In 2008 the Irish government guaranteed all the liabilities of banks domiciled in that country. It was a moment of madness that both set a precedent and cost the country very dear.
Last week the UK government appeared to guarantee Nissan that it would not suffer any costs as a result of Brexit. The offer was made in a state of panic. It revealed a lack of conviction in stated policy on Brexit. And it set a precedent.
Unless we stay in the single market his could prove to be phenomenally expensive as it rolls from company to company, industry to industry and all at cost to the people of the UK, who will be transferring their wealth in the process to multinational corporations, which was the exact opposite of what Brexit was meant to achieve.
Beware government guarantees given in a state of panic.
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It is disgusting when you think that VAT is still at 20% given 6 years of austerity and wages are depressed. But it is big business that gets the help. I wouldn’t mind if this stupid Government helped everyone – but they do not.
You have to give it to the investment class though – they know how to make the most of a crisis.
This is a good example of why (IMO) Parliament needs to block “Brexit” by voting against it (although the Government has argued it doesn’t need a vote to invoke Article 50 I think that position will be successfully challenged in the courts and in any case a vote is needed to repeal the 1972 European Communities Act.)
A “hard Brexit” will be phenomenally expensive for the UK taxpayer – either because much of our industry relocates to the EU leaving a big hole in our GDP, or alternatively, because we have to bribe them not to relocate (assuming such bribes are even legal under the conditions of our trade agreements with other countries) and the taxpayer bears the resulting costs. The whole thing is a complete shambles and, given that the referendum result was a con job and a swindle by the Leave campaign liars in the first place, it’s essential that this gets voted down. But right now the Lib Dems (and a few other mavericks such as Ken Clarke and Tony Blair) are the only people saying this.
The lack if representation of 48% of those who voted is staggering
And I agree with your analysis
I would like to say that I am more relaxed about Brexit but if anything I am more worried rather than less with the passage of time. The Irish decision to guarantee all bank liabilities was as you say made in haste. Had the full extent of the black hole the banks were in – particularly Anglo Irish – been known then it never would have happened. The Nissan deal will go down well with the Brexiteers as indeed the 0.5% growth rate (nearly all consumer spending – “eat drink and be merry for tomorrow we die”).
You’ve probably seen the Guardian Article:
https://www.theguardian.com/politics/2016/oct/30/nissans-post-brexit-deal-could-lead-to-colossal-bills-for-taxpayers?CMP=fb_gu
I would like to say also that I have confidence in what the Government is doing; but can’t. I live in the faint hope that they are not as clueless or ostrich-like as they appear. I hope the autumn statement on the 23rd November will shed a bit more light on their thinking; but I fear that I may become even more depressed.
On a brighter note despite headlines that the Irish Passport is overwhelmed it took them only a week to turn my son’s passport around so he is now a dual citizen. You’ve probably also seen the headlines about German Jews in the UK applying for German passports. Very sensible I’m sure but it is worrying that they feel the need to do so.
Thanks Sean
I share your concerns
Indeed. The banks claimed that the guarantee wouldn’t cost anything, that it was just a matter of ensuring confidence. The dogs in the street knew that Anglo was in trouble. Gordon Brown was not at all pleased when deposits then started to be transferred into Irish banks. In due course, the Irish taxpayer ended up saddled with 42% of the EU’s bank debt.
Precisely
Hi Paul
have you a reference or link to the 42% figure? Ive seen various figures bandied about.
The other thing that is a similarity is the suspension of reality that occurred during the housing boom in Ireland. To me it seemed collective madness; I was probably a bit more objective as I used to visit only about twice a year.
Brexit fever seems to have similarly infected a fraction of the population in the UK.
Surely the gov’t won’t be stupid enough to donate money to foreign countries/corporations à la RBS. Won’t reduced business rates (which I realise are supposed to be directly locally attribubable shortly) or some other concession have formed the basis of any allowance? Whilst it is true that this won’t be great news for the UK, at least it would be tolerable and not result in a direct outflow of funds for Sterling.
Unfortunately I am unused to defending Brexiteeers (the very idea of which I consider only because we might, very regettably, have to tolerate it)…
Events since 2008 prove that elites are probably the most unaccountable and irrational group, coddled for no logic or beneficial reason…..So far, they have received power while causing wars and extreme debts and for what? They gain and the rest suffer and lose….
Whether its bank bailouts globally —or again taxpayer subsidies—people get little if anything of real value in return….see bilaterals.org