Saturday 19 March 2016

What do the Germans know about Brexit that we don't?

Brexit and the proposed London Stock Exchange - Deutsche Borse merger

"The proposed deal highlights the huge power of the City and is eloquent proof that Brexit would not lead to Britain becoming economically and financially isolated."

Interesting argument put by Alex Brummer*. I wondered for a moment if the German view is they would win either way, in or out. If Britain does well, they share in it; if not they could route deals in euros to themselves in Frankfurt rather than some going to Paris. But that's probably paranoia. As Brummer goes on to say: "After all, the Germans would not risk investing in a multi-billion pound deal if they feared they might suffer huge losses if the British vored to leave the EU".

It would, indeed, seem a high price to pay to hollow out just part of the LSE. And it somewhat eases my big concern about Brexit, i.e. the damage caused by uncertainty during the transition, which could be lengthy. If there could be a long period of disruption, why would they be so keen to do the deal now?

And they have chosen to kick it off now. While other bids may yet come in for the LSE, it wasn't in play. The timing of completion for the proposed deal isn't clear to me, but it would surely come after the June referendum.

Maybe they would pull out if we vote to leave? They say not: "the firms say the deal will proceed regardless of how Britons vote" according to Bloomberg.

So, at face value, it would appear to be a statement of confidence that Brexit won't cause turmoil, disruption and a plague of frogs for many moons.

Could it be that Germans are more confident about us outside the EU than we are ourselves?

Oh - but why, if the London Stock Exchange is so strong, will the "merged" company be 55% German owned (and therefore controlled?)

*City Editor, Daily Mail, 18 March 2016.

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