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. :)

[StatisticallyChallenged]

I didn't have the energy to go digging through treasury crap tonight tbh so I was being a bit lazy! I do wonder if the fact that DC refused to enact article 50 has changed things up a bit too as it's created an extra layer of uncertainty - but in our case it's probably kind of favourable uncertainty as there's at least a possibility of more market positive (i.e. non Brexit) outcomes being priced in which probably weren't when things first started to tank on Friday morning.

[Spinflight]

But then Osborne would have known that his mate Cameron wasnt going to trigger it so should have factored that in.

No excuse for scaremongering that was the exact opposite of what happened.

[StatisticallyChallenged]

They could hardly have factored that in to the 'calculations' though - I'm not sure Osborne knows how to work a calculator let alone a spreadsheet or more complex economic modelling software and the Treasury leaks like a sieve. Factoring it in to the calculations would have had the effect of announcing it to the world in 6 foot high sky writing.

No excuse for such shitty projections or scaremongering, but I still don't believe this is a positive for the economy - I think it's just in limbo and the stuff was prepared with too much of a traditional/simplified view of economics (i.e. the one that goes "bad things happen, interest rates go up" with feck all nuance.) It's like it was prepared by a 1st year economics undergrad.

[Spinflight]

A bit like a certain report published before Iraq was invaded...

Civil servants have a legal duty to only prepare reports which are true to the best of their knowledge, about time someone enforced the law I think.

[StatisticallyChallenged]

a legal duty to only prepare reports which are true to the best of their knowledge

See previous comments about being prepared by a 1st year economics undergrad

[Maz2444466]

Thank you **unescorted for your reply :)

[Margrethe]

I was listening to radio4 this morning, and I heard that FTSE bosses have been investing in their own companies after Brexit and have put a total of 14M or 14B into the market. Is this right? Did anyone else hear it? I have been searching the BBC website but cannot find any mention of this.

[Unescorted]

Spin the civil service do, but you have to understand that the reports are then published by politicians and the precise language they are written in is co-opted to mean something else. The report is then only reported in part by the media so by the time it has left the civil service & been "read" it will have been through 2 prisims of deeply held beliefs. So what starts out as one thing gets is morphed into something else entirely by the time the public sees it.

The reports are avaliable in their entiriety & the data sets used are referenced so people if they are so minded can check the data and the gist of the report for themselves. I suspect people rarely do.

[Figmentofmyimagination]

Chinese media report it will take 500 negotiators 10 years to negotiate a trade deal with the uk - not sure if that's an actual effect - perhaps we should wait the 10 years to see if it's true.
shanghaiist.com/2016/06/24/china_brexit_response.php

[Joysmum]

I was listening to radio4 this morning, and I heard that FTSE bosses have been investing in their own companies after Brexit and have put a total of 14M or 14B into the market

If that is true, they'd be best placed to decide if the economy is going to down permanently, or whether now is a great time to buy at a low with a view to making excellent returns in future!

[Margrethe]

Quite! I'd like to understand what's going on there. The FTSE 100 is up way more than the FTSE 250.

[SnowBells]

Spinflight

Interesting thread.

But you have to pretty much dismiss FTSE100 and go for FTSE250 or so to see the impact on the UK economy (better still, get a small cap index). FTSE100 is more sensitive to the global economy.

[SnowBells]

Margrethe

FTSE100 companies are very large companies deriving much of their returns from abroad. Hence, if GBP drops, it's good for these companies as their goods are cheaper abroad.

It's easier to see this in the US market, where it is much more common to look at S&P500 vs. Russell 2000. When the US economy started to recover a few years back, the S&P500 (largest companies) didn't really move much (this reflected the dire state of the global economy). However, Russell 2000 moved quite a bit - smaller companies are more sensitive to the health of the local economy.

[Margrethe]

That makes sense.

[ManonLescaut]

Is this right?

Yes, according to Olivetree Financial. £14M not B.

Including Royal Mail boss, Debenhams' chairman, Lloyds Banking Group's chief executive...

[smallfox1980]

From an economists POV, the actual effects that are going to have long term implications are the fact that the pound is still very low against the dollar and that bank and housebuilders share values have fallen between 25 and 30%.

The FTSE only really recovered after it became apparent that no article 50 would be forth coming Short term, and after £3 billion of liquidity was released by the BOE.

Hitatchi and others stalling their investment has massive implications too. Internal investement is not likely to rise either as the uncertainty put companies off.

If you're a leave voter and you are hanging your hat on the FTSE you are being overly optimistic and as a previous person pointed out a lot of firms are buying their own stock, this isn't a "good" thing, it simply keeps the share price at a certain level and stops investors dumping the stock.

Funny that everyone is an economist now too.

[twelly]

Difficult to make long term predictions, one this that is likely to cause a problem is the constant doom and gloom predictions which at likely to become self-fulfilling prophesies. Much of the financial market is speculative and therefore confine e is key, we need to move on and forward however voted

[smallfox1980]

Well that's a facetious post. The markets will react to the forecasts of the economists and they will base their forecasts on available data.

You think if we all forecast that everything will be alright and based it on sod all data that the markets would be fine? No they wouldn't believe what they were told.

[Joysmum]

Actually the markets bear no relation the value of companies or their long term prospects because it is driven by speculation of short term returns.

That's why the lack of article 50 has led to a recovery and those CEO's were sensible to invest. Their investments are already paying off!

[smallfox1980]

Their investments were to stop their share price from crashing, its short termims, and not really and "investment" as it simply saves their own necks.

[Spinflight]

If we could keep the thread to actual effects rather than speculation...

[smallfox1980]

But that is an effect Spinflight, the share buying by firms has been to protect their share price. Not speculation. Fact.

Also the FTSE 100/250 isn't a great place to get an idea of the economic health of the country, lots of short termism there.

Hitatchi, Siemens and others that have stalled their investments till they know what is happening is a good one. As is the down grading of the UK's triple A rating, that has a real effect on the cost of debt etc.

The fall in the price of the pound making us the 6th biggest economy in the world rather than 5th is a major impact.

[Spinflight]

The share prices have risen on the FTSE100, your supposed economic analysis of this is pure speculation.

One presumes from a butthurt remainiac.

[smallfox1980]

But again, not all share prices have risen, banks and home builders are significantly down.

There is also clear evidence that firms have bought their own shares, its not speculation but fairly accurate to assume that they did this to stop the price from falling any further.

The pound is still low against the dollar though and investment has stalled.

Where is your optimism there?

[StatisticallyChallenged]

It's pretty hard to have a sensible discussion with someone who describes people as "butthurt remainiacs"