The economic consequences of Brexit

[///ajd]

Murph7355 said:

///ajd said:

So you think Jag are fibbing and are not able to see the majesty of your logic?

The idea that brexit britain will thrive and become a global trade powerhouse - by becoming insular and only buying cars made in the UK - is as daft as I just made it sound.

That's not what was being said at all. To think so is what's absurd.

But to be clear, you are therefore content that the Jag job concerns are nonsense and the fag packet business case above trumps any of their issues?

Is that right?

[b2hbm]

sanf said:

(A lot of numbers 'n' stuff)

BUT the UK is a big market - the EU manufacturers want access to it, the UK wants to work with the EU - both have opposing views on free movement - hence the need for negotiating. I really hope (as a remain voter) that we don't screw it up, as I've put before I'm mildly optimistic - although I know I'm putting my faith in politicians to get it right - which is always a bit concerning

I don't know where you got all the numbers from, but well done for taking the time to research and evaluate the problem. Very interesting and far more believable than the "we're all going to die" approach that some on here take.

And this constructive way forward from a self confessed Remain voter as well, well done sir !

[anonymous-user]

Currency devaluation isn't a magic bullet when it comes to production in the UK

You just have to look at the fact that the MG line at longbridge has just shut down. Now I'm not going to pretend that it's the only factor here, but their import costs went up by about 10% rapidly over the past quarter.

By the arguments of others it seems that increasing costs of imports will just lead to more manufscturing coming to the uk, but this shows it definitely isn't the case!

http://www.bbc.co.uk/news/uk-england-birmingham-37...

[anonymous-user]

davepoth said:

This is a good example of why Germany is going to make this deal work. The situation is bad enough in the industrial areas there without having something else to blame on the EU - and the imposition of tariffs is going to hurt BMW/Audi/Mercedes a lot.

Well at the start of the process it made sense for the areas with car manufacturers in the UK to vote to remain.
On the whole they didn't.
I wouldn't assume that logic will always rule when it comes to brexit

[PurpleMoonlight]

davepoth said:

This is a good example of why Germany is going to make this deal work. The situation is bad enough in the industrial areas there without having something else to blame on the EU - and the imposition of tariffs is going to hurt BMW/Audi/Mercedes a lot.

Is it really though?

Would the typical Audi/BMW/Mercedes buyer/leaser really switch to an Astra because the cost had gone up 10%? I don't think so. Small numbers may switch to Jaguar though.

I can see why Jaguar are worried. If their product becomes more expensive in the EU there are a lot of alternatives available to the EU buyer/leaser.

[Jockman]

PurpleMoonlight said:

Is it really though?

Would the typical Audi/BMW/Mercedes buyer/leaser really switch to an Astra because the cost had gone up 10%? I don't think so. Small numbers may switch to Jaguar though.

I can see why Jaguar are worried. If their product becomes more expensive in the EU there are a lot of alternatives available to the EU buyer/leaser.

Not sure I understand your logic PM.

BMW drivers would stay loyal at a higher price but Jag drivers would be disloyal at a higher price?

[Jockman]

///ajd said:

Murph7355 said:

///ajd said:

So you think Jag are fibbing and are not able to see the majesty of your logic?

The idea that brexit britain will thrive and become a global trade powerhouse - by becoming insular and only buying cars made in the UK - is as daft as I just made it sound.

That's not what was being said at all. To think so is what's absurd.

But to be clear, you are therefore content that the Jag job concerns are nonsense and the fag packet business case above trumps any of their issues?

Is that right?

What we are seeing is posturing by Big Business collectively. Rightly so. They have their interests to look after. And their Stakeholders.

[anonymous-user]

///ajd said:

cookie118 said:

Trade tarriffs would be disastrous states jlr boss

http://www.independent.co.uk/news/business/news/br...

It doesn't get much clearer than that.

You might have underestimated the insight and wisdom of the armchair captains of industry that post here.

[b2hbm]

PurpleMoonlight said:

Is it really though?

Would the typical Audi/BMW/Mercedes buyer/leaser really switch to an Astra because the cost had gone up 10%? I don't think so. Small numbers may switch to Jaguar though.

I can see why Jaguar are worried. If their product becomes more expensive in the EU there are a lot of alternatives available to the EU buyer/leaser.

Well I'd change if I no longer thought the German cars were good value. It's not just company directors buying those 300,000 BMW/Audis quoted in sanf's post, it's mostly "normal folks". The wife has a TT, I've got a Cayman. Changing to Jag wouldn't bother the missus in the slightest, in fact she'd probably see it as an upgrade. (old ideas about Morse & his 3.8 ) Porsche are probably in a different market niche and would hold up, but even last time it was a toss between Porsche & Lotus.

[powerstroke]

///ajd said:

Murph7355 said:

///ajd said:

So you think Jag are fibbing and are not able to see the majesty of your logic?

The idea that brexit britain will thrive and become a global trade powerhouse - by becoming insular and only buying cars made in the UK - is as daft as I just made it sound.

That's not what was being said at all. To think so is what's absurd.

But to be clear, you are therefore content that the Jag job concerns are nonsense and the fag packet business case above trumps any of their issues?

Is that right?

Didn't you ever ask for more than you wanted when doing a deal ?? Hmm ....

[PurpleMoonlight]

Jockman said:

Not sure I understand your logic PM.

BMW drivers would stay loyal at a higher price but Jag drivers would be disloyal at a higher price?

Pretty much, but more UK driver will stay loyal but EU driver wont.

[JagLover]

They had the head of the German trade federation (or something similar) on R4 this morning saying that single market access without freedom of movement is impossible.

In that case, so be it, we will still trade with the rest of the world and with Europe under WTO rules. There will of course be economic disruption both here, and in parts of the EU, but this is about more than economics and always has been.

[Jockman]

JagLover said:

They had the head of the German trade federation (or something similar) on R4 this morning saying that single market access without freedom of movement is impossible.

In that case, so be it, we will still trade with the rest of the world and with Europe under WTO rules. There will of course be economic disruption both here, and in parts of the EU, but this is about more than economics and always has been.

I heard him too. He stated on the record that a hard brexit would be better for the EU and the UK than some sort of 'fudge' in the middle.

[paul789]

Hard Brexit is just the 'fk em' approach - the 'Leave it Dean he ain't worth it' method. It's all very Amygdala driven but it may just be the only way. A quick, clean break.

[RYH64E]

paul789 said:

cookie118 said:

Trade tarriffs would be disastrous states jlr boss

http://www.independent.co.uk/news/business/news/br...

There's no way May will ignore warnings like this. She's too shrewd. She has a master plan. We'll have a bespoke deal.

Your blind faith is touching, but not particularly reassuring. May's between a rock and a hard place, she more than likely knows what deal she would like and what deal is best for the country, but her negotiating partners in the EU aren't likely to let her have it and the die hard Brexiters in the cabinet appear to have interpreted the will of the people as expressed in the referendum to mean no contributions and no free movement.

She's probably waiting for the dumb foreigners to wake up and realise that they need us more than we need them, and that they don't really want our automotive and financial services companies relocating or prioritising investment in their EU plants...

[sanf]

powerstroke said:

///ajd said:

Murph7355 said:

///ajd said:

So you think Jag are fibbing and are not able to see the majesty of your logic?

The idea that brexit britain will thrive and become a global trade powerhouse - by becoming insular and only buying cars made in the UK - is as daft as I just made it sound.

That's not what was being said at all. To think so is what's absurd.

But to be clear, you are therefore content that the Jag job concerns are nonsense and the fag packet business case above trumps any of their issues?

Is that right?

Didn't you ever ask for more than you wanted when doing a deal ?? Hmm ....

ajd - that is not what I said at all, I'm posing question's based on figures - I don't have the answers, that's up to our politicians to sort out - as outlined in the post. However you seem hell bent on trying to shoot down anybody that says anything remotely positive about the UK leaving the EU. You're a kind of hardcore militant remainer, with the kind of irrational arguments that ultimately lost us (I say us a remainer) the referendum -the Osbourne/Cameron school of scaring the crap out of people failed terribly, they should have sold a positive message. The main problem now with that message is pretty much none of the doom and gloom predicted has happened....(ok yet), which undermines the argument and makes the leave campaign look more sanguine. Please stop trying to make out anybody trying to be positive is an idiot.

All businesses want the best out of negotiations, its the very nature of business, all businesses across A LOT sectors will currently be lobbying the government with their view with their self interest. At NO point did I suggest we should be isolationist, what I have done is look at the figures and tried to get a handle on what is actually happening with the UK car market - an how that could in theory change....it may not at all.

The figure that is bounded about is 10% tariffs, the UK deficit (just the deficit) on the EU trade is £96 billion, so if that were to happen the government will end up with a £9.6billion 'fund' - that's without even thinking about the disputed £300 million a week. Ironically with tariffs and a deficit the EU could end up funding the UK government!!

Just imagine for a moment, post brexit, bear with me on this.....If the government goes down the route of offering a rebate to UK manufacturers of the 10% - which it will have the funds to do, then in theory from day -1 to +1 brexit the net cost of production & sale would be the same, but the manufacturers could offset the 10% tariff - allowing the costs in the EU to remain the same.

One point I'm sure someone on here will know - with the 10%+ devaluation in sterling - have Jag reduced their prices across the EU? Or are they making more profit by keeping prices the same. I also appreciate it's a complicated manufacturing process, with the parts that are used also coming from the EU - therefore costs increasing (and decreasing) at different stages of manufacturing.

Good businesses look for opportunities - the UK market is a good opportunity, BMW drivers won't want an Astra, but a Jag XE/Jag XF...why not? Ford Focus, change to Astra/Qashqai, Vauxhall Cora, change to Mini. If and it's a BIG if the government get creative post tariffs and in a bid to keep manufacturing in the UK offer a 10% reduction on VAT to UK produced goods which they can do outside the EU, that is a big shift.

Jag XE 2.0d - £29,775 (list) would reduce to £26,797.50
BMW 320eD - £28,775 (list) increases to £31,652.50 (+£4,855)
Merc C220d - £29,365 (list) increases to £32,301.50 (+£5,504)
Audi A4 Technik - £29,265 (list) increases to £32,191.50 (+5,394)

Loyalty always has a price - you could argue the above is protectionist, however the increase would be down to EU tariffs and nothing else and decrease due to a 'protectionist' creative government. But with Jag sales of 4,000 units in Germany - if they had a rebate to hold the costs the same and offset the tariffs, while selling more in the UK that is a business opportunity, pure and simple. Businesses want to exploit all opportunities.

Brexit scares the hell out of me, it is a worry - I looked long and hard before making my decision, as it turned out the 'wrong' one. I've come through the grieving and am now trying to be positive. Please don't just shoot people down from trying to think about where the positives may come from, there may be none....but that is just too depressing. I think if hard core remainers were leading the negotiations we could all curl up in the corner and cry.......

However lets see how it pans it, yes it could go very, very wrong - and be an utter disaster, bet lets hope not. If the team rock up to negotiations and say - 'we want tariff free access, but put no money towards the EU and not have free movement of people' the EU will laugh them out of the room and breath a huge sigh of relief as they realise no thought has gone into this at all. However a well thought out position will allow both sides to negotiate properly, as ALL businesses do daily.

Don't under estimate the UK, the size of the economy and the people's resilience....we are asking, infact expecting a lot from the Brexit team, so they better deliver. I just hope they do.

[catso]

sanf said:

Just imagine for a moment, post brexit, bear with me on this.....If the government goes down the route of offering a rebate to UK manufacturers of the 10%

Do you honestly think they would do that?

[Andy Zarse]

sanf said:

If and it's a BIG if the government get creative post tariffs and in a bid to keep manufacturing in the UK offer a 10% reduction on VAT to UK produced goods which they can do outside the EU, that is a big shift.

Jag XE 2.0d - £29,775 (list) would reduce to £26,797.50
BMW 320eD - £28,775 (list) increases to £31,652.50 (+£4,855)
Merc C220d - £29,365 (list) increases to £32,301.50 (+£5,504)
Audi A4 Technik - £29,265 (list) increases to £32,191.50 (+5,394)

Great posts from sanf, and I totally agree with the positive sentiments. Looking on the down side is a peculiarly British perspective to take. All I know is that if the UK industry players are making such pleas to Mrs May then just imagine the ear-bending Merkel is getting from her industry heavyweights.

That said, with regard to your suggestion on reducing VAT on UK produced vehicles, can anyone confirm if this would breach WTO rules? In my view, this would be unduly protectionist and with say a 10% import tariff, plus the GBP currency devaluation, I suspect the balance is already tippped far enough in the UK manufacturers' favour.

Comments?

[walm]

Andy Zarse said:

All I know is that if the UK industry players are making such pleas to Mrs May then just imagine the ear-bending Merkel is getting from her industry heavyweights.

I think that is the wrong way round.
I don't know the numbers but it seems likely to me that the % of cars made in the UK and exported to the EU will be far higher than the % made in say Germany and imported here.

So JLR might well see what up to 50% of their volumes under the threat of a 10% tariff on arrival in the EU for sale.
Which would be a disaster.

Whereas for VW, who send perhaps 5% of their cars to the UK, it's no big deal.
Sure they would rather the status quo with no tariffs but they won't be shutting down entire plants just because a tiny end market (for them) sees a slight drop in demand.

Hence JLR has far more to lose than VW from a mutually imposed 10% tariff (as per WTO rules), no?

[London424]

Isn't that a a classic example of looking at percentages rather than numbers?

As in 5% of VW might be 50,000 vehicles, whereas 50% of JLR is 2,000 vehicles. So JLR need to try and convince the 50,000 potential VW buyers into a JLR. As long as they can find 2,000 of them they are in the same position as they were.