Brexit, The Economy and House Prices (Part 2)

A_Medium_Size_Jock

And even James Dyson - whilst acknowledging some concerns - reckons that if Brexit talks fail it will be "no big deal".

I am very confident,’ he says, ‘in our ability to negotiate trade deals outside Europe — with Japan, Australia, China, America and so on — because it’s very easy. It’s just us negotiating with them. It’s very, very straightforward and you don’t have to satisfy 27 other people.’ The implication is that a deal with the EU will be harder. He confirms: ‘My view is we almost certainly won’t get a deal. We’ll have to walk away.’
But Dyson doesn’t think that matters. Falling back on World Trade Organisation rules would be ‘no big deal’, he says, because for him it would just lead to a 3 per cent tariff. ‘Frankly,’ he says, ‘lowering corporation tax a few percentage points would pay for that.’

https://www.spectator.co.uk/2017/07/james-dyson-on-brexit-trade-and-being-britains-biggest-farmer/


Three different viewpoints suggesting Brexit may not be such a big deal.

Thrugelmir

ilovehouses wrote: »

What are you going on about? We buy goods from people best placed to produce them and they buy the manufactures we're best placed to produce. It's not zero sum - globalisation adds value - it's win win.

Simplistic answer. Why were Cadbury's UK manufacturing operations closed down and moved to Poland after the takeover by a US Corporation?

Likewise without jobs the very same people previously employed by Cadburys wouldn't have the money to spend on chocolate irrespective of the manufacturer. US Corporations have no social conscience. Their loyalty to is to their remuneration and shareholder returns.

A_Medium_Size_Jock

ilovehouses wrote: »

It's easy to be sanguine about not getting a trade deal when tariffs on your products are only 3% and could easily be covered by a cut in corporation tax (nudge nudge).

Ah.
Then should I perhaps not mention that cutting corporation tax also seems to lead to increasing tax revenue?
There may well be a balance point but it does seem that it's a tradeoff worth pursuing.
That's without even considering alternative possibilities regarding tariffs.

UK corporation tax receipts surged to a record high during the past financial year despite the main rate falling from 30 per cent in 2008 to 19 per cent today.

https://www.ft.com/content/ca3e5bd2-2a7e-11e7-9ec8-168383da43b7

Tromking

ilovehouses wrote: »

That possibility isn't being disputed but let's think more deeply how it would work in the example at hand.

I reckon the tariff for importing a vacuum cleaner into the EU with a self contained electric motor of 1500W or less is 2.2%.

So here's the plan. We leave the EU without a trade deal. Dyson sends vacuum cleaners to the EU and her consumers now have to pay 2.2% duty. Dyson compensates the EU consumer and takes a margin hit. The government compensates Dyson by reducing corporation tax and raises more tax as a result. I think I've just invented the perpetual motion machine!

When something sounds too good to be true....

Dyson 's products are made in the Far East, I get your point though.

Thrugelmir

ilovehouses wrote: »

It's not rocket science. The Polish factory can produce chocolate more efficiently and cheaply than their UK counterparts.

According to this statement then the UK is bound to decline wealth wise in the future. As there's a multitude of places where products can be manufactured cheaper. For no other reason than overheads are lower, including of course labour.

What line of business do you work in?

Thrugelmir

Tromking wrote: »

Dyson 's products are made in the Far East, I get your point though.

What electrical goods does the UK still manufacture at all?

always_sunny

Thrugelmir wrote: »

According to this statement then the UK is bound to decline wealth wise in the future. As there's a multitude of places where products can be manufactured cheaper. For no other reason than overheads are lower, including of course labour.

What line of business do you work in?

It's not necessarily true... however if the UK wants to compete then [realistically] the options are limited, i.e. provide quality or compete with costs.

A disadvantage of the UK is that wages are [already] high for manufacturing, so attracting locals to work in that industry might be a challenge. Retention is already a problem.

What does the UK want to be? From a wealth perspective, the country wasn't faring too bad within the EU really.

fatbeetle

Tromking wrote: »

Dyson 's products are made in the Far East, I get your point though.

From the FT:

Yet the company has not only endured but flourished. It has grown from a start-up with four engineers and a few staff answering calls on one phone in 1993 to an operation employing 6,000 in the UK, Singapore and Malaysia, and making pre-tax profits of £240m on turnover of £1.28bn in 2013. Ninety per cent of its sales are now outside the UK.

Now, Dyson the company and Dyson the family are at a turning point. Dyson is 67 years old and is not looking back. The diggers have broken ground in Malmesbury on a new £250m “technology campus” that will let him add 3,000 people — many of them engineers — to a UK workforce of 2,500.

gfplux

always_sunny wrote: »

I wonder where this belief comes from that the world must do something or risk the "British' whatever.
Are the Americans treating the British differently compared to the French or Japanese?

If queue become unduly long for British, they will wait in the queue like other non-EU member nationals. If a visa system is established for Schengen, the British and other non-EU member nationals will need to use it.

Americans cannot use biometric passport to enter the EU, why would the British be allowed?
Would you expect French nationals to enter the UK using biometric queues together with the British?

Britain proximity to the continent doesn't override the reality that post March 2019 the UK could be a 3rd country like Turkey, Russia, Morocco, etc.

While I have not heard anything in the last few months the EU (the old EU28) were discussing and we're going to implement an ESTA type form (like the USA) that would have to be completed and excepted before travelling INTO the EU28.
Therefore it should be assumed this in time (the slowly grinding wheels of the EU) will come into force and that Brits would be on the outside of the EU and have to apply for one of the EU-ESTA.
I then assume Britain will set up its own UK-ESTA.

gfplux

Thrugelmir wrote: »

According to this statement then the UK is bound to decline wealth wise in the future. As there's a multitude of places where products can be manufactured cheaper. For no other reason than overheads are lower, including of course labour.

What line of business do you work in?

It's not always about the labour cost. A NEW factory will make the product more efficiently and therefore more cheaply. The new factory will employ less people.
Britain is often mentioned as having low productivity I believe it is less to do with the worker and more with using less productive machinery on the production line. Where the fault lies I don't know but the Government have a roll to play and it appears successive governments have not done enough. It also may be more to do with Globalisation and board rooms deciding Britain is not where they should build the new factory.