Steve Davies: prediction

Transcript context

…How hard will the hard Brexit be? Theresa May has said she’s not going to take in migrants from the EU as a matter of law. Some may be taken in on a discretionary basis. She’s making that a campaign pledge. That would seem to rule out an arrangement like that of Switzerland or Norway and an EEA‑like arrangement. That seems to mean hard Brexit, since the European Union doesn’t seem to be giving in. What rights will the London financial sector have to sell product on the continent? What will the raise of tariff be? Will it be default double UTO rates? What will it look like, say, five years from now? That is very tricky because, in terms of…there’s three different issues there. One of them is that the government is deciding to go for, I think, a very hard Brexit. I agree with that. Mainly, I think, for the very bad reason that they want to impose controls on immigration from the EU. They can’t do that if they’re part of the European Economic Area because the European countries, quite reasonably, I think, say, “Look. There’s a whole package deal here. Free movement of labor is part of the package deal. You can’t pick and choose what you get.” They’ve decided, I think very incorrectly, that they, for political reasons, they’ don’t want to do that. Therefore, they’re not going to be part of the EEA. Now, the question then is, well, are they going to be able to get a trade deal with the EU of the kind of Swiss type before the deadline, fall of 2019 when the two‑year ticking clock finally hits midnight? My own view is probably not, actually, because any deal has to be agreed by the 27 remaining members. Getting all 27 of them to agree to it is very, very difficult. Now, this is a case of British strategy coming back to bite them, if you will, because it was British strategy to expand the EU so enormously in the aftermath of the collapse of the Soviet Union. As Sir Humphrey explained very lucidly to Jim Hacker in a very famous episode of “Yes, Prime Minister,” the reason for this was to actually make it so that nothing could get done. That was, indeed, the reason. As he told Jim Hacker, “The goal of British foreign policy for a thousand years had been to bring about a disunited Europe,” which is completely true. The problem is, therefore, I think we’re not going to have a deal at the end of the two years. I think we are probably going to need either to revert to WTO rules or, I think more likely, we will have an interim agreement put in place. That’s where the hard argument will be, about what that interim agreement is. Now, as to the city of London, there’s a lot of talk at the moment the city of London is going to lose its so called passporting rights, which means that it can conduct business in Euros. Last year, before the referendum, the city of London did just under a trillion Euros worth of Euro denomination business. It’s a lot of business. If they were to lose that, that would be an enormous blow to them. The European Central Bank would dearly like to yank that privilege because it didn’t want them to have it in the first place. They have nowhere to put it.…

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