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The Saturday Economist Brexit Briefing, all the information needed to make an informed decision

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The Saturday Economist on Brexit. All the information you need to make and informed decision. We analyse the arguments in to the business, economic, political and social. The political arguments relate to who governs Britain. The social argument largely dealing with immigration and implications for education, health care and welfare.
The economics case argues against Brexit, largely because of the uncertainty relating to the alternative options. Brexit will damage investment prospects in the short term (uncertainty) and in the long term (strategic). We consider that motor, aerospace and financial services industries are particularly at risk.
As for business ... there is no business case to support the "Brexit" argument. The level of uncertainty is too severe JKA

Published in: Business

The Saturday Economist Brexit Briefing, all the information needed to make an informed decision

  1. 1. The Saturday Economist - we always keep you in the picture … On Brexit … ? April 2016 …
  2. 2. 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.
  3. 3. The Saturday Economist - we always keep you in the picture … On Brexit … The Spectrum of Issues … ? Business Economic SocialPolitical Immigration 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
  4. 4. The Saturday Economist … we always keep you in the picture. 12th March 2016 Who governs Britain … Avoiding jingoism and post imperial calls to action …
  5. 5. 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 …
  6. 6. 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 …
  7. 7. 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 …
  8. 8. 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 …
  9. 9. 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 …
  10. 10. Eurozone The Saturday Economist … we always keep you in the picture. The EU is not a “basket case”
  11. 11. Eurozone Q4 2015Latest Data GDP 1.5% Growth Rate 2015 1.6% 2016 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 -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 1.71.61.5 0.9 -0.4-0.6 1.6 1.9 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 2.5 2.7 1.6 Euro Inflation Release Date 14th 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 …
  12. 12. On monetary policy … Mario Draghi is set to do whatever it takes …
  13. 13. The Saturday Economist - we always keep you in the picture … How difficult is it to leave … ? So how difficult is it to leave?…
  14. 14. 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 …
  15. 15. 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?
  16. 16. 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”
  17. 17. 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
  18. 18. 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 … China Trade deficit £25 billion Norway Trade deficit £10 billion Canada Trade deficit £ 4 billion Japan Trade deficit £ 2 billion
  19. 19. The Saturday Economist - we always keep you in the picture … How important is the EU to the UK and vice versa … ?
  20. 20. 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 …
  21. 21. Comparative Sizes Size of economies (GDP, $bn) 3,860 2,836 G erm any France 4,616 Japan 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 …
  22. 22. 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 …
  23. 23. 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 …
  24. 24. 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 …
  25. 25. 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 …
  26. 26. 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 …
  27. 27. The Saturday Economist - we always keep you in the picture 6th February 2016 China Return of the Middle Kingdom … Collectively the ASEAN block accounts for 50% of world population and 30% of World GDP … Growing at 4.5% per annum …
  28. 28. 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 …
  29. 29. The Saturday Economist - we always keep you in the picture … How important is the EU to the UK and vice versa … ?
  30. 30. Share of EU Exports Others 38% 4% 6% 5%3%2%3% China 8% USA 15% UK 16% UK USA China Japan Korea Norway Russia Switzerland Turkey Others The Saturday Economist - we always keep you in the picture … The UK accounts for 16% of EU exports …
  31. 31. Share of UK Exports 3%2%5% 7% ASEAN 16% North America 20% EU 47% EU North America ASEAN MENA Other 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%
  32. 32. Trade Data 2015 £ billion UK to EU % GDP EU to UK % GDP Deficit / Surplus Exports Goods £134.4 7.2% £223.4 1.6% -£89.0 Exports Services £85.7 4.6% £65.7 0.4% + £20.0 Exports Total £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 …
  33. 33. 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 …
  34. 34. 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
  35. 35. 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
  36. 36. 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
  37. 37. 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 £ million The 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 …
  38. 38. 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 £ million The 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 …
  39. 39. 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 …
  40. 40. 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 …
  41. 41. 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 …
  42. 42. 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 …
  43. 43. 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
  44. 44. For more information - Check out The Saturday Economist .com Trade with Europe ... Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovak Republic Slovenia Spain Sweden -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 …
  45. 45. 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 …
  46. 46. 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 2013 Figure 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 …
  47. 47. The Saturday Economist - we always keep you in the picture … How much does it cost the UK … ?
  48. 48. 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 …
  49. 49. For more information - Check out The Saturday Economist .com 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 …
  50. 50. 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 …
  51. 51. 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 …
  52. 52. For more information - Check out The Saturday Economist .com Costs of EU and Allocation € 132,961.30 2014 c 1% of GDP Financing of the general budget and EU expenditure by member state (2014)[29] 6% 14% Internal Policies 10% Structural Fund 30% CAP 40% CAP Structural Fund Internal Policies Pre Accession / Compensation Admin The EU budget is €133 billion that’s 1% of EU GDP approximately … Most of which is accounted for by the common agricultural budget … Just 6% is spent on administration … How much does the EU cost …
  53. 53. For more information - Check out The Saturday Economist .com EU Budget Who Pays Germany France United Kingdom Netherlands Italy Sweden Austria Denmark Finland Ireland Cyprus Croatia Malta Spain Estonia Slovenia Latvia Slovakia Luxembourg Lithuania Bulgaria Belgium Czech Republic Portugal Romania Greece Hungary Poland -18,000 -13,500 -9,000 -4,500 0 4,500 9,000 13,500 18,000 Winners and Losers Financing of the general budget and EU expenditure by member state (2014)[29] Germany is the largest contributor … Poland, Hungary the largest beneficiaries …
  54. 54. The Saturday Economist - we always keep you in the picture … The Big Issues … ? So what are the big issues …
  55. 55. For more information - Check out The Saturday Economist .com The Big Issues … Regulation costing £27 billion! Working Time Directive Temporary Agency Workers Directive Energy and Climate Change
  56. 56. 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 …
  57. 57. For more information - Check out The Saturday Economist .com The Big Issues … And the proposals for change
  58. 58. 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 …
  59. 59. The Saturday Economist - we always keep you in the picture … The Options … ?
  60. 60. For more information - Check out The Saturday Economist .com The Options Current Deal Yes No Yes Yes Yes No Canada Turkey
  61. 61. For more information - Check out The Saturday Economist .com The Options 1.1 This paper looks at the potential models for the UK’s relationship with the European Union, if there were to be a vote to leave. It provides examples of countries that are not members of the EU but have other arrangements with it – specifically Norway, Switzerland, Canada and Turkey – and describes those arrangements. It also looks at a possible relationship based only on World Trade Organisation membership. 1.2 These models offer different balances in terms of advantages, obligations and influence. 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, we would have to accept the free movement of people; •• access to the Single Market would require us to implement its rules. But from outside, the UK would no longer have a vote on these rules. And there is no guarantee that we could fully replicate our existing cooperation in other areas, such as cross-border action against criminals; •• full access to the Single Market would require us to continue to contribute to the EU’s programmes and budget; •• an approach based on a Free Trade Agreement would not come with the same level of obligations, but would mean UK companies had reduced access to the Single Market in key sectors such as services (almost 80 per cent of the UK economy),1 and would face higher costs; ••we would lose our preferential access to 53 markets2 outside the EU with which the EU has Free Trade Agreements. This would take years to renegotiate, with no guarantee 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 EU countries, we would almost certainly have to accept reciprocal arrangements for their citizens in the UK. 1.3 It would take up to a decade or more to negotiate a new agreement with the EU and to replace 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 in agriculture and fisheries. It does not give access to the EU’s trade deals with countries outside the EU and still requires customs checks on goods crossing into the EU. It also involves making a significant contribution to EU spending, accepting free 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 constitute almost 80 per cent of the UK economy. Higher levels of access to the Single Market involve implementing EU rules in domestic legislation, accepting free movement (as in 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 for example in services and agriculture; and •• if we could not reach agreement with the EU on a new arrangement, our trading arrangements would revert to WTO rules. This would provide the most complete break with the EU. It does not entail accepting free movement, budgetary contributions or implementing EU rules. But it would cause a major economic shock to the UK. WTO rules mean that the EU, and all countries with which we currently have trade deals, would have no choice but to apply WTO tariffs on exports from the UK – putting our companies at a competitive disadvantage. Meanwhile, the UK would face a difficult choice between either raising tariffs on imports from the EU or lowering tariffs on imports from all countries. Raising tariffs would have knockon effects on UK jobs and incomes, as well as on the attractiveness of the UK as a destination 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 of the UK’s security and strength. The European Arrest Warrant and the Schengen Informatio System, for instance, allow our law-enforcement agencies to obtain and act on information from their EU counterparts. Even if over time we manage to negotiate replacement bilatera agreements, there is no guarantee that we could fully replace our access to current EU measures for police and security cooperation. And we would no longer be able, as we are now, to use the EU as one of our major tools, like our membership of the UN or other international organisations, to project UK influence in the world, or to use the EU’s economic weight 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’s membership of the EU gives us now. The UK Government believes that no existing model outside the EU comes close to providing the same balance March 2016
  62. 62. 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 …
  63. 63. The Saturday Economist - we always keep you in the picture … The Big Risks … ?
  64. 64. 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
  65. 65. For more information - Check out The Saturday Economist .com Costs of EU Trade and Tariffs The tariffs at issue …
  66. 66. The Saturday Economist - we always keep you in the picture … The Big Risks … ? 1 Trade … 2 Investment … at risk Uncertainty … in the short term Strategic … Motor, Aerospace and financial in the medium term …
  67. 67. For more information - Check out The Saturday Economist .com 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 …
  68. 68. For more information - Check out The Saturday Economist .com Costs of EU This is the range according to the PwC CBI sensitivities …
  69. 69. 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
  70. 70. For more information - Check out The Saturday Economist .com 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 …
  71. 71. 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 …
  72. 72. For more information - Check out The Saturday Economist .comDate of Next Update : 10th October Heading in the wrong direction … For more information - Check out The Saturday Economist .com The Big Risks … Trade deficits are likely to deteriorate in a free trade world …
  73. 73. 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”
  74. 74. -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 …
  75. 75. 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
  76. 76. MarchLatest DataSterling £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 For more information - Check out The Saturday Economist .com 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 …
  77. 77. 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 DataSterling €1.2853 Euro Spot For more information - Check out The Saturday Economist .com 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 …
  78. 78. 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 …
  79. 79. Common Agricultural Policy CAP 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 …
  80. 80. For more information - Check out The Saturday Economist .com NFU pro 50% incomes dependent Key markets could be l o s t i f t a r i ff s a r e imposed … The Big Risks …
  81. 81. 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
  82. 82. The Saturday Economist on Brexit and Fishing … The Big Risks … It’s not just about “our” fish …
  83. 83. The Saturday Economist on Brexit and Fishing … The Big Risks … It’s not just about “our” fish … World wide agreements are necessary
  84. 84. 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
  85. 85. For more information - Check out The Saturday Economist .com Immigration The Big Risks … N e t m i g r a t i o n i s 300,000 …
  86. 86. For more information - Check out The Saturday Economist .com Immigration The Big Risks … Almost 200,000 is study related …
  87. 87. For more information - Check out The Saturday Economist .com Immigration The Big Risks … Almost half from the EU …
  88. 88. For more information - Check out The Saturday Economist .com Immigration Total EU immigration is 260,000 … The Big Risks …
  89. 89. For more information - Check out The Saturday Economist .com Immigration The 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
  90. 90. 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 Payments Will deteriorate faster 15 Government Borrowing largely 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
  91. 91. 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 tr 14 Balance of Payments Will deteriorate faster 15 Government Borrowing largely neutral 16 Scotland … Threat to union? 17 Science Tech Neutral - subsidies lost could be HMG funded 18 Security … Brexit won’t help 19 Peace … NATO and EU issues EU is a force for peace internal NATO 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
  92. 92. 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 Directive The Temporary Agency Workers Directive The Energy and Climate Change legislation but Most 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 …
  93. 93. The Saturday Economist - we always keep you in the picture … ? The CBI The EEF The SMMT The NFU The Big Risks … Voting to remain …
  94. 94. The Saturday Economist - we always keep you in the picture … On Brexit … The Spectrum of Issues … ? Business Economic SocialPolitical Immigration 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"
  95. 95. The Saturday Economist - we always keep you in the picture … On Brexit … ? April 2016 …

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