The economic consequences of Brexit (Vol 2)
Discussion
///ajd said:
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I'm not sure you can have it both ways - many like to imply the Eurozone is wobbling on the brink of an Italian banking crash pulling all into the abyss, but how has it climbed in value vs the £ by 25% since brexit? What does that say about brexit relative to the oh so fragile Eurozone? Not good, is it?
Have you worked out what the correct exchange rate should be yet?I'm not sure you can have it both ways - many like to imply the Eurozone is wobbling on the brink of an Italian banking crash pulling all into the abyss, but how has it climbed in value vs the £ by 25% since brexit? What does that say about brexit relative to the oh so fragile Eurozone? Not good, is it?
///ajd said:
jsf said:
Its more a function of the Euro regaining some lost ground as confidence in the Eurozone area has returned post the French/Dutch elections, plus a weakening of the USD as the expected Trump reforms aren't getting implemented.
Once the Italian election cycle starts it will start to bobble again, if Trump actually gets something done on tax reform you will probably see a shift away from the Euro again too. The £ is still higher against Euro than post the GFC and has gained a lot of ground against the USD in the last year.
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Pound/€ lowest this week since near the 2008 crash/early 2010 - and aside from the GFC, lower at all times since the Euro was launched in 1999.Once the Italian election cycle starts it will start to bobble again, if Trump actually gets something done on tax reform you will probably see a shift away from the Euro again too. The £ is still higher against Euro than post the GFC and has gained a lot of ground against the USD in the last year.
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[url][img]https://www.poundsterlinglive.com/bank-of-england-...
I'm not sure you can have it both ways - many like to imply the Eurozone is wobbling on the brink of an Italian banking crash pulling all into the abyss, but how has it climbed in value vs the £ by 25% since brexit? What does that say about brexit relative to the oh so fragile Eurozone? Not good, is it?
Tuna said:
Wayne E Edge said:
Looks pretty low to me. You post that link as some kind of optimistic outlook? Barmy!
The pound against <currency X> is not an absolute measure of the UK economy. A high pound is not a good thing in itself, unless you're looking for cheap booze on holiday.What we have suffered from has been wage stagnation, which a weak pound will surely only make worse.
glazbagun said:
I would broadly agree, but in the case of tge UK we already had a fairly good employment rate after the GFC compared to other countries.
What we have suffered from has been wage stagnation, which a weak pound will surely only make worse.
The correction in the UK was much harder than in a lot of the EU where governments - notably France - accrued far more debt trying to maintain 'business as usual', much to the chagrin of the ECB and IMF; there are numerous warnings out there, reported over the last few years.What we have suffered from has been wage stagnation, which a weak pound will surely only make worse.
Digga said:
The correction in the UK was much harder than in a lot of the EU where governments - notably France - accrued far more debt trying to maintain 'business as usual', much to the chagrin of the ECB and IMF; there are numerous warnings out there, reported over the last few years.
Surely not all that surprising? Brexit is being treated as a 'reckoning', whereas the recent French elections were treated as dodging a bullet. Regardless of the underlying drivers, sentiment is very much more positive for France despite bigger underlying issues. What happens further down the line though...Tuna said:
Digga said:
The correction in the UK was much harder than in a lot of the EU where governments - notably France - accrued far more debt trying to maintain 'business as usual', much to the chagrin of the ECB and IMF; there are numerous warnings out there, reported over the last few years.
Surely not all that surprising? Brexit is being treated as a 'reckoning', whereas the recent French elections were treated as dodging a bullet. Regardless of the underlying drivers, sentiment is very much more positive for France despite bigger underlying issues. What happens further down the line though...http://www.independent.co.uk/news/world/europe/emm...
London424 said:
Not sure they're too happy with their bullet dodging already!
http://www.independent.co.uk/news/world/europe/emm...
Sounds like us with May/Corbyn or Trump/Clinton. No real choice= everyone equally unhappy.http://www.independent.co.uk/news/world/europe/emm...
Having said that, even for a French President, he's doing an amazing job of losing approval.
London424 said:
Tuna said:
Digga said:
The correction in the UK was much harder than in a lot of the EU where governments - notably France - accrued far more debt trying to maintain 'business as usual', much to the chagrin of the ECB and IMF; there are numerous warnings out there, reported over the last few years.
Surely not all that surprising? Brexit is being treated as a 'reckoning', whereas the recent French elections were treated as dodging a bullet. Regardless of the underlying drivers, sentiment is very much more positive for France despite bigger underlying issues. What happens further down the line though...http://www.independent.co.uk/news/world/europe/emm...
France is screwed whoever is in power whilst they retain the Euro. Macron will be hugely unpopular once his reforms start to kick in, its going to be messy.
steveT350C said:
Yeah, right, let's prepare a 'perfect World' scenario re Tariffs etc - pure soundbites! It will never happen! Why do people fall for this rubbish? 
Does anyone honestly think the Unions and Labour would accept a large number of job losses due to local Manufacturers and Farmers etc being unable to compete in this scenario? Labour would sweep to power, Corbyn would crush any such idea and the UK would be well on its way to bankruptcy. Next gormless idea from the Brexiteers?
Coolbanana said:
Yeah, right, let's prepare a 'perfect World' scenario re Tariffs etc - pure soundbites! It will never happen! Why do people fall for this rubbish?
Does anyone honestly think the Unions and Labour would accept a large number of job losses due to local Manufacturers and Farmers etc being unable to compete in this scenario? Labour would sweep to power, Corbyn would crush any such idea and the UK would be well on its way to bankruptcy. Next gormless idea from the Brexiteers?
I guess it just balances out the pure doom scenarios usually trotted out. Does anyone honestly think the Unions and Labour would accept a large number of job losses due to local Manufacturers and Farmers etc being unable to compete in this scenario? Labour would sweep to power, Corbyn would crush any such idea and the UK would be well on its way to bankruptcy. Next gormless idea from the Brexiteers?
The truth will be in the middle somewhere.
Btw the farmers I know think the way the EU has "supported" their industry has done more harm than good.
Coolbanana said:
Yeah, right, let's prepare a 'perfect World' scenario re Tariffs etc - pure soundbites! It will never happen! Why do people fall for this rubbish?
Does anyone honestly think the Unions and Labour would accept a large number of job losses due to local Manufacturers and Farmers etc being unable to compete in this scenario? Labour would sweep to power, Corbyn would crush any such idea and the UK would be well on its way to bankruptcy. Next gormless idea from the Brexiteers?
If manufacturers and farmers couldn't cope with tariffs of a few percent being scrapped, how do they cope with currency fluctuations?Does anyone honestly think the Unions and Labour would accept a large number of job losses due to local Manufacturers and Farmers etc being unable to compete in this scenario? Labour would sweep to power, Corbyn would crush any such idea and the UK would be well on its way to bankruptcy. Next gormless idea from the Brexiteers?
As for 'will never happen'.
It happened in the UK in the 1840s, it happened and still happens in Hong Kong and Singapore. Each time with spectacular benefits for the economy.
PurpleMoonlight said:
Dr Jekyll said:
As for 'will never happen'.
It happened in the UK in the 1840s, it happened and still happens in Hong Kong and Singapore. Each time with spectacular benefits for the economy.
If it's such a great thing, why isn't every country doing it already?It happened in the UK in the 1840s, it happened and still happens in Hong Kong and Singapore. Each time with spectacular benefits for the economy.
For competitive economies, with a skilled and flexible workforce, there's little to fear. Adjustment yes, but stronger overall.
However, you'll soon see why it's unlikely when ajd gets triggered by the mention of Minford...
Worth noting the opposition in the article - another one who can't see the cognitive dissonance of Single Market freedom with external protectionism when the Single Market economies are about as diverse as you'll get on the World market. Any manufacturers that would be uncompetitive without tariffs have already moved within the EU.
Coolbanana said:
steveT350C said:
Yeah, right, let's prepare a 'perfect World' scenario re Tariffs etc - pure soundbites! It will never happen! Why do people fall for this rubbish? Does anyone honestly think the Unions and Labour would accept a large number of job losses due to local Manufacturers and Farmers etc being unable to compete in this scenario? Labour would sweep to power, Corbyn would crush any such idea and the UK would be well on its way to bankruptcy. Next gormless idea from the Brexiteers?
PurpleMoonlight said:
Dr Jekyll said:
As for 'will never happen'.
It happened in the UK in the 1840s, it happened and still happens in Hong Kong and Singapore. Each time with spectacular benefits for the economy.
If it's such a great thing, why isn't every country doing it already?It happened in the UK in the 1840s, it happened and still happens in Hong Kong and Singapore. Each time with spectacular benefits for the economy.
Sway said:
Fear of change, and politicians that have little vision.
For competitive economies, with a skilled and flexible workforce, there's little to fear. Adjustment yes, but stronger overall.
However, you'll soon see why it's unlikely when ajd gets triggered by the mention of Minford...
Worth noting the opposition in the article - another one who can't see the cognitive dissonance of Single Market freedom with external protectionism when the Single Market economies are about as diverse as you'll get on the World market. Any manufacturers that would be uncompetitive without tariffs have already moved within the EU.
Triggered - touche! For competitive economies, with a skilled and flexible workforce, there's little to fear. Adjustment yes, but stronger overall.
However, you'll soon see why it's unlikely when ajd gets triggered by the mention of Minford...
Worth noting the opposition in the article - another one who can't see the cognitive dissonance of Single Market freedom with external protectionism when the Single Market economies are about as diverse as you'll get on the World market. Any manufacturers that would be uncompetitive without tariffs have already moved within the EU.
I do actually agree with your first statements. I understand Minfords idea, but the risks and upheaval would be eye watering. There is a good reason why most politicians will be fearful of this idea. I see he has changed his view on it eliminating manufacturing, but what if he is wrong? Thats quite an experiment. And I don't think the fact he was right about something in the 80s means he is "one of the economists who is always right". I think we can all agree economists are seldom always right.
I'm not sure where the criticism of the counter view comes from. Does anyone argue the SM doesn't have elements of protectionism about it? I'm not sure anyone has said that, as clearly it has! I don't agree that we should always look for protectionist measures, but I think they have a place given where we are, and we have done well in the EU - no one can claim those protections won't have helped our industries and farmers to a lesser or greater degree.
I'm not sure the public would be too chuffed with the scale of upheaval Minford has in mind. I suspect he doesn't fully get that as he's an academic.
PurpleMoonlight said:
If it's such a great thing, why isn't every country doing it already?
This is a good question... But works more so against the Remain arguments on the key points of debate - FoM, SM, CU. The answers aren't straightforward.
"Like" economies are probably a key point.
I think you also need to determine what industries are fundamental to your national interests (genuinely so, not just letting pride get in the way).
I'm not convinced we've evolved as a species enough to do those latter things properly yet. We may never do.
///ajd said:
Sway said:
Fear of change, and politicians that have little vision.
For competitive economies, with a skilled and flexible workforce, there's little to fear. Adjustment yes, but stronger overall.
However, you'll soon see why it's unlikely when ajd gets triggered by the mention of Minford...
Worth noting the opposition in the article - another one who can't see the cognitive dissonance of Single Market freedom with external protectionism when the Single Market economies are about as diverse as you'll get on the World market. Any manufacturers that would be uncompetitive without tariffs have already moved within the EU.
Triggered - touche! For competitive economies, with a skilled and flexible workforce, there's little to fear. Adjustment yes, but stronger overall.
However, you'll soon see why it's unlikely when ajd gets triggered by the mention of Minford...
Worth noting the opposition in the article - another one who can't see the cognitive dissonance of Single Market freedom with external protectionism when the Single Market economies are about as diverse as you'll get on the World market. Any manufacturers that would be uncompetitive without tariffs have already moved within the EU.
I do actually agree with your first statements. I understand Minfords idea, but the risks and upheaval would be eye watering. There is a good reason why most politicians will be fearful of this idea. I see he has changed his view on it eliminating manufacturing, but what if he is wrong? Thats quite an experiment. And I don't think the fact he was right about something in the 80s means he is "one of the economists who is always right". I think we can all agree economists are seldom always right.
I'm not sure where the criticism of the counter view comes from. Does anyone argue the SM doesn't have elements of protectionism about it? I'm not sure anyone has said that, as clearly it has! I don't agree that we should always look for protectionist measures, but I think they have a place given where we are, and we have done well in the EU - no one can claim those protections won't have helped our industries and farmers to a lesser or greater degree.
I'm not sure the public would be too chuffed with the scale of upheaval Minford has in mind. I suspect he doesn't fully get that as he's an academic.
Farmers aren't suggesting the EU has helped at all - in fact the opposite, while everyone in the UK is paying more than it needs to for food staples.
In the early days of the EU, the protectionism was likely broadly supportable. We were all broadly equivalent economies, each with niche specialisms, and the club meant that we could further our key industry interests whilst getting other countries' specialisms cheaper.
Now, that argument doesn't hold water at all. The protectionist tariff regime does nothing to protect our industries anymore - on a like for like comparison the Polish or Latvian economies can out compete our less competitive businesses - hence the moves from Germany, France, Italy and the UK to those countries. They have lower overheads, fewer employment protections, cheaper labour. German industry in particular has made great use of this, forming it's supply chain in the EE states reaping the cost benefits.
Hence why apart from a very few long term plants, the ones remaining in the UK are some of the very best in the world. We've had to rise to the competition from within the EU. I know I mention it a lot, but Nissan Sunderland isn't scraping the bottom of the barrel in terms of wages or training, and is probably the most efficient plant of it's type in the world.
I understand your concerns about trying to compete with India or China. Yet we wouldn't choose to, as we don't choose to compete with bottom barrel Eastern European business. They do their thing, which our consumers love to buy, we do ours - which our consumers and those around the globe love to buy (the lorries laden with Minis, Land (and Range) Rovers, Jaguars, Hondas and Nissans I used to see working near two of the busy ports is massively eye opening).
As a nation, we would never have survived as a leading economy over the last century without that ability to adapt, develop flexibility (mini's production line is incredible from that perspective) and compete against all comers...
Always amazed that the sole study supporting hard Brexit is regurgitated every few months & received uncritically by the Brexit crowd. EVERY other study conducted has contradicted Minfords conclusions. Not one other supports it.
Minford makes a very dodgy assumption that general pressure - whatever that is will force the EU to drop it's import tariffs from 20 to 10%, ignoring the difference in safety & quality standards on EU goods on producer prices. Moreover, it assumes bizarrely the EU will drop its standards on goods imports from the UK post-Brexit, which implies precisely the sort of deep trade deal which the Economists for Brexit have been consistently arguing that the UK does not need to bother pursuing. Never happening.
So, the term unilateral free trading is doubly misleading, as it assumes reciprocal standards liberalisations with trading partners including the EU & on the EU - that's simply wrong.
Unless we sign an FTA that clearly removes all EU non tariff barriers to UK exports, WTO rules prevent the EU removing tariff barriers soley on the UK. It would be a race to the bottom & that's before you consider Minford's 4% GDP growth, that would require more integration with Europe than we have now as a full member! but can't be tested because he & the other authors won't release their data model.
It's hokum, yet unsurprisingly, a straw that is clutched every time it surfaces. As if it's not the actual sound of a group of convinced ideologue economists s
tting themselves.
And with that, I'm off out to do something productive. Enjoy your Sunday arguing the toss guys.
Minford makes a very dodgy assumption that general pressure - whatever that is will force the EU to drop it's import tariffs from 20 to 10%, ignoring the difference in safety & quality standards on EU goods on producer prices. Moreover, it assumes bizarrely the EU will drop its standards on goods imports from the UK post-Brexit, which implies precisely the sort of deep trade deal which the Economists for Brexit have been consistently arguing that the UK does not need to bother pursuing. Never happening.
So, the term unilateral free trading is doubly misleading, as it assumes reciprocal standards liberalisations with trading partners including the EU & on the EU - that's simply wrong.
Unless we sign an FTA that clearly removes all EU non tariff barriers to UK exports, WTO rules prevent the EU removing tariff barriers soley on the UK. It would be a race to the bottom & that's before you consider Minford's 4% GDP growth, that would require more integration with Europe than we have now as a full member! but can't be tested because he & the other authors won't release their data model.
It's hokum, yet unsurprisingly, a straw that is clutched every time it surfaces. As if it's not the actual sound of a group of convinced ideologue economists s
tting themselves.And with that, I'm off out to do something productive. Enjoy your Sunday arguing the toss guys.
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