Brexit discussion thread II

steddyeddy · 10-09-2017 09:57AM

solodeogloria wrote: »

Good morning!

I disagree with your assumption. You've stopped too soon.

Inflation does cause an erosion of living standards initially. This is what we've seen throughout 2017. But costs on individuals can only go up so much before people put pressure on employers to raise wages. The idea that inflation only changes the price of everything else apart from the price of labour is absurd.

You also have to bear in mind, particularly for multinationals, relative labour costs have lowered significantly in the last year and a half. Therefore there is significant buffer to increase wages without too much harm on their bottom line. They have already had a significant cost saving since the vote.

Much thanks,
solodeogloria

You're muddling things up again. How can labour costs drop if inflation is happening.

In simpler terms, how can something cost less (labour costs) if everything costs more?

Leonard Hofstadter · 10-09-2017 10:46AM

steddyeddy wrote: »

You're muddling things up again. How can labour costs drop if inflation is happening.

In simpler terms, how can something cost less (labour costs) if everything costs more?

If you're a multinational and your headquarters are outside the UK then the drop in the value of sterling will more than compensate for say a 3% wage increase. So, in terms of another currency, the cost of labour in the UK is lower than it is before the referendum.

But of course most multinationals have complex supply chains which criss cross many EU countries so in sterling terms the cost of importing has skyrocketed since the referendum because of the same fall in the value of the pound so yes overall there probably isn't much of a difference or it's probably a bit dearer (hence why the latest figures show that exports to non EU countries are down despite the decrease in the value of sterling) unless you're sourcing pretty much everything from the UK - but even then if those suppliers have to source things from Eurozone countries then their costs will have risen, too.

steddyeddy · 10-09-2017 10:49AM

captainspeed wrote: »

If you're a multinational and your headquarters are outside the UK then the drop in the value of sterling will more than compensate for say a 3% wage increase. So, in terms of another currency, the cost of labour in the UK is lower than it is before the referendum.

But of course most multinationals have complex supply chains which criss cross many EU countries so in sterling terms the cost of importing has skyrocketed since the referendum because of the same fall in the value of the pound so yes overall there probably isn't much of a difference or it's probably a bit dearer (hence why the latest figures show that exports to non EU countries are down despite the decrease in the value of sterling) unless you're sourcing pretty much everything from the UK - but even then if those suppliers have to source things from Eurozone countries then their costs will have risen, too.

Yes there might be a momentary drop in cost as Sterling is devalued, but that's offset by the increased cost of importing and the increase in prices for domestic products.

solodeogloria · 10-09-2017 12:09PM

Good afternoon!

captainspeed wrote: »

If you're a multinational and your headquarters are outside the UK then the drop in the value of sterling will more than compensate for say a 3% wage increase. So, in terms of another currency, the cost of labour in the UK is lower than it is before the referendum.

But of course most multinationals have complex supply chains which criss cross many EU countries so in sterling terms the cost of importing has skyrocketed since the referendum because of the same fall in the value of the pound so yes overall there probably isn't much of a difference or it's probably a bit dearer (hence why the latest figures show that exports to non EU countries are down despite the decrease in the value of sterling) unless you're sourcing pretty much everything from the UK - but even then if those suppliers have to source things from Eurozone countries then their costs will have risen, too.

Thank you for explaining this so well. Currency risk isn't just something that impacts FX traders on Wall Street or in the City, it's something that has an impact on all of our lives.

There's definitely an impact on costs for businesses, but it depends on the type of businesses. I suspect that most multinationals have reserves in other currencies or could bill a subsidiary in another country in order to offset currency risks. (I suspect the more savvy in terms of finance would have been making good use of things like currency options in the aftermath of the referendum to insulate some of this risk also).

The point is that given the sharp decline of sterling, there is scope for wage increases without all that much impact on the bottom line of the business. The logical consequence of inflation is an increase in wages at the end of it.

There is no reason why the cost of employment shouldn't rise as a result of inflation in the wider economy. Companies may choose to absorb this or pass it on in prices thus producing more inflation and thus producing the same cycle again.

steddyeddy wrote: »

Yes there might be a momentary drop in cost as Sterling is devalued, but that's offset by the increased cost of importing and the increase in prices for domestic products.

I don't think it is fully. See what I've said about about multinationals in particular.
EDIT: In a mundane example, at our firm the decrease in Sterling was beneficial as we were able to get more funding for our Christmas party as budgets were expressed in another currency!

It's worth re-emphasising that not all expenditure is subject to this inflation. Loans issued in sterling are not subject to inflation provided they are at a fixed amount with a fixed rate of interest. This is why I made the comment about fixed term mortgages earlier.

It's certainly true that energy prices (unless you agreed a fixed term tariff prior to the referendum, there is good competition in the UK energy market too if you use the right tools), water rates, and food, and other forms of expenditure increase. I suspect commuters will start noticing their season tickets get hiked in January also.

There's no point stating that inflation isn't going to have an impact, but the logical end of this is that wages will rise or recruitment will be a lot harder.

Much thanks,
solodeogloria

Fratton Fred · 10-09-2017 01:00PM

steddyeddy wrote: »

http://www.independent.co.uk/news/uk/politics/conservative-manifesto-lest-theresa-may-immigration-foreign-spouses-threshold-a7742791.html

Also the Home office blocked 9 studies which disputed the effect of immigration on wages. Also the leaked document on post-Brexit immigration strategy.

The Tories have essentially replaced UKIP as an anti-immigration, fairy tail economics and Brexit party. I mean they're in league with the DUP, a anti-Catholic, anti-ethnic (as Sammy Wilson put it) and loyalist party.

You don't seem to see the connections with Tories and anti-immigration, but you seem to equate Labour with UKIP. Do you really think that Labour's policies on immigration are closer to UKIP than the Torie's are? Which party caused Brexit?

that's nice and all, but what does any of that have to do with nurses pay?

You seem to have a talent for making one plus one equal anything you want as long as you can blame the Torres.

LeinsterDub · 10-09-2017 01:27PM

solodeogloria wrote: »

Good morning!

Exactly. You also have to bear in mind that Sterling inflation only has an impact on certain types of expenditure also. Mainly products and services that have a dependency on purchases in other currencies somewhere in the supply chain.

So basically everything thing? Where do you think the majority of the UK's energy comes from?

ThisRegard · 10-09-2017 01:36PM

Sunday Express today telling it like it is

https://twitter.com/SkyNews/status/906635566871187456

listermint · 10-09-2017 02:25PM

As stated already I don't see where companies are going to start increasing wages there is too much uncertainty.

https://www.ft.com/content/d16bb47c-93ba-11e7-bdfa-eda243196c2c

“The rising upfront cost of doing business in the UK, the uncertainty around Brexit, and the constraints created by skills gaps and shoddy infrastructure collectively outweigh any benefit arising from the recent depreciation of sterling,” said Adam Marshall, director-general of the British Chamber of Commerce . “A cheaper currency does not automatically mean an export boom, no matter how some politicians and commentators will it to happen.”

LeinsterDub · 10-09-2017 02:30PM

ThisRegard wrote: »

Sunday Express today telling it like it is

They don't seem to realise this isn't debate club at Oxford. There is no moderator. There is no judging panel. The EU could lose every debate and out of sheer pig headedness say we still aren't offering you a deal. It's about compromise not winning.

Leonard Hofstadter · 10-09-2017 03:58PM

LeinsterDub wrote: »

They don't seem to realise this isn't debate club at Oxford. There is no moderator. There is no judging panel. The EU could lose every debate and out of sheer pig headedness say we still aren't offering you a deal. It's about compromise not winning.

QFT. As I've said many times before, I want a good deal for the UK (it is also in Ireland's interest that there is one), and of course there are some things Britain has to offer the EU, it's not all one way traffic, but it's impossible to get that with the way the British Government is carrying on. The delusion is ridiculous and the electorate still believe that there is going to be a land of milk and honey.

They're doing everything they possibly can to NOT get a good deal for themselves.

I've gone from thinking 'ah sure it will be grand' to 'I hope they're only saying this stuff to win elections' to anger to despair, and at this stage, as much and all as I've enjoyed the nearly 5 years in the UK, and as much and all as I've got time for most Brits, I honestly think the best thing for me (and any other immigrant there) to do now is get out and go home; those of us who follow these things can see the train wreck that is coming and it's best to get out while there are still lifeboats on the sinking ship that is Brexit rather than leaving it too late.

Nody · 10-09-2017 04:02PM

LeinsterDub wrote: »

They don't seem to realise this isn't debate club at Oxford. There is no moderator. There is no judging panel. The EU could lose every debate and out of sheer pig headedness say we still aren't offering you a deal. It's about compromise not winning.

I actually went and read through the article and it's yet another setup piece for the Brexit payment basically.

It starts as usual with explaining how brilliant all the UK negotiators really are and how EU servants are in awe of them before spending 3/4 of the article talking about how UK will not pay the 90 billion requested. The fact EU has not even given a number and want to discuss calculation methods is not relevant of course and now somehow the 90 billion is suddenly a "fact". Instead the main Tory politicians get to all stand in line and state how that is unacceptable and will never be paid no matter what; 90 billion is far to much. It's all to set the tone of how brilliant UK got the bill down from 90 billion to what ever end number (except the 90 billion number never existed outside the UK papers imagination) so they can feel national pride and accept it when voted through parliament. So standard outright lying on behalf of Brexit to sell in the end result; exactly what you should expect from them seeing who owns it.

Jim2007 · 10-09-2017 04:05PM

Zubeneschamali wrote: »

Pressure, yes. But it won't magically produce either the cash or the willingness from employers to raise wages.

It could also be yet another reason for increasing or establishing facilities within the EU.... There seems to be an assumption on the BREXIT side the firms are captive to the U.K. They are not.

Water John · 10-09-2017 06:04PM

Express readers live in an alternate, parallel universe.

The Rape of Lucretia · 10-09-2017 10:54PM

LeinsterDub wrote: »

They don't seem to realise this isn't debate club at Oxford. There is no moderator. There is no judging panel. The EU could lose every debate and out of sheer pig headedness say we still aren't offering you a deal. It's about compromise not winning.

Surely it is about winning - the EU must abslutely ensure that the UK is worse off post Brexit (as they should be since they are resigning their benefits of being in the club, but also, pour encourager les autres), and that the damage to the EU is slight enough for EUans to not notice it.
The UK is trying to negotiate a position where it is better off outside EU.

The two outcomes are incompatible. The EU has the upper hand fundamentally, and seems to be playing their hand better. And so will likely, indeed, win.

Most of the UK will understand that leaving itself is losing, and not getting the EU to pay the bill is to be expected. Some will portray it as the EU 'punishing' the UK - but their opinion is worthless.

flutered · 10-09-2017 11:04PM

got a family member with a fancy job in the city, the oh is looking for an irish passport, also the kids are in the process of gettin one

joeysoap · 10-09-2017 11:12PM

I drive a fair bit in NI, and because of the fall in sterling I think NI petrol prices are now lower then ours, which wasn't the case a year ago. Saw pumps today at £118.8.

Also I notice some UK suppliers are reducing the size of their products in order to keep the price the same as before. Are we, in Ireland the losers as they still charge the same price now for less product?

Puzzled.

Water John · 10-09-2017 11:15PM

If sterling falls against the dollar, it drives up oil prices. If the euro travels the same path, it will drive up oil prices. Oil traded in dollars.

joeysoap · 10-09-2017 11:15PM

flutered wrote: »

got a family member with a fancy job in the city, the oh is looking for an irish passport, also the kids are in the process of gettin one

I understand UK nationals reasons for applying for Irish passports,

I don't understand our reason for issuing them.

If half the UK carry EU passports why would they bother wanting to remain?

Gerry T · 10-09-2017 11:16PM

The actions of multinationals within the UK is complicated, their overriding goal is to satisfy shareholders and secondly market opinions of their business.
For a US company the weakening Stg causes a problem. Revenues have fallen 10% due to currency exchange and could fall by a further 5 to 10% if Stg continues to weaken as I think it will.
Turnover and profitability are two key metrics for multinationals, as turnover is having an artifical fall due to currency exchange these multinationals will guard against any profit erosion.
There are threats in supply chain if material outside the UK is required, and threats in Sales where EU customers source alternative suppliers due to a potential future cost increase through tariff or duty charge post brexit.
This leaves a large piece of the equation, these multinationals will aggressively fight wage inflation to quench any further threat of erosion to their profitability. Ironically brexit will feed into these multinational companies hands by removing employee protection that people have under EU law, my opinion is the UK will no maintain current levels of protection to employees.
There will be a demand in labour post brexit and the solution will be the UK will let people in to satisfy that need. So people will move to the UK from Europe and further afield. I don't see wage inflation due to a supply/demand imbalance, I do see a rise in cost of goods as the pound weakens, the average "man" in the UK IMHO will be far worse of in 5 yrs post brexit.
With time 10 to 20 yrs the UK might bounce back to being a super power. But then so might Poland, neither is really likely.

The Rape of Lucretia · 10-09-2017 11:16PM

joeysoap wrote: »

I drive a fair bit in NI, and because of the fall in sterling I think NI petrol prices are now lower then ours, which wasn't the case a year ago. Saw pumps today at £118.8.

Also I notice some UK suppliers are reducing the size of their products in order to keep the price the same as before. Are we, in Ireland the losers as they still charge the same price now for less product?

Puzzled.

Its only a short term thing until their inflation picks up the currency fall. But definitely great value to be had shopping in the north at the moment, particularly for items that dont change as quickly as petrol. Clothing in the likes of M&S for example is truly 15%ish cheaper than down here at the moment.

joeysoap · 10-09-2017 11:17PM

Water John wrote: »

If sterling falls against the dollar, it drives up oil prices. If the euro travels the same path, it will drive up oil prices. Oil traded in dollars.

I understand that. But sterling has fallen substantially against the dollar in the past 12 months, the euro hasn't.

Yet our petrol has increased but theirs appears to have fallen?

Leonard Hofstadter · 10-09-2017 11:30PM

joeysoap wrote: »

I understand that. But sterling has fallen substantially against the dollar in the past 12 months, the euro hasn't.

Yet our petrol has increased but theirs appears to have fallen?

I was going to say the same thing, I've lived in the UK for almost 5 years now but I'm back in Ireland quite often. I noticed it during the summer that for the first time it was cheaper to buy fuel in the UK, in fact I could buy Super Unleaded for less in the UK than I could buy regular petrol in Ireland. (Super Unleaded is between 7-11 p a litre more expensive than the standard stuff depending on who you buy it from.)

Before it was definitely cheaper to buy fuel in Ireland, and neither country has changed the amount of duty levied on petrol over the past few years.

So I don't understand why petrol isn't cheaper in Ireland to be honest - as oil is traded in dollars and the euro is at its strongest against the dollar in years, it really shouldn't cost so much.

Peregrinus · 11-09-2017 03:16AM

joeysoap wrote: »

I understand UK nationals reasons for applying for Irish passports,

I don't understand our reason for issuing them.

They are Irish citizens. They are entitled to passports.

joeysoap wrote: »

If half the UK carry EU passports why would they bother wanting to remain?

So that they don't have to leave the UK in order to enjoy their rights as EU citizens.

Peregrinus · 11-09-2017 06:11AM

captainspeed wrote: »

I was going to say the same thing, I've lived in the UK for almost 5 years now but I'm back in Ireland quite often. I noticed it during the summer that for the first time it was cheaper to buy fuel in the UK, in fact I could buy Super Unleaded for less in the UK than I could buy regular petrol in Ireland. (Super Unleaded is between 7-11 p a litre more expensive than the standard stuff depending on who you buy it from.)

Before it was definitely cheaper to buy fuel in Ireland, and neither country has changed the amount of duty levied on petrol over the past few years.

So I don't understand why petrol isn't cheaper in Ireland to be honest - as oil is traded in dollars and the euro is at its strongest against the dollar in years, it really shouldn't cost so much.

Because only a relatively small part of the price at the pump prepresents the cost of buying oil on the wholesale markets.

A large part of the cost is made up of excise duty, and (in the UK) excise is denominated in sterling, and when sterling falls .

The figures here aren't anything like correct - I'm pulling them out of the air - but they'll illustrate the point;

Suppose a litre of petrol in the UK costs GBP 1, made up of GBP 0.60 for the cost of the fuel plus the seller's markup plus VAT, and GBP 0.4 for excise. At GBP1 = EUR 1.50, this equals EUR 1.50

Sterling now falls by 50% against both the Euro and the US dollar. GBP 1 now equals EUR 0.75.

The sterling cost of buying the fuel doubles, to GBP 1.20. Excise is still 0.40. So total cost at the pump is GBP 1.60.

GBP 1 now equals EUR 0.75, so GBP 1.60 = EUR 1.20. So, as far as the Euro buyer is concerned, petrol in the UK is now cheaper than it used to be.

The reality is more complex and the figures are of course different, but this is basically what is happening. In Euro terms, the part of the price-at-the-pump which represents an internationally traded commodity should not be affected by movements in the value of sterling, but the cost elements added in the UK, of which excise is the biggest, will be.

joeysoap · 11-09-2017 11:47AM

Peregrines wrote: »

They are Irish citizens. They are entitled to passports.

As Irish citizens they were quite happy with UK passports until now ?

So that they don't have to leave the UK in order to enjoy their rights as EU citizens

Exactly.

Question ; as Irish citizens are they entitled to hold ECIH card and if so who pays?

Ps if I were of Irish descent in the uk I would probably do the same, but it came to my attention earlier in the year while on holidays in Tenerife when I heard 'British' ex pats were looking for Irish passports in order to keep their EU rights.

Zubeneschamali · 11-09-2017 11:52AM

joeysoap wrote: »

As Irish citizens they were quite happy with UK passports until now ?

People are either entitled to an Irish passport or they are not. If they are entitled, and they apply, they get one.

So your real question is "Why are they applying now?" and the answer is obvious - Irish citizens are EU citizens. These UK citizens were up to Brexit, but are now being dragged out of the EU against their will.

if you are suggesting that we rub salt in it by denying them the Irish passport they are entitled to and abandon them to the Brexiteers, I think that is a very heartless suggestion (not to mention illegal and unconstitutional).

ArmaniJeanss · 11-09-2017 12:08PM

Zubeneschamali wrote: »

People are either entitled to an Irish passport or they are not. If they are entitled, and they apply, they get one.

So your real question is "Why are they applying now?" and the answer is obvious - Irish citizens are EU citizens. These UK citizens were up to Brexit, but are now being dragged out of the EU against their will.

if you are suggesting that we rub salt in it by denying them the Irish passport they are entitled to and abandon them to the Brexiteers, I think that is a very heartless suggestion (not to mention illegal and unconstitutional).

It sticks in the craw though that some percentage of the new applicants will likely have voted Brexit, and are using the Irish passport thing as a 'best of both worlds'.

joeysoap · 11-09-2017 12:17PM

I accept it's complicated

Petrol in Newry yesterday £1.118
Few months ago £1.238

Petrol in Dundalk yesterday (varies) around €1.319
Few months ago €1.259

Calina · 11-09-2017 01:06PM

joeysoap wrote: »

As Irish citizens they were quite happy with UK passports until now ?

So that they don't have to leave the UK in order to enjoy their rights as EU citizens

Exactly.

Question ; as Irish citizens are they entitled to hold ECIH card and if so who pays?

Ps if I were of Irish descent in the uk I would probably do the same, but it came to my attention earlier in the year while on holidays in Tenerife when I heard 'British' ex pats were looking for Irish passports in order to keep their EU rights.

I'm going to assume that you're talking about the EHIC card. Typically the EHIC card is available wherever you're paying social insurance payments. YOu need to provide evidence that you are ordinarily residence in Ireland to get an EHIC card issued by the Irish health system so no, they aren't entitled to an EHIC card issued by the HSE or DoH or whoever actually issues it in Ireland. They at a minimum will need a PPS number which they are unlikely to have if they have never actually lived in Ireland.

Additionally, continued access to EHIC coverage for the UK is currently the subject of negotiations (just wait until they get on to discovering that they might lose Roam Like Home) so whether that changes or not is currently uncertain for UK based people.

To be honest I have sympathy for around 48% of the population of the UK. They've been sold down the river and I'd be wealthy if I got ten quid for every time someone said "it worked before the EU, they can get visas like every other country they aren't losing rights". I don't have a lot of sympathy for people suggesting we should close our borders to people who are constitutionally granted citizenship but who may have not previously done the paperwork because between the CTA and the EU, and general freedom of movement and establishment, it wasn't urgently required. Passports are expensive enough as it is, without also dealing with bureaucracy.

That being said, absolutely everyone I know from the UK who has done the paperwork in the last 12 years has noted that Ireland has made the process very straightforward for them.

Calina · 11-09-2017 01:07PM

ArmaniJeanss wrote: »

It sticks in the craw though that some percentage of the new applicants will likely have voted Brexit, and are using the Irish passport thing as a 'best of both worlds'.

It isn't that it sticks in the craw for me; I just find it profoundly hypocritical.

Brexit discussion thread II

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