[Veliladon]

If only there was some form of large market close by that the UK could be a member of so that the UK could trade with them in a frictionless manner and expand the economies of both areas through trade. That would increase the GDP and hence the amount of money the government could have available to it through taxation.

But I don't think there is anything like that around. I mean, if there was, why the hell wouldn't they be lining up to become a member of it? There's only upside there.

[sgt101]

If only. Of course, you mean the EU.

But the UK has run a trade deficit of $60bn with the EU for the last 10 years or so. Leaving hasn't helped that, but staying wouldn't have either.

Something has to change in the relationship - something deep and real. The fundamental is the competitive advantage that the Euro confers on the German economy. Brexit is a way it can change overtime, there won't be an advantage for the UK, just an emergent state that is sustainable. The UK will be poorer in the present - but may avoid a Greece style implosion.

Truss showed that may is important here.

[adrian_b]

I fail to see which advantage is conferred by the Euro to the German economy, at least in the relationship with UK.

Unlike Germany, UK has always been free to establish any exchange rate they desired, between GBP and EUR. So only UK could have any advantages from the manipulation of the currencies.

Within the countries that use EUR, it can be claimed that Germany has the advantage that the other countries cannot cheat and compensate other economic problems by playing with the exchange rate. In my opinion that is a good thing, because stealing money from the people by devaluating their assets through artificial exchange rates is not the right solution for solving international commerce imbalances.

[sgt101]

If the Euro was a currency backed by the economies of Germany, Holland and Denmark it would be valued much more highly than it is now. Because of this these economies have a relative competitive advantage compared to other similar economies.

If the Euro was part of a federal system with federal transfers - like the US$ then this advantage would be mitigated because the budget positions of the rich parts of the EU would be relatively weaker (due to transfers) and the periphery of the EU would have stronger fiscal positions.

>In my opinion that is a good thing, because stealing money from the people by devaluating their assets through artificial exchange rates is not the right solution for solving international commerce imbalances.

Fair opinion - but what is the solution? Do you agree that federalisation with fiscal transfer would be correct?

[cloutchaser]

The only reason Germany become such an export powerhouse is because their currency was lower than what it would have been naturally as a country. Because countries like Greece and Italy pulled the euro down.

This was very convenient for Germany as they could build exports cheaply.

If you don’t understand this, which is a very basic part of how the eu ended up as what it is, I would just question the rest of your commenting.

[sgt101]

I don't blame Germans and Germany for taking advantage, but the political maturity to use this to create security and prosperity for everyone in Europe is completely lacking. I suppose unification and the problems afterwards are somewhat to blame.

[cloutchaser]

Very nice, but the EU is probably going to decline in GDP more than the UK, and the euro could potentially collapse due to the Italy situation in the next few years.

Thinking the UKs issues are because of brexit are about as simplistic as saying “tax the rich will solve all the worlds issues”

[jimnotgym]

>the EU is probably going to decline in GDP more than the UK

Even if that does happen, it doesn't necessarily follow that the UK couldn't also have a higher GDP by trading with the EU

>Thinking the UKs issues are because of brexit

... could make you the governor of the Bank of England

https://www.theguardian.com/business/2022/nov/16/brexit-and-...

[sgt101]

It doesn't follow, but history post 2016 wasn't written in gold if the UK had stayed in. The north of England, the central belt of Scotland and the south of Wales were in a terrible state. Brexit has failed to help, but remaining almost certainly wouldn't have either. The biggest issue the UK has experienced since leaving is Covid-19. Remaining wouldn't have helped us in that contingency.

The UK has blamed Europe for it's ills for 40 years. Remainers/rejoiners are still centered on this - we have to start to look to ourselves. Being in or out of Europe is not at issue; working to build a sustainable national economy and polity is.

[jimnotgym]

>south of Wales were in a terrible state.

South of Wales benefitted greatly from EU funds. From renovating coal tips to employment schemes. I don't understand your point here, it was the EUs fault that the UK had run down regions... even though the EU gave them money????

>The UK has blamed Europe for it's ills for 40 years. Remainers/rejoiners are still centered on this

This makes no sense at all

>we have to start to look to ourselves.

Are you suggesting that we shouldn't have international trade?

[sgt101]

>South of Wales benefitted greatly from EU funds. From renovating coal tips to employment schemes. I don't understand your point here, it was the EUs fault that the UK had run down regions... even though the EU gave them money????

yes - in the same way that it's the EU's fault that Italy and Greece and Spain have run down regions. The Euro is sucking capital from the periphery of the EU to the core... and because the EU has monetary union but not federal union there are only very small fiscal transfers in the opposite direction. This is in contrast to the monetary union in the USA where there are considerable federal transfers.

>This makes no sense at all

I will try and better explain. I think that the UK must stop blaming it's ills on its position relative to the EU; instead it must take the arrangements of other European states as a fact and make its own policy and direction. The obsession with the EU will change nothing - only internal reform of the EU to a fully federal state will change the current dynamic. The only real path for the UK in the EU is to fully join a fully federal state - I wouldn't mind too much about that if the commission was abolished, a proper civil service developed and the EU parliament had the final say over the civil service and the president (I would like a president who could propose legislation and dissolve the parliament for elections if legislation could not be passed).

However, I see precisely 0 chance of this happening in the next 50 years. After that I will be dead...

> Are you suggesting that we shouldn't have international trade?

No, of course not. I am suggesting that we see reforms and changes to our economy that enable us to have balanced trade with the rest of the world. The arrangement where we import vastly more than we export is not sustainable (in so many ways). The Brexit devaluation should have been helpful, but has been rendered moot by the very bad post Brexit trading setup. The end of the current pathway (and the pre-Brexit path) is a comprehensive economic meltdown a-la Greece in 2011; there is still sometime to avoid this - but Trussonomics showed that there is not as much as our establishment would like to think. This is the UK's fault and the UK needs to fix it.

In a way the Truss debacle has been a good wake up call - but there's still time for it to be swept under the carpet...