Brexit, The Economy and House Prices (Part 2)

TrickyTree83

Herzlos wrote: »

Not deluded at all. I mean, look at what 2 of the biggest German industry groups are actually saying and see how it fits with your idea:

https://www.theguardian.com/politics/2017/jul/08/german-industry-warns-uk-over-brexit


Or how about running the numbers. What percentage decline in sales will German car manufacturers see if we switch to buying none? half? Of what we currently do.

Do you have any secret industry access that's telling you something differently? The impression I get (from seeing reports direct from German industry) is that whilst they don't want Brexit, they value Euro cohesion more, and have no interest in giving up the Euro project for our vanity.

Deloitte appear to think that the UK and the rest of the world will do handsomely out of Brexit in terms of the automotive industry. Perhaps that's why we've not seen any major negative shifts and some positive news in the UK automotive industry.

https://www2.deloitte.com/content/dam/Deloitte/de/Documents/Brexit/Brexit-Briefings_Pt5_Hard-Brexit-German-car-industry.pdf

It's current too.

Also interesting is how this was received in the media.

The Independent and Guardian appear not to have covered this particular publication, but have made reference to the increased cost from a different publication with the same findings, omitting the news about the positive impact on the UK and the negative on Germany and the rest of the EU. Lets not forget there's a few French cars on our roads. The Times have covered this, and a quick Google on the topic will show that the media is unbelievably bias. Interestingly the Express did cover this Deloitte publication and they did report it correctly - as it was intended.

The selective reporting is quite apparent from the left wing news outlets. That's not to say that centrist and right wing outlets don't also do selective reporting, but on this topic it's clear what the experts think yet the left wing outlets perpetuate the line that they were those who listened to the experts whilst ignoring these.

I await with baited breath what our left wing forum experts think about the media they cling to and the media they berate on the topic of Brexit and the automotive industry.

Herzlos

I'm reading the report. I'm a bit confused that if the UK takes 20% of German car exports, a hard Brexit would result in a reduction of 32% of exports.

That said, it gives us some numbers to work with. Assuming after Brexit we suddenly buy 0 new German cars (incredibly unlikely), they'll have a drop of about 20% of their export sales and 16,000 staff. Given that car prices are unlikely to up any more than about 25% (factoring in drop of GBP / spending power / terrible tariffs), a corresponding drop would mean a decline of about 5% of their export market and 4,000 staff. That's only for export, and not factoring in the number of domestic market vehicles

That's bad, but it's not in any way terminal. They can probably get that growth out of the US with a good trade deal, or somewhere else.

That's never been in debate. Brexit will cost jobs on both sides. What is in debate is this idea that because Germany will lost some jobs if we stop buying their stuff, that means the EU will have no choice but to let us have our cake and eat it (full freedom of goods & capital, no freedom of movement). Several German business owners have come out on record saying that they'd rather take the hit to maintain the single market and the EU project.

If we're prepared to take some hardship (though we're largely prepared for someone else to take some hardship) to get out sovereignty, then why is it so hard to conceive that the Germans/Dutch/Spanish may be prepared to take a small hit to get rid of the country that's holding back the EU?

On the winners/losers, it's saying that costs will go up for all cars on average 15%, German cars going up by 21%, UK cars going up 15%, RoW 10%.

So that means everyone will be paying more for new cars, with the balance of sales skewing towards the UK/RoW cars because they've gone up by less than EU cars. So RoW car dealers benefit the most, and the consumer loses out pretty solidly across the board. Spending more on cars => spending less on other stuff. It's also predicting that we'll buy about 550,000 less new cars a year (19%), which means a huge reduction in tax take, and an increase in used car prices. So the government likely loses out as do all consumers.

So I guess we can call that a win?

buglawton

Forecasts? Let's try history instead.

Most cataclysmic economic event in the UK prior to the 2008 bank crisis was Black Wednesday September 1992 when the £ crashed out of the ERM and its peg to the mighty Deutschmark, losing 1/3 of its value overnight. No time for fancy forecasts but what happened to car sales?

1991 - 1.59m
1992 - 1.59m
1993 - 1.78m

erm... QED

TrickyTree83

Herzlos wrote: »

I'm reading the report. I'm a bit confused that if the UK takes 20% of German car exports, a hard Brexit would result in a reduction of 32% of exports.

That said, it gives us some numbers to work with. Assuming after Brexit we suddenly buy 0 new German cars (incredibly unlikely), they'll have a drop of about 20% of their export sales and 16,000 staff. Given that car prices are unlikely to up any more than about 25% (factoring in drop of GBP / spending power / terrible tariffs), a corresponding drop would mean a decline of about 5% of their export market and 4,000 staff. That's only for export, and not factoring in the number of domestic market vehicles

That's bad, but it's not in any way terminal. They can probably get that growth out of the US with a good trade deal, or somewhere else.

That's never been in debate. Brexit will cost jobs on both sides. What is in debate is this idea that because Germany will lost some jobs if we stop buying their stuff, that means the EU will have no choice but to let us have our cake and eat it (full freedom of goods & capital, no freedom of movement). Several German business owners have come out on record saying that they'd rather take the hit to maintain the single market and the EU project.

If we're prepared to take some hardship (though we're largely prepared for someone else to take some hardship) to get out sovereignty, then why is it so hard to conceive that the Germans/Dutch/Spanish may be prepared to take a small hit to get rid of the country that's holding back the EU?

On the winners/losers, it's saying that costs will go up for all cars on average 15%, German cars going up by 21%, UK cars going up 15%, RoW 10%.

So that means everyone will be paying more for new cars, with the balance of sales skewing towards the UK/RoW cars because they've gone up by less than EU cars. So RoW car dealers benefit the most, and the consumer loses out pretty solidly across the board. Spending more on cars => spending less on other stuff. It's also predicting that we'll buy about 550,000 less new cars a year (19%), which means a huge reduction in tax take, and an increase in used car prices. So the government likely loses out as do all consumers.

So I guess we can call that a win?

Well I think Deloitte have already crunched the numbers for you and come up with the following bullet point:

Based on these declines in sales and turnover, approx. 18,000 jobs in the
German automotive industry would be directly endangered.

They've taken into account consumer habits and trend in car sales in the UK and extrapolated that the 18,000 number would be the number of jobs lost as a result of a no deal Brexit. Some jobs would still be kept as a result of UK consumers but approximately 18,000 would be lost. This is from the cohort of 60,000 employed as a result of UK market activity.

I don't believe you're able to rationalise that down to 4,000 as you've attempted to do since the report itself does not assume we suddenly buy 0 new cars from Germany (incl. parts). Since as the report clearly states that would result in 60,000 job losses.

I'm not having a go, it's just good to get the actual info out there for those who haven't bothered to read it for themselves.

Herzlos

Fair point. My point being that even the worst case for the German car industry is not going to be enough to force the EU to give us a super special deal.

buglawton wrote: »

Forecasts? Let's try history instead.

Most cataclysmic economic event in the UK prior to the 2008 bank crisis was Black Wednesday September 1992 when the £ crashed out of the ERM and its peg to the mighty Deutschmark, losing 1/3 of its value overnight. No time for fancy forecasts but what happened to car sales?

1991 - 1.59m
1992 - 1.59m
1993 - 1.78m

erm... QED

Whilst I don't remember much about 1992 (being in primary school), I can't really comment. Didn't we have much bigger local car & steel industries at the time, which would presumably mean less dependence on foreign currencies?

Does anyone know what happened to the £ cost of cars between 92 and 93? Did they go up by the 15% being predicted by Brexit?

gfplux

Conrad wrote: »

Youth Unemployment:
46% Greece
39% Spain
35% Italy
26% Croatia
23% Portugal
22% Belgium
21% France
21% Finland
20% Cyprus
17% Sweden
13% UK

Looks like UK has done very well IN THE EU.

Eric_the_half_a_bee

gfplux wrote: »

Looks like UK has done very well IN THE EU.

Looks like UK has done very well despite being IN THE EU.

gfplux

Herzlos wrote: »

I'm reading the report. I'm a bit confused that if the UK takes 20% of German car exports, a hard Brexit would result in a reduction of 32% of exports.

That said, it gives us some numbers to work with. Assuming after Brexit we suddenly buy 0 new German cars (incredibly unlikely), they'll have a drop of about 20% of their export sales and 16,000 staff. Given that car prices are unlikely to up any more than about 25% (factoring in drop of GBP / spending power / terrible tariffs), a corresponding drop would mean a decline of about 5% of their export market and 4,000 staff. That's only for export, and not factoring in the number of domestic market vehicles

That's bad, but it's not in any way terminal. They can probably get that growth out of the US with a good trade deal, or somewhere else.

That's never been in debate. Brexit will cost jobs on both sides. What is in debate is this idea that because Germany will lost some jobs if we stop buying their stuff, that means the EU will have no choice but to let us have our cake and eat it (full freedom of goods & capital, no freedom of movement). Several German business owners have come out on record saying that they'd rather take the hit to maintain the single market and the EU project.

If we're prepared to take some hardship (though we're largely prepared for someone else to take some hardship) to get out sovereignty, then why is it so hard to conceive that the Germans/Dutch/Spanish may be prepared to take a small hit to get rid of the country that's holding back the EU?

On the winners/losers, it's saying that costs will go up for all cars on average 15%, German cars going up by 21%, UK cars going up 15%, RoW 10%.

So that means everyone will be paying more for new cars, with the balance of sales skewing towards the UK/RoW cars because they've gone up by less than EU cars. So RoW car dealers benefit the most, and the consumer loses out pretty solidly across the board. Spending more on cars => spending less on other stuff. It's also predicting that we'll buy about 550,000 less new cars a year (19%), which means a huge reduction in tax take, and an increase in used car prices. So the government likely loses out as do all consumers.

So I guess we can call that a win?

I am not going to read this particular report but does it say that all the German car job losses will be in Germany. Does it indicate how many job losses at the BMW plant in America.
Thanks

kabayiri

Herzlos wrote: »

Fair point. My point being that even the worst case for the German car industry is not going to be enough to force the EU to give us a super special deal.
...

The question then becomes : is any cost acceptable for the higher principles of the EU?

(You could also turn this around and ask about the cost of respecting the democratic decision of the public)

Now we know that Juncker is not particularly a fan of democratic votes. He also prefers closed door discussions.

Fwiw, I agree that it's not worth holding our breath expecting the German auto industry to break ranks and rebel against the German government position.

I do think there are easier softer targets though. If we were inclined, we could basically collapse the economy of closer EU states, just by the passive action of a default exit without agreement.

Is the loss of close relations with somewhere like Eire an acceptable cost for our principles?

kabayiri

Eric_the_half_a_bee wrote: »

Looks like UK has done very well despite being IN THE EU.

Change to outside the Euro and you would be right.

Can the Euro really ever work without harmonization on the other fronts, things like taxation policy?

Macron doesn't seem to think so.

The other question is can they construct a 2 speed EU, independently of using the Euro?