Brexit: Now What? Part II

[Airfix]

Here's another take on Brexit, Economist Roger Bootle's opinion:

So much of the current discussion about our future relationship with the EU is about access to the single market. If we could have all the benefits of belonging to the single market without being obliged to obey its rules, be able to make our own laws, control our own borders, abolish the EU’s tariffs on our imports, make no contributions to the EU budget and make our own trade deals around the world, then I would support being a member. But such a package is unobtainable.

Of the realistic options, some people have argued that we should seek a deal like Norway’s or Switzerland’s. We should want neither of these. Rather, we should seek to be like all other countries in the world, that is to say, outside the single market but trading extensively with it. In realising this vision, our officials and ministers need to bear in mind six key points.
Single market membership is not the be-all and end-all

First, contrary to the propaganda, membership of the single market is not of overwhelming importance. If it were, how would it be possible for non-member countries from all around the world to sell to it so successfully, and why would its members be doing so badly? Why haven’t single market member countries been carried forward on a wave of prosperity created by the mutual recognition of standards and the absence of border checks?

The benefits of the single market have been sufficiently small that they have been outweighed by other factors: the macroeconomic disaster that is the euro and the micro-economic disaster that is the web of regulations, laws and interferences that reduce market efficiency across the union.
Tariffs might be a price worth paying

Second, tariffs are not a big issue. By all means, let’s try to get a deal under which our exports to the EU face no tariffs. But this is not worth paying much for – or enduring much of a delay for. If our exporters end up having to pay the EU’s common external tariff this would not be a killer blow. The average tariff on manufactured goods is about 4pc.

If it comes to it, even the 10pc tariff on cars would be more than compensated by the lower exchange rate for the pound. And if the City loses passporting rights, that isn’t a killer blow either. The key requirement is to be outside the EU’s icy regulatory embrace. In the long term, securing this would be well worth enduring some short-term loss.

Full article here:
http://www.telegraph.co.uk/business...?WTmcid=tmgoff_soc_spf_fb&WT.mc_id=sf35729043

 

[The Don]

Here's another take on Brexit, Economist Roger Bootle's opinion:


Full article here:
http://www.telegraph.co.uk/business...?WTmcid=tmgoff_soc_spf_fb&WT.mc_id=sf35729043

Brexit propagandist spreading Brexit propaganda and ignoring the elephants in the room....

Firstly the strawmanning "if a single market is so great then why aren't all the EU economies booming ?" ignores all the other economic factors. We don't have otherwise identical non-EU economies running as a control to determine how well/badly they would have done without the EU.

Then, by talking only of tariffs and the trade of goods he completely ignores the impact on our service industries of being outside the EEA. Remember, those service industries represent a majority of our exports and provide a significant trade surplus.

Finally, he ignores the impact on UK business of the sudden loss of immediate access to the EU labour pool.

If the best your cheerleaders an advocates can manage is an article which says that "it might not all go tits up" then I think you have to question the strength of your message.

 

[Lothian]

I

Here's another take on Brexit, Economist Roger Bootle's opinion:


Full article here:
http://www.telegraph.co.uk/business...?WTmcid=tmgoff_soc_spf_fb&WT.mc_id=sf35729043

A minority would want that. You can argue with the other percentages but the largest voting group is clear

This is the problem, there is not an outcome which will make more than 50% of the country happy. The best you can do is please 48%

 

[Archie Gemmill Goal]

Here's another take on Brexit, Economist Roger Bootle's opinion:


Full article here:
http://www.telegraph.co.uk/business...?WTmcid=tmgoff_soc_spf_fb&WT.mc_id=sf35729043

Is he one of the good economists that CAN forecast beyond the next six months, then?

It would be interesting to see his analysis that backs this up rather than Brexiteer talking points about controlling our borders (seriously, ANOTHER IMMIGRATION argument?)

 

[McHrozni]

Brexit propagandist spreading Brexit propaganda and ignoring the elephants in the room....

And spouting nonsense at a professional level.

If it comes to it, even the 10pc tariff on cars would be more than compensated by the lower exchange rate for the pound.

Wouldn't the lower exchange rate for the pound translate into lower purchasing power of an average Brit as well? That's usually the case. What would compensate that, exactly?

And if the City loses passporting rights, that isn’t a killer blow either. The key requirement is to be outside the EU’s icy regulatory embrace. In the long term, securing this would be well worth enduring some short-term loss.

If this were true there would be no significant financial centers on the continent. The presensce of alternatives to London - Frankfurt, Paris, Amsterdam, Dublin and more - directly disproves this idiotic 'point'. The key requirement is to be able to sell the products within the EU. Guess what that requires?

He also tries to have it both ways:

The larger and more diverse the organisation doing the negotiations, the more difficult it is to reach agreement. In practice, this factor has been more dominant in the EU’s history than clout. The EU has been a bad trade negotiator and has signed comparatively few trade deals.

And actually, trade deals aren't always better

In any case, the importance of trade deals has been greatly over-estimated.

That's never a good sign if you're looking for serious analysis. A single instance of it - like here - is enough to cast serious doubt on the validity of the entire analysis.

There's also this little gem at the end:

About this, Sir Thingummy Whatnot, of the widget manufacturers’ lobby, understands next to nothing. By all means, listen to what he has to say; but don’t fall into the trap of believing that he knows what is in the interests of the British economy.

Basically a repeat of "let's all ignore the actual experts" stupidity.

McHrozni

 

[Airfix]

Lower purchasing power when it comes to imported goods, same purchasing power for domestically manufactured goods.

But the pound was overvalued anyway and it's fall was inevitable.
IMF 2014:
https://www.ft.com/content/ec6bef86-1653-11e4-8210-00144feabdc0
IMF 2015:
http://www.telegraph.co.uk/finance/...nd-could-hold-back-UK-recovery-warns-IMF.html

Analysts at Deutsche Bank said that the pound was the most overvalued currency in the world, Dec 2015:
http://www.telegraph.co.uk/finance/...ued-currency-in-the-world-analysts-claim.html

It's fall was inevitable, the Brexit vote just sped things up a little.

 

[McHrozni]

Lower purchasing power when it comes to imported goods, same purchasing power for domestically manufactured goods...

... that don't require imported raw materials, or semi-product, or software, or foreign produced machinery, or don't have foreign-based tech support, or ...

You'll probably never wrap your mind around the idea of what a globalized economy actually means. It's okay, you don't get it, no big deal.

Just please stop with this silly nonsense of yours, okay?

McHrozni

 

[Archie Gemmill Goal]

Lower purchasing power when it comes to imported goods, same purchasing power for domestically manufactured goods.

But the pound was overvalued anyway and it's fall was inevitable.
IMF 2014:
https://www.ft.com/content/ec6bef86-1653-11e4-8210-00144feabdc0
IMF 2015:
http://www.telegraph.co.uk/finance/...nd-could-hold-back-UK-recovery-warns-IMF.html

Analysts at Deutsche Bank said that the pound was the most overvalued currency in the world, Dec 2015:
http://www.telegraph.co.uk/finance/...ued-currency-in-the-world-analysts-claim.html

It's fall was inevitable, the Brexit vote just sped things up a little.

Ah more of the good forecasts that we can believe. Kind of hard to use it as compensation for tariffs if it was going to happen anyway, no?

As for the buying power of goods... would be interesting to see just how much of typical consumer buying is imported. Must be a hefty chunk. Especially when you factor in the supply chain.

 

[Tolls]

(quoting from the prior link)
And if the City loses passporting rights, that isn’t a killer blow either. The key requirement is to be outside the EU’s icy regulatory embrace. In the long term, securing this would be well worth enduring some short-term loss.

There was a chap on another forum I frequent, replying to someone spouting that the financial sector would do well as they wouldn't be tied down to all this red tape, pointed out that the whole world had been tightening their regulations since 07/08 and anyone attempting to turn the clock back would be shunned by everyone else. Never mind that arguing that the City should be under laxer regulation when we're still under the effects of the last disaster...well, says it all really.

This chap works in the industry in Singapore where the regulations are much the same...because it's a global economic thing.

I get the impression some of these Brexit types really have a bizarre view of how the world actually works these days.

 

[The Don]

Lower purchasing power when it comes to imported goods, same purchasing power for domestically manufactured goods.

There would be some logic in that were it not for the following:

• The majority of things manufactured in the UK rely on foriegn sourced compnents and/or raw materials, the price of those will go up
• The fall in the value of the pound will mean that imported goods will become more expensive which will in turn mean that there will be upward pressure on wages and hence UK manufactured items. If your wage doesn't rise then your purchasing power will be reduced
• There are whole sectors where UK manufacturing cannot supply UK demand. We don't make consumer electrical goods, (enough) cars, clothes and so on to mee UK demand (and the market isn't big enough to support UK manufacturing of same) so they will have to be imported - so lower purchasing power
• Inflationary pressures will likely result in rising interest rates which will reduce families' disposable income so even if prices remained static, purchasing power would reduce

But the pound was overvalued anyway and it's fall was inevitable.
IMF 2014:
https://www.ft.com/content/ec6bef86-1653-11e4-8210-00144feabdc0
IMF 2015:
http://www.telegraph.co.uk/finance/...nd-could-hold-back-UK-recovery-warns-IMF.html

Analysts at Deutsche Bank said that the pound was the most overvalued currency in the world, Dec 2015:
http://www.telegraph.co.uk/finance/...ued-currency-in-the-world-analysts-claim.html

It's fall was inevitable, the Brexit vote just sped things up a little.

.....and by a significantly larger margin than those experts (who strangely enough you do believe when they agree with you) were suggesting.

 

[Airfix]

The silly nonsense is the idea that you have to be in a clique of nations governed by Commission, tolerating the demise of British industry and basing everything on the services sector (which may I remind you crashed the UK economy in 2008).
Yes the services sector does well out of the EU, but other industries don't.
Ford don't make cars here anymore or Transit vans (those are made in Turkey now).

The fishing industry and shipbuilding have suffered, Terry's of York are no longer based in the UK only the intellectual property and branding remains of that once great company.
Cadbury's have also relocated much of their manufacturing abroad.
Companies were already leaving before Brexit and we need to find new ways of doing things.
UK industry sometimes needs state aid. EU rules make it very difficult to provide that aid.

The EU is inflexible, it hasn't helped the majority of Britons. It wasn't working. Now we're leaving. Get over it.

 

[ceptimus]

I

A minority would want that. You can argue with the other percentages but the largest voting group is clear
http://www.internationalskeptics.com/forums/imagehosting/44757d7bf2c9cf43.jpg

This is the problem, there is not an outcome which will make more than 50% of the country happy. The best you can do is please 48%

That's not the way referendums work. In any case there is the fallacy of splitting the leave voters into sections while leaving the remain voters all in one group. You should similarly split the remain voters into groups like:

Do as Cameron tells me
Don't want to risk my savings
Worried I won't be able to go to Majorca for cheap holidays
Keep my house price (and my second/third/... house prices high)
I have an overpaid job because of our EU membership.

If you did that then you might find that the best you could do would be to please one of the leave groups.

 

[Lothian]

The silly nonsense is the idea that you have to be in a clique of nations governed by Commission, tolerating the demise of British industry and basing everything on the services sector (which may I remind you crashed the UK economy in 2008).
Yes the services sector does well out of the EU, but other industries don't.
Ford don't make cars here anymore or Transit vans (those are made in Turkey now).

The fishing industry and shipbuilding have suffered, Terry's of York are no longer based in the UK only the intellectual property and branding remains of that once great company.
Cadbury's have also relocated much of their manufacturing abroad.
Companies were already leaving before Brexit and we need to find new ways of doing things.
UK industry sometimes needs state aid. EU rules make it very difficult to provide that aid.

The EU is inflexible, it hasn't helped the majority of Britons. It wasn't working. Now we're leaving. Get over it.

Wow, Seriously?

Those behind Brexit have no interest in UK manufacturing. They (Farage, Dyson Etc) want cheaper, tariff free imports from the far east and places with cheaper labour. They are not interested in subsidising uncompetitive industries. You voted against UK manufacturing, not for it.

 

[Lothian]

That's not the way referendums work. In any case there is the fallacy of splitting the leave voters into sections while leaving the remain voters all in one group. You should similarly split the remain voters into groups like:

Do as Cameron tells me
Don't want to risk my savings
Worried I won't be able to go to Majorca for cheap holidays
Keep my house price (and my second/third/... house prices high)
I have an overpaid job because of our EU membership.

If you did that then you might find that the best you could do would be to please one of the leave groups.

No all those Remainers would be happy with staying in and the consequential results. The leavers don't have a solution that will keep them all happy.

 

[The Don]

The silly nonsense is the idea that you have to be in a clique of nations governed by Commission, tolerating the demise of British industry and basing everything on the services sector (which may I remind you crashed the UK economy in 2008).
Yes the services sector does well out of the EU, but other industries don't.
Ford don't make cars here anymore or Transit vans (those are made in Turkey now).

The services industry is the core of the UK economy. Manufacturing accounts for 12%, the service sector for 80%.

I have yet to see evidence that the EU (as opposed to the shortsightedness of UK industry) works against the UK manufacturing sector - other EU countries have booming manufacturing sectors. But even if it were the case surely it makes sense to make economic decisions in the interest of 80% of the economy and not 12%.

The fishing industry and shipbuilding have suffered, Terry's of York are no longer based in the UK only the intellectual property and branding remains of that once great company.
Cadbury's have also relocated much of their manufacturing abroad.

And why is this the fault of the EU when a US-owned company moves prodution ?

Companies were already leaving before Brexit and we need to find new ways of doing things.
UK industry sometimes needs state aid. EU rules make it very difficult to provide that aid.

You have to demonstrate that it would work first before it's an EU problem. In this thread you've advocated state support for BHS and other failing companies.

The EU is inflexible, it hasn't helped the majority of Britons. It wasn't working. Now we're leaving. Get over it.

Evidence for the highlighted part and no, a small majority voting Leave doesn't count....

 

[Archie Gemmill Goal]

The silly nonsense is the idea that you have to be in a clique of nations governed by Commission, tolerating the demise of British industry and basing everything on the services sector (which may I remind you crashed the UK economy in 2008).
Yes the services sector does well out of the EU, but other industries don't.
Ford don't make cars here anymore or Transit vans (those are made in Turkey now).

The fishing industry and shipbuilding have suffered, Terry's of York are no longer based in the UK only the intellectual property and branding remains of that once great company.
Cadbury's have also relocated much of their manufacturing abroad.
Companies were already leaving before Brexit and we need to find new ways of doing things.
UK industry sometimes needs state aid. EU rules make it very difficult to provide that aid.

The EU is inflexible, it hasn't helped the majority of Britons. It wasn't working. Now we're leaving. Get over it.

You seem to be blaming the EU for commercial decisions by companies and your only proposed solution seems to be to bolster uncompetitive manufacturers with state funds.

Put aside the whole EU thing and just look at UK manufacturing. Or in fact global manufacturing in context.

First of all the idea of making things in the UK for the UK is more or less finished. For any market of scale the picture is a global one. So you are fighting against economies of scale.

Secondly most markets are dominated by multinationals. Even UK manufacturing is not necessarily UK owned and a lot of 'UK companies' don't build things in the UK

Where practical production is moving to China, India, Eastern Europe where costs are lower. This creates an interesting dynamic because for most things this is not where the biggest markets are. Not yet anyway.

So the trade off is between concentrating your production in low cost countries and having access to markets. By itself, 60m people in the UK is not all that significant but as a gateway to 500m Europeans it has been.

Now on the other side there are lots of businesses where they will be able to continue just fine as they are. Nobody has denied this. If we negotiate good trade deals with India, China, Korea, the Middle East, the US etc they might even get a little boost.

But there's still a hell of a lot of business which is going to take a hit and balancing side has a hell of a lot of 'ifs' associated with it. If your concern is multinationals leaving the UK to go overseas then that problem just got a hell of a lot worse.

If your goal is to rebuild UK manufacturing then I'm struggling to see how Brexit helps. Perhaps the plan is to mess everything up so badly that we destroy everything and start again and find a way to succeed?

 

[Aepervius]

The silly nonsense is the idea that you have to be in a clique of nations governed by Commission, tolerating the demise of British industry and basing everything on the services sector (which may I remind you crashed the UK economy in 2008).
Yes the services sector does well out of the EU, but other industries don't.
Ford don't make cars here anymore or Transit vans (those are made in Turkey now).

The fishing industry and shipbuilding have suffered, Terry's of York are no longer based in the UK only the intellectual property and branding remains of that once great company.
Cadbury's have also relocated much of their manufacturing abroad.
Companies were already leaving before Brexit and we need to find new ways of doing things.
UK industry sometimes needs state aid. EU rules make it very difficult to provide that aid.

The EU is inflexible, it hasn't helped the majority of Britons. It wasn't working. Now we're leaving. Get over it.

Again with that fishery non sense ? Did you even read the various article we gave you linked ?

Fishery suffered due to a combination of the unwillingness of the local politician to do something which would apply to everybody (e.g. not just british fisher) and the politics of being to sell the boat AND the concession.

In other word it is a british problem by briton, not an EU one.

 

[The Don]

If your goal is to rebuild UK manufacturing then I'm struggling to see how Brexit helps. Perhaps the plan is to mess everything up so badly that we destroy everything and start again and find a way to succeed?

Airfix is not a typical Leave voter because (s)he is a left-winger who views the EU as a corporatist entity working against the interests of the workers. Once the UK has left the EU then a workers' utopia can be established.

If you're familiar with the TV series Ballot Monkeys, Airfix is the equivalent of the principled (yet naive) Welsh girl.

 

[McHrozni]

The silly nonsense is the idea that you have to be in a clique of nations governed by Commission, tolerating the demise of British industry and basing everything on the services sector (which may I remind you crashed the UK economy in 2008).

The only silly nonsense in this thread is that somehow Brexit is the solution to the British problems. In every single instance you yourself chose to point out it has been conclusively shown Brexit can not help, and it is expected to harm the UK. You have not shown a single instance where EU has hurt the UK, or where leaving EU would benefit the UK.

On the other hand, there are plenty of instances where leaving EU will certainly hurt the UK which you haven't even addressed yet.

In order for Brexit to be good for UK, the upsides must outweigh the downsides. Thus far, the ratio is about 1000:0. Meditate on that a bit, will you?

McHrozni

 

[catsmate]

Catsmate, manufacturing accounts for the majority of Britain's exports,

Not actually true. Last year they were equal to the services exports, and that sector is growing while manufacturing is declining.

Further I suggest you look into the manufacturing sector in more detail; automotive is heavily dependent on imported parts and materials, aerospace is deeply entwined with European partners, gemstones (which contribute ~11%) are mostly only cut in the UK.
And also into more details; for example the UK automotive trade surplus is a paltry Stg£8 million.

Finally, the services sector is far more important; producing around 80% of UK GDP compared to ~14% for manufacturing.

the majority of Britain's exports do not go to the EU.

Untrue. The EU share (JUL2016 data) is 50% (Ireland 6%, France 6%, Netherlands 8%, Germany 11%, others 19%).

The idea that exports are all going to stop is false.

Puerile strawman.

The idea that we should look only inwardly to the EU when there is a whole world out there is short sighted.

So why haven't UK companies being doing this? Are you going to blame the Big Bad EU for Britain's economic laziness?

Of course there is uncertainty at the moment, no deal has yet been done or can be done until article 50 is declared, but there will be a deal.

Yes. And it'll be deal that favours the far larger EU.

Our government will be grown up about this and will be respectful.

Seriously? Have you listened to the crap from them?

Both sides will have to be prepared to compromise.

Indeed. And the UK, as the smaller side, will have to compromise more for access to the EU market.
Likewise trade deals with be worse for the UK than they'd have been as part of the EU block.