The economic consequences of Brexit

[BJG1]

cookie118 said:

http://uk.mobile.reuters.com/article/idUKKCN11W003

This is not good news

And it's despite them being confident in their company and the uk's growth-76/100 CEOs surveyed said they are considering moving headquarters due to brexit

Also worth noting that they consider certainty more important than trade terms.

"Three-quarters of British company bosses are considering moving operations abroad following the vote to leave the European Union, according to a survey published on Monday."

Such a brazenly misleading headline

[AC43]

BJG1 said:

cookie118 said:

http://uk.mobile.reuters.com/article/idUKKCN11W003

This is not good news

And it's despite them being confident in their company and the uk's growth-76/100 CEOs surveyed said they are considering moving headquarters due to brexit

Also worth noting that they consider certainty more important than trade terms.

"Three-quarters of British company bosses are considering moving operations abroad following the vote to leave the European Union, according to a survey published on Monday."

Such a brazenly misleading headline

But this is the key phrase; "they (the CEO's) consider certainty more important than trade terms"

If you though the market volatility was bad on the day after the vote wait until we have a long drawn out public negotiating war with the EU complete with tons of highly charged brinksmanship from both sides, both of whom are desperate to be seen to be not losing.

Meanwhile, back in the UK when the hard Brexiteers will realise they can't have it all and they'll start abandoning the Tories for UKIP in their droves. Whilst the people's party of Corbyn will be unleashing hundreds of thousands of SJW's lobbying to nationalise everything, put tax up to 99% and bring back the Morris Marina.

As usual the far right and far left will be chasing impossible dreams and dragging the economy into the toilet in the process.

WTF are we doing?! It's insane.

[b2hbm]

AC43 said:

(clipped quote)
If you though the market volatility was bad on the day after the vote wait until we have a long drawn out public negotiating war with the EU complete with tons of highly charged brinksmanship from both sides, both of whom are desperate to be seen to be not losing.

WTF are we doing?! It's insane.

I follow Reuters Eurozone most days and on balance they are slightly pro-EU and come out with similar surveys roughly on a weekly basis to fill their column inches, so this is nothing new.

However I do agree that the negotiations will be pretty much as you describe with egos being massaged on both sides and yep, it will get even sillier.

But it won't be Brexit that's the main cause of instability over the next year or so, the EU are managing very well on their own in that department.

At the moment they're arguing amongst themselves about sanctions against Russia with revelations that German companies (for one example) are breaking them. The German flagship Deutsche Bank is listing somewhat with Merkel denying a state bail out, and having insisted the Greeks & Italians take the pain she's not going to be able to do without a serious EZ rift.

Then you have the EU hinting they won't follow Basel IV, Draghi complaining (again) about economic imbalances destabilising the Eurozone (German surplus) and you can see it's not just Brexit causing mayhem despite what some would have you believe.

Insanity isn't just a British affliction.

[Digga]

Jockman said:

Ghibli said:

Are the poorer areas of the uk booming from Brexit ?

Probably as much as they were booming before the referendum.

Yeah, Middlesborough was thriving before the banking crisis. Now Brexit.

[Digga]

anonymous said:

[redacted]

Is there any other?

don'tbesilly said:

davepoth said:

cookie118 said:

http://uk.mobile.reuters.com/article/idUKKCN11W003

This is not good news

And it's despite them being confident in their company and the uk's growth-76/100 CEOs surveyed said they are considering moving headquarters due to brexit

Also worth noting that they consider certainty more important than trade terms.

In an idle moment, I might consider getting a tattoo. I won't though.

It's one of those deja vu moments, some expressed considerations in the weeks prior to the 23rd June, and in the subsequent weeks had a lighbulb moment "I thought that a couple of weeks ago, now I've thought about it I won't".

Let's face it, we've all done it.

This, any CEOs not considering this as, at the very least, a contingency ought to be ousted. As ever, that headline twists the actual, underlying facts and then reader's poor comprehension skills sucker them into ignoring the qualifying statements hidden within the article. Clearly, someone at Reuters has an agenda, or more likely a remit to benefit from Remaniac clickbait.

[AC43]

b2hbm said:

I follow Reuters Eurozone most days and on balance they are slightly pro-EU and come out with similar surveys roughly on a weekly basis to fill their column inches, so this is nothing new.

True.

b2hbm said:

However I do agree that the negotiations will be pretty much as you describe with egos being massaged on both sides and yep, it will get even sillier.

This worries me.

b2hbm said:

But it won't be Brexit that's the main cause of instability over the next year or so, the EU are managing very well on their own in that department.

I agree it's by no means the only issue - it's a biggie, though.

b2hbm said:

At the moment they're arguing amongst themselves about sanctions against Russia with revelations that German companies (for one example) are breaking them.

Didn't notice that.

b2hbm said:

The German flagship Deutsche Bank is listing somewhat with Merkel denying a state bail out, and having insisted the Greeks & Italians take the pain she's not going to be able to do without a serious EZ rift.

This is massive - there are trillions on the DB books. Germany/EU can't possibly take the hit on liquidity if that goes down. Makes the German position on the Med countries even more insane.

b2hbm said:

Then you have the EU hinting they won't follow Basel IV, Draghi complaining (again) about economic imbalances destabilising the Eurozone (German surplus) and you can see it's not just Brexit causing mayhem despite what some would have you believe.

Very true

b2hbm said:

Insanity isn't just a British affliction.

No not at all!

I'm just uneasy that we're creating our very own piece of it.

The world economy is in tatters, The EU and UK are in long term decline and the UK population seems to be increasingly drawn to ever more extreme simplistic "solutions".

Have we ever seen situations like this in the past and did it ever turn out well?

My prediction? The super-rich will ride it out, the UK's decline will accelerate, the middle class tax payers will get taxed to the hilt and the recipients of their cut of the ever-diminishing tax fund will be fuming that Middlesborough is still in decline.

[paul789]

Digga said:

anonymous said:

[redacted]

Is there any other?

don'tbesilly said:

davepoth said:

cookie118 said:

http://uk.mobile.reuters.com/article/idUKKCN11W003

This is not good news

And it's despite them being confident in their company and the uk's growth-76/100 CEOs surveyed said they are considering moving headquarters due to brexit

Also worth noting that they consider certainty more important than trade terms.

In an idle moment, I might consider getting a tattoo. I won't though.

It's one of those deja vu moments, some expressed considerations in the weeks prior to the 23rd June, and in the subsequent weeks had a lighbulb moment "I thought that a couple of weeks ago, now I've thought about it I won't".

Let's face it, we've all done it.

This, any CEOs not considering this as, at the very least, a contingency ought to be ousted. As ever, that headline twists the actual, underlying facts and then reader's poor comprehension skills sucker them into ignoring the qualifying statements hidden within the article. Clearly, someone at Reuters has an agenda, or more likely a remit to benefit from Remaniac clickbait.

The (grammatically clunky) KPMG headline in their own article does take a different slant:

"Post-Brexit CEOs buzzing with confidence but cautiously contingency planning, according to latest KPMG research"

https://home.kpmg.com/uk/en/home/media/press-relea...

Reuters have filtered out the 'buzzing'. Let's just hope these plans remain in the Plan B drawer, gathering dust.

[b2hbm]

Digga said:

his, any CEOs not considering this as, at the very least, a contingency ought to be ousted. As ever, that headline twists the actual, underlying facts and then reader's poor comprehension skills sucker them into ignoring the qualifying statements hidden within the article. Clearly, someone at Reuters has an agenda, or more likely a remit to benefit from Remaniac clickbait.

That was my take as well, it's nothing other than contingency planning which any successful business must do. The big question is why UK PLC in the form of the Cameron et al didn't have any contingency in place just in case they lost the referendum. Mind you, the CEO did resign.

AC43 - the link I read about the Russian/EU sanctions was in Reuters World News section

http://uk.reuters.com/article/uk-ukraine-crisis-eu...

reading between the lines (dangerous I know) it sounds as if they're looking for a way to start trading and hence boost EU growth without losing face.

[walm]

AC43 said:

The world economy is in tatters, The EU and UK are in long term decline

This is just wrong.
What on earth is your source for such tin-foil hattery?

We aren't even close to a recession right now.

[AC43]

walm said:

AC43 said:

The world economy is in tatters, The EU and UK are in long term decline

This is just wrong.
What on earth is your source for such tin-foil hattery?

We aren't even close to a recession right now.

The world economy has repeatedly had trillions of QE pumped in over the last 7-8 years in at attempt to kick start it to no avail.

China is tottering, the binge of private, corporate and state debt is at an all time high and ant correction will be very painful.

In terms of growth the EU/EZ has been stagnating for several years.

Our economy, in contrast, was doing OK in growth terms pre-Brexit (and is still OK pre-A50)but we've been running a balance of payments deficit for decades and our public finances are in a terrible state.

There's plenty to be concerned about in a macro sense but, hey, let's have buses with catchy slogans instead.

EDIT http://www.oecd.org/eco/outlook/economic-outlook/

Edited by AC43 on Tuesday 27th September 09:46

[don4l]

AC43 said:

The world economy is in tatters, The EU and UK are in long term decline and the UK population seems to be increasingly drawn to ever more extreme simplistic "solutions".

The world economy is doing veru well. India is growing at 7%. China, with a quarter of the planet's population, is enjoying growth.

The UK's economy is growing.

The only economy that is not performing well, is the EU. Antarctica is not growing much either.

[walm]

AC43 said:

walm said:

AC43 said:

The world economy is in tatters, The EU and UK are in long term decline

This is just wrong.
What on earth is your source for such tin-foil hattery?

We aren't even close to a recession right now.

The world economy has repeatedly had trillions of QE pumped in over the last 7-8 years in at attempt to kick start it to no avail.

China is tottering, the binge of private, corporate and state debt is at an all time high and ant correction will be very painful.

In terms of growth the EU/EZ has been stagnating for several years.

Our economy, in contrast, was doing OK in growth terms pre-Brexit (and is still OK pre-A50)but we've been running a balance of payments deficit for decades and our public finances are in a terrible state.

There's plenty to be concerned about in a macro sense but, hey, let's have buses with catchy slogans instead.

EDIT http://www.oecd.org/eco/outlook/economic-outlook/

You are making/referencing forecasts which is completely different to saying "we are in tatters" which obviously refers to the present.
Or "long term decline" which is simply wrong.

I agree completely that there is much to be concerned about but QE has had an absolutely HUGE impact, hardly "no avail".
Sadly, as I suspect you will agree, that QE is just kicking the can down the road.
But in the meantime as Don points out, TODAY, the vast majority of the economies that matter are still growing, albeit slowly.

[ATG]

walm said:

Or domestic demand is stimulated as homegrown UK product is now cheaper in GBP than the foreign imported product.
Sure the consumer is paying a little more but not enough to be a concern AND that GBP stays onshore to benefit the UK.

Devaluation doesn't stimulate domestic consumer demand; it suppresses it. If foreign manufactured goods become more expensive it gives UK manufacturers the incentive to raise their own prices too. Prices go up; demand goes down. Consumer choice is also reduced which in itself dampens demand ... e.g. "I don't just want any car; I want a Mercedes, but I'm putting the purchase off for a bit". This may be partially offset by inflation expectations, but it'd be odd to think that that would overcome the usual elasticity of demand. The orthodoxy that most centre-right/monetarist/vaguely sane economists used to put forward was that competitive devaluations are the policy of failing socialist regimes and are an economically illiterate policy because the stimulus is an illusion that quickly dissappears in a puff of inflation. Why is it supposed to be different this time?

[walm]

ATG said:

Devaluation doesn't stimulate domestic consumer demand; it suppresses it. If foreign manufactured goods become more expensive it gives UK manufacturers the incentive to raise their own prices too. Prices go up; demand goes down.

You are ignoring the incremental demand from the fact that the consumer is spending in the UK not on imports.
The UK manufacturer has a choice, either to sell the same (or even lower) volumes at a higher price or to sell more for the same price.
Reality will be somewhere in between.
Although I agree that the stimulus is fleeting and eaten by inflation to an extent, it's still a stimulus.

[Digga]

walm said:

ATG said:

Devaluation doesn't stimulate domestic consumer demand; it suppresses it. If foreign manufactured goods become more expensive it gives UK manufacturers the incentive to raise their own prices too. Prices go up; demand goes down.

You are ignoring the incremental demand from the fact that the consumer is spending in the UK not on imports.
The UK manufacturer has a choice, either to sell the same (or even lower) volumes at a higher price or to sell more for the same price.
Reality will be somewhere in between.
Although I agree that the stimulus is fleeting and eaten by inflation to an extent, it's still a stimulus.

For the UK government, there has never been a better or more apt time to invest in decent infrastructure projects. It's not only my view, but that echoed by a number of economists. Borrowing is cheap and there are many geographic areas where, in particular, enhanced transport would bring greater connectivity and efficiency which could, in and of itself, promote economic activity and productivity.

[walm]

Digga said:

or the UK government, there has never been a better or more apt time to invest in decent infrastructure projects. It's not only my view, but that echoed by a number of economists. Borrowing is cheap and there are many geographic areas where, in particular, enhanced transport would bring greater connectivity and efficiency which could, in and of itself, promote economic activity and productivity.

100% agree.
But not HS2.

[Digga]

walm said:

Digga said:

or the UK government, there has never been a better or more apt time to invest in decent infrastructure projects. It's not only my view, but that echoed by a number of economists. Borrowing is cheap and there are many geographic areas where, in particular, enhanced transport would bring greater connectivity and efficiency which could, in and of itself, promote economic activity and productivity.

100% agree.
But not HS2.

Semantics. I think it is unarguable that HS2 will increase capacity and, overall, it is (at least) a step in the right direction in that regard. There's lots of other clever stuff they could add; e.g. why am I driving to Kent tomorrow morning, just to put my car on a train when I could be doing that in the Midlands and not cluttering up the motorway network?

[ATG]

walm said:

ATG said:

Devaluation doesn't stimulate domestic consumer demand; it suppresses it. If foreign manufactured goods become more expensive it gives UK manufacturers the incentive to raise their own prices too. Prices go up; demand goes down.

You are ignoring the incremental demand from the fact that the consumer is spending in the UK not on imports.
The UK manufacturer has a choice, either to sell the same (or even lower) volumes at a higher price or to sell more for the same price.
Reality will be somewhere in between.
Although I agree that the stimulus is fleeting and eaten by inflation to an extent, it's still a stimulus.

I'm not ignoring it; it's part of the process that leads to the short run net stimulus caused by a devaluation ... but it isn't a stimulus for consumer demand. Selling a consumer a UK manufactured product benefits the entire supply chain, of course, but that's a stimulus to businesses, not consumers.

All else equal the benefit of the stimulus becomes offset by inflation, so you don't end up with any net increase in growth ... i.e. over the long run it ISN'T a stimulant. It might be a useful policy to bridge a shock and reduce the risk of an economic contraction turning into a downward spiral, but the only long term impact of devaluation is inflation, a transfer of wealth from savers to borrowers which surely is morally questionable at the very least?

I'd look at the devaluation as an inevitable and necessary evil, not a "good thing". From the way some posters have been talking, you'd have to ask why every government isn't always trying to devalue sterling.

[Digga]

ATG said:

Selling a consumer a UK manufactured product benefits the entire supply chain, of course, but that's a stimulus to businesses, not consumers.

Which, in turn, may help to create growth in either, or both, earnings and numbers of consumers - employees.

ATG said:

I'd look at the devaluation as an inevitable and necessary evil, not a "good thing". From the way some posters have been talking, you'd have to ask why every government isn't always trying to devalue sterling.

Agreed. It is not a panacea any more than it is necessarily a disaster, as some here seem to believe.

[walm]

ATG said:

I'm not ignoring it; it's part of the process that leads to the short run net stimulus caused by a devaluation ... but it isn't a stimulus for consumer demand. Selling a consumer a UK manufactured product benefits the entire supply chain, of course, but that's a stimulus to businesses, not consumers.

All else equal the benefit of the stimulus becomes offset by inflation, so you don't end up with any net increase in growth ... i.e. over the long run it ISN'T a stimulant. It might be a useful policy to bridge a shock and reduce the risk of an economic contraction turning into a downward spiral, but the only long term impact of devaluation is inflation, a transfer of wealth from savers to borrowers which surely is morally questionable at the very least?

I'd look at the devaluation as an inevitable and necessary evil, not a "good thing". From the way some posters have been talking, you'd have to ask why every government isn't always trying to devalue sterling.

I think perhaps we are agreeing.
The consumer demand remains the same (and eventually eroded by inflation to an extent) BUT the UK seller and associated supply chain benefits since the consumer is buying from THAT seller, not a seller from overseas.

All I am saying is that from the perspective of the UK seller they have seen increased consumer demand for their products.
So his sales will be higher as he has taken market share from the Johnny Foreigner seller.
So you DO see an improvement in growth in the UK as a whole.

Imagine the UK Govt introduced a 10% tax on imported goods.
Clearly, domestic manufacturers and UK businesses would benefit as consumers SHIFTED their demand to "Made in Britain" because it's now cheaper (perhaps temporary).

That's the simple point, no?