h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Thomas: Thank you for that comprehensive analysis. Can I summarise your view as one that recognises the attempts at closer political union since Maastricht have failed to produce any gains in democracy because of the imbalance of power due to Germany's economic dominance and that, if Cameron succeeds in winning the referendum on his terms it will provide an impetus for reforming the EU back to the simpler Common Market model?

I think this is certainly something a lot of people here will see as the safe option if Cameron's negotiations produce enough positive benefits.

A professional view of the situation


Monday 8th February 2016

The week ahead seems to be quiet for the UK in terms of economic data releases.
Economic growth in Britain would be up to 4 percentage points lower over the next four years and sterling could lose a fifth of its value if the country votes to leave the European Union.

Analysts predict if we exit it could have a "significant" toll on the UK economy, hitting sterling and sending inflation sharply higher.

Brexit would probably trigger major economic weakness and a political crisis in the UK ... with a 15-20 percent depreciation of sterling in trade-weighted terms.

Leaving the EU would hit exports, investment and consumer spending, while workforce growth would slow because Brexit would lead to a drop in inward migration, either because of legal barriers or because of Britain's "reduced attractiveness.

The 15-20 percent fall in sterling would lift inflation, which has been virtually zero for the past year, up to 3-4 percent for several years, they added. Sterling is currently worth around $1.45 and the euro around 77 pence.

Earlier this week, U.S. bank Goldman Sachs also said the pound could lose up to 20 percent in the event of a vote for Brexit.

Prime Minister David Cameron has promised to hold a referendum before the end of 2017 but a date this summer is increasingly expected.


Grim reading

Bobstafford: that seems very informative but it would be useful to know the source that you are quoting from.

An update report from a leading UK currency exchange company

That matches what I am seeing.

It is worth remembering though that these numbers are close enough to Scotland's - should they have voted for independence. There were just as many public figures who claimed that things would be better economically but fewer of them had day-to-day control of trilians of pounds.

For what it is worth, I don't trust Goldman Sachs to know anything about morality, ethics, public good or ecological diversity. I do trust them to understand the value of money.

However, as with Scotland, public policy should lead financial policy not the other way around. So Goldman's advice shouldn't determine the result. Yet, the mass unemployment and austerity that might follow a Brexit should not come as a complete surprise either, should Goldman's turn out to be right.

It appears that the government has just realised that the french authorities would cease border controls in france. allowing the free flow of migrants to the UK camps for 30,000 to 80,000 per year are a possibility. Not including the migrants awaiting entry at french ports.

Surely it would be foolhardy in the extreme to vote for an EU exit, and then expect the government to be even remotely able to cope with the problems it would cause.


http://www.belfasttelegraph.co.uk/news/uk/brexit-could-undermine-cooperation-on-fight-against-terrorism-warns-pm-34432312.html

Taking the role of Devil's Advocate for a moment, the figures in post 22 could be used just as easily to justify an exit argument: a weaker pound would help British exports, some economists suggest that a 3-4% inflation figure would be good for the economy and reduced migration from Europe would mean more jobs for British people.

As for Cameron's statement about French co-operation; this is an example of the problem I was thinking of in post 1 about learning lessons from the mistake they made in the Scottish referendum when they tried to frighten people into voting to stay in the UK. Cameron is, quite clearly, pandering to right-wing fears of a Muslim 'invasion'. It's not often I find myself agreeing with Liam Fox.

Why is the union which is the United States of America can hold together, while the European Union can't?

Quotes:

That is a very good question but a satisfactory answer would need a War And Peace-sized book. It would certainly have a lot to do with about 1000 years of warfare and the invention of nationalism.

You could sum it up though - one official language, one flag, one army, one constitution, one currency, and that the hardest currency in the world and the de facto standard currency worldwide.

Also, they did have a civil war that passed out of living memory in my lifetime, and there are plenty of people there who despite not being logically capable of remembering it, haven't forgotten it.

David Cameron: "et tu, Boris!" (dies theatrically with severe knife wound in the back)...

The USA has been using a common currency (ish) since the late 1700's and (mostly) has a common language.

Someone from New York wouldn't necessarily see someone from San Fransisco as a foreigner in the same way that someone from Warsaw would a resident of Madrid.

PP.

Our politicians are looking for a safe haven in this, President Truman had the right idea he took responsibility "the buck stops here" our lot do not want to make a decision. Do they simply lack the courage?

Is this is a decision should be made by the british public? Is the information we are being given simply incorrect, misleading or incomplete. The decision will be made based simply based on an emotional basis.

Why cant our leaders make a decision, they are the best qualified to do, and it is afterall their job! Let go of nannies hand and make a decision.

This new idea of a referendum is just a safe haven, a way to blame someone else eg everyone in the UK.

The USA and many other countries rate idea leaving the EU, as to put it mildly rather daft.

Come on Westminster, lets have a bit more Churchill and a lot less Uriah Heap.

Latest gloom
The pound is near seven-year low today and HSBC predicting a 20% drop in value if the UK leaves the EU.
House prices to suffer an average £11.000 fall.

Chris makes the point that when the pound falls (collapses) local labour becomes cheaper to the rest of the world. Surely that cheapens exports, allowing production to increase to fill rising demand and pump the economy.

I understand that this is true when the reason for the currency falling is under-performing labour (or over-performing labour everywhere else). The value of the pound then rises and falls to match the amount of work done within the country (allowing that some work is unaccountably higher valued and a huge store of assets can make a difference, hence the term "commodity dollars").

In the UK's case, labour and revenue in the various areas of work is remaining static but the cost of imports is rising. I.e. many industries will become unprofitable. Under these circumstances they can't become more efficient nor can they easily raise prices.

The pound falling is thus a bad thing. However, I am willing to be convinced otherwise.

I personally favor stabilizing the currency with an annual revaluation so that the mean trading value of the currency is reset to equal the mean trading value at the beginning of the previous revaluation period.

Since the overall trend in the value of the currency in inflationary, that means that in general, on revaluation day, prices would be marked down.

This is, however, still a radical notion with little popular recognition value, let alone acceptance.

Bring THAT on.

The fact that my home is valued at £1/4 million is little comfort to anyone who can't buy their first home.

(That said, I do hope that the Return to The Empire Brigade don't win this one).

PP.

The more I think about this, the more I believe that David "Dave" Cameron, having already announced that he's not going to stand for a third election, has either decided or been persuaded by the men in grey suits to 'take one for the team'. The nasty party know they won't get in on the xenophobic stance they would prefer, but they might if they hang DC out to dry with a transparently useless so-called negotiation of Britain's membership.

It's a kind of reverse stalking horse.

Or am I over-thinking this?

You have me wondering that if it's not some kind of horse, then what sort of reverse stalking animal is it?

Over-thinking is on the rise.

GBP down against every major currency apart from the US dollar Australian dollar and the ruble;

Do they know something we don't?