The economic consequences of Brexit

[anonymous-user]

walm said:

Ghibli said:

All we need to do is change our sell price from £166 to £249 or not use sterling.

The selling price was in EUR though so that is what happens for exporters.

For all the companies who sell things in dollars or euros but have at least SOME GBP costs (e.g. labour) then Don is right. They will make more money.
Even if (almost) EVERYTHING was in USD, for example, but they happened to be a GBP listed company (e.g. BP) then the value of the company goes up a lot because those USDs they earn in profits are worth a lot more GBP now.

This is what the papers mean when they say "the UK will be more competitive with a low GBP".
Our labour is cheaper for EVERYONE ELSE to buy.

The negative side of it is that imports for Brits become more expensive.
So yes - the price will have to rise in GBP, which hurts UK consumers.
This is well documented by Dell, Apple and others raising the price of their products almost immediately post Brexit since all their costs for making those products are USD and getting paid in a weak GBP was squeezing their profits downwards.

It's the negative side which is worrying the thing. Most people in the U.K. Don't benefit from exporting and they will be paying the price.

[don4l]

Ghibli said:

Got it !

All we need to do is change our sell price from £166 to £249 or not use sterling.

You clearly have not got it at all.

The customer has paid exactly the same price in both cases.

Read it again, but a bit more slowly.

[gavsdavs]

andymadmak said:

gavsdavs said:

Thread subject is "The economic consequences of Brexit"

Thread subject is not "Pedantic squabbling about exact percentages of currency devalutation"

But you knock yourself out anyway.

You claimed a 20 - 25% price increase - presumably as as a consequence of the Brexit vote. I merely asked you how you got to your number. You cited the currency chart (actually the same one I use every day) which shows that the real change is probably less than 15%. I'm hardly knocking myself out or being pedantic when I am just trying to get to the bottom of your figures! So now we know it was just some hyperbole on your part we can all move on.

Whilst you're fretting about how-many-percentages-points-i-said does not detract from the fact we've lost somewhere around 15% (by your own numbers) of our spending power. Worry about the minutiae, not the bigger picture, why don't you.

Seems you'd rather 'merely' rubbish my comments for 'hyperbole' than actually admit there has been a negative "economic consequence".

As I said, knock yourself out.

[anonymous-user]

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.

[walm]

Ghibli said:

It's the negative side which is worrying the thing. Most people in the U.K. Don't benefit from exporting and they will be paying the price.

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.

Generally a little inflation can be a good thing short/medium term because it keeps everybody in the "spend now save later" frame of mind which stimulates the economy.
(At least that's how the BofE justifies weakening the pound like it did.)

Long term, the jury is still out of course!!

[don4l]

Ghibli said:

It's the negative side which is worrying the thing. Most people in the U.K. Don't benefit from exporting and they will be paying the price.

Nonsense. (And congratulations on an excellent bit of goalpost manoeuvring).

Most people do benefit from exporting.

If we stopped exporting tomorrow you know, as well as I do, that millions would lose their jobs.

The social and economic costs would be horrendous.

[anonymous-user]

don4l said:

Ghibli said:

It's the negative side which is worrying the thing. Most people in the U.K. Don't benefit from exporting and they will be paying the price.

Nonsense. (And congratulations on an excellent bit of goalpost manoeuvring).

Most people do benefit from exporting.

If we stopped exporting tomorrow you know, as well as I do, that millions would lose their jobs.

The social and economic costs would be horrendous.

There is no moving goal posts

Both my prices are in sterling and unless the uk is going to stop using sterling they are not going to benefit.

[davepoth]

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.

[walm]

don4l said:

Most people do benefit from exporting.

If we stopped exporting tomorrow you know, as well as I do, that millions would lose their jobs.

The social and economic costs would be horrendous.

Ha - now you've moved the posts.
When was "stopping exporting" on the cards!!

Sure, the FX benefit of higher profits accrues to the business owners. It's still an open question whether that "trickles down" to the employees!!

[walm]

Ghibli said:

Both my prices are in sterling and unless the uk is going to stop using sterling they are not going to benefit.

Exporters don't price in sterling though. That's all he's saying.

[don'tbesilly]

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.

[don4l]

walm said:

don4l said:

Most people do benefit from exporting.

If we stopped exporting tomorrow you know, as well as I do, that millions would lose their jobs.

The social and economic costs would be horrendous.

Ha - now you've moved the posts.
When was "stopping exporting" on the cards!!

Sure, the FX benefit of higher profits accrues to the business owners. It's still an open question whether that "trickles down" to the employees!!

I must be extremely bad at explaining myself.

Nobody has suggested that we stop exporting. I was responding to a post that suggested that most people don't benefit from exporting. We all benefit from exports.

[don4l]

Ghibli said:

don4l said:

Ghibli said:

It's the negative side which is worrying the thing. Most people in the U.K. Don't benefit from exporting and they will be paying the price.

Nonsense. (And congratulations on an excellent bit of goalpost manoeuvring).

Most people do benefit from exporting.

If we stopped exporting tomorrow you know, as well as I do, that millions would lose their jobs.

The social and economic costs would be horrendous.

There is no moving goal posts

Both my prices are in sterling and unless the uk is going to stop using sterling they are not going to benefit.

The customer is buying in Euros. The customer hasn't seen a price change. We have simply made a lot more profit.

Magic, innit?

If you still feel that I am wrong, why don't you do a simulation of the same transaction. You could even come up with a completely different scenario, if you prefer.

Another way to prove me wrong would be to analyse my figures and highlight any errors.

I'm happy to help in any way that I can.

[RYH64E]

don4l said:

I must be extremely bad at explaining myself.

You could always try another balloons and sticks analogy, that worked well last time.

[davepoth]

walm said:

Ghibli said:

Both my prices are in sterling and unless the uk is going to stop using sterling they are not going to benefit.

Exporters don't price in sterling though. That's all he's saying.

Some do - we have a couple of export customers that buy in GBP. Thing is, we could either jack up the price by 10% in sterling and the customer wouldn't be spending any extra, or if we weren't seeing too much pressure from our suppliers we could leave the price where it is and pull in a load of extra business.

[anonymous-user]

don4l said:

The customer is buying in Euros. The customer hasn't seen a price change. We have simply made a lot more profit.

Magic, innit?

If you still feel that I am wrong, why don't you do a simulation of the same transaction. You could even come up with a completely different scenario, if you prefer.

Another way to prove me wrong would be to analyse my figures and highlight any errors.

I'm happy to help in any way that I can.

We went through this a few weeks ago. Some posters pointed out they sell in sterling, others not.

You only give praise for the fall of sterling because you personally benefit from it. There is another side which you ignore.

Imports will be more expensive which will effect the whole country. Many won't notice it but the poorer people will. My guess is that these areas will be the areas that voted to leave. if you are planning to set up in these areas and help these people by offering them work with good wages that's great. If you are not and you just want to sit there rubbing your hands together telling them the fall in sterling is the best thing that ever happened to them it shows you are ignoring the economic consequences of Brexit.

Are the poorer areas of the uk booming from Brexit ?

[Jockman]

Ghibli said:

Are the poorer areas of the uk booming from Brexit ?

Probably as much as they were booming before the referendum.

[amgmcqueen]

This thread just keeps repeating the same old ste over and over again.

The simple facts are some people will be better off, others worse. Brexit has been massively beneficial to myself and every company associated. We have struggled to meet demand from our US customer base who are making the most of the fall in Sterling.

[powerstroke]

amgmcqueen said:

This thread just keeps repeating the same old ste over and over again.

The simple facts are some people will be better off, others worse. Brexit has been massively beneficial to myself and every company associated. We have struggled to meet demand from our US customer base who are making the most of the fall in Sterling.

Yes and Looks like if you gave the Remainers the moon on a stick they would still be moaning , just think how much mental energy is being wasted too , Brexititus maybe !!!

[SELON]

Ghibli said:

don4l said:

The customer is buying in Euros. The customer hasn't seen a price change. We have simply made a lot more profit.

Magic, innit?

If you still feel that I am wrong, why don't you do a simulation of the same transaction. You could even come up with a completely different scenario, if you prefer.

Another way to prove me wrong would be to analyse my figures and highlight any errors.

I'm happy to help in any way that I can.

We went through this a few weeks ago. Some posters pointed out they sell in sterling, others not.

You only give praise for the fall of sterling because you personally benefit from it. There is another side which you ignore.

Imports will be more expensive which will effect the whole country. Many won't notice it but the poorer people will. My guess is that these areas will be the areas that voted to leave. if you are planning to set up in these areas and help these people by offering them work with good wages that's great. If you are not and you just want to sit there rubbing your hands together telling them the fall in sterling is the best thing that ever happened to them it shows you are ignoring the economic consequences of Brexit.

Are the poorer areas of the uk booming from Brexit ?

Don't worry about people. They won't want a pay rise or anything like that so they can continue to buy those imported goods. They'll carry on being happy with their pay or benefits staying the same while inflation rises. Won't they.

Let them buy those British made Apple equivalent products that someone suggested they could do as an alternative to the expensive imports.

Also when we're fully out, those little (in some cases not so little) import / export tariffs will nibble at those profit margins. But those will get swallowed by the aforementioned people having to suck it up in their pay freezes.

Will all even itself out in the end. I just pity the kids who left school in 2008 and will have had their first 15 years of working life blighted.