Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

July 11, 2016 | Stellar Opportunity for UK to Set Example for the World

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

IMF head Christine Lagarde has flip-flopped twice on the impact of Brexit.

  1. Ahead of the vote on Brexit, IMF head Christine Lagarde warned of a prolonged period of uncertainty.
  2. On July 3 Lagarde, said Brexit provides the EU a “Better Opportunity for Reform
  3. On July 7, Largarde was worried Brexit would lead to “Disastrous” Trump-Style Protectionism

View number 2 is ridiculous. Yet one can change two characters in the sentence and get things correct.

Stellar Opportunity for UK

The idea that a group of 27 nannycrats are going to agree on needed reforms and implement them is ridiculous.

However, change sentence number 2 to “Brexit provides the UK a Better Opportunity for Reform”, and you have the right idea.

Let the EU Self Destruct

France and Germany want financial transaction taxes. Let em. It will mean more business for the UK, not less.

France insists on agricultural tariffs. Should the UK care now?

The EU does not like Ireland’s low corporate tax rate so much so that the EU is Considering a Minimum Corporate Tax.

Should the EU insist on such silliness, it will drive business to the UK, not away from London.

Trade War the Right Way

The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.

CountryCorporate Tax Rate %HighestLowest
Austria255525
Belgium334833
Bulgaria1040.210
Croatia2020.3220
Cyprus12.52910
Czech Republic194519
Denmark23.55023.5
Estonia202620
Finland2061.820
France33.35033.3
Germany29.6556.829.4
Greece294920
Hungary195016
Ireland12.55012.5
Italy31.453.231.4
Latvia152915
Lithuania152015
Luxembourg29.2240.2928.6
Malta353535
Netherlands254825
Poland194019
Portugal2155.121
Romania163816
Slovakia224519
Slovenia172517
Spain283528
Sweden2260.122
United Kingdom205220
Euro area Average24.636.824.3
European Union Average22.835.222.8

The above table created from Trading Economics data.

Black Holes

France, Germany, and Belgium are hell bent on sticking it to the UK to make a point.

Recall that the Belgian Premier Warns EU Won’t Help UK Out of “Black Hole”

Ironically, If the UK does things correctly, it will be the EU that falls into the black hole.

Set Example for the World

Shed of inane EU rules and regulations coupled with the freedom to do anything it wants, the UK has a golden opportunity to embrace the benefits of genuine free trade and growth via low taxes.

I have often stated the first country that fully embraces free trade, regardless of what any other country does, will come out stunningly ahead.

The UK now has that chance.

Mike “Mish” Shedlock.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

July 11th, 2016

Posted In: Mish Talk

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.