How could Brexit affect expatriates
Seeing this article in the current edition, I anticipated reading an objective summary, setting out the case both for and against. Instead, I was surprised and disappointed to find that the article was completely biased against Brexit, to the extent of being alarmist in its presentation.
Let me nail my colours to the mast. I believe that the eurozone has been a disaster, and that it will not survive despite everything that is being done to prop it up. That being so, it makes better sense for the UK to leave the European Union in a controlled fashion now, rather than to remain, and have to sort out the mess when the inevitable happens. Cameron’s contortions over the acceptability of what little is on offer from Brussels has merely confirmed me in that view.
Turning to the nub of your article, I would comment as follows:
• Despite predictions that Brexit would have an adverse effect of up to 20% on the sterling exchange rate, nobody can foresee that with any certainty, it could just as well go the other way. Likewise, dire warnings about banking and financial institutions moving abroad should be treated with the scepticism they deserve.
• The 8% drop to which you refer has to be seen against the recent remarkable high for sterling, when it touched over 1.40, and at time of writing it’s still trading close to 1.30, which is far better than a year ago when there was not a referendum on the horizon.
• There’s no point in raising the prospect post Brexit of an “extreme scenario” for British residents and visitors to France; we’ve been in this situation before and there was not a problem then, so why invent one now?
• As mentioned above, the deconstruction of Europe has been and remains on the cards, whatever the UK decides to do.
• Your lengthy section regarding S1 forms is also speculative, because healthcare is a reciprocal arrangement between the UK and France, tailored to the particular characteristics of both systems. Neither party has anything to gain by abandoning it.
• Similarly, why would sending a letter, using a mobile phone or air travel cost more?
• Perhaps the most glaring fabrication is the assertion that the so-called jungle at Calais could move to Dover. Let me quote MEP Daniel Hannan on the subject:
“The reciprocal stationing of UK and French customs officials on both sides of the Channel has nothing to do with the EU. It rests on two bilateral deals between London and Paris: the 1993 Sangatte Protocol and the 2003 Le Touquet Treaty”.
I hope you will recognise that there are two sides to this coin, and that you do your readers no favours by failing to produce the sort of objective assessment that the subject merits.
Yours faithfully,
Barry McCanna
Applying a little gentle economics to the in-out European debate.
“Annual income twenty pounds, annual expenditure nineteen, nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” Mr Macawber from David Copperfield by Charles Dickens.
Oh, that life and our own economy were so simple, for, although Mr Macawber led a simple life, the basics are very similar in today’s world, whether they are applied to the individual, a country, a trading bloc or the world. Just like his household, the country is measured by annual income (imports) and annual expenditure (exports) with savings or borrowing where appropriate.
As a trading nation Britain is dependent on trading to survive and to prosper and has not been self-sufficient since it started empire-building a long time before Mr Macawber.
So just as nowadays we may determine our annual worth, calculate our expectations and be awarded a credit rating, so the chancellor does the same (although the figures are somewhat larger!) to determine the UK’s wealth and its standing amongst its trading partners.
To reiterate, this is a trading nation that cannot survive without exporting and importing and those export earnings are vital to enable the UK to buy food to feed its population, and to import all those other goods from around the globe.
Just as individually, we borrow by using credit cards and overdrafts to fund a shortfall in our income, so the country has to do the same by borrowing on the international money markets.The Chancellor has to attempt to manage the accounts, if not balance the books, to borrow wisely by issuing bonds, raising loans and cosying up to the IMF. He has to attempt not to upset the creditors causing them to question his ability to eventually repay these borrowing, service these debts and avoid major questions of confidence in world markets. Mr Osborne is our own Mr Macawber!
As stated above our national wealth depends on what we produce, plus what we import less what we consume and what we export. What we export is made up of what we sell abroad (physical goods or visible earnings) plus what we sell abroad as international services (invisible earnings.)
The two together add up to the total value of our earnings abroad and whereas we usually import more visible goods/earnings than we export each year, invisibles (Financial, Banking, shipping and insurance) have historically been running at a surplus. The latter has often compensated wholly or in part for the shortfall in the value of visible exports and so if the invisible sector of our trading starts to decline, the consequences could be severe as this would directly affect our overall balance of trade causing more national “misery” as the balance of trade gets worse, especially if that fall coincides with a fall in visible exports caused by a loss of markets.
Bearing in mind the similarities between Macawber economics and UK economics and in order not to over-complicate the bigger picture, we must apply these simple basic principles to the question in hand, to the “in-out referendum” to determine if we are better off in or out of the European Union.
The question is how will leaving the EU, affect our balance of trade, the markets we may lose as well as the invisible services that we may forfeit? Or indeed can we make up the shortfall in other places?
Whether we vote to stay or to leave the EU, the decision will affect us all to a greater or a lesser degree, so as voters involved in such an important and possibly life-changing decision process, we need to look at the general, the particular and the longer-term implications. These are just as important as are the terms of possible retention of our membership that are being negotiated by our prime minister and should be considered together and the former should not be overshadowed by the latter.
1. The EU is our biggest single market. What will we lose if we are outside it? Can we compensate by competing in other markets or will we then be competing against our old rivals in the EU? The EU is also on our doorstep with cheaper distribution costs and we know it well whereas other markets may be of higher risk. China and US, if they are both suffering from recession, may tend towards protectionism and tariffs in the future and therefore become more difficult to trade with.
2. If Britain leaves the EU what will happen to the EU? Will it survive and if so will it be less effective in world markets without UK? Will it degenerate into nation states each one vying for its share of world trade? This could lead to greater instability worldwide, less international trade and conflict.
3. If there is an “out” vote, the City of London could lose its position as a major international hub and financial centre which would result in major job losses and transfer of expertise. Frankfurt could emerge as the new EU financial centre to rival London if it gets the stimulus to become the hub for EU trade with the rest of the world by providing those Invisible but vital services, which we would lose. This would have a very serious effect on our balance of trade and on our attempts to balance our books.
4. If we lose trade by opting out, and can no-longer balance our books between exports and imports which is exacerbated by the loss of invisible earnings, this could lead to a fall in the value of the Pound, with the inevitable result that we have to export more to pay for our burgeoning import needs.
5. What about international companies who have based their European operations in UK? Will they stay or leave? What about British international organisations if Britain is no-longer the hub? The list of queries and the implications for institutions and businesses is considerable. “The value of the pound in our pockets will not be any less” Harold Wilson as prime minister on devaluation.
On a personal note as British subjects, domiciled in France and retired, a fall in the rates of exchange between the pound and the euro would directly affect us as our major pensions originate in UK. If the value of the pound falls, this will reduce the value of our pensions and so our standard of living will fall.
In the more general context for the British, holidays abroad would cost more, imports cost more and any fall would also mean Britain would have to sell more as exports just to stay still, even though in the short-term they would be more competitive in foreign markets.
For example some years ago, Ireland opted out of its long-standing relationship by which UK guaranteed the value of the Irish pound, with sterling. The Irish government hoped that this action would result in a positive revaluation of its own currency worldwide. What actually happened was that, the Irish pound lost nearly 20% against other major currencies, (This was before Ireland entered the Eurozone.) and in consequence, although Ireland became more attractive as a holiday destination, and its exports were cheaper in foreign markets, imports became correspondingly dearer and that fuelled inflation.
A change in the value of the pound could be caused by any number of factors, but in an ever interdependent world, its value depends on an increase or decrease in the confidence of the other world players in the health and strength of our economy, as well as our collective enterprise and our ability to pay our bills.
Some reasons for a volatile exchange rate are suggested below:-
A - A loss of income, visible and invisible if we go it alone and therefore a loss in confidence in Sterling.
B - World economic ills –particularly in China.
C - A new US president – for instance a rise in isolationism and protectionism.
D - An exacerbated refugee problem – Syria and the Middle East.
The reason for introducing some rudimentary economics here is that there is a very real danger as the current debate reaches its climax, we get too immersed in the detail of the deals being negotiated with our partners to reform our status as members of EU (however important this is) and forget about the consequences to the United Kingdom and indeed to the European Union itself and the other members, if we were to leave.
Britain is an important member of the club and if it left it would certainly weaken and could cause the collapse into economic chaos of the EU itself with the loss of the UK’s most important export market and thereby instability worldwide.
The EU is not perfect and does certainly need some reform and improvement (what institution doesn’t?) but because it needs to be reformed, does not mean that it should either be abolished or that we should leave it. It can and should be improved and that is what the British prime minister is trying to do.
However, unfortunately, he is trying to do this with at least one hand tied behind his back! Those who have handicapped him are his own party members, the ones who are his uncomfortable bedfellows in the Conservative party.
Sadly he is therefore attempting almost the impossible, a better deal for Britain, stopping his own party from splitting, keeping the greater electorate happy, remaining on good terms with the other members, remaining in his job and a team player.
Not a very rosy prospect and worse still, whatever the outcome of the referendum, it will leave a large minority of the population dissatisfied and disgruntled with the outcome (at the last count 43% pro, 40% anti-EU, and 17% undecided) and really for what?
Surely this whole process has been divisive and could have been avoided and the time, money and energy put to a better purpose – reforming the EU perhaps?
In this situation there are too many people with their own agendas, too many uninformed, too many without a clue about the issues and too many willing to vote/abstain as the wind blows, which makes a nonsense of this sort of democracy.
This is an attempt to bring light to bear on the serious consequences of a hasty exit from whatever the new improved EU might be. For whether we like it or not, we cannot afford isolationism in an increasingly interdependent world, turning our backs on Europe, pulling up the drawbridge and becoming little Englanders! Few if any of our politicians have ventured into the realms of gentle economics to attempt to forecast and to explain the possible consequences of either the ”in” or the “out” result to our citizens before it is too late.
Even the US Government wants us to remain and contribute to a stable and united Europe despite the “special relationship”. and because of its common language, it is also a vital conduit between USA and its European partners. Further the UK is a senior, and valuable member of the EU, as well as a major contributor to its economic power on the world stage, and can act as arbiter between the other larger member states. If Britain leaves it will then have little influence outside the club and would find it very difficult to re-join it at a later date having made such a fuss on exiting. What other members would want such a malcontent?
There is too much concentration in the debate on the terms of the deal itself rather on the consequences of Britain’s exit and so people are not well informed of the possible dangers of the grand gesture of waving goodbye and sailing away into unchartered waters, whatever the new membership deal may eventually be.
If Britain leaves it could so easily be the “thin edge of the wedge” causing an unravelling of the whole EU, which could degenerate into a lot of “Banana” republics none of whom, (with two notable exceptions) would be particularly viable in the global economy. Protectionism and tariffs from one state would beget protectionism and tariffs in return as everyone protects their own. The euro could crumble and there could be a return to national, volatile currencies.
To conclude, it is certainly better to get as good a membership deal as possible, (even golf clubs have different membership categories with differing privileges.) but the UK must stay in, in order to reform this institution from the inside.
Better together than falling apart!
James Patterson
If the UK votes to leave the EU certain things are very likely to happen under the present government. The tax-free personal allowance will be denied to expats; the state pension will be frozen; S1 forms for reciprocal health care for pensioners ended and the possibility they will have to pay French social security on pensions and/or expensive insurance for a Carte Vitale.
The pound will almost certainly devalue dramatically as uncertainty leads to an outflow of capital, manufacturing and even financial services from the UK – further eroding UK pensions and other income for expats.
Those thinking of returning to the UK will face a serious recession and unaffordable house prices, even if they can sell their French homes with so many coming onto the market.
If Scotland then successfully votes for independence, the UK rump will probably be governed interminably by Old Etonians and the like whose real ‘skills’ lie in filling their and their friends boots.
Further deregulation will hit the poor and the disabled, and working people and pensioners will see their hard-won rights further decimated. Expats would be left between a rock and a hard place.
Chris O’Hagan by email
I urge The Connexion to team up with similar newspapers aimed at expats such as The Olive Press in Spain, and similar publications in Ireland, Germany and Cyprus etc to demand answers from the UK government – using the Freedom of Information process if necessary, to find out exactly what the implications could be for the approximately 2.2 million British expats living elsewhere in the EU as a result of a Brexit.
These implications will include things like access to healthcare, residency, pension and employment rights, but also extend to double taxation treaties.
Furthermore, various government departments will have been asked to carry out impact assessments to examine the implications for the UK were sizeable proportion of these expats to decide that they had no option but to return.
There are broadly a similar number of other EU nationals living in the UK as there are Brits living elsewhere (2.3 million). It would essentially be an exchange of nationals, from a largely young, healthy and working immigrant population, to a largely elderly and retired population who would require greater access to healthcare and be eligible to social entitlements that they currently are not entitled to receive.
We expats need answers to matters which will have an impact on our lives in the event of a Brexit.
Sadly, there is not even at this juncture what passes as an open and informed debate based on the facts in the UK. On the one hand we have the daily “EU Rules” lies, distortions and bile from the likes of the Daily Mail, which is guaranteed to get the Kipperati frothing on their porridge. However, even David Cameron cannot be straight. He would prefer to continue to blame ‘Brussels’ for things which are wholly within the gift of the UK government to change, e.g. healthcare and benefits.
Lastly however, in the event that Cameron also gets his wish, and that the UK repeals the Human Rights legislation, we have the comfort that it will still apply in France and elsewhere. We all have the right to a ‘Family Life’. Article 8 enshrines the right to respect for one’s established family life. Many of us have no family life, assets, or interests outside France.
Gary Grant
When will the little island shopkeeper mentality fade out in the UK? The continent is not just there for cheap booze and holidays. It is a serious market place with opportunities for those intelligent enough to seize them. The disparity between pound and euro is hurting trade at the moment but we could be more competitive.
The UK lives in the past, rather like Ireland still carping on about the potato famine 200 odd years ago.
Say yes to the new opportunities, stop carping on about the EU and look at the benefits partnership has bought.
Scotland has done well with partnerships in building roads etc, we sit on our backside and whinge about our contribution while forgetting the subsidies which we enjoy.
Christopher Stiles
In reality the impact of Brexit cannot start to be negotiated until after the referendum. The government wants the UK to stay in the EU.
If, sadly in my view, the vote goes against them, then there would have to be a transitional period and detailed negotiations about the continuing relationship between the UK and the EU and that would include how to deal with various rights, including residence rights, acquired during the period the UK was a member.
There are many more non UK citizens living in the UK, than UK citizens living outside the UK, so it is highly likely that all existing residence rights would be preserved. London could not operate without the many EU citizens working both in the finance and catering sectors. I would assume that other rights acquired (e.g. S1s) would also be preserved as would the recognition of qualifications etc.
The people likely to be affected would be those not yet resident in France but who plan to do so in the future. They might be in a position similar to US or Australian citizens.
We, by which I mean UK citizens resident in France, will be a tiny part of the overall scheme of things but as close financial ties with the EU will go on being needed, I can't see there being any logic in removing existing rights, as to do so would be so damaging to both the UK and the EU.
Jonathan Barclay
I have lived in France for the past 12 years and am becoming quite concerned regarding the forthcoming EU Referendum in the UK.
Is the Connexion newspaper looking to print an article about what would happen to Expats if the UK voted to come out of Europe, in relation to our health, pension, and taxes (as I still pay mine through the Inland Revenue)?
I am not allowed to vote as I have lived outside the UK for over 15 years. Expats need to be aware of all the pros and cons.
Sally Davies, Miramont de Guyenne Lot
Editor’s note: We have an article look at the points you mention in the April 2016 edition of The Connexion. You can buy a pdf version (€3.80) at this link or find a copy in newsagents from March 24 to April 22 2016.
