8 Reasons the EU Will Suffer Far More than UK in Brexit

Harry Dent | August 12, 2019 I came across this Money Maven article by Mike "Mish" Sedlock over the weekend that I believe so perfectly captures the nuances and complexities concerning Brexit that I had to ask him if we could republish the article here. Mike was nice enough to oblige, and I'm thrilled to present it to our readers. I'll be back with you on Wednesday. – Harry 8 Reasons the UK Will Suffer Far More than UK in Brexit Conventional wisdom says the UK will get hit harder than the EU in the event of a no deal Brexit. Conventional wisdom is wrong. Here are eight reasons the EU will suffer more in both the short and long term. Reason 1: Corporate Taxes The UK can and likely will slash corporate tax rates. A lower corporate tax rate will mitigate much of the profit damage suffered by UK corporations in the event of no deal. Note that one of the EU's biggest complaints against Ireland now is the "unfair" corporate tax structure of Ireland. RSVP Now To Get $600 Off A limited number of readers can now get $600 off tickets to Dent Research's premier event of 2019, the IRRATIONAL ECONOMIC SUMMIT - you won't want to miss this. Discover insights to profit from the ground-breaking shifts over the next 18 months from top experts - including the 'Father of Reagonomics', David Stockman, former Federal Reserve Insider, Dr. Lacy Hunt, China expert, Gordon Chang, and more. Click here to reserve your seat and save $600 off the regular price. Reason 2: Currency Fluctuations A falling currency is good for exporters and bad for importers. The British Pound has been falling in anticipation of Brexit. Reason 3: Balance of Trade In the event of no deal, WTO tariffs kick unless the EU offers to work out a trade deal. Under WTO rules, the EU could do that and rules allow a lengthy 10 years to get it done. The EU should agree to do that, but with animosity rising, it probably won't. In a rising tariff setup, exporters will suffer far more than importers. Germany has an enormous trade surplus with the UK. Source: Order of Rank of Germany's Trading Partners. Angela Merkel is very concerned about German exports, as well she should be. Throw in the increasing chance of Trump putting tariffs on German cars and the EU will get crucified. A very severe German recession is in the cards and the EU faces a double whammy of Brexit plus Trump. Note that a falling currency will mitigate some of the Tariff damage on UK exporters while compounding the problems for the EU. Reason 4: Fishing Rights In Brexit, the UK halts all EU fishing rights. EU fishermen will get clobbered. Reason 5: Trade Deals The UK will be able to make its own trade deals and set tariffs how it pleases. Reason 6: Rules and Regulations The UK will finally be free of inane EU rules and regulations on basically everything but especially agriculture. Reason 7: Brexit Fees and Pay to Play Fee Some dispute this, but the UK can halt the Brexit breakup fee. Boris Johnson has threatened to do that. Regardless, the UK will stop paying into the EU coffers even it does pay the breakup bill. The EU has budgeted for UK payments. When the UK stops paying, the EU will have to raise taxes to cover the difference. Reason 8: Long Term Consequences Both the EU and UK will suffer in the event of no deal but the long-term consequences strongly favor of the UK. VISIT ECONOMY & MARKETS » Trending Stories... Gold Had A Big Week Well, the markets rolled over last Friday, and opened this week in a bloodbath. But gold continued to surge, creeping up past the $1,500 mark. We're at critical points with all our bonds, which are making new lows. Which has made gold's current position even more remarkable. I thought gold would begin to flatline around... 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