3 thoughts on “Brexit, the pound, and the J-curve effect

  1. Please excuse me when I am not directly relating to your instructive reasoning in the above post. However, the fragments of my thoughts may help put matters into perspective.

    The other day, I was approached by a German head-hunter who asked me to help organise an event focussing on the effects of Brexit, particularly on the labour markets at Luxembourg and Frankfurt. He envisioned mass immigration by bankers from London to these two places. I cautioned. I lived through a number of ‘revolutions’ (beginning with the Big Bang in the City of London), things tend to work out more subtly.

    For instance, in the past Continental Europe used to be rather anti-banking in its legislative ambitions, only held back by the UK. It may well turn out that, owing to the unleashing of hitherto restrained political forces, after Brexit London is going to become an even more attractive place for the financial world. More likely, there will be mixed and balancing responses on both sides of the new Brexit divide.

    On the most general level, let me say this:

    The UK will still be the UK, a long time after the EU has gone. Whatever negative repercussions the Brexit may burden the UK with, they will be small compared to the negative effects that the EU is having on the largest part of its members; the problems created by the EU for EU members are more substantial and significant than the difficulties a country like the UK may be facing that now has gained greater policy flexibility by vindicating its sovereignty. Apart from the systematic economic disaster that the Maastricht-EU is, the European hyper-state is the worst onslaught against living democracy in Europe since Adolf Hitler.

    I do not understand how the Left could fail to recognise that the EU is the perfect mechanism for corporate interests to prevail over labour. (I suspect, though, the Left is no longer the Left, but rather an extension of the pie-in-the-sky green movement, thoroughly detached from the concrete interests of the working population.)

    At any rate, what I told my EU-happy head-hunter friend (who likes to chime in with the Brexit-bashing voices that now have become UK-bashing voices) is that he might be better advised to prepare for the crash of the EU than to spend his energy on heckling “the stupid, egotistical Brits.”

    Being an admirer of the level-headed tone of this blog, I ask you to bear with the polemical slant of my comment.

    • No worries, thanks for your thoughts. I think the left/post-Keynesians and Marxists are quite anti-EU and the euro as it restrains the potential for full employment fiscal and monetary policies and (for the latter) nationalist industrial policies. So the left is surely divided, but here in the UK, many on the centre left came round to the EU, imagining that the social chapter would enhance workers rights following the deregulatory policies of the Thatcher/Major governments. Given the poor overall performance of the eurozone, and the disastrous response to the eurozone crisis, maybe the left will be persuaded otherwise now, or maybe they think that a reformed EU would be better. There is definitely a left case for Brexit, and those who favour more state intervention at the national level rather than the supranational level (as a way of managing globalisation) should surely support it.

      Personally I have mixed feelings about Brexit. The campaign was ugly and stoked anti-immigrant feeling beyond what was justified. Both sides overplayed their hands by making exaggerated predictions about staying/leaving the EU, and many of these key political players are now nowhere to be seen, with a new Prime Minister and cabinet in place. It has made for an interesting and rather dramatic few months, with surely more to come.

  2. Pingback: Brexit: effects of the currency depreciation on the British Economy | Nova workboard

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