …
The Saturday Economist on Brexit
At the Saturday Economist we always like to keep you in the picture. In this April report, we endeavour to deliver an objective and dispassionate analysis of the pros and cons of Brexit.
We provide the facts and information to assist the decision making process for all our readers. No polemics just the facts.
We assess the implications of leaving the EU and outline the alternative relationships that could ensue - the Danish model, the Swiss Model, the Icelandic model and the Turkish option.
In addition we will consider the impact on UK growth, investment, trade, Sterling, immigration, sovereignty and security of the in-out decision. Don’t miss this important update … all the information you need to make an informed decision.
The Saturday Economist - we always keep you in the picture …
On Brexit … The Spectrum of Issues …
?Business Economic
Social PoliticalImmigration NHS
We think it is important to differentiate the main issues into business, economic, political and social …
Trade Investment Uncertainty
Sovereignty … Who governs Britain …
Growth Jobs Inflation Trade
Deficits Current Account Borrowing Sterling
The Saturday Economist … we always keep you in the picture.
12th March 2016Who governs Britain …
Avoiding jingoism and post imperial calls to action …
The Saturday Economist - we always keep you in the picture …
The Key Question …
?
Should the UK remain a member of the EU or leave the EU …
Should the UK remain a member of the EU or leave the EU …
The Key Question …
The polls suggest the outcome will be pretty close on the 23rd June ….
The Saturday Economist - we always keep you in the picture …
Should the UK remain a member of the EU or leave the EU …
The Key Question …
The FT poll is rather more supportive of the “Remain” case …
The Saturday Economist - we always keep you in the picture …
The Key Question …It is not, or should not be a choice between Europe and the Rest of the World …. we need to trade with both …
The Saturday Economist - we always keep you in the picture …
The Saturday Economist - we always keep you in the picture …
Geographically we are part of Europe like it or not … “Gravitational pull” has a significant impact on trade flows …
Eurozone Q4 2015 Latest Data GDP 1.5%
Growth Rate
20151.6%2016
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
-0.1 1.3 -0.3 0.5 0.2 0.4 0.8 0.9 1.0 1.4 1.7 1.97
Our Forecasts - Euro GDP Growth this year
2014 0.9%
2015
1.5% … and by quarter %
Growth Rate
Data
-2.0
-1.0
0.0
1.0
2.0
3.0
2010 2011 2012 2013 2014 2015 2016 2017
1.71.61.50.9
-0.4-0.6
1.61.9
Euro GDP Eurozone GDP Change year on year … Eurozone Inflation …
Date of Next Update :
-2.0
-1.0
0.0
1.0
2.0
3.0
2010 2011 2012 2013 2014 2015 2016 2017
1.2
0.50.00.4
1.3
2.52.7
1.6
Euro Inflation
Release Date14th August
A slow recovery is taking place. Growth in Ireland was 7.5% and in Spain it was 4.5% in 2015 …
The Saturday Economist - we always keep you in the picture …
The Saturday Economist - we always keep you in the picture …
How difficult is it to leave …
?
So how difficult is it to leave?…
The Saturday Economist - we always keep you in the picture …
Article 50
Simple really, we invoke Article 50 … An Article with 5 clauses and about 270 words …
The Saturday Economist - we always keep you in the picture …
How long will it take …
?
How long will it take to exit?We have no idea. it has never been done before. Exit could take up to two years to organise but it could take even longer. Then we still have to negotiate a new trade deal …
How long will a trade deal take?That could take a further five to ten years at least …
Canada and the EU “CETA” The Trade deal with Canada and the EU has taken almost ten years to negotiate … it could take a similar period to determine the UK : EU deal …
USA and the EU “TTIP”The Trade deal with USA and the EU is an ongoing negotiation which began in 2013 … there is no guarantee of the US commitment to a Free Trade Deal on the scale envisaged by the EU …
USA and the UK …There is no reason why the UK would be able to jump the UK in bilateral talks prior to a satisfactory out turn for a “TTIP” deal …
Trans Pacific Partnership…The Trans-Pacific Partnership (TPP) is a trade agreement among twelve Pacific Rim countries signed on 4 February 2016 in Auckland, New Zealand, after seven years of negotiations.
Historically, the TPP is an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4), which was signed by Brunei, Chile, New Zealand, and Singapore in 2005
Ten Years
Ten Years
Ten Years?
The Saturday Economist - we always keep you in the picture …
How long will it take … The “Leave” deal is an impossible ask!
?
Basis of ”Leave Camp” Deal ..The Leave Camp appear to want …Free trade in goods …Free trade in Services …Free movement of Capital …Free from payments into the EU …Free from commitment to Free movement of Labour … Free from product and labour regulation …
That could take forever … And an impossible “give”
The Saturday Economist - we always keep you in the picture …
And what of free trade deals with the rest of the world …
?
Iceland and China Iceland negotiated a Free Trade deal with China. It took six years for trade flows valued at $180 million largely confined to fish, Ice and Igloos.
Even then there were restrictions on paper products to China and food products into Iceland …
Six Years
The Saturday Economist - we always keep you in the picture …
Be careful what you wish for … the deficits could just get worse
?
UK and China …The UK trade deficit with China was £25 billion in 2015. The UK exported £13 billion worth of goods into China …
China exported £38 billion of goods into the UK even with EU tariffs in place …
The deficit could just get worse …
UK and Norway …The UK trade deficit with Norway was £10 billion in 2015. The UK exported £3 billion worth of goods into Norway in 2015.
Norway exported £13 billion of goods into the UK even with EU restrictions in place …
The deficit could just get worse …
UK and Canada …The UK trade deficit with Canada was £3 billion in 2015. The UK exported £4 billion worth of goods into Norway in 2015.
Canada exported £7 billion of goods into the UK even with EU restrictions in place …
The deficit could just get worse …
UK and Japan …The UK trade deficit with Japan was over £2 billion in 2015. The UK exported £5 billion worth of goods into Japan in 2015.
Japan exported £7 billion of goods into the UK even with EU restrictions in place …
The deficit could just get worse …
ChinaTrade deficit£25 billion
NorwayTrade deficit£10 billion Canada
Trade deficit£ 4 billion
JapanTrade deficit£ 2 billion
The Saturday Economist - we always keep you in the picture …
How important is the EU to the UK and vice versa …
?
Comparative Sizes
Size of economies (GDP, $bn)
The EU is the largest trading block in the world … excluding the UK it would be the second largest trading block in the world after the USA ….
The Saturday Economist - we always keep you in the picture …
Comparative Sizes
Size of economies (GDP, $bn)
3,860
2,836
German
y
Fran
ce
4,616
Japa
n
2,597
The UK is the fifth (or sixth) largest economy in the world … after USA. China, Germany, Japan and possibly France …
The Saturday Economist - we always keep you in the picture …
0%
10%
20%
30%
40%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2030
North America
Asean
China
Japan
Europe
Share of World GDP
It is true to say, Europe’s share of world GDP is declining as the ASEAN block expands …
The Saturday Economist - we always keep you in the picture …
China China will dominate the world growth story in the years ahead …
It is the second largest economy in the world …
With a population of 1.3 billion …
China struggles to enter the world top eighty in terms of GDP per capital …
The Saturday Economist - we always keep you in the picture …
The Saturday Economist - we always keep you in the picture
6th February 2016
China
Return of the Middle Kingdom …We talk of the return of the Middle Kingdom …
China - Return of the Middle Kingdom
0.0%
10.0%
20.0%
30.0%
40.0%
1000 1500 1600 1700 1820 1870 1913 1950 1973 2003 2014
22%
25%
29%
22%
33%
17%
9%
5% 5%
15%13%
22%24%
29%
23%
37%
28%
24%
22% 23%21%
18%
Share Share of World Population
Share of World GDP
Data : Maddison A. Contours of the World Economy 1 - 2030 AD OUP
In the 17th century and in the early 19th century … China was the largest economy in the world …
The Saturday Economist - we always keep you in the picture …
The Saturday Economist - we always keep you in the picture
6th February 2016
The importance of being ASEAN …The ASEAN trade block is of critical importance to China …
The Saturday Economist - we always keep you in the picture
6th February 2016
China
Return of the Middle Kingdom …Collect ive ly the ASEAN block accounts for 50% of world population and 30% of World GDP …
Growing at 4.5% per annum …
The Saturday Economist - we always keep you in the picture
6th February 2016
China
Return of the Middle Kingdom …
The UK is not guaranteed a trade slot in the ASEAN trade group …
The ASEAN block accounts for just 16% of UK exports …
The Saturday Economist - we always keep you in the picture …
How important is the EU to the UK and vice versa …
?
Share of EU Exports
Others 38%
4%6% 5%3%2%3%
China 8%
USA 15%
UK 16%
UK USA China Japan Korea NorwayRussia Switzerland Turkey Others
The Saturday Economist - we always keep you in the picture …
The UK accounts for 16% of EU exports …
Share of UK Exports
3%2%5%7%
ASEAN 16%
North America 20%
EU 47%
EU North America ASEAN MENAOther Europe South America Other nc
The Saturday Economist - we always keep you in the picture …
The EU accounts for 47% of UK exports …
A wider Europe accounts for 52% of UK exports …Europe
52%
Trade Data 2015
£ billion UK to EU % GDP EU to UK % GDP Deficit /Surplus
ExportsGoods £134.4 7.2% £223.4 1.6% -£89.0
ExportsServices £85.7 4.6% £65.7 0.4% + £20.0
ExportsTotal £220.1 11.8% £289.1 2.0% -£69.0
Trade Data : ONS 2015
The Saturday Economist - we always keep you in the picture …
EU trade with UK accounts for 2% of
EU GDP …UK trade with EU accounts for 12% of
UK GDP …
Share of UK Exports
North America
Europe
The Saturday Economist - we always keep you in the picture …
It is true to say, the EU share of UK exports is falling …
Share of Trade
30%
40%
50%
60%
70%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
UK Share of Trade with EU … Trade in Goods
Share of Exports
The Saturday Economist - we always keep you in the picture …
We expect the trend to continue in the years ahead, whilst the EU share of imports is likely to be maintained at around 55% …Share of Imports
Remain basis
Share Trade
30%
40%
50%
60%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
UK Share of Trade with EU … Trade in Services
Share of Exports
The Saturday Economist - we always keep you in the picture …
Trade in services are expected to be much more stable … EU 48% of service sector imports
UK exports to the EU around 40% of total exports …
Share of Imports
Remain basis
Share Trade
30%
40%
50%
60%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
UK Share of Trade with EU … Trade in Goods and Services
Share of Exports
Share of Imports
The Saturday Economist - we always keep you in the picture …
This is the pattern of trade in goods and services with the EU …
Import shares are steady whilst the UK develops greater trade links with the rest of the world …
Remain basis
UK Trade Total
Total Goods Trade …
0
100,000
200,000
300,000
400,000
500,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
£ millionThe Saturday Economist - we always keep you in the picture …
This is the pattern of total trade in goods … the deficits set to continue and expand …
UK Trade Total
Total Services Trade …
0
50,000
100,000
150,000
200,000
250,000
300,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
£ millionThe Saturday Economist - we always keep you in the picture …
This is the pattern of total trade in services … the surplus set to continue and expand …
For more information - Check out The Saturday Economist .com
Trade with EU
-150,000
-100,000
-50,000
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Trade in Goods Deficit with EU …
The UK has a huge deficit trade in goods with the EU … we expect a deficit of £100 billion in 2016 …
For more information - Check out The Saturday Economist .com
-10,000
0
10,000
20,000
30,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Trade in Services Surplus with EU …
Trade with EU
The UK has a huge surplus in services with the EU … we expect + £20 billion surplus in 2016 …
For more information - Check out The Saturday Economist .com
Trade with EU
-150,000
-100,000
-50,000
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Trade in Goods and Services Deficit with EU …
The UK has a huge deficit in goods and services with the EU …
For more information - Check out The Saturday Economist .com
UK Trade with EU
£ million
This is the hard data behind the charts!
At the Saturday Economist … we don’t just make up the numbers …
Cost of Eu Contributions
Trade with EU
The Saturday Economist - we always keep you in the picture …
This is the pattern of EU trade in goods … with member companies
For more information - Check out The Saturday Economist .com
Trade with Europe ...
AustriaBelgium BulgariaCroatiaCyprus
Czech RepublicDenmark
EstoniaFinlandFrance
GermanyGreece
HungaryIreland
ItalyLatvia
LithuaniaLuxembourg
MaltaNetherlands
PolandPortugalRomania
Slovak RepublicSlovenia
SpainSweden
-30 -22.5 -15 -7.5 0 7.5 15
UK trade deficits with other members states Goods and services, £ billion, 2014
This is the wider analysis …
Trade with EU
The Saturday Economist - we always keep you in the picture …
This is the pattern of trade in goods and services by product …
For more information - Check out The Saturday Economist .com
The importance of FDI
0
100
200
300
400
500
600
2005 2006 2007 2008 2009 2010 2011 2012 2013Figure 1 and 2 Overseas net stock of assets held in the UK and earnings received
0
10
20
30
40
2005 2006 2007 2008 2009 2010 2011 2012 2013
Fig 1 EU Assets in UK … Fig 2 EU Earnings in UK …
0
120
240
360
480
600
2005 2006 2007 2008 2009 2010 2011 2012 2013
Fig 3 UK Assets in EU …
0
10
20
30
40
2005 2006 2007 2008 2009 2010 2011 2012 2013
Fig 4 UK Earnings in EU …Figure 3 and 4 UK net stock of assets held overseas and earnings received
This is the pattern of foreign investment and earnings …
For more information - Check out The Saturday Economist .com
Costs of EU
Cost of EU Contributions
£350 million per week?
How much does it cost the UK …
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Costs of EU
Cost of EU Contributions
• Gross Cost £18.0 billion • Rebate £ 5.0 billion• Receipts £ 4.5 billion• Net Cost £ 8.5 billion
• Receipts relate to farming subsidies and poor area allocation. Figures are for 2015. Source HM Treasury "European Union Finances 2015. • Net cost - £23 million per day
How much does it cost the UK …
£350 million per week?
£350 million per week (£18 billion per annum) is the Gross cost before rebate and receipts …
For more information - Check out The Saturday Economist .com
Costs of EU
Cost of EU Contributions
• Full Cost £18.0 billion • Rebate £ 5.0 billion• Receipts £ 4.5 billion• Net Cost £ 8.5 billion
• Receipts relate to farming subsidies and poor area allocation. Figures are for 2015. Source HM Treasury "European Union Finances 2015. • Net cost - £23 million per day
How much does it cost the UK …
£160 million per week?
The net cost is £8.5 billion…
More like £160 million per week …
The Saturday Economist - we always keep you in the picture …
How much does the EU cost …
?
£160 million per week but is that value for money …
For more information - Check out The Saturday Economist .com
Costs of EU and Allocation
€132,961.302014c1%ofGDP
FinancingofthegeneralbudgetandEUexpenditurebymemberstate(2014)[29]
6%
14%
Internal Policies 10%
Structural Fund 30%
CAP 40%
CAP Structural FundInternal Policies Pre Accession / CompensationAdmin
The EU budget is €133 billion that’s 1% of EU GDP approximately …
Most of which is accounted for bythe common agricultural budget …
Just 6% is spent on administration …
How much does the EU cost …
For more information - Check out The Saturday Economist .com
EU Budget Who Pays
GermanyFrance
United KingdomNetherlands
ItalySwedenAustria
DenmarkFinland IrelandCyprusCroatia
MaltaSpain
EstoniaSlovenia
LatviaSlovakia
LuxembourgLithuaniaBulgariaBelgium
Czech RepublicPortugalRomania
GreeceHungary
Poland-18,000 -13,500 -9,000 -4,500 0 4,500 9,000 13,500 18,000
Winners and Losers
FinancingofthegeneralbudgetandEUexpenditurebymemberstate(2014)[29]
Germany is the largest contributor …
Po land , Hunga ry t he l a rges t beneficiaries …
The Saturday Economist - we always keep you in the picture …
The Big Issues …
?
So what are the big issues …
For more information - Check out The Saturday Economist .com
The Big Issues …
Regulation costing £27 billion!Working Time DirectiveTemporary Agency Workers DirectiveEnergy and Climate Change
For more information - Check out The Saturday Economist .com
The Big Issues …
Here are the claims of savings from the leave camp …
We haven’t verified these numbers …
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The Big Issues …
And the proposals for change
For more information - Check out The Saturday Economist .com
The Big Issues …
Chemicals and Health
Emissions Trading System
Common Security and Defence Policy
The Bigger list …
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The Options
Current Deal
Yes
No
Yes
Yes
Yes
No
Canada Turkey
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The Options
1.1 This paper looks at the potential models for the UK’s relationship with the EuropeanUnion, if there were to be a vote to leave. It provides examples of countries that are notmembers of the EU but have other arrangements with it – specifically Norway, Switzerland,Canada and Turkey – and describes those arrangements. It also looks at a possiblerelationship based only on World Trade Organisation membership.
1.2 These models offer different balances in terms of advantages, obligations andinfluence. If the result of the referendum were a vote to leave, we would seek the best possible balance of advantage for the UK. However, regardless of the preferred outcome the UK seeks, the precedents clearly indicate that we would need to make a number of trade-offs:
•• in return for full access to the EU’s free-trade Single Market in key UK industries, wewould have to accept the free movement of people;
•• access to the Single Market would require us to implement its rules. But fromoutside, the UK would no longer have a vote on these rules. And there is noguarantee that we could fully replicate our existing cooperation in other areas, suchas cross-border action against criminals;
•• full access to the Single Market would require us to continue to contribute to the EU’sprogrammes and budget;
•• an approach based on a Free Trade Agreement would not come with the same levelof obligations, but would mean UK companies had reduced access to the SingleMarket in key sectors such as services (almost 80 per cent of the UK economy),1 andwould face higher costs;
••we would lose our preferential access to 53 markets2 outside the EU with whichthe EU has Free Trade Agreements. This would take years to renegotiate, with noguarantee that the UK would obtain terms as good as those we enjoy today; and
•• in order to maintain the rights of UK citizens living, working and travelling in other EUcountries, we would almost certainly have to accept reciprocal arrangements for theircitizens in the UK.
1.3 It would take up to a decade or more to negotiate a new agreement with the EU and toreplace our existing trade deals with other countries. Moreover, each of the alternative models would come with significant obligations and costs for the UK:
•• the Norway model has considerable access to the Single Market but not inagriculture and fisheries. It does not give access to the EU’s trade deals withcountries outside the EU and still requires customs checks on goods crossing intothe EU. It also involves making a significant contribution to EU spending, acceptingfree movement of people, and taking on EU rules without having a vote on them;
•• bilateral agreements vary, but none provide full access to services, which constitutealmost 80 per cent of the UK economy. Higher levels of access to the Single Marketinvolve implementing EU rules in domestic legislation, accepting free movement (asin the case of Switzerland), and in some cases making contributions to EU spending.The EU-Canada Trade Agreement provides reduced access to the Single Market forexample in services and agriculture; and
•• if we could not reach agreement with the EU on a new arrangement, our tradingarrangements would revert to WTO rules. This would provide the most completebreak with the EU. It does not entail accepting free movement, budgetarycontributions or implementing EU rules. But it would cause a major economic shockto the UK. WTO rules mean that the EU, and all countries with which we currentlyhave trade deals, would have no choice but to apply WTO tariffs on exports fromthe UK – putting our companies at a competitive disadvantage. Meanwhile, the UKwould face a difficult choice between either raising tariffs on imports from the EUor lowering tariffs on imports from all countries. Raising tariffs would have knockoneffects on UK jobs and incomes, as well as on the attractiveness of the UK as adestination for international investment. Lowering tariffs would deny the UK revenue,and undermine our negotiating position in future trade deals.
1.4 Under any of these alternatives, there would also be a non-economic cost, in terms ofthe UK’s security and strength. The European Arrest Warrant and the Schengen InformationSystem, for instance, allow our law-enforcement agencies to obtain and act on informationfrom their EU counterparts. Even if over time we manage to negotiate replacement bilateralagreements, there is no guarantee that we could fully replace our access to current EUmeasures for police and security cooperation. And we would no longer be able, as weare now, to use the EU as one of our major tools, like our membership of the UN or otherinternational organisations, to project UK influence in the world, or to use the EU’s economicweight to impose sanctions, such as those it has imposed on Russia or Iran.
1.5 We need to assess the benefits offered by any alternative model against what the UK’smembership of the EU gives us now. The UK Government believes that no existing modeloutside the EU comes close to providing the same balance
March 2016
The Saturday Economist - we always keep you in the picture …
The Big Ask … from the “Leave” camp …
?A Free Trade Agreement for goods and services …
A Free Trade Agreement for Capital…
Restrictions on Labour migration…
No EU budget payment …
Free from EU regulation on goods, labour and capital …
An impossible ask …An impossible give …An impossible deal …
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
1 Trade … 50 % of trade is at stake With no guarantee of post exit trade deals Trade deficits with China, Japan, Norway and Canada could get worse Cars, Aerospace and Financial Services particularly at risk
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Costs of EU
Trade and Tariffs
The tariffs at issue …
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The Big Risks …
?
1 Trade …
2 Investment … at risk Uncertainty … in the short term Strategic … Motor, Aerospace and financial in the medium term …
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The Big Risks
Growth and Jobs …
CBI … 3 million jobs related to EU 1 million jobs could be lost
The Economic estimates vary widely and wildly …The CBI estimates that 3 million jobs are related to trade with the EU …Of which 1 million could be lost in the worst case …
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Costs of EU
This is the range according to the PwC CBI sensitivities …
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The Big Risks …
?
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services
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Growth Financial Services … Relocation Passporting
Financial Services could be the biggest area of impact, w i t h m a n y i n s t i t u t i o n s relocating to ensure Passport access is maintained …
It will also be the toughest area of negotiation with strong competition from EU financial centres in Paris and elsewhere …
The Big Risks …
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
For more information - Check out The Saturday Economist .comDate of Next Update : 10th October
Heading in the wrong direction …
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The Big Risks …
Trade deficits are likely to deteriorate in a free trade world …
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account “Putting more pressure on the capital account”
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
UK Current Account Deficit % of GDP
For more information - Check out The Saturday Economist .com
The UK has a significant current account deficit over 5% in 2015 …
We are already reliant on the “kindness of strangers” to finance the deficit holding 25% of UK Gilts and 50% of UK capital markets …
The Big Risks …
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account
6 Sterling
MarchLatest Data Sterling £1.4514
Dollar Spot
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
2.10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sterling Dollar Daily Rate
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Dollar Rate $Resistance
$1.6800 $1.5000
Support
$1.70 resistance level
Which way for Sterling?
$1.50 support level
Technical
Short Rates
Long Rates
Money
Capital Flows
Portfolio
-0.15 0 0.15 0.3
Sterling Dollar
18th March
T h e r e a r e s o m e suggestions Sterling could fall by 20% …
The Big Risks …
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sterling Euro Daily Rate
Latest Data Sterling €1.2853
Euro Spot
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Euro Rate
€1.28 resistance / support level
Which way for Sterling?
€
March Resistance$1.4000 $1.2800
Support
€1.40 resistance level
Technical
Short Rates
Long Rates
Money
Capital Flows
Portfolio
-0.5 -0.25 0 0.25 0.5
Sterling Euro
18th March
In the short term as a result of uncertainty and volatility … in the long term as a result of capital outflows ..
The Big Risks …
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account
6 Sterling
7 Agriculture and the CAP …
Common Agricultural PolicyCAP accounts for 40% of EU spend …
Set to fall to 30% over the next five years
N F U i s v o t i n g t o remain …
With large proportion of trade with EU at risk …
Farm subsidies £1.5 billion could be lost if Brexit happens…
But could be funded by HMG from EU payment savings …
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NFU pro 50% incomes dependent
Key markets could be l o s t i f t a r i f f s a r e imposed …
The Big Risks …
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account
6 Sterling
7 Agriculture and the CAP …
8 Fisheries CFP
The Saturday Economist on Brexit and Fishing …
The Big Risks …
It’s not just about “our” fish …Wor ld wide agreements are necessary
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account
6 Sterling
7 Agriculture and the CAP …
8 Fisheries CFP
9 Migration
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ImmigrationThe Big Risks …
N e t m i g r a t i o n i s 300,000 …
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ImmigrationThe Big Risks …
Almost 200,000 is study related …
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ImmigrationThe Big Risks …
Almost half from the EU …
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Immigration
Total EU immigration is 260,000 …
The Big Risks …
For more information - Check out The Saturday Economist .com
ImmigrationThe Big Risks …
We have no control over borders …
We must control EU immigration …
Puts pressure on schools and NHS
A drain on welfare …
Deflationary - low level of pay …
Taking “British” jobs
We do have control over borders …
Free movement of labour is an EU principle
NHS is reliant on immigration to maintain staff levels …
Some welfare access in place re timing and pricing …
Provides essential labour pool …
UK approaching “Full Employment” …
We have more vacancies than claimants …
Immigration a source of growth to fund Schools and NHS
Leave … Remain …
The Arguments
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
9 Migration
10 Inflation Immigration cap could push up pay Tariff reductions could lower prices
11 Timetable It will take a long time to set up ..
China - Iceland $180m Canada - EU - CETA 10 years
12 Growth … Will be hit - trade & investment
Motor, Aerospace (Airbus) & Finance 13 Jobs …
3.0 to 3.5 m jobs dependent on EU trade
14 Balance of PaymentsWill deteriorate faster
15 Government Borrowinglargely neutral
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account
6 Sterling
7 Agriculture and the CAP …
8 Fisheries CFP
The Saturday Economist - we always keep you in the picture …
The Big Risks …
?
9 Migration
10 Inflation Immigration cap could push up pay Tariff reductions could lower prices
11 Timetable It will take a long time to set up ..
China - Iceland $180m Canada - EU - CETA 10 years
12 Growth … Will be hit - trade & investment
Motor, Aerospace (Airbus) & Finance 13 Jobs …
3.0 to 3.5 million jobs dependent on EU trade
14 Balance of PaymentsWill deteriorate faster
15 Government Borrowinglargely neutral
16 Scotland …Threat to union?
17 Science TechNeutral - subsidies lost couldbe HMG funded
18 Security …Brexit won’t help
19 Peace …NATO and EU issuesEU is a force for peace internalNATO is a force for peace external
20 Sovereignty A political issue
1 Trade …
2 Investment … Uncertainty short term Strategic … long term
3 Financial Services …
4 Trade Deficits …
5 Capital Account
6 Sterling
7 Agriculture and the CAP …
8 Fisheries CFP
The Saturday Economist - we always keep you in the picture …
?Leave says the UK is “powerless to prevent laws that damage our country”. But the UK enjoys 12.7% of votes in the EU Council, a veto in key areas and influence on many issues.
The Big Risks … Sovereignty
In the UK data suggest that from 1997 to 2009 6.8% of primary legislation (Statutes) and 14.1% of secondary legislation (Statutory Instruments) had a role in implementing EU obligations, although the degree of involvement varied from passing reference to explicit implementation.
Source How much legislation comes from Europe?House of Commons Library October 2010
Who governs Britain?
The leave camp take exception to . The Working Time DirectiveThe Temporary Agency Workers DirectiveThe Energy and Climate Change legislation butMost of these are welcomed by progressive business
Between 1993 and 2014, 64.7 per cent of UK law can be deemed to be EU-influenced. EU regulations accounted for 59.3 per cent of all UK law. UK laws implementing EU directives accounted for 5.4 per cent.
This body of legislation consists of 49,699 exclusively ‘EU’ regulations and 4,532 UK measures which implement EU directives.
This figure is important because EU regulations are transposed into national law without passing through Parliament. Hence, they do not appear in the recent calculation by the House of Commons Library which estimates the proportion of EU legislation at 13.3 per cent.3 The 13.3 per cent
Source Business for Britain Tim Philpott
The level of influence is confused …
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?The CBI
The EEF
The SMMT
The NFU
The Big Risks …
Voting to remain …
The Saturday Economist - we always keep you in the picture …
On Brexit … The Spectrum of Issues …
?Business Economic
Social PoliticalImmigration NHS
We think it is important to differentiate the main issues into business, economic, political and social …
Trade Investment Uncertainty
Sovereignty … Who governs Britain …
Growth Jobs Inflation Trade
Deficits Current Account Borrowing Sterling
“Whatever we may think of the political and social arguments …There is no “Business Case” for Brexit"