Hacker News Reader

Comment by elemeno | Hacker News Reader

> The british economy will collapse completely, they are by far not that important globally.

The UK has the worlds fifth largest economy by GDP and the second largest economy in the EU (Germany is larger, France is smaller) [1]. To claim that they're 'not that important globally' is, frankly, asinine. Do you really think that the EU won't also get hurt by the UK leaving? If you think it won't then it's worth asking why EUR/USD has also gone sharply down today...

[1] http://money.cnn.com/news/economy/world_economies_gdp/index....

View on HN

"Britain slips from 5th largest economy to 6th (behind growth-less France) in the space of five hours" - Channel 4 journalist Jon Snow

>Jon Snow

He knows nothing....

Sorry couldn't resist.

We slipped, yes, but the FTSE100 is close to 80% recovered from this morning whilst the GBP to USD exchange rate is currently where it was at in February of this year.

Our televised news hosts like to dramatise, it seems.

Meanwhile, the Spanish market is down is down 11%, Belgian one is down 5.5%, France down 7%, Germany down 6%.

It's looking like Europe is hurting more from this announcement than Britain at the moment.

UK has a high debt load and is now more isolated than it was. Those are problematic when they are tied together. But I think that what is a major bonus for the UK is that they control their own currency and possibly their debt is issued in UK Pounds (is it?) -- that could be very useful in making their exports attractive if shit hits the fan.

If their debt is not in UK Pounds, it will limit their economic flexibility severely, and I think could lead to a default if things go bad (which we are currently quite far away from right now.)

Thus is the UK debt in UK Pounds? Or is it mostly denominated in Euros, Yen or USD?

The UK national debt is all in Pounds.

But whether or not that is an advantage is hard to establish, that all depends on how much of an export position the UK will have post brexit.

The UK can inflate its debt away, that is always a nice option to have. Greece couldn't do that, and that was a major reason why it was being crushed.

They would not just devaluate the debt but the domestic assets as well.

Sixth, as of this morning. Thanks Boris.

UK benefits mostly from the financial industry afaik. Does anyone really think that this sector will stay 100% in this situation? Bankers are already planning the migration to Frankfurt. This might as well lead to a spiral. We'll see.

And yes, France is now a bigger economy than britain, and it's just been a few hours now.

What is the reason for moving banking to Frankfurt? Is there regulatory issues?

People do not just moving businesses for purely political reasons, there has to be concrete economic reasons.

I actually think that the UK may be less regulated than EU exchanges and that may stay in order to keep the UK more attractive.

If you do not list any real economic reasons, I think this is just scare talk.

> What is the reason for moving banking to Frankfurt?

Stability plus the fact that Frankfurt is already a major financial hub, and that Germany is a major driver of the EU economy.

The only thing that has changed as of this vote of the three things you listed is the "stability" aspect. Maybe that is sufficient to cause an exodus, but I am not sure.

The perception of London being the doorstep of the EU has just changed to London being outside of the EU, it would make zero sense for the EU financial center to be technically outside of it.

> What is the reason for moving banking to Frankfurt? Is there regulatory issues?

London is one of the biggest (or rather the biggest) hub for EUR-denominated trading and AFAIK they're only allowed to do so because they're EU member. There's also the practice called passporting: Bonds, Insurances etc that are regulated in one EU country are allowed to be sold in all EU countries. The UK had the most favorable regulations for those bonds, so a lot of them moved to London. Now that London might soon not be part of the EU any more, the banks at least need a residence in a EU member state. Some might consider to substantially reduce their London operations.

>Is there regulatory issues?

lack of a free trade agreement with europe comes to mind.

As another commenter already noted, the common market covers goods, people and services, including financial services. So in order to sell financial services, you need to be located in the EU. That just changed in the case of London, with obvious consequences:

— Ben Thompson (@BBCBenThompson) June 24, 2016

Sources at Morgan Stanley tell BBC it's already begun process of moving 2,000 London based investment banking staff to Dublin or Frankfurt

I think in the same direction. Not much will change.

Funny how the leave voters of fear and spite are now here talking about punishing the uk out of spite :)

From what I was reading during the last Scottish independence vote, if Scotland goes independent then they take almost all of the UK's oil and gas industries and a surprising amount of the economy with them. If Scotland goes independent and joins the EU, it definitely sounds like Britain's economy could collapse under the pressure of British companies having to spend EU market fees to trade with their subsidiaries that lease Scottish oil fields, alone.

We are living in interesting times, it would seem.

It really depends at which point in time you're observing. France and the UK have been neck to neck for decades.

Reply on news.ycombinator.com