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. :)

Construction sector slumped into recessionary territory in run up to referendum.

www.theguardian.com/business/2016/jul/04/uk-construction-industry-slumps-dramatically-ahead-of-eu-vote-pmi

The services sector grew much less slowly too.

As for historical £/$ it hasn't been this low since the 1980's and has hovered between 1.45 and 1.60 for the last 5 years, this is a big drop and it needs to be admitted that it is.

larry the Euro and GBP are not joined at the hip - if they were then EUR/GBP would never move, would it.

EUR/USD is on a downward trend because of the state of Eurozone economies. GBP/USD is dependent on the state of our economy...which was growing...

How do you think leaving the EU helps the EU economy. And why does leaving improve our economy by itself? Just because the EU's economy is forecast to struggle, does this mean making trade harder with that economy will help us? Isn't that throwing the baby out with the bath water?

Strewth.

By the way, we're not thinking of leaving. We are leaving. T-minus 2.5 years and counting, apparently. Strap yourself in.

We are on holiday where the US dollar is virtually the currency and are converting 1:1 for simplicity, rough calculations to be on the safe side, All very expensive.

GPB/USD in the 80s was because the dollar was strong not because the pound was weak.

Just because the EU's economy is forecast to struggle, does this mean making trade harder with that economy will help us? Isn't that throwing the baby out with the bath water?

But the point is that the EU are just rubbish at agreeing trade deals outside. We don't know whether we will have free trade with the EU in the future, we may well.

And the Euro and Pound are linked its called the EU. That isn't the same as saying they can never move together but our economy due to the absence of free trade deals elsewhere is very co dependent with the Eurozone.

Strewth

Move against each other

If you look at the EU/GBP range and volatility, and except Brexit and the Eurozone crisis (when the Euro was very weak), it is a very narrow range and surprisingly little volatility.

Most of GBP's moves vs the USD have been on the back of the Euro moving, rather than domestic factors.

The EU has not been "rubbish" at gaining trade deals outside.

It doesn't have one with China because it doesn't rank China as a market economy and it isn't. The Indian deal stalled because of many, many issues, not least the fact that India has objections to the stringent non-tariff barriers on goods regarding quality, safety and trademark rights.

The Swiss deal with China gives the Chinese access to Swiss Markets straight away, but the Swiss have to wait 15 years to access Chinese markets. It is beneficial, but no way near as beneficial as EU deals that have been struck.

The EU has struck 32 deals that give member state access to over 50 countries around the world, better deals than have been struck by Australia, the Swiss or Canada. These have been very successful and almost always are in the EU's favour in terms.

Its strange how so many people feel able to talk about trade deals, whilst knowing naff all about them.

The EU is the largest, most powerful trading bloc in the world. The idea that it's somehow bad at agreeing external trade deals is bizarre.

The notorious TTIP deal ran aground for good reasons. The US was basically trying to dilute EU consumer and environmental protection regulations. And the US proposed that the EU would be obliged to notify US authorities and corporations of regulations in advance, to allow them similar input into EU regulatory processes as European firms.

Canada, whose deal NAFTA with the US has a similar legal basis, has already fought and lost cases against US corporations on issues such as reinvesting in communities, halting the destruction of quarrying, or wanting to outlaw carcinogenic chemicals in petrol.

Most of GBP's moves vs the USD have been on the back of the Euro moving, rather than domestic factors

This one was all of our own making.

To the people who keep saying "economists didn't predict 2008", while it might be true that economists connected to banks didn't, it has to be said in their defence that they didn't know about the off balance sheet dealings, or the AAA ratings on CDOs that were false, or about the LIBOR rigging etc. They took their information from what was reported.

However, Krugman said about the housing market before it happend, and 25 years before Minsky was talking about stabilisation leading to euphoria and thus to a crash. There were of voices outside of banking that said that it could happen.

The EU has not been "rubbish" at gaining trade deals outside.

Yes, they have.

en.m.wikipedia.org/wiki/European_Union_free_trade_agreements

It really is a case of 'should do better'

If you're going to assert that the "EU is rubbish at trade deals" you need to be able to show what "good at trade deals" looks like, for a major trading country or bloc of a comparable size. A Wikipedia list doesn't cut it, especially as the EU has many trade deals in effect and its not clear what you would consider to be good enough.

How does the EU compare to the U.S. or China, for example, with regards to its record of negotiating deals?

The length of time it takes for the EU to strike trade deals may simply reflect the fact that trade agreements are not easy to conclude.

Most of GBP's moves vs the USD have been on the back of the Euro moving, rather than domestic factors

Anyone who wants to test the credibility of this assertion simply needs to go and look at charts of currency movements over the last ten years...

Misti,

Agreed,and you will find the assertion well supported. Put up eye/usd and gbp/usd and run a correlation.

The map shows that the few deals in place are the ones where the EU has been massively the stronger party. There are no deals with top economies, where that isn't the case.

Trade deals from scratch aren't easy, particularly when the countries have different standards and culture. But having 28 countries trying to agree rather than 1 makes things more challenging. Perhaps we can move away from all or nothing approaches and start by identifying the areas it will work in for everyone's benefit.

There are challenges ahead and there are going to be lots of discussions around China/ human rights; USA and GM/ access to health service but with only one country it removes added complexity.

"economists didn't predict 2008"

Many warned of US housing bubble. As early as 2005, we were drawing up lists of the home builders, mortgage companies etc in worst financial health and selling options to bet on their prices dropping.

The map shows that the few deals in place are the ones where the EU has been massively the stronger party. There are no deals with top economies, where that isn't the case.

But the EU is the world's largest trading bloc. It is always going to be the strongest party; the only economies where it could be considered to be on an equal footing are the US and China. As we know, negotiations with the US have proved problematic, but not necessarily because of the EU (uh ... TTIP?!), and China does not yet have market economy status, which I think you will agree is something of an obstacle for wide-ranging trade deals.

I don't disagree that having to seek the agreement of 28 (27) parties complicates the process somewhat, but I'm still not persuaded that there is evidence for the EU being worse at agreeing trade deals than other major economies. Indeed, the very existence of the single market would suggest otherwise.

Statutory reminder that nothing has actually happened yet. We have not left the EU or even started taking serious steps towards doing so yet. Wait until something actually happens before reassuring everyone that see, everything is just fine...

Lots has happened already and is still happening, day by day.

We are no longer being invited to european council and council of ministers informal summits.

That is a huge deal.

We have lost our commissioner's portfolio and are sending over a diplomat.

This is already happening.

It is not something that might or might not happen in 2 years time.

Singapore's free trade deals with the EU and the US took 4 years each.

and Singapore, being far smaller than the UK with much less diversity of industry and vested interests, would have been a far simpler deal to strike.

Yes but the deals were with the US and EU, the bigger the organisation the harder it is. In relation to UK/EU negotiations remember we are starting from a point of having no barriers and similar/ familiar laws so that should be a help. Not the same as saying it will be easy though, there are massive challenges ahead and speed is one of them, no doubt