Brexit, The Economy and House Prices (Part 2)

kabayiri

We should have bribed Greece to leave the EU before us. Let them set all the precedents.

Greece leaves EU; UK 'loans' Greece money as good will; Brits run into unexpected bargain holiday bonanza.

Do you think the EU would have been chasing Greece for even a 10bn Euro leaving fee? I doubt it.

The club rules : stiff the rich members to support all the rest.

Herzlos

Thrugelmir wrote: »

Which regulations in particular are you thinking of?

The only ones springing to mind are related to things like GM crops and pesticides. If we can use GM and banned pesticides to increase production and reduce costs, then we can potentially sell domestically or to the US for less money. But we'd be unable to sell any affected crop to the EU. Cross-contamination would likely mean we couldn't GM/pesticide half a farm for domestic, and half for EU.

kabayiri wrote: »

Put some numbers on the bones for me. I admit I don't have them.

Costs of compliance have been calculated and gathered in D2M for a while now, so they should be able to extrapolate based on projected new regs.

We can't put these things into context without knowing some idea of costs.

I don't have numbers, because I don't work in an industry that's likely to be affected by the trade restrictions. It'll be pretty hard to quantify since we'll need to adhere to EU for as long as we want to sell them stuff, and the costs will vary wildly from product to product.

Take a factory selling widgets, and EU compliance costs about 5% of their production costs. Do they:

a. Drop the EU compliance, and sell nothing to the EU (this may be viable if they don't sell much to the EU already).

b. Run a 2nd production line, so you have compliant / non-compliant lines. Means potentially investing in millions of additional equipment, or having down time whilst you change roles, and increased training, stock and admin costs (this may be worth it if the costs of EU compliance are greater than the costs of the extra line. It already exists in some places - I've got a bike rack that's not EU type certified, which was about half the price of an EU certified one from the same manufacturer).

c. Keep everything EU compliant anyway. (This is the most likely one for a lot of companies, it keeps everything simple and the overhead is the same. It does of course mean that leaving the EU makes things no cheaper for them).

Herzlos

A_Medium_Size_Jock wrote: »

Is desperation creeping in; I am stretching nothing, read the OP.

No desperation at all. Just the conclusions you're making from the post are pretty far fetched. I don't think anyone has said we'll become non-compliant purely by invoking Brexit. Over time we'll drift unless we keep up though.

I don't think the EU will be petty and change things just to upset us, but will more likely just not bother taking our needs into considering when drafting new legislation - we generally want exemptions from everything anyway.

Herzlos

always_sunny wrote: »

You're confusing desire with need.
Do shopper go to Aldi because it offers then superior products or because of value?
If Aldi offered the same item at the same cost of Sainsburys would people still go there?

I probably would still shop in Aldi, as the products are all pretty decent quality. Fresh fruit is a bit hit-or-miss though. I quite like the no frills nature of there being 1-2 of anything at most, rather than rows of essentially identical products.

I am a sucker for the random-stuff isles though. At least half of my workshop is kitted out with Workzone stuff.

Herzlos

gfplux wrote: »

I have re read my words.
I still don't see conditions.
The deal is, in no particular order
A new free trade deal with USA
A new free trade deal with India
A new free trade deal with Chine
A new free trade deal with Brazil
A new free trade deal with Australia
A new free trade deal with New Zealand
A new free trade deal with Indonesia

I don't think we need to export more than we import from any of them in order to prosper, but as Conrad keeps saying we need to try and balance our import:export ratio overall.

So the question is, for each of those countries, what are we planning on getting out of the free trade deals?

Are there export markets we can expand into? Are there access to goods at better prices?

What do we want from those countries and what do those countries want from us?

Will growth from these deals counter any potential contraction with EU trade?

Are we planning on doing anything to try and make Just-In-Time stock any easier with countries that are so far away? Do we just need too abandon the Just-In-Time model and go back to warehousing months worth of stock at a time, with associated costs?

I'm not saying there's anything wrong in trying to expand into these markets, and to try and open up trade deals. But I genuinely don't see how any of these markets can compensate for the potential losses from the EU markets we seem keen to throw away through mismanagement. We should be trading with these people, on top of the EU (using the EU negotiated trade deals), rather than abandoning the EU for trade with these countries.

cogito

Thrugelmir wrote: »

If your investments are UK based. Then you've also got to factor in that dividend cover has reduced considerably over the past 5-7 years, and that a considerable number of companies are having to borrow to maintain their dividend levels. As aren't generating enough cash in the business.

The value of your portfolio has gone up. Likewise it may fall if future returns fail to materialise. As to liquidate and cash in. You need willing buyers. Markets can tip very suddenly and without warning. That's the fun of investing though.

I don't really care about dividends. They only represent money that companies would be better investing in the business. Give me capital growth any day. Borrowing to pay dividends is sheer stupidity, if that's what they're doing. Return on capital employed and the ability to generate lots of cash is what really matters.

always_sunny

A_Medium_Size_Jock wrote: »

Ah so you think shoppers NEED to shop at Aldi, not that they want to shop there?
What a load of juvenile male cattle you attempt.
Because according to your thinking the record sales of their "premium" ranges means that these have become necessities obviously.

http://www.independent.co.uk/news/business/news/aldi-supermarket-christmas-record-sales-shoppers-premium-luxury-ranges-uk-german-budget-store-a7517646.html

It seems then that your opinion bears no relation to established fact whatsoever.

it reminds me of the silly argument you were trying to make about the pharmaceutical industry a while ago.
You can twist anyway you like it, the reality though is that shopping at budget supermarket is not a sign of prosperity. You may not believe it but it is a sign that folks are watching the spending.

The common theme between Lidl, Aldi and the other ones (there're many in Europe as well) is lower prices.

With that said, there's nothing wrong going to Aldi, Lidl. I don't personally go not because I snob them but because they don't have what I need; my local ones are really bad stocking fresh fruits/veg.

cogito

always_sunny wrote: »

it reminds me of the silly argument you were trying to make about the pharmaceutical industry a while ago.
You can twist anyway you like it, the reality though is that shopping at budget supermarket is not a sign of prosperity. You may not believe it but it is a sign that folks are watching the spending.

The common theme between Lidl, Aldi and the other ones (there're many in Europe as well) is lower prices.

With that said, there's nothing wrong going to Aldi, Lidl. I don't personally go not because I snob them but because they don't have what I need; my local ones are really bad stocking fresh fruits/veg.

You should see the Chelsea tractors at my local Aldi. All the people watching the spending rock up with Waitrose bags to fool their neighbours that they're rolling in it.

kabayiri

Herzlos wrote: »

...
I don't have numbers, because I don't work in an industry that's likely to be affected by the trade restrictions. It'll be pretty hard to quantify since we'll need to adhere to EU for as long as we want to sell them stuff, and the costs will vary wildly from product to product.

Take a factory selling widgets, and EU compliance costs about 5% of their production costs. Do they:
...

Because something is hard to quantify isn't a "go to excuse". It should be the signal for government backed research to dig into the numbers.

God knows, we have enough surveys on frankly trivial topics. Time to have something relevant and decent.

Otherwise some might be tempted to pluck figures out of the air like 5% . As a comparison how much of production cost do you think goes on quality conformance?

Herzlos

kabayiri wrote: »

Otherwise some might be tempted to pluck figures out of the air like 5% . As a comparison how much of production cost do you think goes on quality conformance?

How long is a piece of string? quality (what quality? EU standard compliance?). Some businesses will have quality/compliance costs that are negligible, some will have high costs. I don't work in an industry that is impacted in the UK, so I don't have any insider info. I'm not seeing any real details online.

So you're right, we probably need a government study to figure out the cost savings by affecting compliance. All I know is that it's very much not free.