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.

"Osborne to block national insurance rise"

+page not found+

Although I'll admit that there is a bizarre lack of information of historical rates online.

You may be right in that Osborne didn't eventually raise it, but the Tories certainly didn't undo any raises.

I don't think any banks want to have to move any of their operations to the EU. But they will balance the cost and hassle of shifting some operations there, against the possible barriers and costs they might encounter if they don't move. The point is that no-one yet knows what the situation will be post Brexit, so they would be mad not to draw up some contingency plans. They are waiting until they get more clarity before making a decision. Hopefully, the loss of jobs won't be too bad but surely falling back on WTO rules would be the worst case scenario for our financial industry? In which event we would see a lot of jobs moving. And 25% of mainly well paid jobs has an effect on plenty of other jobs, too as well as the tax revenue.
I live in a city which has seen a propprtion of well paid jobs lost due to an industry downturn and trust me, you can see the knock on effects on those not directly employed in the industry.

Hmmm ... maybe the following will work.

"Osborne to block national insurance rise"
www.channel4.com/news/articles/politics/domestic_politics/osborneaposs+pledge+to+block+national+insurance+rises/3593962.html

Re what else Osborne did to lower the tax burden to businesses, there were some, but I can't be bothered to look.

My Point to Mistigri, and how we got onto this subject, was the positive message that UK Manufacturing has a good future outside the EU, but governments have a key role in helping to support them - and I suspect a lot of businesses in the Eurozone, with all their layers of bureaucracy and added costs of doing business - would echo that sentiment.

Well, that was a "pledge", but he still didn't stop the rise that Darling had announced in 2010 which didn't take place until 2011 - when Osborne was in power.

Anyway, this would presumable be the same George Osborne that thinks that we'll "lose control of our economy" if we go ahead with Brexit, and thinks it would leave the UK "permanently poorer"...

CardinalSin

It looks like Osborne just reduced Labour's National Insurance rises already baked into Labour's government spending plans, not cancelled them.

It was than Osborne that was to lower the Corporate Tax burden each year, and gvve companies national Insurance holiday, including for hiring the then approaching 1 million of our youth etc.

The OTHER Osborne, who during the EU Referendum predicted an emergency budget straight after a 'leave' vote as the economy was to crash, was as recent history shows us, rather a numpty - and proves his best days were using his Eaton brains to attempt what Labour was to frightened to do, in fixing their ideological anti Eaton mess - not making up 'Project Fear' stories.

He made mistakes, but if it was all simple to sort, those currently riding two EU horses at the same time, would have done something from 2008, other than raise taxes.

An emergency budget was predicted when the Tory had promised to activate Article 50 the day after a Leave vote.

The fact that all Tories seem to bel lying to us doesn't do your cause much good...

Thea do you work in manufacturing? I work in a fairly senior role in planning and forecasting for a large UK manufacturer. The impact on our business is potentially very serious if there is a hard brexit, although we are temporarily enjoying the currency windfall (helped my bonus for 2016/17; thanks brexiters!). We can discuss the detail if you wish; my personal experience in mftg spans the auto, chemical and pharma sectors, all of which are negatively affected. If you have some specific, practical and achievable ideas about how companies in those sectors can profit from brexit, I'm sure there are a dozen large employers who would be delighted to receive your CV.

Indeed, I'd be happy to pass on your wisdom to my employer, which has delayed construction of a new plant in the UK and is moving another to eastern Europe; we'd all like to save those jobs if there were a practical and cost effective way around the non tariff barriers that Brexit will erect. (Note: this is not primarily about money. It's about getting goods to customers, and regulatory compliance, and not losing market share if a hard border comes into existence overnight.)

Mistigri

I am not disputing that the larger businesses will be more affected, say in the FTSE 100, 250, or more - but here are many tens of thousands of businesses in the UK - and we have get to see what a UK government can do to help the largest, when somewhereclose to the details of a Brexit deal, being agreed.

I know it won't be hard for the Remainers to say it, but in NOT putting a mutually beneficial Trade Deal at the FRONT of their schedule of negotiations, the Brussel's negotiators were w-w-w-w-wr-wr-WRONG?

"An emergency budget was predicted when the Tory had promised to activate Article 50 the day after a Leave vote."

Really, how dumb was that, which Tory was saying that, provide a link and lets shame that fool.

Thea can you just answer the question please? What "specific, practical and achievable ideas" do you have that will help manufacturing companies to profit from brexit? Since we've agreed that brexit is going to damage larger exporters, I'd be happy to hear about how it will benefit SMEs :)

Mistigri

To begin with I said larger companies will be more affected to an extent not yet known, but as I assume that they don’t do or feel tied to Europe for 100% of their business, do you see a problem with them say ‘adapting’, by increasing business with existing customers OUTSIDE the EU - or spending the next 2-4 years trying to find NEW customers, as there is this new whirligig called the ‘interweb’ – so a marketing team can get a fairly quick response.

How many UK businesses of the total here, has little or indeed any direct contact with EU markets, but are still subject to their more costly rules and regulations?

Next I am assuming that you are ideologically blind to the significant help this government has already given companies since 2010, not just by lowering Corporate Tax from 28% to what 19% now, possibly lower by 2020 etc, but by just taking away the previous ‘annual event’ worry of one tax or another being hoisted ONTO their cost base, allows them with flexible labour laws (as opposed to inflexible EU ones) – in a world and markets always fraught with political and competitive risk, to plan 3-5 years ahead with confidence, as they won’t be ideologically ££mugged from within.

As an example, the UK Tolleys Tax guide is around 16,220 pages long, having DOUBLED in size under socialism from 1997 to 2011, no wonder with such complicated tax matters, companies need big expensive accountancy teams within, or costly external ones, to ensure their company is annually fully compliant.

From 2010 Cameron, Osborne and others were taking trade delegations all over the globe, that ‘opening of national doors’ is still going on at the business level, and will be in addition to the current business we do in the EU if those feckwits in Brussels DON’T chose to politically decide on new trade rules, and focus on the mutually beneficial economic merits.

The last time I looked the UK’s manufacturing base had risen from 10-11% of our economy to around 15%, repairing some of the dame done under the previous government, so we are already doing something right – and if ‘on shoring’ manufacturing output we lost, or new companies that can re-locate here if they like what they politically see – the government is setting the conditions to expand markets, with new companies and old friends frozen out by our EU membership.

The POINT is we are leaving, and as long as the UK government is business friendly, not outright hostile funding their new Shangri -La-La land, there is no sensible reason why trade with the EU (or anywhere else) will dramatically fall over the next few years as companies expand existing business outside the EU e.g. airlines once they know wots wot - other than by the hostility of Brussels leaving Trade until last, but of course, they can’t do anything wrong.

Well my DH works for a big american my company. Most of the products is sold outside Europe.
They'll be very affected by Brexit because they will not be able to make the best of the FTA between Europe and some countries such a South Korea.
Atm there is NO signs of any FTA with any country at all.
Not with Australia etc.., not with some countries that already have a FTA with the EU. And LIam Fox has agreed that there will be no agreement until we leave the EU.
And then there are the parts that are coming either form the eu from outside the eu butbagian from countries with a FTA with the EU.

The outlook isn't good at all for them and they know it.

If companies who already trade outside the EU are finding it hard, how can you expect companies who do NOT trade outside the EU easy and full of opportunity exactely?

Btw to make it clear, I'm not talking about the effect on shares etc...
The size of the company in the uk is the one of a SME (and they have different accounts etc.. within the company so they are and will be seen as 'independent' on accountancy POV).
If that part in the U.K. Is not profitable, they will be closed and the production relocated somewhere else (not in Europe but more likely in India or China....)

Thea still no specific, practical and achievable ideas, just more word salad.

Do you seriously think that big industrial companies just need to send a few emails to increase their sales? LOL.

Most big companies already sell to non-EU markets, although as I have emphasised above, they often supply these more distant markets from local production sites. It depends a lot on the value and the size of shipments: you can ship small high margin products like medical devices worldwide, by air, but bulkier products which have to go by sea can be effectively excluded from certain markets because of client-imposed delivery times. This is particularly true where products are supplied to client specification and to JIT supply chains.

Perhaps you have ideas for specific products that the UK might be able to sell more of, and to which countries? Then we can talk about how specific trade barriers or other obstacles might be overcome.

Jam!

"Do you seriously think that big industrial companies just need to send a few emails to increase their sales? LOL."

In short yes. Take my Tanzania example earlier, they would and I understand have, messaged back immediately.
Its one thing entering a free trade deal with a single nation, and quite another contemplating open hunting season with an utterly ruthless bloc of self financing nations. You really dont know how close we still are to having TTIP back on the table. Merkel, Germany and Brussels are desperate.

If you dont understand what the impact of TTIP is, I suggest you google it. Im not going to spend hours explaining the basics to cardinal 'thelibdemsdidreallywellatthelastelection' sin. But be assured, TTIP is the future the EU want for you. And its 1000 times worse than Brexit.

ec.europa.eu/citizens-initiative/public/initiatives/open/details/2017/000008

Misti, you still havent answered my question. Why is your UK manufacturer still here and not already in Poland? Economically, whilst enjoying the benefits of the EU, and the huge subsidies on offer to relocate, its mad to have any manufacturing in the UK. (Agree, corporate tax did indeed swing the balance sheet for many Thea) But why is your company still here Misti?
The fact theyre moving to Poland, blaming Brexit as they go, is neither a surprise nor news. Theyre just a few years behind everyone else.

Theres always a danger though in short term subsidised set ups, its the risk it ends up doubling the cost, even in the relatively short term. Take the call centers to India. Its been cheaper to move them back than keep them going.

The eastern bloc are a canny lot, its certainly the area to watch at the moment imo, and if anyone can turn a position back on the 'smart money' taking advantage, its them.

The reality is, ignoring corporation tax, ignoring the drivers of business, ignoring how business works in reality and getting obsessed with what appears on the p&l of UK PLC doesnt even start to tell the story.

Virgin Group have a revenue now of around £20billion pounds. He supports a staff of 70,000. (Just for context, because I know eyes have already glazed over, Estonias GDP is 23billion and they support a population of 1.3 million) As well as Richard Branson personally being a tax exile, he holds most of his corporations in perfectly EU acceptable tax havens, including Virgin Health which is chomping on the doors of the NHS and plunging the public purse at a time of crisis. (Not one to miss an opportunity our Richard) The point is, despite having an obsessive aversion to contributing to the UK coffers, hes actually small fry. In the world of corporate business big hitters, hes tiny. But thats the model you have to extrapolate upwards.

The irony, that if hed paid into the Uk what he morally (and some say legally) should, his contribution would have provided the NHS with the very services hes now selling into them.

Michael Oleary is even more ridiculous. The 'Del Boy' Trotter of aviation. The man who openly pulled routes to Angouleme and many others, because they wouldnt pay a high enough bung (EU legal) to him to land there, (Limoges then did in that instance). He famously stropped out of Denmark when they refused to allow his appalling working terms and conditions (whilst the EU not only allow it, they legislate for it.)
These are the business models the EU legislate for. Tax avoidance, employee exploitation. These are your rabid pro-remainers.
Im a tory not a socialist. I believe in capitalism and consumer driven trade. But I dont believe in exploitation of the working classes and unemployed to achieve it. Thats why Brexit crossed all spectrums, in all walks of life.

"Yes, it it would be so easy to just go back to "making things2, what with all our natural resources and all 

While we're about it, Cornwall could go back to copper mining, and we could send urchins up chimneys..."

Cardinal, lets see if you join the dots. Go google France May 68. Read for a little while and absorb. When youve done that, let me tell you a small group of students, upset that they couldnt have sex in dorms, did this.

Mistigri

While you show me ‘size matters’ on shipments and production overseas, I show you that UK companies already have businesses and ‘production sites’ overseas e.g America and as other countries cost bases rises, and we are ‘on-shoring’ production as we can do it ourselves cheaper here (with transportation in the equation) – so its obviously a two way street and likely to evolve over the next few years – and I reiterate our government will play a key role here to try ensure the problems of businesses are considered.

• Currently in a low tax government we have Philip Hammond, an ex-businessman as Chancellor, who with businesses in mind has been pushing for a transition period of up to 3-years and apparently getting his way – which I don’t personally agree with, but understand as Brussels are being such cocks insisting Trade comes LAST in the negotiating ordeh – it might be the only ‘business friendly’ way to Brexit

• The shadow Chancellor who wants a high business tax government, has no commercial or ministerial experience, has spent his life supporting ideological ‘struggles’ around the world against the established government, indeed his current specialised subject is trying to arrange mass marches to overthrow the government – who last Sunday, still doesn’t know if we wants (the UK) to still be in the Customs Union (and so the Single Market).

Now with Brexit a firm manifesto commitment by both main parties, tell me the UK government policies over the next 5-years, will have no bearing on the UK to retain companies here at all, never mind have their confidence?

You really dont know how close we still are to having TTIP back on the table

Absol-bloody-lutely We will be getting TTIP on steroids the moment we complete Brexit! It was the rest of the EU, led by the French, that stood up against TTIP in the first place. All of the leading Tory politicians have said that they would have signed it eve before it was amended (and still rejected by the rest of the EU).

How can you not understand that! It couldn't be clearer!

Carolinesneanies

A thought provoking last post, and I totally agree with your EU observation on Poland, and indeed the Baltic states members e.g. Estonia, ability to attract production lines etc.

Surely going to be an ope ended business alternative issue with the likes of France and Italy for years to come.

CardinalSin

"Absol-bloody-lutely We will be getting TTIP on steroids the moment we complete Brexit!"

W-h-a-t????

TTIP Definition; The Transatlantic Trade and Investment Partnership (TTIP) is a proposed trade agreement between the European Union and the United States, with the aim of promoting trade and multilateral economic growth.

Please explain how once OUT of the EU, a U.S. Treaty with the EU will affect us (and the Tories)???

Typical scaremongering.

And before we get the barrage of mis-information about how TTIP including the EU (whether we are in or out) will mean national governments will be powerless to stop the Americans privatising any national service, like the NHS;

“TTIP and the NHS”