Tuesday 20 August 2013

Article 50: No Sudden Movements

No country is an island (with apologies to John Donne). 
Geographically the UK is very obviously an island with all the benefits that brings, although not quite as comprehensively as is often imagined. However in many other senses such as economically, militarily and politically the UK is anything but.

The UK occupies a remarkably unique position in global affairs. It is the only state which is a member of the G8, G20, the EU, NATO, the Commonwealth, the Council of Europe and a permanent member of the UN Security Council. In addition the UK is a nuclear power and, despite current difficulties, has one of the largest economies in the world. We may no longer be an imperial power, but "punching above our weight" sometimes seems to be an understatement.

Thus it is clear that a country the size and importance of the UK leaving the EU is going to have very significant political and economic ramifications which will reverberate around the world. Greenland leaving the then EEC in 1985 is one thing, the UK leaving the EU now is an entirely different matter altogether. Just the effects on the EU alone would be profound, not least in reversing partly the political momentum for ever closer union and thus showing a different path for other member states. Other countries such as Ireland and Denmark may follow us out. We would be creating a precedent.

So while some arguments ensure over legal details such as whether "the Commission can do what they like in the two year process under Article 50" - it can't as I noted here, here and here - there are significant consequences that transcend the dry legalities of leaving.

One thing stock markets dislike intensely is uncertainty which is why market sensitive data is often released over a weekend when they are closed; thus any unilateral exit by the UK especially with no plan and no warning would clearly send the FTSE, the Dow Jones, the Nikkei et al smashing through the floor on a plummet trajectory.  Tearing up international agreements on an ad hoc basis is likely to lead to stock market crashes and history tells us where stock markets crashes end up.

We've had plenty of evidence on the sensitivities of the market during the Eurozone crisis, for example when, to the complete surprise of virtually everybody, including his own parliamentarians, Greek prime minister George Papandreou called a referendum to approve a EU bailout deal in November 2011:

Global stock markets dropped sharply as investors sold off shares after Greece's shock decision to hold a referendum on its eurozone bail-out package thratened to intensify the region's debt crisis.
London's FTSE 100 index of leading shares dropped more that 2pc, with markets in Germany falling, France, Spain and Italy sliding between 2.7pc and 4pc.
And not just the stock markets, the bond markets have also played an important part of the eurozone crisis. More so as bond markets generally have large power over countries again typified by the fate of Eurozone countries such as Spain, Italy and Portugal.

So we come to Chancellor George Osborne whose entire strategy is effectively betting on being able to borrow on the bond markets at rock bottom rates. Osborne’s recovery plan is based on the hope that rates will stay pinned to the floor, and given that we're borrowing £3,000 a second he (and we) can’t afford for borrowing costs to overshoot, which they most certainty will do in the event of uncertainty regarding sudden exit from the EU. Escalating borrowing rates as a result are very likely to make Greece's situation look like a picnic in comparison..

And not just the bond market, there's also the sterling and the forex market, any movement on EU membership by the UK will have dramatic impact on the value of GBP, with economic consequences for us all.

So to leave without an orderly exit in place, in times of a fragile world economy, will have adverse economic consequences also for other countries to the ultimate and obvious detriment of our own. Any immediate destabilisation of EU membership by any member state would impact on the Eurozone undoubtedly dramatically ensuring it enters yet another crisis furthering affecting the UK economy.

Thus we have an international duty, in our own self interest if nothing else, to make sure our exit has to be as smooth and as structured as possible, and that can only be achieved by showing the international community we honour international agreements and are willing to follow due process. Undoubtedly an extensive period of foreshadowing our intentions beforehand is likely to be necessary to allow politicians across the world, the economy and the markets to price the change in.

Purely taking an English stance by seeking comfort in quotes from the Magna Carta and other Constitutional Acts which apparently bind their Parliamentary successors and hoping for the best without consideration of the UK's position in the world simply will not wash...


  1. Art 50 does it for me.

    But am I correct in saying ALL of the other members have to agree that we can leave?

    Ain't gonna happen, is it? Many of them depend on our dosh to survive.

    Can we live without the EU?

    Hell yes.





    Let's leave already.


  2. @CR "But am I correct in saying ALL of the other members have to agree that we can leave?"

    In a word no.

    A50 is effectively like handing your notice in at work, i.e. "I give 28 days notice (or equivalent) as per my employment contract".

    Just in A50's case it's 2 years. Either we negotiate a new relationship or failing that we leave after 2 years by default.

    As for UK's contribution they'll find some other way - fine Microsoft or something. That's what they usually do when short of cash. Propping up the political integration project is more important than our money. And we're an inconvenient anchor on their ambitions.

  3. :)

    That or raid peoples bank accounts a la Cyprus....

    Thanks. I thought we needed the others to 'ratify' our departure. It makes Art 50 even more attractive.

    Mind you, as others have said, it will take a long time to unpick the crap we signed up to. This, after all, is a 40 year relationship. Or, as I like to call it, a forced marriage.

    Like Scottish independence, (if gained) it will take many, many years to actually separate that 300 year old union.

    I'm happy to leave. Today.

    We can work out the nitty-gritty at our own speed.


    1. Part of the problem with Scottish independence is that bugger off and assume the loose ends will resolve themselves in a satisfactory way for Scotland, isn't a very inviting prospect. e.g. would Scotland be a member of the EU by default, the EU seems to say not. On what basis would they trade with the EU, including the UK? Would they have to apply for EU membership? What happens in the mean time?

      Yes, the desire for independence is largely emotional but that won't take you the whole way. You need convincing answers to these questions. You need a plan which takes account of these problems rather then discover them as a succession of surprises after the event.

      It would have been a completely different question in the 70s or even the 80s before the EU started to crystallise to the state it's at now.

      Like an unhappy marriage, you'd want to get out of it, but just declaring it over and clearing off is likely to have unpleasant consequences.

  4. CIB (Campaign for an Independent Britain) is organising a Discussion on this topic at Derby on Friday 6 September in the evening from 7.00 pm.

    I will be speaking on the constitutional angle, including Article 50 and Hugo van Randwyck will speak on the EFTA option.

    We hope it will be a lively discussion rather than an adversarial debate, although there are bound to be strong feelings. I have them myself as I began in this fight over 40 years ago. But we mustn't muff our chance just because we are angry.

    The meeting is held under the slogan
    "PREPARE AND DECIDE FOR INDEPENDENCE" and we hope it will be the beginning of a series.

    Given the response to publicity so far, I am just ever so slightly worried that we might not have room for everybody in the main room upstairs and was at the venue today to see if there was a downstairs corner where we speakers could work a double shift if necessary. Mine host was quite relaxed about it.

    The proceedings will appear on our website
    www.freebritain.org.uk after the event.

    TBF If you would like to post a notice, I think you have my email but I can't absolutely guarantee a place for everyone, as it is an open meeting with strong local interest too. We have never filled the room before.The interest has been very strong, especially from people unable to come who want to be sure of being able to read the proceedings.

    Captain Ranty - We have to work out the economic nitty gritty in a credible way BEFORE leaving, so that trade is not disrupted and businesses and their employees can be assured on that point. I have one idea of how to do it and satisfy those who think Article 50 is a trap. Doubtless there are much better ones.

    1. Will you video it? Will there be a transcript? I'm going deaf (yes, old age) and I'd love to be there but there's no point if I can't hear. The next best thing would be video (I turn up the volume on my headphones). Thanks, Sue

    2. Edward, I've added a notice in the side bar. Sadly I probably can't make the discussion myself in person.

    3. Can I second Sue's request for a video. It would be really helpful if this got the widest possible circulation.

  5. Edward,

    That would surely take years?

    I hear what you are saying but (as a frequent visitor to Europe) I do not see any appetite for dumping Britain if we take a walk. They need us, we need them. We already have a 'meeting of minds' so I think the paperwork would be completed in short order.

    We can work on trade deals with EU members and expand what we do with the ROW at the same time. I have worked with UKTI in the past and they are pretty slick.

    I'm not saying it would be easy, (the divorce) but it is very doable.

    Let me have the Derby details too so that I can promote the meeting.


  6. Exactly Ranty,

    I was talking particularly about trade. They have an interest too. There are short cuts but we cannot go around just tearing treaties up and hitting Johnny Foreigner for six over the pavilion. Any bull in a china shop stuff would have our opponents bleating "3 million jobs" in unison. Unless there is a credible plan, we would deservedly lose any referendum - even a fair one (which we certainly won't get)

    1. Edward,

      I have blogged it here:


      And tweeted it to 2000+ followers.

      I wish you good luck and Godspeed.


    A DISCUSSION, organised by the cross-party
    Campaign for an Independent Britain (CIB)
    7.00 pm Friday 6 September
    New Bridge Inn, CHallaston Road, Shelton Lock, Derby DE24 9EF
    (on the A 514 on the South side of Derby)

    Chairman - George West, President CIB
    Edward Spalton (Hon Sec CIB)
    Renationalising Britain's Constitution. What happens to the law when a country becomes independent.

    Hugo van Randwyck - The European Free Trade Association (EFTA) Access to the EU market but not run by the EU.

  8. WHOOPS !

    Should have been CHELLASTON Road.

    I forget that my cataract operation has made me long sighted and that I must put on my reading glasses now for this job.


  9. Tearing up the ECA and letting the details (actually significant problems) take care of themselves, is not going to happen with any government we are likely to see. I somehow doubt UKIP are going to form a government with a working majority this next GE, or even the one after, not that their position on this is clear anyway.

    All such talk does it make it less likely that the no camp, against which the dice are loaded by the Beeb etc, could prevail in a referendum.

  10. Thank you TBF. You've introduced a new aspect to the exit debate and without the sort of hostile language we've been experiencing recently on some blogs. An interesting read.

  11. TBF You say :"Just in A50's case it's 2 years. Either we negotiate a new relationship or failing that we leave after 2 years by default."

    That is the theory, but stated like that its all too simple, and the whole discussion interesting as it is, is marked by the hypothetical and, even more important, the unknown. Thus the "invoke Article 50 - versus - repeal the ECA 1972 is at this point a discussion in pure semantics. Why?
    1. We do not know what government will be in power in the UK either in 2017 (possible referendum time), or 2025 (another possible referendum time)

    2. We do not know if the current government of the time will be in favour of a Brexit or not.

    3. We DO know that to invoke Art. 50 would be to confirm and endorse an already made political decision to exit by a UK government, so it would be a case of negotiating the terms for future trading with the EU.

    4. At present we know that no UK political party has a detailed Brexit policy, or if there is one it remains undeclared to the British public. (including UKIP)

    5. Since Cameron's much vaunted "re-negotiation of powers back to the UK" stance is pie in the sky - its not going to happen since no substantial powers will ever be returned under the Aquis Communitaire - then that too runs into the sand.

    6. Assuming the validity of point 5 above, and assuming Art 50 is applied for, then there remains Brexit "by default". This being the case, it is impossible to argue that no British government within that two year period, would not ALREADY be making all the necessary decisions and/or bi-lateral trading relations with others during that period - including of course the EU itself, as a vital insurance. It would be a dereliction of duty not to do so.

    7. It must be obvious to all that political and economic conditions in all the member states, and Eurozone in particular, and in Britain, may be so radically different in 2017 or 2025, that this discussion will remain largely in the realm of the academic for the immediate future - pending the outcome of future elections and policies.

    However, discussion and exchange of views (Derby) is all to the good - for at least we are on the common ground of a consensus for a future Brexit in some shape or form.

  12. Graham - as always, you are missing the point. The purpose of a coherent exit plan is to arm ourselves for the coming referendum, whenever it comes, so that we can provide reassurance to potential "out" voters that leaving the EU is possible and safe. Thereby we neutralise the FUD and minimise the status quo effect.

    Preparing our arguments in good time is not an academic exercise - it is not a matter of semantics. It takes time and a great deal of discussion to work out the answers, and longer to establish them and spread the message. And then, the fact of a coherent exit plan, we hope, encourages others to believe that leaving is a realistic possibility. Leaving thus becomes a self-fulfilling prophesy.

    1. Richard. I don't think I am missing the point. I am simply airing the view that the whole discussion is premature, given the uncertainties and "unknowns" I refer to.
      I agree that the eurosceptic movement as a whole would greatly enhance their future prospects if a broad agreement was reached on either/or Article 50 or repeal of the ECA - but, as I point out the actual decisions are political and very far off anyway.
      I suggest that a massive percentage of the electoratet would regard the means of a Brexit as being far less an issue than the actual political decision to do so taken by a political party.
      The latter is the game changer.
      Discussion of the two options is rather like one party in an engagement to marriage insisting that the icing on the wedding cake should be pink rather than white - you get the drift.
      That said, I take your point that coherent exit plan would be better than none, and that is why I argued (on AM's blog) that UKIP should certainly spell out their policy - and spell it out clearly on their appalling website.

    2. In any referendum, the key factor will undoubtedly be the status quo effect. Only if we are able to contain it - which also means neutralising the FUD - do we stand any chance of winning the out vote.

      And that will require of us to demonstrate that an orderly exit from the EU is possible, with minimal economic damage and disruption to our international relations. Therefore, an exit plan become THE central feature of any referendum campaign.

      Perforce, the only way we can be assured of an orderly exit is by invoking Art 50, so it becomes incumbent on us to devise an exit plan, based on Art 50, as soon as we can, and to promulgate the details. The earlier we do this the better, as it maximises the time we have to spread the word.

  13. The most gentle elbow in the ribs on Article50 I have seen so far TBF.

    I wish that I had the heart and head to argue in such a manner.

    Well said.

  14. All rather pointless and presumptive given we have no guarantee of even having a VOTE on in/out. The odds of a Conservative re-election is minimal (zero?) and Labour are conveniently schtum on the issue......

    Horse before the cart anyone?

  15. The argument would have some value if the only options on the table were Article 50 or Bust. In fact we know there are many routes to the destination of sovereign independence (should it be desired) and - as Graham Wood suggests - it is for too premature to give more than a passing nod to the existence of means to this end (with the rider that it would, to some degree, depend upon the political terrain closer to the time).

    The EU's Article 50 - with its two-year deadline for 'negotiations' to complete - may seem an irresistible mechanism to those who have spent the best part of their lives pawing over every last dotted 'i' and crossed 't' of labyrinthine EU law. But, in being bullied into its early adoption as the 'only' exit route, are we not in danger of leaving ourselves fully exposed to a far more lethal deadline… that of a subsequent British General Election?

    Those able to keep their options open, for the time being, might allow themselves the intellectual space to wonder what else the EU might get up to in the two year timeframe it has bought itself under the cloak of Article 50? Given that a new UK government, mandated to exit, might require six months to formally draw together a legal statement of intent, and that the EU might insist upon another six months to make arrangements for 'negotiations' to start, the two years already stretches out to three (not counting any extensions required if/when the EU begins throwing spanners into the works of a process we have ceded it exclusive control over).

    Of course, being a supranational bureaucracy not exactly known for the high value it places on democracy or sovereignty - and with a history of stamping on both to protect its interests - we might wonder at the wisdom of handing the EU a two-year-plus window in which it can blame every conceivable ill within its territory on Britain's destabilising move, channel monumental amounts of money towards efforts to undermine it (both outside and inside UK borders) and encourage businesses to make or enact threats to leave the UK market. The vital deadline being worked to here, of course, becomes the next British General Election… in which a throughly demoralised and frightened electorate votes in a pro-EU government - who immediately cancel the whole process.

    1. Two years "cannot stretch out to three" without the consent of all parties involved including us. And nor can the EU insist on anything.

      You're also overlooking the fact that the EU is just as keen, if not more so, to have an orderly exit of a member. A stock market crash would be more disastrous for them - destroying the eurozone as it would. Keeping their pet project alive is vastly more important than keeping us on board. It would not be in their interests to destabilise the process.

      As for the "more lethal deadline", that always applies what ever route we took to exit. It's not confined solely to A50. As I noted in previous blog piece any exit regardless of how it happened can always be reversed by Article 49. That is a reflection of the failings of our own system of government not the process of Article 50.

    2. "You're also overlooking the fact that the EU is just as keen, if not more so, to have an orderly exit of a member."

      Is that the same "anti-democratic and pernicious European Union" you mention in your blog intro?

      "Keeping their pet project alive is vastly more important than keeping us on board. It would not be in their interests to destabilise the process."

      Then that provides Britain with an exceptionally strong hand... say, to insist upon a six month timeframe to sew up its exit and have an equal input into what is negotiated and how.

      "A stock market crash would be more disastrous for them..."

      The EU has probably already arrived at the conclusion that Britain's exit (orderly or no) will be disastrous for them and will, in any case, set off a chain of events ending in a stock market crash. Never underestimate the EU's scheming... its ridiculous two year timeframe has one goal in mind... reaching the safe harbour of the next UK general election.

  16. Only through article 50 can we have an orderly exit which would be coupled by our joining the EEA and/or EFTA. It is important to publicise how we can leave the EU yet retain access to the single market and preserve the jobs that many people feel would be threatened by our leaving. Then we need to shackle our government to the peoples will.

  17. Richard [North] has some good points, as ever.

    We will only win a referendum if we address concerns over the status quo, but I think that three things will work for us
    (1) that if we stay in, we can legally repatriate powers. This is becoming common knowledge.
    (2) if we stay in, there is commitment in principle to ever closer union. This includes accepting the European Court's integrationist verdicts.
    (3) there is already marked concern in business about the latter, such as in the British Chambers of Commerce.

    I personally doubt if weasels like Cameron will give us a referendum. But things will be much different in 2017.

    Precipitated by the IEA Brexit debate, there will be far greater awareness of trade stability, and I would bet that in most cases free trade will continue. The reasons include the Commission's own lobbying for free trade and the continentals' wish to avoid a trade war that will hurt them.

    Once the retention of trade is established, I can see the Sorrells and Rudds of this world looking foolish if they preach trade disaster.

    I am not saying that withdrawal will not involve a lot of planning and hard work, purely that the omens are favourable for continuing trade.

  18. Anonymous - 22 August 2013 10:03
    Think you mean
    "that if we stay in, we can NOT legally repatriate powers. This is becoming common knowledge."

    On websites like Conservative Home, this is now the established position of contributors. A link quoted
    www.newalliance.org.uk/noway.htm has the detail.