The economic consequences of Brexit

[Murph7355]

JawKnee said:

Nissan wouldn't have thought twice about investing had we voted to remain. No problem at all. Now to keep them here the government will have to subsidise a foreign company if we don't get a favourable Brexit deal. Is this how our money should be spent post Brexit?

Dangerous precedent to set.

No one other than the government and Nissan are fully aware of what has been agreed, if anything (I suspect nothing more than they have already).

Nissan do what is best for Nissan and on balance that is evidently to stay with the UK. I believe they still have the most productive car plant in Europe here, they have invested a lot of time and effort in it (the site, the skills etc) and there is nothing to say any tariffs will apply and what the UK response to them will be. It would have been foolish to leave IMO. Just as it would have been in the early 90s when they threatened to leave if we didn't join the Euro.

It's all self interest codswallop and Ghosn is a stand up example of the boy who cried wolf.

Regardless the only thing ALL of us, regardless of the way we voted, should be doing is being happy about it.

In 5yrs' time they'll be even happier they stayed here.

JawKnee said:

Good news? Economic growth is slowing and that's good news?

It's still growth. The recession Remain were predicting would instantly descend upon us is still not here yet. It may well be in due course, but a million things other than Brexit will influence that (elections in the US, Germany and France for example).

Also note that growing a developed economy is much harder than one that is not. I would bet that we are still above our peers despite us being the sickly child that cannot wipe its own arse (the only figures I can find to compare like for like are from July when we were over 60% ahead of the EU in terms of GDP growth rate).

Maybe we're benefitting from a weaker currency right now. But that's exactly what the Germans have been doing for the last decade or more. So bring it on.

And yes, we're still in the EU....but the predictions were for immediate doom. Casts a poor light on those making them - and it was noted before the 23rd June that their prediction success rate was a little...poor.

JawKnee said:

Banks are far from happy. Some want to leave, others are seeing declines in revenue because of low interest rates.

Banks have been "exiting" the UK for years. It's not Brexit related.

JawKnee said:

If these tariffs are such a wonderful thing for the economy then why are countries around the world trying to strike up deals with each other to reduce or remove them?

Tariffs make our products less competitively priced and imported goods more expensive for the consumer. Not quite the win-win you're painting it out to be.

Now I'm on the verge of agreeing with you...which worries me.

Tariffs are not a good thing in many respects (though Chinese dumping of steel does make me wonder whether that can be said universally).

BUT...you are aware that the EU runs tariffs with pretty much everyone else outside the member states? And that one of the key worries of the Remain camp seems to be that the EU will whack us with punitive tariffs...Just like free movement of people, if it's universally a good idea, why doesn't the EU just drop all tariffs with everyone?

The EU is a massive blocker on free trade outside of the member states, and it's trying to use it's size to give a far better deal for it than its trading partners. Protectionism extraordinaire. Nothing necessarily wrong with that, but it does call into question your (and my) view that tariffs are bad, and whether the EU is on the right track or not....

[Tony427]

Fastest Growing economy in the G7.

Exports growing as a result of currency movement.

WTO boss extremely supportive.

NO chance of recession.

Doom and Gloom merchants completely discredited.

Major manufacturers choose to invest in UK.

Plague of Locusts and boils avoided.

Whilst the EU carries on doing what the EU does, ie screwing everything up.


I wonder what the other disgruntled EU countries are thinking as they look across the channel?

Cheers,

Tony

[johnfm]

Did Godzilla emerge from the Thames yet? Or is he waiting until warmer weather?

[Burwood]

johnfm said:

Did Godzilla emerge from the Thames yet? Or is he waiting until warmer weather?

Last seen taking a dump in Islington

[don4l]

Trophy Husband said:

Trying to decipher the truth from the lies like most other people.

You are absolutely correct.


It's quite funny that remoaners are still bleating on about Leave lies. Whenever you ask for examples, the answer always involves £350M.

Here are half a dozen Remain lies.

David Cameron: “The job you do, the home you live in are at risk. The shock to our economy after leaving Europe would tip the country into recession.”

George Osborne: “A vote to leave would tip our economy into year-long recession with at least 500,000 UK jobs lost”

Treasury: “UK economy would fall into recession”, predicted 2016 Q3 growth between -0.1% and -1%

IMF: “Brexit would trigger recession”, predicted -0.3% GDP for Q3 2016

Bank of England: Mark Carney said “It would be likely to have a negative impact in the short term… I certainly think that would increase the risk of recession.”

OECD: Short term impact of -1.25% GDP

[bobbylondonuk]

don4l said:

Trophy Husband said:

Trying to decipher the truth from the lies like most other people.

You are absolutely correct.


It's quite funny that remoaners are still bleating on about Leave lies. Whenever you ask for examples, the answer always involves £350M.

Here are half a dozen Remain lies.

David Cameron: “The job you do, the home you live in are at risk. The shock to our economy after leaving Europe would tip the country into recession.”

George Osborne: “A vote to leave would tip our economy into year-long recession with at least 500,000 UK jobs lost”

Treasury: “UK economy would fall into recession”, predicted 2016 Q3 growth between -0.1% and -1%

IMF: “Brexit would trigger recession”, predicted -0.3% GDP for Q3 2016

Bank of England: Mark Carney said “It would be likely to have a negative impact in the short term… I certainly think that would increase the risk of recession.”

OECD: Short term impact of -1.25% GDP

At least the British people are smart enough to vote against these Experts! Leavers are not idiots, almost all of them have voted against all the above scaremongering and more. Idiots would have fallen for all of this and the results would have swung around big time in favour of remain.

[Pesty]

I feel sorry for remainers. They were sold a lie that all car producers would leave, and they believed it.

[Blue Oval84]

Mrr T said:

Blue Oval84 said:

Blue Oval84 said:
Thank you for saving me the bother of posting this.

It's a bloody win win, we either don't have to pay Nissan a penny, or we cover their losses and take the money from the much larger pile of tariffs on imported vehicles.

UK Gov could afford to subsidise every car manufacturer in Britain and still be quids in.

You do understand it would be UK tax payers paying the UK import duty? So thats a massive rise in UK taxes?

Yep, tariffs are a disaster for everyone, but at the very least we can use the taxes to keep manufacturing in the UK competitive. The alternative is to just have the massive tax rises AND potentially lose manufacturing/jobs. The government are surely taking the sensible route.

I still maintain that tariffs on cars are unlikely, the German auto industry would be furious. If they manage to negotiate one thing, that will be it.

[Garvin]

Mrr T said:

Blue Oval84 said:

Thank you for saving me the bother of posting this.

It's a bloody win win, we either don't have to pay Nissan a penny, or we cover their losses and take the money from the much larger pile of tariffs on imported vehicles.

UK Gov could afford to subsidise every car manufacturer in Britain and still be quids in.

You do understand it would be UK tax payers paying the UK import duty? So thats a massive rise in UK taxes?

You've lost me on this one? The only 'tax' the UK govt would be paying (if it's even true) is the tariff on Nissan exports to the EU. The argument is that they would pay this from the income generated by the tariff imposed on imported cars from the EU. These tariffs are paid by EU industry and are nothing to do with taxes levied within UK or any massive rise in them!

Personally, I would expect Nissan to have considered the efficiency of the Sunderland plant (which is pretty much benchmark for Nissan) and compared that to the best it could expect in another EU country set against set up costs and shut down costs in UK together with any expected tariffs and its own assessment of future exchange rates. IMHO these would be the main drivers in the Nissan decision not any discussion with TM.

[don4l]

Pesty said:

I feel sorry for remainers. They were sold a lie that all car producers would leave, and they believed it.

Some of them still believe it. A suggestion was made on here today that Nissan was only investing for the next two and a half years.

How can people be so stupid?

[JawKnee]

davepoth said:

JawKnee said:

davepoth said:

JawKnee said:

I reiterate my point. Low interest rates are affecting banks' revenue.

How?

http://www.investopedia.com/ask/answers/041015/how-do-interest-rate-changes-affect-profitability-banking-sector.asp

No attribution, no references. Might have been written by JawKnee for all we know.

Here's something written by a real economist that says the opposite, with references.

https://www.stlouisfed.org/on-the-economy/2016/may...

It doesn't say the opposite. It is more nuanced than that.

The point being made in your link is that monetary easing in the short term increases net interest margins (NIMs) for banks due to the mismatch in existing loan maturities and new loan funding. Granted that is good for their balance sheets in yhe short term. As time progresses however and IRs remain low, NIMs narrow as old loans at higher rates are payed off and new ones at lower rates are taken out which is where we are at now.

[PurpleMoonlight]

Garvin said:

You've lost me on this one? The only 'tax' the UK govt would be paying (if it's even true) is the tariff on Nissan exports to the EU. The argument is that they would pay this from the income generated by the tariff imposed on imported cars from the EU. These tariffs are paid by EU industry and are nothing to do with taxes levied within UK or any massive rise in them!

http://www.dutycalculator.com/help_center/who-is-responsible-for-the-payment-of-import-duty-and-taxes/

Ultimately end consumer pays the tax.

[jamoor]

Garvin said:

You've lost me on this one? The only 'tax' the UK govt would be paying (if it's even true) is the tariff on Nissan exports to the EU. The argument is that they would pay this from the income generated by the tariff imposed on imported cars from the EU. These tariffs are paid by EU industry and are nothing to do with taxes levied within UK or any massive rise in them!

Am I understanding that the taxpayers will subsidise nissans operations here? Or am I mistaken?

[Blue Oval84]

Garvin said:

Personally, I would expect Nissan to have considered the efficiency of the Sunderland plant (which is pretty much benchmark for Nissan) and compared that to the best it could expect in another EU country set against set up costs and shut down costs in UK together with any expected tariffs and its own assessment of future exchange rates. IMHO these would be the main drivers in the Nissan decision not any discussion with TM.

I can't back it up with any links, and it's basically hearsay so people can either believe me or not, but a friend of a relative is very close to someone very senior in the Sunderland plant. They said before the vote that regardless of the outcome Nissan almost certainly would stay, the plant is just too good to close (£ exchange rate will have made this even less likely)

I think Carlos Ghosn has form for his scaremongering to get a good deal though. The other day my Facebook linked me to a 2003 article where he was warning that failure to join the Euro was likely to result in withdrawal of future Nissan investment...

[davepoth]

JawKnee said:

It doesn't say the opposite. It is more nuanced than that.

The point being made in your link is that monetary easing in the short term increases net interest margins (NIMs) for banks due to the mismatch in existing loan maturities and new loan funding. Granted that is good for their balance sheets in yhe short term. As time progresses however and IRs remain low, NIMs narrow as old loans at higher rates are payed off and new ones at lower rates are taken out which is where we are at now.

So rather than your link which says drops in the interest rate hurts banks, mine (which is correct) says that in the short term it helps them but in the long term there's no overall benefit?

Please, spin this in a way so that you're right. I'm waiting.

[RYH64E]

Garvin said:

You've lost me on this one? The only 'tax' the UK govt would be paying (if it's even true) is the tariff on Nissan exports to the EU. The argument is that they would pay this from the income generated by the tariff imposed on imported cars from the EU. These tariffs are paid by EU industry and are nothing to do with taxes levied within UK or any massive rise in them!

Tariffs on imported goods are paid by the importer not the exporter, so BMW UK would pay import duties on anything manufactured at their EU plants to HMRC, thereby increasing their costs, resulting in higher prices for UK customers. EU industry would not be paying, the UK consumers would.

Any subsidies paid to Nissan would be to enable them to lower their selling prices to EU customers so that they remained competitive with EU based manufacturers.

Edited by RYH64E on Thursday 27th October 18:47

[anonymous-user]

jamoor said:

Am I understanding that the taxpayers will subsidise nissans operations here? Or am I mistaken?

What May has said to the whole car industry, is she will ensure that the UK will remain a good place to base your manufacturing.

That is multi-faceted and can include tax breaks, commitment to infrastructure investment, training grants, reduction in Corporation tax, no planned changes to employment laws and so on.

Both Nissan and the Government have stated that Nissan has not received a special deal, they just feel assured that no matter what happens, the UK will remain a good place to do business.

[anonymous-user]

RYH64E said:

Garvin said:

You've lost me on this one? The only 'tax' the UK govt would be paying (if it's even true) is the tariff on Nissan exports to the EU. The argument is that they would pay this from the income generated by the tariff imposed on imported cars from the EU. These tariffs are paid by EU industry and are nothing to do with taxes levied within UK or any massive rise in them!

Tariffs on imported goods are paid by the importer not the exporter, so BMW UK would pay import duties on anything manufactured at their EU plants to HMRC, thereby increasing their costs, resulting in higher prices for UK customers. EU industry would not be paying, the UK consumers would.

Any subsidies paid to Nissan would be to enable them to lower their selling prices to EU customers so that they remained competitive with EU based manufacturers.

Edited by RYH64E on Thursday 27th October 18:47

Currently, any tariffs UK government take from none EU imports get sent 25% to the UK exchequer, 75% to the EU.

When we leave the EU, 100% of any WTO tariffs will go to the UK exchequer, so for example any import tax on a new Subaru Impreza will add an extra 75% import tax to the UK than is currently present. So on a £30K Impreza, the government will gain an extra £2000 without the UK consumer seeing any price increase on the car.

Should the EU choose to not do a trade deal on car imports, that would trigger a huge increase in tax take, which would allow them to lower VAT, corporation or income tax to help counter the increased cost of living from import duties.

The longer term goal is to have trade deals in place that have no import tariffs, so the UK consumer will pay less than they do now for goods from the whole world, whilst that is being sorted out we may have to potentially deal with higher import costs, but long term we will be out of a protectionist block.

Brexit is all about the long term, which is why the current 24/7 news is a load of bks if you really want to understand the future.

[RYH64E]

jsf said:

Should the EU choose to not do a trade deal on car imports, that would trigger a huge increase in tax take, which would allow them to lower VAT, corporation or income tax to help counter the increased cost of living from import duties.

And who would be paying the huge increase in taxes?

[JawKnee]

davepoth said:

JawKnee said:

It doesn't say the opposite. It is more nuanced than that.

The point being made in your link is that monetary easing in the short term increases net interest margins (NIMs) for banks due to the mismatch in existing loan maturities and new loan funding. Granted that is good for their balance sheets in yhe short term. As time progresses however and IRs remain low, NIMs narrow as old loans at higher rates are payed off and new ones at lower rates are taken out which is where we are at now.

So rather than your link which says drops in the interest rate hurts banks, mine (which is correct) says that in the short term it helps them but in the long term there's no overall benefit?

Please, spin this in a way so that you're right. I'm waiting.

You really are struggling here.

We are agreed there is no benefit. What your link fails to point out is what the disadvantages are in the long term. Lower IRs eventually mean lower NIMs. Even the Bank Of England have recently just admitted to as much.

http://www.telegraph.co.uk/business/2016/10/26/len...