"I was here till 5 o'clock this morning working through this and we've made some progress but there's still no deal.”
That’s from British PM David Cameron, who was apparently up all night in an effort to understand why his country should stay in the EU. Unless Cameron hears what he wants to hear, he will not campaign for the UK to remain in the bloc ahead of an expected referendum on membership in June.
“Britain has always had an ambiguous relationship with the bloc, staying out of two of its most ambitious projects, the Schengen border free zone and the euro common currency,” Reuters writes. “Its exit would end the vision of the EU as the natural home for European democracies and reverse the continent's post-World War Two march toward ‘ever closer union.’”
Cameron is seeking changes that will reduce his country's financial burden as it relates to refugees and other EU nations. "As I have said, I would only do a deal if we get what Britain needs, so we are going to get back in there," he said, after marathon talks.
"Paris has pushed for amendments to ensure Britain cannot veto actions by the euro zone countries or give City of London banks competitive advantage through regulation," Reuters goes on to note. "A group of east European states chaired by the Czechs is trying to hold back how far their citizens can be denied welfare benefits in Britain or have family allowances reduced."
Meanwhile, the Conservative Party and the UK press are pushing for reforms. "Britain's place in Europe has been allowed to fester for too long" Cameron says, but there's "now a chance to settle this issue for a generation".
"For now I can only say that we have made some progress but a lot needs to be done," EU president Donald Tusk said.
UK business leaders are skeptical. "Mr Cameron’s team has been lining up business leaders to come out in support of his EU deal next week, even before any agreement has been reached," FT says, before noting that although "a letter from supportive business leaders is planned for next week, with 80 out of Britain’s FTSE 100 companies backing Britain staying in the EU, "that number was seen as speculative by some in the Remain camp and research by the Financial Times this month revealed that some top companies were reluctant to get drawn into the debate."
- What is at stake? Financial services account for 180 billion pounds ($258 billion) a year — about 12 percent — of U.K. economic output and contribute 66 billion pounds in taxes. In some areas, like foreign exchange trading (41 percent of the world total) and over-the counter derivatives (49 percent), London is the undisputed global leader. Opponents of a Brexit fear a departure would precipitate years of uncertainty and steady waning of influence and market share.
- What is passporting and why does it matter? Under the current regime, any firm authorized in the U.K. firm is free to do business in any other European Economic Area state by applying for a "passport" from British regulators. For non-EU banks like JPMorgan Chase & Co., Credit Suisse Group AG or Nomura Holdings Inc., the ability to access the region’s 500 million customers from a base in London has been an important draw. Without it, many firms may seriously consider upping sticks.
- What would Brexit mean for the banks? Every day more than a trillion dollars worth of euros change hands in London, close to half the global total, according to the Bank for International Settlements. The City’s global dominance of the foreign-exchange market is likely to be tested by any Brexit package that fails to guarantee a continuation of access to the single market. Over-the-counter derivatives are another area for concern. About three-quarters of all trading in such instruments in Europe currently takes place in the British capital. Without access to the single market, much of that is likely to migrate, according to lawyers and bankers who say that U.S. banks are already mulling moving operations.
Right. So this isn't just symbolic. "While no FTSE 100 company said it wanted Britain to leave the EU, only 18 were prepared to state unequivocally that they supported continued membership," FT goes on to note.
Right. Because in reality, there aren't very many solid arguments for supporting continued memebership and whatever arguments were left have been significantly diminished by the bloc's worsening migrant crisis. Still, Cameron is calling for a "live and let live approach." Here's a look at UK trade vis-a-vis the rest of Europe.
But numbers aren't likely to sway the British people who are prepared to opt out of the ill-fated union.
Cameron says he's "battling for Britain", but in reality he's "battling for the EU." With the future of the union already in question thanks to the festering migrant crisis, Britain may well be better off abandoning this sinking ship. "It's the EU in question, not just one country in the EU," French President Francois Hollande said on Friday.
Indeed. And the time has now come for Britain to decide whether it's prepared to go down with this ship, or forge a path ahead on its own. In the meantime, expect volatility, PIMCO says. "Irrespective of the twists and turns in the debate over U.K.’s planned referendum on EU membership, uncertainty over the result is likely to weigh on U.K. markets for a good few months yet," Mike Amey, Pimco portfolio manager said in a press release. Right. it is likely to cast a pall on markets "for a good few months yet," as you can tell from the below:
Of course all of this is nothing a rate cut can't fix...
Negotiations are continuing into this evening. A Cabinet meeting won't be possible tonight. One will be held if and when a deal is done.— David Cameron (@David_Cameron) February 19, 2016