Skyline of the City of London (capital markets, banks, London Stock Exchange). © European Union, 2017/Source: EC – Audiovisual Service / Photo: Jack Taylor.
It may be true that the world is tired watching Britain being completely confused about choosing the way to exit from the European Union. Yet, the almost schizo division plaguing the Brits and their political elites alike still paralyzes to this date the divorce negotiations. Countries to be most affected by Brexit like Holland are seriously preparing for a catastrophic no-deal exit. In view of that, the UK’s Brexit Secretary, David Davis, tries to break up the mainland front. The other 27 EU member states have unanimously set tough terms for Britain’s exit. Let’s start from the latest developments.
Last Friday, Davis, in a BBC interview said “countries like Denmark, Holland, Italy, Spain and Poland”, want to break away from the hard Franco-German line, in reference to the hard Brexit conditions. The 27 EU countries have unanimously adopted a tough stance regarding Britain’s exit from the Union. They demand to first settle the cost London has to pay for the divorce and then discuss the future trade relations. For Britain though, future economic relations is the key Brexit issue and London wants to shape it in parallel with the discussions about the cost. The 27 leaders are to meet on 14 December to assess London’s response about all that.
First the divorce cost
The Brussels bureaucracy estimates the ‘leave’ cost at anything between €40 and €60 billion. Prime Minister Theresa May has accepted to pay €20 billion for a two years interim period after March 2019, during which nothing will change in the UK-EU relations. Brussels has denied discussing that separately. Michel Barnier, the Chief EU negotiator for Brexit, at some point appeared positive discussing it, but Berlin and Paris were adamant about their position on the negotiations agenda; fist the divorce money London has to pay and then the rest.
In relation to that, the EU Council has set a deadline for Britain for the end of November, beginning of December to settle the money issue. Then, the EU27 will assess the UK’s position in their meeting of 14 December. As things stand now, they will accept to discuss an interim period and the future trade relations on that day, but only after London has agreed how to settle the divorce cost.
Divisive tactics repelled
Davis’ comments about a split in mainland’s camp vis-à-vis Britain, were badly received on the other side of ‘La Manche’. The same day, Donald Tusk, the President of the European Council, found the opportunity to remind to PM Theresa May that her government has to come up with a relevant response on Brexit in time, for the 27 EU leaders to discuss in mid December. Otherwise, he said, London will lose the opportunity to “push the talks to the negotiations about the future trade relations”. This deadlock is a major predicament for a large number of Britain’s economic sectors, with the London City’s financial hub most important amongst them.
In this respect, it’s very interesting to watch the approach towards Brexit of those giant banks, which make up the core of the London City. Up to now, their standard reaction to a possibility of a hard Brexit or worse, to a no-deal Brexit, was to advertise their readiness to move some business across the Channel, preferably to Frankfurt. As if it would be business as usual, regarding their European and global dealings. Of course, they forget to mention that Germany or France are not like London. In mainland Europe banks cannot ‘wash’ unlimited quantities of money that easily in collaboration with the well known tax and otherwise havens under British jurisdiction, like the English Channel islets and the Caribbean islands.
Bankers alarmed
From the very first moment when the Brits voted ‘leave’, the bankers who made the London City what it is today, didn’t believe things may come to this; a hard or no-deal Brexit. However, bit by bit the London financial ‘community’ understood that a hard Brexit would cut them off from the mainland opportunities in tax evasion and money washing ‘markets’. The same is true for the huge legitimate capital markets. Such activities can only be best served from London. Today, the scheme works perfectly and the City bankers make unbelievable profits in servicing the ‘needs’ of mainland Europeans, and of course of the rest of the world.
Under the EU umbrella the London City financial groups have the so called ‘passport’, enabling them to offer their services all over the 28+1 EU member states from their offices in Britain. All that may end though, if the UK leaves the EU without a good agreement, servicing the interest of London’s City.
A no-deal Brexit
When this danger became real, the bankers tried to approach the government and the Prime Minister in 10 Downing Street. To the financiers’ astonishment, hard Brexiteers in government didn’t seem available to seriously take account of the London City problems. The bankers were never invited by the Prime Minister or key ministers and the populist Brexiteers proved to be as allergic to financiers as they are to Globalization.
Now, the City people are totally discouraged with what they can expect from the May administration. For the first time, the giant baking groups have not a strong clout on British politics. So, they have adopted rebellious tactics. Last week, Goldman Sachs CEO, Lloyd Blankfein, a Wall Street old fox, had an ‘advise’ for the Brits. According to a Reuters report in relation to Brexit, he said, “Better sense of the tough and risky road ahead. Reluctant to say, but many wish for a confirming vote on a decision so monumental and irreversible. So much at stake, why not make sure consensus still there?”
‘Advising’ the Brits
Obviously, he advises the Brits to vote again, and understandably this time they should decide differently than on 23 June 2016. If he didn’t want them to vote differently, he wouldn’t have asked for a ‘confirming vote’. Why is a confirmation needed, if the one who asks for it, doesn’t mind the result? Obviously, this unbelievable guy, Blankfein who can shake Britain’s economy any moment he chooses, is now showing his teeth. It’s not the first time though a financier of global dimensions had something dead serious to tell Britain.
Everybody remembers the George Soros ‘attack’ on the British Pound Sterling and his success in devaluing it, and with it blocking Britain’s option to join the Eurozone. On Black Wednesday, 8 October 1990, Soros broke the Bank of England by short selling the Pound. He forced Britain to remove the Pound from a scheme pegging it with the Deutsche Mark. Does Blankfein have something like that in mind? Is the largest bank of the world ready to question 10 Downing Street’s decisions about Brexit? Is Goldman Sachs threatening Britain with a new financial attack?
Remember Soros
It’s impossible to divine what Blankfein really has in mind, but Goldman Sachs’ goldmine in London is clearly threatened. Soros didn’t do what he did just because he believed the Pound was overvalued. Judging from the results, he primarily managed to block the Pound’s association with the then incubating single European currency. He was not alone in it. Other financial sharks lent him $10 billion to short the Pound.
It is evident that Soros was representing something bigger than himself. Is Blankfein organizing something similar? We will soon know. The London City financial hub probably has many more secrets, than we laypeople can imagine. Some key factors may think London should never be cut off from mainland Europe and strive to make sure they succeed in that.
The losers
Napoléon Bonaparte who tried hard, lost the Waterloo Battle. He then disappeared and the City celebrated wildly. Now that Brexit threatens again to cut off the City from mainland, a globalized wave of reactions has arisen.
Only Donald Trump celebrated the ‘leave’ vote, but currently he avoids mentioning it, being preoccupied by protecting himself from the Russian scheming. He must have learned something by now which he didn’t know on 23 June 2016. In any case, soon we will know more about all that.
Leave a Reply