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. :)

[Spinflight]

But again please keep your ill mannered speculation for the numerous other threads.

[Spinflight]

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

I would be happy to argue that butthurt remainiacs talking the economy down has had a negative impact, and therefore an economic effect. :)

[smallfox1980]

Where have I been ill mannered?

[StatisticallyChallenged]

But your economic analysis of that would be pure speculation, wouldn't it?

[smallfox1980]

The markets don't pay attention to mumsent, what they do pay attention to is economic institutions and ratings agencies. The majority of whom think that leaving the EU will have negative consequences for the UK

[Spinflight]

I don't think the panic that set in post brexit vote could be attributed to anything but Cameron and Osbourne's doom mongering.

By the way I didn't actual think of you when I mentioned butthurt remainiacs, though if the cap fits!

Tee hee!

[smallfox1980]

Basiacly what you wanted on this thread was people to say: "its fine there is no economic impact really" but what you got was people disagreeing and posting well though out posts.

It wasn't just Osborne and Cameron predicting negative effects it was PWC, HSBC, the IFS, Oxford Economics, The OECD, the IMF etc.

It seems that there has been negative effects of brexit and they have been quite quick. There is a distinct possibility that it could get worse.

But what you want is people to agree with you, you didn't get it, so you got rude.

Shows the paucity of your analysis really.

[missmoon]

Thanks smallfox and SnowBells, very clear explanation.

[Luckystar1]

Please can we try and not derail the thread. This is the only one I'm following as it is helping me keep abreast of things rather than get bogged down in ever increasing piles of indecipherable rhetoric.

Thank you!

[StatisticallyChallenged]

You can't expect a thread with only one sided analysis though, which is what the OP seems to be trying to get when they try to suppress any discussion of why certain things might have happened. You can't have a thread on economic effects without analysis or it's meaningless - things like discussing why the FTSE has behaved the way it has and breaking the results down are important. Just saying "it's not down, hahaha doom-mongers you're wrong" is not helpful.

[caroldecker]

Not sure about the economic forecasts though - traditional economics says a cut to credit ratings causes increased interest rates, but UK gilts have fallen. So large investors are ignoring the 'experts'

[smallfox1980]

Lowering gilt yeilds is not exactly good for the economy either it will effect pensioners and pension funds badly. It also suggests that there will be further weakness in the pound later in the year.

[ManonLescaut]

This thread reminds me of Leadsom accusing Carney of 'provoking financial instability' by 'incredibly dangerous' warning of post-Brexit UK recession and 'spill-over into the global economy'.

As Carney replied he has a 'responsibility to identify risk not to cross your fingers and hope that risk would go away.'

It's not as if the warnings weren't there across board. Panic was always a possible consequence of Brexit at the very least, blaming it solely on OsCam 'doom-mongering' is absurd.

[Spinflight]

Quite Carol,

Reading through the treasury's long term and immediate forecasts they only focus on GDP.

Indeed I'd say that GDP was a tory fixation, even though it is increasingly viewed as rather a blunt and old fashioned measure.

Sharply put a banker earning £1 million + in the city is very likely better for GDP than 20 lasses earning less than half that elsewhere. For GDP growth however the 20 people are far better.

Joseph Stiglitz, Nobel prize winner, found that when the top 20% increase their earnings by 1% the rate of GDP growth in the wider economy actually decreases slightly.

When the bottom 20% on the other hand increase their earnings by 1% the gdp growth increases by 0.4% per year.

Hence the treasury forecasts didn't make sense and had no relevance to most people, even if they were right! Which they weren't.

If all the bankers had to tighten their belts and sell their second Porsche then the treasury was arguing this was bad for the 'economy'.

The economy they are talking about here is the South East and London, where the top 20% tend to live.

Don't forget that the large investors are looking for opportunities in the UK as a whole and probably have a better grasp of actual, visceral, real time economics than most academics. They'll read the academics of course for their historical insights into trends and effects.

Economists are a bit like military historians. The Generals will read their works but when it comes to real time stuff the Generals are going to take a historian's views with a pinch of salt.

Hence one of the likely effects of brexit is an increase in wages for the lower skilled. I'd argue that this is good for the overall economy even if not immediately for actual GDP which doesn't take inequality and poverty into account.

Another is a rebalancing of economic activity away from the preponderance of London and the South East. The fact that house builders and banks have been hit is therefore a good sign to me, though these losses have clearly been outweighed by positives elsewhere.

Hence when you see remainiac propaganda stating that all those with degrees, or all those who are successful and living in the South East, or all the chairmen of large corporations were voting for remain they are merely talking about the selfish self interest of a group ( the top 20%) which doesn't actually realise it is the problem.

Seeing the overlooked and disadvantaged ( bottom 20%) sticking it to the establishment and greatly upsetting them in the process (butthurt!) is an actual effect ( which has caused great amusement and glee I hasten to add) which could have very positive economic consequences. I suspect they will carry on doing it, not that the politicians can really carry on disregarding their views anyway.

[smallfox1980]

The bottom 20% are far more likely to suffer in recession though.

[smallfox1980]

Where is your evidence for the fact that wages for the lower paid will rise on Brexit also? Or that the "rebalancing of the economy" will take place?

[StatisticallyChallenged]

Hence one of the likely effects of brexit is an increase in wages for the lower skilled.

What are you basing this assumption on, because it doesn't follow from your previous content.

And again, rampant speculation. And your definition of "actual effect" appears to be one thing for you, and one for anyone else. It's pretty clear you aren't looking for a sensible discussion of economic effects though.

[Spinflight]

Another, rather odd, actual effect was that the computer algorithm trading rather proved itself...

Now I've had reason to criticise the move to almost purely algorithm based trading in the past so I'm not exactly being consistent here but it appears things worked rather well after the brexit 'shock'.

The majority of trading firms forbade their staff from placing bets on Brexit as the result was too close to call. Some fairly extreme methods were used to try to predict the result by the larger operations, though it seems these were generally wrong.

For instance a large investment bank hired various noted intellects, on very large fees, to give them a percentage opinion. Niall Ferguson happily pocketed his fee to tell them it was 50-50! Bit like the met office telling you it will either rain tomorrow or it won't.

Several private exit polls were conducted ( these aren't cheap!), and gave the wrong verdict.

The small and medium firms however just left their computers on and made a lot of money.

The reason being that they had no bias, they merely buy and sell based upon market signals rather than dodgy dossiers from the treasury. Computers know nothing of brexit, they merely see stocks over or under valued.

Hence the rapid recovery from panic is I think down the algorithmically based trading and the very well paid geniuses who write them. Even a small city trading firm is worth tens or hundreds of millions, so to make 2 or 3% overnight as many reported is quite a feat. Not a bad hourly rate if you can get it!

This makes me wonder who lost an awful lot of money betting on a remain win, it was clearly far too much to be private investors. I really hope it was JP Morgan and Goldman Sachs, who funded the remain campaign. :)

[Luckystar1]

Oh for goodness sake, I'm going to have to come off this thread too. ACTUAL EFFECTS PLEASE. Should really meant this thread is quiet over the weekend...

And I'm not saying I don't want to hear both sides, I'm saying for those of us on this thread initially we just want the reality, not speculation.

As I said before I'm not well enough versed in this things to extract salient information from the masses that gets reported every day. Please remember that's why a lot of us are here...

[ManonLescaut]

How do you get from Stiglitz' trickle up to the wild claim that Brexit will result in higher wages for the lower skilled? What evidence do you have for this?

[Whereisthesnow]

This is a very one sided discussion. I don't claim to be an expert in economics. Although thank goodness for some sensible pro leave people who are actually providing some concrete reasons as to why leave was the right choice rather than Naaa we won get over it!
But unfortunately you cannot cherry pick a few bits and bobs to try and show that all is rosy in the post brexit world. It's perfectly valid to consider economic predictions and forecasts.

[DoinItFine]

Another plea for ACTUAL EFFECTS PLEASE.

The predictions on both sides are clearly political.

It has been so great to have a thread just looking at what is actually happening.

[DoinItFine]

Oh, and I'm a butthurt remainer.

I think it's time to rub our arses and deal with the actual situtation we have been forced into, rather than sulking and hoping for terrible things to prove us right.

[Margrethe]

Agree DoinItFine.

[Luckystar1]

If we are only discussing ACTUAL EFFECTS (please!!) it will matter not a jot whether one voted remain or leave as we are all in the same boat now.

I'm happy to also hear of expert forecasts relating directly to (and deriving from) these effects but I really don't want to hear yet more speculation (however well intentioned), as it is purely that.