The economic consequences of Brexit
Poll: The economic consequences of Brexit
Total Members Polled: 732
Discussion
Now I'm no economist and generally have no clue about this sort of thing but how long can growth occur when we've got finite resources and finite space?! why is growth seen as a good thing? Why do we push to keep builders building and everyone to keep making stuff?Surely we need to look at other ways of keeping people occupied / in money?!
don4l said:
jjlynn27 said:
shakotan said:
I have seen it, and yet Dell didn't see reason for a 15% price increase in February when the dollar was at 1.38/£.
How surprising.
I'll try to explain differently. This price increase is result of Dell's view where the pound is going to go. In other words, they see that result of brexit will push pound down. I'm not sure why you are surprised by this. And they are not going to be the only ones, of course. Hence need for calming the markets and getting on with things.How surprising.
Do you agree that Dell have got it wrong?
Dell doesn't want be exposed to perceived volatility of pound. Different sources are predicting different things obviously. So they fixed exchange rate for whatever term to certain rate. Dell now doesn't win or lose regardless of rate movement. They sold the risk to someone else. Whatever happens, bar their counterpart going kaput, they know how much US$ will they get when they exchange their £. To compensate for that rate (and/or whatever else) they've decided to put up prices by 15%.
I'm, rather obviously not in FX, so above is possibly quite wrong. It seems to me like the most obvious explanation. Quick look on one of the client sites predicts 1.10 by New Year. I don't agree or disagree with that either. But it does like a prudent idea to fix if you don't want to gamble.
Can someone tell me why Germany will give a stuff about our £24n trade deficit? All through the campaign and since we have repeatedly been told that it will strengthen our negotiating position, but the amount is peanuts to the Germans, especially when set against the potential of relocating financial services from London to Frankfurt.
Despite what Melvyn King asserts, German and European bankers are rubbing their hands right now.
Despite what Melvyn King asserts, German and European bankers are rubbing their hands right now.
Mario149 said:
At the risk of putting words into jlynn's mouth, they made a long term judgement (probably 6+ months I'd imagine with suppliers and what not) and it doesn't matter whether Dell have got it wrong, the end result is still the same: their product just got 15% more expensive for us to buy.
As much as you were wrong on JD thread, the above is correct 
. Easiest to imagine, for me, is like a fixed mortgage, you have no idea what IR will do, so you want to protect yourself for as long as possible. You might get stuck on IR that is actually higher than the rate at some point in future but at least you know what your payment is going to be.jjlynn27 said:
I'm, rather obviously not in FX, so above is possibly quite wrong. It seems to me like the most obvious explanation. Quick look on one of the client sites predicts 1.10 by New Year. I don't agree or disagree with that either. But it does like a prudent idea to fix if you don't want to gamble.
Given that I can lock in a rate of 1.33 or thereabouts, who is willing to trade at 1.1?I feel there is some money to be made...
Evolved said:
Time to switch manufacturers then, opportunistic twits. Their machines are run of the mill anyway!
I work for a multi billion pound company, we spend months having hardware approved to go on the list of equipment we can use, it will take months to get approval to use someone else.Another thing, we're a European company most of what we sell is supplied by Europe, it's about to get a damn sight more expense to do business.
fido said:
So run me through the scenario for a trade war - and who gains/loses what? If you did this then you would answer your own question ..
I am not building scenario for a trade war, simply wondering why Germany would give a stuff about losing £24bn, especially when set against the potential gains of relocating business from London to Frankfurt. sidicks said:
Mrr T said:
FX forward rates are nothing to do with where the market thinks the currency will be in the future. The forward rates are set by the interest rate differences between the relevant currencies.
Indeed, that's the theoretical starting point. And if 'Most people around the world' thought that GBP was going to depreciate further, they wouldn't trade in the market to implement that view?And if so, what would happen to the forward rate?
F is the forward exchange rate
S is the current spot exchange rate
id is the interest rate in domestic currency (base currency)
if is the interest rate in foreign currency (quoted currency)
Blue62 said:
I am not building scenario for a trade war, simply wondering why Germany would give a stuff about losing £24bn, especially when set against the potential gains of relocating business from London to Frankfurt.
But that's exactly the scenario you would build to analyse what decision you make? Who is Germany? Merkel, the industry minister, the Eurocrats, the CEO of BMW? It's not a simple decision about £24bn. Why couldn't they relocate business to Frankfurt when we were inside the EU?I don't think it's even a question of "trade war". If we trigger A50 I think we may have lost already. From figures I can find:
1) 80% of our exports are financial services
2) 43% of our financial services go to the EU
Financial services aren't covered by WTO to the best of my knowledge, there are non tariff barriers such as laws/regulations etc. So while we might end up on WTO most favoured nation status rules paying 5%-or-whatever tax on our BMWs, without staying in the single market, we can't sell any of our financial services to the EU without another agreement. Based on the figures from (1) and (2), that's 30%+ of our exports at risk. And that doesn't even account for the fact that while some of our FS go elsewhere, much of them that do may be dependent on us having access to Europe.
As far as I can tell, whatever plan we have it doesn't matter. We trigger A50, the EU tells us the terms they want, we tell them ours, and they just smile, sit back and watch as we try and work out where else we're going to sell 30%+ of our exports at 24 months notice if we don't agree to what they're asking.
Happy to be corrected as I'm not an economist,
1) 80% of our exports are financial services
2) 43% of our financial services go to the EU
Financial services aren't covered by WTO to the best of my knowledge, there are non tariff barriers such as laws/regulations etc. So while we might end up on WTO most favoured nation status rules paying 5%-or-whatever tax on our BMWs, without staying in the single market, we can't sell any of our financial services to the EU without another agreement. Based on the figures from (1) and (2), that's 30%+ of our exports at risk. And that doesn't even account for the fact that while some of our FS go elsewhere, much of them that do may be dependent on us having access to Europe.
As far as I can tell, whatever plan we have it doesn't matter. We trigger A50, the EU tells us the terms they want, we tell them ours, and they just smile, sit back and watch as we try and work out where else we're going to sell 30%+ of our exports at 24 months notice if we don't agree to what they're asking.
Happy to be corrected as I'm not an economist,
Genuine question - how did the UK get to be such a big player in financial services? Is it because we're the larger of only two English-speaking countries in the EU, or because we are better at this stuff than the French and Germans, or something else? If the answer is (a) we might be stuffed (buy shares in Dublin property companies, now), if (b) we might be OK.
fido said:
But that's exactly the scenario you would build to analyse what decision you make? Who is Germany? Merkel, the industry minister, the Eurocrats, the CEO of BMW? It's not a simple decision about £24bn. Why couldn't they relocate business to Frankfurt when we were inside the EU?
From the few bits that I've heard (open to corrections as usual); They were actively trying to poach business for yonks, you had Lord Hill, stable environment in London within EU, talent pool. Now; Lord Hill gone, no one knows what options will be available to stay within single market and will not know for next couple of years. What I do know is, that Germans are contacting tech firms in London and offering sweet deals to move them to Berlin. I'm talking about companies run by tech people in their 20s and early 30s who, ime, are not particularly bothered with democracy, sovereignty and are much more interested in stable environment, funding and freedom of movement.
sidicks said:
Given that I can lock in a rate of 1.33 or thereabouts, who is willing to trade at 1.1?
I feel there is some money to be made...
Or lost, it's a gamble. Having said that, the advice I've been given is to expect GBP to weaken further, but they're wrong as often as they're right.I feel there is some money to be made...
I've given up speculating on currency, from now on if I take on a large job at a low margin I'm buying enough currency to cover it at whatever rate I've assumed in the quote, and my prices are going up.
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