Sunday, March 31, 2019

Brexit: EU Control The Outcome

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-1137343314&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1137343314/960x0.jpg?fit=scale&q; data-height=&q;515&q; data-width=&q;960&q;&g; (photo credit: Getty)

It is now the situation that the outcome of Brexit is down to the EU.

These are the five options:

&l;strong&g;1. Revoke article 50&l;/strong&g;

This kills Brexit, once revoked it would never be reissued. On the surface at least, the EU can&a;rsquo;t say no to that. This would utterly humiliate the U.K. and remove any leverage on negotiations about the future of the EU, beyond the U.K. being 10% of the population of the EU and a reasonable sized region of Europe.

&l;strong&g;2. A second referendum&l;/strong&g;

This has been voted off the option list by the British parliament but if it was to be revived, the EU would have to agree to an extension and if it didn&a;rsquo;t, a hard Brexit would most likely follow, unless the twice rejected deal was suddenly signed off on. At this point it would be down to the EU whether a second referendum was callable.

&l;strong&g;3. Sign the pre-negotiated EU exit deal

&l;/strong&g;This is a slam dunk but the British representatives, the MPs (members of Parliament) have already turned that down twice. It would be frankly weird if they agreed to it third time around. It&a;rsquo;s not impossible but highly unlikely. This would place the U.K. into a kind of EU limbo. The U.K. would get lots of benefits but would be in many minds half in and half out of the EU and with no voice in future decisions.

The U.K. would be half ruled but unrepresented by the EU. It would leave the U.K. able to detach further or move closer, but the Remainers hate the option as much as the Brexiters. That joint loathing should be a good pointer that it&a;rsquo;s the right deal, but Parliament isn&a;rsquo;t having it and are unlikely to change their tune.

&l;strong&g;4. A hard Brexit&l;/strong&g;

The U.K. would be like any other country outside of the U.K. block but so much of the U.K. economy is hardwired to be inside that the trauma of a breach is too much for most to countenance. The Remainers don&a;rsquo;t want any Brexit, let alone a violent rupture, and even many Brexiters don&a;rsquo;t want to end up in the cold outside the high wall of the richest economic zone in the global economy. However, many voters don&a;rsquo;t care what kind of Brexit they get, they just want out, but the key thing is, Europe can inflict this on the U.K. unless article 50 is revoked. Without revoking article 50, the U.K. can fall out of the EU and at the moment it has till April 12 to do just that if it can&s;t sign off on the current deal.

&l;strong&g;5. Parliament build a deal they can sign up for and present it to the EU&l;/strong&g;

Would the EU play ball? Very probably not. You can bet that all parties since the beginning of the process, including David Cameron&a;rsquo;s failed attempt to do a better deal with the EU for staying in the U.K., have tried all possible angles. The EU have simply said, &a;ldquo;no.&a;rdquo; The EU have made it crystal clear the current unpalatable deal won&a;rsquo;t be reopened. Unless the proposed deal was worse for the U.K., it&a;rsquo;s hard to imagine them agreeing a different one now. The EU has stated it has finished preparation for a hard Brexit; that implies they consider that a bigger probability than the U.K. does, but no one in the U.K. appears to be listening. In many U.K. minds, it is still the case that the continent will be cut off from the U.K., not the other way around.

So the outcome seems to be very likely to be &a;lsquo;Dead Brexit&a;rsquo; or &a;lsquo;Hard Brexit.&a;rsquo; Make no mistake, the vast majority of MPs want a dead Brexit and while they are trying to put the blame anywhere but on themselves of killing Brexit, they may run out of time and end up with a hard Brexit.

A hard Brexit is deemed by the betting markets as very unlikely, but sometimes it&a;rsquo;s the worse outcome that is the most likely, simply because the situation is so toxic.

A toxic outcome is possible for these 5 reasons:

&l;/p&g;&l;ol&g;&l;li&g;Nailing the U.K. via a hard Brexit will send a message to all the populations of the fiddly little awkward countries in the EU that leaving the EU would be economic suicide, and demonstrate to their politicians that the process is political suicide. The latter is already clear, the former is yet to be underlined.&l;/li&g;

&l;li&g;The U.K. politicians will find it easy to blame other politicians for the hard Brexit outcome and will be able to blame the EU for being beastly.&l;/li&g;

&l;li&g;Without the U.K. in the EU, Europe will be able to move ahead towards super-state status, the logical destiny of Europe, which the U.K. has been sabotaging the whole time.&l;/li&g;

&l;li&g;The EU will take over the U.K.&a;rsquo;s position as Europe&a;rsquo;s financial center and get a boost from all those companies using the U.K. as an English-speaking platform for the EU. That will amount to a significant GDP boost, something needed in most of the EU.&l;/li&g;

&l;li&g;The U.K. has demonstrably 50% of its people against being in the EU, not a recipe for harmony as the EU continues to develop into a closer political and economic block.&l;/li&g;

&l;/ol&g;

It&a;rsquo;s easy to say anything could happen and it really could but Brexit or No-Exit are going to be the high probability outcomes and they will be on the EU&a;rsquo;s terms not the U.K.&a;rsquo;s.

The EU is likely to prove that like Hotel California, once you enter you can never leave. Even if the U.K. does, then it will be the only country that ever will and it will pay for its independence with a long period of hard times.

It is no wonder so many British people want to remain under the umbrella of the EU, when their local regional government, that of the British parliament in Westminster, is so utterly hopeless and weak.

If the betting is to be believed the U.K. is heading for a soft Brexit but only a bizarre set of turns of events will bring that to pass.

&l;em&g;Clem Chambers is the CEO of private investors web site&l;/em&g;&l;span&g;&l;em&g;&a;nbsp;&l;/em&g;&l;/span&g;&l;a href=&q;http://www.advfn.com/&q; target=&q;_blank&q;&g;&l;em&g;ADVFN.com&l;/em&g;&l;/a&g;&l;em&g; and author of &l;/em&g;&l;a href=&q;http://www.amazon.com/dp/B00R3ABO9G&q; target=&q;_blank&q;&g;Be Rich&l;/a&g;&l;em&g;, &l;/em&g;&l;a href=&q;http://www.amazon.com/dp/B00HCOUWS2&q; target=&q;_blank&q;&g;&l;em&g;The Game in Wall Street&l;/em&g;&l;/a&g;&l;em&g; and&l;/em&g; &l;a href=&q;https://www.amazon.com/dp/B077D9ZZ7P&q; target=&q;_blank&q;&g;&l;em&g;Trading Cryptocurrencies: A Beginner&a;rsquo;s Guide&l;/em&g;&l;/a&g;&l;em&g;.&l;/em&g;

In 2018, Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards.

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