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.

Their migrant labour sends remittances home that supports their economies.

This has concerned me since I heard a friend talk about sending all his money back to his family. So, whilst Europeans are working here and although paying taxes, they are not spending their money here and therefore not contributing to our economy, apart from a (pretty much paltry) contribution via tax.

On TTIP, Boris Johnson is on record as saying that it's a wonderful opportunity and if the EU passes on it (which it's looking like it may) then the UK should swoop in and take the deal.

So, pick your poison...

If we leave and TTIP should go ahead (I think this is unlikely -but probably more likely if we leave as the rest of the EU be negatively affected) then the UK would not be able to have a trade treaty on any better deal than the EU. So we would have more American companies marching in and even less we could do about it as only 60 million people (note not 70 million as Scotland will become independent) compared to 320 million US population.

"I'm heartily sick of looking at labels telling me something's 'made in China'."

The reason so many clothes come from China/Vietnam/Taiwan is that labour costs are much lower there so clothes are much cheaper to produce. If we went back to making clothes in the UK they would be much more expensive, as wages are higher (because the cost of living is higher).

So we wouldn't be able to afford new clothes anything like as easily, and pile 'em high sell 'em cheap chains like Primark would have a really hard time. Which isn't the end of the world, but would be a nasty shock for many people who have got used to cheap clothes.

Are other countries fearful of us leaving? And if so, why?

Yes, absolutely. First because the bigger the EU, the stronger it is, and the UK is a big player. Also because they are rightly concerned Brexit may eventually trigger general political and economic meltdown in the EU, which would not be good for anyone.

It's interesting how the UK perceives itself as hard-done by in the EU, because the feeling on the continent (in France and Germany at least) is that the UK somehow managed to get an incredibly sweet deal whereby it gets all kinds of exemptions and rebates that no one else gets. But the UK always keeps asking for more and more special treatment, so they feel they've reached breaking point now. (I am not talking about facts here, I don't know enough to be honest - just about the perception from other EU countries)

If we leave and TTIP should go ahead (I think this is unlikely -but probably more likely if we leave as the rest of the EU be negatively affected) then the UK would not be able to have a trade treaty on any better deal than the EU.

The EU does not currently have a trade deal with America.

You don't need a trade deal to trade with any particular country including America.

We could trade freely with America when we are outside the EU.

So we would have more American companies marching in and even less we could do about it as only 60 million people (note not 70 million as Scotland will become independent) compared to 320 million US population

We are the largest investor in America and America is the largest investor in the UK.

You won't hear Osborne telling you that as that would be rather inconvenient for him when he's trying to sell project Fear and telling you you are weak and insignificant and couldn't manage on your own.

Which of course is utter nonsense.

We could trade freely

Well, depends what you mean by "freely". Britain could trade on the standard WTO rules until a deal is done, however long that takes. But there would be tariffs.

So we wouldn't be able to afford new clothes anything like as easily, and pile 'em high sell 'em cheap chains like Primark would have a really hard time. Which isn't the end of the world, but would be a nasty shock for many people who have got used to cheap clothes.

So, some people will surrender their sovereignty and democracy for a few cheap polycotton T shirts?

Iceland (pop = piddling) has a trade deal with China. Do you honestly expect people to believe that China would not be rushing to make a trdae deal with the 5th argest economy in the world - the UK? The UK that is one of the biggest markets for Chinese goods?

Or would you prefer to stay in the EU and be fined £Ms by the EU for impropertly importing Chinese garlic?
www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8884126/EU-sends-Britain-a-20m-garlic-bill.html

How many hip replacements, doctors, cancer drugs, motorway improvements etc could that £20million have been spent on in the UK?

Are you happy that the EU has that level of control over the UK? I'm not. I'm voting LEAVE

Why don't we just make everything ourselves, and not bother with trade? The reason is that specialising in what we are best in makes us all better off. I am capable of growing all my own food, and could have a few hens and some potatoes and be self-sufficient. However, I'm not as good at growing vegetables as farmers, but I am good at economics. I can earn much more as an economist which gives me money to buy much more varied food than I can grow (coffee and aubergines for example).

It is the same with countries. We are all better off specialising in what we do best and trading with others. There are some bits of this we may not like but in the same way as I would be much worse off if I became a subsistence farmer, countries are worse-off if they seek to erect barriers to trade.

Globalisation has created winners and losers, but leaving the EU will not stop globalisation.

I just wanted to say I'm finding this thread really helpful and refreshing. I really really hope it stays like this.

The more I read the more confused I feel but thanks to all giving good opinion and links without frothing and rhetoric- on either side.

Why don't we just make everything ourselves, and not bother with trade?

Because we need to procure raw materials we don't have in the UK. Because we can't easily grow bananas and pineapples in the UK.

The reason is that specialising in what we are best in makes us all better off. We are all better off specialising in what we do best and trading with others.

That is the argument for globalisation in a nutshell.

There are some bits of this we may not like but in the same way as I would be much worse off if I became a subsistence farmer, countries are worse-off if they seek to erect barriers to trade.

The EU erects barriers to trade. It gives trading preference to a small club of 28 member countries and actively deters trade with other countries by insisting that trade deals are the domain of the EU and cannot be made by its member countries and also by raising prohibitive tarifs for some other countries seeking to trade with the EU - like the 35% tariff it sometimes levies on Kenyan flowers to keep them out and favour the EU member county flower growers. These developing countries are the losers in your argument for globalisation. hen they cannot improve their economies through trade because trading blocs like the EU exclude them, they are more likely to stay poor and have their people coming to Europe as economic migrants. If we want to stop the migrant flow we should be providing trade - not aid. But the EU actively prevents.
And the other problem is that globalisation is great when we are all living in stable peaceful times but what happens when you abandon your attempts to make steel because you can buy it cheaper from elsewhere - and then war intervenes ad you are unable to import the essential things you need - like steel to repair your ships and weaponry? A major fear of the US during WW2 was that it would run out of rubber - it imported all its rubber from countries that were then under Japanese Occupation.

Globalisation has created winners and losers, but leaving the EU will not stop globalisation.

Nobody's saying it would. Globalization is a different issue. Leaving the EU is about regaining control of our laws, our trade and our borders.

All this scaremongering about trade deals is just that - scaremongering. We traded with the world without the EU before and we will do so again. The EU is not very good at world trade. They are protectionist and they like to put up trade barriers which we get stuck behind.

I run an export business and I am convinced that we will be much better trading with the world on our own terms. Anyone who doubts the UK should come to Cambridge. Loads of world class British businesses in tech, bio, pharmacy marketing, engineering, you name it. All willing and able to sell to the world. Please have confidence in the UK. We are a small island group but we are the 5th biggest economy in the world.

Don't worry about currency and FTSE wobbles. Those markets go up and down like waves as traders buy and sell to make profits for the banks everyday. Have a look at a ten year chart of the FTSE 100 on Google. You will see a massive dip in Spring 2015. I don't remember Osborne gnashing his teeth and wailing about that one. Any big change and the traders cash in. That's their job. But the FTSE soon recovers if the underlying economy is sound.

Our economy is sound. Unlike the Eurozone which is going to go pop.

Our economy is sound. Unlike the Eurozone which is going to go pop.

Well said Milly.

Greece's next bailout will be needed in July. I'm surprised it hasn't run out of money already - it said it expected to by now. Guess who will have to pay towards the next Greek bailout - yes, the UK.
Then we'll probably have bail out Italy as well at some stage.

We are being offered a lifeboat that will call alongside for a short period on 23 June and leave later that evening.

If we don't jump we will go down with the SS EU.

Don't let us saddle our future generations with this because a few elite in Europe were hellbent on a single currency experiment that history shows has always failed. and which could take us down with it

And apologies if that sounded gloaty about the Eurozone. I love Europe and I have lots of customers there. In fact I hope if we leave it will give them a wake up call about the folly of the single currency in time to save Greece, Italy, Spain and Portugal.

"We are being offered a lifeboat that will call alongside for a short period on 23 June and leave later that evening."

Or, rather, will spend several years trying to extricate itself from the liner next door, being thrown around on the waves all the time, before finally making its wobbly way across the sea by itself...

If our economy was in better shape I would be less worried, but while certainly better than southern Europe it has been flatlining for years.

Leaving's winning. For me, anyway.

Too many good reasons given above and too few from anyone in the Remain camp.

Thank you, all.

Can I just ask.

I've googled a couple of sites and they are quoting the "£30billion" without mentioning a time scale. Is Osborne doing Gordon Brown's favourite trick of quoting a 10-year figure whilst implying it is an annual figure?

I've googled a couple of sites and they are quoting the "£30billion" without mentioning a time scale. Is Osborne doing Gordon Brown's favourite trick of quoting a 10-year figure whilst implying it is an annual figure?

It's plucked out of the air.

You can make economic forecasts say anything you want if you plug in woefully pessimistic data and ignore any optimistic data or balance. Even the Treasury say his forecast is overly gloomy.

Osborne cannot even predict the next 6 months let alone years ahead and every economist will tell you that his claim that the UK would be 'permanently' disadvantaged is literally incredible - as he would be forecasting into infinity. Even he's not that good.

This is just Project Fear. He'll keep ramping it up. He'll get the IMF to help. Obama will lend a hand. He will attempt to frighten, batter and browbeat the electorate into submitting to Remain.

Even if he secures a Remain it will be a pyrrhic victory as all tryst in him and the current Tory Government has evaporated.

I think the trouble is, many of us simply don't understand the scale of globalisation. Trade deals are the nature of the world we live in. We simply cannot, by withdrawing from the world's largest free trade bloc, suddenly begin manufacturing everything that we need ourselves. Fair enough to say make clothing here in the UK rather than paying import tariffs to the Chinese. But we have virtually no manufacturing infrastructure or knowledge in this country, let alone sufficient raw materials. Take energy as an example. We already rely on imports for about half of our energy use, a figure that is on the rise. 4 of the big 6 energy suppliers (EDF, E-ON, npower and Scottish Power) are either French, German or Spanish-owned. How will that be affected by a Brexit?

Regarding trade deals, the two years grace period we have within the EU to renegotiate is not going to be anywhere near enough to even begin to build up domestic manufacturing as you seem to be suggesting. And what particular rush will other countries be in to negotiate trade deals with us? The EU is a huge market for China and the US, the UK not so much.

However, the biggest problem of this referendum is getting the average Joe to understand any of this complex stuff. Which is why the only sensible thing to do is to put our trust in the economists, who are overwhelmingly in favour of remain. They don't have a crystal ball, but they have a better chance of predicting the economic future than the rest of us.

GraceGrape

Aaaah, thank you SO much for your insight - very helpful. I will be sure to inform the 'average Joe's' in my social circle that they can't possibly begin to understand the complexities of the EU and therefore must vote 'remain' because they're clearly too stupid.

If I share your view, will it gain more 'remain' votes, do you think? Happy to do so...

The EU is a huge market for China and the US, the UK not so much

Which member of the EU is the huge market for China and the US? Break it down then please, if you're going to make such a statement. WE are part of the EU, currently, so how are WE not contributing to this 'huge' market?

We already rely on imports for about half of our energy use, a figure that is on the rise. 4 of the big 6 energy suppliers (EDF, E-ON, npower and Scottish Power) are either French, German or Spanish-owned. How will that be affected by a Brexit?

It doesn't change. Electricity and gas still flows into our homes, offices, shops and factories.

Regarding trade deals, the two years grace period we have within the EU to renegotiate is not going to be anywhere near enough to even begin to build up domestic manufacturing as you seem to be suggesting.

It's not 2 years. It can be longer. The onus is on us to trigger it - not the EU.

And what particular rush will other countries be in to negotiate trade deals with us?

Seriously? We are the 5th largest economy in the world. Of course non-EU countries will want a trade deal with us. we will be the EU's biggest market when we Brexit. You don't need tradedeals to trade. The EU doesn't have any trade deals with Us, India, Australia and many of the world's largest economies - we could have.

The EU is a huge market for China and the US, the UK not so much.
ReallY? I'd be interested to see the figures. There's the Hinckley point deal for a start. That's billions

However, the biggest problem of this referendum is getting the average Joe to understand any of this complex stuff. Which is why the only sensible thing to do is to put our trust in the economists, who are overwhelmingly in favour of remain.

Let's break that down.
The majority of these academic economists funded - churning out propaganda for their paymasters. Same with the Treasury - paid for propaganda from the Government - who didn't dare run their dodgy figures past the OBR, which is truly independent.
Plus, it was 'most of the economists who responded ' - most didn't. The number of economists is therefore just a fraction of what you're trying to claim.

They don't have a crystal ball, but they have a better chance of predicting the economic future than the rest of us.

Remind me - did they predict the banking crash - No. Didn't they advise us to join the Euro - Yes.

Economists exist to make astrologers look respectable.

Tatty I did not intend to cause offence. Perhaps "Joe Public" was the expression I was searching for. I include myself in this category. I've studied international economics and trade etc, and I still find the whole scenario very complicated to understand. My gripe is mainly that this sort of question should never have been put to a referendum as our relationship with the EU covers so many complex issues that it is impossible to make a truly informed decision.

With regard to the UK being a less important market for the US (for example,) the trade arrangement they have with the EU allows them preferential access to the markets of all EU member states. Britain doesn't currently have its own trade arrangement with the US, only the one it has in place through the EU, so if we left, we couldn't just carry on trading with them under current conditions.

US officials have stated that they have no current interest in arranging a free trade agreement with Britain as a single nation. We would be subject to the same level of tariffs as India, Brazil, China etc. Of course, this could just be a scare tactic, but nobody knows.

The UK is a relatively small, although not insignificant, export market for the US. We take around 3.8% of their exports. By contrast, 17% of UK exports go to the US. Therefore, we have more to gain from a trade deal with them than they have with us, which doesn't put us in a good bargaining position.

There are countries that have stated they would be happy to negotiate a free trade arrangement quickly with the UK (I believe New Zealand is one).

At the end of the day, it does sound from everything you've said that you favour "Leave". Despite all the arguments to and fro, I suspect come June 24th, most of us will just end up voting with our gut feeling.

Or even the 23rd June!

GraceGrape No offence taken and I apologise for being tetchy. After reading as much as possible yesterday in order to attempt an educated decision, I think I'd had enough!

Thank you for your posts - despite my knee jerk earlier, they've been very helpful. I'm still not entirely sure which way I'm going even though leave is looking likely. We still have a week to go (my poor head!).

Again, thanks all for your help