The economic consequences of Brexit
Poll: The economic consequences of Brexit
Total Members Polled: 732
Discussion
don4l said:
Jockman isn't a rare exception.
Every single UK manufacturer who has foreign competition has become more competitive as a result of the drop in value of the pound.
Mind you, I doubt that Jockman ever had serious foreign competition. Coffins are big and heavy, therefore they would be bloody expensive to ship around the world.
The Chinese ship them in Russian doll format which improves their efficiency but makes them restrictive in another way. Every single UK manufacturer who has foreign competition has become more competitive as a result of the drop in value of the pound.
Mind you, I doubt that Jockman ever had serious foreign competition. Coffins are big and heavy, therefore they would be bloody expensive to ship around the world.
don4l said:
youngsyr said:
Jockman said:
youngsyr said:
Or, to put it another way, if you want to compete with Chinese manufactured goods, you better be willing to accept Chinese living standards.
I do. I'm a small manufacturer and I'm proud to pay young people a living wage. Yes I accept its not a panacea for all ills in society. The Chinese cannot compete with my prices. Currency devaluation has made them even less competitive apparently.
don4l said:
youngsyr said:
Jockman said:
youngsyr said:
Or, to put it another way, if you want to compete with Chinese manufactured goods, you better be willing to accept Chinese living standards.
I do. I'm a small manufacturer and I'm proud to pay young people a living wage. Yes I accept its not a panacea for all ills in society. The Chinese cannot compete with my prices. Currency devaluation has made them even less competitive apparently.
Every single UK manufacturer who has foreign competition has become more competitive as a result of the drop in value of the pound.
Mind you, I doubt that Jockman ever had serious foreign competition. Coffins are big and heavy, therefore they would be bloody expensive to ship around the world.
Back in the real world, the fact that unless we're producing the raw materials for our manufacturing in the UK (exceedingly unlikely in many instances), the manufacturing company's primary production costs (materials) and their transport have also increased at the exact same rate that their sale prices have fallen by on the international market.
On top of that, Sterling has been extremely volatile in the past 12 months, primarily due to the the Brexit decision, meaning that any foreign buyer looking to place an order cannot be sure how much their order in GBP is actually going to cost them when it comes time to pay, this lowers confidence as well as increases costs.
Add to the mix that the actual trade terms between the countries and the potential for changes in tarrifs are now up for renegotiation and you pile uncertainty on uncertainty.
Saying that a drop in Sterling is unilaterally positive for the UK is spinning of the highest order.
TDIPLC said:
If anyone's interested, so far this is the best year my firm has ever had, and the best August (which is normally quiet) in our history.
We're in a "discretionary spending" industry, and don't see any black clouds on the horizon yet.
Great news, but that doesn't really tell us much though - some people will no doubt do extremely well out of the current situation, some will just do ok and some will be severely impacted. It's the balance between those three across the hundreds of thousands of businesses in the UK that matters to the rest of us.We're in a "discretionary spending" industry, and don't see any black clouds on the horizon yet.
What industry are you in and do you feel it is an industry wide trend?
TDIPLC said:
If anyone's interested, so far this is the best year my firm has ever had, and the best August (which is normally quiet) in our history.
We're in a "discretionary spending" industry, and don't see any black clouds on the horizon yet.
Perhaps people are panicking and getting their cars tuned before Tusk's prediction of "the end Western civilisation" comes true.We're in a "discretionary spending" industry, and don't see any black clouds on the horizon yet.
youngsyr said:
Back in the real world, the fact that unless we're producing the raw materials for our manufacturing in the UK (exceedingly unlikely in many instances), the manufacturing company's primary production costs (materials) and their transport have also increased at the exact same rate that their sale prices have fallen by on the international market.
I can tell your not an industrialist. Raw materials, whether domestically produced or imported, are commodities and, as such, global price variations are small. Prices changes due to exchange rates make no disadvantage for UK producers.
Moreover, IME, despite unknown levels if Chinese support/dumping in steel products, we can still manufacture competitively in the UK. I know this for a fact, I've checked and re-checked all our costings. It's part of my job. That's aside the issue of quality of materials and workmanship.
Admittedly, there are things made well and very efficiently in China. And we use those too, where it makes sense - have done for a decade.
Ghibli said:
What about the poor. Will their food and fuel prices be effected ? Will the working poor get wage rises ? Will benefits go up ?
Good point. One of the reasons our profligate governments like inflation is the denominator effect on (both govt and private) debt. For that to work fully, price inflation needs to filter into wage inflation. So it remains to be seen.Even if it does, there's regrettably usually a lag where, for a short while, the poor are squeezed.
Ghibli said:
What about the poor. Will their food and fuel prices be effected ? Will the working poor get wage rises ? Will benefits go up ?
Any change in the price of food or fuel will impact on everyone, admittedly the impact on the richer in society will be less, but to date fuel prices have dropped, and I have seen no change in the price of a weekly shop.Wage rises if any will probably not change, and Benefits are in line with inflation as far as I know, so I can't see any changes there.
What do you think?
Digga said:
youngsyr said:
Back in the real world, the fact that unless we're producing the raw materials for our manufacturing in the UK (exceedingly unlikely in many instances), the manufacturing company's primary production costs (materials) and their transport have also increased at the exact same rate that their sale prices have fallen by on the international market.
I can tell your not an industrialist. Raw materials, whether domestically produced or imported, are commodities and, as such, global price variations are small. Prices changes due to exchange rates make no disadvantage for UK producers.
Moreover, IME, despite unknown levels if Chinese support/dumping in steel products, we can still manufacture competitively in the UK. I know this for a fact, I've checked and re-checked all our costings. It's part of my job. That's aside the issue of quality of materials and workmanship.
Admittedly, there are things made well and very efficiently in China. And we use those too, where it makes sense - have done for a decade.
Edited by richie99 on Saturday 27th August 14:45
richie99 said:
Thank goodness we have 'an industrialist' to put us straight on the youngster's point. Not sure your professed level of is quite where you claim.
I'm struggling to see what's so difficult to grasp.Edited by richie99 on Saturday 27th August 14:45
Everyone payers, pretty much, the same material prices globally. The markets are efficient. All exchange rate changes do is alter currency amounts.
Meanwhile, all the stuff we pay for in sterling is a bit cheaper - here, exchange rates do help UK producers of goods.
Not sure whether to draw a diagram or a parrot.
youngsyr said:
don4l said:
youngsyr said:
Jockman said:
youngsyr said:
Or, to put it another way, if you want to compete with Chinese manufactured goods, you better be willing to accept Chinese living standards.
I do. I'm a small manufacturer and I'm proud to pay young people a living wage. Yes I accept its not a panacea for all ills in society. The Chinese cannot compete with my prices. Currency devaluation has made them even less competitive apparently.
Every single UK manufacturer who has foreign competition has become more competitive as a result of the drop in value of the pound.
Mind you, I doubt that Jockman ever had serious foreign competition. Coffins are big and heavy, therefore they would be bloody expensive to ship around the world.
Back in the real world, the fact that unless we're producing the raw materials for our manufacturing in the UK (exceedingly unlikely in many instances), the manufacturing company's primary production costs (materials) and their transport have also increased at the exact same rate that their sale prices have fallen by on the international market.
Let's take your example to the extreme. This will be the absolutely worst case for the UK based company.
We will simply import and export the same item at tweo different exchange rates.
Exchange rate £1.00 = $1.50.
I buy $150.00 worth of goods from Taiwan. This costs me £100.00.
I make 40% gross margin when I sell them to a country in the Middle East, so I sell them for £166.00, or $250.00.
Now, let's assume that the Pound has fallen to parity with the dollar. £1.00 = $1.00.
The goods have now gone up from £100.00 to £150.00.
If I sell them at the same price, $250 (£250) I make an extra £34.00. Or I could aim to make the same profit and sell the goods for $216.00. I have become more competitive.
I understand this because it is what I do for a living.
youngsyr said:
On top of that, Sterling has been extremely volatile in the past 12 months, primarily due to the the Brexit decision, meaning that any foreign buyer looking to place an order cannot be sure how much their order in GBP is actually going to cost them when it comes time to pay, this lowers confidence as well as increases costs.
Most companies who trade internationally fix their exchange rates once or twice a year. It is a doddle and costs sod all.youngsyr said:
Add to the mix that the actual trade terms between the countries and the potential for changes in tarrifs are now up for renegotiation and you pile uncertainty on uncertainty.
Saying that a drop in Sterling is unilaterally positive for the UK is spinning of the highest order.
Feel free to quot/highlight where I said that a drop in Sterling is unilaterally positive for the UK. You cannot - because I didn't say it. You just made that up.Saying that a drop in Sterling is unilaterally positive for the UK is spinning of the highest order.
richie99 said:
Digga said:
youngsyr said:
Back in the real world, the fact that unless we're producing the raw materials for our manufacturing in the UK (exceedingly unlikely in many instances), the manufacturing company's primary production costs (materials) and their transport have also increased at the exact same rate that their sale prices have fallen by on the international market.
I can tell your not an industrialist. Raw materials, whether domestically produced or imported, are commodities and, as such, global price variations are small. Prices changes due to exchange rates make no disadvantage for UK producers.
Moreover, IME, despite unknown levels if Chinese support/dumping in steel products, we can still manufacture competitively in the UK. I know this for a fact, I've checked and re-checked all our costings. It's part of my job. That's aside the issue of quality of materials and workmanship.
Admittedly, there are things made well and very efficiently in China. And we use those too, where it makes sense - have done for a decade.
Edited by richie99 on Saturday 27th August 14:45
You and youngsyr clearly do not understand international business. Why on Earth would you want to go on a public forum and act like an expert in a subject that you obviously know nothing about?
don4l said:
youngsyr said:
don4l said:
youngsyr said:
Jockman said:
youngsyr said:
Or, to put it another way, if you want to compete with Chinese manufactured goods, you better be willing to accept Chinese living standards.
I do. I'm a small manufacturer and I'm proud to pay young people a living wage. Yes I accept its not a panacea for all ills in society. The Chinese cannot compete with my prices. Currency devaluation has made them even less competitive apparently.
Every single UK manufacturer who has foreign competition has become more competitive as a result of the drop in value of the pound.
Mind you, I doubt that Jockman ever had serious foreign competition. Coffins are big and heavy, therefore they would be bloody expensive to ship around the world.
Back in the real world, the fact that unless we're producing the raw materials for our manufacturing in the UK (exceedingly unlikely in many instances), the manufacturing company's primary production costs (materials) and their transport have also increased at the exact same rate that their sale prices have fallen by on the international market.
Let's take your example to the extreme. This will be the absolutely worst case for the UK based company.
We will simply import and export the same item at tweo different exchange rates.
Exchange rate £1.00 = $1.50.
I buy $150.00 worth of goods from Taiwan. This costs me £100.00.
I make 40% gross margin when I sell them to a country in the Middle East, so I sell them for £166.00, or $250.00.
Now, let's assume that the Pound has fallen to parity with the dollar. £1.00 = $1.00.
The goods have now gone up from £100.00 to £150.00.
If I sell them at the same price, $250 (£250) I make an extra £34.00. Or I could aim to make the same profit and sell the goods for $216.00. I have become more competitive.
I understand this because it is what I do for a living.
youngsyr said:
On top of that, Sterling has been extremely volatile in the past 12 months, primarily due to the the Brexit decision, meaning that any foreign buyer looking to place an order cannot be sure how much their order in GBP is actually going to cost them when it comes time to pay, this lowers confidence as well as increases costs.
Most companies who trade internationally fix their exchange rates once or twice a year. It is a doddle and costs sod all.youngsyr said:
Add to the mix that the actual trade terms between the countries and the potential for changes in tarrifs are now up for renegotiation and you pile uncertainty on uncertainty.
Saying that a drop in Sterling is unilaterally positive for the UK is spinning of the highest order.
Feel free to quot/highlight where I said that a drop in Sterling is unilaterally positive for the UK. You cannot - because I didn't say it. You just made that up.Saying that a drop in Sterling is unilaterally positive for the UK is spinning of the highest order.
It only becomes relevant if the business needs to make payments in GBP, where you will obviously benefit from the weaker GBP.
However, the UK is a net importer, so there are more people whose income is in GBP, but importing foreign goods than there are Brits earning their income in USD and paying their costs in GBP.
So, "Dear God" indeed! Congratulations on identifying the minority that benefits from weaker GBP, but unfortunately it's just another example of your spin.
Do you also really need me to point out that you can imply a point of view without spelling it out word for word? Perhaps you should move out of business and get into politics, I suspect UKIP could use your "skills"!
Edited by youngsyr on Saturday 27th August 17:05
don4l said:
You do know that there are people on here that trade internationally, don't you?
You and youngsyr clearly do not understand international business. Why on Earth would you want to go on a public forum and act like an expert in a subject that you obviously know nothing about?
Have you considered that because we aren't focussed on any one particular business, we can see how other types of businesses/people may be experiencing the negative aspects of a weak currency?You and youngsyr clearly do not understand international business. Why on Earth would you want to go on a public forum and act like an expert in a subject that you obviously know nothing about?
The current situation may be great for your business, Jockman's and Digga's, doesn't mean it's great for the UK as a whole.
youngsyr said:
However, the UK is a net importer, so there are more people whose income is in GBP, but importing foreign goods than there are Brits earning their income in USD and paying their costs in GBP.
So you reckon there are more pounds being sold for foreign currencies than foreign currencies being used to buy pounds. How does that work?If you are exporting you are selling UK labour to foreign buyers, a lower valued pound makes it cheaper for them so they tend to buy more of it. QED.
Dr Jekyll said:
youngsyr said:
However, the UK is a net importer, so there are more people whose income is in GBP, but importing foreign goods than there are Brits earning their income in USD and paying their costs in GBP.
So you reckon there are more pounds being sold for foreign currencies than foreign currencies being used to buy pounds. How does that work?If you are exporting you are selling UK labour to foreign buyers, a lower valued pound makes it cheaper for them so they tend to buy more of it. QED.
As you and Don4l point out, exporters benefit from a weaker GBP, BUT, the UK is a net importer so overall we suffer!
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