Eurozone exit talk first started with “Grexit” (Greece exit). It progressed to “Spexit” (Spain exit), and now talk centers on “Nexit” (Netherlands exit).
Before anyone else claims the names, let me propose “Frexit” and “Fexit” (France exit) as well as “Sexit” a sexy sounding alternative for Spain Exit.
So far the “exit” scorecard remains on zero, but eventual exits are likely. No one can be assured of the timing or catalyst, but eurosceptcism is on the rise in a huge way.
In the Netherlands, opposition leader Geert Wilders outlines case for a Dutch ‘Nexit’ from the EU.
Geert Wilders, leader of the far-right Freedom Party (PVV) that is leading in Dutch polls for May’s European parliament elections, presented a study on Thursday that claims the Netherlands would be better off if it left the EU and he urged voters to support his call for “Nexit”.
The study, by the consultancy Capital Economics, claims the Dutch economy would quickly emerge from its sluggishness to brisk growth, generating billions of euros – or new Dutch guilders – in fresh revenues for debt-laden households.
Mr Wilders is one of a handful of populist leaders in the EU – including Marine Le Pen in France; Nigel Farage in Britain and Alexis Tsipras in Greece – whose sharp anti-Brussels rhetoric has helped push them into either first or second place in public opinion polls ahead of May’s Europe-wide vote.
The Netherlands is one of the founding members of the EU, and has long been seen as a core supporter of a more integrated Europe. Yet public opinion polls reveal growing support across the country for a renegotiation of powers with Brussels over a number of policy areas, including access to domestic welfare for other EU citizens.
Mark Rutte, Dutch prime minister, in June presented a list of 54 competencies that should remain with national governments rather than be given to the EU, a plan many in Brussels have viewed as the Liberal premier’s attempt to fend off the challenge from Mr Wilders.
“Nexit means that we no longer have to pay billions to Brussels and weak southern European countries,” added Mr Wilders. “We can save billions by liberating ourselves from EU regulations. We can end the mass immigration and stop paying welfare checks to, for instance, Romanians and Bulgarians.”
Mark Pragnell, one of the authors of Capital Economics’ report, said the Netherlands would be significantly richer if it left the EU and the single currency, despite a short period of volatility.
Capital Economics, a London-based economic research firm, has become a leading voice for eurozone break-up, last year winning a £250,000 prize from a British think-tank for its proposal on how to end the single currency.
What’s the Point?
Financial Times columnist Gideon Rachman asks What’s the point of calling for a Nexit?
Wilders is after the protest vote, and he will get it – just like Marine Le Pen’s National Front and the UK Independence Party of Nigel Farage. All three movements have an excellent chance of topping the polls or at least upsetting the political apple cart in their respective countries.
Here lies the significance of Wilders’s call for “Nexit” – or Dutch exit from the EU. As an economic argument, it does not stand up at all: the Netherlands is so deeply integrated into the eurozone and the EU single market that Nexit makes no more sense than “Brexit” for the UK or “Grexit” for Greece.
Bias, Irony, and One Size Fits All Silliness
One can stop reading right there understanding full well the extreme bias in what Rachman wrote. Given that Rachman is a columnist and not a news reporter, bias is to be expected.
But please note the extreme irony in his statement: Nexit makes no more sense than “Brexit” for the UK.
The fact of the matter is that “Brexit” happens to make perfect sense for the UK.
There is not going to be a two-speed EU with some countries in the Eurozone and others not. One is going to be either in or out. Sitting on the fence forever won’t happen. Neither French president Francois Hollande nor the UK liberals will allow that.
The moment the UK fully commits to the eurozone, all kinds of financial stupidities are bound to happen, including financial transaction taxes that are bound to cripple London. Moreover, the UK would be subject to the “one size fits Germany” interest rate policy of the EU.
A valid (albeit clearly out of context) interpretation of Rachman’s statement is as follows:”Nexit makes sense, because Brexit makes perfect sense“.
It’s important not to leave the Fed out of these exit scenario discussions. I revise my copyright for “Fexit” to mean Fed Exit, while retaining use of “Frexit” for France. Of course we all know the Fed has no exit strategy other than to hold all the assets it accumulated to maturity.
Mike “Mish” Shedlock