Actual economic effects...

[Spinflight]

FTSE closed on Wednesday at 6138. Closed on Friday at 6138.

Long term borrowing rates have come down as brexit appeared more likely, 10yr ones from 2% down to 1.09% post brexit. Similarly all the European long term borrowing rates rose sharply. Lesson? We are a less risky and more credit worthy outside the EU than in.

One ratings agency did drop our credit worthiness, though oddly the last time they did was out of fear of Eurozone contagion. Seems completely at odds with the long term borrowing rates, which matter quite a great deal given our debts.

The pound dropped, quite significantly. It appears however that there was some 'unusual' activity in the market which forced it down whenever the Leave campaign polled well. To the extent of trying to sell it when there were no buyers.

Some people lost a great deal of money, probably dwarfing the millions contributed to the remain campaign, lets hope it was Goldman Sachs and JP Morgan. :)

"the idea that Brexit inevitably means a downward slide that goes on forever."

Surely nobody suggested that any slide can go on forever.

The best possible outcome for the economy from this position seems, to me, to be a swift declaration that we would like stay in the EEA at whatever price that may be.

LOL

I sincerely hope you never need to do any negotiating.

You can't seriously think that going into a negotiation saying "we have no options, we're fucked, we'll take whatever you give us" is a good idea?

The UK needs to go into those negotiations having sounded out tge types of bilateral deals they can get elsewhere, particularly the US.

We, and they, both need to know that we have other options. That the UK has a non-EEA strategy.

Desperate clinging is never a good look.

Surely nobody suggested that any slide can go on forever

Well I suggested that one couldn't and someone disagreed with me.

So kinda.

Well if my I were on the EU side, I would be looking at us and thinking 'what do you think you're going to achieve in 2 years? Here's our offer, like it or lump it.'

And the idea of having any kind of firm options before we enter negotiations - so in the next 6 months - seems even less likely.

Just my opinion, would be delighted to be proved wrong.

They're probably going to try that.

But I can't see them keeping up the "no informal negotiations" thing for 6+ months.

That was a bluff they tried to pull to get us to invoke quickly, and we didn't buy it.

But (within reason) the timing is up to us, and that puts them on the back foot a bit, because they want a conclusion.

In the meantime we need to exploit dissatisfaction with Juncker, kiss a bit of bilateral EU arse, cosy up to the US, make strong Javid-style anti-austerity plans that countries terrified of the Euro will watch with interest.

We need to wait to trigger until we can make a convincing case that we will survive outside the EU, and possibly be better off for it.

We have to be able to say "your two year deadline doesn't scare us. We can do WTO until our bilateral deals are sorted."

Even if we want EEA more than anything, it can't be our only option. Or we won't even get that.

I see that the blinkers are still firmly in place.

The UK is in a poor negotiating position with all its potential major trade allies. They are bigger than us and they need a deal much less than us.

And that's before we even get into the issue of who, exactly, is going to do all this negotiating. At the top level, May has been a competent Home Secretary who has proven herself capable of making difficult decisions (regardless of whether you agree with her or not, I think she has probably earned some respect). She has little or no foreign or trade experience though. And the other candidates are far worse from this point of view.

As for Javid, what he's proposing sounds like Corbynomics without bothering to raise any taxes to pay for it. I certainly don't disagree with the premise (the UK's infrastructure is in a poor state and it needs money spending on it) but if Labour were suggesting this, they would get shouted down and told they were being irresponsible. The hypocrisy is astounding.

if Labour were suggesting this, they would get shouted down and told they were being irresponsible.

Sure.

But I'll still take it.

Our lack of experienced negoiators is an issue.

But it is a skill you can buy in, to some extent.

We can go into this as supplicants, or we can do our best to maximise the position we are in.

Recognising your straitened circumstances but trying to maximise yoyr advantages is not being blinkered.

Insisting that we are fucked and there is no hope is its own tyoe of blinker.

The UK is in a poor negotiating position with all its potential major trade allies. They are bigger than us and they need a deal much less than us.

I'd be very interested to hear any rebuttals to this statement, because as far as I can see, it is irrefutable.

What I know about trade deals you could put on the back of a postage stamp - but we were in a hugely strong position trade-wise as part of the EU. Size matters when it comes to trade, we are weaker without the union.

I think the only reason the bottom hasn't dropped out of our world completely this week, is because there is still a hope we'll manage to stay in the single market, and maintain the city passport. How we'll negotiate this without allowing free movement of people - which seems to be the most important thing to Leave voters - is anybody's guess, but without the single market, I think we'll find ourselves in a whole heap of crap.

Recognising your straitened circumstances but trying to maximise yoyr advantages is not being blinkered.

Sure. But part of recognising your straightened circumstances involves conceding that you have to make compromises, and being honest about the realities of negotiating complex trade deals. If the year deadline doesn't scare you, then you are either reckless or stupid. Even the fucking leave campaign isn't that stupid (bar a few right wing nut jobs like Liam Fox who fortunately no one is going to let near the negotiating table).

the two year deadline, sorry, must learn to proof read.

Manon I'm afraid I think it is down to Merkel and Hollande. We only hold one card, and that's when to Trigger Article 50. Once that's done, the clock's ticking and everyone knows it

May's deferred Art 50 to the end of the year, if ever.

An EEA deal isn't solely down to Merkel & Hollande, but the unanimous consent of the 27 states, the European Parliament & the 4 EFTA states.

The whole world knows we're in a desperate position, that's why this vote was so foolish. But to go to the EU with no other plan but an EEA deal would be like going into a referendum with no plan B...

I'm not 100% sure that the UK public & the Tory right would accept a EEA deal any more than the EU. So we have no choice but seriously to look at Canada/WTO options. It's not beyond the realms of possibility that we couldn't get equivalence for clearing operations. (The very thought of it makes my head hurt).

What I am certain of, is that by far the best deal we could ever possibly get is the one we have now. So, I don't understand the collective sheep-off-cliffism that has decided we cannot challenge a non-legally binding referendum that hasn't even been ratified by Parliament.

It doesn't matter if it's irrefutable.

Just like it nolonger matters that we willingly gave up a choice position in a strong trading bloc for no good reason.

No matter how weak our position, we now need to negotiate.

And we need to negitiate smart andvwell and make the most of every possible advantage open to us.

Because sitting around belly aching about how weak our position is is pointless.

Negotiations are complex and psychological.

If you think you have nothing to offer, you will get offered nothing.

There is a lot of wiggke roon opening up in the various EU country positions.

There is some with the countries that might like to send a message to the EU by negotiating a sweet deal with us.

I presume there are people out there already laying down early terms and talking about timings of discusdions and announcements

I presume there are people out there already laying down early terms and talking about timings of discusdions and announcements

Let's hope, but I'm not sure I share your confidence.

I have read that Aus/NZ have offered us some trade negotiators. And that we have few in the UK (haven't really needed them in the EU) and the ones we have will find it difficult to unpick the trading relationships we have built up within the EU.

Totally agree Manon

Esoecially this:

The whole world knows we're in a desperate position, that's why this vote was so foolish. But to go to the EU with no other plan but an EEA deal would be like going into a referendum with no plan B...

And also that it is crazy to be so supine about accepting the result of this crazy, undemocratic plebiscite whilst going to negotiate something that won't change any of the points of contention.

As for Javid, some of it's basic and some of it's mad - I mean infrastructure programmes in the UK? Haha.

However I do appreciate him bothering to pitch up in a power vacuum with a piece of paper. I agree with his suggestion that we guarantee EU migrants the right to remain, and I agree with explaining the trade deficit to the public so that they understand what we're a weak position we're in, in addition to our sinking economy. Ok that may be all I agree with, but that's not the point (sad laugh).

I think May needs to outline the various trade model options to the public, because many people haven't got a clue.

What do you have to say about FTSE 250 and Aviva, OP?

I'm not 100% sure that the UK public & the Tory right would accept a EEA deal any more than the EU

Even if you assume only a small proportion of Brexiters wanted out of the EU but wish for a EEA deal, it would take many of us in addition to the 48% who voted to remain to swing it as the preferred option.

We have every reason to feel calm and optimistic OP, what a wonderful thread.

OP - lower borrowing rates don't just signal confidence in an economy. They also signal a belief that things are getting so scary that you should park your money somewhere safe rather than take a risk by investing. E.g. when lehmans went tits up US borrowing rates went negative - investors were paying the US government to take their money.

Oh dear. Now what's the thing Remainers keep being told? Something about stop whinging, get over it and suck it up losers?

m.thenorthernecho.co.uk/news/14600610.North_East_and_North_Yorkshire_set_to_lose___665m_of_EU_funding_after_Brexit/

isn't that a bit like having your cake and eating it?

so where is this money to fund replacing EU finding going to come from? How much per week were we paying again?

From this morning's happy economic news:

www.theguardian.com/business/live/2016/jul/07/pound-dollar-brexit-politicians-city-stock-markets-retail-live

This blog about the economic outlook following the referendum is very clear and balanced, I think. Also on what to look out for in the news: www.georgemagnus.com/ftse-isnt-telling-us-anything-about-the-post-brexit-world-but-is/

There you go, Talking Britain Down again .

(Actually it's not funny at all ).

Glad Osborne put a "growth" duty in last year's Deregulation Act (a statutory duty to consider the effect on "economic growth" before enacting any new set of regulations).

If it wasn't so serious it would be funny, in a Pythonesque sort of way.