“It’s life Jim, but not as we know it.” – Star Trekkin’
There are several ways of looking at the results of last week EU referendum in the U.K.
Clearly the people spoke and the result was to withdraw from this European Political Union. However, most voters(over 59 years old) would suggest they joined a common market in 1975 and not a political union. Hence how does one leave something one did not join in the first place?
The other point of this referendum is that it appears to be the over 50s who have swung the result for “leave.” Those are the same people who remember their parents voting in 1975. On the point of 1975, it’s also worth remembering that until June 23, 2016, not one U.K. citizen under 59 years of age had voted in joining the EU.
So a nation of merchants has made its decision. The vote was to leave the union. To take back borders, sovereignty, laws, trading standards, measurements, deportation requirements. To take control from Europe and return it to the “Mother of Parliaments.”
It must also be noted that the U.K. created the modern Europe. Winston Churchill advocated for a “kind of United States of Europe” in 1946, but the EU wasn’t the kind he meant. A common flag, a shared currency and open borders without passport control are unlikely to have been in Sir Churchill’s thoughts. Nor at the time would he have known of the “Red House Report” conceived in Strasbourg, France, in 1944,
Now that the economy that is referred to as Europe’s second largest economy, likely to be the largest in 180 months, and the world’s fifth largest GDP, has left. What are the consequences?
On the domestic front, it would be a new prime minister. David Cameron resigned as the people had voted in effect against him. However, that is too simplistic a view. We have London, Northern Ireland and Scotland, city after city voted to leave. Why did they vote to leave when they would most likely experience the “Balkan Effect”? The effect entails the workers see their wages diluted by cheaper labour from the former Eastern Block, and wage increases in the 1% range due to higher labour supply from overseas, as employers’ profits soar. But, this effect was not felt in London or Scotland. In Leeds, Manchester, Newcastle, Liverpool,
The result says more about the demographics of the U.K. than it does about the view of the people toward Europe. Metropolitan Elite London, not effected, voted “remain.” The rest of the country voted “leave.”
Will BMW stop making every new gear box for every new car it builds in the U.K.? No.
Will Nissan (which produces more cars in one U.K. factory than the entire Italian car manufacturing industry), Toyota, Honda and Tata Motors’ Jaguar leave the U.K.? No.
Will the international banks leave London where they have every facility and access to the required skill set? No.
Will the U.K. collapse? No.
Will France hold a referendum after the presidential elections? Yes.
Will Netherlands & Italy do the same? Yes.
Will the EU collapse? No, but ironically it will need to change, perhaps into the organisation the U.K. wanted it to be in the first place.
A chartered banker by profession, Michael Moore has held senior roles in banking, international finance, lending, treasury, FX and banking technology for more than 20 years. He is a member of the Chartered Institute for Securities & Investment and a fellow of the Royal Society of Art. He is also an author, with his book “Tom Lorrigan The Fire Starter” published in 2011. He has also built three hedge funds.
He’s been living in Switzerland for the past eight years. He is now a gold, oil and dollar trader. He spends most of his time researching the market and offering analysis to his 27,000 ultra-high-net-worth-individual clients. You can contact him via Twitter @tomlorrigan.
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