The European club has two categories of member – contributors and beneficiaries. All joined for the same reason – the economic benefits from being part of the club – but we are only now starting to learn what happens when a country decides they no longer wish to ‘play the game’?
There are no end of economists and other so called ‘experts’ who are predicting a broad spectrum of outcomes my guess is they will all be wrong! So what do we know:
- when the UK leaves there will be one less ‘contributor’ placing an additional burden on the remaining members and reducing the money available for distribution
- The European dream itself is already under threat – if the UK exit is a success then there will be a queue at the door marked exit.
- Unity amongst the remaining members is fragile – every country has a domestic agenda – look at Ireland’s focus on border arrangements.
Add to these the medium term considerations:
- Europe is an ‘ageing’ economy. Over the next 20 years the ‘economically inactive’ over 60s will be the fastest growing market sector in Europe
- An increasing share of European investible assets will be controlled by those 65 and over who are naturally conservative
- Europe is a hugely important market of over 500000 consumers, however the world population is more than 7 billion including all the fastest growing economies
- European social costs are typically 100% of the salary bill or higher – a huge barrier to employment.
So back to the question. I believe the UK’s departure will hasten the time when our European cousins have to face the fact that they are funding their comfortable life-style by passing the costs on to their children and grandchildren. With a falling birth-rate and children and grandchildren reaching the age they can vote they may either ‘vote with their feet’ and move elsewhere or vote for change. The European dream is under threat.
Undoubtedly the UK will be blamed…..!