The economic consequences of Brexit

[kurt535]

///ajd said:

But these businesses in some cases contribute 10% of our GDP - thats' 100s of Billions.

You have no problem with that being lost to the treasury? That pays for your services and NHS.

ajd: what could possibly go wrong?

as the person said..brexit best thing to have happened to this country...............taxi.......

[kurt535]

bmw535i said:

I think you know full well how the NHS will be funded post Brexit

beemer...i genuinely have no idea other than i see us adopting a NZ or Australian style of health care where first contact you pay.

[anonymous-user]

Mario149 said:

Tony427 said:

In Mario's example we have a manufacturer of undifferentiated commodity products faced with extensive competition that is making a nett 10% margin manufacturing in the UK.

His business is split 50/50 UK and EU.

He imports all his raw materials and is expecting a 60% tariff on those imports if the raw material cost is 50% of manufacturing cost. As it's a commodity product with little added value and lots of competition 50% raw material cost is probably on the low side. ( Cannot say if a contract is worth £2m or £3m only difference raw material cost import tarffs)

I'd like to know wha traw material product he currently imports where a 60% tariff from the EU would apply.

He is not expecting his foreign competition to face any tariff barriers to the UK market whatsoever.

He is expecting to lose his EU business because of tariffs facing him exporting into the EU.

He is not looking to source his raw materials from non EU suppliers.

He is planning to move to an EU country, where his EU competition is, thereby surrendering his UK market ( tariff barriers again) which, as the product is a commodity, will be supplied by his existing UK competition or maybe a new start up company.

I'm finding it difficult to understand his logic.

Cheers,

Tony

That's prob because you're massively over simplifying the situation - I'm not having a go btw, you can only go on what I can share and he didn't give me a detailed breakdown of his business. As I said in my initial post, the main threats appear to be his suddenly and significantly increased raw material costs due to the weak £ in terms of his UK business i.e. he can still do the work but his margins are reducing and if he raises his price he won't be able to sell enough. And the uncertainty over tariff barriers selling to the EU and tariff barriers that may go up for his purchase of raw materials from outside the EU i.e. in say a year's time Deutsche Kompany GmbH will ask how much it will cost him to supply X, but he won't know what tariff may be applied to his raw materials by the UK gov or what tariff may be applied to his output products by the EU, so he can't give them a number they can rely or one that he can guarantee to deliver on.

Fundamentally, people reading this can either:

1) assume a chap who's built a £50m turnover business over a few decades knows what he's on about when he says our current political course may be terminal for it, or at best force it abroad and/or massively downsize it, and that many of our other companies may be about to take a shafting as well if we pursue a hard Brexit

or

2) assume a chap who's built a £50m turnover business over a few decades is a bit of an idiot and doesn't know what he's on about and everything is fine and dandy

Edited by Mario149 on Sunday 4th December 15:02

Your neibour has survived a much larger increase in his raw material costs in the past (and profited from large changes in the past also), the UK pound and Euro have been changing constantly in the past, we are currently at a rate that was being used less than 2 years ago.

So I suggest the currency change isn't the reason why he wont survive, its no worse than previously, its not even more volatile than previously.



What he is concerned about is not the currency value, it cant be based on previous history, he Is concerned about tariffs, but shutting his UK arm if that were the case wouldn't help him in that respect to maintain his UK sales.

If tariffs do come in, whats stopping him keeping the UK base and adding an EU based subsidiary?

[RYH64E]

jsf said:

Your neibour has survived a much larger increase in his raw material costs in the past (and profited from large changes in the past also), the UK pound and Euro have been changing constantly in the past, we are currently at a rate that was being used less than 2 years ago.

So I suggest the currency change isn't the reason why he wont survive, its no worse than previously, its not even more volatile than previously.

Raw materials are mostly priced in USD not EUR, take a look at GBP vs USD graphs.

[///ajd]

jsf said:

If tariffs do come in, whats stopping him keeping the UK base and adding an EU based subsidiary?

Nothing.

But if he exports >50%, that is a lot of business we just lost to the EU where he will pay tax. It was all in the UK before as all was in the Single Market.

Why are we looking to make a Britain a place where productivity goes offshore as we messed up our Euro access/trading conditions?

It is difficult to dress up messing up our access to the Single Market as anything other than a bad idea that will negatively affect our business.

[anonymous-user]

kurt535 said:

beemer...i genuinely have no idea other than i see us adopting a NZ or Australian style of health care where first contact you pay.

What? You've never heard of the big red bus?????

[anonymous-user]

RYH64E said:

jsf said:

Your neibour has survived a much larger increase in his raw material costs in the past (and profited from large changes in the past also), the UK pound and Euro have been changing constantly in the past, we are currently at a rate that was being used less than 2 years ago.

So I suggest the currency change isn't the reason why he wont survive, its no worse than previously, its not even more volatile than previously.

Raw materials are mostly priced in USD not EUR, take a look at GBP vs USD graphs.

That looks just as bad for the EU euro based companies, with the Euro dropping 31% against the $ since mid 2014 compared the GB Pound dropping 34% over the same period.





There is a good reason the UK pound has dropped recently against the $ as we have chosen a path with some instability initially, the EURO dropping by similar amount without such a seismic change should be more worrying long term for the EURO zone.

[don'tbesilly]

kurt535 said:

beemer...i genuinely have no idea other than i see us adopting a NZ or Australian style of health care where first contact you pay.

What was the upshot of this Kurt (your quote below)?
You posted it on the 10th July.

It's 5 months down the line, I guess your Pals scientist partner has made the choice by now, was it Sweden or Switzerland?

I suggested the company might be Pfizer,as I know someone who works there, but it wasn't apparently.
I did ask who the company was but you never got back to me.

I did ask my friend at Pfizer if she knew of any Surrey based pharmaceutical companies that were relocating, and she wasn't aware of any despite her company being one of the biggest (800 employees), just in Surrey.

kurt535 said:

minor snap-shot. family pal's scientist partner works at big pharmaceutical surrey way; she (along with whole dept) has already been offered relocation to either sweden or switzerland to take place in next 6 months....yes, it was due to brexit.

[sidicks]

kurt535 said:

fyi lots of companies, especially, city based ones, have taken your advice and seem to like the frankfurt boat a lot more than the grace darling era lifeboat you appear to be sailing in......

///adj said:

But these businesses in some cases contribute 10% of our GDP - thats' 100s of Billions.

You have no problem with that being lost to the treasury? That pays for your services and NHS.

Please can you explain which 'city based companies' which contribute 10% of our GDP are moving to Frankfurt?

Links to statements from the firms concerned would be helpful....

[anonymous-user]

///ajd said:

jsf said:

If tariffs do come in, whats stopping him keeping the UK base and adding an EU based subsidiary?

Nothing.

But if he exports >50%, that is a lot of business we just lost to the EU where he will pay tax. It was all in the UK before as all was in the Single Market.

Why are we looking to make a Britain a place where productivity goes offshore as we messed up our Euro access/trading conditions?

It is difficult to dress up messing up our access to the Single Market as anything other than a bad idea that will negatively affect our business.

You seem to live in a fantasy world where nothing ever changes.

Productivity has been going offshore for decades already.

The final outcome for UK PLC could go many ways, always was the case, Brexit or no Brexit, always will be the case.

[ukkid35]

Robin Cook was one of the very few to question the wisdom and validity of the Iraq War, now you can't find anyone who thought it was a good idea at the time. The same will happen when the fallout from this fiasco becomes abundantly clear.

[don'tbesilly]

ukkid35 said:

Robin Cook was one of the very few to question the wisdom and validity of the Iraq War, now you can't find anyone who thought it was a good idea at the time. The same will happen when the fallout from this fiasco becomes abundantly clear.

This fall out, what specifically is it?

[ukkid35]

don'tbesilly said:

This fall out, what specifically is it?

I think that is what the previous 441 pages were about...

[mike9009]

jsf said:

Your neibour has survived a much larger increase in his raw material costs in the past (and profited from large changes in the past also), the UK pound and Euro have been changing constantly in the past, we are currently at a rate that was being used less than 2 years ago.

So I suggest the currency change isn't the reason why he wont survive, its no worse than previously, its not even more volatile than previously.



What he is concerned about is not the currency value, it cant be based on previous history, he Is concerned about tariffs, but shutting his UK arm if that were the case wouldn't help him in that respect to maintain his UK sales.

If tariffs do come in, whats stopping him keeping the UK base and adding an EU based subsidiary?

If his neighbour is buying raw materials, I suggest it is denominated in dollars and not Euros. I can only check back the last 25 years and the pound has never been so low against the dollar.

At present the pound is 23% lower than the average for the last 25 years and in that time period has never been so low. (for comparison the Euro is 12% below the average since 1999)



Mike

Edited by mike9009 on Sunday 4th December 19:43

[don'tbesilly]

ukkid35 said:

don'tbesilly said:

This fall out, what specifically is it?

I think that is what the previous 441 pages were about...

Haven't left yet, keep up.

[loafer123]

mike9009 said:

If his neighbour is buying raw materials, I suggest it is denominated in dollars and not Euros. I can only check back the last 25 years and the pound has never been so low against the dollar.

At present the pound is 23% lower than the average for the last 25 years and in that time period has never been so low. (for comparison the Euro is 12% below the average since 1999)



Mike

Edited by mike9009 on Sunday 4th December 19:43

Yes, but he also gets to sell into the Eurozone at a substantial discount due to the recent fall in the GBP, mitigating raw materials and tariff costs. In the absence of detail it is hard to take seriously.

[Burwood]

don'tbesilly said:

Mario149 said:

Tony427 said:

In Mario's example we have a manufacturer of undifferentiated commodity products faced with extensive competition that is making a nett 10% margin manufacturing in the UK.

His business is split 50/50 UK and EU.

He imports all his raw materials and is expecting a 60% tariff on those imports if the raw material cost is 50% of manufacturing cost. As it's a commodity product with little added value and lots of competition 50% raw material cost is probably on the low side. ( Cannot say if a contract is worth £2m or £3m only difference raw material cost import tarffs)

I'd like to know wha traw material product he currently imports where a 60% tariff from the EU would apply.

He is not expecting his foreign competition to face any tariff barriers to the UK market whatsoever.

He is expecting to lose his EU business because of tariffs facing him exporting into the EU.

He is not looking to source his raw materials from non EU suppliers.

He is planning to move to an EU country, where his EU competition is, thereby surrendering his UK market ( tariff barriers again) which, as the product is a commodity, will be supplied by his existing UK competition or maybe a new start up company.

I'm finding it difficult to understand his logic.

Cheers,

Tony

That's prob because you're massively over simplifying the situation - I'm not having a go btw, you can only go on what I can share and he didn't give me a detailed breakdown of his business. As I said in my initial post, the main threats appear to be his suddenly and significantly increased raw material costs due to the weak £ in terms of his UK business i.e. he can still do the work but his margins are reducing and if he raises his price he won't be able to sell enough. And the uncertainty over tariff barriers selling to the EU and tariff barriers that may go up for his purchase of raw materials from outside the EU i.e. in say a year's time Deutsche Kompany GmbH will ask how much it will cost him to supply X, but he won't know what tariff may be applied to his raw materials by the UK gov or what tariff may be applied to his output products by the EU.

Fundamentally, people reading this can either:

1) assume a chap who's built a £50m turnover business over a few decades knows what he's on about when he says our current political course may be terminal for it, or at best force it abroad and/or massively downsize it, and that many of our other companies may be about to take a shafting as well if we pursue a hard Brexit

or

2) assume a chap who's built a £50m turnover business over a few decades is a bit of an idiot and doesn't know what he's on about and everything is fine and dandy

How many employees does the business have Mario?

To add my bit. If he's built a 50m business why should anyone feel sorry for him. It's personal self serving and selfish to expect everything to go your way. Hasn't he made enough money? It's not about the staff. It's a worry he won't make 5m net an longer. We have all taken a big hit in business in the last 6 to 12 months.

[ukkid35]

Burwood said:

It's not about the staff.

Phew, that's OK then, I was worried for a moment.

[Burwood]

ukkid35 said:

Burwood said:

It's not about the staff.

Phew, that's OK then, I was worried for a moment.

Well, the truth hurts

[kurt535]

bmw535i said:

kurt535 said:

beemer...i genuinely have no idea other than i see us adopting a NZ or Australian style of health care where first contact you pay.

What? You've never heard of the big red bus?????

argh you got me...so it was true after all those lies where people said it wasn't true