The Consequences of Brexit (part 2)

[andyofborg]

I hope your scepticism is soon replaced by optimism.

 

well we seem to have optimistic scepticism so i guess we're on the way

[unbeliever]

I'm convinced that it is the uncertainty and not the outcome which is causing the economic disruption. That disruption is far smaller than what the remainers predicted, but it's certainly not zero. Uncertainty peaked after the vote and will fall continuously over the next 2 years and change, until the final arrangements are announced.

[andyofborg]

Oh yes, exporters are saving far more due to the fall in Sterling that they're due to pay in 2 years and change in tariffs. But it's likely that Sterling will recover as the plans for the UK's future trading relationship firms up and Nissan need to plan more than 2 and a half years ahead.

 

except the vast majority of exporters wont be saving a great deal, most exported goods will be made from imported goods which are now higher in price. there may be some things which the manufacturing process adds a lot of value to and they will probably be doing ok, the rest will be hanging on.

[Petminder]

except the vast majority of exporters wont be saving a great deal, most exported goods will be made from imported goods which are now higher in price. there may be some things which the manufacturing process adds a lot of value to and they will probably be doing ok, the rest will be hanging on.

 

In a lot of cases the raw materials will only represent a very small part of the final price, so a 20% increase in raw material prices might only result in a 1% increase in the final price.

[unbeliever]

In a lot of cases the raw materials will only represent a very small part of the final price, so a 20% increase in raw material prices might only result in a 1% increase in the final price.

 

Quite. Beat me to it.

Not just raw materials of course, but also commodity parts.

[andyofborg]

I'm convinced that it is the uncertainty and not the outcome which is causing the economic disruption. That disruption is far smaller than what the remainers predicted, but it's certainly not zero. Uncertainty peaked after the vote and will fall continuously over the next 2 years and change, until the final arrangements are announced.

 

people are worried about the possibility of a bad outcome.

 

if the government made clear that they wanted the sort of deal which me and others have outlined and went for it at full tilt then we could get all this cleared up in a reasonable amount of time. a good outcome works for both us and the EU

 

the problem is that there is a significant but vocal minority in the conservative party who are ideologically against such an outcome and are quite prepared to sacrifice everything to create their neoliberal fantasyland where ordinary people are basically roadkill. There are a few who are also so hostile to the EU, that anything which might help them as well as us is unacceptable to them.

 

to keep these people under control then the government makes stupid pronoucements, like amber rudd's lists which then get rolled back very quickly but these things play badly in the rest of the world and encourage some in the EU to make equally stupid statements.

 

the economic argument is clear, the problem is it many become politically unacceptable to implement it and that would be to the detriment to everyone.

 

still, trump may become president and will have a nuclear war with someone by the end of feb and none of this will matter anymore.

 

---------- Post added 29-10-2016 at 11:53 ----------

 

In a lot of cases the raw materials will only represent a very small part of the final price, so a 20% increase in raw material prices might only result in a 1% increase in the final price.

 

I did say that that those who added a lot of value would be ok, but i'm not sure that applies to a lot of our exporters.

[unbeliever]

people are worried about the possibility of a bad outcome.

 

if the government made clear that they wanted the sort of deal which me and others have outlined and went for it at full tilt then we could get all this cleared up in a reasonable amount of time. a good outcome works for both us and the EU

 

the problem is that there is a significant but vocal minority in the conservative party who are ideologically against such an outcome and are quite prepared to sacrifice everything to create their neoliberal fantasyland where ordinary people are basically roadkill. There are a few who are also so hostile to the EU, that anything which might help them as well as us is unacceptable to them.

 

to keep these people under control then the government makes stupid pronoucements, like amber rudd's lists which then get rolled back very quickly but these things play badly in the rest of the world and encourage some in the EU to make equally stupid statements.

 

the economic argument is clear, the problem is it many become politically unacceptable to implement it and that would be to the detriment to everyone.

 

still, trump may become president and will have a nuclear war with someone by the end of feb and none of this will matter anymore.

 

 

I disagree. I think that a full/hard Brexit is fine economically (in fact I think it's for the best). But the government must manage the process sensibly and make the decisions. More is lost in indecision than wrong decision. Once industry knows there we're headed they will start to adapt. Right now all they can do is hold back until they know what the future holds.

[andyofborg]

I disagree. I think that a full/hard Brexit is fine economically (in fact I think it's for the best).

 

clearly Nissan don't think that, i imagine other businesses who are based here to gain access to the single market will be thinking along similar lines.

 

neither does the 30% financial sector who will no longer be able to operate in the uk

 

still i'm sure liam fox is busy looking for the countries which our exporters don't know exist.

[unbeliever]

clearly Nissan don't think that, i imagine other businesses who are based here to gain access to the single market will be thinking along similar lines.

 

neither does the 30% financial sector who will no longer be able to operate in the uk

 

still i'm sure liam fox is busy looking for the countries which our exporters don't know exist.

 

 

You have no idea what Nissan think. What about businesses which are based in the cheaper parts of the EU in order to gain access to the UK market, which would have to relocate to the UK?

Passporting for financial services would be useful, but not as vital as some have suggested.

[NigelFargate]

Here is an interesting article below by Wolfgang Munchau, who writes for the FT. Munchau is a well-respected and seasoned observer of the EU and certainly no 'Brexiteer'.

 

Nevertheless, he thinks that the outcome of the forthcoming Brexit negotiations will be fair, square and positive for both sides. His reasoning is essentially the same as what I and others have been saying on the forum recently, i.e. that the negotiations are likely to be far more symmetrical than the remainers tend to assume. This is because EU countries (not least Germany) have a lot to lose from a punitive approach. Germany, for example, not only has a large positive trade balance with the UK in manufacturing, but in services also. So although the EU countries and institutions will seek to present a united front in the negotiations, the national interests of member states (particularly the ones with positive trade balances with the UK) are likely to take precedence, despite the earnest efforts of pan-European nationalist ideologues, such as Verhofstadt or Juncker, to sabotage any mutually beneficial outcome.

 

 

http://www.irishtimes.com/business/economy/wolfgang-munchau-the-eu-and-uk-will-do-a-deal-1.2842688

Edited October 29, 2016 by NigelFargate