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. :)

It's also had a reputation for pragmatic, rational, canny political and economic decisions. It's not been prone to ideological political choices as Germany, Russia, Italy, Spain etc.

Would it be good or bad for the UK if investors stopped seeing UK property as an investment commodity?

As a philosophical and idealistic question, that's interesting. Why don't we knock everything down and start again. I take back what I said, recessions are great. Let's have a day of Jubilee while we're at it.

And what was I thinking. The behaviour of FTSE 250 since Brexit is completely irrelevant.

It's worth noting that although most people don't know exactly how what's going to happen will play out, they're generally agreed it's not good.

Yes it would be fascinating to see the investment portfolios of Leave voters...

As Millyonthefloss2 says, the current levels of the FTSE 100 and FTSE 250 don't really tell us much at the moment.

I'm not even sure that the suspension of the Aviva property fund (together with those of Standard Life, M&G, Canada Life, Columbia Threadneedle, and Henderson) says that much either beyond what happens when investors want to remove money from funds based on illiquid assets.

Give (hopefully not Gove) it a few months, and that's when we'll see the picture start to emerge properly. Which is why the main priority at the moment is to have a new PM who has a position of triggering Article 50 later rather than sooner.

Milly It's more to the point that the property funds have suspended investor redemptions. Not just Aviva - but M&G, Standard Life, and three others followed yesterday.

It's not positive if investors stop investing in UK property. £650 million worth of London commercial property deals collapsed after Brexit. Unless you want to buy a commercial property right now? You'd get probably get a good price.

Xpost - snap.

I think it's up to 50% of fund based investment value in UK commercial real estate now in suspended stocks. Probably for at least 6 months.

The rest is expected to follow shortly. I give it a week.

Whatever one's philosophy on property as an investment, that speed of wind back is a very big, very negative deal.

Hmm, when they come back from suspension (I'm assuming they will!) the prices of those funds are going to be very low. Might put that thought to the back of my mind for a while.

The behaviour of FTSE 250 since Brexit is completely irrelevant.
Did I say that? I said the fact that it has gone up today is not very relevant. But it has not tanked since Brexit if that is what you want to imply. Have a look at the charts.

It's worth noting that although most people don't know exactly how what's going to happen will play out, they're generally agreed it's not good.
Eurosceptics like me genuinely think things will be better because of Brexit once the uncertainty is over. But instead of just calling me a twat, please can some of you have a look at what Javid has been doing and saying over the last few days. There is a successful future for us outside the EU and some people are getting on with it.

They'll reflect the newly valued underlying assets and faith in their potential to appreciate, roughly speaking.

If they funds hold, typically, 10% cash, redemption date and value will depend on price obtained for flogging multi-million pound office blocks in the center of London. All at the same time. In this economic climate.

A popular UK pension fund choice. Nice one

Bank chiefs pledge to protect City of London:

"Britain’s decision to leave the EU clearly presents economic challenges which we are determined to work together to meet.

We will also work together to identify the new opportunities that may now become available so that Britain remains one of the most attractive places in the world to do business.

One of Britain’s key economic strengths is that it is a world leading financial centre.

It has one of the most stable legal systems in the world, a brilliant workforce and deep, liquid capital markets unmatched anywhere else in Europe, all of which are underpinned by world class regulators.

In recent years it has established itself as a global hub for renminbi, rupee, Islamic finance and green finance, as well as leading in new markets such as FinTech.

Today we met and agreed that we would work together to build on all this with a common aim to help London retain its position as the leading international financial centre.

It’s signed by:

Chancellor of the Exchequer, George Osborne
Mr Bill Winters, CBE, (Group Chief Executive, Standard Chartered)
Mr Michael Sherwood, (Vice Chairman and co-CEO, Goldman Sachs International)
Mr Alex Wilmot-Sitwell, (President (Europe and Emerging markets excl. Asia), Bank of America Merrill Lynch)
Mr Robert Rooney, (CEO, Morgan Stanley International)
Mr Viswas Raghavan, (Deputy CEO and Head of Investment Banking (EMEA), JP Morgan)"

How credible is that pledge?

Here's another Economic effect. I live in Ireland.
Before Brexit I was looking at a pair of Vans for DS on a UK website.
Before Brexit the £42 shoes costing €55 euros.
Today After Brexit those £42 shoes will cost me just €49 euros.
That's a pair of £42 shoes costing people in the Euro zone £5 (€6) less after Brexit.
Seems good for people in the Euro zone if buying shoes/clothes/goods online but not good economically overall.
For the British online shop, not so good they have to pay the extra £5 more to their Euro/other currency supplier of the shoes.
I would prefer to pay the British online shop more money if it meant we didn't have this unrest affecting all of us.

Well that's the same economic effect - the pound has fallen relative to the Euro.

The cross border shopping in Ireland will move back to the North.

(While we still have an open border that is )

To follow on from my Shoe example:
So in order to to not lose money, the British website would have to increase the price of their shoes from £42 to £49 pounds.
But I, as the buyer, might think that is too dear and buy from another European website. That is the real economic effect for UK businesses trying to sell stuff.

How credible is that pledge?

The boss of investment bank JP Morgan has warned that he may move thousands of jobs out of the City, if Britain loses full access to the single market.

Jamie Dimon told Bloomberg that it’s crucial that firms in London retain the ability to ‘passport’ into other EU countries and sell financial services there.

If that passporting rule is broken, then JP Morgan staff will be packing their bags.

Dimon explained:

“If we have that passport after Brexit, we likely would not have to make any change at all.
“But I think the European Union will not accept that. It will put more conditions on the U.K. and might force banks to become smaller in London.”
Those with memories of the financial crisis might welcome an exodus of bankers. One problem, though, they do provide a lot of tax receipts

sadie nice example of how the currency movement is a double-edged sword.

So presumably you are more likely to buy the shoes. Which means our volume of exports should rise. But the profit margin on those exports may fall because the shoes, or the raw materials to make them, may have been imported, and will therefore have been more expensive.

In addition, sales to UK customers may also now be less profitable as the price in pounds is the sames as it was, but the costs of production may have risen. So either the company makes less money or it has to raise prices.

Overall as an economy we import more than we export, so as of now, the costs will outweigh the benefits. Some commentators are saying this will help us to balance our imports and exports. And to me that does add up, economically speaking. But surely the implication is that we will import much less - because as in the above example the shoe price will eventually have to rise, meaning some people are priced out and do not buy.
The implication of that is falling standards of living. No?

sadie x-post!

"The behaviour of FTSE 250 since Brexit is completely irrelevant.
Did I say that? I said the fact that it has gone up today is not very relevant. But it has not tanked since Brexit if that is what you want to imply"

What? The FTSE 250 is down 7.7% from a year ago, and down 7.7% (7.68% to be precise) from a month ago. What am I missing? What is your definition of "tanking"?

My fitbit on amazon was much cheaper today too. I also live in Ireland. Interesting I was up in the North last week and popped into the shops. I was the only Rep of Ire reg I saw. I think people are waiting to see how much further the pound might fall relative to the euro. Now if it was Nov/Dec the queues would be to Kerry from the border.

"Bank chiefs pledge to protect City of London"

How sweet of them. London can't continue to be the world's most important financial centre if it is no longer in the EU. They know it. We know it. Everybody knows it.

The head of Deutsche Bank's M&A group in London has been told that they are relocating to Germany by next year. He is a friend of a friend, which is how I know. He is not happy, and neither are his family, apparently.

milly I don't think you get it. People are getting on with 'it' and 'it' happens to be like desperately trying to balance an apple cart on top of an earthquake. Pensions, mortgages, life savings - all these things are in real jeopardy and no amount of 'jolly hockey sticks' thinking in Britain is going to prevent us all losing a great deal of money that we can't afford to lose.

People like my DH are not, on the whole, trying to forward an agenda or being 'difficult' about Brexit. While you are being so brave and free and autonomous, they are trying to protect investment portfolios that are currently nose diving as a result of circumstances that are way beyond their control.

We were looking for a house to buy. Now we've found it but we can't buy it because it would be stupid in light of what's happening. Tiny example.

'Pledges' are just attempts to restore confidence.

Clearly. But how likely is it to work?

But CotedAzur - don't you realise that Deutsche Bank are overreacting/they're just bluffing/it'll never happen/it's not true/your friend of a friend is imaginary/it's all the banks' fault/we don't need the banks anyway/let's stick our heads in the sand/let's stick our fingers in our ears ?

Perm any combination of the above

"In the week before the referendum almost 1.5 million jobs were advertised online, dropping to under 820,000 in the following week. This is an early indication that UK-based companies are pulling back from hiring following the EU referendum result. The 47% drop in job openings compared to last year is far outside the normal fluctuations we see, which tend to be between 5% and 10%. At this stage it is unclear if this is an early shock reaction from employers and whether this trend will continue, however, if recruitment budgets do contract and open headcounts are frozen, it will certainly have a negative impact on the UK economy.
Brian Kropp
HR practice leader at consultancy CEB"

I assume this is legitimate as on BBC Business live feed. A real effect I reckon, we'll see if it continues :(