Tuesday, October 25, 2016

Trump claims he will be the US "Brexit"; too bad he has no idea what that means

Earlier this week, Trump brought up Brexit while campaigning in Florida.
The Republican nominee finds himself behind in both national and Florida statewide polls, down six and two respectively, according to the Real Clear Politics average.
“I think we’re going to have a little Brexit coming up in November,” he said.
Brexit has not been good for the UK now, and it is looking as if the predictions of a large consensus of economists is coming true, that it will hurt the economy in the UK in the future. In particular there is an expected loss of jobs as foreign investment, notably Japanese capital, moves to the mainland of Europe.

As the following news article from Reuters notes, there are 2 MILLION jobs involved in the projected move, and a potential loss affecting up to 12% of the UK economy. That kind of move hurts, it can lead to a significant recession or even depression, and it will continue to have ripples for global economies, including our own.

An example of how Brexit has affected a company with operations in the UK but based here in the US, from the Irish Times:

Brexit turmoil sees Whirlpool cut annual profit forecast

Appliance giant hurt by sluggish US sales and Brexit-inspired uncertainty in UK

Whirlpool cut its annual profit forecast after results fell well short of estimates in the third quarter, hurt by sluggish sales in the US and Brexit-inspired turmoil in the UK.
...The UK’s vote to leave the European Union – and subsequent impact on the pound – also took a toll on results, the Benton Harbor, Michigan-based company said.
Here's what the British Chamber of Commerce had to say last month about how Brexit affected the UK, from the Guardian:

UK economy to hit near standstill as Brexit vote hurts investment – BCC

British Chambers of Commerce more than halves GDP growth prediction for next year to 1%, citing post-referendum uncertainty
Britain’s economy will grind to a near standstill over the coming months as post-referendum uncertainty triggers a slump in business investment, a leading business group has warned as it slashed its growth forecasts.
In its first set of forecasts since the vote to leave the EU, the British Chambers of Commerce (BCC) on Monday more than halved its GDP growth prediction for next year from 2.3% to 1.0%. That would mark the worst economic performance since 2009, when the UK was emerging from a deep recession sparked by the global financial crisis.
Much as the low-education pro-Trump dummies who hate globalism would love to see less of it, here's a story from Reuters back in May before the actual Brexit vote.
If Britain votes to leave the European Union in June, some U.S. banks could give up parts of their business in the bloc altogether.The scenarios being studied by taskforces at U.S. banks underscore the extent to which the London operations of non-European banks are linked to business on the continent.
In particular focus are the banks' market operations, as trading of most European securities is regulated at the EU level but conducted by many investment banks mainly out of London.
The five largest U.S. banks employ 40,000 people in London, more than in the rest of Europe combined, taking advantage of the EU "passporting" regime that allows them to offer services across the bloc out of their British hubs.
Those businesses in the UK shut down, it means not ONLY the loss of 40,000 jobs in London, it will mean the loss of jobs here too.

Trump was notorious in his very public ignorance of Brexit when he was visiting Scotland. He appears to have continued his ignorance late into the campaign.

From Reuters

Banks preparing to leave UK over Brexit, says banking body chief executive
Big international banks are preparing to move some of their operations out of Britain in early 2017 due to the uncertainty over the country's future relationship with the European Union, a top banking official said.

Writing in the Observer newspaper, Anthony Browne, the chief executive of lobby group the British Bankers' Association, said the public and political debate was "taking us in the wrong direction" and businesses could not wait until the last minute.

"Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it," said Browne. "Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year."

Many of the world's major banks have their European headquarters in Britain, where the financial sector employs more than two million people and makes up almost 12 percent of the economy.

Banks in London depend on a European "passport" to serve clients across the 28-country European Union from one base and lenders worry that this right will end after Brexit.

Browne said while finance minister Philip Hammond and Brexit minister David Davis were "making the right noises", he was concerned that some high-profile Brexit supporters believed banks did not need passporting and could rely on so-called equivalence, under which the EU can allow access to its markets for countries whose regulations are similar to the bloc's.

"The EU's equivalence regime is a poor shadow of passporting, it only covers a narrow range of services, can be withdrawn at virtually no notice, and will probably mean the UK will have to accept rules it has no influence over," he said.

"For most banks, equivalence won’t prevent them from relocating their operations."

Banks have already said they are making contingency plans to move some of their operations to continental Europe if Britain does not negotiate access to the EU single market after Brexit.

Prime Minister Theresa May has said she will trigger formal talks to leave the EU by the end of March 2017 after Britain voted to leave in a referendum last June.

She has said she will fight to retain access to the single market but several EU leaders have insisted that will depend on Britain accepting free movement of workers from the EU - a condition Britain has vowed to curtail.

No comments:

Post a Comment