Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

UK Election Result Strikes Another Blow Against EU

Politics / European Union May 17, 2015 - 07:55 AM GMT

By: MISES

Politics

Ryan W. McMaken writes: With the victory of the Conservatives in last week’s British election, the future of both the European Union and the United Kingdom looks more doubtful. Newly re-elected Conservative Prime Minister David Cameron, in order to please anti-EU constituents who were essential to his re-election, promised a referendum on EU membership by 2017, although it could come sooner than that.

At the same time, the promised referendum is again inflaming secessionist sentiment among Scottish nationalists and separatists who wish to remain a part of the EU.


Naturally, it would be highly simplistic to point to the EU issue as the only major issue behind the Conservative victory. As Louis Rouanet points out here, the British economy in recent years has performed relatively well — with an emphasis on the word “relatively” — and has done so by eschewing the French model of tax hikes and increased interventionism. Whether deserved or not, Cameron was probably able to convince more than a few voters that he deserved some credit for this.

A Gain for Euroskepticism

Nevertheless, the election was a good sign for the euroskeptics, even in the face of the United Kingdom Independence Party (UKIP)’s inability to deliver much in the way of electoral success to its members. CNBC explains:

Yes, [UKIP] got one MP — but 3.5 million people (in a country of around 62.5 million) voted for the anti-EU party. If there is a low turnout for the EU referendum, and you add the number of people who voted UKIP to those who voted for other parties but aren’t keen on the EU, there might be a real risk of exit.

So, the Cons were able to peel a lot of people out of the UKIP camp, but there remains a real core of anti-EU voters out there whom Cameron (who is a Europhile) can’t simply ignore in the face of his razor-thin victory.

Cameron’s promised referendum has caused the term “Brexit” — with obvious allusions to the possible Greek exit or “Grexit” — to enter the international lexicon. But of course a British exit would be a totally different matter than a Greek exit. For one, Greece is part of the eurozone, while Britain is not, but more importantly, Greece is a net receiver of EU welfare while Britain is a net payer.

In other words, Britain, like Germany and France, are the larger productive economies in the EU that pay the EU’s bills, give it economic influence, and produce the wealth that gets spread around to the less-productive countries like Greece and Ireland.

It’s not difficult to see why some Brits might tire of paying Portugal’s bills when Britain has plenty of economic challenges of its own.

Scotland Looks to the EU and Secession

Of course, I use the term “Brits” loosely. “The English” would be a more accurate term in this case since the Scots, knowing how their bread is buttered, continue to look to secession and the EU as a possible escape plan if the Conservatives deliver at all on their promises to slash government spending or withdraw from the EU.

This would make perfect sense for the Scots, of course, since the EU might indeed offer more generous welfare benefits than the Tories in England. Scotland only has to look next door to Ireland — which benefited mightily from EU largesse during the 1990s — to see how a small relatively poor country can do quite well as an EU receiver state. The Irish state still brags about being a net receiver of EU funds.

Thus, we find that if the British manage to leave the EU, the Scots would be likely to seek secession soon after. Rather than living largely off the forced generosity of taxpayers in England, though, the burden would be passed over to German and French taxpayers, among other northern Europeans.

The biggest loser in this whole reshuffling would be members of the Labour Party in England, who would still be subject to the edicts of London, but who — without reliable left-wing Scottish votes on their side — would be relegated to a political party with little hope of gaining a majority in Parliament in the near term.

(This analysis of course ignores all the non-financial repercussions of a more Conservative British state such as the decline of civil liberties, a strengthened surveillance state, and possibly a more belligerent foreign policy.)

Meanwhile, Back on the Continent

At the other end of the equation, the balance of power in the EU would shift dramatically as well. With the departure of the UK, the productive economic base — the “net tax payer states” of the EU, such as Germany — would be depleted even more, and the balance of power would shift even more to the more numerous net tax receiver states. Would this accelerate a German exit in a scenario similar to that imagined by Patrick Barron? Possibly, although it’s hard to predict how long the Europeans can keep using Nazi war guilt to keep the gravy train flowing out of Germany to the rest of Europe.

In addition to promising an EU referendum, Cameron has said that he will seek to renegotiate the terms of the UK’s relationship with the EU. With recent floods of refugees and migrants to Europe, the pressure on Cameron for successful renegotiation has increased. EU politicians have proposed spreading out migrants in a resettlement plan across numerous European countries. Naturally, British nationalists aren’t fond of that idea, since new migrants would place additional pressure on the British welfare state. But even if no migrants ended up in the UK at all, the British would end up at least partially funding resettlement through their EU taxes. A partial answer to it all can be had by simply leaving the EU.

As a final note, it might be worth remembering that back in America, the land of the free, the net tax payer states face few legal options if they grow weary of funding welfare programs and government projects in other states. If Colorado and Texas and Minnesota tire of being made to throw money at Mississippi, South Carolina, and Vermont, it’s just too bad for them. In Europe, wanting to break off from the centralized political structure is often called “skepticism.” In America, it’s usually called “treason.”

Ryan W. McMaken is the editor of Mises Daily and The Free MarketSend him mail. See Ryan McMaken's article archives.

You can subscribe to future articles by Ryan McMaken via this RSS feed.

http://mises.org

© 2015 Copyright Ryan McMaken - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in