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. :)

"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."

The entire world knows that going to WTO rules is economic suicide, and pretending it's actually ok doesn't change our negotiating position at all. They know that we know that it's madness.

"The entire world knows that going to WTO rules is economic suicide, and pretending it's actually ok doesn't change our negotiating position at all. They know that we know that it's madness".

Of course they do. But then the whole referendum vote was one short economic suicide note.

In the Alice in Wonderland world in which we now live, any outcome, however insane, is conceivable.

Equally we have to be prepared for it, in case we can't get a decent EEA deal or the Leave camp won't accept any outcome that involves Brussels.

We've written the suicide note, now it's just a question of choosing by which method we die.

I think the main problem here is the seemingly deliberate lack of positive messages from government. Nothing from Cameron - and he is still PM. He should have planned for a Leave result and how he would make the best of it. He needs to make a much firmer and more positive official announcement asap stating that we will negotiate a good position for the UK - and in the meantime it is business as usual - plus a cut in corporation tax/stamp duty - or whatever other stimulus they choose to reassure overseas investors.

The top concern of Leavers was sovereignty - to take back control of our democracy, our justice system, our tax revenues, our borders. As I understand it, the top concerns of Remainers were the maintenance of trade with the EU and the maintenance of joint programmes in education and research. So the negotiation must aim to satisfy the main concerns of the two sides. That should be made clear now - so that nobody thinks they are about to be shafted.

In the meantime we need an immediate reassurance that all EU nationals here on 23 June can stay and much more positivity and reassurance from the PM - it's his duty - he can't just sulk and say he's not playing anymore.

If Cameron doesn't want to do his job he can move out of no. 10 today and we can have someone like Hague as interim PM.

*It being WTO trading

"You never lost control of you democracy , your justice system or your tax revenues
You had to contribute a smig of GDP to EU
You had complete control of your borders vis third countries
You had partial control vis a vis EU citizens

So all you have done is potentially get in complete control over Eunationals right of entry

However you won't even get that without loosing access to the common market which no sane politically would contemplate

Twat

Twat"

Indeed this is true, but you are responding to a poster who, on a thread before the referendum vote, claimed that the French revolution was a success, without any apparent awareness of the 20 years of chaos, poverty and war in between storming the bastille and restoring something only slightly less authoritarian than a full blown military dictatorship.

Well done everyone. We got to page 13 before it ended up just like all the others...

Going back to this link posted above www.theguardian.com/business/live/2016/jul/07/pound-dollar-brexit-politicians-city-stock-markets-retail-live

I agree with El-Erian the freefall of the pound is in part due to inadequate leadership and the complete uncertainty over where we are headed. There's a power vacuum, and no-one is stepping in. It's not enough to say we don't have answers until we talk to Europe - we need, the city needs, the world needs to see there is someone steering the ship.

I don't think we can wait until September for a new leader. It's got to the point where I think we may need to consider a national government as in WWII.

"Lack of positive messages" is not the "main problem" - that's irrelevant to the cold hard judgment of the global economic system. Just saying cheery things won't make the EU and nations outside the EU agree that we can have whatever we want and everything will be all right. The fact is that now that the Leave vote has happened, we don't have much of a position to bargain from anymore.
And how do you figure Hague or anyone else will become PM overnight?

Uncertainty is unfortunately the name of the game here, and for the foreseeable: from 23 June through the triggering of Article 50 and on through the following two years (and beyond). And of course the markets love uncertainty.

And how do you figure Hague or anyone else will become PM overnight?
I just googled who would be PM if Cameron was run over by a bus. Clearly quite a common google search! Couldn't find a quick answer strangely, but the Tory party must have some succession mechanism if Cameron were to step down now. Hopefully he will step up to the plate instead or they will rush May in somehow.

"the main problem here is the seemingly deliberate lack of positive messages from government... He needs to make a much firmer and more positive official announcement asap stating that we will negotiate a good position for the UK - and in the meantime it is business as usual - plus a cut in corporation tax/stamp duty - or whatever other stimulus they choose to reassure overseas investors."

If only it were that easy.

As pensive said, happy announcements of wishful thinking will do nothing at all to bring foreign investors back to the table. Only an end to uncertainty and concrete results can (potentially) do that.

If I'm investing to build a factory in the UK from which I hope to serve the European market, I need to know if I can sell those products to the EU without import tariffs and quotas. A bit lower tax is not going to rock my world if I can't.

Following the link provided by missmoon above I found this article written a few weeks before the vote which shows that someone had an idea about how things were going:

www.prospectmagazine.co.uk/blogs/george-magnus-2/european-union-referendum-brexit-pound-sterling-euro

If I'm investing to build a factory in the UK from which I hope to serve the European market, I need to know if I can sell those products to the EU without import tariffs and quotas. A bit lower tax is not going to rock my world if I can't.
Agree.
But a firm statement from the PM that that is what we are aiming for would be helpful. It would be welcomed by German manufacturers too.

The PM has no say in what we are aiming for. What we are aiming for will be defined by the negotiating position adopted by his successor and their advisors. Effectively somewhere on a scale between WTO rules vs EEA. And what is decided as being the aim is going to go against the wishes of a significant part of the Leave voters (because they have contradictory views among themselves).

How can Cameron tell the people who defeated him what the shape of things will be without the authority to say it when it goes against what they believe they voted for?

In these circumstances the PM would be wise to make general soothing noises but beyond that say as little as he can get away with.

"a firm statement from the PM that that is what we are aiming for would be helpful."

No, it wouldn't. Everybody knows that of course that is what the UK will be aiming for.

The question is whether they will actually get it.

Molly: George Osborne is First Secretary of State, so in the absence of a "Deputy Prime Minisyer", if Cameron fell under a bus, he'd be the one who took over.

Doesn't help us out in the current situation. Neither Cameron nor Osborne wanted this in which case they should have stood up to their own party rather than run scared of UKIP and abdicate responsibility

So who would you rather in charge in the interim period before the new PM is decided: Cameron or Osborne?

So no one is willing to comment on the FTSE 250 or Aviva. Or the falling shares this morning.

Interesting.

Didn't get a response to the loss of research funding and UK researchers being frozen out of collaborative grant applications either.

FTSE250 is currently at 15,900, approx. 1,000 points off it's pre-vote average, though a recovery from the low point.

The pound has 'recovered' to 1.30.

Individual daily price movements are an unreliable guide to their future direction. More helpful is the developing trend.

I think it's also fair to say that the volatility in these prices is much higher than normal. Even seasoned market professionals are probably still trying to work out what normal is. I'm buggered if I've got even half a clue.

FTSE 100 and FTSE 250 both up so far today actually. Not that it means a great deal.

The suspension of the Aviva property fund is more worthy of comment. Would it be good or bad for the UK if investors stopped seeing UK property as an investment commodity?

Elements

Look! Rainbows!! Everywhere! Lalala...

I think that's how we're meant to see the world.

As pensive said, happy announcements of wishful thinking will do nothing at all to bring foreign investors back to the table. Only an end to uncertainty and concrete results can (potentially) do that.

Yes, and yet I think it's even worse than that now; the UK has previously enjoyed a strong reputation as safe place to invest due to both economic and political stability as well as being foreign-friendly. Whilst economic and political stability are interlinked, the political set up here has been exposed as a special kind of hell. As for foreign-friendly, well that's also apparently off the table now.

I can't imagine any international company currently chosing to invest in the UK for any reason whatsoever, sad to say.

Or the masses of investors all over the world who are trying to get their clients' money (all of our pensions) out of British property investments. It's like a run on the bank, only it's a run on the investment funds. It's called a redemption request. Several property funds have had to suspend trading (stop people selling their shares in those companies) in order to stop the money leaving.
If you are part of the Leave vote you'd know and most likely have expected that, because you'd be reading the financial news pages, having made your decision in the interest of the country. You'd probably have made sure your fund manager had diversified much more into more global funds than having the majority in UK funds. However, if you were truly patriotic you'd have already been choosing UK property funds over global funds. Because UK businesses need your money, right?
It's really amusing that staying in UK funds is much more patriotic and 'pro-Brit' yet the fund advisors were advising this "Investing in overseas equities means your portfolio is less vulnerable to further declines in sterling, " in order to not see a massive drop in pensions pro Brexit.
What they were saying was, if you don't want to lose money on Brexit then move your money out of UK funds. I am Irish myself but I suspect a lot of my already paltry pension is invested in UK funds too, so I am pretty annoyed.