Thursday, 16 June 2016

Thursday, 16 June 2016

On my Soapbox for a moment




The EU Referendum

Whilst the EU have made some significant achievements, I am not a believer in the EU as I feel it has become an all-consuming, inefficient, over bearing waste of money and is a far cry from the ‘vanilla’ version that we voted into in 1973. I think that the EUs original principal of a common market to help cross border trade and the movement of people was sensible BUT they should have left it with the ECU (European currency Unit) rather than creating the Euro. The single currency limits an economies ability to control themselves and the addition of poor performing member states has created a system that is similar to the principal of sub-prime mortgages. If you bundle all the rubbish together and put in some good stuff, then the overall package appears at face value to be more appealing. The reality is that this is a house of cards with only 1 potential outcome unless you change the structure before it is too late. Total economic unity and further integration cannot be the future as differing economies have differing requirements and therefore this 3 legged race is not a recipe for success. An inability to manage ones economy through interest rates, currency changes and independent legislation hinder many and helps very few and the fact is that the Eurozone is the worst performing growth continent other than Antarctica! Governments around the world have had to make budget cuts by up to 40% following the recession and yet Brussels increased its budget.

HOWEVER

Do we think we'll be better on our own starting from scratch than the collective buying power that the scale of the EU brings??? I doubt it.

The fact is no one knows what it will look like, but the one thing we can be sure of is that sterling will tank further and people don't invest in times of uncertainty. We see it in the markets over the last week (and leading up to it) and if we leave then it will only grow. It is true both in the markets and in companies. Why would I invest a company selling anything if I have no idea about what its ability to distribute is going to be and what tariffs and quotas it will be subject to? Might be ok, might not, but for any import/export company, a few years of small/ nil investment could sink it.

End of the day - Do we want to be an island in every sense and gain some misplaced idea democracy and sovereignty... For what? And then what? Yes we could have some tweaks around the edges and bicker over immigration +/- but quantifying it is almost irrelevant. It is more a political and conceptual question for me and I think we are stronger together.

Has the EC done a good job? In some things... Does it need reform? Definitely. The only way to do this is to join with the French, Germans and Dutch and lobby collectively for reform.

Perhaps Britain may leave as the EU changes shape in the future but I don’t think that now is the time to make such a leap into the unknown.




A guest blog post by 
Adam Bobroff
Director
The Foremost Currency Group


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