The economic consequences of Brexit

[SilverSixer]

don4l said:

rs1952 said:

Don seems to think that a sunk £ is a good idea - but then Don has a lot of strange ideas...

There are few benifits in having a strong pound.

One of the benefits is that foreign holidays are a bit cheaper.

I've recently had a couple of weeks in Spain. Everything cost 8% more than last year. In all honesty, I didn't really notice that it was more expensive. When you are dining out at a cost of €10 per head, 8% doesn't make much difference.

We have recently heard that British resorts are having a fantastic summer because people are having their holidays here. This is a huge benefit to Britain. While these holidaymakers are here, they are spending money. The recent rise in consumer spending is a direct result of this.

People ask about the effects on importers. The good news is that importers will be badly hit. Imports are not good for an economy. It is much better to manufacture goods than to import them.


Britain suffers from a trade deficit, and a weak pound will help to rectify that problem.

Sounds like it would be a brilliant idea then for Scotland to go independent, and start its own, weak currency (let's call it the 'Jocko') in order to address the trade deficit they would inevitably be starting out with. Imagine, they could start it off at 10 Euros to the Jocko, and then watch it slide down to parity, perhaps beyond if they're lucky, rubbing their hands with glee about all the lovely new exporting opportunities and the demolition of their trade deficit. Soon, they will be in economic nirvana, and will have a smashing little exchange rate like Italy and Turkey used to have, maybe even reach that golden zone of 1,000,000 Jockos to the Euro.

Anyone got Sturgeon's phone number, I think don4l's got a plan.

[youngsyr]

fblm said:

youngsyr said:

...what continues to worry me are the "macro" indicators, namely the GBP:USD exchange rate...

Of all the things to worry about, the exchange rate isn't currently one of them. In a world of almost no inflation there are far more positives than negatives from a weaker exchange rate. In any event to put the post Brexit drop into context; it fell from the 1.40's to the 1.30's and in the 08 recession it fell from 2.1 to 1.4

You weaken your argument by selectively editing your numbers - "fell from the 1.40's to the 1.30's" suggests around a 10c fall (7%), in fact it fell from 1.48 to 1.29: a 19c (13%) fall and this all happened within 1 week of the Brexit decision.

The financial crisis, although saw much greater falls, it was also over a much more elongated time period - the USD 2.10 to USD 1.4 that you're talking about over around 18 months from mid 2007 to early 2009 (the USD was also never at 2.10 during 2008, as per your example).

Probably also worth pointing out that the financial crisis was the worst global recession we've ever seen that we are still recovering from now, 8 years later.

[Digga]

youngsyr said:

Probably also worth pointing out that the financial crisis was the worst global recession we've ever seen that we are still recovering from now, 8 years later.

Probably also worth pointing out that one of the reasons the UK saw such a correction, where France did not, was they the French government kept spending like a man with no arms, and, they, Spain and Portugal have faced repeated budget warnings from the EU to no avail. Yet...

Things are not fixed as they are right now.

[Dr Jekyll]

SilverSixer said:

Sounds like it would be a brilliant idea then for Scotland to go independent, and start its own, weak currency (let's call it the 'Jocko') in order to address the trade deficit they would inevitably be starting out with. Imagine, they could start it off at 10 Euros to the Jocko, and then watch it slide down to parity, perhaps beyond if they're lucky, rubbing their hands with glee about all the lovely new exporting opportunities and the demolition of their trade deficit. Soon, they will be in economic nirvana, and will have a smashing little exchange rate like Italy and Turkey used to have, maybe even reach that golden zone of 1,000,000 Jockos to the Euro.

Anyone got Sturgeon's phone number, I think don4l's got a plan.

If a country has a trade deficit then devaluing the currency is exactly the right plan. In fact a trade deficit simply shows that the currency is overvalued in the first place.

[FN2TypeR]

Digga said:

youngsyr said:

Probably also worth pointing out that the financial crisis was the worst global recession we've ever seen that we are still recovering from now, 8 years later.

Probably also worth pointing out that one of the reasons the UK saw such a correction, where France did not, was they the French government kept spending like a man with no arms, and, they, Spain and Portugal have faced repeated budget warnings from the EU to no avail. Yet...

Things are not fixed as they are right now.

This is very true, the can has been kicked and kicked and kicked down the road.

[SilverSixer]

Dr Jekyll said:

SilverSixer said:

Sounds like it would be a brilliant idea then for Scotland to go independent, and start its own, weak currency (let's call it the 'Jocko') in order to address the trade deficit they would inevitably be starting out with. Imagine, they could start it off at 10 Euros to the Jocko, and then watch it slide down to parity, perhaps beyond if they're lucky, rubbing their hands with glee about all the lovely new exporting opportunities and the demolition of their trade deficit. Soon, they will be in economic nirvana, and will have a smashing little exchange rate like Italy and Turkey used to have, maybe even reach that golden zone of 1,000,000 Jockos to the Euro.

Anyone got Sturgeon's phone number, I think don4l's got a plan.

If a country has a trade deficit then devaluing the currency is exactly the right plan. In fact a trade deficit simply shows that the currency is overvalued in the first place.

So why is one of the biggest arguments against Scottish independence the fact that they would have to create new, and probably weak, currency? Sounds like they should go for it.

[Dr Jekyll]

SilverSixer said:

So why is one of the biggest arguments against Scottish independence the fact that they would have to create new, and probably weak, currency? Sounds like they should go for it.

The problem is having to create a new currency at all, whether it would be weak or not isn't the issue. The biggest argument against Greece being in the Euro is that if prevents them solving their problems by devaluing the currency. Which was also the problem with the UK being in the ERM.

To reiterate, we have a trade deficit, ergo the currency is too strong, QED.

[SilverSixer]

Dr Jekyll said:

SilverSixer said:

So why is one of the biggest arguments against Scottish independence the fact that they would have to create new, and probably weak, currency? Sounds like they should go for it.

The problem is having to create a new currency at all, whether it would be weak or not isn't the issue. The biggest argument against Greece being in the Euro is that if prevents them solving their problems by devaluing the currency. Which was also the problem with the UK being in the ERM.

To reiterate, we have a trade deficit, ergo the currency is too strong, QED.

But Scotland could break from the UK/Pound, and devalue even more freely, and solve its trade deficit more quickly than rUK tied to that overvalued pound, and FREEDOM!!!

Sounds like a brexiter's argument.

Why is having to create a new currency a problem? Just print pretty notes with William Wallace on them and loads of 00000000000000000s. Job done.

[Jockman]

SilverSixer said:

So why is one of the biggest arguments against Scottish independence the fact that they would have to create new, and probably weak, currency? Sounds like they should go for it.

Is it? I wasn't aware of that.

[SilverSixer]

Jockman said:

SilverSixer said:

So why is one of the biggest arguments against Scottish independence the fact that they would have to create new, and probably weak, currency? Sounds like they should go for it.

Is it? I wasn't aware of that.

OK, MAY have had to create a new currency, or join the Euro, or take the risk of trying to hold on to Sterling with a potentially disruptive partner over the border. It certainly was a big issue during the independence referendum campaign - the currency question was simply not addressed properly by the Yes campaign and the SNP. It remains one of the biggest issues.

If only they'd rung don4l.

What I find interesting is that it seems that economic stability and the currency issue was one of the biggest drivers delivering a No vote in Scotland in 2014, and this reasoning was then repeated in their Remain vote this year. They get it. The economic risks were too great. England and Wales evidently skipped a few lessons.

[don4l]

More good post Brexit news!

Daily Mail said:

Demand for new homes has soared since the Brexit vote, says major housebuilder as Britons shrug off concerns about leaving the EU

http://www.dailymail.co.uk/news/article-3755545/De...

A few weeks ago I recommended that people buy Taylor Wimpey shares at £1.21. Many of you laughed at me - utterly convinced that the UK construction industry was doomed because "Leave" had won.

Today they are trading at £1.68. You could have made 38% in just a few weeks.

If the Remoaners had a bit more confidence in their country, they could be making a bit of money.

[catso]

don4l said:

People ask about the effects on importers. The good news is that importers will be badly hit. Imports are not good for an economy. It is much better to manufacture goods than to import them.

Thanks for that

The products I import from Italy are not made here (and that goes for a lot of technical/manufacturing equipment).

My customers are UK manufacturers, so the higher prices are actually hurting an already battered UK manufacturing industry...

[SilverSixer]

catso said:

don4l said:

People ask about the effects on importers. The good news is that importers will be badly hit. Imports are not good for an economy. It is much better to manufacture goods than to import them.

Thanks for that

The products I import from Italy are not made here (and that goes for a lot of technical/manufacturing equipment).

My customers are UK manufacturers, so the higher prices are actually hurting an already battered UK manufacturing industry...

But he's right though, catso. I'm busy planting olive groves here in Berkshire as I will now be able to supply the UK with Extra Virgin at a very reasonable price. Everyone's a winner. I'm just on hold to Tesco's at the moment.

[catso]

SilverSixer said:

catso said:

don4l said:

People ask about the effects on importers. The good news is that importers will be badly hit. Imports are not good for an economy. It is much better to manufacture goods than to import them.

Thanks for that

The products I import from Italy are not made here (and that goes for a lot of technical/manufacturing equipment).

My customers are UK manufacturers, so the higher prices are actually hurting an already battered UK manufacturing industry...

But he's right though, catso. I'm busy planting olive groves here in Berkshire as I will now be able to supply the UK with Extra Virgin at a very reasonable price. Everyone's a winner. I'm just on hold to Tesco's at the moment.

Indeed, maybe you should diversify and set a vineyard, 'Chianti Berkshire' sounds like a winner...

[anonymous-user]

don4l said:

If the Remoaners had a bit more confidence in their country, they could be making a bit of money.

Who says remainers are not making money ?

[PurpleMoonlight]

catso said:

don4l said:

People ask about the effects on importers. The good news is that importers will be badly hit. Imports are not good for an economy. It is much better to manufacture goods than to import them.

Thanks for that

The products I import from Italy are not made here (and that goes for a lot of technical/manufacturing equipment).

My customers are UK manufacturers, so the higher prices are actually hurting an already battered UK manufacturing industry...

I think Don would like to close the boarders and make the UK self sufficent. Doesn't to seem work all that well for North Korea but hey, we'll be fine .....

[anonymous-user]

PurpleMoonlight said:

I think Don would like to close the boarders and make the UK self sufficent. Doesn't to seem work all that well for North Korea but hey, we'll be fine .....

It does appear that way.

[SilverSixer]

As if by magic, the story appears today:

http://www.bbc.co.uk/news/uk-scotland-37167975

Now if they weren't shackled to a politically driven currency union with no say over their own legislation and could act to vary the value of their own currency at will, everything would be OK........right?

[London424]

People seem to still be spending money...

http://www.travelweekly.co.uk/articles/62853/indus...

[Puggit]

French media seem to have picked up on the lack of a crash: http://www.lefigaro.fr/economie/le-scan-eco/decryp...

(use Chrome to translate it...)