06-29-2016, 12:12 AM
The stakeholders of the global economy are struggling to plot a course through the aftershocks of Brexit. From what’s legal to what’s possible to what’s desirable, little has been clarified in the four days since U.K. voters took the unprecedented step of choosing to take their country out of the European Union. Making matters even more complicated are the meltdown in Britain’s two main political parties and the enduring legacy of the 2008 financial crisis. “Uncertainty is bad,” said Kit Juckes, global strategist at Societe Generale SA. “That wouldn’t matter if the global economy were ticking along nicely, but it isn’t.”
Picking Through Brexit Rubble, Leaders Try to Plot the Future - Bloomberg
Failure to mend fences with London risks an economic crisis that would expose the long-festering pathologies of monetary union. "There is a cocktail of factors that could lead to disintegration," said Pier Carlo Padoan, Italy's finance minister. "We face a double reaction from Brexit: financial and political." The 12.5pc collapse of Milan's FTSE MIB index on Friday was a warning shot. Unicredit was down 24pc, below depths reached in the Lehman crisis. Italy's banking system has been so destabilized by the EU's new "bail-in" rules that it cannot withstand any serious errors made over Brexit.
Parliament must decide what Brexit means in the interests of the whole Kingdom
Boris Johnson, Dan Hannan, and others in the sovereignty camp are signalling that they could live with a Brexit compromise that accepts EU migrant flows, but going back to pre-Maastricht rules that guaranteed only the right to work, before the concept of EU citizenship. This would be a modified variant of the Norwegian Model, or European Economic Area (EEA).
Parliament must decide what Brexit means in the interests of the whole Kingdom
EU legislation is incorporated into the devolution settlements of Scotland and Northern Ireland. In effect, they have a "reserve" that can greatly complicate Brexit, giving them legal leverage as well as a moral claim for special care. By the same token, Scottish and Northern Irish demands give Leavers the political "cover" they need to accept a compromise.
Parliament must decide what Brexit means in the interests of the whole Kingdom