'‘Brexit,’ a Feel-Good Vote That Could Sink Britain’s Economy' diff viewer (0/1)

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‘Brexit,’ a Feel-Good Vote That Could Sink Britain’s Economy	‘Brexit,’ a Feel-Good Vote That Could Sink Britain’s Economy
2016-05-20 10:55:07 UTC	2016-05-20 17:40:09 UTC (about 7 hours later)
BIRMINGHAM, England — If not for the trifling matter of Britain potentially abandoning the European Union, Rowan Crozier figures the factory he oversees would already be clattering away with extra urgency. Men and women in blue coveralls would be busy patrolling the concrete floor, monitoring molded hunks of steel that stamp loops of metal into electronics parts. A new order would be destined for a major customer.	BIRMINGHAM, England — If not for the trifling matter of Britain potentially abandoning the European Union, Rowan Crozier figures the factory he oversees would already be clattering away with extra urgency. Men and women in blue coveralls would be busy patrolling the concrete floor, monitoring molded hunks of steel that stamp loops of metal into electronics parts. A new order would be destined for a major customer.
Mr. Crozier, 41, is the chief executive of Brandauer, a small manufacturer in a gritty suburb of Birmingham, 125 miles northwest of London. Started 154 years ago as a maker of nibs for pens, his factory these days makes components that land in a range of everyday items, including cars and teakettles.	Mr. Crozier, 41, is the chief executive of Brandauer, a small manufacturer in a gritty suburb of Birmingham, 125 miles northwest of London. Started 154 years ago as a maker of nibs for pens, his factory these days makes components that land in a range of everyday items, including cars and teakettles.
Last year, a prominent American brand approached Brandauer about supplying parts for a new product it planned to assemble at a factory in Germany. The deal appeared in hand. Then, the Americans began asking about the referendum, a June 23 vote on whether Britain should remain part of the European Union.	Last year, a prominent American brand approached Brandauer about supplying parts for a new product it planned to assemble at a factory in Germany. The deal appeared in hand. Then, the Americans began asking about the referendum, a June 23 vote on whether Britain should remain part of the European Union.
Not since the fall of the Berlin Wall has Europe confronted such a profound question about its future course. The vote throws open elemental questions about the lines of regional power and the spirit of collective interest that has prevailed since the end of World War II. The war yielded an understanding that people would feel less inclined to murder their neighbors if their livelihoods were dependent on trading goods with one another.	Not since the fall of the Berlin Wall has Europe confronted such a profound question about its future course. The vote throws open elemental questions about the lines of regional power and the spirit of collective interest that has prevailed since the end of World War II. The war yielded an understanding that people would feel less inclined to murder their neighbors if their livelihoods were dependent on trading goods with one another.
That idea brought the European Union into being and propelled its expansion, even as bitter differences emerged over its mission: Was it an economic confederation, or a political creation that required central authority? If Britain leaves, it could presage the disintegration of the European project.	That idea brought the European Union into being and propelled its expansion, even as bitter differences emerged over its mission: Was it an economic confederation, or a political creation that required central authority? If Britain leaves, it could presage the disintegration of the European project.
That Britain is even contemplating an exit speaks to the ferment shaping politics in much of the world, as people grapple with the effects of globalization, automation and immigration — forces that present opportunities and pressures alike, changing the look and feel of communities. With the vote, Britain is determining its place in the world. Yet an argument over British identity is masquerading as an economic debate.	That Britain is even contemplating an exit speaks to the ferment shaping politics in much of the world, as people grapple with the effects of globalization, automation and immigration — forces that present opportunities and pressures alike, changing the look and feel of communities. With the vote, Britain is determining its place in the world. Yet an argument over British identity is masquerading as an economic debate.
If Britain opts for a so-called Brexit — and polls show the electorate roughly split down the middle — that would set up the mother of all divorces. British leaders would commence negotiating with the European Union on the particulars of a separation agreement. Should they fail to strike a deal within two years, British exporters could confront tariffs slapped on the goods and services they are now able to sell duty-free in the 27 other countries that make up the European Union’s vast shared market.	If Britain opts for a so-called Brexit — and polls show the electorate roughly split down the middle — that would set up the mother of all divorces. British leaders would commence negotiating with the European Union on the particulars of a separation agreement. Should they fail to strike a deal within two years, British exporters could confront tariffs slapped on the goods and services they are now able to sell duty-free in the 27 other countries that make up the European Union’s vast shared market.
What would happen to exchange rates? To the free movement of labor? Would Brandauer be able to ship its components to the factory in Germany without paying duties?	What would happen to exchange rates? To the free movement of labor? Would Brandauer be able to ship its components to the factory in Germany without paying duties?
With the knowns trumped by a proliferating set of unknowns, Brandauer’s American customer held off its order. Mr. Crozier expects to hear nothing until after voters deliver their verdict, determining whether Britain is to remain a central player in the largest unified market on earth or instead revert to an island separate from the troubled Continent across the channel.	With the knowns trumped by a proliferating set of unknowns, Brandauer’s American customer held off its order. Mr. Crozier expects to hear nothing until after voters deliver their verdict, determining whether Britain is to remain a central player in the largest unified market on earth or instead revert to an island separate from the troubled Continent across the channel.
“It’s just this uncertainty,” Mr. Crozier said. “Honestly, I think this is crazy. It’s a big step back for the U.K. if we do actually step away.”	“It’s just this uncertainty,” Mr. Crozier said. “Honestly, I think this is crazy. It’s a big step back for the U.K. if we do actually step away.”
Those campaigning for Britain to depart the European Union tend to dismiss such laments as the cost of liberation from an institution troubled by malaise, political dysfunction and unrelenting bureaucracy. In their telling, Brussels, the headquarters of the European Union, is a land of pencil-pushing killjoys who awake every morning eager to find new ways to strangle business with inscrutable directives, writing nonsensical rules that standardize everything from the length of the workweek to the acceptable shape of bananas. Ditch all that, they say, and flush times will follow.	Those campaigning for Britain to depart the European Union tend to dismiss such laments as the cost of liberation from an institution troubled by malaise, political dysfunction and unrelenting bureaucracy. In their telling, Brussels, the headquarters of the European Union, is a land of pencil-pushing killjoys who awake every morning eager to find new ways to strangle business with inscrutable directives, writing nonsensical rules that standardize everything from the length of the workweek to the acceptable shape of bananas. Ditch all that, they say, and flush times will follow.
But the terms of the discussion have veered into misleading terrain, colored by talk of money — jobs to be gained or lost, investments secured or imperiled. What the pro-Brexit crowd really wants more than anything is the authority to limit the numbers of immigrants reaching their shores, which is beyond reach so long as Britain remains in the European Union.	But the terms of the discussion have veered into misleading terrain, colored by talk of money — jobs to be gained or lost, investments secured or imperiled. What the pro-Brexit crowd really wants more than anything is the authority to limit the numbers of immigrants reaching their shores, which is beyond reach so long as Britain remains in the European Union.
This is an aspiration fueled by talk of Polish plumbers pressing down wages, would-be terrorists crossing porous borders and the maddening impossibility of buying a flat in an era in which sons and daughters of London must compete with the offspring of Russian oligarchs and Saudi royalty. In the Brexit campaign, the public has found an expression for those fears, frustrations and desires.	This is an aspiration fueled by talk of Polish plumbers pressing down wages, would-be terrorists crossing porous borders and the maddening impossibility of buying a flat in an era in which sons and daughters of London must compete with the offspring of Russian oligarchs and Saudi royalty. In the Brexit campaign, the public has found an expression for those fears, frustrations and desires.
The problem is that Brexit proponents are trying to sell an emotionally gratifying movement as economically virtuous. One could wallpaper Buckingham Palace with the pages of recently released reports — from the International Monetary Fund, the Organization for Economic Cooperation and Development and a half-dozen academic institutions — concluding that a Brexit would diminish the British economy. It would put trade at risk, they say. It would sow unease across Europe.	The problem is that Brexit proponents are trying to sell an emotionally gratifying movement as economically virtuous. One could wallpaper Buckingham Palace with the pages of recently released reports — from the International Monetary Fund, the Organization for Economic Cooperation and Development and a half-dozen academic institutions — concluding that a Brexit would diminish the British economy. It would put trade at risk, they say. It would sow unease across Europe.
The British Treasury explored a range of trade arrangements the government might forge with Europe post-Brexit and concluded it could lop some 6.2 percent off the gross domestic product by 2030, leaving the average household worse off by about ~~4,200~~ pounds a year ~~(more~~ ~~than~~ ~~$6,100).~~ The governor of the Bank of England, Mark Carney, said that leaving the European Union could swiftly send Britain into a recession.	The British Treasury explored a range of trade arrangements the government might forge with Europe post-Brexit and concluded it could lop some 6.2 percent off the gross domestic product by 2030, leaving the average household worse off by about 4,300 pounds a year (about $6,240). The governor of the Bank of England, Mark Carney, said that leaving the European Union could swiftly send Britain into a recession.
“It is absolutely clear we would incur significant economic costs if we left the European Union,” said Paul Johnson, director of the Institute for Fiscal Studies, an independent research institution in London. “Free trade with the E.U. is worth quite a lot, and foreign direct investment would be impeded. All of the serious economic models show that.”	“It is absolutely clear we would incur significant economic costs if we left the European Union,” said Paul Johnson, director of the Institute for Fiscal Studies, an independent research institution in London. “Free trade with the E.U. is worth quite a lot, and foreign direct investment would be impeded. All of the serious economic models show that.”
Though the European Union has no shortage of economic afflictions, it also absorbs 44 percent of British exports, a flow of trade linked to some 3.3 million British jobs. Its inclusion in the European Union’s vast single market is a primary reason multinational companies have in recent years expanded operations in Britain. From that perch, they can sell goods and services from Scotland to Romania — an area holding more than 500 million people. It is part of the reason London has grown into a financial center whose importance rivals New York.	Though the European Union has no shortage of economic afflictions, it also absorbs 44 percent of British exports, a flow of trade linked to some 3.3 million British jobs. Its inclusion in the European Union’s vast single market is a primary reason multinational companies have in recent years expanded operations in Britain. From that perch, they can sell goods and services from Scotland to Romania — an area holding more than 500 million people. It is part of the reason London has grown into a financial center whose importance rivals New York.
The Brexit camp insists that an independent Britain would somehow wind up richer.	The Brexit camp insists that an independent Britain would somehow wind up richer.
“The suggestion that the world’s going to stop and trade’s going to stop is complete scaremongering,” said Richard Tice, a property magnate and a co-founder of the Leave campaign. Once freed of the stultifying straits of Brussels, he added, Britain could expand trade with faster-growing parts of the globe like China, India and the United States.	“The suggestion that the world’s going to stop and trade’s going to stop is complete scaremongering,” said Richard Tice, a property magnate and a co-founder of the Leave campaign. Once freed of the stultifying straits of Brussels, he added, Britain could expand trade with faster-growing parts of the globe like China, India and the United States.
Even Mr. Tice acknowledged that the economy could be in for “a bit of bumping and boring” in the years after a Brexit. But he prefers to focus on more pleasing aspects.	Even Mr. Tice acknowledged that the economy could be in for “a bit of bumping and boring” in the years after a Brexit. But he prefers to focus on more pleasing aspects.
“Life’s not just about money,” said Mr. Tice, whose firm manages a hoard of real estate worth in excess of $750 million. “It’s about the quality of life, the quality of public services, the density of your population and looking after your own people first.”	“Life’s not just about money,” said Mr. Tice, whose firm manages a hoard of real estate worth in excess of $750 million. “It’s about the quality of life, the quality of public services, the density of your population and looking after your own people first.”
In that regard, a Brexit collides directly with the collectivist notion that has propelled European integration for seven decades.	In that regard, a Brexit collides directly with the collectivist notion that has propelled European integration for seven decades.
Brandauer and its exports are the fruit of this project. During World War II, the factory supplied parts for British fighter planes, as the Germans bombed the city. These days, Brandauer sends its wares to trade shows in Germany. The rebuilt city streets are full of German-made luxury cars.	Brandauer and its exports are the fruit of this project. During World War II, the factory supplied parts for British fighter planes, as the Germans bombed the city. These days, Brandauer sends its wares to trade shows in Germany. The rebuilt city streets are full of German-made luxury cars.
“History is history,” sniffed Mr. Tice. “All you can do something about is the future. And the E.U. in its current form is no longer fit for purpose.”	“History is history,” sniffed Mr. Tice. “All you can do something about is the future. And the E.U. in its current form is no longer fit for purpose.”
Spend a little time with Mr. Tice and you come away with the impression that, whatever comes next — whether Britain remains, exits or perhaps even runs off to join Tanzania — he will be all right. Brash and imposing, he filled out a double-breasted blue suit accented with a shiny red necktie as he occupied a bench above the lobby of the upscale May Fair Hotel (two-bedroom suite: $4,300 a night) in London. “It’s like an extension of my office,” he said, as women with extravagant hairstyles showed off handbags brought home from weekends in Paris, and waiters raced fearfully, bearing trays laden with champagne. A red Maserati was parked in front of the entrance.	Spend a little time with Mr. Tice and you come away with the impression that, whatever comes next — whether Britain remains, exits or perhaps even runs off to join Tanzania — he will be all right. Brash and imposing, he filled out a double-breasted blue suit accented with a shiny red necktie as he occupied a bench above the lobby of the upscale May Fair Hotel (two-bedroom suite: $4,300 a night) in London. “It’s like an extension of my office,” he said, as women with extravagant hairstyles showed off handbags brought home from weekends in Paris, and waiters raced fearfully, bearing trays laden with champagne. A red Maserati was parked in front of the entrance.
“The E.U. is stagnating,” he said. “It’s got unbelievable, devastating levels of unemployment. There’s no growth there.”	“The E.U. is stagnating,” he said. “It’s got unbelievable, devastating levels of unemployment. There’s no growth there.”
But finding economists who say they believe that a Brexit will spur the British economy is like looking for a doctor who thinks forswearing vegetables is the key to a long life.	But finding economists who say they believe that a Brexit will spur the British economy is like looking for a doctor who thinks forswearing vegetables is the key to a long life.
“The pro-Brexit argument that Britain will be free of lots of regulations, that there will be a bonfire of red tape that will cause us to grow rapidly and we’ll strike lots of new trade deals as this buccaneering new England — there’s just no credible scenario to any of that,” said John Van Reenen, director of the Center for Economic Performance at the London School of Economics. “There aren’t anything like the game-changing propositions that the pro-Brexit camp is putting forward.”	“The pro-Brexit argument that Britain will be free of lots of regulations, that there will be a bonfire of red tape that will cause us to grow rapidly and we’ll strike lots of new trade deals as this buccaneering new England — there’s just no credible scenario to any of that,” said John Van Reenen, director of the Center for Economic Performance at the London School of Economics. “There aren’t anything like the game-changing propositions that the pro-Brexit camp is putting forward.”
A Brexit vote would put into play Britain’s access to the European market. If no deal were struck within two years, trade between Britain and the Continent could be governed by the terms of the World Trade Organization. Under its rules, member nations have the authority to impose potentially steep tariffs on imports — an average of 9 percent when no preferential trade deal is in force, according to the British Treasury. The British government could impose tariffs on imported wares, lifting prices for consumers and businesses alike.	A Brexit vote would put into play Britain’s access to the European market. If no deal were struck within two years, trade between Britain and the Continent could be governed by the terms of the World Trade Organization. Under its rules, member nations have the authority to impose potentially steep tariffs on imports — an average of 9 percent when no preferential trade deal is in force, according to the British Treasury. The British government could impose tariffs on imported wares, lifting prices for consumers and businesses alike.
That this has merely entered the realm of possibility is already having an effect. In London’s Canary Wharf district, a once-thriving port revamped as high-rise office towers serving as headquarters for multinational banks, many worry that a Brexit could cost jobs.	That this has merely entered the realm of possibility is already having an effect. In London’s Canary Wharf district, a once-thriving port revamped as high-rise office towers serving as headquarters for multinational banks, many worry that a Brexit could cost jobs.
The European Central Bank in recent years has sought to shift trading of securities priced in euros to countries that actually use the currency, a clear swipe at Britain, where the pound remains. Last year, the European general court handed Britain a victory in a lawsuit brought by the government. So-called clearing of euro-denominated trades was permissible anywhere in the European Union.	The European Central Bank in recent years has sought to shift trading of securities priced in euros to countries that actually use the currency, a clear swipe at Britain, where the pound remains. Last year, the European general court handed Britain a victory in a lawsuit brought by the government. So-called clearing of euro-denominated trades was permissible anywhere in the European Union.
If Britain leaves, European governments are likely to make another run at moving this lucrative business to their shores. And financial firms could shift foreign exchange operations and investment banking to the Continent. Executives at global banking giants such as HSBC and Goldman Sachs have already suggested that a Brexit would prompt them to move jobs.	If Britain leaves, European governments are likely to make another run at moving this lucrative business to their shores. And financial firms could shift foreign exchange operations and investment banking to the Continent. Executives at global banking giants such as HSBC and Goldman Sachs have already suggested that a Brexit would prompt them to move jobs.
“The minute the U.K. is no longer part of the E.U., there is zero chance that London remains the center for euro-denominated transactions,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “London will become a much smaller, more regional financial center.”	“The minute the U.K. is no longer part of the E.U., there is zero chance that London remains the center for euro-denominated transactions,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “London will become a much smaller, more regional financial center.”
In the northeast of England, the city of Sunderland worries that it, too, could be a casualty. In the mid-1980s, at a time of fears about Japan’s rise, Sunderland secured a victory: Nissan set up a factory there. Over the years, the plant expanded, selling cars across Europe. In a city of 277,000 people, the Nissan plant now employs some 7,500.	In the northeast of England, the city of Sunderland worries that it, too, could be a casualty. In the mid-1980s, at a time of fears about Japan’s rise, Sunderland secured a victory: Nissan set up a factory there. Over the years, the plant expanded, selling cars across Europe. In a city of 277,000 people, the Nissan plant now employs some 7,500.
But with the Brexit vote, the Nissan factory could become a lesson in the pitfalls of redrawing the map. Nissan has been weighing Sunderland against other plants in France and Spain as it seeks a place to develop a new version of a popular sport utility vehicle. If Sunderland is not in the union, that could increase the cost of imported parts while making its finished vehicles more expensive in European markets.	But with the Brexit vote, the Nissan factory could become a lesson in the pitfalls of redrawing the map. Nissan has been weighing Sunderland against other plants in France and Spain as it seeks a place to develop a new version of a popular sport utility vehicle. If Sunderland is not in the union, that could increase the cost of imported parts while making its finished vehicles more expensive in European markets.
“Our preference as a business is, of course, that the U.K. stays within Europe — it makes the most sense for jobs, trade and costs,” Carlos Ghosn, Nissan’s chairman and chief executive, said in a written statement. “A position of stability is more positive than a collection of unknowns.”	“Our preference as a business is, of course, that the U.K. stays within Europe — it makes the most sense for jobs, trade and costs,” Carlos Ghosn, Nissan’s chairman and chief executive, said in a written statement. “A position of stability is more positive than a collection of unknowns.”
Not for nothing is Birmingham sometimes referred to as the Detroit of England. A centerpiece of the Industrial Revolution, it rose to formidable heights as an automaker before manufacturing shifted to lower-wage countries and automation replaced working hands.	Not for nothing is Birmingham sometimes referred to as the Detroit of England. A centerpiece of the Industrial Revolution, it rose to formidable heights as an automaker before manufacturing shifted to lower-wage countries and automation replaced working hands.
When MG Rover, an archetypal British brand, closed a major factory here in 2005, the pain spread through the local supply chain. But the MG plant was recently bought and revived by SAIC Motor, a Shanghai-based carmaker. What had been a grubby and forlorn downtown now has a glittering new train station with high-speed rail connections to London and a Selfridges & Company department store, which occupies an architectural trophy that looks something like a steel-plated armadillo.	When MG Rover, an archetypal British brand, closed a major factory here in 2005, the pain spread through the local supply chain. But the MG plant was recently bought and revived by SAIC Motor, a Shanghai-based carmaker. What had been a grubby and forlorn downtown now has a glittering new train station with high-speed rail connections to London and a Selfridges & Company department store, which occupies an architectural trophy that looks something like a steel-plated armadillo.