Will the U.K.’s relationship with Europe change?
Steve Chiotakis: Borrowing costs for Italy are a lot lower today, with bond buyers feeling a little more confident about a European plan to avert another debt crisis. Details of the plan aren’t out yet, but we do know this: a handful of EU countries did not sign onto the deal — including the U.K. How could that play out?
Marketplace’s Jeff Tyler has more.
Jeff Tyler: By turning its back on its European neighbors, Britain protected some of its short-term interests.
Gary Hufbauer: They don’t take on any financial obligation. Any oversight of their own fiscal affairs.
Gary Hufbauer is with the Peterson Institute for International Economics. He says Britain benefited by not having to chip-in for a bailout fund. Also, the Brits didn’t like the euro deal’s potential for new regulations and a possible tax on financial transactions. London’s financial center is as big as — or bigger — than New York’s.
Hufbauer: It is a major industry in London. It is a powerhouse in the world. And the British are not going to give that up.
What the British do give up is influence over European affairs. And Hufbauer says the decision could come back to haunt the U.K.
Hufbauer: If Britain comes up on hard times, it will not be able to look to Europe for help.
Going forward, Britain still needs to negotiate with the continent about everything from trade to immigration. And some of the spurned European leaders will likely be looking for payback.
I’m Jeff Tyler for Marketplace.
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