Facts do not destroy beliefs

Facts do not destroy beliefs

by Pininvest Analysis

British Industry on US exchanges on pininvest.com

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Beliefs are bringing the British departure from the European Union ever closer to reality

The 'belief' in a brighter  future, free from the strictures of the Union, is becoming policy, strengthening Marcel Proust's assertion that "facts do not mesh with the realm of our beliefs"

On the contrary, and ambiguously, beliefs inspire a new reality backed by political choices, bringing about profound transformations, impacting the British economy and possibly, British world standing, but confronting the EU with no less existential challenges

While the impact of Brexit on the UK has been the focus of intensive study, the essence of the European Union is also in play, certainly much less commented but likely to entrench Europe's framework for years to come

With immediacy,  following Brexit,  the EU will have to address new budgetary constraints and to rebalance trade agreements, impacting unequally the various european economies

A recipe for bickering and mounting tensions, economic and financial issues hint at vastly more complex risks in the search of a new Continental balance between distinct, sometimes overlapping regional alliances

An enterprise fraught with danger - just consider European history since the Peace of Wesphalia put an end to the Thirty Years War (1648)




The brief note published in June ’18 entitled Facts and beliefs in parallel worlds oozes nostalgia about what could have been and, with sad fatalism, about how the Brexit drama would probably play out

To introduce our comment at the time, we quoted Marcel Proust, from his 1913 oeuvre ‘Swann’s Way’

"Les faits ne pénètrent pas dans le monde où vivent nos croyances"
"Facts do not mesh with the realm of our beliefs" (in our translation)

And we left the concluding words to the same French author

«[Facts] did not instigate [the beliefs], they do not destroy them; they may disclaim their assertions strenuously without weakening their thrust… » (1)


Reading the British and the European newspapers with a heavy heart, we feel embarrassed for the British Foreign Service – and for the successive Permanent Representatives of the UK who defended British interests forcefully in Brussels

There was a time when British statesmen doggedly pursued a balance of power in Europe and stood firmly by their commitments – to guarantee Belgium’s neutrality in 1914 and Poland’s independence in 1939

There was a time indeed when Lord Castlereagh, overriding Cabinet policies, did his utmost at the 1815 Vienna Congress to fill the void Britain’s departure from the European theater would have left

There was a time


Today is different

Today the European Commission has received non-papers (meaning not for public distribution) – properly qualified since the papers turned out to be non-proposals, crossing critical red lines of the EU's Single Market

Today, with not a single statesman in sight, we have politicians and their consultants hitting new lows, entertaining anti-German and anti-French sentiments, hoping presumably to ride high on the back of the British lion from the coat of arms of the Duchy of Aquitaine

Today, we have no Richard the Lionheart (and no Churchill either) but a sandbox, with non-entities swirling the sand at embarrassed EU representatives and crying ‘it is all your fault’

The EU forgot all about Proust … Facts do not destroy beliefs; facts may disclaim their assertions strenuously without weakening their thrust

Today, at a cross-road to secure continental balance, the EU will need to choose its options carefully


Politics having a field day

On the face of it, these options appear foremost economic, cast in the terms of trade and dependent on the ‘harshness’ of the Brexit, as Pascal Lamy, former WTO Director discussed in his presentation to the Henry Jackson Society at the House of Commons in London (29 April 2019)

But the political dimension of the future UK – EU relationship is the real unknown, both a test of European coherence and a challenge redefining the continental balance


The fact that the departure of the UK from the EU will force the country back at the negotiating table with ‘Brussels’ is obvious although the reality remains hidden, as we discussed in ‘Avoid looking desperate

The complexity of any future economic trade agreement will be considerable

The EU negotiators must protect the Single Market from as yet unknown competitive advantages the UK hopes to extract from its own agreements with third countries

Simultaneously, the EU will need to balance fundamentally divergent interests of free trading Northern countries, of Germany’s reliance on exports (with UK being fifth largest export destination of Germany with 6% of total exports) and of France’s lack of engagement (on average, its exports to UK have been 1/3 of Germany’s)

Germany exports to the UK (monthly data, in € millions)

(credit - trading economics)

source: tradingeconomics.com

French exports to the UK (monthly data, in € millions)

(credit - trading economics)

source: tradingeconomics.com

Divisive strategies pursued by the UK might to some extent weaken the hand of EU trade negotiators as each country will be tempted to claw back previous export volumes under the new trading regime

To nip supposed country by country favors in the bud, solidarity with the most exposed – and smaller – countries, foremost Ireland but also coastal countries (Belgium and the Netherlands), will probably be initiated by the EU, implying political determination


Trade may be the front door to politics, but continental balance after the departure of the UK will recast political settlements in more profound, though still unpredictable, ways

Largely informal, EU power sharing has been relying to a large extent on the UK-FR-DE triumvirate, with the UK standing in for the more trade-friendly Northern countries, France loosely associated to the Southern countries (Italy, Spain) and Germany pivoting to some extent towards Eastern Europe

Finding their own voice, on the strength of their economic performances, the Northern countries can be expected to consolidate their influence in the European Commission and at the Parliament (where the Liberal Group holds the central vote)

For different reasons, Eastern European countries can be counted on to speak more forcefully in the European arena, possibly putting aside some of their more obnoxious illiberal propaganda in an effort to seek allies beyond Germany

In a sense, the latest elections at the European Parliament have been front-running a major reshuffle of political options

The end game is caught up in the hazards of human frailty, but there is little doubt that the UK’s departure will raise the stakes for the EU in unheard and as yet obscure ways


(1)« ils n'ont pas fait naître celles-ci, ils ne les détruisent pas ; ils peuvent leur infliger les plus constants démentis sans les affaiblir…" Du côté de chez Swann, Marcel Proust