Until We Meet Again

Belgius Capital Commentary

Belgius Capital

Until We Meet Again

The United Kingdom finally pulled away from the EU at 11 pm on Friday, January 31st, 2020.

The Political upheaval unleashed by the referendum vote to [surprisingly] leave the EU on June 23rd, 2016 created a tsunami of bitter discord and personal animosities that, only now are slightly assuaged by the conservative landslide victory in the December General Election that saw the controversial Boris Johnson as Prime minister storm through with a resounding mandate to Leave.

So its Au Revoir, Hasta La Vista, [to name a couple] as the UK divorces after 47 years from what was once the EEC but now the EU; and therein those trite initials is the kernel of the problem that came to be.

The EEC [European Economic Community] a loose combination of Sovereign European states, separated by diverse languages and often quite different cultures and cherished customs, but with agreements concerning the free movement of peoples, goods, and services.

The entire assembly anchored by a flexible moving electronic exchange rate called the ECU [European Currency Unit] that collectively gave autonomy to each country's particular economic and political circumstances at any given time while allowing for certainty in any worldwide trade or financial transaction.

From this loose but fathomable currency construct came the highly successful ECU bond [later Eurobond] market that thrived in the 1970s-80s.

More by stealth than design the EEC was, over time, replaced [gradually/incrementally/surreptitiously] by the EU [European Union]: an entirely different piece of social engineering and financial architecture from the EEC that had initially been approved by more than 75% of the British population in 1973 and ratified again in 1975.

The British were until 2016 never given a vote on the morphed EU, and when they were in June 2016, they rejected it.

The British were fortunate, as they were the only European member ever given the vote on the EU.

Similarly, the Euro replaced the ECU, but more significantly was also imposed on national currencies, and as we now know, with devastating consequences for people and communities, particularly in Southern Europe.

The UK now has 11 months to finalize the final terms of its future trading with the EU. The negotiations will not be easy.

Mr Barnier, who has never held 'elected' office [he was appointed], remains the chief obstacle with his escalating French intransigence. The EU happily trades with Thailand, South Africa, and Canada; expect no such concessions to the British who have dared to challenge EU orthodoxy. We believe the EU will want to make an example of the UK and construct a severe deterrent to any other member who may also wish to quit the EU embrace.

The main stumbling blocks in any negotiation will be

  1. Fishing rights; coastal waters, and large zones designated marine national parks.
  2. London's preeminent position as a global financial center will also be on the table, and we believe, held to hostage.

We are not optimistic that an agreement will be reached. Instead, the UK will leave with no deal come December 2020.

The Global economy is now perilously close to falling into recession, turbocharging the worries are the fast developing Coronavirus which originated in China [as of this writing] and is developing at a speed and consequence that could barely have ever been imagined.

The UK/EU negotiations are taking place against an unprecedented global backdrop of trade tensions and Trump tweets.

The EU is desperate to reignite economic growth within its member states and to avoid another Banking crisis from which its banks are already heavily exposed to sovereign debt.

The Year ahead is going to be perilous on many fronts.

The UK shorn of its EU shackles will be in a better space to navigate the stormy seas ahead.