No-Deal BREXIT: The COST

Brussels claims the UK will need to cough up $47.7 billion in a hard BREXIT. PM Johnson claims the number is closer to $8 billion. Who is right?

When Theresa May was PM, she supposedly offered $40 billion to the EU Commission and that was rejected.   Obviously, the art of the deal was to never have a deal. And May was a part of that treason. While the EU continues to use this number as an agreed dollar figure, given there was ‘no agreement’, that number disappears from any future negotiations.  As in – poof.

In other words, the EU Commission may have royally screwed themselves in not making any partial or piecemeal form of agreement within the Theresa May treason. That could have obligated the UK to some form of payment.   But a ‘no deal’ means exactly that, nothing was resolved.   A legal misstep.

And in that, Boris Johnson is correct, the only potential obligation would be the UK’s annual membership fee through 2020.

Most recently, the EU has insinuated that a nonpayment scheme would result in instituting a trade war to punish the UK.   Roughly 35% of UK exports find their way to EU countries. But more significantly, 45% of UK imports come from the EU bloc.   With the economy of Germany tanking, a trade war with the UK would all but collapse the EU. Still, the EU is adamant, “UK will have to pay no deal BREXIT”.

But the UK isn’t arguing that, the argument is how and how much?

The problem? The legal position is unclear, allowing for vast differences of ‘opinion’ as to how and how much.

While May invoked Article 50 in 2016 giving a two year window for negotiations, there is no mandate in that Article for financial reparations.   Article 210(3) discusses the exact template of divorce, but also provides no insight into a financial obligations.   However, some legal opinion states that the UK is subject to trade agreements made by the EU in 2014, which are valid for seven years, placing the UK liable for their unused share – November 1, 2019 thru December 31, 2020, which would amount to 16%.

It is then up to the EU Commission to provide substantive analysis of each and every trade agreement created in 2014 for which the UK would be held responsible, and the amount that remains unpaid in such negotiations.   But that is rather simplistic when one considers the co-mingling of assets – as in a marital divorce.   Those assets far exceed any dollar figure the EU can legally assert against the UK, and will require extensive research and market analysis.

In 2017, the UK’s net contribution to the EU was roughly $9 billion.  If the EU wants to have access to the single market system like Switzerland, it is estimated to cost $3.71 billion per year.   It is based on a flat rate of .2% of GDP.   But someone hasn’t done their math!   In 2017, Switzerland’s GDP was roughly $679 billion. If their contribution rate is .2% – their contribution would only be $1.35billion.

In 2017, the UK GDP was $2.62 trillion. If we impose the same deal as Switzerland, the incorporated trade deal would cost the UK, $5.2 billion per year or about half its current contribution with all the luxuries that are afforded other non-EU members including Switzerland.

In that light, the UK would have no obligation to commit to the Socialist rules and agendas imposed by the EU, would not be propping up faltering economies, and would enjoy the freedom of single market trade.

But during the massive treason exploited by Theresa May, the GDP growth rate for the UK tanked falling recently to negative territory triggered by manufacturing.     France and Germany have also experienced a sharp decline in the GDP since the beginning of 2018.   (Interestingly, Russia’s GDP growth rate has far surpassed that of the EU member states – but the media is silent…).

Forecasts for France and Germany, the EU powerhouses, are glum with high unemployment, low growth, a rising trade imbalance, and high personal and corporate tax rates. They have lost their ‘mojo’.

The EU Commission no longer holds the aces in a poker hand, and PM Johnson and President Trump are all too aware of that truth.

A no-deal BREXIT may have a sluggish start, but given assistance from the US in trade, it would be absolutely disastrous for EU partners to lose the UK as a trade account.   Germany’s economy would tank, France’s would follow, while other lesser trade countries might take advantage of a lucrative deal; Hong Kong, Italy, China, Japan, South Korea, Turkey and UAE, to name a few.

If Germany and France go – so shall the entire EU, as in – poof…

4 thoughts on “No-Deal BREXIT: The COST

  1. Come on, you know how Democracies work. Merkel holds the same loyal votes the democrat and republican bases give Americans.

    It’s not true that the commission does nothing. I have a friend that works for the train company in Devonshire, He told me the EU rebuilt his train line and they weren’t allowed to tell anyone.

    I had dinner with a British friend last night who works for the judicial system in Scotland. He thinks, for the same reason I do, that Brexit is crazy. The reason is, England is expecting to keep all those neat little perks they get AFTER Brexit. Why would the Eurozone offer Visa free travel to Europe for Brits after the Brits deny the same thing to Europeans? Do you have any idea how many Brits work in Europe?

    Millions.

    Then there’s trade.

    As to who I’d rather have as allies, the Brits cut and ran in Normandy, they abandoned Australia after the Japanese invaded, they cut and ran in Singapore even though they had 5 to one numerical superiority, and actually even refused to defend Canada after the war of 1812. Iran’s Amidinijad thought the British he held captive were so gutless, he was embarrassed holding them and sent them home. British pows complained that they had to PICK UP THEIR KIDS FROM DAY CARE, and some cried themselves to sleep.

    And, last but not least, they colluded with Hillary to try and overthrow the US presidency.

    As to the socialist Eurozone, I’d gladly pay their tax rates to live here.

    • You yourself stated earlier that most Germans hate Merkel – so if now you are saying she remains in charge due to democracy – there is something missing. Could it be, like everywhere now, election fiddling? And the EU rebuilt the train line but were not allowed to tell anyone? C’mon! Why? Was it misappropriating funds? Was it outside of their parameters? Of course it was – building a train line has absolutely nothing to do with the duties of the EU Commission. They make rules and arbitrate – they don’t create infrastructure contracts – they are an enforcer, not a doer. Norway and Switzerland are not a part of the membership but have negotiated a different deal that includes trade and travel. Bottom line the Brits voted for BREXIT, and it is not up to you or I to make judgment. If Germany is the place for you that is your prerogative – enjoy your time. There are numerous towns with incredible old world charm still alive today – here, there and everywhere.

  2. England’s problem is that they don’t have a government, so even if a good decision could be imagined, they can’t execute it. When you discuss England politics with Germans, the Germans just say “they’re lazy.” In fact, the Brits I know here in Germany say that England was far better under the EU than alone. They say British politicians only care about London and that the EU is the government that has helped poor English cities to build new infrastructure.

    Why is it that Brits living in places like Spain are voting for Brexit? After Brexit, they’ll lose residence rights in the EU and have to get visa’s to live there. (Which they won’t get)

    After Brexit, Germany can declare it has won WW2. Hitler was right in the end. The next deal Merkel cuts will be with Putin for natural gas. Where does England get energy once it’s monopolized by Germany?

    • So let me see if I get it here… Germans who hate the Communist Merkel but continue to elect her while she spirals the economy into a recession, think the Brits are lazy and stupid because their Parliament is in chaos and unable to make a single solitary decision and thus they should defer to the rabid Socialist Wizards that rule the EU Commission despite the Commission having done absolutely nothing except inundate the EU in chaotic immigration that has caused crime rates to spike, rape, and no-go zones whilst most of the EU caves into a defunct empire?
      Did I summarize that accordingly?
      The enemies of our enemies are our friends – and our allies would certainly not include the EU Commission, Germany and France…

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