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BREXIT

Old 5th Mar 2020, 09:50
  #4901 (permalink)  
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POLITICO (Brussels):https://www.politico.eu/article/brex...re-to-be-done/

Whisper it … an EU-UK deal is there to be done
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Old 5th Mar 2020, 09:56
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Originally Posted by ORAC View Post
POLITICO (Brussels):https://www.politico.eu/article/brex...re-to-be-done/

Whisper it … an EU-UK deal is there to be done
No doubt a deal is there to be done, but how good it will be from the perspective of manufacturing and financial services, the former vital if the Conservatives are to retain their newly found supporters in the Midlands and the North, and the latter for the prosperity of London and the Southeast, remains to be seen.

I don't believe that Johnson himself has any principals, other than his own survival and is, as the article suggests, likely to make some concessions left to his own devices. However puppet master in chief Cummings I believe is much more of an ideologue and really doesn't care a sh1t about voters, or the economy - just his pet project. He is on the same page as Farage.
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Old 5th Mar 2020, 10:15
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Cummings doesn't have voters. That's the point and problem
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Old 5th Mar 2020, 12:12
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L'n S - Your demonstrated keyboard dexterity is impressive; I am less certain of your assessment of the value of biographies versus AUTObiographies (just to provide a 'Witter-feed'!). I'm unaware of an auto version for the Buffoon (and would avoid it anyway) but the biography (apparently) is less than complimentary (true to life?)
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Old 5th Mar 2020, 15:13
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Originally Posted by ATNotts View Post

The direction of travel since June 2016, aside a few bumps in the road, up until Johnson's victory in December has been a stead decline in sterling. The trend line is downwards.

Isn't that what everyone wanted?

The IMF said the pound's level in 2015 was between 5pc and 20pc "above the level consistent with fundamentals and desirable policy settings".
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Old 5th Mar 2020, 19:41
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Well, since the UK imports pretty well all it's consumer goods from the outside world, especially China and the EU, a dramatic fall in sterling would inevitably lead to consumer price rises, and a consequent reduction in consumer confidence that could possibly lead to recession. Remember our economy is build upon consumption not manufacture. The next logical step would be a rise in interest rates to bolster the pound. Remember the early 60s, Wilson, devaluation and "the pound in your pocket"?

We don't really want to get back there do we? Perhaps some do.
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Old 5th Mar 2020, 22:15
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Originally Posted by ATNotts View Post
Well, since the UK imports pretty well all it's consumer goods from the outside world, especially China and the EU, a dramatic fall in sterling would inevitably lead to consumer price rises, and a consequent reduction in consumer confidence that could possibly lead to recession. Remember our economy is build upon consumption not manufacture. The next logical step would be a rise in interest rates to bolster the pound. Remember the early 60s, Wilson, devaluation and "the pound in your pocket"?

We don't really want to get back there do we? Perhaps some do.

But as the IMF said, you are not going to be able to re-balance the economy away from a reliance on cheap imports with an overvalued Pound. Of course that assumes you want to re-balance the economy in the first place.

If you look at Germany for instance they have had an under-valued currency for the last 20 years thanks to the Euro and they have a pretty vibrant manufacturing sector in large part because of it. Now many in the UK say (often) than we need to rebalance away from services back to manufacturing and be more like the Germans but that simply will not happen if your currency is consistently over valued.
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Old 6th Mar 2020, 05:38
  #4908 (permalink)  
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Taxpayers rejoice ! Money no object to achieve Holy Grail of " taking back control !" and "regaining our, never actually relinquished but sounds suitably jingoistic , sovereignty !" ......a true bargain for the British !.........a mere £4bn !.......I'm sure we all appreciate this expenditure with the utopia that awaits once the EU have been forced to capitulate .....

https://www.bbc.co.uk/news/uk-politics-51762243

Last edited by Krystal n chips; 6th Mar 2020 at 08:58.
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Old 6th Mar 2020, 08:45
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Originally Posted by cashash View Post
But as the IMF said, you are not going to be able to re-balance the economy away from a reliance on cheap imports with an overvalued Pound. Of course that assumes you want to re-balance the economy in the first place.

If you look at Germany for instance they have had an under-valued currency for the last 20 years thanks to the Euro and they have a pretty vibrant manufacturing sector in large part because of it. Now many in the UK say (often) than we need to rebalance away from services back to manufacturing and be more like the Germans but that simply will not happen if your currency is consistently over valued.
Germany has had a vibrant manufacturing sector for donkeys years, certainly not just since the advent of the Euro, largely because a) the trades unions weren't hell bent on killing it off, partly because b) German management has a rather less adversarial approach to the management / staff relationship, and c) because the German federal and state governments have had a rather more enlightened attitude towards the important of manufacturing to a balanced economy.

Sadly, no matter what the exchange rate the UK has missed the boat on rejuvenating it's manufacturing and re balancing it's economy, not least because the UK has successfully (?) divorced itself from it'a major trading partners, and anyway, if anyone, say Tesla (dream on!!) wanted to build a new factory they'd be thwarted at every step by local authority planning committees and NIMBYs. The UK runs it's economy of personal debt, and borrowing cash on the basis of how much your house is worth - along with windfalls from compensation claims.

It isn't and never has been any way to run an economy, but that's the way we persist in doing it.
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Old 6th Mar 2020, 11:26
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Originally Posted by cashash View Post
<snip>
If you look at Germany for instance they have had an under-valued currency for the last 20 years thanks to the Euro and they have a pretty vibrant manufacturing sector in large part because of it. Now many in the UK say (often) than we need to rebalance away from services back to manufacturing and be more like the Germans but that simply will not happen if your currency is consistently over valued.
And the Deutsche Mark was undervalued too? How much did the Pound lose since the beginning of the 70s? Still overvalued?
If you want to find out why Germanys manufacturing is more successful than Britains, look at productivity, education level of workers, behaviour of unions, quality of managers, dedication to quality,...
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Old 6th Mar 2020, 12:21
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Thormos, the German trade unions and the manufacturing management learned hard lessons in the 1980s and 90s , its a shame that the same lessons weren't learned in the rest of Europe especially the UK.

However,let's not forget that, as recently as 2002, Germany was the "Sick Man of Europe" and was saved by the effective de-valuation of the currency when the Euro was adopted although now the "effective" GBP/DM exchange rate is back to where it was in 1998.

Regarding manufacturing as a percentage of GDP I was surprised to find that the UK still derives 20.2% of it's GBP from manufacturing compared to the global average of 30.0%, Germany-30.7%, Switzerland-25.6%, Italy-23.9%, France-19.5% and the USA-19.1%

Last edited by LowNSlow; 6th Mar 2020 at 12:32.
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Old 6th Mar 2020, 12:27
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Originally Posted by LowNSlow View Post
Let's not forget that, as recently as 2002, Germany was the ...and was saved by the effective de-valuation of the currency when the Euro was adopted although now the … is back to where it was in 1998.
Let's not forget that Germany had to adopt a derelict country with 17 million people…
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Old 6th Mar 2020, 12:34
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ThorMos; that was indeed a huge economic challenge that still echoes through the corridors of power.

I don't think there are many other countries who could have made as much of a success of it as Germany has regardless of the outstanding problems.
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Old 6th Mar 2020, 15:02
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Originally Posted by ThorMos View Post
And the Deutsche Mark was undervalued too? How much did the Pound lose since the beginning of the 70s? Still overvalued?
If you want to find out why Germanys manufacturing is more successful than Britains, look at productivity, education level of workers, behaviour of unions, quality of managers, dedication to quality,...
Try reading again - I never said that the only reason for Germany having a large manufacturing sector was the value of their currency. But you would be a fool to claim that having an consistently undervalued currency has not helped.

The IMF again..
Real Exchange Rate

Assessment. The EBA REER Level model yields an undervaluation of 16 percent, whereas the undervaluation implied by the assessed CA gap using standard trade elasticities is in the range of 12 to 27 percent.3 Taking these estimates into consideration and the 2018 real appreciation, staff assesses the 2018 REER to have been undervalued in the range of 8 to 18 percent.



link
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Old 6th Mar 2020, 15:59
  #4915 (permalink)  
 
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From Today's FT. This is only part of the article. Many on here might want to review their doom and gloom posts re the Nissan factory.
But probably will just deny they made any such comments.


Nissan is investing £400m in its Sunderland car plant in preparation to build future models at the site, despite the company’s warnings that tariffs after Brexit will endanger the facility’s exports. On Friday the Japanese carmaker unveiled a new £52m press line, which it has installed ahead of building a new version of the Qashqai, the family sport utility vehicle that accounts for two-thirds of the site’s output. Despite pledging in late 2016 to make the next Qashqai model in the UK, the company has never before detailed its investments in the site for the new model, which is expected to begin production around the end of this year. The majority of the £400m investment, which is supported by an £11m government grant, has already been spent, people familiar with the situation say. Installation of the press line began 18 months ago, the company said on Friday. The spending comes despite Nissan repeatedly warning tariffs with Europe will “jeopardise” the business model that involves exporting 70 per cent of the vehicles made at the site to the EU.
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Old 6th Mar 2020, 16:50
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Originally Posted by cashash View Post
Try reading again - I never said that the only reason for Germany having a large manufacturing sector was the value of their currency. But you would be a fool to claim that having an consistently undervalued currency has not helped.
<snip>
Then try writing again, you did not mention that an undervalued currency is just 'one of the reasons'.

The value of the Pound in 1960 was DM11,70 (€5,98), today it is at DM2,25, €1,15. The UK manufacturing should be in an unbelievable state.
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Old 6th Mar 2020, 17:05
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Originally Posted by The Nip View Post
The spending comes despite Nissan repeatedly warning tariffs with Europe will “jeopardise” the business model that involves exporting 70 per cent of the vehicles made at the site to the EU.
Car purchases, financing, servicing and insurance are very big parts of the UK economy (and 30% their Sunderland production line apparently), so there has to be a business case for continued production within the UK. Another is that people need jobs to buy cars. Help create the market, sell to the market.
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Old 6th Mar 2020, 17:13
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Originally Posted by ThorMos View Post
Then try writing again, you did not mention that an undervalued currency is just 'one of the reasons'.

The value of the Pound in 1960 was DM11,70 (€5,98), today it is at DM2,25, €1,15. The UK manufacturing should be in an unbelievable state.
I apologise if I was not clear enough but we all know the history of the past 60 years. But in the here and now if you have 2 car factories, one in Sunderland and one in Stuttgart with one location exporting using a currency that is 15% overvalued and one exporting using a currency that is 15% undervalued, then I would humbly suggest that the car plant in Stuttgart is getting the better of the arrangement.
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Old 6th Mar 2020, 17:13
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Originally Posted by ThorMos View Post
The UK manufacturing should be in an unbelievable state.
It is actually...

They're just trying to make up excuses to justify the undeniable fact that the UK is not able to compete with Germany in car manufacturing.
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Old 6th Mar 2020, 17:18
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Originally Posted by ThorMos View Post
And the Deutsche Mark was undervalued too? How much did the Pound lose since the beginning of the 70s? Still overvalued?
If you want to find out why Germanys manufacturing is more successful than Britains, look at productivity, education level of workers, behaviour of unions, quality of managers, dedication to quality,...
Investment and longer-term planning have been greater in Germany too. The state sector is bigger and infrastructure in general is clearly in better shape. Some years ago I read that more days were lost to strikes in DE than in the UK, contrary to popular perception. But the social contract keeps things bubbling along without the kind of upheavals the UK has faced in recent decades. Lots of badly paid work and increasing working poverty in DE too though. Can’t buy a nice car and save for your pension when the wages barely cover the cost-of-living. The “middle” is sagging.
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