In European Commission President Jean-Claude Juncker’s State of the Union speech in September, he focused on the future of the EU 27 – the 27 remaining members of the European Union. Juncker has already erased the UK from mind and talks of deepening the union between the remaining 27 nations.
Conservative Member of European Parliament for Wales Kay Swinburne voted to remain in the European Union. But she says she would vote to leave Juncker's new vision for the EU.
“I voted to remain in the EU. I was committed to staying in and reforming the EU from within. But now I wouldn’t vote to stay. Now there is a push for all members to take up the single currency. Money talks. Currently the Polish government for example see their currency as an extension of their proud patriotism and Sweden keeps deferring the decision to join the euro. But things change,” she said.
“Without the UK the EU will be move to a more cohesive union. They will appoint a single EU Treasury Minister. There will be a more centralised system. The axis of power will shift from between the UK and Germany to between France and Germany.”
Speaking in Brussels last week, Swinburne says there is now a different attitude among the Commission elite. Without the UK, the plan is for a more united Union.
As a result, Germany and France will dominate the agenda. Small member states will not be able to be as vocal, or have a strong a standing in decision making. Many small member states want to stay close to London, particularly those with financial services connections such as Ireland, Luxemburg, Cyprus and Malta.
In the past the UK would help dictate EU law, if the UK said a certain policy would not work then it would not happen. Scandinavia in particular is concerned about our voice no longer being a part of proceedings. Central and Eastern European countries are worried too; the UK assisted in their ascension the EU and have helped in their success. Many eastern nations left a big Bloc not that long ago and are not keen to join another.
What Next for the UK?
The legislation culture is as if Brexit is not happening, says Swinburne. There is talk of repatriating euro-clearing – the flow of money around the world done in daily trading between and within financial services – from the UK to Brussels.
Swinburne says: “The truth is clearing can’t be ‘repatriated’ as it was never headquartered in Brussels. These transactions have always taken place in London.
“The EU cannot force all euro clearing to happen in the eurozone; there is a similar location policy in place in Japan but only a fraction of trades are cleared there. There is too much liquidity risk.”
Without the UK, EU capital markets are less strong says Swinburne. The EU is reliant on turning German savers into investors to invigorate the markets, but she says that will be a difficult shift. It will be tricky to replace London capital market flows.
Talks of the demise of the City of London are overstated.
“The City of London will remain a key financial centre. There may be some people movement but in 10 years’ time London will be the financial hub it is today,” says Swinburne. “The combination of a supportive financial legal system, strict regulation, labour flexibility and infrastructure will ensure that. Another reason it is a financial centre is the time zone – this hasn’t changed. London is positioned between the US and Asia. The UK Government will continue to enforce regulation – the Prime Minister is committed to making London the best regulated financial centre.”
Why Did Brexit Happen?
Swinburne says she knew she was against the populist vote, campaigning in Wales to remain in the EU. Wales voted 52.5% to leave, not that different to the national vote. But if you break the results down by region 17 councils voted to leave the EU, compared to just five voting to remain.
“Brexit happened because voters felt no one was listening, it was a protest vote – nothing to do with the European Union,” says Swinburne. “They wanted to vote against the Government, including those who were in receipt of the largest amount of EU money. The referendum conflated very different issues but I believe in democracy.
“People were feeling sore and bitter. We did not realise that we already had our cake and were eating it too when it came to the EU – we had rebates and no euro. Now we will have to work out how to minimise the cost of leaving; in constructing car parts a car moves across the border between the UK and Europe 20 times – 10 times there and 10 times back. It is not just the tariffs to consider, it is the paper work, the friction that will hold up work.”
