How is brexit going to affect Ireland?

Spinflight

Regarding "future spectacular failures".

The global debt figure is now truly staggering, as of course the 2008/9 financial recession (that both caused the economic recession and held back the usually bank lending recovery) was the worst since the 1930’s, and that a 2008/9 UK great recession that few predicted, can happen again at any time – but most of the indebted countries will no longer have the financial ‘firepower’ to stop the consequences, which will mean substantially cutting public services spending, at the very least.

The following link “European debt crisis: It's not just Greece that's drowning in debt” gives a picture of EU member states debt versus GDP, and mentions that only a few countries have REDUCED their debts in ‘real’ terms’ – and in that respect, Ireland gets mentioned in despatches with a gold star.

In debt cash terms the link mentions;
“There are five EU countries that have debts standing at over €1trn: the United Kingdom, Italy, Germany, France and Spain.”

Which exposes two red flags with Brexit and our UK domestic politics;

• The now largest FOUR EU country member economies are no longer able to SUSTAINABLY fund the transfer of funds from themselves to smaller and emerging member states now, never mind in the event of another financial ‘event’ – which clearly explains their extortionate attempt to claim Euro 60 billion to 100 billion from the UK without a detailed invoice, as a divorce settlement.

• The UK is in no position now, or in the uncertain future, to go on a reckless spending spree when the UK already has £7.2 trillion plus in National Debt, and unfunded pension liabilities of both the State and government employees, that get paid out of annual government budgets, when fall due.

Love reading Theasaurass' posts.

Just to add, a good benchmark is to watch Deutchebank particularly. They have managed to avoid a total catastrophy recently by selling out a significant portion to the Chinese, without which they would have gone under. Does that mean the Deutchebank crisis is over? No. The same issues that drove them to the brink are still at play. Just as the Italian banks nave needed to go back for further bailout, the whole euro 'model' is failing.

Spinflight

Germany ‘running the EU for the last decade’, nicely ties in with the Financial Recession, which of course led to an Economic one, as it was Germany who was guaranteeing the European Central Bank etc financial bailouts of countries like Spain, Portugal and of course the Republic of Ireland and/or their banks (as it all became very blurred who was bailing out who) – estimated to have been around Euro 3 trillion.

Germany would have leveraged that financial help within the EU membership, but in effect, Germany was bailing out their own banks (and lesser so to those of France and Belgium) that had fuelled the pre 2008 crash Eurozone lending/debt boom - that by 2009 with huge exposure to the further above mentioned three countries, and Italy and Greece – there would have been a much wider banking crisis of their own, if Germany and France had NOT bailed out the other countries.

German banks are still rumoured to have bad loans on their books, Italian banks that by EU rules should not have had a bailout out, recently has, meanwhile the European Central Bank is STILL pumping in Quantitative Easing (QE) type member state bond buying operation the UK stopped several years ago – again now in the Euro trillions that will have to be reversed one day.

Re closer Eurozone integration with a view of a 2 speed Europe, the German and French axis had been weaken a bit since 2012 as Germany and socialist President Hollande did not have much in common.

But new President Macron, an ex-investment banker who wants to model the French economy closer to the UKs - is not only more in tune with Germany economically, but also in heading towards a ‘core’ Eurozone that probably goes beyond the 6 founder members, but how many more Eurozone members depends on how integrated they are willing to go towards a near Federal entity.

Below is quite an interesting short article on the subject, mentioning various problems facing the EU, and concludes that “more Europe” is not the answer to any of them.

“Warning: the EU's integration drive may backfire.”

Spot on.

Is it just me who doesn't understand this? If I recall, Merkal has effectively been leader of the EU for the last approx ten years. Would a revolving leadership with representatives from each member state being leader for a one or two year period not be more equitable? Same with Juncker, who has been president since 2014. Surely it's time for a change?

I appreciate this means their plotting for the future may change but that's probably a good thing.

Good for him. It's hardly an unreasonable request is it.

RortyCrankle

Well put another way, when the UK government informed the EU that if they offered us a rubbish deal that affected our countries international business competitiveness (the not commercially minded Corbyn calls ‘becoming a tax haven’), they went apoplectic, demanding that THEY can dictate to the UK our tax rates AFTER we leave. Idjuts.

As it is, for UK companies needing to do business within the EU, you may have heard its still up in the air re ‘passporting’ rights to trade with the EU, especially in financial services – where it looks around 20-25% of their Investment Banking company may have to be relocated to an EU member state – but as that means needing to hold more capital etc, even that might not be viable, which is a problem for a Europe needing the investment banking services to hedge etc, from the city.

WHICH EU member so far has been mixed, often along the lines of existing non UK mainland offices in Europe, or the need to be near the central bank etc,

But the point is they don’t want to move lock, stocks, and barrel their whole operation to Europe due to restrictive labour laws etc – and to my mind, the Dublin option is a no brainer, if allows ‘passporting’ rights and has the 12.5% Corporate Tax to very profitable companies –plus the city is so beautifully practical, and the Guinness DOES taste so different.

Clearly for manufacturing etc, being in mainland Europe rather than in the most far flung western EU outpost, would be a different advantage.

In conclusion, the Japanese have a saying ‘the tallest nail gets hit first’, and a 12.5% plus Corporate Tax Rate is a huge target, especially if Dublin becomes the main option for relocation choice – so you’ll have ‘Juncker and the boys’ knocking down the door sooner than later, IMO - IF say Paris via new President Macron, doesn’t try a similar thing, and lower tax zones becomes more EU widespread.

Interesting, thank you Thea . How hard do you think Ireland is going to fight against the EU who I understand are not happy with its 12.5% Corporate Tax rate?

RortyCranckle

To put some perspective on Ireland's trade with UK as mentioned by cdtaylornats post, I'm sure that in 2010 I heard that the UK was doing more trade our near neighbour than the 2.4 billion consumers within Brazil, Russia, India and China - which kinda shows how complacent we had become recirculating the wealth within the EU, while they were struggling for growth with non competitive economies and currency, some could have devalued more than the Euro, if their own..

cdtaylornats

Juncker’s rant yesterday to only around 30 MEPs in attendance to the European Parliament for the closing of Malta’ time in the ‘big chair’, and the bun fight that ensued, would in the real world have some baring on his future, but Brussels bureaucrats don’t answer to ‘the people’ and so only seem to go when they want to.

Ironically Malta was indirectly reminding the parliament that it was Junckers borders inflexibility to Cameron (pre EU Referendum), not offering any respite to the pressure on our homes and services, that resulted in our leaving.

Unfortunately for the future of the EU, Juncker is by no means the only Federal States of Europe ‘at any cost’ idealist at the top in Brussels, as shown by that nice (read vindictive) Mr Guy Verhofstadt - one of the Lead Brexit negotiators, who recently ran for the President of the EU position, and thankfully failed - wanting a much closer harmonisation/integration of the EU, and knows the UK he hates, never did.

Verhofstadt is a piece of …work, as on one hand he is saying that the UK is welcome to stay in the EU, but on the other hand saying, only if the UK contributes far more to their failing experiment, by giving up our “entitlement” to the Thatcher rebate, that from the 1980’s significantly reduced our annual contributions, some of which that idiot Blair gave back when horse trading subsidies with France.

People like Verhofstadt wants a Federal Gloop of Europe, with member states having given up some or all of their powers of veto, and completely ‘harmonised’ members via taxation, accounting, eventually (unsustainable) pensions etc – which would only benefit the larger states on the mainland like Germany and France.

As when smaller member countries struggle with a much higher Euro and Euro interest rates, within the economically dysfunctional Eurozone model where ‘one size fits all’, they will be UNABLE to adjust to boost their economy/jobs.

Maybe there will be little blue uniforms with (by then ) 33 gold stars on for everyone to wear as well.

The vast amount of Irelands trade is with the UK. Almost all of Irelands business with Europe goes via Liverpool and the Tunnel. One feature of these talks that the smaller economies will be looking at is the attitude of the EU big boys to destroying smaller economies

I confess to not knowing a huge amount about Ireland and it's economy. Anyone who does, how do you think Ireland will respond to the push from Juncker and Macron for an EU wide tax level? I'm guessing they are not going to want to give up the benefits they currently reap from being an effective tax haven. I see trouble ahead.

Given what Junker said about MEPs today perhaps we wont have to worry about him much longer.

Spinflight

While it is true that the EU wants to move quicker to become a Federal State of Europe, with as the new French President Macron wants, the ‘elite’ 19 country Eurozone to have its own MEPs etc – the Republic of Ireland is in the Eurozone, and as they refused to give up their 12.5% Corporate Tax rate to German and French demands to get a financial bail out after the financial crash – one can assume they will keep that a lot longer, until Brussels finally runs the EU show and all countries (or those within the ‘inner’ Eurozone circle) lose the power of veto.

Clearly that would then help the UK, unless by then Labour’s higher taxes for business takes away any advantage companies in the Republic would have, relocating to the union, rather than other EU countries.

What we have to positively remember in that the EU sells more to us than we do to them, and so in their mutual interests to have Tariff Free trade.

That is why in the strict EU bureaucrats schedule of Brexit negotiations, they want to try and extort money first from the UK, before they talk Free Trade, but as the EU Trade Commissioner says, the (EU) bloc will do post-Brexit free trade deal with UK “for sure”.

Brexit negotiations have just started on at least a 2-year journey, and as you say the one thing both sides agree on, is to keep the borderless Ireland.

Panicking everytime an issue comes up, just helps EU negotiators.