The Economy is in for a rough ride

[jeremyp]

But the thing is who is included in that 15%. Some big names who are going to lobby Brussels to give us a nice deal or else they will lose out big time. The EU will also lose our membership fee so putting more pressure on the poorer ones to pay in more and get less out, so they can't afford to lose our ｣60 billion trade deficit we have with them.

Economically, it is in everybody's interests for us to have a free trade deal with the EU, but most of you Brexiters seem to be against that, so it won't happen.

The likes of BMW (as an example) would definitely prefer no tariffs, but they still have the rest of the EU to export to so, while tariffs will hurt them, they  won't hurt them as much as they will hurt Jaguar. Faced with 10% tariffs to export to the EU, the owners of Jaguar will have a strong incentive to move production to the EU. The incentive will be even stronger for Toyota and Nissan who have no historical British links.

[Sriram]

http://www.bbc.com/news/business-37374888

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In one sentence the Bank has revealed it is ready to upgrade its growth forecasts for the UK economy.

"The Committee now expects less of a slowing in UK GDP growth in the second half of 2016," it said, referring to the Monetary Policy Committee of Bank economists and external experts that sets UK interest rates.

The key point - the Bank's internal judgement is that growth in Q3 (that's July to September) will now be between 0.2% and 0.3%, a pretty chunky upgrade on its August forecast of 0.1%.

It's not an official forecast, but given the Q3 growth figure will be announced before the next meeting of the MPC in November, it is as close as we are going to get.

Those who predicted the possibility of a recession following a vote to leave the European Union - which included the governor of the Bank of England - are having to revise their positions.

The UK economy has performed more robustly than many expected.

************

[L.A.]

Economically, it is in everybody's interests for us to have a free trade deal with the EU, but most of you Brexiters seem to be against that, so it won't happen.

The likes of BMW (as an example) would definitely prefer no tariffs, but they still have the rest of the EU to export to so, while tariffs will hurt them, they  won't hurt them as much as they will hurt Jaguar. Faced with 10% tariffs to export to the EU, the owners of Jaguar will have a strong incentive to move production to the EU. The incentive will be even stronger for Toyota and Nissan who have no historical British links.

I think we can quite confidently predict that if we end up with significant EU tariffs Toyota, Nissan and probably a number of others will simply shut up shop.

I wonder if those workers in Sunderland who so enthusiastically voted Brexit will appreciate the irony?

[BashfulAnthony]

I think we can quite confidently predict that if we end up with significant EU tariffs Toyota, Nissan and probably a number of others will simply shut up shop.

I wonder if those workers in Sunderland who so enthusiastically voted Brexit will appreciate the irony?

L.A., morning.

This is all a waste of time:  suppose, might, predict, theorise, what if.   None of us know how it will all end.  I don't think anyone, anywhere, does.  We have to wait and see, and there's nothing else to be done by the likes of us.  Though I guess the Remainers will go on predicting gloom, as it's the only thing left to them to try and come to terms with the reality of being losers.   

[L.A.]

http://www.bbc.com/news/business-37374888

***********

In one sentence the Bank has revealed it is ready to upgrade its growth forecasts for the UK economy.

"The Committee now expects less of a slowing in UK GDP growth in the second half of 2016," it said, referring to the Monetary Policy Committee of Bank economists and external experts that sets UK interest rates.

The key point - the Bank's internal judgement is that growth in Q3 (that's July to September) will now be between 0.2% and 0.3%, a pretty chunky upgrade on its August forecast of 0.1%.

It's not an official forecast, but given the Q3 growth figure will be announced before the next meeting of the MPC in November, it is as close as we are going to get.

Those who predicted the possibility of a recession following a vote to leave the European Union - which included the governor of the Bank of England - are having to revise their positions.

The UK economy has performed more robustly than many expected.

************

Unless there is some kind of 'secret plan' that no one is admitting, I don't see any basis for short-term optimism. The current up-term we are seeing can be attributed to the lower pound boosting exports which is fair enough, but the downside is that imports will cost more - and that hasn't really worked through the system yet.

Maybe the future will be rosy, but there are a great many uncertainties ahead and it will be a long and difficult road. I doubt that I will ever live to see the country as prosperous as it was on the 23rd of June 2016.

[L.A.]

L.A., morning.

This is all a waste of time:  suppose, might, predict, theorise, what if.   None of us know how it will all end.  I don't think anyone, anywhere, does.  We have to wait and see, and there's nothing else to be done by the likes of us.  Though I guess the Remainers will go on predicting gloom, as it's the only thing left to them to try and come to terms with the reality of being losers.

Morning B.A.

of course politicians have been known to perform 'U' turns and (occasionally) not keep their promises  - but the way that the 'Red Lines' are set at the moment seems to exclude tariff-free access to the EU, which would lead to the dire consequences I have been pointing out.

[BashfulAnthony]

Morning B.A.

of course politicians have been known to perform 'U' turns and (occasionally) not keep their promises  - but the way that the 'Red Lines' are set at the moment seems to exclude tariff-free access to the EU, which would lead to the dire consequences I have been pointing out.

L.A.,  you are an extremely sensible person.  Please don't let yourself be drawn into the doom and gloom scenario.  I have faith in this country to do a fair and workable deal; and I am sure, in the final analysis, that the EU desires the same, and that accommodation will eventually be reached.  It makes sense for all concerned to arrange a mutually acceptable deal: why would anyone want anything else? There is enough expertise, and sense, across the board to achieve that. I am not being unrealistic or naive :  I am an optimist

[L.A.]

L.A.,  you are an extremely sensible person.  Please don't let yourself be drawn into the doom and gloom scenario.  I have faith in this country to do a fair and workable deal; and I am sure, in the final analysis, that the EU desires the same, and that accommodation will eventually be reached.  It makes sense for all concerned to arrange a mutually acceptable deal: why would anyone want anything else? There is enough expertise, and sense, across the board to achieve that. I am not being unrealistic or naive :  I am an optimist

I am sure that some kind of deal will eventually emerge but I fear that in most tangible aspects, it will be worse than what we had pre-brexit. (though some will claim that we have regained some kind of freedom)

[wigginhall]

But look on the bright side, we'll have more powerful toasters. 

[Jack Knave]

Economically, it is in everybody's interests for us to have a free trade deal with the EU, but most of you Brexiters seem to be against that, so it won't happen.

A trade deal is fine if it is the right one.

The likes of BMW (as an example) would definitely prefer no tariffs, but they still have the rest of the EU to export to so, while tariffs will hurt them, they  won't hurt them as much as they will hurt Jaguar. Faced with 10% tariffs to export to the EU, the owners of Jaguar will have a strong incentive to move production to the EU. The incentive will be even stronger for Toyota and Nissan who have no historical British links.

What a terrible argument. "The rest of the EU" ? Most of it is run down and BMW sell more to us than most of the other EU members put together. We're one of their biggest markets.

[jeremyp]

A trade deal is fine if it is the right one.

We have a tariff free trade deal with the EU now. There's no way we'll get anything better.

What a terrible argument.

By which you mean what a good argument that you can't counter.

"The rest of the EU" ? Most of it is run down and BMW sell more to us than most of the other EU members put together. We're one of their biggest markets.

Nonsense. BMW sells more cars in Germany than to the UK and then you can add France, Italy and Spain.

[Jack Knave]

We have a tariff free trade deal with the EU now. There's no way we'll get anything better.
Nonsense. BMW sells more cars in Germany than to the UK and then you can add France, Italy and Spain.

Your ripostes are so pitiful. The EU will suffer too if they play hardball. And if the tariffs are a few per cent it won't hurt. We gain in other ways.

We are still a substantial market that they can't afford to bugger up.

[jeremyp]

Your ripostes are so pitiful.

You still have nothing, I see.

The EU will suffer too if they play hardball.

Everybody's going to suffer. We already know that, but the EU has more to lose if they don't play hardball than if they do.

And if the tariffs are a few per cent it won't hurt. We gain in other ways.

10% on the price of a Nissan is not "won't hurt".

We are still a substantial market that they can't afford to bugger up.

Actually they can because their buggering up of their opportunities in the UK will be as nothing compared to our buggering up of our opportunities in Europe. Also, bear in mind the political factors. We cannot be seen to do well out of this otherwise there might be moves in other countries to leave the EU.

[Jack Knave]

Everybody's going to suffer. We already know that, but the EU has more to lose if they don't play hardball than if they do.

Except it is the council of ministers who do the actual negotiations and the signals coming from them is one of working best for both sides.

10% on the price of a Nissan is not "won't hurt".

You can't read, which no surprise. I said a few %.

Actually they can because their buggering up of their opportunities in the UK will be as nothing compared to our buggering up of our opportunities in Europe. Also, bear in mind the political factors. We cannot be seen to do well out of this otherwise there might be moves in other countries to leave the EU.

BMW (my comment was in reference to them) and companies do not think in these overall terms they just look to making as much sales and profits that they can.

That is a fine line that the EU have to play but as there are many now losing faith in the EU system, including the people, it may transpire that it gets changed anyway so the easy deal we get will become EU policy for all member states. 

[L.A.]

And if the tariffs are a few per cent it won't hurt. We gain in other ways.

That statement shows a profound ignorance typical of the Brexiteers. A great many manufacturing industries operate on very low profit margins, they make a good overall profit only because of the volumes they produce. On a Radio 4 program last week they stated that most car manufactures based in the UK operate on profit levels of around 5%. Stick 'a few percent' tariff on that and they are operating at a loss - and unlike the state sector, commercial companies can't operate at a loss for very long.

[BashfulAnthony]

That statement shows a profound ignorance typical of the Brexiteers. A great many manufacturing industries operate on very low profit margins, they make a good overall profit only because of the volumes they produce. On a Radio 4 program last week they stated that most car manufactures based in the UK operate on profit levels of around 5%. Stick 'a few percent' tariff on that and they are operating at a loss - and unlike the state sector, commercial companies can't operate at a loss for very long.

L.A., come on? A comment typical of Brexiteers. There are 17,000,000million of them!

[jeremyp]

Except it is the council of ministers who do the actual negotiations and the signals coming from them is one of working best for both sides.

Yes, but if there is a conflict, they will choose the deal that works best for the EU. Furthermore, there are countries in the EU that won't ratify a deal that lets us of the hook too much.

Actually, I'm pretty sure that the EU will offer us a good deal with no tariffs, but we'll have to accept free movement of labour in return.

You can't read, which no surprise. I said a few %.

I said 10% because that is what the likely tariff for car imports will be.

BMW (my comment was in reference to them)

Why are you fitting on BMW? I only brought them up as an example. My comment applies ti EU manufacturers in general.

and companies do not think in these overall terms they just look to making as much sales and profits that they can.

Nobody said that tariffs won't hurt the likes of BMW, what they (I) said is that EU companies will be hurt less than British companies.

That is a fine line that the EU have to play but as there are many now losing faith in the EU system,

Are there? Support for the EU in the EU went up after the Brexit vote. It will go up again if Britain is shown to suffer as a result of this appalling decision. Politically, the EU needs to give us a tough time and we both agree that the EU sometimes does ignore economics in order to achieve a political end.

[jeremyp]

L.A., come on? A comment typical of Brexiteers. There are 17,000,000million of them!

I agree, many Brexiters completely failed to grasp the concept of tariffs at all and what they would do to their jobs. This is one explanation for why Sunderland Nissan workers voted to slit their own throats.

[L.A.]

L.A., come on? A comment typical of Brexiteers. There are 17,000,000million of them!

B.A.
throughout the campaign and since, several prominant Brexiteers have made statements suggesting that 'just' a few percent export tariff would be of little consequence (as Jack did).

I'm afraid that they couldn't be more wrong! It would finish exporters with low margins.

[Jack Knave]

That statement shows a profound ignorance typical of the Brexiteers. A great many manufacturing industries operate on very low profit margins, they make a good overall profit only because of the volumes they produce. On a Radio 4 program last week they stated that most car manufactures based in the UK operate on profit levels of around 5%. Stick 'a few percent' tariff on that and they are operating at a loss - and unlike the state sector, commercial companies can't operate at a loss for very long.

Then the market would say that prices should rise a bit. We should learn to make things last a little longer.

[BashfulAnthony]

I agree, many Brexiters completely failed to grasp the concept of tariffs at all and what they would do to their jobs. This is one explanation for why Sunderland Nissan workers voted to slit their own throats.

It hasn't happened , and since you are not an economist, I see no reason to believe what you suggest.

[JP]

What will happen to Nissan Sunderland?

[BashfulAnthony]

What will happen to Nissan Sunderland?

Well, they're in the bottom three now, so they need a couple of wins pretty quickly!

[JP]

Well, they're in the bottom three now, so they need a couple of wins pretty quickly!

Sunderland stay up, or Nissan move. Hmmm, both not happening haha.

[L.A.]

Then the market would say that prices should rise a bit. We should learn to make things last a little longer.

That isn't that way that it works Jack. Although they obviously sell cars in the UK, companies such as Nissan set-up manufacturing facilities in the UK primarily to serve the EU.. These kinds of manufacturing operations are quite 'finely balanced' as there is not a great profit margin in manufacturing cars. What might seem a small increase in costs could potentially make the whole operation nonviable.

You say that 'the market would say that prices should rise a bit' - but what the market actually says is 'it's now cheaper to manufacture cars elsewhere'