A Fine Worth Millions of Pounds Threatens the UK

Originally appeared at A-specto, translated by Borislav exclusively for SouthFront

The danger that Britain will face court is ever more likely. This would happen if the British government tries to conclude trade agreements with other countries before leaving the European Union – an implication the country made two months ago. If Britain does not comply with Brussels requirements, this can lead to a “violation of procedures” of the European Commission. If it is established that the country does not act according to the rules, it may face legal proceedings and be forced to pay a fine amounting to millions of pounds. The right to such a procedure is held by both the European Commission and the Member States themselves.

European Council President Donald Tusk, says it is “very likely” that Theresa May will trigger Article 50 of the Lisbon Treaty in January or February next year. However, it seems that the British Prime Minister and her ministers are not rushing to exit the EU. Beguiled by the political jesters Boris Johnson and Nigel Farage, government representatives stated in one voice that the country will build its new global role on the world market, without relying on the European Union. But suddenly they went in reverse. Realizing what the direct losses for the country will be, they began wringing their fingers. They came out with the feeble excuse that before they withdraw from the bloc, Britain must first weigh all the benefits and negatives.

“The role of the Department of International Trade is looking for trade opportunities after Brexit. We will get the best deal for the UK by building its new global role,” stated a government spokesman. Meanwhile, European Commission President Jean-Claude Juncker emphatically noted that Britain can not get access to the single European market without accepting the free movement of workers – a condition which the country is not too willing to comply with. “We are talking about the rights of ordinary people and workers, those who live in Europe, so I do not see opportunity for a compromise on this issue”, said Juncker, adding that European leaders will not give up a millimeter from their position.

Just a month ago the Institute for Fiscal Studies issued a frightening forecast for the losses the country will suffer if it is excluded from the single market of goods and services in the European Union. According to the analysis, after Brexit and till 2030, the UK Treasury will lighten by about 75 billion pounds. Even before the referendum, the institute had published a report which showed that the lower economic growth and the additional loans that the country will have to take after its release from the EU, will form a huge hole in the budget. Expectations were that within 3-4 years between 20 billion and 40 billion will sink, and the government will be forced to impose austerity for at least a decade ahead. The dimensions of the actual losses will become clear when it is known what trade regime will replace the full membership in the EU.

Amid all this, the head of the Central Bank in Germany warned that London would suffer a serious blow as a financial center if the UK leaves the Single Market. The “Brexit” favored by some leading conservative Eurosceptics would mean that its banks will automatically be deprived of the opportunity to operate within the EU, says Jens Weidman, Bundesbank president. In his words the “passport rights” of financial institutions are tied to the Single Market and will automatically cease to apply if the UK is no longer part of the European economic zone.

On the eve of the Brexit referendum, Boris Johnson, whose recent appointment as foreign minister still raises a laugh, is trying to reassure state banks that Britain will retain its rights even if they leave the economic zone. According Weidman however, many companies will be forced to relocate their activities in financial centers like Frankfurt. According to him, there are already signs that the British economy is gasping due to the turbulence, which fell upon it after the results of the referendum.

Weidman believes the assumptions that the negative shock on the UK economy will be slight, is false. “Britain is too closely associated with the European Union and Germany,” he explained. According to him, if relations between the parties are limited, it will stifle the economic growth in the UK. Moreover Weidman believes that Europe has lost its luster and has “become a projection screen for the shortcomings of globalization and migration”.

Curiously, only 53% of people who voted for Britain’s exit from the EU, believe that the government can reap benefits for the economy during negotiations for its withdrawal. These are the results of a new study at The Institute for Government. The survey showed that almost three months after the results of the referendum, the British are still not sure what Brexit will mean for the country.

Nevertheless, the new Iron Lady, as they call Theresa May, is eager to convince the leaders of other member states, to sign a trade agreement with the United Kingdom. According to her, such a deal will benefit other members of the union.” I believe in good trade relations, I have said before that I want the UK to be a global leader in free trade”, said the British Prime Minister before the United Nations. However, she reminded world leaders that they have a “duty” to stem the tide of migrants, and once again stressed that Britain does not intend to comply with the requirement of European leaders on the free movement of workers. May’s thesis, that all countries have the right to control their borders and protect their citizens by limiting the flow of illegal and uncontrolled migration is unshakable. Yet people still view her with suspicion.

Before the referendum, some thought that the country could retain membership in the single market, as is the case with Norway. The conditions for this to happen, were for the UK to help increase the EU budget as well as to allow for free movement of workers from across Europe to the UK. It is clear, however, that disagreements regarding financial and migration policies in the EU are deepening, since neither European leaders, nor the UK are willing to compromise. This disunity has become a key factor in driving up tensions between southern European nations, which have received an unprecedented number of migrants, and northern European nations that have taken steps to tighten border controls. At the core of the problem seems the maxim “Brexit means Brexit.” The conundrum spoken by Theresa May, left too many questions unanswered. It will continue to fog the heads of both representatives of the British cabinet, and the European leaders, in the search for mutually beneficial outcomes.