Brexit - Deal or No Deal?

[Barn]

What do we have to negotiate with? What is our BATNA?

Failing to reach a deal with the UK would leave a multi-billion euro gap in the EU's finances, cause more job losses in the EU than it would in the UK (in absolute terms) and potentially cut European businesses off from the continent's financial and insurance capital.

 

[najaB]

Failing to reach a deal with the UK would leave a multi-billion euro gap in the EU's finances...

But also reduce their budget requirements by a comparable amount. Don't forget that a significant portion of the UK's contribution is immediately returned in the form of rebates.

...cause more job losses in the EU than it would in the UK (in absolute terms)...

But not in percentage terms which is what really matters.

...and potentially cut European businesses off from the continent's financial and insurance capital.

Banks are already making plans to leave, and Frankfurt, Paris and Brussels would bend over backwards to accept them.

 

[Barn]

But also reduce their budget requirements by a comparable amount. Don't forget that a significant portion of the UK's contribution is immediately returned in the form of rebates.

The UK's contribution is at least €10bn per year, net of rebate and spending within the UK.

But not in percentage terms which is what really matters.

You may be right in terms of classic negotiating psychology, but not in terms of political reality. The Belgian government calculated that EU job losses would be over twice the level of UK job losses in the event of no deal. They are not spread evenly across the whole EU but are in concentrated packets within France, Belgium, Netherlands, Denmark, Ireland, etc. They are all real people, and politicians at national state level will be very conscious of them (much more so than may have been revealed so far) even if Commission officials and MEPs don't care.

Banks are already making plans to leave, and Frankfurt, Paris and Brussels would bend over backwards to accept them.

Banks are planning to move relatively small functions and subsidiaries to other cities. That is a very, very different position to moving London's huge capacity to arrange loans, insurance, reinsurance, bond issues, swaps, share transactions, currency deals, etc, all of which are very valuable to businesses right across Europe. It is simply not possible to move that level of capacity, experience and reputation to any other city, at least in a period measured in less than decades. Just for scale, the number of City workers exceeds the entire population of Frankfurt. You cannot simply hire new people to replace that scale in a few years, and you certainly cannot move significant numbers of existing staff across a continent. They are all real people with mortgages, relationships, kids in school, language limitations, etc.

 

[najaB]

They are all real people with mortgages, relationships, kids in school, language limitations, etc.

I love that you think that the bosses of these businesses care.

 

[Barn]

I love that you think that the bosses of these businesses care.

They will care when they realise that they simply don't have the staff needed to do the work.

It's not a matter of caring about people, it's about the sheer difficulty (read: impossibility) of moving a gigantic, highly skilled workforce across a continent.

Look at how difficult the European Medicines Agency are finding their proposed removal from London. They could lose 70-94% of their staff, and I know for a fact that they are a very multi-national workforce, not simply a collection of Brits. Like top City workers, they also cannot simply be hired from employment agencies and job centres in other cities.

https://www.theguardian.com/world/2...gency-relocation-could-cause-permanent-damage

 

[najaB]

It's not a matter of caring about people, it's about the sheer difficulty (read: impossibility) of moving a gigantic, highly skilled workforce across a continent.

In a year, I agree. But Brexit is forever.

 

[Barn]

In a year, I agree. Brexit is forever.

It is fortunate, therefore, that it is in the near term that we will be seeking to conclude a long term deal.

 

[deltic]

Banks are planning to move relatively small functions and subsidiaries to other cities. That is a very, very different position to moving London's huge capacity to arrange loans, insurance, reinsurance, bond issues, swaps, share transactions, currency deals, etc, all of which are very valuable to businesses right across Europe. It is simply not possible to move that level of capacity, experience and reputation to any other city, at least in a period measured in less than decades. Just for scale, the number of City workers exceeds the entire population of Frankfurt. You cannot simply hire new people to replace that scale in a few years, and you certainly cannot move significant numbers of existing staff across a continent. They are all real people with mortgages, relationships, kids in school, language limitations, etc.

While i dont disagree with the sentiment there is a bit of exaggeration here. There are about 250,000 people working in financial services in the City and Tower Hamlets not all of whom will be involved in international transactions. The population of Frankfurt is in excess of 700k. There is unlikely to be much movement out of the UK but future European investments/projects are likely to be located in the EU rather than London. What makes London such an attractive city for international businesses is its diversity and the question arises after Brexit will it still be easy to employ the best talent. The company I work for employs a wide range of international staff (in my section UK passport holders are the minority) but it will not pay for work visas due to cost and hassle of obtaining them. The majority of graduate applicants we get come from EU countries there just isnt the UK talent to recruit. If it wants to expand in future it is more likely to look to European locations than expand in London.

 

[Barn]

Your 700k figure is correct, but your 250k figure is too low, especially when you consider the professional services jobs which would inevitably be required to support the front-line financial services jobs, together with the other service providers required to support the whole ecosystem. Far in excess of anything Frankfurt could muster up.

Obviously I don't know what the Government is planning on future immigration (hopefully it knows!), but I am quite confident in predicting that EU citizens aiming for high paid graduate jobs in the City will not face significant immigration hurdles. I agree with you that this is vital.

 

[Suraggu]

So what do we actually get out of a no deal, just curious.

 

[highspeed990]

We should be the ones telling the EU where to stick it

 

[najaB]

So what do we actually get out of a no deal, just curious.

Nothing. Trade on WTO terms and being outside the customs union hurts us a lot more than it hurts our trading partners.

 

[najaB]

We should be the ones telling the EU where to stick it

We're the ones with something to lose here. The EU as an economic block will get on quite well without us in it. We are an important member but not essential to its existence.

"I'm taking my ball and going home." only works as a threat if nobody else has one. As the negotiating team is finding out, the EU has balls and isn't afraid to show them.

 

[Ianno87]

My prediction is we'll settle on some sort of miserable compromise of a deal, that is worse for the UK than our current agreement, albeit with a major concession or two to our negotiating position (e.g. on freedom of movement)

 

[DarloRich]

We should be the ones telling the EU where to stick it

such silliness typical of brexit.

 

[nlogax]

such silliness typical of brexit.

It seems to be the default statement for so many. 'Sod the facts, sod the ramifications, please accept these two fingers as payment'.

 

[Barn]

What I'd really like to see is the EU just tell Britain to get stuffed.

We should be the ones telling the EU where to stick it

Nobody should be telling anyone to stick anything. I've seen both sides calling for that in this thread (which is a only two pages long), and it's just childish.

 

[highspeed990]

Ok so why do we need to pay them, explain that.

 

[nlogax]

Ok so why do we need to pay them, explain that.

Here you go. Some facts. These should help. https://www.instituteforgovernment.org.uk/explainers/eu-divorce-bill

If you *really* want to get into the nuts and bolts, here are some financial breakdowns and maths; http://bruegel.org/wp-content/uploads/2017/03/WP_2017_03-.pdf#page=54

 

[SteveP29]

It's not a matter of caring about people, it's about the sheer difficulty (read: impossibility) of moving a gigantic, highly skilled workforce across a continent.

There's literally a pot of MILLIONS of people to entice into employment if the people currently working i London won't relocate, or are you saying that British workers are far more intelligent and are the only ones who can do those jobs?

 

[highspeed990]

Here you go. Some facts. These should help. https://www.instituteforgovernment.org.uk/explainers/eu-divorce-bill

If you *really* want to get into the nuts and bolts, here are some financial breakdowns and maths; http://bruegel.org/wp-content/uploads/2017/03/WP_2017_03-.pdf#page=54

If it's the government, I'm not interested. If it's someone else, most organisation saying stuff like this are known to take backhanders from the EU and cheat.

 

[Barn]

Ok so why do we need to pay them, explain that.

We probably do not need to pay them (although that would ultimately need to be decided by arbitration if it came to it).

The EU want us to pay them.

The UK may wish to pay the EU, if it results in benefits which are calculated to equal or exceed the payments made. Although I voted leave, I happen to think that this could well be the case.

The UK does not wish to pledge large sums of money without seeing what those benefits might be. This conflicts slightly with the scheduling of negotiations required by the EU. The UK made a strategic error in agreeing to this scheduling, especially as it is not envisaged by article 50 itself. The EU thought that it was being clever, but will probably get a worse result if it sticks rigidly to this schedule. It's a bit of a game of chicken at the moment.

 

[highspeed990]

We don't need the EU at all, we can walk away with no deal. They need us though. We however have countries lining up to trade. I don't care if we break EU law, what are they going to do, invade? We know how many times they've tried that before! Didn't work so now they seek to dominate Europe economically..

 

[Barn]

There's literally a pot of MILLIONS of people to entice into employment if the people currently working i London won't relocate, or are you saying that British workers are far more intelligent and are the only ones who can do those jobs?

*sigh*

Firstly, as has been discussed upthread, the population of the City is diverse. Whilst Brits are well-represented (obviously), this is nothing to do with any sort of British exceptionalism. It is not the Brits that are more intelligent, it is that London has attracted la crème de la crème of financial services personnel and it is fantasy to suggest that significant numbers would be willing to move en masse to any single other city or that a sudden mass hiring of new recruits would (a) be possible or (b) in any way replicate the critical mass here already.

The European Medicines Agency is finding out now that, even though people may have travelled to London from another country, that does not mean that they are necessarily willing to travel elsewhere once settled and experienced. This is partly because London is actually quite a nice city (certainly much more exciting than Frankfurt...), partly because of the widely-understood nature of English, and partly because people who came here as young job seekers are now (when they're experienced and valuable) well-settled with homes, mortgages, kids in school, marriages, friends, etc. These may sound frilly but, trust me, I have been involved in some scoping exercises for relocations and managers have consistently found that it is dangerous to ignore these factors.

No other city has the infrastructure or ecosystem to replicate London in the short term. You couldn't move everything to Frankfurt or Dublin, and if you start scattering banks in various cities, the attractiveness of those cities is further reduced in comparison. People like to work in London partly because of the choice of high quality institutions to work in. If Barclays went to Dublin, and Goldman Sachs went to Frankfurt, and Credit Suisse went to Brussels, only those people happy to commit their careers to those particular banks would even consider moving.

Secondly, you need to think about timing. The UK needs a deal quickly. It therefore is mostly interested in its leverage now. You simply cannot 'entice into employment' anywhere near enough people to replicate anything like the City of London elsewhere in the near term. Even a short absence of London from Europe would cause huge damage to European financial transactions and, therefore, the European economy. It doesn't really matter what might happen several years or decades down the line, because by then we will already have exercised our leverage to get a deal, or have reoriented our economy away from Europe.

 

[Barn]

We don't need the EU at all, we can walk away with no deal. They need us though. We however have countries lining up to trade. I don't care if we break EU law, what are they going to do, invade? We know how many times they've tried that before! Didn't work so now they seek to dominate Europe economically..

Mate, honestly, are you actually a Remainer doing a parody of leaver clichés?

 

[DarloRich]

If it's the government, I'm not interested. If it's someone else, most organisation saying stuff like this are known to take backhanders from the EU and cheat.

We don't need the EU at all, we can walk away with no deal. They need us though. We however have countries lining up to trade. I don't care if we break EU law, what are they going to do, invade? We know how many times they've tried that before! Didn't work so now they seek to dominate Europe economically..

yet more silliness bordering on pastiche.

Both sides need to sit down and talk like mature adults. Sadly i fear that is impossible, especially on our side when the agenda is being driven by brainless Daily Mail/ Express types

We also need to understand where the power lies in negotiations. I don't think that sits, despite what the braying brexit masses seem to think, in our hands. I ask again: What is our BATNA? (Do the government even know?)

 

[SteveP29]

*sigh*

Firstly, as has been discussed upthread, the population of the City is diverse. Whilst Brits are well-represented (obviously), this is nothing to do with any sort of British exceptionalism. It is not the Brits that are more intelligent, it is that London has attracted la crème de la crème of financial services personnel and it is fantasy to suggest that significant numbers would be willing to move en masse to any single other city or that a sudden mass hiring of new recruits would (a) be possible or (b) in any way replicate the critical mass here already.

The European Medicines Agency is finding out now that, even though people may have travelled to London from another country, that does not mean that they are necessarily willing to travel elsewhere once settled and experienced. This is partly because London is actually quite a nice city (certainly much more exciting than Frankfurt...), partly because of the widely-understood nature of English, and partly because people who came here as young job seekers are now (when they're experienced and valuable) well-settled with homes, mortgages, kids in school, marriages, friends, etc. These may sound frilly but, trust me, I have been involved in some scoping exercises for relocations and managers have consistently found that it is dangerous to ignore these factors.

No other city has the infrastructure or ecosystem to replicate London in the short term. You couldn't move everything to Frankfurt or Dublin, and if you start scattering banks in various cities, the attractiveness of those cities is further reduced in comparison. People like to work in London partly because of the choice of high quality institutions to work in. If Barclays went to Dublin, and Goldman Sachs went to Frankfurt, and Credit Suisse went to Brussels, only those people happy to commit their careers to those particular banks would even consider moving.

Secondly, you need to think about timing. The UK needs a deal quickly. It therefore is mostly interested in its leverage now. You simply cannot 'entice into employment' anywhere near enough people to replicate anything like the City of London elsewhere in the near term. Even a short absence of London from Europe would cause huge damage to European financial transactions and, therefore, the European economy. It doesn't really matter what might happen several years or decades down the line, because by then we will already have exercised our leverage to get a deal, or have reoriented our economy away from Europe.

Excuse my French, but that is a crock of ****, if a company want to relocate, they will do it.
Is the population of Frankfurt, Brussels and Paris not diverse?
Its rubbish to suggest that currently highly paid individuals are going to stay in an ever decreasing puddle of opportunity in London, they will be motivated by money and they will go where the money is.
If the absence of London is so critical to the EU, then why haven't they pleaded for the UK to stay? why are they keen to let the UK go? If it's going to almost wreck the European economy, why did they accept our Article 50 letter and our intention to leave without asking for other financial reparation than what this country has already committed to up until the date we are supposed to leave?

 

[najaB]

No other city has the infrastructure or ecosystem to replicate London in the short term.

Brexit is forever.

 

[Barn]

Brexit is forever.

Yes, as you said just a few posts above. And as I replied, one element that we bring to the table when we're concluding a long term deal is the fact that Europe won't want to be separated from London in the short term.

That was the original question: what does the UK actually being to the table and why would the EU themselves want to do a deal? Retaining access to London is way more important to the pan-EU economy than is retaining access to our car purchasers.

 

[Barn]

Excuse my French, but that is a crock of ****, if a company want to relocate, they will do it.
Is the population of Frankfurt, Brussels and Paris not diverse?
Its rubbish to suggest that currently highly paid individuals are going to stay in an ever decreasing puddle of opportunity in London, they will be motivated by money and they will go where the money is.
If the absence of London is so critical to the EU, then why haven't they pleaded for the UK to stay? why are they keen to let the UK go? If it's going to almost wreck the European economy, why did they accept our Article 50 letter and our intention to leave without asking for other financial reparation than what this country has already committed to up until the date we are supposed to leave?

The EU isn't keen for us to go at all, and will be keen to do a deal. It's just that lots of remainers take EU negotiation stances as gospel rather than the political bluffing that they are.