The Brexit campaign was this weekend fixated with the US President, Barack Obama's intervention and supposedly rigged speech in which he suggested Britain would find itself left out in the cold should it leave the EU.
Obama said Britain might find itself at "the end of the queue" when it came to negotiations for any future trade deals with the United States. This was seen by those in the leave camp as interfering with some fixating on his use of the word queue instead of line, suggesting that Number 10 had been involved in formulating his speech.
But President Obama was not the first major world leader to stick his oar into the EU referendum debate.
China syndrome
Last October China's President, Xi Jinping, made a rare and unusual public statement about Britain's relationship with the EU when he expressed the view that Britain would play a far more constructive role with developing Sino-EU ties.
In a statement, Xi said, "China hopes to see a prosperous Europe and a united EU, and hopes Britain, as an important member of the EU, can play an even more positive and constructive role in promoting the deepening development of China-EU ties." [
RT]
China usually abstains from commenting on the internal affairs of other countries so Xi's statement along with similar comments made by China's Foreign Ministry earlier the same month made it clear that the country is concerned about a possible Brexit.
While the statements coming from both the US and China may well be seen as one of self interest, they also give an indication how Britain's relationship with the world's two biggest trading blocks may well be affected should the UK leave the EU.
If the UK left the EU, it would be leaving the biggest trading partnership in the world. Moreover, the UK may well be left out if the EU is able to negotiate more favourable access for European companies to China's markets.
Some have argued that leaving the EU would create the opportunity for the UK to negotiate its own trade deal with China based explicitly on UK, rather than EU interests. However, critics of this view warn that because of the relatively small size of the UK market, China may remain more interested in negotiating with the EU, leaving the UK out in the cold unless it agrees to less favourable terms than might otherwise be secured through the EU. And Obama's statements over the weekend echo this warning.
Business interests
It is not just the leaders of the two biggest economies that are making their views felt. International business leaders have urged the UK to stay in the European Union, warning of complications that could follow a Brexit vote.
There are suggestions that a Brexit could also bring Britain's so-called special relationship with China to an end. With the real possibility now emerging that Britain could exit the EU, Chinese investors are getting nervous.
China's richest man and the head of airline Qantas have both joined the chorus of corporate heads calling on Britons to vote to remain in the EU.
Billionaire Wang Jianlin, who owns businesses including Britain's Sunseeker yachts and the firm behind the One Nine Elms development in Battersea, predicted that Chinese companies could move elsewhere [
Guardian /
InFacts].
A Brexit "would not be a smart choice" for the UK, and separation "would create more obstacles" for investors, Wang told the Sunday Times. Meanwhile, Qantas chief executive, Alan Joyce voiced his view saying that it was "in the economic interest of Britain and the EU to stay together" [
FT /
Brookings].
Another big player has warned that a Brexit could seriously harm Sino-UK relations when it comes to business. Chief executive officer of BHP Billiton Ltd., the world's biggest mining company, backed the campaign for Britain to remain in the European Union, saying that exiting the bloc would damage its relationship with China.
"I can tell you from my dealings with the highest level of the Chinese government that China takes Britain far more seriously because we are a major player in the EU," Andrew Mackenzie said [
Bloomberg].
Financial services
The focus of Obama's comments have hinged on trade deals. However one major area in which Britain might lose out is with financial services.
Banks in the US that have operations in the EU will have a new headache in an already-difficult year should UK voters opt out of the political and economic union. And most of the biggest banks operating on Wall Street have key operations in places like London and Ireland, which could turn into a management nightmare instantly should UK residents vote on 23rd June to opt out of the governing collective.
US and European banks alike that benefited from "passporting" regulations that let them run trading operations in UK locations like London would have to hastily revisit those operating plans. Some banks may consider relocating trading operations to cities like Paris, Amsterdam or Frankfurt if the UK opts out of the EU.
"At the moment they can run operations out of London," said George Karamanos, head of European bank equity research at Keefe, Bruyette and Woods. "If they lose that, it means that no longer can they run regulated activities out of London." [
CNBC]
And Katie Nixon, chief investment officer of Northern Trust Wealth Management, told CNBC's "Power Lunch" that a Brexit could create further uncertainty in already uncertain financial world market.
According to Nixon, "Immediate economic impacts will be felt through the trade channel, as well as through the movement of people. Both are negatives for growth. Further, a Brexit would introduce additional risk to the EU: who would be next?" [
CNBC]
Indeed there have already been signs of uncertainty after Asian stocks fell over concerns of a possible Brexit [
The Street].
US and EU deals
But what of Britain's relationship with the US. Obama certainly made his position clear, saying he preferred the current status quo and warned of difficulties in making trade deals [
WSJ].
"The UK. would not be able to negotiate something with the United States faster than the EU," Obama told the
BBC.
And while Brexit proponents insist that deal could be struck with the US, it ignores the hard reality that the US has a preference for big regional agreements, such as the Transatlantic Trade and Investment Partnership now being discussed with the EU, something Britain would be left out of.
The same might apply to trade deals within the EU itself. One risk to the UK economy is that much of the trade in today's world of global supply chains is in intermediate goods such as motor parts and electronic components.
British businesses, as well as foreign businesses based in Britain, would be likely to find themselves at an immediate disadvantage and potentially excluded from those supply chains. Following a Brexit the UK government would have to find a way to plug the gap quickly.
Plugging such holes would only be the beginning of what might become a costly and time consuming exercise, not only for the British government but also for British businesses [
FT].
While Brexit campaigners are, in a democracy, entitled to their opinion, so too are those that wish Britain to remain a part of the EU. And while those that wish to leave may feel indignant at Obama's comments, he is not the only foreign leader or commentator to express an opinion. And as far as other states are concerned not one single country has of now declared they would prefer the UK to leave the EU. Not one.
tvnewswatch, London, UK
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