The economic consequences of Brexit
Poll: The economic consequences of Brexit
Total Members Polled: 732
Discussion
Ghibli said:
don4l said:
Nothing could be simpler.
If the exchange rate is £1.00= €1.30, then your Spanish customer is paying €26.00 per item. You make £90.00
The rate drops to £1.00 = €1.10.
€26.00 is now worth £23.63. Your income is now 9*£23.63 = £212.72.
You have made £112.72.
That is £22.72 more than you made when the Pound was worth €1.30.
I know that we are largely anonymous on here, but shouldn't you do the most basic of checks before asking such ridiculuous questions?
How does this work if my customer is paying me in sterling ? If the exchange rate is £1.00= €1.30, then your Spanish customer is paying €26.00 per item. You make £90.00
The rate drops to £1.00 = €1.10.
€26.00 is now worth £23.63. Your income is now 9*£23.63 = £212.72.
You have made £112.72.
That is £22.72 more than you made when the Pound was worth €1.30.
I know that we are largely anonymous on here, but shouldn't you do the most basic of checks before asking such ridiculuous questions?
I haven't mentioned being paid in euros.
I would also question the wisdom of selling and being paid in EUR when your overheads and outgoings (eg payroll, building costs, taxes, etc) have to be paid in GBP. You're rather exposed to FX movements.
Dr Jekyll said:
There is because you can choose to reduce the Euro price a bit and still make say £11.36 more profit per item than when the pound was worth 1.10.
Components and raw materials are increasing in price, anything imported is costing more because of the weakness of the pound (primarily against the USD), and even UK sourced products are costing more because those suppliers typically import raw materials or components, there's little room for price cuts for most of us. When the increased costs begin to feed through into higher shop prices there will be upward pressure on wages as well. Ghibli said:
don4l said:
Nothing could be simpler.
If the exchange rate is £1.00= €1.30, then your Spanish customer is paying €26.00 per item. You make £90.00
The rate drops to £1.00 = €1.10.
€26.00 is now worth £23.63. Your income is now 9*£23.63 = £212.72.
You have made £112.72.
That is £22.72 more than you made when the Pound was worth €1.30.
I know that we are largely anonymous on here, but shouldn't you do the most basic of checks before asking such ridiculuous questions?
How does this work if my customer is paying me in sterling ? If the exchange rate is £1.00= €1.30, then your Spanish customer is paying €26.00 per item. You make £90.00
The rate drops to £1.00 = €1.10.
€26.00 is now worth £23.63. Your income is now 9*£23.63 = £212.72.
You have made £112.72.
That is £22.72 more than you made when the Pound was worth €1.30.
I know that we are largely anonymous on here, but shouldn't you do the most basic of checks before asking such ridiculuous questions?
I haven't mentioned being paid in euros.
You have a Spanish customer who trades in Sterling?
Go away!
Ghibli said:
Dr Jekyll said:
Then you can raise the sterling price knowing that it's the same price for the customers point of view because sterling is cheaper than before.
Should I do the same with my UK customer to cover my loss. Obviously it will cost him more using sterling.RYH64E said:
Components and raw materials are increasing in price, anything imported is costing more because of the weakness of the pound (primarily against the USD), and even UK sourced products are costing more because those suppliers typically import raw materials or components, there's little room for price cuts for most of us. When the increased costs begin to feed through into higher shop prices there will be upward pressure on wages as well.
But you don't export something for exactly the price of the imported materials used to produce it. Part of the selling price covers UK salaries and overheads, so the increase in cost is less than the fall in the exchange rate.In the early 1980s a strong pound caused great problems for UK manufacturers, despite the fact that their imports were cheaper their UK costs often made it impossible to sell abroad for a competitive price. Similarly a weak pound unarguably makes exports more competitive.
Ghibli said:
don4l said:
Jesus Christ!
You have a Spanish customer who trades in Sterling?
Go away!
He came to me and it's my currency.You have a Spanish customer who trades in Sterling?
Go away!
Would he only trade in sterling if I bought from him.
If you are in the UK then you trade in Pounds.
You are spouting utter s
te!What age are you?
don4l said:
If he is in Spain then he trades in Euros.
If you are in the UK then you trade in Pounds.
You are spouting utter ste!
What age are you?
But if the Spanish customer buys from a UK company then he will pay in Pounds, at least my few overseas (including EU) customers do as that's what I invoice them in.If you are in the UK then you trade in Pounds.
You are spouting utter s
te!What age are you?
As an aside I have a Swiss supplier who invoices me in USD so not everyone uses their home currency.
don4l said:
If you are in the UK then you trade in Pounds.
Yes, that's the point that is being made against you. UK supplier, prices in GBP, sells in GBP, receives GBP.
If the UK supplier sells in EUR then movements of GBP to EUR are irrelevant to the sales side of the business. They may affect the purchase side, but that's not what you're focusing on.
Greg66 said:
Yes, that's the point that is being made against you.
UK supplier, prices in GBP, sells in GBP, receives GBP.
If the UK supplier sells in EUR then movements of GBP to EUR are irrelevant to the sales side of the business. They may affect the purchase side, but that's not what you're focusing on.
They are relevant because once you've got the Euros you can buy more GBP with them, so you are better off than before. Or you can lower your price to get the same GBP you started with, or somewhere in between.UK supplier, prices in GBP, sells in GBP, receives GBP.
If the UK supplier sells in EUR then movements of GBP to EUR are irrelevant to the sales side of the business. They may affect the purchase side, but that's not what you're focusing on.
catso said:
don4l said:
If he is in Spain then he trades in Euros.
If you are in the UK then you trade in Pounds.
You are spouting utter ste!
What age are you?
But if the Spanish customer buys from a UK company then he will pay in Pounds, at least my few overseas (including EU) customers do as that's what I invoice them in.If you are in the UK then you trade in Pounds.
You are spouting utter s
te!What age are you?
As an aside I have a Swiss supplier who invoices me in USD so not everyone uses their home currency.
Ghibli said:
Ultimately the answer appears to be, ditch sterling and use the Euro or any other strong currency.
How very brexit.
No the answer is you raise your sterling price to match the original Euro equivalent or keep it the same and have a lower Euro equivalent and get an increase in volume.How very brexit.
Ditching sterling for the Euro would be a complete disaster, ask Italy, Spain or Greece.
CaptainSlow said:
Greg66 said:
davepoth said:
Greg66 said:
don4l said:
Ghibli said:
If I buy ten units from Taiwan for £100 then sell them to Spain for £200 I make £100.
If the pound loses 10%
I buy nine units from Taiwan for £100 then sell them to Spain for £180 I make £80
Is this right ?
No.If the pound loses 10%
I buy nine units from Taiwan for £100 then sell them to Spain for £180 I make £80
Is this right ?
Think it through.
Why did you drop your price the second time?
The critical point here is that a cheap pound makes every penny of value added to a product that's subsequently exported worth more than it previously did. That's why a cheap pound is good for export.
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