Brexit odds

GadgetObsessed

Sorry I am not sure what you mean by that.
Do you mean to say that you think that the EU is dependent upon UK trade because of the trade defecit?

Pacifico

Yes - conspiring with a foreign power to block the decision of the UK electorate. How does it go? - 'Lock him up'   

As regards the odds on brexit, I would say slim to non-existant. After all they do say that if voting chnaged anything they wouldnt let you do it.

EarthRod

Bearing in mind of course you are comparing a country with a bureaucratic organisation.

If you compared a country against another country, for example UK against Italy or France, then the figures would reflect country economies in a better light.

GadgetObsessed

These figures compare the GDP of one country, the UK, with a group of countries, the remaining EU countries - not an organisation. The relevance in this case is simply that you have two parties negotiating a trade deal. One party is economically smaller and more dependent upon trade with the other, than the other party is.

There is no reason that the GDP of a country cannot be compared to that of a particular group of countries - and this is frequently done in economics. (My first degree was in Economics.) The GDPs of countries is often compared with trading blocks such as the EU, NAFTA, ASEAN, etc. This often comes up as trading blocs often negotiate trade deals with individual countries. For example, the EU has negotiated free trade deals with countries such as South Korea and Japan. (The UK will no longer be part of such free trade deals once we leave the EU.)

EarthRod

You are comparing import/export figures of the EU (a bureaucratic organisation) with the UK (a country) as follows:

"The EU's exports to the UK are valued at £341bn which is around 2.8% of the EUs GDP.
The UK's exports to the EU are valued at £274bn which is around 12.7% of the UKs GDP.
The UK's trade deficit with the EU is £67bn - which is around 0.5% of the EUs GDP."

You made no mention of countries, except for the UK. Therefore you are comparing a bureaucratic organisation with a country.

I quite understand a comparison can (and is frequently done) be made between a trading block and a country. However, your comparison gives the impression of highlighting a weakness (your percentage figures in bold) in the comparison, the UK figures being very much smaller than the EU figures.

In addition, the fact you have a degree in Economics (and noted the reference to your first degree) does not bear any weight to my point. In other words, I am not cowed by your disclosure.

It seems to me all you have done is shown 27 countries in total have better import/export figures than one country.

Fair enough.

weaviemx5

The EU negotiates as the EU, it’s a trading block. We can’t negotiate a trade with Italy direct (for example) as they’re a member of that trading block.

If you want to compare us to a single country, why not look at large economies like USA, China, India etc.  The fact the UK Government has fanfared the currently comparatively tiny trade deals that have been pre-agreed with countries like Eritrea shows that their negotiations have so far only dealt with smaller economies, with a comparatively tiny financial benefit.

GadgetObsessed

No need to be so touchy. I wasn't trying to brow beat anyone by mentioning that I had a degree. I mentioned it as I had personally looked at comparisons involving trade blocs and countries before. It had not even occurred to me that anyone could consider that mentioning a degree could be construed as trying to cow someone. (Maybe though, because I work in an industry where you assume everyone else has at least one degree as a matter of course, I consider having a degree as more normal/usual than most other people do.)

OK as you are so focused on wording, lets change the term "EU" to "the 27 countries that we are negotiating with".

Yes, I do believe that if you focus on trade, then we are in a weaker position for negotiating an agreement. We are negotiating with 27 countries and together those countries have a much larger economy. Those countries are also proportionately far less dependent upon trade with us than we are on trade with them. If, for arguments sake, trade between the UK and the EU 27 countries was reduced by X% after Brexit then the unemployment rate in the UK would rise far more significantly than the unemployment rate in the EU 27 countries.

From a purely trade perspective, those 27 countries simply do not need us as much as we need them.

Now, if you invoke other arguments on the relative strength of the two parties in the negotiation you would be on more solid ground.

For example, the UK is the second largest net contributor to the EU budget with a net contribution of around £10bn in 2018 and an average of about £8bn over the last 5 years. However, the existing financial settlement has the UK paying around £5bn a year for a number of years - so there isn't much of a saving/loss on either side for a number of years. The EU can certainly kick the problem of needing to cut spending down the road for a number of years. (Especially as for the next few years the UK will continue contributing but will cease being able to claim funding.)

Stuey1

The big issue with this is it almost assumes that all 27 countries have an equal distribution of imports and exports from/to the UK, when in reality it is likely to hit the big hitters (Germany, France, Spain) much more than it is going to hit Romania for example.

It's sort of using statistics to mislead IMO - yes 27 countries together have a much bigger economy that one country - but if 20 of those countries do very little trade with the UK then the GDP of those countries is just bulking up the numbers to suit an argument

Sonic67

Germany is close to recession. France has had over 40 rioting weekends. Spain, Italy, Greece etc are in a mess. Eastern Europe relies on handouts.

And that's all right now.

I don't see how the EU losing out on billions, or the UK trading more elsewhere will help the EU with any of that.

GadgetObsessed

Ok - lets take the two largest economies in the EU once/if the UK leaves - France and Germany.

In GBP/Sterling terms the sizes of the relevant economies are:
Germany - £3 trillion
France - £2.1 trillion
UK - £2.1 trillion.

The UKs imports and exports to those countries are:

Germany - Exports to UK - £78bn. Imports from UK £57bn
France - Exports to UK - £41bn. Imports from UK £40.5bn

So, on to relative dependence on bilateral trade:
Germany
2.6% of German GDP is dependent upon exporting to the UK
2.7% of UK GDP is dependent upon exporting to Germany

So the UK is very slightly more dependent upon trade with Germany than Germany is. In practice it is so close that lets say that we are both equally dependent upon this bilateral trade. Germany exports more to us than we do to them but it is in matched by how much larger the German economy is compared to that of the UK. You cannot say that Germany is more dependent upon UK trade than the UK is on German trade.

France
1.95% of French GDP is dependent upon exporting to the UK
1.9% of UK GDP is dependent upon exporting to France

Again, it is so close that lets say that we are both equally dependent upon this bilateral trade. In this case both economies are more or less the same size and export more or less the same amount to one another.

These balanced bilateral trading relationships would give us equal footing (in trade terms) if we were negotiating with France or Germany, individually.

However, we are negotiating with a party that represents both. If there were disruption to UK-Franco-German trade, then we would suffer the impact on both our exports to Germany and our exports to France, while each of those would only suffer the impact of the loss of trade to the UK. So in that sense we in the UK are roughly twice as dependent upon trade with Germany and France as either of those parties are on trade with us.

Once you take into account all of the other EU countries we are dealing with, then the overall disparity of dependence of trade dependence becomes far greater.