UK wants to restore its independence through Brexit - Natixis

René Defossez, Research Analyst at Natixis, suggests that one of the main objectives pursued by the “leavers” is for the United Kingdom (UK) to restore its independence.

Key Quotes

“The country must be able to negotiate trade agreements with all third-party countries, it must no longer depend on the jurisdiction of the Court of Justice of the European Union (CJEU), and standards for goods must be defined at national level. Of course, the UK must have sole say when it comes to its migration policy, in particular be in a position to control immigration from the European Union (EU). To varying degrees, all Brexiters share these objectives. They are more divided when it comes to the UK’s future trade relations with the EU.”

“The most fervent Brexiters are quite prepared to take the big leap, i.e. they are agreeable to trade relations between the EU and UK being governed by WTO rules. The rationale can be summed up as follows: why preserve more or less as they are relations with an economic area that is enjoying far weaker growth than many other countries, notably China, India and former countries of the Commonwealth. Some Brexiters are more cautious and would prefer to maintain “special relations” with the EU, which roughly accounts for half the UK’s foreign trade.”

“In the meantime, the British economy is continuing to be buffeted by the impact of the Brexit risk. This is being felt mainly at three levels: households, firms and the central government.”

“It goes without saying that, if in March 2019, the UK celebrates its Independence Day and leaps off the cliff edge, the economic cost will be inordinately greater, what with the end of passporting for banks, the introduction of customs tariffs, the relocation of not just financial activities but also other activities to the EU, etc.”

“The paradox is that the UK may well restore its independence in relation to the Court of Justice of the European Union, but that because of its twin deficits and isolation it will be far more tributary on the judgement of the market, which thus far has remained very accommodating towards the UK.”