Europe – Robert Bischof

UK and EU Could Be Better Partners Apart

Why a deal will (have to) be done

by Bob Bischof in London
Published on OMFIF Wed 28 Feb 2018

As a German businessman who has lived and worked in Britain for 40 years and seen all facets of the Anglo-German divide over Europe, I am convinced that UK and continental negotiators will reach a mutually satisfactory accord over European Union withdrawal.

Britain and the EU-27 are better off apart than together. The EU will reach an agreement because the other 27 countries believe it is in their interest that Britain not only leaves now, but also that no future government thinks of knocking on the door again. Many well-meaning British Europhiles from all parties are sadly wasting their time by campaigning for Britain to stay in.

There has been much noise and hot air. Prime Minister Theresa May’s cabinet met last week and declared that only a bespoke deal is acceptable – earning an immediate rebuff from Brussels that this is impossible. Jeremy Corbyn, the leader of the Labour party, has pledged that Britain will stay in a customs union with Europe to help industry and employment and prevent a ‘hard’ Irish border. This spurred claims that Labour is ‘betraying’ those party supporters who want a full-scale EU exit. It also threatens May by encouraging Europhile Conservative rebels to join Labour against the prime minister’s strategy.

Squabbling over Europe is as old as Britain’s 50 years of half-hearted attempts at being a full and engaged European partner. European wrangles have haunted successive Conservative prime ministers. David Cameron had to step down after miscalculating the outcome of the 2016 referendum. May would have met the same fate, had her adversaries not hesitated to oust her out of fear of Corbyn in Downing Street.

The litany of divergence is long and substantial. Not having accepted the euro or Schengen area borderless travel, Britain will never sit at Europe’s top table. Public opinion, heavily influenced by a powerful right-wing press, is hostile to Europe. The British don’t like and are not good at the big government, structure and regulation conducive to European integration.

Other sources of division are Britain’s affinity with case law and a non-written constitution, contrasting with the continent’s Napoleonic code, and the British hankering for flexible labour markets and shareholder value rather than worker protection and the social market economy.

The referendum outcome gave credence to James Surowiecki’s book The Wisdom of Crowds. Large numbers of ordinary people sometimes make better decisions than smart elites. Because of deep cultural, political and economic disparities, I believe now – as I did before the vote – that Britain will continue to have misgivings about the EU and its political framework in spite of the fact that it will be worse off economically. Moreover, the EU will be better off without its quarrelsome neighbour.

For all these reasons, May and the EU have to and will agree a deal that Remainers and Leavers can (just about) live with in parliament and even in a second referendum.

Ultimately the EU will deliver such an accord. The reasons are rooted in reality, not fairyland. The right-wing press regularly claims that the EU needs Britain more than vice versa, that the EU’s exporters are somehow more vulnerable than the UK’s, or that the EU will be a more dangerous place without a deal. These mantras are overdone and misleading. Both sides need a deal, for equal and opposite reasons.

Separation can take place amicably. The French and German elections led to one common political result: more Europe and more integration.

A softer EU stance on Brexit is unlikely to encourage other countries to leave, as the EU is economically out of the doldrums. Employment is rising. Growth is higher and at a more sustainable rate than in Britain, where, in spite of sterling’s fall, the high current account deficit is expected to show only marginal improvement. Household debt is at record highs. Unemployment started to creep up in the last quarter of 2017.

No wonder net migration to the UK has fallen substantially. Because of Britain’s worse economics, I predict that immigration will shrink so much that May will claim victory and can drop insistence on free movement of people for a future accord. This is one more reason why, in the coming months, headlines will portray more harmony than hostility between London and Brussels.

Bob Bischof is Chairman of the German-British Forum, a Vice-President of the German-British Chamber of Industry and Commerce and a member of the OMFIF Advisory Board.

Merkel’s Germany: Shaper or Taker of a United Europe?

As Europe’s largest economy struggles to find its future path, what about calls that Germany is Europe’s hegemon?

As Published on The Globalist, December 15, 2017

Credit: MagMac83 Shutterstock.com

As Germany’s main political parties struggle to find a formula for a new coalition agreement under Angela Merkel’s leadership, the rest of Europe is testing the waters.Some argue nothing in Europe can move forward with a Germany occupied with itself. Others relish German paralysis. Yet again others fear German dominance no matter what. That is quite a spectrum of opinion.

Where should the future European journey go?

The majority of Europe’s political elites are trying to determine the proper pathway. Should there be further integration towards a United States of Europe?

Is such a move not mandated as a proper global counterweight in a world marked by the incessant rise of China, the hard-to- calculate Russians and the demise of the United States under Trump as the leader of the free world?

France’s President Emmanuel Macron has definitely defined such a response as his main aim. He needs Germany to come on board, not least to guard against the centrifugal powers of populism that are rising throughout most of Europe and keen to destroy his dream.

Spreading ominous thinking

But where does Germany stand? Is it really tearing apart at the fringes? That’s the suggestion of many who see the German elections in the dark light, on account of the success of the extreme left and right parties. Sections of the British press compared the right-wing AfD‘s march into the Bundestag to events in 1930.

Fortunately, this is far from the reality. Germany’s centrist parties scored an overwhelming 78% of the vote.

Still, one cannot deny or underestimate the disruptive danger of populism. In Poland and Hungary, for example, populists are making hay out of old fears and tribal aspirations.

German hegemony?

One underlying thread that united much political analysis throughout Europe is the fomenting of fears that is associated with the talk of a new German hegemony. In my view, that is just alarmist talk, designed to whip up the forces of populism in whatever country whose leaders think in those terms.

Others present a milder suggestion. For example, David Marsh in a recent article on The Globalist talks about a rerun of the Holy Roman Empire of German Nations in the Middle Ages.

That, too, sounds ominous. However, any student of history knows that Germany‘s neighbors would have nothing to fear.

That Empire was never dominated from the center. In fact, the center was kept deliberately weak. Power resided in the leaders of the constituent parts of that empire, who elected whoever the new emperor would become. It was thus anything but an effective political entity.

If anything, that Holy Roman Empire – transferred to our era – actually resembles quite closely the European model which the UK always has in mind.

If one wants to compare the European present with the past, the first German reunification in 1871 is a more fitting example. Driven by the onset of the industrial revolution (today’s equivalent of globalization in terms of its transformative powers), first a customs union was created. Then, under strong leadership by Prussia, came monetary and political union.

But even that parallel doesn’t really fit for various reasons. Anybody looking for a clearer understanding of Germany’s multi-layered historic, social and cultural role in Europe should read Stephen Green‘s excellent book “Germany the Reluctant Meister.“ He hits the nail on the head.

What about Angela Merkel?

Frau Merkel‘s Germany needs France much more than the French need the Germans. Herself long on desire, but short on actual vision, she would like nothing better than Monsieur Macron driving the European project forward. To her delight, he has taken the initiative. He is her “vision king.”

True, unlike the SPD – her potential governing partner – Merkel will only be a reluctant follower when it comes to German taxpayers shouldering too much of the cost of futher European integration.

But I am sure Merkel believes it is a reasonable price to pay, all the more so as she can rely on the Social Democrats to provide her sufficient political cover. They will allow her to convince most of her voters, who want the CDU to govern, that this is worth the cost.

Which leads to one big question in the European context: Will the SPD jump aboard the Merkel bandwagon once again?

The reason why I feel confident about a rerun of the last coalition is that the Social Democrats need not to fear playing second fiddle to her and falling further back in the next election. This is definitely Merkel’s last term in power. In fact, it would be a surprise if she stayed the full term.

Berlin Rules: Book Review for OMFIF

If you plan to read Paul Lever’s book, Berlin Rules: Europe and the German Way, to enjoy a bit of good old fashioned German bashing, and to confirm your anxieties about a Europe run by Germany, you might be disappointed at times and reassured at others.

As published on omfif.org – September 2017

In just over a decade, Germany has been transformed from the ‘sick man of Europe’ into a domineering and threatening force, according to some. Given the UK’s decision to leave the EU and the negotiations about the terms of Brexit, there is renewed interest in all things German, and British authors have responded.

Read the review in full – download PDF.

Liverpool Voted Remain – Due to Lack of Sun?

How did Liverpool vote compared to other cities on the EU referendum? – The Liverpool Echo has an interesting report.

How did Liverpool vote compared to other cities on the EU referendum? – Liverpool Echo

I have mentioned before the appalling influence of the right wing British press on public opinion. Here is some proof:

As you can see the whole of the Liverpool region voted 58,2% to remain although according to the Joseph Rowntree Foundation referendum analysis they should have come out on the Leave side due to their socio-economic make-up. Why did they vote so differently from the rest of the UK?

There is only one possible explanation – ever since the Hillsborough disaster 28 years ago the SUN newspaper has been boycotted in Liverpool….
I think that is quite conclusive!

The people have spoken in the referendum, but the puppeteers pulled their strings!

Read the statistics in the Liverpool Echo here: http://www.liverpoolecho.co.uk/news/liverpool-news/how-liverpool-vote-compared-cities-11521041.amp

Trump and Germany

Germany should point out to Trump that it is his own irresponsible macroeconomic policies that make the dollar strong and the euro weak.

This article first published on The Globalist, 10 March 2017.

https://www.theglobalist.com/trump-germany-on-trade-imbalances-exchange-rates/

President Trump is a man on a mission, to the tune of several earth-shaking ones a week. After Mexico, this time it is Germany’s turn.

Going mano a mano with Germany

Another staggering current account surplus of near 9% of German GDP has caught his administration’s eye. Clearly, the euro too weak, the Trumpists argue. They want to have a mano-a-mano talk with the Germans, outside of WTO and EU structures.

Rampant bilateralism is the only way in which the Trump administration can imagine the world. Otherwise, the world clearly gets too complicated for him and them.

It ain’t so easy

But whatever Mr. Trump’s desires, the world of exchange rates doesn’t move to the tune of the unilateral issuance of executive orders. Here is an inconvenient fact: There is a market out there that actually establishes those (market) rates.

Still, there are some serious questions to be answered – none bigger than this: If the euro is too weak (and the dollar too strong), who dunnit?

And: Is Germany taking advantage of the United States? And what can the U.S. government possibly do to rectify the imbalances.

The President, for all his assumed omnipotence, will be in for a surprise the who’s dunnit. He will also find to his great dismay that the world of currencies and revaluations and devaluations has changed.

The old world

Under the Bretton Woods Agreement, signed in July 1944, the exchange rates of the major countries were fixed, with the U.S. dollar acting as the reserve currency, at an agreed price to gold of US$35 per ounce.

This system made business transactions between nations again possible after WWII and led to a rapid increase in world trade.

Over time, however, this regime started to create increasing imbalances between countries. Britain, economically ever more lacklustre, had to devalue its currency in 1967 against the dollar, from 2.80 to 2.40.

Similarly, an economically resurgent German deutschmark was revalued, from 11.20 to 9.60. Even so, the UK trade deficit did not go away though and further devaluations of Sterling became necessary.

As an importer of engineering products from Germany at the time, I had to buy DM forward in order to protect myself against these gyrations in the markets. At first, is wasn’t easy to get reasonable cover as there was not enough liquidity around in the market.

Brave new world

Soon enough, the banks and other Fintech companies became aware of the fact that there was a lot money to be made in the foreign exchange business and that, in order to tap into these profit opportunities, there was no need for an underlying trade in the real economy to occur. The currency casino started to gear up big time.

With North Sea oil coming on stream in the late 1970s and 1980s, and with the UK service sector expanding after Big Bang with the massive deregulation of the financial sector, Britain’s current account stayed more or less in balance.

UK runs out of steam

Selling a huge number of assets — from luxury homes in London to the energy sector, ports and airports as well as numerous companies — helped to keep the UK’s current account in balance.

During the last decade, however, this situation has reversed dramatically. Both trade and services are now showing growing deficits.

The UK current account deficit, as of 2016, stands at around 5% of GDP, probably because much of what could be sold off to foreigners has been sold off.

Even so, this period of growing current account deficits coincided with the opposite of what one would expect — a period of relative strength for Sterling, which was only interrupted by the Brexit vote.

During the same period, the eurozone has developed a growing current account surplus (in 2016 amounting to around Euro 400 billion).

However, contrary to what one would expect – a strengthening of the euro, to reflect the strong fundamentals — the euro remains weak.

As goes the UK, so does the US

Why am I telling this UK story? Because it foreshadows developments with regard to the United States. Despite a huge current account deficit there, the U.S. has to contend with a strong dollar.

How does Germany fit into all this? It has, of course, contributed around three quarters of the eurozone’s current account surplus.

Can Trump make the mental leap?

Somebody has to explain to Mr. Trump that the rules of the current account/forex game have changed significantly. Of course, the U.S. dollar is overvalued in PPP terms. However, the dollar will remain strong and even may appreciate further.

Particularly so if – and this is where it gets interesting — Trump goes on a spending spree and inflation picks up. He won’t have much choice under those circumstances but to introduce defensive tariffs to compensate for the strong dollar to fend off imports.

His advisers may have foreseen this – hence all the noise about “putting the U.S. first” and hitting out at the world.

The real world doesn’t matter that much anymore

What is fairly new, of course, is that currency adjustment don’t follow any more what is happening in the real economy. Rather, they are determined by interest rate expectations and movements.

Ask any currency broker and he/she will confirm this. The problem with this new scenario is that the imbalances will be getting worse as the deficit countries like the U.S. and UK are expected to be the first to raise interest rates.

What then is the reason behind the performance of the real economy no longer being the main driver for currency adjustments in the short and medium term?

The answer is simple: The volume of the currency trade needed for “real economy transactions” – which still shape our collective mind about exchange rate developments — is totally dwarfed by the volume of speculative currency transactions traded each day in the financial markets.

Just how dwarfed? By 5 trillion a day total market.

We clearly live in financial times.

Is English Glory Foreign-Made?

Exploring parallels between English football and the economic and political landscape of the country.

This article was published in The Globalist on 5 July 2016

England has without doubt the most expensive and internationally most followed football league in the world. Many Premiership clubs are owned by Americans, Russians, Saudis, Iranians, Thais and Chinese.

The global element shaping the sport in England doesn’t end there: Out of the top 12 clubs in the 2015/16 season, 11 were trained by Italians, Spanish, French, Dutch, a Chilean, a Croat and a German.

In the pool of players signed by all Premiership teams, 59 foreign nationalities are represented, accounting for 67% of all players in the league. Of the remaining 33% — the English players — not even half get to play every weekend.

The English press regularly proudly reports the Barclays Premier League as the richest, best and most successful league in the world.

It also elevates the English team before every international tournament like the World Cup in Brazil in 2014 and the current European championship to semi-favourite status.

Soccer, just like the economy

The English are without doubt the champions in self-promotion. The meeting with reality is quite harsh, though. Consider that Spanish club teams made a clean sweep of trophies in European club competitions this season, with the English clubs all knocked out early.

The early exit of the national team in Brazil in 2014 and now in 2016 against Iceland shows up the fundamental weaknesses of the overall approach.

The sport is played for profit only, with little regard for the development of home grown talent on or off the field. That money-based approach has an obvious impact on the national team, which has underperformed badly yet again.

This soccer saga has all the hallmarks of the overall British economic and political malaise. In politics, the bragging about the greatest league translates into “We are the fifth-largest economy in the world” and “We are the fastest growing country in the G8.”

This self-boosting rhetoric has been peddled by Cameron and Osborne over the last few years and featured hugely in the British press. However, once the pair decided to campaign for remaining in the EU, it came to haunt them.

Harsh economic reality

The two slogans were effectively used by the Leave campaign by simply claiming, “we can stand alone, we don’t need Europe.” Neither Cameron nor Osborne could admit that both claims were untrue for fear of being accused of “talking the country down.”

As David Smith, the Economics Editor of the Sunday Times, pointed out, economic reality is not as kind. The UK, by Purchasing Power Parity (PPP), is the tenth largest economy.

And in the first quarter of 2016, Britain’s economy grew at less than half the pace of the Eurozone – 0.3% versus 0.7%. Moreover, it was forecast to lag behind for the full year without the Brexit disaster.

But not only that – the country’s fiscal deficit is also going up. The current account deficit is at record high with 7% of GDP, this under a presumably strict Conservative government.

Private household debt hit a new record way above the pre-crisis level of 2008, with credit card debt rising at double-digit rates. The much talked about National Health Service is under water, to the tune of £2.5b billion.

The underfunded company pension schemes – like those of Tata Steel and BHS – amount to £92 billion, much of that shortfall will have to be covered through the government guarantee scheme.

Public pension deficits look even worse.

Sterling under pressure

All of it is totally unsustainable, even without the shock of Brexit. Theresa May, the leading contender for the prime ministership, announced simultaneously with Chancellor Osborne the abandonment of the fiscal target for this parliament. It makes sense, but doesn’t solve the problem.

Britain’s current account deficit is of particular concern. The trade balance has always been negative, but services made up for the gap in the past.

No longer so. Britain has lived for decades on the proceeds of selling assets to shore up the current account deficit and the exchange rate. Ports, airports, the energy sector, huge numbers of industrial businesses have been sold to foreign investors.

Unsurprisingly, the UK’s once considerable earnings flow from overseas investment has reversed. It means that Sterling would have come under pressure before any Brexit-related effects.

Overseas investment

The car industry, once the perpetual laggard, is now thriving. It is almost completely under foreign ownership and management. These firms have trained their workforce well, for example, by re-introducing German-style apprenticeship systems and taking a long view.

The Brits treat this as a great success story. But working for so many foreign employers has another side to it. There is a deep psychological problem here, too.

Having foreign bosses and even being paid well by them is one thing. Liking that situation is quite another matter altogether.

Accordingly, there is a growing feeling of alienation in the country because of these developments. The migration crisis, which made the timing of the referendum so awful, has of course magnified this feeling.

“We want our country back” seems also a cry of despair about what has happened – and blaming others like Brussels was just so easy to exploit by the populists on the right and left.

Need for home-grown talent

What gets lost amidst all this is that what still makes Britain great these days is that it attracts so many skilled professionals in all sorts of fields, not just soccer; however, more home reliance is clearly necessary.

German and many other clubs on the European continent are owned by their members. Of course, German clubs also import players, but they are serious about developing their own young players – always with an eye on the national game, too.

Unless Britain develops more home-grown talent in all walks of life, changes the overall approach from short to long-term thinking and stops kidding, if not deluding itself, it will not succeed — on or off the field.

Why Brexit is So Likely

As a German I would definitely like Britain to remain in the EU – with my English hat on it is, however a bit less clear cut.

This is based on the transcript for a speech given at the Kapitalmarkt Forum of Commerzbank AG in Hamburg, October 2015. Lesen Sie diese auf Deutsch

There are a number of reasons why the British people may prefer an exit in the forthcoming in/out referendum. These are quite apart from any economic arguments that have been put forward and which may point to staying in.

Firstly this island paradise is already overpopulated and has too much foreign influence – in most British eyes. Immigration from Commonwealth countries in Asia, Africa and the Caribbean started decades ago, is still strong and the integration process in many peoples’ eyes has not gone well.

The new immigrants from Europe were welcomed to start with – Polish plumbers were much in demand during the big housing boom prior to the recession. Instead of using the permissible EU quota system, Labour decided to let all in who wanted to come. During the recession when unemployment was high and afterwards, when wages remained depressed, politicians like Farage and others took advantage to blame Britain’s membership in the EU. The fact that Europe went through a terrible time made their argument even stronger. The Merkel invitation to all refugees from Muslim populated countries into Europe is possibly the final straw in the debate about immigration.

Whilst Germany may be able to cope and eventually integrate these people and bolster its workforce, the rest of Europe is struggling with it. And so is Britain. One big reason is that Britain has never had and probably will never have an infrastructure to cope with large scale immigration. No identity cards, no border controls on exit are just two examples. Students come on a six months visa and stay for twenty years; nobody knows how many are living in Britain. This is one of the main reasons why Britain has become the preferred immigration country – apart from the fact that the whole world speaks some broken English and that seemingly unlimited numbers of unskilled jobs are available in the service sector.

Secondly, structures and regulations are quite alien to the British and they do not care for them.

It’s a cultural thing; it starts with the language: a grammar with more exceptions to rules than rules themselves. Easy to learn, but very difficult to perfect. One also prefers to express oneself vaguely rather than clearly, as the anthropologist Kate Fox describes beautifully in her book Watching the English.

“Very interesting” usually means “boring” or “rubbish“. “You must come for dinner” means you never hear again. Speaking your mind is – particularly if it comes from a German – called blunt, or in your face, or worse. Proper English is not only a living and constantly evolving language, it is also an important domain for the true Brits.

My friend Prof Thomas Kielinger, correspondent for Die Welt, has showcased this splendidly in his book “Crossroads and Roundabouts” – everything is constantly in flux. The Germans like regulation; they stand patiently at a road crossing and wait for green to cross the street – whether there are cars coming or not. But in the UK, self-reliance and self-regulation is more important than rule by the authorities.

Labour flexibility is the name of the game in the world of business in Britain, and employment laws don’t fit easily into an adversarial culture. For Germans with their more consensual model they are the norm.

Another huge difference – Britain sports “case law” whilst the Continent has written law – another non-fit and quite alien.

So it’s not surprising that that there is so much opposition to the huge amount of regulation coming out of Brussels, lots of it of course unnecessary.

Thirdly, the press in the UK is mostly Eurosceptic, and their owners are probably frightened of all the possible rules and regulations that might come their way one day. For them the debate has started in earnest and their influence on the referendum should not be underestimated.

And finally, the Exit Supporters have simpler messages:

We want our country back from those unelected and overpaid bureaucrats in Brussels
Being outside the Eurozone, Britain will have little influence and will be a second grade player forever
In language, history and politics, the UK is closer to the USA than to Europe – and when it matters, has to follow America.
The Europeans sell more to us than we to them – it’s all to their advantage
You can’t trust the Europeans – least of all the French and the Germans, who are suspect, as they want to rule Europe again
The City contributes more to GDP than manufacturing and Brussels wants to break or undermine its supremacy in Europe.

As a German I would definitely like Britain to remain in the EU – with my English hat on it is, however a bit less clear cut.

The more EU or German politicians try to help the UK to remain in the EU, the more it appears to the Eurosceptics that the Europeans are doing it for their own advantage. A real conundrum. It will require very finely tuned political handling to find the right tone here. Sentimentality is neither suitable nor wanted. The Anglos always were from Mars and the Europeans more often from Venus (even the Germans nowadays – to everyone’s confusion).

Will Britain exit? The Scots were very close to leaving and to creating a social democratic country. They have promised that if the UK overall votes “out” and the Scots vote “in” then there will be another referendum in Scotland, and the Scots may well leave the UK. There could be some tactical voting here!

Much depends on how Europe portrays itself until voting day. If the Eurozone develops on a positive trend economically, as it appears to be doing at the moment, that will take some of the wind out of the sails of the no campaigners; if not – and if the immigration problem gets worse, which is more likely, then I feel that many Brits will want to shut off the tunnel for good.

BB/January 2016

Why Brexit is So Likely (auf Deutsch)

Bob Bischof speaks about the inevitability of the ‘Brexit’ with his German-British perspective. Read the transcript here.

This is the transcript for a speech given at the prestigious Kapitalmarkt Forum of Commerzbank AG in Hamburg, October 2015. Read the English version here.

Ladies and Gentlemen, meine Damen und Herren

Es gibt eine Reihe von Gruenden dafuer, dass die Briten den Exit vorziehen koennten bzw ich moechte darstellen, wie hoch der Berg ist, den die Briten ueberwinden muesssen, um sich fuer Europa zu entscheiden oder gar zu begeistern – dann koennen Sie selbst entscheiden, wie hoch die Wahrscheinlichkeit ist.

Dazu muss man die folgenden Scenarien verstehen

Das Inselparadies ist bereits uebervoelkert und ueberfremdet in vieler Briten Augen. Die Einwanderung aus den ehemaligen Kolonien wie Indien, Pakistan, Afrika und dem Karibik Raum begann schon vor Jahrzehnten und viele der Immigranten sind wenig integriert und leben in bestimmten Ballungsrauemen. Die neue Immigration aus Europa wurde zunaechst begruesst – polnische Klempner waren begehrte Fachkraefte waerend des grossen Haeuserbooms in der Vor-Rezessionszeit. Als danach die Arbeitsosigkeit und ebenfalls die Europafeindlichkeit stieg begannen Politiker wie Adolf Farage sorry der heisst Nigel mit Vornamen mit simplen Parolen wie „die nehmen uns die Arbeit weg und sind fuer die hohen Hauspreise verantwortlich“ Schlagzeilen zu machen und die Regierung unter Druck zu setzen. Seine UK Indepence Party (UKIP) gewann die Europa Wahl und Prime Minister Cameron musste sich unter Druck seines rechten, ausserordentlich euroskeptischen Fluegels auf das Referendum einlassen.

Die Immigration ist tatsaechlich ein heisses Thema besonders weil UK

– wie ich im naechsten Teil darstellen werde, ein Land ist, dass total unterstrukturiert ist – wie Deutschland vielleicht ueberstruckturiert ist. Da es keine Personalausweise –identity cards – gibt und niemand weder Fahrzeugpapiere noch einen Fuehrerschein bei sich haben muss, weiss man nicht wie viele ueberhaupt im Lande sind. Hinzu kommt, dass es nur Grenzkontrollen bei der Einreise, aber nicht bei der Ausreise gibt. Studenten kommen mit Visa nach GB und keiner kontrolliert, wann sie wieder abreisen. Great Britain ist deswegen ein bevorzugtes Einwanderland und auch weil die ganze Welt zumindest gebrochenes Englisch spricht und wie spaeter erklaert, es unskilled (ungelernte) Jobs in Huelle und Fuelle gibt.

Regeln, Strukturen und Vorschriften liegen den Englaendern nicht

a. Es geht mit der Sprache los. Die Sprache hat kaum Regeln und die Grammatik besteht im wesentlichen aus Ausnahmen. Daher ist sie leicht zu lernen aber unendlich schwer zu perfektionieren. Man drueckt sich auch ungern klar aus, wie Anthropologin Kate Fox in ihrem Buch „Watching the English“ so gut beschreibt. Very interesting heisst total rubbish etc Henning Wehn, der deutsche Komiker, der in England Furore macht, beshreibt das herrlich

b. Es gibt weder eine geschriebene Konsitution noch ein BGB oder HGB – alles ist auf case law aufgebaut und damit interpretierbar – Beispiel die sogenannten „Pay Day Loans“ mit 4stelligen Zinssaetzen waeren auf dem Kontinent unmoeglich, da es Wuchergesaetze oder aehnliches gibt

c. Main Freund Prof Thomas Killinger, Korrespondent der Welt in UK hat das vortrefflich in seinem Buch „Crossroads and Roundabouts“ beschrieben – alles ist staendig im Fluss

Meine Damen und Herren – stellen Sie sich vor, was sich da abspielt, wenn so eine Gesellschaft von unseren EU Freunden in Bruessel mit Regelungen und Vorschriften ueber alles und jedes beglueckt wird…..Das passt wie die Faust aufs Auge.

In der Wirtschaft steht die Flexibility im Vordergrund und Arbeiter-und Angestellten Schutzgesetze (Employment Law) passen da ueberhaupt nicht hin. Wir in Europa sind an diese Dinge wie Mitbestimmung gewoehnt, fuer die englische Wirtschaft ist das alles ein rotes Tuch. Es gibt in UK etwa 2 millionen Zero-hour contracts, bei McDonald allein etwa 100.000, d.h. man wird nur bezahlt, wenn Arbeit da ist.

Als Ausbildung wird in der Regel das „on-the-job“ training als ausreichend angesehen. Im Service Sektor ist das auch oft ausreichend im Herstellbereich nicht – aber der schrunft sich schon seit Jahren gesund und liegt inzwischen bei knapp 10% vom GDP

Die Presse ist ueberwaeltigend rechts, zum Teil rechts von Tchingis Khan

a. Allen voran die Murdoch Presse mit eienm Zeitungs- und TV Empire, dass euroskeptisch ist und mit grossem Misstrauen den Kontinent betrachtet. Murdoch’s Einfluss ist so gross, das Blair und Brown jede Idee von einem Stakeholder Model a la Soziale Marktwirschaft aufgeben mussten. Am 8.1.1996 hielt Blair eine Rede in Singapore ueber die Vorteile des Stakeholder Models. Drei Wochen spaeter mussten Blair und Brown bei Murdoch antreten – das Wort stakeholder wurde danach aus jedem Labour Program gestrichen. Fast wie zu Stalin’s Zeiten, wenn ein General oder Politiker ausradiert wurde.

b. Die Daily Mail, Daily Express und Daily Telegraph sowie und ihre lokalen Ableger sind noch extremer eurofeindlich mit fast taeglichen Attacken auf Bruessel oder auch Deutschland und Frankreich

c. Man darf nicht uebersehen, wie hoch die Auflagen der Zeitungen in UK sind – etwa das zehnfache der deutschen… Die Leser werden in allen Zeitungen mit 20-40 Seiten Sportberichten gefuettert. Wie im alten Rom – Brot (minimum wage) und Spiele. Vorne eine paar Schlagzeilen, harte Kommentare wobei Information oft hinter Meinungsmache zurueckbleibt

d. Guardian und Mirror auf der linken Seite haben wenig Chancen sind aber auch klar tendenzioes ausgereichtet – nur nach links.

Die Exit Befuerworter haben die simpleren Messages a. Ohne Mitglied des Euro Clubs zu sein, ist UK ohne wirkliches Mitspracherecht im Kreis der Grossen und braucht eine Sonderstellung bzw ist besser gleich draussen b. Sprachlich, politisch und kulturell ist UK naeher an USA als an Europa und muss im Zweiferlsfalle immer Amerika folgenc. Den Europaern allen voran den Franzosen kann man nicht trauend. Europa ohne Grenzen ueberschwemmt das Land mit Fremden

Die City hat einen ebenso grossen Anteil am GDP wie der Manufacturing Sektor; die einen brauchen Volatility die anderen Stabilitaet. Vorschriften aus Bruessel werden oft als Unterwanderungsabsicht der Kontinentaleuropaer gegen die Vormachtstellung der City in allen Finanzangelegenheiten dargestellt. Freiwillige Ueberwachung hat zwar in der Vergangenheit nicht funktioniert aber wir nach wie vor bevorzugt. Die Meinung in der City ist jedoch sehr geteilt was das Referendum angeht, aber ueberwiegend pro EU Verbeib – allerdings sie war immer anti Euro, da der Euro bedeutet, dass man nicht mehr mit Waehrungen von 19 Laendern spielen kann, sondern nur noch mit dem Euro.

Was sagt die verarbeitende Wirtschaft dazu?

Ueberwaeltigend dafuer in der EU zu bleiben, aber moeglichst mit einer „reformierten EU“ – weniger Regeln, mehr Subsidiarity, Einspruchsrecht (Veto) im Arbeitsrecht und Finanz- und Steuerangelegenheiten etc

Als Deutscher moechte ich die Briten klar in der EU behalten – mit meinem englischen Hut auf, sehe ich das allerdings nicht unbedingt so eindeutig.

Nebenbei, je mehr sich die deutschen Politiker um UK bemuehen, um sie in der EU zu halten, desto mehr erscheint es den Insulanern, dass die Europaer das nur aus Eigennutz befuerworten zum Nachteil der Englaender. Es bedarf also grosses politisches Fingerspitzengefuehl, hier den rechten Ton zu finden. Sentimentalitaet ist wenig angebracht oder gefragt. Die Anglos waren schon immer von Mars und die Europaer eher von Venus (selbst die Deutschen zur allgemeinen Verwirrung neuerdings).

Mae West Zitat – “When she was good, she was very very good, but when she was bad, she was …. magnificent”. Leicht abgewandelt auf Deutschland bezogen wuerde das heissen

“When the Germans are bad, they are awful, but when they are good …. they are even more annoying.”

Ce la vie!

Werden die Briten austreten? Die Schotten waren nahe daran, die UK zu verlassen und ein sozial-demokatisches Land zu bilden und haben geschworen, dass wenn Grossbritannien insgesamt mit „out“ waehlt und die Schotten mit „in“, dann wird es ein neues Referendum in Schottland geben und die Schotten wuerden die UK eventuell dann verlassen. Die Scottish National Party, die eine grosse Mehrheit hat, ist nebenbei am weitesten links (im englischen Sinne) – sie nennt sich „progressiv“ und befuerwortet das Model der sozialen Marktwirtschaft a la Germany.

Die neue Labour Opposition unter Jeremy Corbyn ist ein natuerlicher Verbuendeter der SNP, steht allerdings auf sehr fragwuerdigen politischen Positionen wie Verstaatlichung der Bahn und Energiewirtschaft, ist allerdings pro-Europa.

Vieles haengt natuerlich davon ab, wie Europa sich bis zum Wahltag darstellt. Falls die Eurozone sich positiv entwickelt, ist den Austretern schon ein wenig Wind aus den Segeln genommen. Falls nicht und falls sich das Immigrationsthema noch schlimmer entwickelt, wollen viele Englaender den Tunnel wieder zuschuetten …

Bob Bischof – September 2015

Eurozone Membership

This letter was published 24 July 2015 in the Financial Times here

This letter was published 24 July 2015 in the Financial Times: click here to view

Sir,

Although I can go along with Ed Balls’ general comments of Britain in Europe (“The risk of fumbling the Europe poll”, July 22), I don’t agree with his and the general British public’s belief that it is such a godsend for Britain not being in the euro. It certainly isn’t for exporters!

Bob Bischof letter in the FT July 2015 — The eurozone is good for exporters

Just like the other “independent minded” nations’ currencies, sterling has been revalued over the past 18 months by around 30 per cent and is nearly 40 per cent higher than at its low point in 2008-09. British exports to Europe and the rest of the world are suffering and importers are gaining market share with disastrous effects on the balance of payments, which is heading for a record deficit of about 6 per cent of gross domestic product. At the same time, the eurozone is heading for a balance of payment surplus in 2015 of about €200bn. It shows that currency markets don’t follow the real economy but interest rate expectations, and that individual countries’ currencies become a plaything for the markets.

UK manufacturers don’t just suffer from the overvalued currency, but also have to bear the cost of currency exchange and hedging. Germany and the other eurozone members can trade without the volatility and uncertainty of currencies in a market of 350m people — a huge advantage! The “March of the Manufacturers” has been blocked one more time.

Bob Bischof

Vice-President, German British Chamber of Industry & Commerce; Chairman, German British Forum

Sterling at €1.34 is a threat: Britain, the EU and the price of independence

At the heart of the British argument against closer ties with Europe has always been many UK citizens’ fear of losing control over the country’s affairs in general and in economics in particular.

This article originally appeared on OMFIF’s website here

At the heart of the British argument against closer ties with Europe has always been many UK citizens’ fear of losing control over the country’s affairs in general and in economics in particular. For many in Britain, the euro project is not a basket of former independent currencies, rather a basket case. Doubts about the wisdom of so-called ‘German-backed austerity policies’ or about the ability of Greece and others to stay in the single currency have strengthened this belief in many British minds.

The ‘in-out’ referendum on Britain’s membership of the European Union which could take place in 2017, depending on the outcome of the May general election, will further focus attention on this point. Latest opinion polls indicate a majority in favour of departing.

The big question for a relatively small country like Britain is what ‘independence’ means in a globalised world. Being on your own, in monetary affairs as well as politically, can be damaging. Against its €1.04 low point in 2009, sterling has appreciated by 30% to around €1.34. This may be good news for Britons holidaying abroad, but the pound’s rise will hammer British manufacturing exports.

Switzerland, which has just abandoned its currency peg against the euro, has a current account surplus and high-value manufacturing goods, helping the Swiss absorb the shock of the latest 20% Swiss franc revaluation. Britain, on the other hand, has a large and growing current account deficit. It desperately needs to rebalance its economy away from services to manufacturing.

Although the UK’s coalition government has declared it wishes to further the ‘march of the manufacturers’, it has made little progress. Britain’s external performance will get worse. All this spells future trouble for sterling, especially if an inconclusive May election result brings political uncertainty.

Against this sobering background, Britain’s power over monetary and fiscal policy – setting interest rates, deciding quantitative easing and calibrating fiscal expansion or contraction – is well short of being an unmitigated benefit.

Germany has been doing well within the euro area because it benefits from the weak euro for its non-European exports, and even more from the stability, or lack of volatility, that emanates from membership of a large club. Germany still runs a substantial trade surplus with the rest of the euro area, but it has fallen sharply in recent years, making up less than 25% of Germany’s overall external surplus, against 40% in 2011.

If Britain wants to be serious about rebalancing the economy, it has to give its manufacturers a solid base, particularly in foreign trade. Currency hedging is expensive, the more so when volatility is high. The euro bloc encompasses most of the UK’s largest trade partners. Every transaction to another currency – whether one is buying or selling – costs money.

With so much of British industry in foreign ownership, there is an additional danger. When the foreign owners see developments they don’t like, they will first stop investing and then look elsewhere. At the German-British Chamber of Commerce and Industry we hear many worried comments from the over 1200 German-owned companies in the UK. The grumbling is getting louder.

And it’s not confined to the Germans. British business is overwhelmingly in favour of the UK staying in the EU, as a recent poll by the EEF manufacturers association showed. Britain can hardly be expected to join the euro in the foreseeable future. But as the election approaches, the issue of UK EU membership will start increasingly to occupy business people’s minds. Some might even support Labour as a potential party of government that will not brook a referendum on the matter – and could bring a weaker currency as well.

OMFIF

The Official Monetary and Financial Institutions Forum is an independent research and advisory group and a platform for confidential exchanges of views between official institutions and private sector counterparties.

The overriding aim is to enable the private and public sector to learn from each other in different ways, promoting better understanding of the world economy and higher across-the-board standards.

All developments regarding OMFIF can be followed at www.omfif.org and www.twitter.com/OMFIF.

Bob Bischof is a member of the OMFIF Advisory Board.