Undoubtedly you are familiar with the term “Brexit” by now. The choice the British made in 2017 has become a buzz word in geopolitical pop culture since then. The basic idea is that Great Britain wants to be “great” again, standing on its own without the EU bossing it around.
This is something we as Americans can all understand. After all, we broke away from Great Britain ourselves over 225 years ago precisely because we did not want them telling us what to do anymore. The problem with the idea of breaking free from an oppressive overlord is that it is rarely painless or easy.
The British have just figured this out. Brexit offers tremendous benefits and hopeful opportunities for them in the future. The problem is that now it is creating a whole host of problems for the world’s fifth (or sixth depending on what measurement you use) largest economy and international banking and gold center.
It appears that with only seven months left to go until the fateful March 19, 2019 hits, the British government led by Prime Minister Theresa May has been unable to effectively reach a compromise with their counterparts in the European Union. There is plenty of blame to go around for this dismal result on both the European and British sides.
Remember though, that in the past when a nation decided to reclaim its sovereignty, it usually involved soldiers shooting at (or sword fighting with) one another. So the end result is this: Great Britain has no deal, and the European Union chief negotiator has already warned them that the EU 27 side had to have a final package (that both parties agreed on) on their Brussels’ desks in early October at the latest.
Checking your calendar tells you that the Brits have run out of time to do so. Five to six weeks may sound like a good bit of crunch time left, but in the heady and hectic bureaucratic world of international (and especially European) geopolitics and negotiations, this is no time at all. So the British have finally started to come to grips with some stark facts.
They are going to crash out of the European Union in the hardest of all possible Brexits. The government has all but acknowledged this on the past Thursday by issuing its very first “contingency plans” on what will happen when they leave without any meaningful agreement on the future relationship with their largest trading partner and biggest export and import market.
The brutal truth is that they are going to regain their independence, but potentially this will come at a steep economic price. So now the government is trying to prepare the British public for the likely disruptions that will soon begin to happen in earnest come March. May’s Conservative government’s hope is to dispel the growing national fear and disquiet without creating or spreading crippling panic.
To do this, the government towed the line of the last year and a half that they anticipate reaching an ultimate deal with the EU. In a new batch of technical papers and documents, they are warning that there will likely be substantial additional red tape for both exporters and importers, that British citizens residing within the EU may see their pensions and banking services evaporate, and that debit or credit card payments on the continent may come at a higher cost.
Other more ruthlessly realistic assessments warn of long delays for thousands of trucks each day trying to enter via the English Channel tunnel to Dover from Calais, France, possible shortages of food and some imported goods, and even economic decline as the city of London loses a significant part of its world-leading financial services industry to rivals still based in the EU. It is not only the British who are in economic and financial peril from this likeliest end-result though.
The Deputy Director-General Josh Hardie of the Confedration of British Industry warned:
“By now, few can be in any doubt that ‘no deal’ would wreak havoc on economies across Europe.” The people who make the case that it is somehow acceptable to shift (without warning and) urgently to the World Trade Organization rules “live in a world of fantasy, where facts are not allowed to challenge ideology.”
Hardie sees things through more realistic lenses than most. The U.K. crashing out of the EU is going to be painful for Europe, for the wider world, and for Great Britain. But at least the British will not be squaring off against the likes of Napoleon, Kaiser Wilhelm, or Hitler and their avenging armies this time.
Is Your Retirement Portfolio Protected from A Brexit-Fueled Crisis?
The Secretary of State for Brexit Domnic Raab says he wishes to show the EU that Britain is prepared to walk away from the talks on Brexit this year if he has to. He is about to get his wish. He is right about one thing, they need to be ready for the carnage that will potentially ensue when this happens. You also need to be ready to defend your retirement portfolio from this falling Brexit domino that could be the one to trip up the entire world economy in only a few short months.
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