Actual economic effects...

[Spinflight]

FTSE closed on Wednesday at 6138. Closed on Friday at 6138.

Long term borrowing rates have come down as brexit appeared more likely, 10yr ones from 2% down to 1.09% post brexit. Similarly all the European long term borrowing rates rose sharply. Lesson? We are a less risky and more credit worthy outside the EU than in.

One ratings agency did drop our credit worthiness, though oddly the last time they did was out of fear of Eurozone contagion. Seems completely at odds with the long term borrowing rates, which matter quite a great deal given our debts.

The pound dropped, quite significantly. It appears however that there was some 'unusual' activity in the market which forced it down whenever the Leave campaign polled well. To the extent of trying to sell it when there were no buyers.

Some people lost a great deal of money, probably dwarfing the millions contributed to the remain campaign, lets hope it was Goldman Sachs and JP Morgan. :)

Paris and Frankfurt are already eyeing up our financial services, and I know at least one of the EU countries have been writing to FS companies 'offering' the benefits of moving to their country.

I'm sincerely hoping that the EU doesn't want to cast us out and laugh while we flounder, but I think it's extremely naive to think that a) trade negotiations are going be quick or easy to set up, and b) that other EU countries won't go after "the money" - ie. London's financial companies.

I think the EU is a lot more complex than people are acknowledging. We are blithely stating 'the EU countries will'. Well, they will want different things which ultimately is the weakness of the EU. Some will want banking in Frankfurt, others won't. Some will want to punish us, others won't. Some will privately think the EU is doomed long term and this is the first part of it, others won't. The EU is a collection of very different countries with different views and interests.

I suspect a lot of people fear a reprise of 2008. They like access to financial services and the financial and political time bomb to sit in uk.

I think Basic is spot on. There are a lot of different interests in Europe at play here and it will be interesting to see who comes out on top.

Fingers crossed, eh.

" It takes years to set up a newly fully cabled decent sized dealing room."

No, it doesn't. You really need to stop claiming such nonsense.

I was at the inception of two stock exchanges in Asia back in 1980s-1990s and it did not even take that long to set up the markets themselves. Trading rooms are not difficult to set up at all, especially these days when it's all standardized and electronic.

It will not be much trouble at all for Paris or Frankfurt to set up larger premises with stronger infrastructure to accommodate increased trading volumes.

I think Basic is spot on. There are a lot of different interests in Europe at play here and it will be interesting to see who comes out on top.

Indeed. And this is another good reason why negotiating with the EU will be so difficult. We've seen this with the Canada deal which will, I believe, now need ratification by each individual parliament.

What this means for the UK is that a deal which is favourable to, say, German car makers still has to be ratified by other states whose interests are rather different. It doesn't make a deal impossible - far from it - but:

• it will make negotiations complex and timeconsuming
• it increases the risk of a lose-lose outcome, because it only takes one national government to put political gain ahead of economic sense to scupper a deal.

Certainly negotiations have nowhere near started.

Negotiations started at dawn on 24th of June.

Not officially, but it has been game on since then.

All public statements from all officials involved in the matter have been part of that.

That's why a "warning" is indistinguishable from a threat.

We are blithely stating 'the EU countries will'. Well, they will want different things which ultimately is the weakness of the EU. Some will want banking in Frankfurt, others won't.

Yes, a good point, Basic.

The 24 vetos I have been viewing as working entirely against us could be an advantage if we have the right negotiators in place.

Julian King will be off to the heart of Brussels soon. "Not negotiating". Goodness know.

Does anyone have any insights into his diplomatic abilities? I'm presuming Cameron is sending him because of strengths in this area.

negotiations started on 24th June

They really didn't. If you think this, you have literally no idea what negotiating complex deals involves. There is no one in place to negotiate right now.

What started was the staking out of positions: the political context in which negotiations take place. (Actually this did not start on 24 June, but much earlier).

Julian King is a diplomat. If he has a role in this, it won't be in the nitty gritty of negotiation, which is a highly technical process, but in maintaining the diplomatic relationships necessary to provide a positive atmosphere for negotiation.

Question is, now that the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru have signed the Trans-Pacific Partnership agreement, what will their attitude be to negotiating with the UK?

BTW, the aim of the TPP is to deepen economic ties, slash tariffs and foster trade to boost growth. There is also an ambition (in some countries, at least) to foster a closer relationship on economic policies and regulation.

A bit like the EU, in fact.

I have a very good idea of what negotiating complex deals involves.

Which is why I know that soft negotiations are absolutely crucial to it.

If you are unable to see how much more than staking out of oositions has been going on in public (never mind in private), then fair enough.

If you think negotiations only begin once official negotiations start, why do you think there has been so much play about informal negotiations and whether they will be happening?

One of the things that has always hurt the UK in the EU is their failure to understand and take advantage of soft negotiations.

I sincerely hope we've learnt that lesson. Belatedly.

I think when arguing about what level of power the UK holds in regard to negotiations with the EU, we are ignoring the fact that for the EU as a whole, the political stability of the Union is as, if not more, important than the economic stability. They may be prepared to sacrifice some of the economic benefits of trading closely with the UK in favour of keeping the EU together. To do this, they will not want to give the UK a deal that lets others think they're better off out too.

If you think negotiations only begin once official negotiations start, why do you think there has been so much play about informal negotiations and whether they will be happening?

I don't think this, why would I? But for negotiations to start, both parties have to have people in place who are in a position to start to negotiate. The UK at present has neither: no technical teams of trade specialists and lawyers, and no leadership. While some staking out of positions has started, particularly on the EU side, the UK government that will decide on the framework for negotiations isn't even in place yet.

we are ignoring the fact that for the EU as a whole, the political stability of the Union is as, if not more, important than the economic stability. They may be prepared to sacrifice some of the economic benefits of trading closely with the UK in favour of keeping the EU together. To do this, they will not want to give the UK a deal that lets others think they're better off out too.

This is true, and the fact that there is already some evidence of a decline in pro-referendum/ anti-EU sentiment in some EU states suggests that the EU's hard line position is working. They may choose not to change a winning formula.

I have to laugh at the naïveté of posters who think financial services jobs take years to move. Having been on the receiving end of it once myself and worked for a company that has moved operations twice between countries it can be done very quickly. Financial services is more than just dealing rooms.

But for negotiations to start, both parties have to have people in place who are in a position to start to negotiate.

For official negotiations to start we need a team of negotiators.

We already have people in place in the EU who are in a position to start informal and soft negotiations.

Why do you think we are sending over a new lame duck commissioner who is a diplomat?

For unofficial negotiations to start we just need diplomats and civil servants to be in contact with equivalents from other organisations.

This process is a lot more nuanced than you seem willing to concede.

Pushing the decision out to early next year means informal negotiations are a certainty.

We haven't a good record of building alliances within the EU, but I can't imagine we're not trying now.

By the time the official negotiations start, a huge amount of work will have bern done.

doinitfine I suspect we are just using different definitions of "negotiations", and when they can be considered to have started.

For me, negotiating involves two or more parties, each of which has a defined position on what constitutes a preferred outcome or set of outcomes (a "shopping list"), trading concessions to arrive at a settlement. At the moment, the UK has no defined position on what constitutes its preferred outcome; no one, including the government, knows what is on its shopping list.

If you define "negotiating" to include the upstream diplomacy and toe-dipping that tests the waters ahead of informal and eventually formal negotiations, then you would probably consider that negotiations began at the time that the referendum was announced.

I used to negotiate deals. I see "negotiations" from Doinitfine's perspective. The soft stuff and relationship building at the start is often more crucial than the details down the road.

I was specifically talking about negotiations with WTO, as that was the discussion at the time. I think it would be fair to say they have not started yet, we don't even know on what basis we're trading in the EU.

I don't dispute discussions have been going on in the EU since the result.

To do this, they will not want to give the UK a deal that lets others think they're better off out too

Agreed. The EU cannot give us a beneficial deal to the point that we're better off out than in. Any leeway it gives on the single market with us with regard to movement of people, capital, services would have to be conceded to other states. Switzerland has not won on that point, why would we, who are buggering off causing enormous hassle.

The second point is that they have every right to use this disastrous political mistake to their competitive advantage. If Frankfurt and Paris would like to develop their financial services at our expense, why shouldn't they? We would do the same if Fr/Gr were so stupid as to put themselves in our position.

I didn't mean the French will move their banks to France, but picking up the clearing services we will lose

Sorry this makes no sense. It should say services etc. But this is not about French banks moving their banks to France, but all banks & financial services potentially having to move some operations to Europe. Clearing operations is one example.

Cote,

'No, it doesn't. You really need to stop claiming such nonsense.

I was at the inception of two stock exchanges in Asia back in 1980s-1990s and it did not even take that long to set up the markets themselves. Trading rooms are not difficult to set up at all, especially these days when it's all standardized and electronic.

It will not be much trouble at all for Paris or Frankfurt to set up larger premises with stronger infrastructure to accommodate increased trading volumes.'

You love to speak authoritatively without any evidence or real knowledge. If you worked for NASA when it landed the Rosetta probe, it does not make you an astrophysicist capable of giving authoritative opinions. It just means that you shared the same employer.

What do you mean by 'standardized and electronic'? They have been electronic since the 80s.

What types of cable are you intending to use? How will you adapt the building to them? How long will it take?

How will you dissipate the heat generated?

Mostly banks choose to move to purpose built new buildings as refurbishing existing ones are expensive. On that basis, one to two years is a fair estimate from wanting to move to setting up an equipped dealing room.

I used to negotiate deals. I see "negotiations" from Doinitfine's perspective. The soft stuff and relationship building at the start is often more crucial than the details down the road.

I've been involved in business negotiations, but a large trade deal is at least an order of magnitude more complex.

The definition of "negotiations" matters, because when people talk about "four years to negotiate a trade deal" this doesn't include the "soft stuff" up front. So let's be honest about this. The clock isn't ticking yet.

On that basis, one to two years is a fair estimate from wanting to move to setting up an equipped dealing room.

That's not exactly the impression that you gave initially though is it? Any lay person reading your original words - "it takes years" - would assume that your intended meaning was several (3 or more) years, not 18 months. I can believe it might take a year and perhaps two to find and equip a building and recruit local staff. That's quite achievable ahead of a brexit.

If Frankfurt and Paris would like to develop their financial services at our expense, why shouldn't they?

Well potentially because other EU and Eurozone countries might prefer that they didn't.

As was pointed out earlier, the multilateral nature of the negotiations means that this isn't going to be a simple Us v Them.

There will be other countries involved who are not keen on German dominance of the EU, to give one example, and might prefer that Frankfurt doesn't get things its own way.

Why do you think Merkel was so insistent that no informal negotiations were going to take place before invocation?

That wasn't just a warning to us. But to any small or peripheral EU country that Germany would be unamused bybany breaking of the ranks.

then you would probably consider that negotiations began at the time that the referendum was announced.

Not really.

A possible Brexit has been mooted/threatened for some time.

Everything changed once it was on the cards as a reality.

It went from something that might happen from something that is happening.

We moved from general positioning to actually figuring out next moves.

Misti,

I think we are all guessing but I think, if there is real desire on both sides, things can happen very quickly. Look at the complexity of the global banking bailout in 2008. Should have taken years but was completed v quickly.