Ireland’s Euro Straightjacket

The CApx article below is more elegant than my own attempts to explain that the structural problem of the EU is the Euro, not the odd country leaving. Germany, Ireland, Spain and Italy do not belong in the same currency and forcing them into one creates social tensions that lack a democratic outlet. It is indeed about Optimal Currency Areas.

Eventually the Euro will lead the EU project to fail in its present form. Not sure when and not sure how, but it will. Strong economies might leave from the top or weak economies might be kicked out of the bottom. Both routes lead to a core EU and periphery. 

The Brexit question is where do you want UK to be when this happens. Certainly, out of the Euro. If UK was inside the EU at the point of Euro crisis then London would have a stronger voice. If it was outside the EU then UK is better able to select national as opposed to collective crisis management measures. Either way UK will be affected but remember the Euro will need London markets to raise cash.  UK’s is best protection is to gain more global customers than EU customers, which is happening naturally. Again it can grow global trade with either a full or partial Brexit. So even positioning Britain for a probable Euro crisis does not point clearly at either full or partial Brexit outcomes.

In this Euro Crisis scenario, and many others, it is not a particular version of Brexit which determines UK’s 10 year outlook but global events and some things UK can do regardless. Trade in most goods and some services is made by markets of buyers and sellers not by government trade deals. Such deals help, support and mostly come after a market has been created be people who speculatively get on airplanes and have a go. 

My advice to SMEs. Assume 6 to 10 weeks of chaos at Dover. Then ignore the Brexit noise, make a special effort to look after your EU customers, but prioritise new sales effort in markets outside the EU. 

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s