It is not what will happen to the UK economy post-Brexit which really concerns world markets, but that the whole of the EU, and more particularly the Eurozone, is a pack of cards.
It is hugely debt-leveraged and propped up by Germany, but even the world’s third largest economy has its limits.
Of course, European politicians and financiers will never voice their real fear.
The UK is Germany’s third largest export market after the USA and France, and it is hugely important to it. The UK is only Germany’s ninth supplier of imports so Germany has a huge balance of trade surplus with the UK.
There is no way Germany is going to risk this business and huge benefit to its economy (as well as its ability to support the rest of the EU) by alienating the UK in any post-Brexit trade negotiations.
Similarly, the UK is France’s fifth biggest export market — the value of French exports to the UK is more than its exports to the USA — but only its eighth largest supplier of imports so France also has a very good balance of payments surplus with the UK.
So French political talk about a hardnose post-Brexit trade deal for the UK with the EU is just that — ‘talk’.
It’s the same story for the Netherlands and many of the other major EU member economies.
However, Europe is gradually becoming a less important export market for the UK.
In 2000, 60 per cent of UK exports went to other EU countries, but the percentage fell to 58 per cent in 2005, 54 per cent in 2010 and 47 per cent in 2015, notwithstanding the growth in the value of exports over this period.
Over the same period, imports from the EU remained constant, accounting for 54 per cent in both 2000 and 2015, but representing a significant increase in value terms.
So again, EU political talk about a hardnose post-Brexit deal is just political sabre-rattling.
However, tough talk about making things hard on the UK to discourage other EU members, who may be considering the nature of their own future relationship with the EU, is more likely.
The UK is the most important export market for the USA in Europe, making up almost a fifth of all its exports to the EU. However, whereas the USA has a significant balance of payments deficit with the EU overall, its trade balance with the UK is almost a net zero.
So despite ex-President’s Obama’s ‘threat’, the USA was never going to put the UK at the back of the queue in any future post-Brexit trade deal.
And in any case, the UK already has its own bilateral trade relations with the USA.
Prime Minister May’s speech in Florence last week on the Brexit process was, I believe, a complete betrayal of the British electorate and the democratic process.
In line with the comments made by the former Governor of the Bank of England, Lord King, the UK should simply ‘walk away’ from the EU in line with the 2019 deadline, and with no further financial contributions thereafter, other than those to which it may be contractually bound as in any commercial relationship.
Trade would default to WTO Rules.
As Lord Dyson, one of the UK’s most successful entrepreneurs, stated, this would not represent a major obstacle for UK exporters.
If the EU would like a better relationship with the UK on trade and other issues then it should propose one for our consideration.
The fact is that the EU needs the UK for trade, security, etc, far more than the UK needs the EU.
So why is Theresa May adopting the role of a supplicant?
The Tory management of the Brexit process has made us a laughing stock in not only the EU, but the rest of the world, signalling that in future trade negotiations, etc, this country is a push-over.
The EU has nothing to gain by proactively seeking to reach an agreement with the UK, and delay and delay, with matters just continuing as they are, is all to its advantage.
The British people voted simply to ‘Remain’ or ‘Leave’ the EU, not for some kind of ‘half-in half-out’ compromise.
A clear signal should be sent to the EU that come 2019, the UK intends to be completely out of it and will make no further payments or commitments beyond that date.
This is the only means by which the European Commission’s Chief Brexit Negotiator Michel Barnier and his political bosses will ever come around to putting forward some sensible proposal for a post-Brexit relationship that this country can accept.
2019 will be three years after the UK referendum to leave the EU; the British people do not want it to be five years or longer.
And they certainly do not want to pay to the EU any more of taxpayers’ money on top of what has been paid out over the past 44 years of membership when it could be so much better invested in the UK.
Dr Keith White-Hunt