Nissan to build a new plant.

HAMISH_MCTAVISH

The pound's devaluation rebalances the economy by lowering people's living standards - we all become poorer - which is exactly the same thing as taking a pay cut to increase competitiveness.

Inflation will now start to rise faster than wages - we will suffer real terms wage deflation - which helps exports to other countries that have not taken these cuts to their living standards and income.

We get poorer - but we theoretically may also sell more stuff at a cheaper price - which could soften the blow in the short term but also creates more problems than it solves.

globalds

steampowered wrote: »

Of course there are benefits to having a lower pound, but pretending that it is 100% positive and that there is no negative impact is just ridiculous.

The value of the pound simply reflects what the international investment community believe the British economy is worth. Your salary, for example, is now worth significantly less than what it was worth a few months ago.

Like it or not we do have to import things and buy things denominated in foreign currency - such as fuel, petrol, technology, computer software, holidays, cars, bananas and countless other things. Those are all going to be more expensive.

Saying the drop in the value of the pound is great news is essentially the same thing as saying that it would be good for everyone to have their wages reduced to improve the competitiveness of our exports and boost productivity. Yes that would be true, and it is also true that as a country our productivity is low and wage bill is high. But there is an obvious negative impact on people's living standards if you reduce their wages (this is essentially exactly what has happened, as the real value of a £ wage has dropped).

The Pro's far outweigh the Con's
Not only does the wage bill go down ...But also the incentive to develop efficiencies and use alternatives goes up whether it is energy usage or to source imported goods more locally.

Your arguments don't make any sense when considering the long term .Whereas an overvalued currency leads an economy to drift further away from realistic practices. A healthy currency should reflect the activity of its economy and if it is overvalued it should be able to adjust. Fuel is not at an all time high, food prices have not shifted dramatically . The lowest have recently had a large pay rise due to the new living wage for 3 million people.

If the Brexit vote has caused the world to look at our spending habits as a nation as unsustainable then a drop in the value of the pound is probably the kindest way of being told an uncomfortable truth and allowing the UK to work towards a resolution .. Reduce our imports ...Or can you think of an alternative that helps to fix things and is shared by just about everyone in equal measure to the amount they hold in Sterling ?

Yamumuk

Everything that comes out of the earth that ends up in a Nissan (oil for plastics and upholstery/minerals and metals for electronics and computers/steel etc.) will now cost more directly due to weak pound so those Nissan's will cost more in the showroom and may not sell as well in general.

Yamumuk

Conrad wrote: »

Precisely the problem, too much reliance on imports. I want prices to go to force us to think more carefully before buying. Many UK firms are filling the space left by costly imports.


Our services exports have no import cost.

Expect countries we export to, to do the same, it works both ways. Nationalism and protectionism tends to breed nationalists and protectionists. Lots of losses likely made on our exports too with this approach.

Graham_Devon

HAMISH_MCTAVISH wrote: »

The pound's devaluation rebalances the economy by lowering people's living standards - we all become poorer - which is exactly the same thing as taking a pay cut to increase competitiveness.

Inflation will now start to rise faster than wages - we will suffer real terms wage deflation - which helps exports to other countries that have not taken these cuts to their living standards and income.

We get poorer - but we theoretically may also sell more stuff at a cheaper price - which could soften the blow in the short term but also creates more problems than it solves.

Sorry Hamish, but you have ignored this time and time again. Will you respond this time?

Since when were you worried about inflation being higher than the average Joes income?

I've never seen you post anything of the sort in my time here, and we've lived through a few years of inflation being higher than income increases.

I've only seen you post the exact opposite - i.e. inflation is a price worth paying for the economic benefit of lower interest rates, investment etc.

Now, you appear to have turned on the head of a nail and seem to be all concerned over the wage rises of the lower end worker....worried about their living costs, worried about their food costs.

What's changed?

steampowered

Or can you think of an alternative that helps to fix things and is shared by just about everyone in equal measure to the amount they hold in Sterling ?

Your post assumes that the pound was overvalued before the Brexit vote.

By extension you must also think the pound was overvalued for the last 31 years so, and that people's living standards have been unsustainably high and that everyone now needs to cut back.

I respect that view but I don't agree. The pound is a floating currency, so I think it is a dangerous game to think that you knew the value of the pound better than the world's investment professionals (and if you truly did think better you could have made money by shorting the pound).

It is true that a high pound damages manufacturing as low-value manufacturers can't keep up with high-value services, but I don't agree with the world view which says we should prioritise manufacturing jobs over higher-value service jobs at the cost of damage to people's living standards.

Fuel is not at an all time high, food prices have not shifted dramatically

That's because retailers purchase fuel and food several months in advance under advance contracts. We'll begin to see the impact come through over the coming months.

It seems inevitable that fuel will go up. Oil is priced in USD.

I suppose food produced here will be the same price, but anything imported will naturally go up in price.

Yamumuk

michaels wrote: »

But upgraded to max 600k cars per year from 500k - 100k cars per year is not a small 'factory' in its own right.

The cynic in me wonders how much we taxpayers are paying (or garanteeing) for the priviledge of Renault-Nissan boosting their profits.

I suspect subsidies being paid or Brexit is not actually happening or at least not happening on anything close to how Brexiters think and want... if they could ever actually be sure about whether what they think and want is one and the same thing and/or predict what the outcomes could be. Which they obviously cannot because to this day there is no information available other than Brexit means Brexit which will be like a sword May will have to fall on.

She might as well have said "Brexit means whatever"

HAMISH_MCTAVISH

Graham_Devon wrote: »

What's changed?

The Global Financial Crisis left us with no choice - we had to minimise the damage from the fall-out as best we could - and those actions then were right.

But over the last couple of years the country was finally recovering from the biggest and deepest recession since the Great Depression.

After many long years of below inflation pay rises, we'd finally turned the corner, inflation was low, wages were rising strongly, people's standards of living were starting to rise again.

And that has now been reversed - pointlessly - with the self inflicted economic damage now being wrought on the nation.

HAMISH_MCTAVISH

globalds wrote: »

The Pro's far outweigh the Con's

Nonsense.

The pound's devaluation rebalances the economy by lowering people's living standards - we all become poorer - which is exactly the same thing as taking a pay cut to increase competitiveness.

Inflation will now start to rise faster than wages - we will suffer real terms wage deflation - which helps exports to other countries that have not taken these cuts to their living standards and income.

Devaluation hurts everybody - and only a few gain - that's the very definition of the Cons far outweighing the Pros.

Conrad

Talking rubbish again by only thinking the obvious. Look at the history of devaluation aside from numpty examples such as Zimbabwe.

You will find British sourcing and production picks up, and yes we can provision a great deal more of our need than we do.

You are also ignoring the hard currency we earn by selling more competitive services and goods abroad. This all makes us genuine wealth, not illlusory numpty wealth based on importing underpants and letting out houses