Wednesday, March 3, 2021

"Like Charles I, Boris Johnson would like to do without elected officials to plunge the United Kingdom in the post-Brexit"

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An exit from the European Union without agreement would be a catastrophic scenario. The British prime minister should have it in mind, "as the caution that should be adopted when we think of confronting the Parliament of the kingdom," said Philippe Escande, economic editorialist at the "World".

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At the Nissan plant in Sunderland, North East England, in 2014.
At the Nissan plant in Sunderland, North East England, in 2014. OLI SCARFF / AFP

Losses & profits. If there is one country in the world where the question of customs duties is taken seriously, it is the United Kingdom. In January 1629, King Charles Ist inaugurates the second session of Parliament and launches with the Assembly on tariffs and those who will pay them. Three months later, the rebellion rises in the House of Commons, which votes an absolute right to look at these levies. Whoever does not respect him "Is a traitor to the freedoms of England and an enemy of the nation". Furious, the king dissolves Parliament, reigns as a tyrant, ends up losing the civil war and is executed by the new Republic of England. Since then, no monarch has ventured to cross the doors of this Chamber so eruptive.

We therefore understand the anger of parliamentarians over the excesses of Prime Minister Boris Johnson, who, like Charles Ist, would like to go over their heads to plunge the country into the new world after Brexit: the return of tariffs negotiated country by country. For the tenant of 10, Downing Street, this is a new era of opportunity that would open for the whole country. Economic circles are not convinced. Especially, if he takes the steep path of an exit from the European Union without agreement.

Article reserved for our subscribers Read also In the UK, companies face the Brexit wall

Since the resumption of negotiations, the markets do not want to believe this possibility. The agency Bloomberg evaluates to less than 15% the risks of such a scenario. But if it happened, the event would be a disaster for them. In a recent conference, the president of the Société Générale, Lorenzo Bini Smaghi, described it as "Systemic risk".

An economy could plunge into recession

It must be said that the financial center of London, the first in Europe, pushes its ramifications very far in the world: 50% of the interest rate derivatives market is denominated in euros, and 2 trillion public and private debts are held there by foreign investors. In the event of a sharp shock, Morgan Stanley Bank estimates that the pound sterling could still fall by 20%, to reach parity with the dollar. The changing war climate, with stocks of food and commodities accumulating throughout the country, has created an atmosphere of unprecedented uncertainty. Investments have collapsed, like the margins of industry. The automotive sector, one of the biggest winners of EU membership, will be the big loser, with massive factory relocations, as Nissan threatens to do.

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