Talk me through the implications of leaving the Single Market

[Rechargeable]

I am a bewildered Remain voter. It seems to me that the majority want control of our borders, sovereignty, and not to pay £x million to the EU. So as Gove said (I think), that means we will leave the Single Market - that's what Brexit means, right? So there will be tariffs both ways, although the weak pound might help with that. We will have opportunities to trade with emerging markets - what will they want to buy off us and vice versa? I am not very clever at all this but as I have to lump it, apparently, I would like to understand more.

[Thegirlinthefireplace]

One major issue is that a big chunk of our economy is from London financial services which require single market membership to be legally allowed to operate (calls Passporting). These financial services would need to be replaced with something to keep the economy afloat because of the extent of our countries dependency on them. No one has ever (that I have seen) come up with how this gap will be filled. Would be thrilled if someone on this thread can do so.

[LurkingHusband]

The Single Market prevented countries from imposing tariffs on imports/exports within it's borders. So if you are a UK farmer, and you want to sell your grain to France, France cannot impose a tariff on it that is any different to any other country in the SM. (The history of the SM is steel and coal).

So out of the SM, France is allowed to impose whatever tariff it likes on UK grain. If that makes UK grain more expensive than grain from an EU country, then c'est la vie.

The opposite is also true. Now a French company could charge a UK company more for it's widgets that it charges a German company. If those widgets are used to build cars, and UK cars become more expensive than German cars then ... c'est la vie.

Of course the UK can offset higher component prices by reducing wages.

(One notion did occur to me, and that is the fact that out of the Single Market, there is no reason why car manufacturers can't charge more for RHD cars. Which leads to the amusing prospect of UKIPpers clamouring for the UK to adopt left-driving to have cheaper cars )

Of course, nothing is that simple, and a lot of horse trading will be needed. However I can guarantee one simple fact. Whatever, however, and whenever these negotiations take place, the ultimate loser will be the end consumer. Look how every shift in exchange rates or oil prices is pretext for a price rise. Still that is what 52% wanted, so as long as they are happy.

Currently we're in the quiet before the storm bit. Just wait till holidays start going up 10, 20% (that weak pound) ...

[Rechargeable]

Thank you for the replies. So if we can't save the London financial services, does that mean it won't happen I wonder? Would the EU give way on that in return for something? Can we sell financial services to the emerging markets - the Leave argument seemed to hang on Global trading opportunities but I am struggling to see what they are - perhaps we will get our widgets from India? Any Leave voters able to help me understand this at all do you agree that inevitably everything will be more expensive (labour shortages would add to that I suppose).

[Topseyt]

You really aren't alone in not understanding this. I don't think very many of us do, and least of all many of the leave voters I know of (I voted remain), who mostly seemed to vote on the issue of immigration and nothing much else.

I guess we just have to hang onto the hope that all these wonderful trade deals will materialise, whatever they may be.

The financial markets are doing extraordinarily well at the moment, but what happens if their passporting arrangement ends is an unknown and worrying quantity. Financial services very much underpin the UK economy.

[Topseyt]

Also, I believe that in financial services we already do trade with and buy into emerging markets around the world. As do the other European money markets (Paris, Frankfurt etc.).

All rather confusing.

Not sure how that hangs together with the current EU arrangement.

[lljkk]

I'm worried about shoddy quality goods coming in to be sold in our shops, "deregulation" and all that.

[Itinerary]

lljkk I don't think there will be "shoddy quality goods". Britain had its own safety standards long before the EU existed. The British Standards Mark, which is now the BSI Kitemark, originated in 1903. The BSI will still be a voting member of the European Committee for Standardisation. And under the Sale of Goods Act 1979, products must be of satisfactory quality and fit for purpose.

[Thegirlinthefireplace]

My fear is that if we don't get single market access we end up in this tax haven/oligarch scenario, no corporation tax, wages on the floor, no worker rights/health and safety etc etc. How else would we attract investment? And it would suit the Tories fine, they'll be on the right side of things. But I admit I can be a bit "glass half empty".

[Rechargeable]

I'm thinking as well that the government will have to subsidise farming and so will find itself under pressure to support other industries which they aren't allowed to do in the EU. Not sure that will suit the Tories actually! They will certainly become more accountable. Very very different to what we have now, certainly a massive leap into the dark. I find it very difficult to see this actually happening unless the EU do allow us to stay in the Single Market. Which makes the whole thing seem rather pointless. I am not at all convinced this will actually happen.

[wooflesgoestotown]

David Davis:
There is also a political, or perhaps sentimental point.  The great British industrial working classes voted overwhelmingly for Brexit.  I am not at all attracted by the idea of rewarding them by cutting their rights. This is in any event unnecessary, and we can significantly improve our growth rate by stopping the flood of unnecessary market and product regulation

So he says the plan is NOT to reduce employment rights.... We will see.

[GettinTrimmer]

Rechargeable I am also a bewildered remain voter. I can only imagine Theresa May has brought Boris into government because he is a persuader, and will have to persuade the public to accept single market and to take the flak for his half truths etc; I have read many articles trying to understand, and regret not studying economics.

I am thinking we will have to go back to the model we had in 1973 before joining the 'common market' - I don't really have any understanding of this - the EU was much smaller then.

thegirlinthefireplace I read something written by Martin Lewis and he said something about Britain may become a 'tiger economy' and we have been described as maybe becoming something like Singapore, but he was skeptical. Somebody called Lord Digby Jones said on BBC News channel (he was trade advisor for the government at some point) about how he reluctantly voted leave, and how good it would be to trade with Africa without having to worry about undercutting French farmers etc.

A friend voted Leave because of immigration and she says the NHS is bursting at the seams, and told me to look up BRIC countries (Brazil, Russia, India and China) they had a summit and are projected apparently to overtake G7 countries by 2050. Complicated to say the least.

[GettinTrimmer]

So if the government completely wants to deliver Brexit, in the Gove sense of the meaning, our economy will have to move away from financial services.

[concertplayer]

I think Leave believe the historical position of the UK will ensure that the EU and others will give us a good deal but things have greatly changed in the last 50 years. EG the Far East opened up with cheap imports and a culture of long working hours unlike Europe's 9-5 culture. Mobility of business ,people, goods and services internationally and nationally underpins more and more economic activity as we have become less self-sufficient and dependent on technology. eg Heathrow is the biggest airport in Europe (and 2nd in the world) and Gatwick is not far off.A lot of Europeans and Americans use them for transit. Business person buys tea and cake uses a mobile phone and may have to go through security clearance and you see all the jobs that creates and that is without paying for the flight.Even airlines have agreements now and use each other's planes or operate the flight under another's name.
I predict that Frankfurt or Schipol or Charles de Gaule may become
the leading airports or at the very least with a low pound Gatwick will
def suffer as it is mainly a holiday airport and we will have less to spend
on hols.
Currently the plan to expand one of these airports is on hold-more jobs
on hold though of course Green people will say this is a good thing

[GettinTrimmer]

It seems the leave campaign totally failed to communicate the benefits of staying in the EU, but to be fair the argument is more complex that 'take back control.'

[GettinTrimmer]

I meant the remain campaign!

[LurkingHusband]

and we can significantly improve our growth rate by stopping the flood of unnecessary market and product regulation

How ?

That "market and product regulation" will be a non-negotiable part of any deal. Does this man seriously think that the EU is going to allow the UK to sell shoddy knock-offs while Germany, France et al have to comply to their disadvantage.

If we want to see to the EU, we will need to implement whatever market and product regulation they require. Ask Norway. And, if we aren't happy with that market and product regulation we can go fuck ourselves.

True, we can now implement our own "market and product regulation" which is stricter or more proscriptive than EU regulations, so that is a freedom gained I guess. Although I am struggling to see how making our own products more expensive benefits anyone.

[Underparmummy]

We seem to have arrogantly decided that people will want to do deals with us because we used to have an empire. That's what I understood from the Leave campaign.
I don't believe that to be true.

[GrandadGrumps]

There is a good argument that members of our ex-Empire would find it very easy to do business with us because of our similar legal systems and them almost universally having English as a first or second language.

You could also just about envisage the UK managing to have one foot in the EU and one foot in a 'commonwealth trading area' - in fact we tried to bring France into a commonwealth trading area in the 50s I think.

Does anybody know, if we have a free trade agreement with country A and country B but they don't have one between themselves can goods go from A to B via UK on a free trade basis? Could we become some sort of a free trade hub?

[LurkingHusband]

There is a good argument that members of our ex-Empire would find it very easy to do business with us because of our similar legal systems and them almost universally having English as a first or second language.

I'm sure they would. I'm also sure they would want some element of FOM in that deal. Of course they may not get it, but if they (and we) ares starting from scratch.

[GrandadGrumps]

I don't see why. What have India, Pakistan, Nigeria, Bangladesh, SA, Tanzania, Kenya, Canada or anyone else got to gain from encouraging anybody to leave their countries to work over here? They want to keep both their key workers and their factory-fodder at home producing wealth surely?

We're certainly not going to open the doors to 2.2 billion people on a free movement basis anyway, on any terms.

I had an 'interesting' conversation with someone about this the other day (actually I butted into someone else's conversation because he was annoying me). I was asking him who would do all the E. European's work if they went home. He said it would be people from the Commonwealth, and he didn't mind having Australians and Canadians over here because they're 'like us' and they speak English. The look on his face was priceless when I googled the figures on where most Commonwealth migrants come from.

[LurkingHusband]

I wonder if the Empire Windrush is still seaworthy ?

[JamieVardysParty]

Can't speak for any of the other countries, but when you realise that unemployment in SA is 26%, I can see the benefit of shipping off some of the unemployed to another country.

Especially when you consider a certain political party here who wants to drive all whites into the sea

A lot of our family/family friends from SA/Zim/Zambia would jump at the chance to move to the UK. A lot have, using their ancestry.

[GrandadGrumps]

But SA itself surely has no interest in seeing its most educated and able people shipped overseas. It's in the best interests of the country to develop its own economy and ship goods overseas instead.

That's a whole other issue though, but do you see my point? While it's great for our economy that we can import skilled workers from poorer Commonwealth countries (and we already do), I don't think it's that desirable for the countries themselves so it's not something they'd push for. And I don't see us ever opening up freedom of movement which extends to any African or Asian unskilled worker who can raise the air fare. It's just not going to happen.

[IPityThePontipines]

Yes, that would make a big chunk of the leave voters very happy: Ok, we aren't going to have as many people from EE anymore, but we want greater FOM from the Commonwealth, and no that doesn't just mean Aus/NZ/Can.

I'm sure they would love that.

At best we will end up in the EEA. Anything else doesn't bear thinking about economically.

[JamieVardysParty]

No, I do get your point. But the social and political situations are a bit more complex than that.

A lot of well-educated young people are coming out of university and are unable to find jobs, either because of the unemployment rate or because of BEE.

This has already resulted in a massive brain drain of young, well-educated and able white people, mainly going to Australia, but also further afield. It's already happening here, although I can't speak for other countries.