Brexit discussion thread IX (Please read OP before posting)

Infini

Sterling now officially 93p to the €1. Just slid past the mark and is nearing all time low of 93.5p. Wonder how long this slow corrosion will go on before we hit 94/95 etc and head towards parity.

Leroy42

Are they purposefully allowing a depreciation in the pound to help with exports?

Bit cynical

Leroy42 wrote: »

Are they purposefully allowing a depreciation in the pound to help with exports?

I don't think they've had a policy of maintaining a particular level with the Euro or other currencies since they left the ERM. Market sets the exchange rate.

Strazdas

Leroy42 wrote: »

Are they purposefully allowing a depreciation in the pound to help with exports?

Given that it's an import led economy (unlike Ireland), that would be a very bad idea.

I do think the falling pound is deeply problematic for the zealots and the Brexit cheerleaders. It's very hard to spin this as a positive and it is hitting ordinary citizens in the pocket.

Sam Russell

Bit cynical wrote: »

I don't think they've had a policy of maintaining a particular level with the Euro or other currencies since they left the ERM. Market sets the exchange rate.

I think they have had BoE intervention at various times.

Current rate is equivalent to IR£1 = £1.18. Before, the IR£ was always weaker than the GB£ since we split.

It is now weaker against the € than any time in the last 9 years. It has lost 40% against the US$ in the last decade.

GB£10,000 invested in Deutsche Marks in 1966, would now be worth €50,000.

In 1948, there were US$4 = GB£1, now it is US$1.20 = GB£1.

Spanish Eyes

No one seems to care that much, and there is little panic going on amongst those who will be most affected.

Must be the red tops. Sorry now. But I reckon most are punch drunk and want to just get on with it now.

Cummings (pseudo PM) has it sussed. There must be parallels somewhere for this kind of thing somewhere.

Capt'n Midnight

20silkcut wrote: »

Same with Japan. Conventional bombing did not bring them to the table either.
It took the atom bomb
The blitz spirit is certainly not unique.

On the 8th of August Japan had the Americans on the front door. But their backs were covered by a peace treaty with Russia , and a secure hinterland in Manchuria with a million man army. It was possible to imagine continuing the fight from there.

Then the Soviets announced that they would be at war with Japan tomorrow the 9th.

By the 16th the Soviets had blitzkrieged their way through most of the defences. It was so fast that Korea is split in two.



Right now the UK is looking for a trade deal with the EU. That's the visible threat.

If a car plant or two gets nuked on WTO terms it won't take the whole economy down.


But it's like they've forgotten just how dependent their service sector is on the goodwill of the EU. The UK needs to get and keep Data Adequacy and Equivalence or large chunks of the service sector will be blindsided. Then the economy will have nothing to fall back on.

David Davis himself threw a spanner in the works when he got the European court of justice to rule that the UK's snooper’s charter was illegal.



https://www.instituteforgovernment.org.uk/explainers/data-adequacy
Suspicion that they are transferring security data to Five Eyes would give the EU the option to pull the rug out from under them anytime.
Workarounds to Data Protection can take a year and would be on a company by company basis if the go the BCR route.
Customs delays if there's data transfer issues.



As for the timewasting and sabre rattling by the UK over Brexit and preparations :
They that sow the wind, shall reap the whirlwind

Capt'n Midnight

Sam Russell wrote: »

In 1948, there were US$4 = GB£1, now it is US$1.20 = GB£1.

Much of the drop occurred on September 18 1949 when sterling was devalued from $4.03 to $2.80

What it shows is how one-sided the "Special Relationship" has always been.

Or look at how Canada has been treated. Trump tore up the Trans-Pacific Partnership. Imposed Steel and Aluminium tariffs on Canada and the EU using China as an excuse.

NAFTA got replaced with USMCA.

Country of origin rules: Automobiles must have 75 percent of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs
...
US farmers get more access to the Canadian dairy market:

UK cars only have 41% local content. They've a snowball's chance in Hell of getting on a Free Trade Agreement.

Imreoir2

GBP just dropped below the previous lowest value in the last ten years.

prawnsambo

Capt'n Midnight wrote: »

Much of the drop occurred on September 18 1949 when sterling was devalued from $4.03 to $2.80

What it shows is how one-sided the "Special Relationship" has always been.

Or look at how Canada has been treated. Trump tore up the Trans-Pacific Partnership. Imposed Steel and Aluminium tariffs on Canada and the EU using China as an excuse.

NAFTA got replaced with USMCA.

UK cars only have 41% local content. They've a snowball's chance in Hell of getting on a Free Trade Agreement.

Afaik, USMCA is being held up in congress. So NAFTA is still operative. Doesn't change your point though.

Irish Praetorian

Capt'n Midnight wrote: »

On the 8th of August Japan had the Americans on the front door. But their backs were covered by a peace treaty with Russia , and a secure hinterland in Manchuria with a million man army. It was possible to imagine continuing the fight from there.

Then the Soviets announced that they would be at war with Japan tomorrow the 9th.

By the 16th the Soviets had blitzkrieged their way through most of the defences. It was so fast that Korea is split in two.

Maybe lets not get into the guts of that debate here, I think the point might be that the message needs something stronger to get through to the UK.

Interesting that someone brought up the question of a weakening pound possibly being good for cheapening UK exports to the EU. Now this is in theory true but the problem, part of which you have identified here, is that the barriers to trade in the EU comprise not just tariffs but also a variety of non-tariff barriers (registration, sign-offs, verification, etc) that can add a significant unspoken cost to exports. I suspect that might be the big rub when it comes to EU-UK trade post Brexit.

While I'm posting here, I couldn't help but observe Julia Hartley-Brewer commenting today on the pre-eminence of the UK in the university rankings as compared with the EU. I believe in the top 10 world universities, the UK has about 4, the EU (excluding the UK) none. So I went a bit deeper to the top 50 and I would suspect the UK has about 15, the rest of the EU 5 and the rest of the world the remainder.

The best riposte I could come up with is that this might in part be a product of EU investment and the UK's access to an entire EU pool of academic talent. I had considered making the case about EU funding but I suspect this would be easily brushed off as being less than the UK's EU contribution. Can anyone suggest any other counters we might use for the point?

tuxy

Well this phrase has been used again in reference to brexit.

n****r in the wood pile

http://www.irishnews.com/news/northernirelandnews/2019/08/09/news/bbcni-apology-after-richard-halleron-drops-n-word-during-live-interview-1680967/

I had never head it before an MP said it in 2017!

Imreoir2

Irish Praetorian wrote: »

Maybe lets not get into the guts of that debate here, I think the point might be that the message needs something stronger to get through to the UK.

Interesting that someone brought up the question of a weakening pound possibly being good for cheapening UK exports to the EU. Now this is in theory true but the problem, part of which you have identified here, is that the barriers to trade in the EU comprise not just tariffs but also a variety of non-tariff barriers (registration, sign-offs, verification, etc) that can add a significant unspoken cost to exports. I suspect that might be the big rub when it comes to EU-UK trade post Brexit.

While I'm posting here, I couldn't help but observe Julia Hartley-Brewer commenting today on the pre-eminence of the UK in the university rankings as compared with the EU. I believe in the top 10 world universities, the UK has about 4, the EU (excluding the UK) none. So I went a bit deeper to the top 50 and I would suspect the UK has about 15, the rest of the EU 5 and the rest of the world the remainder.

The best riposte I could come up with is that this might in part be a product of EU investment and the UK's access to an entire EU pool of academic talent. I had considered making the case about EU funding but I suspect this would be easily brushed off as being less than the UK's EU contribution. Can anyone suggest any other counters we might use for the point?

There is no use in countering the point, in terms of rankings, for what they are worth, the UK has some great Universities, and that has been a significant boost to their economey and soft power globally for years. Brexit will have a negative impact on their universities, but may not change the overall picture significantly in terms of how they are ranked. The wider point, however, is that their great universities will not save them from the consequences of Brexit, not even close.

Shelga

Forgive my ignorance, but why has the pound plummeted so sharply this week? On Monday it was around £1=€1.095, if memory serves, now, 4 days later, it has drastically gone down to £1=€1.068?? It has dropped more every time I’ve looked at it.

Why didn’t it drop so sharply the moment Johnson became PM, if his new government’s no-deal policy is the cause of the drop in value?

*edit* obviously the announcement today that the economy shrank by 0.2% in the first quarter is key, but it was already falling sharply before that? Was that in anticipation of today’s announcement?

FrancieBrady

Shelga wrote: »

Forgive my ignorance, but why has the pound plummeted so sharply this week? On Monday it was around £1=€1.095, if memory serves, now, 4 days later, it has drastically gone down to £1=€1.068?? It has dropped more every time I’ve looked at it.

Why didn’t it drop so sharply the moment Johnson became PM, if his new government’s no-deal policy is the cause of the drop in value?

*edit* obviously the announcement today that the economy shrank by 0.2% in the first quarter is key, but it was already falling sharply before that? Was that in anticipation of today’s announcement?

Confidence is waning. Simple economics.

Sam Russell

Shelga wrote: »

Forgive my ignorance, but why has the pound plummeted so sharply this week? On Monday it was around £1=€1.095, if memory serves, now, 4 days later, it has drastically gone down to £1=€1.068?? It has dropped more every time I’ve looked at it.

Why didn’t it drop so sharply the moment Johnson became PM, if his new government’s no-deal policy is the cause of the drop in value?

*edit* obviously the announcement today that the economy shrank by 0.2% in the first quarter is key, but it was already falling sharply before that? Was that in anticipation of today’s announcement?

I would think that the sentiment in the market has moved towards accepting that a No Deal is getting more likely and they are pricing it in.

It has been a steady decline for some time - against the US$ and the GBP, but 'Do or Die' is a bit dramatic and it may have spooked the market.

There is obviously talk of a serious constitutional crisis coming, and that is bad news - with potential civil unrest.

Imreoir2

Shelga wrote: »

Forgive my ignorance, but why has the pound plummeted so sharply this week? On Monday it was around £1=€1.095, if memory serves, now, 4 days later, it has drastically gone down to £1=€1.068?? It has dropped more every time I’ve looked at it.

Why didn’t it drop so sharply the moment Johnson became PM, if his new government’s no-deal policy is the cause of the drop in value?

*edit* obviously the announcement today that the economy shrank by 0.2% in the first quarter is key, but it was already falling sharply before that? Was that in anticipation of today’s announcement?

To an extent its herd mentality, people will hold off as long as others do, and once the herd starts to move it can generate its own momentum becasue the mentality sets in that others must know something that you don't so you better move to keep ahead.

J Mysterio

Leroy42 wrote: »

Are they purposefully allowing a depreciation in the pound to help with exports?

What are they going to export?

Imreoir2

Indestructable wrote: »

What is after happening sterling in the last 2 hours or so. Nearly a full pence lost against the euro.

Just growing confidence in the market that we are on a no-deal path and the market responding accordingly. Its been on a fairly steady adjustment since May as the Tory leadership contest played out and the shape of Johnsons government became clear.

Capt'n Midnight

Irish Praetorian wrote: »

Maybe lets not get into the guts of that debate here, I think the point might be that the message needs something stronger to get through to the UK.

The UK need to understand that they still haven't got a trade deal with the EU.

They only have a firm offer of a transition period in which to negotiate a trade deal. It's 595 pages and additional clarifications.

Leaving isn't an end.

It's the beginning of the real talks.

And not just with the EU, they've to have deals with all the big countries and blocs, and all at the same time because they are starting over. So it's not like they can have their A Team do it all.


And by announcing they are removing tariffs on 87% of all kinds of everything they have removed a lot of the incentive of other countries to give them special deals.

BonnieSituation

J Mysterio wrote: »

What are they going to export?

Feelings, belief and Blitz Spirit I guess

Imreoir2

BonnieSituation wrote: »

Feelings, belief and Blitz Spirit I guess

Brexit surely? Once the rest of the EU sees the UK enjoyng the sunlit uplands of Brexit, then Frexit, Irexit, Italexit etc are sure to follow in quick succession.

FrancieBrady

Capt'n Midnight wrote: »

The UK need to understand that they still haven't got a trade deal with the EU.

This.
We have to remember this is not a period of negotiation, that is over. We are watching the machinations of the UK political establishment.
All that is required of the rest of the EU is patience. Let them sort it out, because only they can.

Seth Brundle

FrancieBrady wrote: »

All that is required of the rest of the EU is patience.

Hence why the various EU leaders (including bith Leo and Simon) are keeping fairly quiet.
Three or four months ago you had various statements daily from Tusk or Juncker amongst others.
Now there's a fairly dignified silence in the face of ongoing bravado and insults from the UK cabinet.

Popeleo

J Mysterio wrote: »

What are they going to export?

BonnieSituation wrote: »

Feelings, belief and Blitz Spirit I guess

And jobs. Lots of jobs.

Itineoman

Imreoir2 wrote: »

Irish Praetorian wrote: »

Maybe lets not get into the guts of that debate here, I think the point might be that the message needs something stronger to get through to the UK.

Interesting that someone brought up the question of a weakening pound possibly being good for cheapening UK exports to the EU. Now this is in theory true but the problem, part of which you have identified here, is that the barriers to trade in the EU comprise not just tariffs but also a variety of non-tariff barriers (registration, sign-offs, verification, etc) that can add a significant unspoken cost to exports. I suspect that might be the big rub when it comes to EU-UK trade post Brexit.

While I'm posting here, I couldn't help but observe Julia Hartley-Brewer commenting today on the pre-eminence of the UK in the university rankings as compared with the EU. I believe in the top 10 world universities, the UK has about 4, the EU (excluding the UK) none. So I went a bit deeper to the top 50 and I would suspect the UK has about 15, the rest of the EU 5 and the rest of the world the remainder.

The best riposte I could come up with is that this might in part be a product of EU investment and the UK's access to an entire EU pool of academic talent. I had considered making the case about EU funding but I suspect this would be easily brushed off as being less than the UK's EU contribution. Can anyone suggest any other counters we might use for the point?

There is no use in countering the point, in terms of rankings, for what they are worth, the UK has some great Universities, and that has been a significant boost to their economey and soft power globally for years. Brexit will have a negative impact on their universities, but may not change the overall picture significantly in terms of how they are ranked. The wider point, however, is that their great universities will not save them from the consequences of Brexit, not even close.

Brexit will take the UK universities out of EU research funding frameworks such as Horizon 2020 (worth €80 billion between 2014 and 2020)
as well as the upcoming Horizon Europe worth €100 billion. I haven’t the figures but it is a safe bet that the higher ranked universities would be taking a fair slice of that. Research grant money ( competitively hard-won) from schemes such as this is one of the metrics used in the university rankings.
It will make it more difficult for them to collaborate in international research projects overall and I’d expect this to have an impact on the rankings over time.

Infini

Imreoir2 wrote: »

GBP just dropped below the previous lowest value in the last ten years.

New Record low of 93.93p to the Euro as of 23.40 UTC 9/8/19. Ladies and Gentlemen I do believe the real economic shítshow is starting to begin after all this time and from what it looks like the lunatics in the asylum have got enough run of the place that Markets are starting to react as predicted.

Imreoir2 wrote: »

Just growing confidence in the market that we are on a no-deal path and the market responding accordingly. Its been on a fairly steady adjustment since May as the Tory leadership contest played out and the shape of Johnsons government became clear.

I'd say it's more than that, the fact's so far seem to be that those in charge of Britain are essentially idiot's of the highest order and no amount of warnings is going to make them see common sense. These are the type of cancerous idiots that will only ever buckle when facing real consequences of their actions. The real question though of course is that considering the UK government refuses to see sense will their be a run on the Pound over the next month because I can certainly see parity before the end of August at this rate and I hope the pound does tank enough to get across the point that this is just the opening act not the main event.

It's also laughable that those in the UK somehow they'll get a better deal after a no deal Brexit. What will ultimately happen is that if there really is a no deal Brexit that the next agreement they go looking for will be a list of Damages and demands that will be all one way. Noone on this side want's a no deal Brexit but what those over there in the Tories don't seem to get is that while the EU doesn't want a no deal that doesn't mean they aren't willing to tackle it either.

Geuze

Yes, a sharp drop again tonight.

But not a record low.

https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/eurofxref-graph-gbp.en.html

10yr low = 94.08 pence, 13-Oct 2009

Low since EMU started = 97.855p, 29-Dec 2008

Strazdas

I've seen people suggest that the serious effects of No Deal may well kick off before October 31st. For example, continental hauliers may decide to pull their trucks out of GB for fear of them being trapped in the country.

Lucy8080

I get a good giggle out of the phrase " they need us more than we need them" in relation to exports.

U.k. exports to the E.U. in 2018 made up 46% of "their" total exports. Admittedly they imported just over 50% of "their" imports from the E.U.

But, not one nation in the E.U. is exporting 46% of their products to The U.K. I think Ireland is around 13% exports to the U.K. (could be less).

Just one example of the sleight of hand tactics "Brexit Politicians" have been foisting on the British public.

It is kind of sad to hear some callers to British radio stations assert this "phrase" with wholehearted belief.

"we buy more from them than they buy from us guv., they'll blink and no mistake, two world wars and one world cup. I blame the fackin' Irish ,bless their little spud munchin' cotton socks"