If we vote for Brexit what happens

buglawton

peter_we wrote: »

Every commodity is priced in USD, starting with oil.
UK farmers can export their goods to get a better price, so UK consumer will have to match that price.
Food and manufacturing use commodities which will rise in price, which will increase costs for service providers.
Thats how inflation works.

So the histories of UK 1970s inflation and 1990s sudden £ value drop over 1 day are to be repeated, but this time concurrently?
Hmm somehow I don't think so.
But I do remember some things from the inflationary 70s and 80s: Pay rises used to automatically land on your desk with not so much as a performance review. That hasn't been happening lately for some reason...

Thrugelmir

lisyloo wrote: »

Perhaps you're in a comfortable position, however there are people who want to get jobs or are coming to end of a lease on a commercial property who want to make decisions. Whole countries and e rest of Europe want to know where they stand as well as individuals and businesses.
I don,t think it should be rushed, but I do understand the desire.

Hardly, I've been in the front line of the austerity drive for 4 years.

As with anything it all takes time. Far more complex than people imagine. The EU isn't in a position to lecture others either. When you consider how long it takes them to make a decision. For the vast majority Brexit is just something that will dealt with in the stride of daily business life. Just like any other event.

AnotherJoe

peter_we wrote: »

Every commodity is priced in USD, starting with oil.
UK farmers can export their goods to get a better price, so UK consumer will have to match that price.
Food and manufacturing use commodities which will rise in price, which will increase costs for service providers.
Thats how inflation works.

I'm not sure thats true, and no one said prices would not rise. Just that your ludicrously simplistic model where the pound dollar change directly relates to inflation was patently and provably wrong. This can be proven simply by cooking at a graph of dollar/pound vs inflation, or reflecting that in recent periods where the pound got stronger against the dollar, say by 5%, we didnt get deflation of 5%. There are numerous other factors at work. This ought to be blindingly obvious.

If you dont believe me, take it up with the BoE who say (in summary)

Using very rough rules of thumb, the BoE has traditionally estimated that the pass-through from exchange rate movements to UK import prices is roughly 60% to 90%, and the import intensity of the consumer price index (CPI) is about 30%.6 This generates an overall pass-through coefficient of around 20% to 30%.7 In other words, the 17% appreciation of sterling that has occurred since the spring of 2013 would reduce the level of the consumer price index by about 3 to 5%.

So, that was the Pound rising. In the opposite direction you'd expect it to work pretty much in reverse, 17% drop, inflation rises by 3 to 5%.Not 17% drop 17% inflation.And thats only for certain economic sectors, not the whole economy.
This by the way is from a long and complex paper which I've butchered to make that summary, but without doubt the end result is what I said, exchange rate change does not equal inflation / deflation.
As this talk has shown, this insight on the importance of “noting” is also critically important when analysing how exchange rate movements affect inflation and therefore monetary policy. Some of our most basic assumptions and priors do not do a particularly good job in explaining recent pass through in the UK. More specifically, sectors with a higher imported content do not systemically appear to be more sensitive to sterling’s movements. Sectors that are more tradable and face greater international competition show only limited evidence of greater sensitivity to sterling’s moves. And the extent of pass through from sterling’s movements to both CPI inflation as well as import prices has changed over time. This has created substantial challenges to predicting how recent exchange rate movements will affect inflation in the future.

http://www.bankofengland.co.uk/publications/Pages/speeches/2015/839.aspx

Conrad

Frexit is a real possibility, a new poll reveals 61% of Frenchies have an unfavourable view of the EU and o er 30% are polling for Le Pen with momentum in her favour in poll after poll.

At least Britain has grasped the nettle and is ahead of the pack, so smart investors will take comfort from this. Sterling was over valued as the IMF kept pointing out, and making us less competitive, good news it's settling at a lower peg.

Kohoutek

Conrad wrote: »

Sterling was over valued as the IMF kept pointing out, and making us less competitive, good news it's settling at a lower peg.

GBP is a free floating currency, it's not pegged. So it could go lower or higher.

buglawton

UK car production up 7% in July YoY, first time over 1m in a year for around 10 years if I heard the radio correctly.

glasgowdan

http://nethouseprices.com/news/show/2078/traditional-pensions-are-failing-could-property-be-the-answer

mwpt

Conrad wrote: »

Frexit is a real possibility, a new poll reveals 61% of Frenchies have an unfavourable view of the EU and o er 30% are polling for Le Pen with momentum in her favour in poll after poll.

At least Britain has grasped the nettle and is ahead of the pack, so smart investors will take comfort from this. Sterling was over valued as the IMF kept pointing out, and making us less competitive, good news it's settling at a lower peg.

"Peg"? I think you're using a random term in the wrong way.

You know how you perceive alternate views as negative? The way I have your posts in my mind is that whatever happens, *must* be the right thing right now, because brexit.

Whatever happens is good, because we voted brexit. Currency drops? Great news, it was wrongly priced. Stock market drops. Great news, it was wrongly priced. Stock market rises a week later. Great news, shows our economy is doing well. Economic indicators down? Totally worth it, we'll come out stronger the other side, only cowards fear change. Economic indicators up? See, markets love our decision.

I mean, positive is good and all, but it makes for very bland discussion when the only argument is "must be right because brexit".

chucknorris

mwpt wrote: »

Whatever happens is good, because we voted brexit. Currency drops? Great news, it was wrongly priced. Stock market drops. Great news, it was wrongly priced. Stock market rises a week later. Great news, shows our economy is doing well. Economic indicators down? Totally worth it, we'll come out stronger the other side, only cowards fear change. Economic indicators up? See, markets love our decision.

I mean, positive is good and all, but it makes for very bland discussion when the only argument is "must be right because brexit".

That is absolutely correct, I know 'Brexit' was the wrong way to go, you only have to look at Sunderland's first two results, they failed to win one of their first 2 games, that hasn't happened since last season! QED!

Seriously though, we won't actually know for quite a while yet, but I'm happy enough with what has happened so far, but it is way too early to be even thinking of forming a picture of what the result of Brexit might be, we just don't know, but at least the sky hasn't fallen in yet.

Castle

chucknorris wrote: »

That is absolutely correct, I know 'Brexit' was the wrong way to go, you only have to look at Sunderland's first two results, they failed to win one of their first 2 games, that hasn't happened since last season! QED!

But at least they have a British manager; far better than those European managers such as Wenger, Mourinho, Klopp, Guardiola, Ranieri and Koeman.:)