Mistakes of the EU

Mistakes of the EU

The EU has many achievements of which it can rightly claim. Long period of peace and prosperity, unrivalled in European history. Secured transition to democracy for countries such as Spain and post-Communist countries in Eastern Europe Free trade and free movement  has helped improve economic growth and living standards. Working on European wide problems, such as environment and over-stocking However, despite these considerable achievements, the EU has become more unpopular amongst the electorate of member states, with many feeling the EU has lost its way and made several mistakes that…

Negative bond yields – definition and explanation

Negative bond yields – definition and explanation

Negative bond yields (e.g. -0.04% on 2 year gilt) mean that those who hold the bond to maturity will receive less than the value of the bond. A negative bond yield is usually very rare. In normal circumstances, investors require some yield (interest) to give an incentive to buy government bond. There is no good reason to buy a government security (bond or gilt) if it was going to lead to a loss. You would be better off holding cash. However, in recent years – which has been characterised by a…

Problems facing UK economy post Brexit

Problems facing UK economy post Brexit

After the UK’s decision to leave the EU, what economic problems will it face? Summary of problems Devaluation of Pound Sterling, increasing price of imported goods, such as food, oil, manufacturers and domestic inflation. Decline in capital flows as UK is seen as more risky place to invest and save. Decline in inward investment. UK is currently 3rd largest destination for inward investment in world, but this may fall when it is outside the EU. UK’s large current account deficit,  which will put further downward pressure on Sterling Decline in…

Policies to deal with the free movement of labour

Policies to deal with the free movement of labour

In this recent post we saw some of the economic and political challenges of allowing free movement of labour within an economic block, such as the EU28. To what extent can the government / EU mitigate these negative impacts, whilst retaining free movement of labour? 1. Funding related to number of people. One issue of free movement of labour is that certain areas can see a sudden influx of migrants, which places a stress on social services, housing and possibly wages. If government spending was more flexible, higher public funds…

An evaluation of Labour’s remain campaign

An evaluation of Labour’s remain campaign

To what extent was Labour’s remain campaign insufficient? It’s hard to say. Labour voters did vote 63% to remain, which compares to SNP (64%), Greens (75%) and Lib Dems (70%) and 42% Conservative. 4% for UKIP. How UK voted Pros of campaign It started well with message that social and economic problems caused by austerity not immigration. But, this message seemed diluted during the rest of  the campaign. Sometimes it’s best to chose one strong message and reinforce it. There would have been more material, such as cuts to NHS…

Problems of free movement of labour

Problems of free movement of labour

In a recent post, we looked at the advantages of free movement of labour. But, what about the problems which might arise from free movement of labour? Firstly, free movement of labour depends on the area in question. To make an easy contrast, initially, the EU was free movement of workers between 12 / 15 countries in Western Europe. These countries had relatively similar wage rates, and we didn’t see any dramatic shift in workers between EU member states In recent years, the EU has expanded to 28 (27 post…

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Dealing with Brexit

There are perhaps 16 million people who voted Remain and are now very unhappy at the decision to leave the EU. Feelings are so strong there are calls for a second referendum – 3 million signing a petition for a 2nd referendum. However, if the initial referendum was over-turned, you would have 17 million very unhappy and angry Leave voters, who would feel democracy and their voice was betrayed. And if Remain won the second referendum, you could easily make a case for ‘best of three’ – Though once you…

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What they didn’t tell you during EU referendum debate

Some thing that weren’t always made clear during EU referendum. Economic experts are worth listening to. A string of senior ‘leave’ politicians lined up to say you shouldn’t listen to economists making warnings about short term and long-term damage to economy. But, just because economic analysis is inconvenient to your point of view, doesn’t alter the fact, if you leave EU, there will be fall in confidence, fall in inward investment, falling Pound and a negative impact on trade. The impact is hard to define precisely, but the basic rationale…