[beninvalencia]

As other comments have noted, the point is that the EU will not want to give the UK a good deal on leaving, because the EU does not want to give any encouragement to the other countries which want to leave the EU (some of which want to leave more strongly than the UK do - apparently).

Secondly, why would the UK end up with a Norway or Switzerland deal, when the UK is the 5th largest economy in the world? This is unprecedented. This isn't some one sided negotiation.

The EU needs the UK. If you sift through the garbage press, you'll see that the BDI in Germany - "The Voice of German Industry" - says that trade curbs against the UK would be "foolish". Of course they would be! Do you know how many German cars are sold in the UK each year?

"About a fifth of all cars produced in Germany last year, or around 820,000 vehicles, were exported to the UK, making it the single biggest destination by volume." Source: FT.com

"The UK is the fourth-biggest export market for German engineering companies, with sales of €6.8bn last year." Source: FT.com

The scaremongering goes on even after the vote has been called...

[mrb]

"The EU needs the UK"

Not true. It is the reverse because the UK runs a gigantic trade deficit: in 2014 they exported 472 billion USD, but imported 663 billion USD¹. In fact the UK is the second country in the world with the largest trade deficit (behind the US). A huge portions of UK's export go to Europe, therefore the EU has definitely more say when it comes to negotiating trade deals with the UK. I would be very worried for my economic future if I were a UK citizen...

¹ http://atlas.media.mit.edu/en/profile/country/gbr/

[UK-AL]

UK importing tons of good from EU means that the uk is generating a lot of jobs for EU countries.

[paloaltokid]

When talking about trade deficits, I always like to remember what one of my econ professors said about treating them as scorecards, which is usually misleading.

Exports are things we sell, imports are things we get to keep.

[craigyk]

I'm not sure this is a strong counterargument.

[x0x0]

That cuts both ways. Germany has used the EU to run a giant trade surplus, and if that arrangement blows up, so does their economy.

http://www.tradingeconomics.com/germany/balance-of-trade

[tn13]

I find the whole argument X needs Y foolish. It is so much similar to Donald Trump's China hatred.

Members of EU benefit every-time they export something to a large market such as UK (e.g. Cars). Members of EU benefit each time they willingly import something from UK (e.g. Tea). Either ways if EU wants to protect interests of its members it makes sense to trade with UK just the way it did in past. Any "revenge" is likely to hurt EU members whether or not it hurts UK.

UK survived before EU and will continue to survive beyond EU too. In fact I think with better immigration policies and freedom from red tape of EU, UK will be better off economically. The very presence of EU in my opinion is against principles of democracy. People of England basically accepted restrictions coming from Brussels who were not voted for by them.

>In exchange for access to the common market, Britain had to accept an external tariff and, over time, a deluge of regulations from power-hungry Brussels. The former makes imports more expensive in Britain, while the latter makes British exports less competitive globally.

> Jean-Claude Juncker, the current president of the EU Commission, summed up the decision-making behind the introduction of the single currency thusly: "We decide on something, leave it lying around and wait and see what happens. If no one kicks up a fuss, because most people don't understand what has been decided, we continue step by step until there is no turning back." [1]

[1] http://humanprogress.org/blog/britains-democracy-is-a-sham

[Shivetya]

I am quite certain the exports will still go there, but to say its not true ignores the true financial impact which is other countries will consider leaving. That is the big bugaboo and cannot be under estimated.

The ideals of the union certainly haven't been held up with what has actually occurred. The fear factor being put out about doom and gloom for UK people's is mostly engineered by those who profit off the union and don't see the same margins with a separate UK or worse other drop outs. With a union marginal countries can be propped up to great profit for the financial groups but without one, who knows.

[ZenoArrow]

I don't know how you come to that conclusion. The UK has a trade deficit with the EU, which means we buy more from the EU than we sell to it. From the EU perspective, the UK is a good customer. Like it or not that counts for something.

[MustardTiger]

You just confirmed what the person you replied to was saying. Having a trade deficit is why the EU needs them. They buy all of the EUs goods.

[paganel]

> The scaremongering goes on even after the vote has been called...

The terms are simple: You can't have free movement of goods without the equally free movement of people. As long as people in the UK are ok with the free movement of people (even though the fight against it was a big part of the "Leave" campaign) then I would see no reason why us, the rest of the EU people, should impede the UK products' access to the European market. You can't have your lunch and eat it too, meaning you can't be against free movement of people (against "immigration") and then expect us to accept your economic products. It's not "scaremongering", this are the true, hard facts.

[ptaipale]

>The terms are simple: You can't have free movement of goods without the equally free movement of people.

Why not? No movement is absolutely "free" of course, but we get lots of goods from (e.g.) China, while it is not that easy to immigrate into China. There are many big trading nations that are not at all that free about moving into them (for instance, Singapore).

The people in UK seems to think that their island is rather full. Those of us in the remaining EU need to reassess the idea to push deeper and deeper political integration towards a federal wannabe-superpower.

[99_00]

>You can't have free movement of goods without the equally free movement of people.

Why not? Other countries have free trade without the free movement of people.

[zghst]

China ships tons of products to the US, however the freedom of movement between the two nations are comparatively low compared to the EU.

[sverige]

But most of the immigrants are coming from outside the EU. There's the rub.

[oldmanjay]

I feel like you have to be a lot more explicit about the connection between your statements. You word things as though one implies the other but they seem independent to my eye, and the independence belies your point

[vsl]

Err, there isn't free movement between UK and the Schengen area. Yet it apparently doesn't impede trade.

[badloginagain]

The scaremongering has just begun. A successful UK exit is going to be powerful ammunition for any nationalist politician in any EU country.

[beninvalencia]

This is also a very astute comment I think. The EU and those with interests that are similar will need to increase scaremongering even more to try and prevent other countries from leaving the EU. I wonder what will happen at Greece's next bailout/imposed conditions breaking point...

[rmc]

Which is why the establishment in other EU countries want to ensure it's not successful...

[bayesian_horse]

Fat chance of a "successful exit" ... so no worries!

[ThePhysicist]

This is exactly the kind of lose-win or lose-lose discussion that everyone (well 49 % of people) wanted to avoid. Asking who will profit from this or who will be on top is not relevant probably, because each side will lose now (at least in the short term) the question is just how big the losses will be. Also, bear in mind that the UK will not only have to rearrange its terms with the EU, but with more than 50 non-EU countries as well.

Leaving the economic impact aside, the societal and demographic implications are just as important (for me) and a very hard to predict. Great Britain might very well fall apart over this, as Scottish politicians already announced that they will push for a leave if the UK leaves the EU.

For me, this thing is just the biggest and most catastrophically failed political gamble of the century. Times are strange indeed.

[_Understated_]

My biggest fear is another Scottish referendum... the last one was bitter and polarizing.

I have just spent the last 20 minutes drafting letters to my MP and MSP basically telling them I do not want another referendum.

[Scarblac]

The UK had a good deal. They had what Norway has, plus actual influence as a full member, plus many opt-outs. They've rejected it. What kind of good deal would they even be looking for?

[ZenoArrow]

With regards to trade tariffs, nobody expects the deal to be as good as the ones the UK had in the EU. However, in order for EU members to protect their own economies, you would expect some form of trade deal between the EU and the UK to be hammered out. The Eurozone isn't exactly in great health right now, even before Brexit, you'd expect politicians to want to perform some form of deal, even if it's only for the sake of damage limitation. The EU may want to make an example of the UK and drag these talks out, but I expect economics will win over political maneuvering in the end.

[junto]

You've forgot to look at the other side of the coin. Due to the EU trade tariffs with Asian and US countries, many non-EU manufacturers took advantage of the "final fabrication" loop-hole and the huge EU subsidies aimed at helping poor economic areas of the UK gain jobs, and set up fabrication plants in the UK.

Asian car manufacturing were and are heavy investors in the UK, in order to produce vehicles for the UK and EU markets [1].

Those perks have just evaporated, along with the jobs. The blue collar workers that heavily backed a Brexit, have shot themselves in the foot. It makes financial sense for Toyota who sell 90% of their UK produced vehicles to move away from the UK and back into the EU zone. They have just lost their EU trade tariff benefits and been hit by the GBP/EUR drop, making their cars 8.5% more expensive to 90% of their customers.

  Those firms would be hit hard by a Brexit, losing preferential tariff and 
  customs treatment in Europe. Toyota, for example, exports 90% of its U.K.-
  built cars.

If you haven't got a job, you can't buy German cars anyway. The argument is mute. This vote is going to have a huge impact on jobs, since being part of the Eurozone was more than just British imports.

http://www.wsj.com/articles/asian-company-shares-reeling-aft...

[conistonwater]

> This isn't some one sided negotiation.

This is pretty reckless risk management on Britain's part: to place so much weight on a question of just how a future, unclear negotiation, subject to who knows what bureaucracy and other countries' own interests, will turn out. It's very vague to just say "well we're trading a lot, so surely we're very important" without any supporting evidence or precedent: it makes all sorts of unjustified assumptions.

[Zelmor]

Keep in mind, if Scotland leaves the UK in favour of the EU, England is in deep shit regarding natural resources. REmember why those English mine towns were closed? Not much money to be made there.

[kaftoy]

"Do you know how many German cars are sold in the UK each year?"

So what you are saying is that brits will stop buying German/EU cars? Where are they going to buy their cars from? It's not like UK has some meaningfull car making industry, they moved all factories away. Not everyone can buy an Aston Martin.

I think that as long as the price for an EU car will be just below the price for importing an equivalent car from US or Asia, brits will have no other choice but to buy from Germans, even with new taxes added.

[throwaway049]

BMW will become a slightly more premium option if there are higher taxes. Meanwhile asian-made cars (like mine) will likely occupy the same market position they did before. Depends on the strength of Sterling as well of course.

[tonyedgecombe]

The UK makes about 1.6 million cars a year and exports about 1.2 million of them.

[_ph_]

> Secondly, why would the UK end up with a Norway or Switzerland deal, when the UK is the 5th largest economy in the world?

As of now, France is the 5th largest economy of the world. The Pound collapsing has already bumped the UK down.

Yes, eventually there will be a relatively free trade agreement in place. But still the UK will have to abide to any European regulation, if they want to trade. Just that they do no longer get a vote on those regulations.

[mattmanser]

For just the exports to the EU. I've seen this view several times in the thread, but never acknowledging that it's a small part of the economy that will have to do that.

[kps]

“The EU” is not the same as the people of the EU. The French and Dutch people voted against the Maastricht Treaty when given the chance.

[Scarblac]

...through stupid yes/no referenda. No voters included people opposed to the whole idea, people disagreeing with some small part and also people who thought it didn't go far enough, but mainly people who wanted to protest the national government at the time, as usual.

The Netherlands has unfortunately become much more Eurosceptic since, but let's not conclude too much from those referenda.

[thenomad]

I wrote a lengthy article on this when James Dyson made the same arguments.

In short, I'm very unconvinced. In negotiation, the person who cares less wins. Individual EU countries - who would have to vote on any deal - care a lot less about their exports to the UK, because they're a small percentage of their economy, than the UK cares about its exports to the EU, which are just under half of all our exports.

https://medium.com/im-trying-to-fact-check-brexit/fact-check...

[ewood]

I find the '5th largest economy' argument vacuous. When the UK joined the EU in 1973 it was the world's 5th largest economy and represented a much larger portion of European GDP. In spite of that they were forced to accept the terms of the EEC and the terms of the French President Pompidou. Why would being the '5th largest economy' have a bearing this time?

[frankmcsherry]

> Secondly, why would the UK end up with a Norway or Switzerland deal, when the UK is the 5th largest economy in the world?

Well, 6th now. Sorry about that. France said "bonjour" as you passed.

[mikeokner]

According to April 2016 data, France is behind both the UK and California: https://en.wikipedia.org/wiki/Comparison_between_U.S._states...

Edit: presumably you're referring to reports based on today's Pound Sterling crash, but those are incorrect as well: http://www.independent.co.uk/news/business/news/eu-referendu...

[return0]

> because the EU does not want to give any encouragement to the other countries which want to leave the EU

That's not the only reason. UK is taking advantage of its position as a global financial hub in the EU. It's in the EUs interest to make the UK less attractive for foreign investment.

[restalis]

"UK is taking advantage of its position as a global financial hub in the EU."

I imagine EU courting Switzerland for assuming this role from now on.

[cisstrd]

It's not completely one-sided, it's rarely black and white. But you can't seriously say that they are on equal footing when trying to do trade agreements. The GBP has taken a nosedive already...

[Aelinsaar]

The largest importer of champange in the world? UK. Not per capita either... just the largest, in front of the US. The UK has a ton of money for luxuries and all kinds of things that the healthier economies of the EU desperately want access to.

[vidarh]

Well, we now already have a lot less, given how far the pound has tumbled.

[MagnumOpus]

> The UK has a ton of money

In case you didn't notice, the pound just went down the toilet. A ton of GBP is not worth all that much suddenly.

And as you say - the English need the foreign booze, so low tariffs are in their interest. The French don't want or need IPA or scrumpy, so they don't mind tariff barriers so much.

[rodgerd]

How much champagne will England be buying when the City decamps to Frankfurt?

[randomsearch]

Are you trying to imply things won't change? Then why have EU membership at all?

It will, of course, be a compromise, but one that likely results in the UK being much worse off.

[jpfr]

You're talking cars.

The EU is talking survival. The UK will get indeed a bad deal. And the rest of the EU will stick together even closer. I hear "fiscal harmonization", e.g. common taxation is the new big thing.

[akerro]

Common taxation will be a good argument for countries of communistic block to leave. Good luck with that.

[dmichulke]

The EU will not want to (give the UK a good deal) but for each trade area there will be a member state suffering if they won't.

The negotiations themselves may prove a good catalyst for further disarray.

[cm2187]

But that's because all european politicians at that time completely discounted the fact that the vote could go that way. If only they had looked at polls then they would have realised this was a very serious risk.

[bayesian_horse]

You think the "scaremongering" is "going on"? I don't think it has even fully started yet ...

Reality will be a lot scarier.

[mrweasel]

>Reality will be a lot scarier.

Reality is boring most of the time. It will be fine in the end. The UK isn't going to sink into the sea or become the North Korea of Europe. The EU won't fall apart, it might need a little adjustment, and one or two additional countries will consider leaving, depending on the kind of deals that the UK can get.

I don't expect anything fantastically interesting to happen. The rest of 2016 will be a little bumping as everyone adjusts and then that's it.

[ganwar]

The unnecessary scaremongering goes on even after the vote has been called...

[tkyjonathan]

The EU doesnt need to punish the UK.. The markets are doing that already.

[wyclif]

$4 trillion a day changes hands on the foreign exchange market, and half of that is in London. England is going to be OK, people. Project Fear has been voted down, after all.

[sfifs]

This happens primarily because the city of London has a lot of exceptions provided to it by the EU and becomes an attractive place for the Americans, Chinese and Japanese institutions to funnel money into EU markets. It is really in a role similar Hong Kong vis a vis China. With Brexit, EU every reason to promote places like Luxembourg and other financial centers as the financial hub and end exceptions that make City of London competitive. Banks being banks will simply close offices and move business across the water.

[bayesian_horse]

Ah yes, many banks are already talking about moving their business elsewhere. Good luck with that marketplace...

[DominikR]

Of course the EU will continue to threaten the UK to "reconsider" its decision. But the fact remains that countries like Switzerland and Norway are much better off in economic terms by not having joined the EU in the first place.

Citizens of the UK have to ask themselves if they are going to allow the EU to threaten them into submission.

I am now 100% sure that the EU is done, this is it. Le Pen will win the next elections in France and then they'll leave too. Same goes for the Dutch.

[roel_v]

"Same goes for the Dutch."

Eh, no. 58% wants to remain, 26% leave (numbers as of two weeks ago). The Dutch realize much more than the Brits how much we depend on tight integration with others (as a small country, as a heavy trader, but also as less inward-looking as the Brits).

[notahacker]

Switzerland and Norway have joined the EU in all but name (and voting rights) economically; all the trade-related EU directives apply and their borders are actually more open and let in more EU migrants per capita.

Of course the UK has the option of going for the same deal, but if they do, a lot of the Leave voters are going to feel very, very betrayed.

[bayesian_horse]

Switzerland and Norway are better off by agreeing to terms which the Leave campaign explicitly does not want.

They also have significant strategic advantages which the UK is just lacking, and their economies are rather small. The UK can't get a better deal even if the EU wanted to give it to them. Which they don't by the way!

[seszett]

> Le Pen will win the next elections in France

Yeah... not a chance really.

[bench_soup]

>Le Pen will win the next elections in France and then they'll leave too.

They have no intentions to actually leave, their economic program doesn't even make sense.

[rmc]

> The scaremongering goes on even after the vote has been called...

The markets are already reacting. And they aren't confident./

[tikumo]

I wonder if it's possible for example the Netherlands or Germany to make a seperate trade agreement with England.

But i think that in the long run some company's will act as proxy's to deliver goods and workers, so nothing will change, just some other way's of looking at it..

[bayesian_horse]

"Trade curbs" are not within the discussion. But without EU regulations applying to Britain, you can't simply continue international trade without additional costs. Even without additional taxes, there is a lot of added cost in bureaucracy and handling.

[Keyframe]

UK to EU exports 45% of all exports. EU to UK 6%. EU will be just fine. It's not as if import/exports will cease to be either. UK will be hurt, EU not so very much.

[kaid]

what is stopping them from doing trade after uk leaves eu? seems most comments around is expecting each side to loose their market on the other side.

[AnonymousPlanet]

I wonder, how many of these cars are assembled in Britain? And how much of the supply chain is inside Britain? Will it still be economical to import parts from the EU and assemble in Britain? Maybe the supply chain will be built inside Britain, maybe assembly will shift away from Britain. This is relevant for German as well as Japanese cars. And it's not only cars.

Whatever bilateral deals will be made post brexit, there will be a lot of shifting going on.

[rodgerd]

> I wonder, how many of these cars are assembled in Britain?

Over 450,000 Nissans are built every year in Sunderland; when it opened the plant was considered the great hope of the area, which had been devastated by the decline of British manufacturing in the 80s, and Thatcherism in the 80s.

80% of those cars are exported within the EU.

An overwhelming majority of Sunderland voted to leave.

[grey-area]

Britain has very little manufacturing left. The financial industry on the other hand will be hard hit as power and influence moves to Frankfurt/Berlin.

[smegel]

The UK will also still carry a lot of influence over Europe through NATO.

[sverige]

NATO's time has come and gone. Europe needs to defend itself against Russia. It's not like they lack the resources; the only thing they lack is the will. No one wants a strong German military because that has always led to catastrophe in the past, but maybe it's time for them to re-arm. I mean, what are the odds that they'll produce another megalomaniac?

[gkop]

The UK itself may fracture - Scotland and/or Northern Ireland may peel off for the EU - putting NATO at risk.