The economic consequences of Brexit (Vol 2)

[Tuna]

Toaster said:

Just a quick question, in order to trade we have to have something to sell. when you look at most companies they seem to buy a heck of a lot or out source overseas. Now as we don't seem to have much of a manufacturing industry and what we have seems to be owned by other countries so what are we going to be selling, and how are we going to keep the money in this country rather than offshore?

Are you really asking that?

"Don't seem to have much of a manufacturing industry" - it's bigger than ever.

"companies [...] seem to buy a heck of a lot" - yes, it's the job of companies to buy stuff, use it to create value and sell that value added stuff on - whether it's a company buying steel and selling knives, or a company buying computers and selling financial services. The big trick is to buy stuff cheap and add the most value. As such, if 'stuff' is cheaper overseas, then great! That company will make more profit. (Incidentally, low tariffs on imports also help)

"how are we going to keep the money in this country rather than offshore?" - well, we have to keep finding ways to add value. Research and development, business investment, tax breaks for companies, improving education - there are lots of ways we can do that and Brexit doesn't change the importance the slightest bit. If we play our cards right, we should use this as an excuse to step up our focus on creating great businesses.

[s2art]

Toaster said:

Just a quick question, in order to trade we have to have something to sell. when you look at most companies they seem to buy a heck of a lot or out source overseas. Now as we don't seem to have much of a manufacturing industry and what we have seems to be owned by other countries so what are we going to be selling, and how are we going to keep the money in this country rather than offshore?

See http://www.nationmaster.com/country-info/stats/Ind...

[Toaster]

Tuna said:

Are you really asking that?

"Don't seem to have much of a manufacturing industry" - it's bigger than ever.

Yes I am really am asking that, bigger than ever I'm sure! :

THE DEINDUSTRIAL REVOLUTION: THE RISE AND FALL OF UK MANUFACTURING, 1870-2010
Centre for Business Research, University of Cambridge Working Paper No. 459


"This paper considers the evolution of the manufacturing sector in the UK since 1870. It analyses the contribution of manufacturing to national income, employment and trade. From 1870 to 1960, manufacturing played a key role in the development of the economy, undergirding success in other sectors of the economy and securing rising living standards. The subsequent fifty years, from 1960, have witnessed a relative decline of the UK manufacturing sector – relative to other sectors of the economy, and relative to the manufacturing sectors in other countries."

https://www.cbr.cam.ac.uk/fileadmin/user_upload/ce...

[Dr Jekyll]

Toaster said:

Tuna said:

Are you really asking that?

"Don't seem to have much of a manufacturing industry" - it's bigger than ever.

Yes I am really am asking that, bigger than ever I'm sure! :

THE DEINDUSTRIAL REVOLUTION: THE RISE AND FALL OF UK MANUFACTURING, 1870-2010
Centre for Business Research, University of Cambridge Working Paper No. 459


"This paper considers the evolution of the manufacturing sector in the UK since 1870. It analyses the contribution of manufacturing to national income, employment and trade. From 1870 to 1960, manufacturing played a key role in the development of the economy, undergirding success in other sectors of the economy and securing rising living standards. The subsequent fifty years, from 1960, have witnessed a relative decline of the UK manufacturing sector – relative to other sectors of the economy, and relative to the manufacturing sectors in other countries."

https://www.cbr.cam.ac.uk/fileadmin/user_upload/ce...

[Toaster]

Dr Jekyll said:

relative is still a decline as outlined

https://www.ons.gov.uk/employmentandlabourmarket/p...


The number of jobs in Manufacturing fell by 51%, from 264,000 to 129,000 jobs in London between 1996 and 2015. It was almost the only industry to lose jobs over the period, whereas jobs in London as a whole grew by 40%.

23.7% of employee jobs in Manufacturing in London were earning below the London Living Wage in 2015, up from 19.3% in 2014, and real average (median) hourly earnings (excluding overtime) in Manufacturing in London have fallen over time, from £16.71 in 2008 to £13.94 in 2015, in 2015 prices. Real earnings have been calculated using national Consumer Prices Index figures, as data are not available at the London level.

https://www.sheffield.ac.uk/news/nr/manufacturing-...

UK manufacturing has entered a new phase of decline, new report finds:

Meeting our makers: Britain’s long industrial decline
The Slow Death of British Industry: a 60-Year Suicide, 1952-2012 - review.:

http://www.newstatesman.com/culture/culture/2013/0...

In the past 30 years, the UK's manufacturing sector has shrunk by two-thirds, the greatest de-industrialisation of any major nation. It was done in the name of economic modernisation – but what has replaced it?

https://www.theguardian.com/business/2011/nov/16/w...


So I will go back to my point if we are not Manufacturing as a Nation what are we going to trade?

[anonymous-user]

Manufacturing, which often requires a large floor space is hardly likely to expand in a capital city such as London, its not a very good metric to use.

How do you think the UK currently earns its money?

[Eddie Strohacker]

Toaster said:

So I will go back to my point if we are not Manufacturing as a Nation what are we going to trade?

You're stepping outside of the PH orthodoxy, so you're going to get bluster, but let's look at some basic numbers: Manufacturing is 10% of the economy. Services is about what? 70--80% There are no tariffs on services. The whole imports/reduced tariffs argument is spurious, even if you can do it, thereby flooding the country with cheap imports & killing whole sectors overnight, but you probably can't anyway but the intricacies of WTO rules are overlooked or more likely just not understood by former front line politicians like Nige who endlessly repeats that no deal is better than a bad deal whilst citing repeatedly our contributions to the EU budget as justification in relation to lowering tariffs & many here think he still has a future in the real world.

But, as one of a small handful of people not onboard with Brexit as anything like a remotely good idea, I find it wearing to read up on the detail only to go round & round the same old schtick day in, day out with the same people to no real purpose. So, enjoy the incoming, for it is incoming.

[Tuna]

Toaster said:

relative is still a decline as outlined

https://www.ons.gov.uk/employmentandlabourmarket/p...


The number of jobs in Manufacturing fell by 51%, from 264,000 to 129,000 jobs in London between 1996 and 2015. It was almost the only industry to lose jobs over the period, whereas jobs in London as a whole grew by 40%.

23.7% of employee jobs in Manufacturing in London were earning below the London Living Wage in 2015, up from 19.3% in 2014, and real average (median) hourly earnings (excluding overtime) in Manufacturing in London have fallen over time, from £16.71 in 2008 to £13.94 in 2015, in 2015 prices. Real earnings have been calculated using national Consumer Prices Index figures, as data are not available at the London level.

You are relying on some very strange reports - the number of manufacturing jobs in London?!

Even if you ignore the focus on London, it's not surprising that manufacturing jobs have fallen during the largest transition from heavy industry to automation and services. The question to ask is whether we're generating less money - how is the economy doing? You can put your own spin on that, but I don't think anyone is advocating employment for the sake of employment.

The first report you cited also neatly avoided showing comparative graphs of manufacturing output between equivalent nations, rather cherry picking statistics that tended to come immediately after the 2008 crash. Reduction in heavy industry is a big feature of the 1st world economies, and we're maintaining our relative wealth by punting the labour intensive stuff around the world where it's cheapest. There is an issue coming where those convenient sources of cheap labour have been brought out of relative poverty and stop being so cheap (as is already happening in China), but that is a global issue, not something specific to the UK or Brexit.

Regardless of all of this, what do you think this actually has to do with Brexit? Our industrial strategy is more or less independent of whether we're in the EU or not.

[Tuna]

Eddie Strohacker said:

You're stepping outside of the PH orthodoxy, so you're going to get bluster, but let's look at some basic numbers: Manufacturing is 10% of the economy. Services is about what? 70--80% There are no tariffs on services. The whole imports/reduced tariffs argument is spurious, even if you can do it, thereby flooding the country with cheap imports & killing whole sectors overnight, but you probably can't anyway but the intricacies of blah blah blah......

This is Eddie in a nutshell. People take the time out to rationally discuss why they believe particular approaches are worthwhile, and what evidence there might be for that. Mysteriously, he disappears for that part of the debate.

Then later he reappears, accusing others of bluster before himself making overblown and evidence free claims.

Remarkable.

[Toaster]

jsf said:

How do you think the UK currently earns its money?

Clearly its not Manufacturing, whilst your eagle eye spotted one reference for London.

So:

Manufacturing as a % of GDP

UK manufacturing has been in relative decline since the 1960s. Manufacturing as a share of real GDP has fallen from 30% in 1970 to 12% in 2010........[ So much for manufacturing more than ever!]

Then you have: Exports as a % of GDP have increased from 14% to 18%, but imports have increased even more – from 16% to 24%.

[Eddie Strohacker]

Tuna said:

Then later he reappears, accusing others of bluster before himself making overblown and evidence free claims.

Remarkable.

QED. Throw a bit of mud, hope it sticks. I saw you mention my name three times since I last posted & that's why I haven't posted. You either pull it out of the playground goading, or you don't. And you don't. Why not challenge me on the GDP % of manufacturing? Or tariffs on services? But no, just a dig, hoping for a bite. So, it's wearying dealing with you & your Brexiteer pals. hope that explains it.

[anonymous-user]

Toaster said:

Clearly its not Manufacturing, whilst your eagle eye spotted one reference for London.

So:

Manufacturing as a % of GDP

UK manufacturing has been in relative decline since the 1960s. Manufacturing as a share of real GDP has fallen from 30% in 1970 to 12% in 2010........[ So much for manufacturing more than ever!]

Then you have: Exports as a % of GDP have increased from 14% to 18%, but imports have increased even more – from 16% to 24%.

You do realise that world GDP from manufacturing as a percentage of overall GDP has been falling for decades down 6% since 1995.

The growth is not in manufacturing, even in traditionally high GDP manufacturing countries like Germany, even with their re-unification and then position at the centre of the EU manufacturing complex with the benefits its now getting from an undervalued currency and cheap eastern block supply chain post EU expansion, its had a stagnant GDP % from manufacturing since 1995. Between 1991 and 1995 Germany lost 5%

http://data.worldbank.org/indicator/NV.IND.MANF.ZS

[Tuna]

Eddie Strohacker said:

Tuna said:

Then later he reappears, accusing others of bluster before himself making overblown and evidence free claims.

Remarkable.

QED. Throw a bit of mud, hope it sticks. I saw you mention my name three times since I last posted & that's why I haven't posted. You either pull it out of the playground goading, or you don't. And you don't. Why not challenge me on the GDP % of manufacturing? Or tariffs on services? But no, just a dig, hoping for a bite. So, it's wearying dealing with you & your Brexiteer pals. hope that explains it.

OK, let's look at your comments then.

Eddie Strohacker said:

The whole imports/reduced tariffs argument is spurious, even if you can do it, thereby flooding the country with cheap imports & killing whole sectors overnight

We can test that theory quite easily. Average EU tariffs on RoW imports are say 10%-20% ignoring the headline grabbing outliers. What would happen if we reduce the price of imports by 10-20%? You say it would flood the country with cheap imports and kill whole sectors overnight.

When the Leave vote happened, exchange rates dropped by around 20%, making imports more expensive overnight. Economists predicted the UK economy would implode, with half a million jobs lost as a consequence.

Did that happen? No.

What would happen if we dropped EU tariffs down to zero? We'd return import prices to more or less what they were pre-vote. Pre vote, were we flooded with cheap imports and seeing whole sectors killed?

No.

The reason I laid into you is because I'd like you to actually engage in a discussion rather than this frustrating drive-by hyperbole. //ajd managed to put forward a sensible case for his position - and we might disagree on the political outlook, but at least we can understand where it is we're coming from.

[Tuna]

Toaster said:

Clearly its not Manufacturing, whilst your eagle eye spotted one reference for London.

So:

Manufacturing as a % of GDP

UK manufacturing has been in relative decline since the 1960s. Manufacturing as a share of real GDP has fallen from 30% in 1970 to 12% in 2010........[ So much for manufacturing more than ever!]

Then you have: Exports as a % of GDP have increased from 14% to 18%, but imports have increased even more – from 16% to 24%.

What do you suggest? None of this is remotely related to Brexit as all of the studies you mention stop seven years or more before we even voted.

You're talking about a common shift in manufacturing for all industrialised nations - very slightly related to the introduction of information technology. What has that got to do with leaving the EU?

[Sway]

Tuna said:

Toaster said:

Clearly its not Manufacturing, whilst your eagle eye spotted one reference for London.

So:

Manufacturing as a % of GDP

UK manufacturing has been in relative decline since the 1960s. Manufacturing as a share of real GDP has fallen from 30% in 1970 to 12% in 2010........[ So much for manufacturing more than ever!]

Then you have: Exports as a % of GDP have increased from 14% to 18%, but imports have increased even more – from 16% to 24%.

What do you suggest? None of this is remotely related to Brexit as all of the studies you mention stop seven years or more before we even voted.

You're talking about a common shift in manufacturing for all industrialised nations - very slightly related to the introduction of information technology. What has that got to do with leaving the EU?

Equally, the value created by the manufacturing industries has increased - the fact that other industries have increased even more is hardly a slight on the manufacturing sector.

Eddie - you suggest opening tariffs would destroy sectors, which ones and if they're uncompetitive globally why haven't they already gone under when competing with zero tariffs with disparate economies such as Poland, Latvia or the Czech Republic? They have vastly lower wages, employment protection, overheads, etc.

[Deptford Draylons]

Eddie Strohacker said:

Tuna said:

Then later he reappears, accusing others of bluster before himself making overblown and evidence free claims.

Remarkable.

QED. Throw a bit of mud, hope it sticks. I saw you mention my name three times since I last posted & that's why I haven't posted. You either pull it out of the playground goading, or you don't. And you don't. Why not challenge me on the GDP % of manufacturing? Or tariffs on services? But no, just a dig, hoping for a bite. So, it's wearying dealing with you & your Brexiteer pals. hope that explains it.

Unfortunately you have history here as a waste of space and answer dodger when questioned on your claims. Multiple times by multiple people asking you to clarify and you just don't even wish to be drawn. Lots of big claims, little evidence and a fear of backing them up is your hallmark on this forum.

[Murph7355]

Toaster said:

Clearly its not Manufacturing, whilst your eagle eye spotted one reference for London.

So:

Manufacturing as a % of GDP

UK manufacturing has been in relative decline since the 1960s. Manufacturing as a share of real GDP has fallen from 30% in 1970 to 12% in 2010........[ So much for manufacturing more than ever!]

Then you have: Exports as a % of GDP have increased from 14% to 18%, but imports have increased even more – from 16% to 24%.

Why are you trying to use "as a %age of" to suggest we're not manufacturing more than ever?

If everything else increases faster, new things come on board etc that's bound to happen.

Conversely, it would be possible for "as a %age of" figures to go up but for our GDP figures to decline. Presumably you'd see that as OK?

So where are your absolute numbers to prove your assertion?

All "as a %age of" does in this context is demonstrate the balance of the economy. It's not great here tbh, but then that's always difficult as a developed nation.

[Eddie Strohacker]

Tuna said:

We can test that theory quite easily. Average EU tariffs on RoW imports are say 10%-20% ignoring the headline grabbing outliers. What would happen if we reduce the price of imports by 10-20%? You say it would flood the country with cheap imports and kill whole sectors overnight.

When the Leave vote happened, exchange rates dropped by around 20%, making imports more expensive overnight. Economists predicted the UK economy would implode, with half a million jobs lost as a consequence.

Did that happen? No.

What would happen if we dropped EU tariffs down to zero? We'd return import prices to more or less what they were pre-vote. Pre vote, were we flooded with cheap imports and seeing whole sectors killed?

No.

You have this backwards. Reduce tariffs unilaterally & you'll increase cheap imports. Doesn't really matter what on, say Cauliflowers - you put cauliflower growers out of business as the market votes with its feet. Applies to anything you care to name.

This is an example of Economists for Brexit's unilateral trade model. But in any event, it's not feasible to think that we can go naked into trading with the world & expect reciprocation. For one, other countries are not likely to follow suit & especially not Europe - but good luck buying Parma ham from Indonesia & moreover, we can't do it, WTO rules disallow it, it's a fundamentally flawed idea.

Thirdly, it's misleading in any event to focus on tariffs, it's a running narrative in Brexit but if you look at FTA's and tariff levels, there's a general downward pressure on them, reducing the figurative importance & besides, FTA's tend to be more about regulatory convergence & standards in any event. But in our case, it's like two bald men arguing over a comb, our economy is overwhelmingly service based, the focus on tariffs is not relevant to what this country is about economically. It is in Port Talbot & Cowley, but not in UK Plc as a whole & not by a long, long chalk.

[anonymous-user]

Eddie Strohacker said:

This is an example of Economists for Brexit's unilateral trade model. But in any event, it's not feasible to think that we can go naked into trading with the world & expect reciprocation. For one, other countries are not likely to follow suit & especially not Europe - but good luck buying Parma ham from Indonesia & moreover, we can't do it, WTO rules disallow it, it's a fundamentally flawed idea.

What cant we do under WTO? buy ham or have zero tariffs?

I've cured your ham problem http://www.carmarthenham.co.uk/

[Dr Jekyll]

Eddie Strohacker said:

You have this backwards. Reduce tariffs unilaterally & you'll increase cheap imports. Doesn't really matter what on, say Cauliflowers - you put cauliflower growers out of business as the market votes with its feet. Applies to anything you care to name.

This is an example of Economists for Brexit's unilateral trade model. But in any event, it's not feasible to think that we can go naked into trading with the world & expect reciprocation. For one, other countries are not likely to follow suit & especially not Europe - but good luck buying Parma ham from Indonesia & moreover, we can't do it, WTO rules disallow it, it's a fundamentally flawed idea.

Thirdly, it's misleading in any event to focus on tariffs, it's a running narrative in Brexit but if you look at FTA's and tariff levels, there's a general downward pressure on them, reducing the figurative importance & besides, FTA's tend to be more about regulatory convergence & standards in any event. But in our case, it's like two bald men arguing over a comb, our economy is overwhelmingly service based, the focus on tariffs is not relevant to what this country is about economically. It is in Port Talbot & Cowley, but not in UK Plc as a whole & not by a long, long chalk.

If you reduce tariffs, unilaterally or multilaterally, imports get cheaper. But they also get cheaper through currency fluctuations and the economy doesn't collapse. Of course our economy like most developed economies is mainly serviced based, but this does not alter the benefits of cheaper imports.