UK Referendum on Europe: Chances of Pulling Out are Virtually Zero
We enter a new week with the financial markets looking very perky indeed as previous resistance levels have succumbed one after the other.
This said, it can hardly be claimed that the stock markets
have been exciting. Each day has seemed to struggle arthritically from one peak to the next.
The slow grind rather matches the political situation as the politicians try to divert attention away from the economy, which they have done nothing about, to petty domestic and international spats.
In the case of the UK, we have now moved onto a kind of phoney war over Europe and whether we will have a 'referendum' on Britain's membership.
Here, we already know the answer. Much of the population seems to want 'out' but business leaders and politicians generally want in.
Whichever way the vote goes, the chances of the UK actually pulling out are so small as to be virtually non-existent.
An outright vote for exit will probably become a 'policy', then a 'target' and finally just a 'possibility'.
This issue will, of course, run and run as there is little that divides the extreme wings of all parties more than EC membership.
The problem for the Tories is that they have a very vociferous minority who question continued EC participation.
The Labour party face a different problem in that they can't be too scathing about Tory disunity because many of their own voters probably agree with the right wingers.
For the economy, it might pan out quite well if attention is diverted elsewhere, as there is a good chance of the government doing nothing, which is often good for growth. Or rather, there is little worse for an economy than politicians thinking they know how to run it.
The major issue for western economies remains the huge burdens of the welfare state, or whatever the equivalents are called in France, Germany and the US, coupled with an aging population.
If nothing is done to curb the ever rising GDP percentage taken up by benefits, for whatever use, then debt and taxes will rise inexorably.
Unfortunately, this writer fears that the politicians will not decide anything until their country reaches PIGS status and they have the solution forced upon them.
Of course, Greece had Germany to bail them out, but I am not sure who is going to bail out France and the UK.
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By Simon Denham, 21 January 2013