Confused about Brexit Budget Cuts

[TattyCat]

Someone help me out here please and apologies if this has already been covered elsewhere.

George Osborne has said that in the event of Brexit, he will have to raise taxes and slash public spending. Now, given that we give £350m per week (ok, I know this figure is disputed but either way, it's large) to the EU albeit getting some of this figure back, how on earth can this mean that we have less money as a country?

I know we need to repay the national debt and a percentage would be paid towards that, but surely it means we would have more money to distribute as we see fit?

Am I being thick and missing something fundamental? I realise it's a very simplistic view but I really do fail to see how it would mean cutting spending and raising taxes.

[Chalalala]

the idea is that Britain would get some money back from the EU, BUT that it would lose a much higher amount in lost economic growth and therefore lost tax revenue.

so yes, Britain would have less money overall.

that's what all the economic experts are saying anyway, now up to you whether you trust them or not.

[TattyCat]

Thanks. So how, exactly, would we lose economic growth? We would be able to negotiate new trading deals, replacing any we lost, wouldn't we?

[Thunderwing]

The 350m per week is nowhere near accurate;

"In 2015, Britain actually sent £250 million a week to the EU. After accounting for the money the Brussels sent back to Britain and EU spending we include in our foreign aid target, the net cost was £120 million a week or £17 million a day. Per person, that’s 26p a day – or half the price of a Mars bar....if we wanted to leave the EU but stay in the single market, like Norway, we’d most likely still have to pay a membership fee. Norway’s net payment per person is about the same as ours." infacts.org/uk-doesnt-send-eu-350m-a-week-or-55m-a-day/

So, if (post Brexit) companies get the jitters and leave, and the pound takes a nose dive (as many people are predicting), and we still have to pay a 'membership fee' to the EU then we could potentially have less money as a country. As I understand it, I might be totally wrong and will defer to those who know more.

[Millyonthefloss2]

It is just a threat.

If economic growth did slow down why would a Tory Government put up taxes? It is a fundamental Tory belief that putting up taxes makes a slow down worse.

The British economy will bounce back, but Osborne will not recover from this.

[Millyonthefloss2]

We would be able to negotiate new trading deals, replacing any we lost, wouldn't we?

Of course we would.

It's all nonsense designed to scare people.

[Millyonthefloss2]

The collapse of the Eurozone is going to cause a crash though. It's just a question of when it happens.

[Chalalala]

So how, exactly, would we lose economic growth?

Number of reasons - companies relocating because they want to be in the EU, loss of access to the Single Market (which Leave say they want), mostly the general uncertainty.

The trade thing is very, very complicated. The bottomline is that no one knows for sure what trade deals the UK can get, or how fast. The EU are taking a very hard line, Brexit say they're bluffing, who knows. The US say no trade deal any time soon, maybe they're bluffing too. The WTO say Britain would have to renegotiate every deal from scratch, which would take years. Maybe they're bluffing to.

The only clear thing is that no one knows for sure, and that it will likely take years to settle. So we go back to the uncertainty problem.

[TattyCat]

It's all nonsense designed to scare people.

I know but I'm trying to draw a reasoned argument from those that believe Remain is the way forward and can actually give some facts about the damage leaving would do. I'm swaying to Leave but am open to learning something that might change my mind. I've heard and read nothing yet that tells me staying is a good thing.

What I think will happen if we leave is that some other countries will follow and it could spell the end of the EU. Then there will be a scandal and years and years of postmortem on where all the money went and who grossly benefited from the union. Other countries will follow when they see that there is no real negative effect in doing so and we're no longer propping it up.

[YourPerception]

A Tory Government will always cut public services and privatise. GO can't even meet his own targets.

Economically in or out of the EU there is trouble ahead.

[Chalalala]

I think a point everyone can agree on is that the UK's net contribution to the EU is a relatively small figure compared to GDP.

For instance, if the GDP grows by 1% less than it would have done in the EU, that's all the "savings" entirely wiped out. Conversely, if it grows by 1% more, that's double the savings - yippee.

So it really does depend on if you think economic growth will be affected. I think everyone agrees (even Gove admitted) that there will be a short-term shock, if only due to the uncertainty. A few years out, still likely to affect growth, according to the vast majority of economists (feel free not to trust them). Long term, no one has the faintest idea. But then, as Keynes said, in the long term we're all dead.

[Chalalala]

oh, and here's a fact for you OP: in the past 4 days since Brexit has taken the lead in the polls, the FTSE has lost £100bn. That's more than 5 times Britain's yearly net contribution to the EU. In 4 days.

Sure, it could be temporary, a short-term gasp. But is it a good sign?

[BritBrit]

sorry Chalalala but there have been good economic signs as well, in the last 2 weeks despite Brexit on the way manufacturing has seen a big increase, unemployment has gone lower showing businesses are hiring new workers despite Brexit vote on the way & foreign investment reached an all time record high this month, the stock market is not only influenced by Brexit it is influenced by everything

[Littlemisslovesspiders]

Corbyn has said the Labour party would vote down the Osborne emergency budget along with 57 Tory MP so it wouldn't pass anyway.

[Chalalala]

fair enough BritBrit, it is difficult to determine which recent economic trends are linked to Brexit anticipation, and which are not.

I would personally guess that there is probably a link between the turn of the polls in favour of Brexit, and the sudden and huge losses in the stock market. But I could be wrong.

[Mistigri]

We would be able to negotiate new trading deals, replacing any we lost, wouldn't we?

The question is not whether, but how quickly, and on what terms...

[TattyCat]

I'm also failing to see the reasoning behind bringing Tory/Labour govts into the argument. We have voted the Tories in and if we don't like them, we vote them out! Why should being in the EU be relevant to who governs our country at any given time? How, exactly, have the EU 'protected' us from a Tory or a Labour Govt within since we joined? What has the EU stopped our Government from doing in that time? Any party, that is.

[ExtremelyConfidential]

If anyone is interersted, here's the bloomberg note for today with a lot of info regarding the market impact of brexit

newsletters.briefs.blpprofessional.com/document/5tzu-SYAPdeetYuWyAZaGw--_brz1rsfioluz7dy8hd/qampa-iif-on-brexit

[MrsBlackthorn]

Wow, that's the most negative yet. And that's not even from someone in either campaign.

[TattyCat]

Another question then - why do we need a huge amount of trade deals with other countries? Obviously I realise that we need some, but would a vote for 'leave' not generate more business within the UK? So, we start manufacturing more and people start buying 'British' again? We already have so much tat from abroad - do we really need it? And what are the tangible things that we will lose in having to renegotiate trade deals?

I know this is a very simplistic view - I'm really just asking what people think we will lose and what we really need. Surely a leave vote would be an opportunity for businesses here to grow?

[BreakingDad77]

well the biggest question on how the budgets will change is wether we are still free trade/movement or fully leave.

Leave wont say to keep everyone on side.

[TJEckleburg]

You are aware that the cost of the EU to Britain is less that 1% of our annual budget? £350m seems like a huge figure, but it really isn't in terms of an entire country's expenditure. And that just in the last 3 days fears of brexit have wiped £67 billion off the stock Market? That would've covered our contributions for more than eight years.

[BreakingDad77]

The tax gap could be as much as 120 billion pounds www.taxresearch.org.uk/Documents/PCSTaxGap2014.pdf which kind of makes worries about the EU petty tbh.

Again nothing to do with the EU and everything to do with government but not sexy and doesn't grab the headlines.

[MrsBlackthorn]

Surely a leave vote would be an opportunity for businesses here to grow?

Maybe back when people grew all their own food, but modern life demands globalisation. At its most basic, we don't produce much of our own natural resources. We don't make our own stuff. Our tastes have changed - look at the contents of your shopping basket and see how much of couldn't be grown in Britain even if we wanted to. The phone I am writing this on - not a single component comes from the UK.

Yes, in theory we could all go back to eating only turnips and cabbage grown in the UK and using only things made in the UK, but not only would it be dull, it would be difficult - we're not in any way set up to be self-sufficient, having imported large amounts of our basic goods for several hundred years now.

[TattyCat]

MrsBlackthorn

That's what frightens me about staying in the EU. We are utterly dependent upon the rest of the world and have no self-sufficiency whatsoever. We have nothing to offer anymore. Do we?

[Chalalala]

We import 40% of our food and almost all of our energy. So yes, we need trade deals.