Tuesday, May 21, 2013

EU referendum: a common vision

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The first thing you need to know about Goldman Sachs, it says here, is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

That was written a while ago, but it may give some hint to the fact that this blood-sucking parasite it not universally adored. And it may, therefore, be a mixed blessing for the europhiles to have it reporting that a British departure from the EU would result in a "loss/loss scenario" in which both the UK and the rest of the bloc would be damaged. 

The report is from Kevin Daly, a member of the investment bank's economic team, and it says that a UK exit would "come with a significant economic cost to the UK" because it is "highly integrated" with the EU. 

Crucially, Daly then dismisses those who argue that Britain could negotiate a trade deal with the EU once it had left. "Given the size and importance of the UK economy, it is unlikely that the UK could negotiate the same access to the EU single market that Switzerland and Norway have achieved", he says. 

Now, that Mr Daly so carefully refers to Britain negotiating a trade deal with the EU "once it had left" cannot be an accident. It must be done for effect, especially as Article 50 refers to negotiationsbefore a withdrawing country leaves. 

Assuming that the default position of any responsible government would be to invoke Article 50, Goldman Sachs is therefore engineering a scenario which is both extreme and highly pessimistic - and not provided for in the Treaty. And, without it offering a range of scenarios, this can only mean that the bank is talking a partisan and therefore worthless line. 

The thing is, of course, is that the UK could opt for membership of the EEA via EFTA, and for repatriating the entire aquis. This may not be acceptable to the "unilat" fundamentalists of UKIP, who are singing from the same songsheet as Goldman Sachs, but it is a tenable option and one espoused by at least one British cabinet minister. 

But then, Goldman Sachs could not possibly consider this scenario if it is to stand up its headline finding that the UK leaving the EU would be a "loss/loss scenario". And, for a company that works hand in glove with the European Commission, this is the only conclusion that its employees would be permitted to draw. 

It was, after all, Goldman Sachs alumni, Mario Monti who took over the governance of Italy at the behest of the Commission, it was Goldman Sachs who cooked the accounts to allow Greece to join the euro, and it was then Goldman Sachs people who engineered the Greek "bailout" and the haircuts which tipped the country into the depression. 

That such an eminently untrustworthy organisation thus reports adversely on the UK exiting from the EU is, therefore, no bad thing. But how fascinating it is that both Goldman Sachs and the UKIP fundamentalists share a common vision of how the UK will manage its departure.