The consequence thread (Brexit)

[tzijlstra]

It can't possibly work like that overall. It's more money coming into the country. More money, not less. If the government keep it it will be more spent on public services etc, if we get a tax cut we're quids in. Either way it's a win for the UK.

More money coming into the UK is good.

Wow, that is very naive, didn't expect that from you Unbeliever.

 

Here is a question for you - more money coming in presumably means more manufacturing so goods can go out (basic economics).

 

Unemployment is already very low. You can't open up a can of new workers because Teresa May still wants to bring immigration down into tens of thousands. So who is going to manufacture these new goods?

 

Britain doesn't have an abundance of raw resources and in fact, much of the production of industrial goods, like steel, has been killed off, so what is going into these new manufactured goods?

 

If we look at services, Britain is a major service-exporter, but with Hard Brexit the City looks to be on very shaky ground and that is one of the key-drivers, if not THE key-driver for the export of services... How are they going to be enticed to stay?

[unbeliever]

Wow, that is very naive, didn't expect that from you Unbeliever.

 

Here is a question for you - more money coming in presumably means more manufacturing so goods can go out (basic economics).

 

Unemployment is already very low. You can't open up a can of new workers because Teresa May still wants to bring immigration down into tens of thousands. So who is going to manufacture these new goods?

 

Britain doesn't have an abundance of raw resources and in fact, much of the production of industrial goods, like steel, has been killed off, so what is going into these new manufactured goods?

 

If we look at services, Britain is a major service-exporter, but with Hard Brexit the City looks to be on very shaky ground and that is one of the key-drivers, if not THE key-driver for the export of services... How are they going to be enticed to stay?

 

I'm trying to keep it simple.

I'm not having WTO MFN status portrayed as some sort of economic catastrophe for the the UK because that's insane.

An agreement with the EU not to impose trade barriers would be preferred even though WTO MFN has its advantages for the UK.

Non tariff barriers for financial services would potentially be a concern, but the WTO (MFN) framework for services is actually pretty good for us anyway.

 

I'm aware that there are plenty of anecdotes from one financial business or another indicating that the UK looks less attractive to them without single market membership, but anecdotal evidence does not lead one to good decision making.

[andyofborg]

That's not actually possible. It's literally impossible. More money coming into the UK literally cannot have a direct net negative effect on the wealth of the nation.

 

Now free trade promotes good international relations and promotes growth, which is why WTO MFN status is second choice. But as second choices go it's a pretty damn fine one.

 

more money wont be coming into the uk though, the "extra" money you seem obsessed with is consumer's money and that's money which wont be spent on something else.

 

wto mfn status might not be a bad choice but it's nowhere near as good as what we have now. the difference could well send companies with small margins over the edge.

[I1L2T3]

But if folk buying Mercedes Benz cars contribute by paying a purchase levy there is less need to tax incomes and more money for things like the NHS.

 

The end result is an increased price in the shop. Price increases mean inflation. Inflation, if wages do not keep pace, means less money to spend.

 

It's a dangerous game.

 

At the moment we have free trade with 27 countries in the single market. The EU has 50 free trade agreements. We therefore already have almost 80 free trade agreements. Negotiations or some kind of other agreement is already in place with all but about 30 other countries. The only sizeable country where some form of negotiations are not underway is Russia.

 

Hard Brexit swipes all those deals and negotiations away in one go. It's utter madness.

[unbeliever]

more money wont be coming into the uk though, the "extra" money you seem obsessed with is consumer's money and that's money which wont be spent on something else.

 

wto mfn status might not be a bad choice but it's nowhere near as good as what we have now. the difference could well send companies with small margins over the edge.

 

You're ignoring the benefits of self-government and getting our EU payments back.

 

Taxation is always taking money from potential consumers and handing it to the government. I would suggest to the government that the extra revenue from tariffs should be returned in the form of a VAT cut. Would you agree?

 

In any event the average tariff under WTO MFN rules is around 2%. Try and tell me that this 2% is going to be catastrophic. We just had a 2.5% increase in VAT and that affected all goods and services, not just imports. How can an average 2% on imports only (or exports depending on how you look at it) possibly be some kind of disaster? It's ridiculous.

 

---------- Post added 15-10-2016 at 09:37 ----------

 

The end result is an increased price in the shop. Price increases mean inflation. Inflation, if wages do not keep pace, means less money to spend.

 

It's a dangerous game.

 

At the moment we have free trade with 27 countries in the single market. The EU has 50 free trade agreements. We therefore already have almost 80 free trade agreements. Negotiations or some kind of other agreement is already in place with all but about 30 other countries. The only sizeable country where some form of negotiations are not underway is Russia.

 

Hard Brexit swipes all those deals and negotiations away in one go. It's utter madness.

 

 

Average of 2% under current WTO rules. Just had a 2.5% increase in VAT across almost everything (not just imports/exports). Dangerous madness my a£$@.

[tzijlstra]

I'm trying to keep it simple.

I'm not having WTO MFN status portrayed as some sort of economic catastrophe for the the UK because that's insane.

An agreement with the EU not to impose trade barriers would be preferred even though WTO MFN has its advantages for the UK.

Non tariff barriers for financial services would potentially be a concern, but the WTO (MFN) framework for services is actually pretty good for us anyway.

 

I'm aware that there are plenty of anecdotes from one financial business or another indicating that the UK looks less attractive to them without single market membership, but anecdotal evidence does not lead one to good decision making.

 

Keeping it simple is not an option, it is what led to this Brexit decision in the first place. Cutting off the single market might seem appealing for the long term, but it requires a huge economic retooling of the entire nation.

 

The economy is already running near peak-capacity when it comes to workforce, a lot of people believe that hard Brexit is favourable on the grounds of immigration. That is the simple view, cutting immigration significantly is going to lead to skills shortages, lack of flexibility in the economy and ultimately stagnation of growth.

 

Let's take Forgemasters, highly skilled and specialised English workforce, they might take up the slack introduced by tariffs on EU steel (WTO) but that requires expansion, investment in the workforce (training) and so on, those skilled jobs aren't going to appear overnight.

[andyofborg]

You're ignoring the benefits of self-government and getting our EU payments back.

 

no i'm not......

 

and we're going to have an extra £350 million a week spent on the NHS

 

Taxation is always taking money from potential consumers and handing it to the government. I would suggest to the government that the extra revenue from tariffs should be returned in the form of a VAT cut. Would you agree?

 

there wont be any extra revenue from tariffs, if you go buy an imported car then you will be paying the tariff that means you either wont buy it because it's too expensive or you will have less money to spend on other things either way there will be no extra revenue.

 

In any event the average tariff under WTO MFN rules is around 2%. Try and tell me that this 2% is going to be catastrophic. We just had a 2.5% increase in VAT and that affected all goods and services, not just imports. How can an average 2% on imports only (or exports depending on how you look at it) possibly be some kind of disaster? It's ridiculous

 

a) the figure you quote is an average, some will be higher some will be lower. the commonly quoted figure for cars is 10%

 

b) if you are selling into a competitive market and/or have a very narrow margin then any increase is going to be damaging possibly fatal to a company.

[lizmachin]

 

of course, rising prices of imports should encourage local manufacturing but it will take years to significantly rebuild and of course will require investment capital, skilled workers, raw materials all of which will will be in short supply unless they are imported.

 

I would have thought the infrastructure was largely in place. The UK has steel and chemical industries crying out for orders. There is a motor industry that could increase output if required and railway and tram manufacturers who would just love to be making HS2 or Supertram. I have no idea what Forgemasters make but keep hearing they are crying out for orders to make it.

Isn't that the point that if the British public stop buying Mercedes and start buying Jaguar that not only will the motor industry benefit, but also those making the parts and the steel?

[unbeliever]

A tariff is essential a tax on a "foreigner" selling their wares in the UK.

If there's no domestic competition then they can simply pass on the cost to the customer. This will be exceptional. Mostly they'll have to absorb the cost or their products won't sell.

I'd prefer free trade, but an average 2% tax on EU businesses selling into the UK does in principle make us rather a lot of money. The EU governments will of course impose a similar tax on us, but we export to them a lot less than we import from them and our exports are biased toward services which are tariff free under WTO rules.

Edited October 15, 2016 by unbeliever

[andyofborg]

A tariff is essential a tax on a "foreigner" selling their wares in the UK.

If there's no domestic competition then they can simply pass on the cost to the customer. This will be exceptional. Mostly they'll have to absorb the cost or their products won't sell.

I'd prefer free trade, but an average 2% tax on EU businesses selling into the UK does in principle make us rather a lot of money.

 

the production and distribution chain can't and won't absorb the additional costs forever, one way or another they will be passed on to the consumer. Eventually, selling into our market becomes either unprofitable or not worth the effort and they will stop.

 

The manufacturers will, of course, be looking for new and more profitable markets to replace sales into the UK and the UK distribution network will be left to wither and possibly die.

 

As I pointed out earlier, the tariff on cars is 10% not 2%, that is a business damaging rate.