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"The UK will slide into a slow decline - very much reminiscent of the post imperial decline after WWII..."

More likely it will be a steep collapse. Nissan is in the process of collapsing on its own even without Brexit pressure. American chlorine chicken and GM corn is on the way, regardless of what the British consumers want. London financial houses will bail out when the EU notices the incongruity of offshore banking. The fishermen are going to be very unhappy. China is going to try to move in, example: Huawei.

Question is whether the collapse will be within the 11 month negotiating window. If in August the economy is in the dumpster, BoJo will have no negotiating leverage with the EU, the US, or China.

by asdf on Sat Feb 1st, 2020 at 01:08:17 AM EST
Brexit will not change the terms of trade until 1/1/21 when WTO tariffs and cross border checks and paperwork will kick in absent an FTA and agreement to maintain regulatory alignment.

Before that any business failures are not necessarily linked to Brexit in any very direct way. Of course there could be the "confidence faery" effect of businesses cutting investment and re-locating parts of their business to the EU in the expectation of tariff and no-tariff barriers. Consumer confidence could also suffer.

It's also pretty clear that London financial services will have to set up operations within the EU if they wish to service the EU market. But the degree to which theses may be little more than brass plate operations will not become clear for some time. Airlines will have to be majority EU shareholder owned unless an extension of the Blueskies agreement is negotiated, so why not Financial Services companies? But that may take time.

So I wouldn't expect a dramatic decline in 2020, other than a continuation of the slow down that is already taking place. The UK has been teetering on the edge of a mild technical recession for the last few quarters and could slip into recession in 2020, but a steep collapse seems less likely until at least 2021.

What could collapse in 2020 is government revenues as lucrative city firms move their IP and profits off-shore. Ireland has been experiencing an unexpected and largely unexplained corporate tax receipts boom in the last couple of years even though the obvious tax loopholes such as the double Irish and Dutch sandwich have been closed, and many US firms have shipped their cash piles back to the US to take advantage of the Trump tax cuts.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Feb 1st, 2020 at 01:42:56 AM EST
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