Brexit and the waning days of the United Kingdom

[Tamas]

But come on. NOTHING has happened yet, except a 20% devaluation of the pound which is like a 20% boost for exporters' income.  There is no other difference between pre-vote UK and current one. We don't even know, until hopefully just later today, what the Brexit plan is.

[The Larch]

Agree that industrial output is not a great indicator for the British economy, while the UK has access to the common market it will mostly be business as usual. One would think that foreign investment could be a better indicator, in case multinationals think twice about making big investments in the UK in case access to the common market is lost after Brexit.

In a different development:

Pound sterling slumps below euro

Against US dollar, the pound is 30 per cent lower than its average


The latest slump in the value of the pound means some travellers flying from Britain today are paying more than £1 for each euro - and a McDonald's coffee in Switzerland will cost over £4.

After sterling fell in overnight trading in Asia, Moneycorp bureaux de change at Gatwick airport are charging £102.69 for €100 — valuing each pound at just 97.4 euro cents.

The inter-bank rate was around €1.14 for £1, and $1.20. Research by The Independent on the value of the pound over the past 15 years shows an average of €1.38 and $1.70. Against the euro, the pound is 17 per cent below the average, while against the dollar the present value is 30 per cent down.

Sounds like a good time to visit the UK for tourists. 

[Gups]

Before the vote we were all (including me) predicting a series crisis of confidence in the economy in the event of a Brexit vote. We should have the honesty to admit we were wrong.

I'm glad I was and hope I am also wrong about the likely effects of Brexit when it actually happens

[Josquius]

Before the vote we were all (including me) predicting a series crisis of confidence in the economy in the event of a Brexit vote. We should have the honesty to admit we were wrong.

I'm glad I was and hope I am also wrong about the likely effects of Brexit when it actually happens

Before the vote we were predicting brexit going ahead on a much quicker schedule.
If things are still fine in a few years then I'll admit I was wrong. Really think all signs suggest its just a slow burner.

Agree that industrial output is not a great indicator for the British economy, while the UK has access to the common market it will mostly be business as usual. One would think that foreign investment could be a better indicator, in case multinationals think twice about making big investments in the UK in case access to the common market is lost after Brexit.

In a different development:

Pound sterling slumps below euro

Against US dollar, the pound is 30 per cent lower than its average


The latest slump in the value of the pound means some travellers flying from Britain today are paying more than £1 for each euro - and a McDonald's coffee in Switzerland will cost over £4.

After sterling fell in overnight trading in Asia, Moneycorp bureaux de change at Gatwick airport are charging £102.69 for €100 — valuing each pound at just 97.4 euro cents.

The inter-bank rate was around €1.14 for £1, and $1.20. Research by The Independent on the value of the pound over the past 15 years shows an average of €1.38 and $1.70. Against the euro, the pound is 17 per cent below the average, while against the dollar the present value is 30 per cent down.

Sounds like a good time to visit the UK for tourists. 

Foreign investment wise things are interesting IMO.
Foreign companies are keen to come in and buy up British firms while the pound is low... but they are faced with two competing factors 1: They know the pound will get lower, and 2: they know their competition is looking to do the same.
So some are already going ahead and buying British shares (ARM is the huge one) whilst others are holding steady.

[Tamas]

Yeah. I am embarking on the quest of building a life and family out of almost nothing in the UK, I really, really, really want the opportunity to be proven wrong about Brexit.

But right now, everyone is waiting to actually hear what "Brexit" even means. Then we can see the reaction, and see if the "scaremongers" were wrong.

[Richard Hakluyt]

Before the vote we were all (including me) predicting a series crisis of confidence in the economy in the event of a Brexit vote. We should have the honesty to admit we were wrong.

I'm glad I was and hope I am also wrong about the likely effects of Brexit when it actually happens

I find the certainties expressed by both sides somewhat irritating. I will come out right now and say that I have no idea how the economy will perform in 2018 and onwards.

I'm in good company there, Mark Carney doesn't seem to know either :

http://www.bbc.co.uk/news/business-38644963

[The Larch]

I must also admit that I thought that the UK economy would have been hit harder in the short term because of Brexit (although the devaluation has been heavy, I don't know if it was expected or not), over here during the euro crisis we were hammered down with the mantra that "uncertainty is bad for business" and every downturn in the stock exchange was blamed on that, I though that the uncertainty would have hit the UK economy harder. I mean, nobody knew what a risk premium for national debt was until then, and we ended up tracking it almost on a real time basis in the news, which was ridiculous. How's British public debt performing?

[Zanza]

Is there a statistic that shows British PPP per capita in USD before and after Brexit? I would imagine that the decline of the pound combined with the high amounts of imports would have some dampening effect on this measure? It would show that while the economy may still be growing in nominal GBP terms, the British have already become quite a bit poorer due to the Brexit-induced value loss of the GBP.

[Zanza]

I must also admit that I thought that the UK economy would have been hit harder in the short term because of Brexit (although the devaluation has been heavy, I don't know if it was expected or not), over here during the euro crisis we were hammered down with the mantra that "uncertainty is bad for business" and every downturn in the stock exchange was blamed on that, I though that the uncertainty would have hit the UK economy harder.

Same for me. I would have expected the uncertainity to have a more immediate effect. However, I could still imagine a creeping effect ongoing right now. As a company I would for example withhold investments into the UK that are not meant for the British domestic market until there is a clearer picture of Brexit.

I mean, nobody knew what a risk premium for national debt was until then, and we ended up tracking it almost on a real time basis in the news, which was ridiculous. How's British public debt performing?

That's actually an interesting question. Britain has a gigantic current account deficit, i.e. relies on foreigners to put capital into the UK. With the GBP losing value, it might be harder to raise that capital in the midterm. But as far as I know the government also borrows heavily directly from the Bank of England, i.e. has debts to itself. Will be interesting if those eventually trickle down as inflation.

[Richard Hakluyt]

The GDP figures are in volume terms https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/secondestimateofgdp/quarter3julytosept2016 .

Inflation has increased to 1.6% and is expected to go higher; otoh the target is 2% so one should possibly not get too excited by this.

Nominal GDP must be somewhere between 3 and 4% but I'm having trouble finding a good reference for that.

[Liep]

May's speech starts of with:

"[The British people] voted to leave the EU and embrace the world" Did they?

[Tamas]

Catchphrase of the month will be "Global Britain"

http://www.bbc.co.uk/news/live/uk-politics-38635035


Apparently the Leave voters did not want the UK to turn inward, but to make it properly global.

[Duque de Bragança]

Yeah. I am embarking on the quest of building a life and family out of almost nothing in the UK, I really, really, really want the opportunity to be proven wrong about Brexit.

Austria must have been really baaad for you to not move there. 

[Tamas]

Yeah. I am embarking on the quest of building a life and family out of almost nothing in the UK, I really, really, really want the opportunity to be proven wrong about Brexit.

Austria must have been really baaad for you to not move there. 

Meh. They speak German and they have giant red stars on buildings in Vienna.

[Duque de Bragança]

Yeah. I am embarking on the quest of building a life and family out of almost nothing in the UK, I really, really, really want the opportunity to be proven wrong about Brexit.

Austria must have been really baaad for you to not move there. 

Meh. They speak German and they have giant red stars on buildings in Vienna.

German? Syt complains quite a bit about the dialects there, not exactly Standard German; as for the Red Stars, don't mention it or Tyr will become jealous.