• Quick note - the problem with Youtube videos not embedding on the forum appears to have been fixed, thanks to ZiprHead. If you do still see problems let me know.

Cont: Brexit: Now What? Part 5

Status
Not open for further replies.
It seems that the government is so confident about the success of Brexit that dissenting voices should be silenced :rolleyes:

Health Secretary Jeremy Hunt has said that "threats" by business over Brexit are "completely inappropriate".

He was responding to warnings by Airbus and BMW that investments in the UK could be jeopardised by Brexit uncertainty.
Click to expand...

https://www.bbc.co.uk/news/business-44593095

I guess businesses should just shut up and then pull out of the UK without warning if the post-Brexit situation makes it too difficult to do business.
 
Consensus among the Brexiters seems to be that Airbus will toe the EU line because of the subsidies they get.
 
Captain_Swoop said:
Consensus among the Brexiters seems to be that Airbus will toe the EU line because of the subsidies they get.
Click to expand...
Why could a "complete Brexit" UK not be even more generous with its subsidies? Some of the fabled "Brexit dividend" might be used for this purpose
 
Last edited:
Craig B said:
Why could a "complete Brexit" UK not be even more generous with its subsidies? Some of the fabled "Brexit dividend" might be used for this purpose
Click to expand...

Because that would involve the UK ending up suffering from punitive tariffs and thus involve the UK taxpayer effectively paying the other countries (through those tariffs) in order to keep UK businesses afloat - as opposed to them competing fairly and bringing in money through exports?
 
Remember that Airbus is about 25% state owned by Germany, France, and Spain - so when Airbus is trying to influence Brexit that influence is partly coming from foreign EU states.
 
Tariffs are nearly always import tariffs charged by the importing states - so if the EU imposes a tariff on goods it imports from the UK, that, by itself, doesn't cost UK companies anything. Of course, it would be likely to have an impact on their export volumes as some of their former EU customers would choose to swap to buying things from other sources rather than pay the increased prices because of the tariffs.

If the UK retaliates by also charging import tariffs then that means that UK customers and companies have to pay more money for any goods coming from the EU. That extra money flows to HMRC (UK government) who could then choose to spend it on subsidies somewhat negating the extra costs, though in reality they would be more likely to spend it on the usual government spending departments - defence or similar - or use it to reduce taxes below what they otherwise might be.
 
ceptimus said:
... the usual government spending departments - defence or similar - or use it to reduce taxes below what they otherwise might be.
Click to expand...
I'm sure you wish that the only government spending was on the military "or similar" and that money should otherwise only be used to reduce taxes, but that's not how things stand. See https://en.m.wikipedia.org/wiki/Government_spending_in_the_United_Kingdom. The highest spending is on social protection, health, and education. Pity, I suppose, but there it is.
 
Well, if we have to introduce new tariffs because the EU won't negotiate a sensible trade deal, it will be a sort of windfall tax for the government to spend on whatever they need to. But of course, tariffs will harm the economy so in the longer run they'll have even less to spend.

It's true that tariffs will harm the EU too, of course, but their tariffs will be spread across a much larger group of customers so it won't hit them as hard as it hits the UK. The EU probably figure it's worth their economy taking a hit providing they can make the UK suffer more and therefore dissuade any other EU countries that might be thinking of leaving.
 
It's just occured to me that I'm playing Mad Max:Fury Road so much at the moment is because a post apocalyptic wasteland in which men eat dog food and the maggots from corpses while fighting to the death for a canteen of water seems a reassuring escape from our Brexit future and the idea that Jacob Rees-Mogg is a realistic candidate for leadership of our country.
 
In what ways do you think Jacob Rees-Mogg would be worse than our current Prime Minister? And how does he compare with Jeremy Corbyn who is another contender for the post?
 
ceptimus said:
<snip>

It's true that tariffs will harm the EU too, of course, but their tariffs will be spread across a much larger group of customers so it won't hit them as hard as it hits the UK.

<snip>
Click to expand...


I'm not sure I understand this.

If the cost of delivering a product to a customer goes up due to the cost of a tariff being included, why does it matter how many people are in the country (or trade group)? Each customer purchasing that product is still going to pay the same increase, whether there's a million people there or a billion.
 
It has less effect (on the whole country or countries) when the same amount of tariffs are spread across a larger population. Of course for the individual or company that has to pay the extra cost it's just the same, but a million euros of tariffs spread across a population of a few hundred million will have less effect on the area than a million euros of tariffs imposed on a country of less than a hundred million.

We've heard many times the mantra, "We buy more from them than they buy from us" so if tariffs are imposed at the same rates by both the EU and the UK, then the UK will spend more on tariffs than the EU does - and that higher cost will be spread across a smaller population.

All this assumes that trade continues at roughly the same levels as before - but that is an incorrect assumption. The actual tariffs paid will depend on how much stuff the UK continues to import from the EU after Brexit, and how much stuff the EU continues to import from the UK. Both amounts will most likely be substantially less after the imposition of any tariffs, but how much less depends on the levels of any tariffs, and how easily and cheaply alternative goods can be obtained from elsewhere.
 
Last edited:
ceptimus said:
It has less effect (on the whole country or countries) when the same amount of tariffs are spread across a larger population. Of course for the individual or company that has to pay the extra cost it's just the same, but a million euros of tariffs spread across a population of a few hundred million will have less effect on the area than a million euros of tariffs imposed on a country of less than a hundred million.

<snip>
Click to expand...


That country of less than a hundred million would have to buy a few hundred times more pieces per person for that to be true.

Unit price is unit price. The purpose of a tariff is to discourage or encourage the purchase of some product. By way of affecting the unit price. It doesn't make any difference how many people are in the targeted market. The change in price for that item costs each one of them equally.
 
Last edited:
Let me try again.

A smaller population (the UK) buys more from the EU than the EU buys from the UK.

So if the same tariff levels (as a percentage of the cost of the imported items) are applied both ways, that means that, on average, each UK citizen will pay more in tariffs than each citizen in the EU.

Even if the total trade both ways were the same, the average tariff paid by a UK citizen would still be greater because of the smaller population.

If the total trade in each direction were proportional to the population of the importing country or countries, only then would the average tariff paid by each individual be the same - but that isn't the case right now.
 
Last edited:
ceptimus said:
Tariffs are nearly always import tariffs charged by the importing states - so if the EU imposes a tariff on goods it imports from the UK, that, by itself, doesn't cost UK companies anything. Of course, it would be likely to have an impact on their export volumes as some of their former EU customers would choose to swap to buying things from other sources rather than pay the increased prices because of the tariffs.

If the UK retaliates by also charging import tariffs then that means that UK customers and companies have to pay more money for any goods coming from the EU. That extra money flows to HMRC (UK government) who could then choose to spend it on subsidies somewhat negating the extra costs, though in reality they would be more likely to spend it on the usual government spending departments - defence or similar - or use it to reduce taxes below what they otherwise might be.
Click to expand...

The issue with tariffs is not just a finished goods issue but a supply chain issue where tariffs will have been applied in multiples depending on the complexity of that supply chain. Most large EU/UK manufacturers have EU wide supply chains and the tariffs will result in higher prices for the end customer. This is also true of the food supply chains of the major supermarkets like Asda, Tesco, Waitrose et al. The continuation of relatively cheap food in the UK must be a major Brexit risk, and to expect everyone in the UK to only buy UK produce will be challenging to say the least. If you also consider that the rest of the EU will still have the choice of the other 27 countries to create tariff free supply chains then it would be amazing if they decided to stick with the parts of their supply chain in the UK.The UK will not have that option and will either have to pay the tariffs or increased distribution and logistics costs from moving their supply chain to other trading partners who will offer them a tariff free deal.
 
Last edited:
MCel58 said:
The issue with tariffs is not just a finished goods issue but a supply chain issue where tariffs will have been applied in multiples depending on the complexity of that supply chain. Most large EU/UK manufacturers have EU wide supply chains and the tariffs will result in higher prices for the end customer. This is also true of the food supply chains of the major supermarkets like Asda, Tesco, Waitrose et al. The continuation of relatively cheap food in the UK must be a major Brexit risk, and to expect everyone in the UK to only buy UK produce will be challenging to say the least. If you also consider that the rest of the EU will still have the choice of the other 27 countries to create tariff free supply chains then it would be amazing if they decided to stick with the parts of their supply chain in the UK.The UK will not have that option and will either have to pay the tariffs or increased distribution and logistics costs from moving their supply chain to other trading partners who will offer them a tariff free deal.
Click to expand...
Tariffs are not the only issue. Most pan-european manufacturers such as car manufacturers operate just-in-time systems where parts are not held in stock but are bought in as needed. Free movement of goods assists that. Customs checks are seen as a big barrier. Manufacturers who source parts from the EU are likely to save money by moving into the customs area their parts come from.
 
Genuine question, I don't know the answer. If there is a "no deal" break next spring, and we plunge out of the EU with nothing agreed, do we still pay the "divorce settlement" (C. £39 billion)?
 
"Nothing is agreed till everything is agreed." It means that deals already agreed and signed don't necessarily apply until a final setlement is reached. So in principle the UK could withhold the payments if a satisfactory trade deal isn't reached. Most commentators think the UK would still honour the payments - or at least a sizeable proportion of them.
 
http://uk.businessinsider.com/uk-bid-for-a-share-of-eus-150-billion-in-assets-post-brexit-2017-2

Did the EU ever agree that the UK was entitled to a share of the assets it has paid towards over its years of membership? The assets include buildings, but also wine, fine art, and financial investments. Last I heard was that the EU was still insisting that all liabilities belonged to member countries (and former member countries) but that all assets belonged to the EU itself.
 
Last edited:
Status
Not open for further replies.

Back
Top Bottom