Tag Archives: eurozone

Brexit will not stop EU free movement

Leaving the European Union would not halt the free movement of migrants into the UK, a legal expert has said.

A key argument for the ‘leave’ camp ahead of the 23 June referendum on Britain’s membership of the EU has been migration, at a time when the bloc is struggling to deal with the fallout from the Syrian refugee crisis.

Eurosceptics argue that leaving the EU will give us sovereignty over our borders and stem the flow of migrants from newer members of the economic and political union, such as Bulgaria and Romania – and prevent migrants from outside the bloc entering the UK via other member states.

If we did leave the EU, the UK would have to establish new trade agreements with the rest of Europe. But Anthony Woolich, partner at Holman Fenwick Willan, told Hot Commodity that if the UK expects to continue doing business with EU member states, it will come with strings attached.

“If the UK wants to export its goods and services to the EU, free movement of persons could be a key part of a free trade agreement,” he said.

“Especially bearing in mind how close the UK is to mainland Europe, I think it is highly likely that the EU would demand free movement as part of the deal.”

However, it should be noted that the EU currently has 53 trade agreements with countries around the world – all with varying Visa arrangements – so free movement is not a certainty.

Regarding the trade deal itself, Woolich argues that this could be tricky to thrash out.

“I don’t think the UK will be very popular if we leave the EU, as it’s a time of crisis,” he said. “So I think the EU will drive a hard bargain.

“Furthermore, the EU has negotiated our trade agreements with countries outside the bloc – does our civil service have the expertise to negotiate these deals?” he added.

“These discussions are slow moving and we will have to do this on multiple levels.”

The migrant crisis has dominated headlines in recent months and added weight to the ‘leave’ argument, due to growing concern over border control. Prime Minister David Cameron recently came back from Brussels with a proposal for EU membership reform that was seen as far too weak by Eurosceptics.

The large inflow of migrants has put a strain on some eastern European countries, who do not have the capabilities to deal with them. Macedonia provoked outrage when it resorted to using tear gas to hold back migrants, while other countries have built high fences and tightened their identity controls to protect their borders.

This week the EU proposed a deal whereby Turkey will take back Syrian migrants who have arrived in Greece and in return, a Syrian already in Turkey would be resettled in the EU. Turkey would receive financial support and progress on its EU membership application.

ECB’s QE plan is widening gap between rich and poor, but it has no choice

The European Central Bank is set to announce whether it wants to extend its quantitative easing programme in the eurozone this Thursday. Andreas Utermann, global chief investment officer at Allianz Global Investors, is confident that the ECB will do what is expected and the market will get the liquidity it wants.

“The European Central Bank’s plan, although they might not admit it, is to keep the euro cheap,” he said at the asset manager’s Market Outlook 2016 roundtable. “The tap of liquidity is turned on and it is not getting turned off.”

The ECB launched its bond-buying programme in January, pledging to splash out about €60bn a month from March 2015 until September 2016, hoping to rocket-launch inflation from its near-zero doldrums to a sparkling two per cent.

But growth has not picked up as quickly as some hoped and there have been hints from the central bank that they may extend the programme. ECB president Mario Draghi recently said that the central bank will “do what we must” to return inflation to its two per cent target “as quickly as possible” – a strong hint of further action.

But all this easy money comes at a price.

“Noone is writing about the social impact of quantitative easing,” said Andreas. “It widens the gap between rich and poor. But noone is addressing it due to lack of other options.”

In the US, former Republican presidential candidate Mitt Romney has blamed QE for rising inequality as it “held down interest rates” and “caused the stock market to rise”.

Here in the UK, pensions minister Ros Altmann has complained that the bond-buying programme has resulted in a huge tax increase on pensions – with pensioners relying on interest income – and a tax cut for banks, borrowers and the wealthy.

And Bank of England research back in 2012 said the policy had boosted asset prices and made the rich richer.

But as Andreas says, what is the other option? Answers on a postcard please, or even better, email info@hotcommodity.co.uk with your views.