Europe for the UK or not?

Hi All,

This is a tricky one at present.  Here in the UK we are about to be given the chance to vote on whether we are in or out of Europe.

I’ll provide a very brief overview of our [UK’s] present position with regard to the EU:

  • Without a shadow of a doubt World War II changed Europe, Britain [UK] took a leading roll in it’s rebuilding.  The main emphasis was never, ever to have or experience the extremes of the Hitler effect.
  • The UK was given a vote on Europe in the late 1970’s, since then we’ve been a 75% committed member – the obvious observation is that there was and is no way the EU could of or would of been allowed to run itself without serious and senior UK involvement – due WWII.  From the late 1970’s to present (Mid 2013) the UK public have not been given the option of voting on Europe.
  • So in the 1970’s the UK signed up to semi-partial involvement, when I say semi-partial I mean that we have certain opt-outs and vetos, we refused to join the single currency (Euro) and the like, whereas other countries joined up in full and adopted full EU integration.
  • We always refer to the World Wars – as the UK won the battles over Germany and it’s allies and so many people lost their lives in that fight, there is no way in the British public’s mind that power or association with the powers in Europe that caused the World Wars should be granted.
  • At present the UK is basically governed by European Law and Human rights  – this is what is causing friction in British people’s minds.  Being told you can only sell Banana’s of a certain minimum length and curvature!
  • The UK is funding the EU with approx £53 Billion a day – yes a day, just for being part of the “club”
  • Being part of the EU provides a great trading ground for UK businesses and the like.

At present if we were to vote on Europe I’m pretty sure we’d tell them to clear off and reject being part of it, the problem that I can see is that we are going to get a vote on it before 2017.  As many of you know my analysis of the current bear market will still be in force in 2016 – If the stock market is down or flat significantly in the months and years to the vote we could out of haste reject Europe, through sheer anger and depressive thoughts.

Now personally I’d prefer to be working alongside the EU like the USA does, rather than being a member of the EU club, If all countries could work together efficiently and effectively then anything is possible – politicians have inflated ego’s of achieving something and leaving a legacy behind – basically having their names in the history books to impress future generations – so having an effective business run country is not likely to happen.  But I do hope.

The main point I’m making is the way the EU is run has to change, giving the UK people a vote during a bear market is likely to result in complete rejection.  The implications would obviously run for decades and may be good or bad – I have yet to work that part out.

Watch the stock markets in the year or 2 prior to the vote it could reveal all!

I’ve not included other area’s in the detail above, the content is OK for the generalisation I’m making, which can be summed up as:

“If the UK’s stock market is DOWN HARD in the 2 years up to any such EU vote, then expect a rejection of Europe by the UK voters, If the stock market is flat to MILDLY DOWN then it could swing either way, If the stock market is higher than 2013 when we go to the polls expect acceptance of joining the EU”

My expectation of the stock market from 2013-2016 is down – but I’m unsure of how hard it might be down due to QE, If we did not have QE injections then I’d be saying watch out for the March 2009 lows being targeted or exceeded.

As usual all I’ll be looking at is the Stock market, nothing else.

This is one to monitor as time goes by and I will be looking to put a wager on this closer to the time (along with one on the USA President – another post at some stage) If I can find a bookies who’ll take the wager.

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2 Comments

  1. Mark B

     /  June 12, 2013

    I’ve got to be careful with what I say here, as one can all too easily come over very technical and condescending.

    Whilst I appreciate that you are writing from a financial perspective and not a political one, I cannot help but put you straight on one crucial matter regarding the European Union and our membership.

    Namely, the European Union is a ‘political project’ with a customs union and a Single Internal Market added to it. It is not, and never really has been about trade. It is, and will always be, about political, fiscal and financial union.

    Jean Monnet (founding father of the EU) realised that for France and Germany to coexist, they need to unify much in the same way that England and Scotland had. The thing is, the people and their need for national identity would stand in the way. So the idea had to be masked and proposed as a trading arrangement. First it was the European Coal Iron and Steel (?). Then it morphed into the European Economic Community (EEC).

    Names may have changed but, the intention was always the same.

    As for the UK and this referendum three things:
    1) A referendum depends on us voting back in David Cameron and his party.
    2) Referendums in this country are NOT legally binding. All three main political parties have stated their desire to remain in the EU. So even if we voted to leave, they can just ignore the result – we the people, cannot do a thing.
    3)The political parties aside, the forces ranged against any out campaign will be considerable. Think pf what happened in Ireland recently regarding the Fiscal Pact to know what I mean.
    4) No one, not even UKIP has a creditable exit plan. You simply cannot vote to leave and up-sticks and go. You have to invoke Article 50 of the Lisbon Treaty first. Then negotiate your way out.

    Leaving the EU is doable and, as time goes on, will become necessary as the Eurozone moves too ever closer union, which it must do in order to survive.

    I do not wish to deconstruct what is a well intentioned but not particularly well informed piece. I recommend that, if you wish to understand the EU a little better, you would be well advised to go to Dr. Richard North’s blog over at EURferendum.

    Reply
    • Thanks for the comment Mark, you make some really great points.
      I am aware of those points, I just did not include them as I’m not writing about the EU from a political perspective, purely from the perspective of the the likely reaction the general public will have from the position of the stock market – again you make a great point about the UK public voting for a political party in the next few years, again I’ve previously written a similar blog post based on the expected outcome of that from stock market action in the build up, exactly as per the re-election of President Obama and my prediction of that outcome last year.
      From a personal perspective, I can’t see us leaving the EU even if the public vote for it, the blog post is an attempt to predict the outcome of the result of any such vote based purely and solely on the state of the stock market in the build up to elections.

      Reply

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