The economic consequences of Brexit

[Garvin]

London424 said:

HughiusMaximus said:

Garvin said:

PurpleMoonlight said:

Welshbeef said:

Why do we have to wait?

What will the EU do to us if we do commence trade deal negotiations which will govlive on our exit?
State it's not legally binding? Who cares it's post our exit
Give us a fine? Who cares it's worth it
Tell us off ? Who cares

Why would countries spend significant time and money trying to agree a trade deal with the UK when they have no idea when that may be effective from and what our WTO default is?

Now let's see? Perhaps those who already export a lot to the UK under EU arrangements and might be a tad worried about tariffs being applied the day after actual Brexit. How about those countries who see the world's fifth largest economy possibly opening up a potentially lucrative market for them? Why delay any more than necessary?

6th largest economy... it was overtaken by France post Brexit due to the drop in the value of the pound!

You sure about that one?

Don't worry too much - 5th or 6th makes no difference to the points being made and such pedantry offers nothing to the debate. Just ignore.

[andymadmak]

London424 said:

HughiusMaximus said:

Garvin said:

PurpleMoonlight said:

Welshbeef said:

Why do we have to wait?

What will the EU do to us if we do commence trade deal negotiations which will govlive on our exit?
State it's not legally binding? Who cares it's post our exit
Give us a fine? Who cares it's worth it
Tell us off ? Who cares

Why would countries spend significant time and money trying to agree a trade deal with the UK when they have no idea when that may be effective from and what our WTO default is?

Now let's see? Perhaps those who already export a lot to the UK under EU arrangements and might be a tad worried about tariffs being applied the day after actual Brexit. How about those countries who see the world's fifth largest economy possibly opening up a potentially lucrative market for them? Why delay any more than necessary?

6th largest economy... it was overtaken by France post Brexit due to the drop in the value of the pound!

You sure about that one?

We're still 5th officially. It depends on when you actually do the count. We may drop to 6th, but that's purely on an accounting (currency) basis rather than any real shift in output

[Digga]

stongle said:

Digga said:

Great post.

Other than, I do think it critical to invest in infrastructure for several reasons:

1. the demand/population is not going to go away, but merely increase, so fixing now gives earlier return on investment.
2. the service sector does, in some instances need the rest of the economy, so the better it works, the stronger the service sector.
3. IMHO a significant chunk of the GE and Brexit 'protest vote' is down to regions feeling (rightly) underinvested.

Agreed, but the economy IS going to suffer in the next few years - (with or without BREXIT) and we don't have enough money to actually implement Fiscal programs. UK PLC needs every single penny of tax revenue to run ANY sort of infrastructure program. Hammond is trying to build a £20bn war chest (to deploy just before next GE); but £20bn is a drop in the ocean (its F**k All).

There seems to be a lot of regional discontent towards London - which is justified; but we cannot afford to do ANY sort of deal that hampers our main trading asset (regardless whether you think we should be knocking out more Land Rovers). A rush deal focused towards Goods could irreversibly damage the UK economy; when we need fiscal stimulus (and some of the more pro Brexiters here have less than FA knowledge on the service or finance sectors their comments are often laughable).

There's never been a cheaper time to borrow for major projects. I'd argue it will only get more expensive from here on in. I think there's a great opportunity for the UK generally to gear up to better utilise regions, business capital and workers.

[gooner1]

Digga said:

stongle said:

Digga said:

Great post.

Other than, I do think it critical to invest in infrastructure for several reasons:

1. the demand/population is not going to go away, but merely increase, so fixing now gives earlier return on investment.
2. the service sector does, in some instances need the rest of the economy, so the better it works, the stronger the service sector.
3. IMHO a significant chunk of the GE and Brexit 'protest vote' is down to regions feeling (rightly) underinvested.

Agreed, but the economy IS going to suffer in the next few years - (with or without BREXIT) and we don't have enough money to actually implement Fiscal programs. UK PLC needs every single penny of tax revenue to run ANY sort of infrastructure program. Hammond is trying to build a £20bn war chest (to deploy just before next GE); but £20bn is a drop in the ocean (its F**k All).

There seems to be a lot of regional discontent towards London - which is justified; but we cannot afford to do ANY sort of deal that hampers our main trading asset (regardless whether you think we should be knocking out more Land Rovers). A rush deal focused towards Goods could irreversibly damage the UK economy; when we need fiscal stimulus (and some of the more pro Brexiters here have less than FA knowledge on the service or finance sectors their comments are often laughable).

There's never been a cheaper time to borrow for major projects. I'd argue it will only get more expensive from here on in. I think there's a great opportunity for the UK generally to gear up to better utilise regions, business capital and workers.

Can we really afford not to improve our infrastructure, and would not the money earmarked for HS2 be better of spent elsewhere? I realise I may be guilty of sweating the small stuff, but hey ho.

[Digga]

gooner1 said:

Can we really afford not to improve our infrastructure, and would not the money earmarked for HS2 be better of spent elsewhere? I realise I may be guilty of sweating the small stuff, but hey ho.

This is how I see it. Failure to move now will compound the issues we face.

Right now, the UK is suffering from decades of underinvestment and misplaced anti-road government policies. We're already on the back foot - we've consistently spent less than our major EU counterparts - and a failure to act now threatens higher future costs and even greater inefficiency due to congestion and stagnation.

[walm]

Digga said:

Right now, the UK is suffering from decades of underinvestment and misplaced anti-road government policies. We're already on the back foot - we've consistently spent less than our major EU counterparts - and a failure to act now threatens higher future costs and even greater inefficiency due to congestion and stagnation.

Wow.
I had no idea how bad it was.
Check out charts B and C on page 15.
http://www.oecd.org/officialdocuments/publicdispla...

[B'stard Child]

Digga said:

stongle said:

Don't go there, in a world of digital responses "does not compute, does not compute"

Anyway,

This debate is a lot more complex than WTO rules.

Our balance of trade is shocking and UK PLC has a productivity problem, that is more to do with infrastructure. That isn’t going to turn itself around without significant fiscal investment; something we simply cannot afford given the current economic outlook and ridiculous welfare bills (and INHO the UK’s lazy c**t problem trumps our immigration one – but lets not go there).

It’s simply impossible to ignore that the UK services sectors way outperform manufacturing / goods in global league tables (3rd largest services global exporter / trader Vs 10th or 11th for exports of goods); and close our balance of payments gap as best possible. Its more critical to get deals brokered in and around services particularly MiFID, EMIR and passporting than the fantasy nirvana of a deal that regenerates manufacturing in the UK. Only fiscal intervention will ignite that powerhouse so we shouldn’t burn the Golden Goose of Tax revenues that is the services and finance sectors.

Our negotiating hand on Services is a lot better than it is elsewhere, but it’s much more complex and nuanced area. Changes in the US with the potential repeal of Volcker and moves to strengthen bank capital do fit in line with the BoE – without the structural weaknesses and challenges the ECB faces with bank capital, bail in and contagion. In fact the EUROZONE may have to promote smaller CET1 buffers for their banks than the UK or US (we’ve already adopted elements of IFRS9 the Eurozone banks would be underwater when they do). We should ignore RBS as it’s a basket case currently (a state owned bank fails a stress test – hahahahohohoho) – but would probably outperform Euro banks in the BoE tests.

Even if you get the basis of an agreement done in a couple of years it will take years to implement given the subsequent redrafting of individual or bilateral firm level agreements that govern transactions. We’re still implementing post GFC Financial regulations 9 years after the first bank collapses and it goes onwards beyond 2020. It’s going to take years.

I was 55:45 remain / leave; but we’re coming out now so we best make the best of the negotiation (actually I’m now 60:40 in favour of leave with the blind optimism that May may actually be able to steer the ship and get us a result) . But, but, but we need to re-invent our Services sector as a / THE Global hub for trade finance and financial services and offer incentives thus. A cross between Cayman, Singapore, Switzerland & London supermax centre would be a great result for UK PLC (and a great result from leaving the EU) . A kamikaze approach being advanced by the most ardent Brexiters will burn our ability to actually get the “cake and eat it”.

Great post.

Other than, I do think it critical to invest in infrastructure for several reasons:

1. the demand/population is not going to go away, but merely increase, so fixing now gives earlier return on investment.
2. the service sector does, in some instances need the rest of the economy, so the better it works, the stronger the service sector.
3. IMHO a significant chunk of the GE and Brexit 'protest vote' is down to regions feeling (rightly) underinvested.

Both good posts

[stongle]

Digga said:

There's never been a cheaper time to borrow for major projects. I'd argue it will only get more expensive from here on in. I think there's a great opportunity for the UK generally to gear up to better utilise regions, business capital and workers.

We need a separate vehicle like an SWF for this sort of activity, there is to much friction in Government borrowing and leakage in administration. Credit guarantee from the Government of course. And the in the future we can make it eligible asset for QE!!!! Everyone's a winner.

[Digga]

stongle said:

Digga said:

There's never been a cheaper time to borrow for major projects. I'd argue it will only get more expensive from here on in. I think there's a great opportunity for the UK generally to gear up to better utilise regions, business capital and workers.

We need a separate vehicle like an SWF for this sort of activity, there is to much friction in Government borrowing and leakage in administration. Credit guarantee from the Government of course. And the in the future we can make it eligible asset for QE!!!! Everyone's a winner.

Whatever, it needs doing. We rank 29th globally for the quality of our road network, according to the World Economic Forum last year.

[Andy Zarse]

Digga said:

stongle said:

Digga said:

There's never been a cheaper time to borrow for major projects. I'd argue it will only get more expensive from here on in. I think there's a great opportunity for the UK generally to gear up to better utilise regions, business capital and workers.

We need a separate vehicle like an SWF for this sort of activity, there is to much friction in Government borrowing and leakage in administration. Credit guarantee from the Government of course. And the in the future we can make it eligible asset for QE!!!! Everyone's a winner.

Whatever, it needs doing. We rank 29th globally for the quality of our road network, according to the World Economic Forum last year.

The roads of the South Coast are a hopeless joke. They weren't fit for purpose by 1980, the volume of traffic is now horrendous. Try getting from say Weymouth to Dover. It's a 200 mile journey yet would literally take all day if you didn't go via the M25, and about four hours with no hold ups if you do.

In fact try getting from Portsmouth to Brighton. Look on the map and it's really no distance. With a decent dual carriageway it should take no longer than around 40 minutes. But I would allow an absolute minimum of an hour and a half and not be surprised if it took two hours.

It's an absolute juddering disgrace. I don't think there has been a proper new road built in Hants/Sussex for at least twenty years.

[Digga]

walm said:

Wow.
I had no idea how bad it was.
Check out charts B and C on page 15.
http://www.oecd.org/officialdocuments/publicdispla...

It'd be positively comical if it weren't so serious. I do honestly think a lot was to do with the rise of the eco-loon (these, as distinct from the logically and pragmatically ecologically considerate) in UK politics and media.

Andy Zarse said:

The roads of the South Coast are a hopeless joke. They weren't fit for purpose by 1980, the volume of traffic is now horrendous. Try getting from say Weymouth to Dover. It's a 200 mile journey yet would literally take all day if you didn't go via the M25, and about four hours with no hold ups if you do.

In fact try getting from Portsmouth to Brighton. Look on the map and it's really no distance. With a decent dual carriageway it should take no longer than around 40 minutes. But I would allow an absolute minimum of an hour and a half and not be surprised if it took two hours.

It's an absolute juddering disgrace. I don't think there has been a proper new road built in Hants/Sussex for at least twenty years.

A road dumbing-down is a perennial issue and has pushed extra local traffic onto motorways.

In the 1970s, Digga snr used to commute from jct13 of the M6, down to Oldbury, jct 2 of the M5 in 30 mins, without fail. You try doing that at 8am nowadays and it's triple the time, if you manage to avoid an accident.

Absolutely every road user I know routinely experience delays - on both business and private journeys - on our roads. We all do. There is a huge social and economic cost attached to this which is simply being swept under the carpet.

[sparkythecat]

Digga said:

Great post.....

Not really. It contains 5 or 6 acronyms that many of us will need to Google in order to make sense of it.

[Digga]

sparkythecat said:

Not really. It contains 5 or 6 acronyms that many of us will need to Google in order to make sense of it.

Pointless post.

The acronyms are used in context and for a reason (brevity, and because many have been used here on NP&E before) and are simple enough to decipher.

[gooner1]

sparkythecat said:

Digga said:

Great post.....

Not really. It contains 5 or 6 acronyms that many of us will need to Google in order to make sense of it.

Not really a hardship, if one is genuinely interested in the post/thread.

[B'stard Child]

sparkythecat said:

Digga said:

Great post.....

Not really. It contains 5 or 6 acronyms that many of us will need to Google in order to make sense of it.

You want to be spoon fed?

What's wrong with a little effort being needed to fully understand things

[walm]

WTO - world trade organisation
UK PLC - United Kingdom
INHO - (typo) IMHO - in my humble opinion
MiFiD - Markets in Financial Instruments Directive (financial regs)
EMIR - European Market Infrastructure Regulation (on derivatives, central counterparties and trade repositories - more financial regs)
Volcker - https://en.wikipedia.org/wiki/Volcker_Rule
BoE - Bank of England
ECB - European Central Bank
CET1 - Common Equity Tier 1 (capital requirement for a bank to stop another financial crisis part of a "stress test")
IFRS9 - Accounting reporting standard for financial instruments - also an effort to prevent...
GFC - Great Financial Crisis (st-show from 2008-2009)
RBS - Bank with no problem passing stress tests... oh wait!

[Digga]

Only takes one idiot to de-rail a very constructively debated topic.

Anyway, back to those OECD figures that Walm kindly dug out - the need for investment in the UK, to get productivity back on track, is what I've been arguing for for some time, because the need and benefit is clear. The derision from some Remainers who think this is tantamount to saying the rest of the economy can somehow replace FS is to ignore the issue, the risks of not addressing it and the benefits of dealing with it properly.

[walm]

Digga said:

Only takes one idiot to de-rail a very constructively debated topic.

Anyway, back to those OECD figures that Walm kindly dug out - the need for investment in the UK, to get productivity back on track, is what I've been arguing for for some time, because the need and benefit is clear. The derision from some Remainers who think this is tantamount to saying the rest of the economy can somehow replace FS is to ignore the issue, the risks of not addressing it and the benefits of dealing with it properly.

I haven't thought about it very much but how is infrastructure spending linked to Brexit?
Because right now I think I am agreeing with you on one but not the other.
What's the connection?

[Digga]

walm said:

Digga said:

Only takes one idiot to de-rail a very constructively debated topic.

Anyway, back to those OECD figures that Walm kindly dug out - the need for investment in the UK, to get productivity back on track, is what I've been arguing for for some time, because the need and benefit is clear. The derision from some Remainers who think this is tantamount to saying the rest of the economy can somehow replace FS is to ignore the issue, the risks of not addressing it and the benefits of dealing with it properly.

I haven't thought about it very much but how is infrastructure spending linked to Brexit?
Because right now I think I am agreeing with you on one but not the other.
What's the connection?

There needs to be a plan for the UK and getting the rest of the country and the non-FS businesses working better is key. There's rightly a lot of talk about how the FS industry transitions, but there are those (I suspect are in the subset of being Remainers and also working within FS) who don't see the need for the infrastructure spend.

A cursory Google of motorway closures (M6 southbound was such near Middlewich 2 days ago as an example) will highlight just how overcrowded and fragile the road network is.

[Andy Zarse]

Digga said:

road dumbing-down is a perennial issue and has pushed extra local traffic onto motorways.

In the 1970s, Digga snr used to commute from jct13 of the M6, down to Oldbury, jct 2 of the M5 in 30 mins, without fail. You try doing that at 8am nowadays and it's triple the time, if you manage to avoid an accident.

Absolutely every road user I know routinely experience delays - on both business and private journeys - on our roads. We all do. There is a huge social and economic cost attached to this which is simply being swept under the carpet.

Now you're talking! I remember them building the M6/M5 interchange as we lived a couple of miles away. They had some fantastic old heavy plant working on it.