Brexit consequences

[Spinflight]

Can't find the old one, despite a search. Hence a year on...

I started it to compare the doom and gloom predictions from people who should know better, especially the treasury, to actual observable facts.

Thus far the treasury predicted our borrowing costs would soar by over 130 points. In fact they're down about 100.

No trade deals possible before (I forget the date they said, was far in the future though) compared to actual negotiations beginning with the USA later this month with the president firmly behind them. Canada, New Zealand, Australia, India, South Korea and several others I've forgotten have shown a great desire for a deal quickly.

Ftse 100 and 250 are well up, just shy of 7500.

Best of all from a macro economic perspective is inflation touching 3%. When you are £1800 billion in debt rating that away with inflation is far preferable to actually paying it off.

Growth has dropped a bit, though nowhere near the instant recession that was predicted. Bit early to say though this is likely due to the referendum.

External investment is actually nicely up, with several major companies announcing various large commitments.

Things could be rosier, though it would be a struggle to describe them generally as bad, quite contrary to 'informed' opinions. Even the oecd recently ate their pre referendum words.

www.independent.co.uk/news/uk/politics/brexit-latest-news-vote-leave-director-dominic-cummings-leave-eu-error-nhs-350-million-lie-bus-a7822386.html
Even Dominic Cummings has come to the conclusion it's a mistake...

"Where's that £350m per week for the NHS then? I know...it's only been a year. Anyone who voted for Brexit care to say that the money will come?"

Noone but the government can say authoritively how the brexit dividend will be spent however I find £350m per week to be rather a low figure.

Our gross EU contribution is £18 billion, of which about £10 billion is net. This however isn't the only financial issue.

On top of our contribution are the elements of what the EU calls it's own resources. When Japanese or American companies export to us they fall foul of the EU external tariff. Many of these are hideously weighted against the third world developing their own industry but that's a different story.

We are allowed to cover our costs in imposing these EU tariffs but the vast majority of the money goes straight to Brussel's coffers, at least 75% of it. I seem to recall our small slice was worth £3.7bn in 2015 so post actual brexit you can add many billions to the dividend, likely under wto rules.

In addition leaving the customs Union means that EU exports to ourselves will incur tariffs which will go straight to the exchequer. Under wto rules I've seen estimates of between £12 and £13 billion.

There's also the proportion of our VAT which goes straight to the EU, only those of a certain age remember that vat is an EU tax imposed to enable our membership of the EEC.

And then of course there's the fish. We currently import several billions worth per year from the EU. Indeed the UK is the world's seventh largest fish importer.

Note that it isn't the fish themselves, it's the infrastructure and industry that follows them that shows the real economic benefits. The fiscal multiplier is 700-800% from catch to plate, and it is the export businesses, canning factories, food preparation and associated industries that have followed the trawlers away from our shores. The French fleet for instance gets more than half it's catch in our waters, but it is Findus and similar brands which generate their wealth and value.

So in total I really don't understand the constant whingeing about the £350m figure. Nigel farage argues that £220m should have been used instead, though I suspect the true brexit dividend will actually be closer to £700m per week.

Let me further clarify, before anyone misunderstands me..

Which the revenue from tariffs will, I think, likely dwarf the £18bn or £350m per week figure I would be much happier were it far closer to zero.

The EU external tariffs are probably the most un-British element of the entire project to my mind. Whilst within the customs Union they primarily penalise shoes, clothes and handbags this is due to the nature of our industries.

Staples such as raw coffee, cocoa and other unprocessed and unpackaged ingredients carry no or very low tariffs. Meanwhile the tariffs on jarred and roasted coffee or chocolate bars are extreme.

Hence our commonwealth cousins in Africa can grow and export the green coffee to Germany, but it is then German industry which benefits from the value added by roasting and branding it. Kenco did instance was once a Kenyan coffee company, though no sources little of its coffee from Africa.

Indeed Germany makes more from coffee exports than any African country despite not growing a single bean.

It is the customs Union tariffs that enable this viscous cycle.

I honestly think that brexiteers and remainers would agree wholeheartedly on the need for free and fair trade where the economic benefit resided in the country of origin rather than a lederhosen clad industrialist.

Sadly the narrative and scare stories surrounding the customs union never seem to mention the external tariffs, their revenue and disasterous effect upon developing countries.

Would you really insist upon your coffee being packaged and processed within the EU? Or would you prefer sipping your latte to bring real benefit to the country where it grew?

The latter option, by the way, would also be far cheaper.

You'll be smiling out the other side of your face when the NHS is sold off and the City loses passporting and all the tax revenue that keeps the rest of the country afloat disappears.

I can't believe these threads are for real. Loads of them around the time of the referendum and now they are starting to pop up again now a hard Brexit looks to be under threat.

Complete anti-economics, anti-common sense, anti-truth. Who are you people? Who is employing you to write this trash?

Trading on WTO rules is not a good thing, leaving the customs union is not business friendly, staying in the Single Market (which was assumed by most prominent brexiters before the referendum) is economically desirable.

Plenty of people don't give a shit about the above, given. They didn't give a shit before the vote and they don't give a shit now. Brexit at any cost, although most just don't believe that the UK needs to pay attention to the normal rules of economics. Those are your people OP - and there are lots of them, you don't need to create 'alternative economic truths' to keep them on board.

Short term economic outlook of Brexit is bad. If the likes if David Davis get free reign, likely dire. Medium term difficult to poor depending on the type of Brexit. Perhaps the long term will eventually be fine/good, but that's a long time away and the opportunity cost from the interim period will be huge.

Just stop fabricating economic arguments.

this

Yes^^

Don't have time to go through point by point but I couldn't let this ridiculous one stand:

In addition leaving the customs Union means that EU exports to ourselves will incur tariffs which will go straight to the exchequer. Under wto rules I've seen estimates of between £12 and £13 billion.

Don't you realise that is £12-13bn in additional money coming out of our pockets in increased prices of the things we want to buy that come from the EU? Some directly in increased prices in supermarkets and some indirectly for things that businesses import and then pass costs on down the supply chain. You are effectively celebrating us all paying extra tax. Woohoo.

I'll ignore the fact free criticisms...

"Don't you realise that is £12-13bn in additional money coming out of our pockets in increased prices of the things we want to buy that come from the EU? "

As the major EU companies such as Mercedes and BMW know the UK by the cute nickname of treasure island I suspect they can maintain their current prices and merely cut their profit margins.

If not then British made will be significantly cheaper and import substitution will be a no brainer. Or preferably true competition from the rest of the world.

"You'll be smiling out the other side of your face when the NHS is sold off and the City loses passporting and all the tax revenue that keeps the rest of the country afloat disappears."

Both business services and financial services are growing strongly, therefore the doom and gloom predictions of such from before the referendum and after are.... Shall we say perpetually delayed?

No idea where the NHS being sold off comes from, please explain.

Saying that I do fully accept that brexit will at least not favour London and the South East, and could be quite bad overall.

I'd expect the economy to rebalance somewhat more towards it's historical norms. The once great trading cities of Liverpool and Glasgow for instance recovering from their neglect to something closer to their past prosperity.

No bad thing in my book, though I'm not from London. The bleating media of course almost universally are which probably explains the remoaning echo chamber. :)

I'd expect the economy to rebalance somewhat more towards it's historical norms. The once great trading cities of Liverpool and Glasgow for instance recovering from their neglect to something closer to their past prosperity.

Are we bringing back slavery then?

Well, we'll see OP. It's going to have to be a spectacular success throughout the country for Brexit to have been worth it.

The once great trading cities of Liverpool and Glasgow for instance recovering from their neglect to something closer to their past prosperity.
Liverpool has been regenerated a lot recently with money from, you guessed it, the EU.

"Liverpool has been regenerated a lot recently with money from, you guessed it, the EU."

And could have had more than twice as much if we hadn't given that money to the EU in the first place. :)

The idea that Westminster will give money to regions currently relying on (or who have relied on) EU money is hilarious. Or it would be if it didn't make me sad.

spin can you point out to anystudies that actually show how much better we will be?

Because atm, all the studies i have seen, incl the ones from banks and other big companies, are actually showing the opposite. And that's when they even try because it seems to be so dependant on what sort of deal we will get that trying to guesstimate what the future will be is very difficult indeed. So difficult that a lot (all??) of our politicians etc.. seem to avoid to answer altogether.

So Im wondering where your optimism is coming from (as well the numbers that our government doesn't seem to be abel to find either). Or are you knowing something I/politicians dont know??

As my op aluded, and I probably explained in greater detail on the original, I set up these threads to test those self same predictions made by government, international bodies and industry against reality.

To say that reality has beaten the doom and gloom predictions, and often showed effects quite the opposite and in similar proportion to the doom predictions of these esteemed institutions is an understatement.

The trend appears to be strong though, the more connected to London the commentator or body is the more shrill and strident the tone.

I'm rather surprised at the overwhelmingly negative reaction that the prospect of free and fair trade which benefits both nations has received. I assumed this would be a universal British truth, something intrinsic and instinctive.

I can understand Tarquin's chinless jaw dropping at the huge hike in the price of French champagne which is likely, but assumed those outside of the home countries would thoroughly approve... The popcorn bill for the pity party likely huge! :)

Saddens me a bit...

"brexit dividend"

HAHAHAHAHAHAHA!

"I'm rather surprised at the overwhelmingly negative reaction that the prospect of free and fair trade which benefits both nations has received."

More logic free comment! We're all very positive about the free and fair trading which we've been enjoying in the EU. We're negative about that fact that it won't be possible in the event of a hard Brexit.

Really Brexit HQ, please try harder...

Third sign in 3 days that Brexit is destroying the economy...

So you're actual brexit consequences could be summed up at:

I do fully accept that brexit will at least not favour London and the South East, and could be quite bad overall.

"Could be quite bad overall"?

Why didn't you just say that at the beginning?

I think things are declining slowly, rather than quickly but I don't think we have much cause to celebrate. Consumer spending is becoming more and more driven by consumer, debt, which is not sustainable long term and a bit of a worrying sign. I am not saying this is caused by Brexit, but it is probably disguising some of the effect Brexit is having on the economy. Many businesses will be waiting to see what kind of Brexit we have before committing to a relocation, but that doesn't mean they don't have contingency plans in place. We are on a low income at the moment, and I have noticed my weekly shop increasing in price. Maybe I notice it more because I have to pay close attention to what I spend, and we don't have much wriggle room to cut back because I am already buying own brand from cheap supermarkets. Real pay is falling. You can tell me things are fine all you like, but they are not looking great to me.

If a slow decline in living standards, rather than a sudden crash, is considered a "win" by Brexiteers, then the remain camp weren't the only ones exaggerating, were they?

Love your posts OP and you're absolutely right. However, there is NOTHING you or anyone else can say to spill a spark of light on the dark, miserable depths of the doom laden attitudes of some Remainers. They are desperate for failure and bad news about anything connected to Brexit, no matter how tenuous - for them it's like finding an oasis in the desert.

I do fully accept that brexit will at least not favour London and the South East, and could be quite bad overall.

Ah well, that's cheered me right up. Not doom laden at all.

"I assumed this would be a universal British truth, something intrinsic and instinctive"

Op, the 19th Century called, you need to come in for yer tea.

But Rorty, there's not a single mention of sunlit uplands or unicorns!