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How Issues of Sovereignty and Delusion are at the heart of the Economics of Brexit.

Humanosity says…This is a sharp critique of the central arguments put forward by Brexiteers by Mona Ali in the Political Quarterly Blog. She goes through the main pro Brexit arguments and how they affect the economics of Brexit.

Her first point is that Britain already has a special relationship with the EU in that the UK has managed to negotiate concessions that aren’t available to other members.

On more than one occasion, Britain has embroiled the EU in drawn-out renegotiations of the very terms upon which it had agreed to join the supranational federation. In 2016, for instance, David Cameron signed Britain out of the first clause of the Treaty on European Union, where other member countries promise to strive towards a ‘ever closer union’. 

Some of the opt outs the UK has were negotiated as far back as 1975 when the government of the time managed to secure an opt out from joining the European Monetary Union.

This was not a one-off instance. In 1975, just two years after its accession to the European Economic Community, the UK opted out of the European Monetary Union. Whilst benefiting from full access to the single market, as a non-euro member of the EU, the UK managed to maintain full monetary autonomy. This proved especially useful in the aftermath of the 2008 economic crisis when, attempting to restore macro-confidence, the Bank of England cut interest rates more quickly and aggressively compared to the European Central Bank…..

She goes on to argue that a key part of Brexit thinking is based on the conflicts that arise from relationship that Britain has with the EU and the US. Brexit seeks to prioritise the US relationship especially at a time when the EU’s rules are diverging from those of the US.

One of the reasons stated by David Cameron for not signing the European Fiscal Compact of 2012 was that he wanted to protect American banks in London from EU financial regulation. Cameron’s position was rooted in a longstanding transatlantic alliance dating back to Bretton Woods. Postwar, the British and American financial establishment jointly carved out the City as an offshore financial center. Ironically, the Eurodollar markets located in London were an escape route for finance capital from the regulatory constraints of Bretton Woods.  

Read the full in depth article here

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