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. :)

Pwc now saying Brexit will not result in recession or housing crash (the times).

'Experts' already changing their tune....

I want it to go well, but I do wonder if PWC is now on the "payroll" for lots of consulting services and is suddenly "onside."

Magrethe,

They are citing stimulus due to devaluation and rapid formation of new government as positives.

It's a bit silly to argue that it's unimportant that a man who recommended we march out of the EU didn't have the first idea of how the EU worked in terms of trade.

Until May.

When he said things that revealed this ignorance at the time, I presumed at the time that he was lying.

It was (and still is) inconceivable to me that a politician who served a European role and had such strong feelings on the matter of the EU could be so ignorant of the basics.

It terrifies me that someone who lacks basic man in the street knowledge of the EU has any part of these negotiations.

Apparently he was woeful last time he was out there and made it very hard for the civil servants briefing him to do their jobs.

'Apparently he was woeful'

Where is this from? Sas, science degree, mba, 20 year career in business....v good cv to me.

It's from the people who had to try to repair the damage he was doing to us with his pigheadedness and refusal/inability to grasp how multilateral negotiations work.

Doin,

Well maybe. Not for me to doubt what you say but then it seems to me that every poster on here is an expert trade negotiator, intimately connected to government.

You should send your cvs to Davis, I bet a good trade negotiator is worth hundreds of thousands pa right now.

I'm not a trade negotiator.

But I have worked on EU negotiations in another field.

And I have a network of diplomatic contacts.

And I read articles.

So doubt away.

But the word is that Davis did not perform well on his last time out in the EU.

larrygrylls

www.bloomberg.com/news/articles/2016-07-19/brexit-bargains-scented-by-asia-s-rich-following-pound-s-plunge

More foreign investment in UK assets following Sterling's devaluation.

Its not "investment" its buying up of formerly owned UK assets, taking advantage of the weak pound.

There may be investment somewhere down the line in factories or plants etc, but there is also a high risk of the repatriation of profits meaning less tax paid, also MNCs tend to protect the investments in their own countries first in any down turn.

They buyout of listed companies by foreign firms is not a sign of economic robustness.

Umm, from their perspective it is investment. When I buy shares, I feel that I am investing, don't you?

It is a sign that foreigners view the futures of these companies positively, otherwise they would not get a return on their investment.

It counts as an investment for them yes, but as said I wouldn't hold it up as a positive.

Yes, exactly as smallfox states; a nice big transfer of ownership from the British to evil foreigners . Good article in WSJ about this today and also yesterday re the Wells Fargo deal.

Exactly as per after the GFC except this time around, the foreigners just have more money to spend...and there are some great discounts to be had! Wait a while and it will also filter through to London residential property but only in a year or 2 when GBP and the market are perceived to be at rock bottom....who wants to catch a knife falling double-speed as the currency and asset class both decline simultaneously?

This is history rhyming, so surely hardly a surprise

Anyway, a nice week packed full of UK data....

Having foreign companies buy up UK companies and all their IP doesn't strike me as brilliant news for the UK.

Particularly not for a country wanting to "take control".

Ownership is really not that important these days. Most of the tax is paid by the employees and the multiplier effect. Very few corporates make big profits and pay large amounts of corporation tax.

You can try as you like to make this a good story Larry, it isn't, neither is the sell off of ARM holdings yesterday.

Corporation tax btw makes up 16% of the entire tax take.

Ownership is important too, it matters where the decisions are made, firms are far more likely to protect their domestic base in time of economic uncertainty and down turn rather than assets in foreign economies.

Here's a simple (as in: basic but pretty sound) article about the impact of Brexit on those with an interest in preserving their pension savings in the light of Brexit impacts:

www.telegraph.co.uk/money/special-reports/heres-how-to-brexit-proof-your-pension-savings/

www.theguardian.com/business/2016/jul/19/imf-cuts-uk-growth-forecasts-following-brexit-vote

From the latest BOE minutes. Seems that unlike most posting on this thread the majority of businesses are carrying on as usual and only 1/3 see a negative impact over the next 12 months...

'The BOE said Wednesday that a majority its business agents comprising a network of firms across the U.K. do not expect an immediate impact from the vote on their hiring or investment plans. A third said there would be some negative impact on those plans over the next 12 months.

“As yet there was no clear evidence of a sharp general slowing in activity,” the BOE said in the report. For many firms surveyed “the result of the referendum was a shock; few had contingency plans and so for the time being were seeking to maintain ‘business as usual’,” it said.'

Thanks larry for your informative posts putting much of the negative spin to bed. Nowhere like MN for a bit of hysteria.

1/3 of busiensses is a lot!

Also that counters the Business optimism surveys completed a week before where almost all firms said that they were going to stall investment.

But I do guffaw a bit when you use BOE data for anything, after all they STILL predict that economic conditions of Brexit will be negative.

Confirmation bias abounds.

The thing is as well Larry that many of the investment decisions for the next 6-12 months will have been made and financed prior to the brexit vote.The links below will tell a different story for the later half of 2017.

www.telegraph.co.uk/business/2016/07/13/business-optimism-deteriorates-out-of-all-recognition-in-uk-afte/
www.cityam.com/245143/business-optimism-and-output-sink-three-year-lows-back

cep.lse.ac.uk/pubs/download/brexit03v2.pdf

Only a third