The EU needed Britain more than Britain needed the EU
The economic lesson emerging from the Brexit vote is consistent with what those who favored the Leave campaign long suspected: continental Europe needed the U.K. far more than the U.K. needed Europe.
The globalist dominoes will ideally begin to fall after Brexit as other leading nations realize they have unwisely hitched their economic wagons to parasites for the past several decades (see, e.g., the U.S.-Mexico relationship in NAFTA).
The Brexit hysterifiers almost uniformly predicted that it would be a Black Friday indeed for the U.K. if they voted to leave, and the other members of the EU promised to punish Britain if it chose a divorce.
Looks as though it was Britain that had the last laugh on the day after Brexit. It wasn't the British markets that took the real hit. That was borne by the continental Europeans:
- The FTSE 100 finished down 3.1%
- Germany's Dax dropped 6.8%
- France's Cac closed 8.0% lower
- Spain's Ibex ended down 12.4%
- Italy's FTSE MIB fell 12.5%
- In Greece, the Athens market lost 13.4%
At The Spectator, Matthew Lynn summed up the sentiment:
Share prices in freefall. Pension funds obliterated. A sea of red ink across trading screens. Billions wiped off the value of leading companies. And brokers, or at least the automated trading algorithms that have replaced them, contemplating throwing themselves out of the window, or whatever exactly it is that an algorithm does when it has a really bad day at the office. That is surely an accurate description of the City of London this morning.
Except, er, it isn't really ...
It is Madrid, Milan, Paris, and Frankfurt that are tanking. The reason? While there will be a short-term hit to the British economy, it will be the rest of Europe that suffers far more from this than us -- and investors have already figured that out.
The predictions were that the London market would go into meltdown if we voted to leave the EU. It would be Lehman Brothers all over again, except probably far worse. The index could lose 20 per cent or 30 per cent of its value we were told ... But it's only fallen back to its level of, er, last Friday. In effect, a week of gains have been lost. It is still up on the beginning of February. You need a very fevered imagination to describe that as a catastrophe.
In short, the losses across Europe are far worse than ours. That is, to say the least, a bit odd. After all, Brexit is meant to be an economic catastrophe for us, not for our neighbours, who have all been wise enough to stay in the EU, and will carry on enjoying all its wonderful economic benefits.
So what's up? The explanation is simple. In reality, the EU doesn't make much difference to the UK economy one way or another ...
Our trauma will be over quite quickly but the EU's has just begun. The markets have worked that out -- and investors are quite rightly getting out while they still can.
Now that Brexit has shown that disentanglement is possible without disaster, this paves the way for a long list of other supranational arrangements to be successfully unwound. First the EU, then comes the U.N. itself.