Brexit discussion thread XIII (Please read OP before posting)

VinLieger

Peregrinus wrote: »

So far as it goes. But it's a very, very thin deal; EU would prefer a much deeper one, which would confer more benefit on both parties.

Brexiters are obsessed with trade surpluses, for reasons that I have never quite understood (and, I suspect, they haven't understood either). The EU isn't, however, and from the EU's point of view whether a deal is good or bad isn't really measured by the effect it has on trade surpluses.

Its because they've been told by the tory propaganda machine that trade is a zero sum game, they cant get their heads around the idea that everyone can benefit equally in a trade deal because in their backwards world view brittania must always benefit the most above all other parties or else somehow they are losing or being disrespected. Its the same arseways thinking Trump has on trade with his idiotic "america first" policy.

trellheim

Some chatter that fish is agreed, broadly no change and kicked into the long grass for a few years

Yes some murmuring but I think if the fishermen complain I am not sure it will work, depends on what was flashed at them.

Jizique

trellheim wrote: »

Yes some murmuring but I think if the fishermen complain I am not sure it will work, depends on what was flashed at them.

That’s the big problem; all their worries were going to be resolved, no deal is better than a bad one, they hold all the cards, WTO the way to go - it is hard to march everyone back down the hill of compromise

ancapailldorcha

VinLieger wrote: »

Its because they've been told by the tory propaganda machine that trade is a zero sum game, they cant get their heads around the idea that everyone can benefit equally in a trade deal because in their backwards world view brittania must always benefit the most above all other parties or else somehow they are losing or being disrespected. Its the same arseways thinking Trump has on trade with his idiotic "america first" policy.

To add to this, the Conservatives denuded the country of its heavy industry and manufacturing during the Thatcher years with the result being that it had to rely on imports to make up the shortfall.

forgottenhills

Peregrinus wrote: »

So far as it goes. But it's a very, very thin deal; EU would prefer a much deeper one, which would confer more benefit on both parties.

Brexiters are obsessed with trade surpluses, for reasons that I have never quite understood (and, I suspect, they haven't understood either). The EU isn't, however, and from the EU's point of view whether a deal is good or bad isn't really measured by the effect it has on trade surpluses.

Of course the EU are keenly interested in running trade surpluses and in maintaining trade links that enable this to continue. It is the basis of the economic success of countries like Germany. A trade deficit has to be financed through borrowing or inward investments.

forgottenhills

ancapailldorcha wrote: »

To add to this, the Conservatives denuded the country of its heavy industry and manufacturing during the Thatcher years with the result being that it had to rely on imports to make up the shortfall.

I think that's an overly simplistic way of looking at it. For many of the years from the 1960s to the 1990's, when British manufacturing was suffering its greatest decline, the Labour party were in power there and they didn't do any more than the Tories to arrest the decline during their periods in government.

What was happening was a widespread move of manufacturing from high cost areas in the West to new low cost and highly efficient manufacturing areas particularly in China, Japan and Korea. It is debatable if any government there could have saved traditional manufacturing. Where the UK missed out was in having any strategy to change from their traditional manufacturing in steel, heavy engineering, shipbuilding etc into new areas such as pharma, electronics etc. Ireland was lucky in that we didn't have much heavy manufacturing to lose to the Far East and instead we skipped industry generations straight to the pharma and IT era.

forgottenhills

forgottenhills wrote: »

I think that's an overly simplistic way of looking at it. For many of the years from the 1960s to the 1990's, when British manufacturing was suffering its greatest decline, the Labour party were in power there and they didn't do any more than the Tories to arrest the decline during their periods in government.

What was happening was a widespread move of manufacturing from high cost areas in the West to new low cost and highly efficient manufacturing areas particularly in China, Japan and Korea. It is debatable if any government there could have saved traditional manufacturing. Where the UK missed out was in having any strategy to change from their traditional manufacturing in steel, heavy engineering, shipbuilding etc into new areas such as pharma, electronics etc. Ireland was lucky in that we didn't have much heavy manufacturing to lose to the Far East and instead we skipped industry generations straight to the pharma and IT era.

There was a significant consumer Electronics industry in the UK throughout that period, but almost all of their production went to the far East in the 1990s, remember Sinclair, Amstrad and a host of TV & radio manufacturers and of course all the "home computer" makers, on the professional side you had the likes of PYE.


So the UK didn't miss out, just they failed to retain their markets due to government incompetence.

ancapailldorcha

forgottenhills wrote: »

I think that's an overly simplistic way of looking at it. For many of the years from the 1960s to the 1990's, when British manufacturing was suffering its greatest decline, the Labour party were in power there and they didn't do any more than the Tories to arrest the decline during their periods in government.

What was happening was a widespread move of manufacturing from high cost areas in the West to new low cost and highly efficient manufacturing areas particularly in China, Japan and Korea. It is debatable if any government there could have saved traditional manufacturing. Where the UK missed out was in having any strategy to change from their traditional manufacturing in steel, heavy engineering, shipbuilding etc into new areas such as pharma, electronics etc. Ireland was lucky in that we didn't have much heavy manufacturing to lose to the Far East and instead we skipped industry generations straight to the pharma and IT era.

Surely the answer would have been to invest in manufacturing instead of just abandoning most of the country outside the southeast? The Germans seemed to have done a decent job of this.

The problem with Thatcher was that she was utterly opposed to any state action to save jobs. That's not to say they should have paid employee's salaries but surely some sort of action could have been taken to train workers or encourage investment in the deprived areas.

forgottenhills

Deleted User wrote: »

There was a significant consumer Electronics industry in the UK throughout that period, but almost all of their production went to the far East in the 1990s, remember Sinclair, Amstrad and a host of TV & radio manufacturers and of course all the "home computer" makers, on the professional side you had the likes of PYE.


So the UK didn't miss out, just they failed to retain their markets due to government incompetence.

I don't think that the demise of companies like Sinclair or Amstrad had much to do with UK governments. On the one hand computers became commoditised so that high margins disappeared and manufacturing moved to the most efficient and low cost manufacturing areas. Secondly these companies did not stay ahead of other companies in the market who innovated more so you saw the like of HP, Sony, Dell, Apple etc coming to the fore with innovation and strong management (not government intervention).

Sam Russell

forgottenhills wrote: »

I think that's an overly simplistic way of looking at it. For many of the years from the 1960s to the 1990's, when British manufacturing was suffering its greatest decline, the Labour party were in power there and they didn't do any more than the Tories to arrest the decline during their periods in government.

What was happening was a widespread move of manufacturing from high cost areas in the West to new low cost and highly efficient manufacturing areas particularly in China, Japan and Korea. It is debatable if any government there could have saved traditional manufacturing. Where the UK missed out was in having any strategy to change from their traditional manufacturing in steel, heavy engineering, shipbuilding etc into new areas such as pharma, electronics etc. Ireland was lucky in that we didn't have much heavy manufacturing to lose to the Far East and instead we skipped industry generations straight to the pharma and IT era.

The Tories have been in power for 50 of the last 75 years, so they must be responsible for most of the problems.

It was MT who shut down the ship building, coal industry, and caused the demise of the British car industry as represented by BMC and the British Leyland. There was a significant balance of payments problem throughout the first 50 years, up to the time the SM happened. The Tories, particularly MT, took on the unions with the intent of destroying them in which she was successful - a bit of a Pyrrhic victory, since the UK lost heavy manufacturing.

British car production suffered from poor models, poor quality, and poor productivity - all resulting from poor management, too many union strikes, and huge lack of investment. BL were making a huge number of models (about 30) that competed with each other, and only with each other - for example the Triumph 2000 competed with the Rover 2000. On the other hand Ford made more cars with just 5 or 6 basic models.

Because of poor productivity and high costs, they had difficulty making any profit, and had no willing investors, not even a Tory Gov. Eventually, they sold the whole BL for £10 to BAe who knew nothing about cars, and it ended up with BMW.

No, the Tories think the market is where money can be made - the casino that is the City of London.

The move to China is much more recent - post 1990.

Roanmore

Deleted User wrote: »

There was a significant consumer Electronics industry in the UK throughout that period, but almost all of their production went to the far East in the 1990s, remember Sinclair, Amstrad and a host of TV & radio manufacturers and of course all the "home computer" makers, on the professional side you had the likes of PYE.


So the UK didn't miss out, just they failed to retain their markets due to government incompetence.

Not sure it was even incompetence, think it was a deliberate decision.
They didn't want manual labour jobs.

When Dell left Limerick for Poland I remember Mary Wallace (or maybe it was Mary Hanafin) saying they were not the jobs we really wanted in Ireland, we wanted more high tech.
I was furious at the time because I remember the same thing happening to the UK in the 80s.
If you lose manufacturing you lose the foundation of your economy.

The guys selling Brexit seem to think they can bring back that manufacturing industry. Maybe but not in the short to medium timeframe.

forgottenhills

ancapailldorcha wrote: »

Surely the answer would have been to invest in manufacturing instead of just abandoning most of the country outside the southeast? The Germans seemed to have done a decent job of this.

The problem with Thatcher was that she was utterly opposed to any state action to save jobs. That's not to say they should have paid employee's salaries but surely some sort of action could have been taken to train workers or encourage investment in the deprived areas.

Yes agree, successive UK governments from both main parties failed to move their country into new area of manufacturing, pharma or IT where margins were higher and factors such as speed to market and innovation were more important than wage costs.

ancapailldorcha

forgottenhills wrote: »

Yes agree, successive UK governments from both main parties failed to move their country into new area of manufacturing, pharma or IT where margins were higher and factors such as speed to market and innovation were more important than wage costs.

Until May and Johnson, both main parties were very much of the opinion that state intervention was a bad idea and never justified unless in pursuit or either law and order or conflict overseas.

I don't want to go any further off topic but I do feel that it's noteworthy that the party complaining about trade and current account deficits is the party responsible for them.

forgottenhills

ancapailldorcha wrote: »

Until May and Johnson, both main parties were very much of the opinion that state intervention was a bad idea and never justified unless in pursuit or either law and order or conflict overseas.

I don't want to go any further off topic but I do feel that it's noteworthy that the party complaining about trade and current account deficits is the party responsible for them.

Yes but not to labour the point (pun intended) it seems to be the influence of the Dominic Cummings group that has only recently raised the idea of heavy UK state intervention in the high tech area and making the state aid area a key crux of trade deal talks. This is the opposite of traditional Tory economic policy and it is interesting to see where they believe they are going to go with this. Cummings could get ejected from his position (likely to be in an internal heave over COVID) at any time and this whole shift in economic policy could easily die with him.

ancapailldorcha

forgottenhills wrote: »

Yes but not to labour the point (pun intended) it seems to be the influence of the Dominic Cummings group that has only recently raised the idea of heavy UK state intervention in the high tech area and making the state aid area a key crux of trade deal talks. This is the opposite of traditional Tory economic policy and it is interesting to see where they believe they are going to go with this. Cummings could get ejected from his position (likely to be in an internal heave over COVID) at any time and this whole shift in economic policy could easily die with him.

That's an idea doomed to fail though as they think that all they need is money. They've established such a nasty, xenophobia and nationalist culture here that it's hard to see any sort of entrepreneural class heading over in droves to make this happen. The US is always going to be the place for them.

Christy42

forgottenhills wrote: »

Yes but not to labour the point (pun intended) it seems to be the influence of the Dominic Cummings group that has only recently raised the idea of heavy UK state intervention in the high tech area and making the state aid area a key crux of trade deal talks. This is the opposite of traditional Tory economic policy and it is interesting to see where they believe they are going to go with this. Cummings could get ejected from his position (likely to be in an internal heave over COVID) at any time and this whole shift in economic policy could easily die with him.

Was it not promised that Cummings would leave in December after the uproar due to rules not applying to Cummings when he broke lockdown several times?

Though it is a weird dynamic with Cummings being largely the one in control and the actual tory politicians largely taking orders. As seen from how willing they were to put forward farcical defenses for the man at the time.

View

forgottenhills wrote: »

Of course the EU are keenly interested in running trade surpluses and in maintaining trade links that enable this to continue. It is the basis of the economic success of countries like Germany. A trade deficit has to be financed through borrowing or inward investments.

The basis of the economic success of Germany is that their companies make products to a consistent high quality and charge high prices accordingly.

They also do this without the “low tax, low tax” mantra that we are obsessed with as they appreciate that the infrastructure that industry needs to operate in requires ongoing investment from their (higher corporate) taxes.

forgottenhills

View wrote: »

The basis of the economic success of Germany is that their companies make products to a consistent high quality and charge high prices accordingly.

They also do this without the “low tax, low tax” mantra that we are obsessed with as they appreciate that the infrastructure that industry needs to operate in requires ongoing investment from their (higher corporate) taxes.

Well yes but they manufacture in quantity in order to achieve economies of scale and hence they have a vital need to export. To export you need to avoid tariffs and thus you need trade deals. (You also need to keep your currency from going too high and many argue that the Euro is a convenient mechanism for Germany to achieve this but that is a whole different thread in itself). In manufacturing the last few percent of your production run can be 100% of your profit after fixed costs and hence the Germans will be keen to hold on to a tariff free market into the UK, even if is only 5-6% of global sales. There is also the issue of JIT manufacturing of many products using components sourced in both the UK and the EU, the problem of identifying country of origin for customs purposes for some manufactured products, the interconnected nature and physical proximity of the economies that the EU never had to contend with in other trade talks.

The EU had a no-blame open door to walk away from trade talks with the UK after the UK signaled that they would renege on the WA with their Internal Market Bill but it is telling that they did not even though this was a real insult and provocation. Mutti Merkel had her say and now they all seem to be the best of mates again and about to sign up to a free trade deal. All a coincidence I'm sure. The EU doesn't need access to the UK market blah blah blah...

Hermy

forgottenhills wrote: »

The EU had a no-blame open door to walk away from trade talks with the UK after the UK signaled that they would renege on the WA with their Internal Market Bill but it is telling that they did not even though this was a real insult and provocation.

What's most telling is that the EU is not inclined to rise to the bait and has remained focused on the issue at hand, namely a trade deal, while the UK has, among other things, indulged in insult and provocation.

PeadarCo

forgottenhills wrote: »

Well yes but they manufacture in quantity in order to achieve economies of scale and hence they have a vital need to export. To export you need to avoid tariffs and thus you need trade deals. (You also need to keep your currency from going too high and many argue that the Euro is a convenient mechanism for Germany to achieve this but that is a whole different thread in itself). In manufacturing the last few percent of your production run can be 100% of your profit after fixed costs and hence the Germans will be keen to hold on to a tariff free market into the UK, even if is only 5-6% of global sales. There is also the issue of JIT manufacturing of many products using components sourced in both the UK and the EU, the problem of identifying country of origin for customs purposes for some manufactured products, the interconnected nature and physical proximity of the economies that the EU never had to contend with in other trade talks.

The EU had a no-blame open door to walk away from trade talks with the UK after the UK signaled that they would renege on the WA with their Internal Market Bill but it is telling that they did not even though this was a real insult and provocation. Mutti Merkel had her say and now they all seem to be the best of mates again and about to sign up to a free trade deal. All a coincidence I'm sure. The EU doesn't need access to the UK market blah blah blah...

But here's the thing the EU wants a trade deal with the UK. A no deal would be bad for both sides. I don't think anyone in the EU has stated anything different. So the EU won't walk away as the EU wants a deal. Given that the trade deal that's being talked about doesn't cover services an area where the UK does have some competitive advantages there is no reason for the EU to walk away. A bare bones deal for the EU is still better than a no deal.

The UK can't walk away or at very least walk away without causing massive disruption for its economy. The UK making threats is nothing new in this process. In fact when you look back over the last couple of years it's normal. Why would the EU stop talking to the UK when after all the bluster they are going to agree to what the EU wants at the end of the day. There are numerous examples of this happening, the best of being the Withdrawal agreement which was the same deal under a different name that Johnson campaigned against.

Sam Russell

correct horse battery staple wrote: »

As someone who works in tech and had own company here, I find the idea of governments picking winners in tech laughable. It will just endup in corruption (which cynical me thinks is the plan), and incompetence just look at the Covid app here vs what happened in uk.

The best a government could do is set a level playing field and trade agreements especially with data privacy and ownership becoming a huge topic. Maybe a government could setup a venture type fund and ecosystem of expertise, connections, and tax breaks instead of grants/handouts. But that is not what Cummings proposes.

Being outside gdpr alone will hurt UK tech. UK is about to become as relevant in tech as Russia is, not relevant at all, with best and brightest leaving. I don't think troll factories are a good business model...

Look back at the dot com bubble.

Venture capitalists threw money at anyone who had a dot before a com and a sort of idea. All this money was burned at a furious rate that produced very very few successes ad a lot of very unhappy investors and quite a few rich fraudsters.

Entrepreneurs are like artists - they produce their best work when they are hungry.

Cummins plan for seeding tech start ups is folly and will spawn much corruption, as has already been seen from this Gov.

Capt'n Midnight

Sam Russell wrote: »

Because of poor productivity and high costs, they had difficulty making any profit, and had no willing investors, not even a Tory Gov. Eventually, they sold the whole BL for £10 to BAe who knew nothing about cars, and it ended up with BMW.

No, the Tories think the market is where money can be made - the casino that is the City of London..

Don't get me started.

Short version. North Sea oil money drove Sterling. Great for those holding assets and service companies down in the capital and their friends. Disaster for companies struggling with high interest rates and a high currency.

Rover was sold to Rolls Royce for way below the market value as a way of bypassing state aid rules. Huge asset that was sold off as soon as practicable in the circumstances.

Capt'n Midnight

forgottenhills wrote: »

I don't think that the demise of companies like Sinclair or Amstrad had much to do with UK governments. On the one hand computers became commoditised so that high margins disappeared and manufacturing moved to the most efficient and low cost manufacturing areas. Secondly these companies did not stay ahead of other companies in the market who innovated more so you saw the like of HP, Sony, Dell, Apple etc coming to the fore with innovation and strong management (not government intervention).

Here's the thing. Ireland ended up assembling something like 90% of EU computers at one point. And most of the support centres. So even without margins it can and was done.

Also had places like Intel, Digital in Galway and Amdahl in Dublin making higher value components.

But the UK had a lot of other tech companies that went under. The UK was the first to run commercial nuclear power stations, but now has to import the expertise and finance.

View

forgottenhills wrote: »

Well yes but they manufacture in quantity in order to achieve economies of scale and hence they have a vital need to export.

No, they are manufacturing in quantity due to the high demand for their products. They aren’t just doing so in the hope that people will buy their products if they drop the price enough.

forgottenhills wrote: »

To export you need to avoid tariffs and thus you need trade deals.

Avoiding tariffs is a bonus, not a necessity. China is one of Germany’s biggest export markets but there is no EU-China FTA.

forgottenhills wrote: »

(You also need to keep your currency from going too high and many argue that the Euro is a convenient mechanism for Germany to achieve this but that is a whole different thread in itself).

That’s just a Brexiter argument which assumes the financial markets can’t price a currency accurately.

It is also one that they never make about elsewhere in the world - You never hear them arguing that the US dollar is a convenient mechanism that boosts the profits of companies in California by keeping the currency of California low or that the same applies to companies in the London and SE England regions for a U.K. wide Sterling. If the poorer Euro regions are supposedly dragging down the value of the Euro then equally the poorer regions of the USA and of the U.K. are dragging down the value of their respective currencies.

forgottenhills wrote: »

In manufacturing the last few percent of your production run can be 100% of your profit after fixed costs and hence the Germans will be keen to hold on to a tariff free market into the UK, even if is only 5-6% of global sales.

There is also the issue of JIT manufacturing of many products using components sourced in both the UK and the EU, the problem of identifying country of origin for customs purposes for some manufactured products, the interconnected nature and physical proximity of the economies that the EU never had to contend with in other trade talks.

This argument has been made for ages and to date, there is no sign of Mercedes or BMW riding to the rescue for Brexiters and overriding the sovereign governments of the EU member states to achieve this wonderful deal.

forgottenhills wrote: »

The EU had a no-blame open door to walk away from trade talks with the UK after the UK signaled that they would renege on the WA with their Internal Market Bill but it is telling that they did not even though this was a real insult and provocation. Mutti Merkel had her say and now they all seem to be the best of mates again and about to sign up to a free trade deal. All a coincidence I'm sure. The EU doesn't need access to the UK market blah blah blah...

The EU countries certainly could have done that but that would just allow Brexiters to blame the failure of Brexit on a “vindictive” EU. This way the talks continue and when they fail to deliver everything the Brexiters promised, it is their fault.

tanko

forgottenhills wrote: »

Well yes but they manufacture in quantity in order to achieve economies of scale and hence they have a vital need to export. To export you need to avoid tariffs and thus you need trade deals. (You also need to keep your currency from going too high and many argue that the Euro is a convenient mechanism for Germany to achieve this but that is a whole different thread in itself). In manufacturing the last few percent of your production run can be 100% of your profit after fixed costs and hence the Germans will be keen to hold on to a tariff free market into the UK, even if is only 5-6% of global sales. There is also the issue of JIT manufacturing of many products using components sourced in both the UK and the EU, the problem of identifying country of origin for customs purposes for some manufactured products, the interconnected nature and physical proximity of the economies that the EU never had to contend with in other trade talks.

The EU had a no-blame open door to walk away from trade talks with the UK after the UK signaled that they would renege on the WA with their Internal Market Bill but it is telling that they did not even though this was a real insult and provocation. Mutti Merkel had her say and now they all seem to be the best of mates again and about to sign up to a free trade deal. All a coincidence I'm sure. The EU doesn't need access to the UK market blah blah blah...

Where can i find the details of the free trade deal that the EU and UK are about to sign up to??

Sam Russell

Capt'n Midnight wrote: »

Don't get me started.

Short version. North Sea oil money drove Sterling. Great for those holding assets and service companies down in the capital and their friends. Disaster for companies struggling with high interest rates and a high currency.

Rover was sold to Rolls Royce for way below the market value as a way of bypassing state aid rules. Huge asset that was sold off as soon as practicable in the circumstances.

Rover was sold to British Aerospace, (not Roll Royce - that was sold to VW), where it should have been sold to Honda who had a long standing relationship with BMC {They were one of few who paid licence fees to BMC for the UJ design use in the Mini]. Rover was then sold to BMW, who then sold the remnants and a fw brand names to the Chinese.

MT was a shopkeeper's daughter, whose understanding of economics were informed by the shopkeepers arithmetic - sell for more than it cost. That does not work with the National Exchequer.

Jizique

Sam Russell wrote: »

Rover was sold to British Aerospace, (not Roll Royce - that was sold to VW), where it should have been sold to Honda who had a long standing relationship with BMC {They were one of few who paid licence fees to BMC for the UJ design use in the Mini]. Rover was then sold to BMW, who then sold the remnants and a fw brand names to the Chinese.

MT was a shopkeeper's daughter, whose understanding of economics were informed by the shopkeepers arithmetic - sell for more than it cost. That does not work with the National Exchequer.

Bentley was sold to VW and RR Motors to BMW

Sam Russell

Jizique wrote: »

Bentley was sold to VW and RR Motors to BMW

OK, got it the wrong way round - apologies.

Professor Moriarty

Sam Russell wrote: »

OK, got it the wrong way round - apologies.

Your point remains though.

Capt'n Midnight

Sam Russell wrote: »

Rover was sold to British Aerospace, (not Roll Royce - that was sold to VW),

Thanks, I had thought it was Rolls Royce the jet engine makers. Rover used to make jet engines once upon a time.

BMW bought the name Rolls Royce and VW bought the name Bentley and the factory.

IIRC it was cheaper for BMW to buy Rover than develop a new mid range model. Legend has it that that during board meetings back in Germany Rover soon got the nickname "The English Patient"



Still be interesting to see what the new tariffs on the White Ford Transit van beloved of small businesses will be, seeing as how they are made in Turkey these days.