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Brexit What Happens Next Thread ---multiple merged threads.

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Q4 GDP +0.2.

https://www.bloomberg.com/news/articles/2019-02-11/u-k-economy-wilts-as-brexit-jitters-hit-business-investment?srnd=premium-europe

Quote

The U.K. economy buckled under the strain of Brexit uncertainty in the fourth quarter.

Gross domestic product increased a smaller-than-forecast 0.2 percent, compared with 0.6 percent in the third quarter. December alone saw the economy shrink by 0.4 percent, the most since before the 2016 vote to leave the European Union.

The slowdown over the quarter came as businesses cut investment for a fourth consecutive quarter, the longest continuous decline since the financial crisis, and the weakening global economy hit trade. The pound fell 0.3 percent to $1.2909 as of 9:46 a.m. in London.

But there was no widespread evidence of stockpiling as the prospect of a no-deal Brexit looms larger, with inventories rising just 1.6 billion pounds ($2 billion) in the quarter.

While organizations such as Heathrow airport and Unilever have said they are keeping more on the storeroom shelf to guard against disruptions to supplies brought in from the EU, the Office for National Statistics said a relatively small number of firms reported doing so.

The economy is facing the worst year for growth since 2009, with economists warning of a recession if Britain leaves the EU without a deal to smooth the transition on March 29. The Bank of England sees growth of 0.2 percent in the first quarter, but the sudden loss of momentum at the end to 2018 suggests the economy could stagnate, as indicated in recent purchasing manager surveys.

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15 minutes ago, zugzwang said:

There is little doubt in my mind that Brexit will cause a slowdown and there is already evidence for this.

However, there are other reasons, which, at this point are IMV more important:

- We are (over)due a recession anyway; I'm amazed we've lasted this long without one,

- The ROW is slowing down,

- We are a debt laden, oligopolistic, rent seeking economy driven by speculation and not real economic activity presided over by a banking sector which contributes virtually nothing to the economy and is based on a tower of speculative activity which is not only zero sum but which poses huge systemic risk.

If you think Brexit is the biggest risk: think again.

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5 minutes ago, crouch said:

There is little doubt in my mind that Brexit will cause a slowdown and there is already evidence for this.

However, there are other reasons, which, at this point are IMV more important:

- We are (over)due a recession anyway; I'm amazed we've lasted this long without one,

- The ROW is slowing down,

- We are a debt laden, oligopolistic, rent seeking economy driven by speculation and not real economic activity presided over by a banking sector which contributes virtually nothing to the economy and is based on a tower of speculative activity which is not only zero sum but which poses huge systemic risk.

If you think Brexit is the biggest risk: think again.

The pro-EU argument seems to be that it provides us with a bit of protection against that (your mileage may vary on that), from which the wrong conclusion is drawn - "therefore we need to remain in the EU" rather than "therefore we need to fix our problems."

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9 minutes ago, crouch said:

There is little doubt in my mind that Brexit will cause a slowdown and there is already evidence for this.

However, there are other reasons, which, at this point are IMV more important:

- We are (over)due a recession anyway; I'm amazed we've lasted this long without one,

- The ROW is slowing down,

- We are a debt laden, oligopolistic, rent seeking economy driven by speculation and not real economic activity presided over by a banking sector which contributes virtually nothing to the economy and is based on a tower of speculative activity which is not only zero sum but which poses huge systemic risk.

If you think Brexit is the biggest risk: think again.

It is the accumulation of risks that matters. Individually a no deal crash out would be the biggest risk if it materialised but it probably won't.

Given the current global/European outlook, it seems likely that even May's deal will be enough to tip us into recession. In fact if you strip out stockpiling ahead of Brexit, is possible we are already entering a recession.

 

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11 minutes ago, Riedquat said:

The pro-EU argument seems to be that it provides us with a bit of protection against that (your mileage may vary on that), from which the wrong conclusion is drawn - "therefore we need to remain in the EU" rather than "therefore we need to fix our problems."

Quite. If we stay in the EU it will be BAU and these issues will fester.

To fix these quite fundamental issues we need a shock; they will not be fixed within BAU. The advantage of Brexit is that it is a political shock. If we had (or rather will have GFC 11) I'm quite sure that would be papered over and politically might have very little effect; it will be treated as a purely financial matter. This is just as much a political crisis as an economic one, something Remainers appear not to realise.

Edited by crouch

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12 minutes ago, crouch said:

There is little doubt in my mind that Brexit will cause a slowdown and there is already evidence for this.

However, there are other reasons, which, at this point are IMV more important:

- We are (over)due a recession anyway; I'm amazed we've lasted this long without one,

- The ROW is slowing down,

The UK economy has been sucking wind since the TFS window closed last year; the EU likewise, since TLTRO II was tapered off. A painful divorce is the last thing either party needs but especially not now.

And that -0.4 contraction in December? Tells me the Q1 GDP print is going to be negative. Recession ahoy!

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12 minutes ago, MonsieurCopperCrutch said:

Someone needs to remind this thick-fingered oaf that all the world's commodities are priced in dollars.

As for cutting taxes and increased spending? So there is a Magic Money Tree, after all. ^_^

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13 minutes ago, MonsieurCopperCrutch said:
Quote

A 20% fall in the value of the pound in the event of a no-deal Brexit "might not be such a bad thing", David Davis has claimed.

It will be when prices rise 20% but wages don't.

Also shouldn't underestimate the phycological impact of the £ dropping below parity with the Euro and project fear turning out to be reality. 

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24 minutes ago, MonsieurCopperCrutch said:

Giving the proles 20% less spending power in the global economy...  Sounds like great news.  I wish I'd voted for Brexit now...

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18 minutes ago, wish I could afford one said:

Giving the proles 20% less spending power in the global economy...  Sounds like great news.  I wish I'd voted for Brexit now...

"It does not mean that the pound here, in your pocket or purse or in your bank, has been devalued."  :lol:

Harold-Wilson-Prime-Minister-Great-Briti

Edited by zugzwang

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30 minutes ago, zugzwang said:

Someone needs to remind this thick-fingered oaf that all the world's commodities are priced in dollars.

As for cutting taxes and increased spending? So there is a Magic Money Tree, after all. ^_^

Brexit is only for the very rich. Nobody else matters.

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3 hours ago, Chunketh said:

Very clear and concise.

Needless to say, leavers won't watch it.

It's the equivalent of discovering the aliens don't exist for Scientologists.

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33 minutes ago, zugzwang said:

Someone needs to remind this thick-fingered oaf that all the world's commodities are priced in dollars.

As for cutting taxes and increased spending? So there is a Magic Money Tree, after all. ^_^

If you believe in Modern Monetary Theory, as many do, there is indeed a "Magic Money Tree".

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16 hours ago, crouch said:

"More immigration from non-EU countries"

Probably; but we will control it which we cannot do with FOM.

"More unwanted crap like HS2, austerity, NHS privatisation and the snooper's charter."

HS2 should be cancelled; austerity should never have been introduced; NHS privatisation - as someone who is being treated well for prostate cancer I hardly think so; snoopers charter : an unacceptable invasion of privacy.

Nirvana? I don't think so; just a reasonable improvement in things.

I am sorry to hear about your prostate cancer Crouch. Hope it all works out OK. From what I understand the treatment has a high success rate?

But on the NHS, you may not have noticed it - but it's happening. It's part of the post-Brexit plan.

http://www.patients4nhs.org.uk/how-is-the-nhs-being-privatised/

https://tompride.wordpress.com/2016/04/15/leading-members-of-brexit-campaign-call-for-privatisation-of-the-nhs-and-much-worse/

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3 hours ago, crouch said:

I did not say it was mostly FOM; I said it was sovereignty and FOM.

As far as the mystic meg is concerned you're like most Remainers - utterly credulous; take anything at face value - can you not recognise a spoof when you see it posted as a contra to a Brexagedon post that was made in all seriousness?

Tut tut. You sound like you're busy rowing backwards now. That particular bit of anti EU propaganda proving too hard for anyone to swallow and having to change tack.

Which of your other amazing insights will you also declare to be spoof. Are you still blaming business for failing to plan for an undefined outcome?  

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6 minutes ago, crouch said:

If you believe in Modern Monetary Theory, as many do, there is indeed a "Magic Money Tree".

I know that and you know that, and every Tory MP secretly knows it too. But rather than admit the truth, which is that the national budget is nothing like a household budget and that public expenditure is never revenue constrained, Tory MPs at all times pretend the opposite and characterise Labour as improvident spendthrifts because of it.

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2 minutes ago, jonb2 said:

I am sorry to hear about your prostate cancer Crouch. Hope it all works out OK. From what I understand the treatment has a high success rate?

But on the NHS, you may not have noticed it - but it's happening. It's part of the post-Brexit plan.

http://www.patients4nhs.org.uk/how-is-the-nhs-being-privatised/

https://tompride.wordpress.com/2016/04/15/leading-members-of-brexit-campaign-call-for-privatisation-of-the-nhs-and-much-worse/

I have a localised tumour but "privatise the NHS?" - over my dead body! My care has been exemplary.

For all its faults my opinion is that the NHS ranks as one of the greatest achievements since the war. The thought of a US style health service absolutely horrifies me, not for me because I'm old, but for younger people.

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Workers' and women's rights

1. EU workers’ rights laws are lower than UK’s

  • UK statutory paid holiday entitlement is 28 days, in EU only 20 days
  • National Minimum Wage Act 1998 – there's no EU minimum wage law
  • Maternity leave – UK: 52 weeks, EU: 14 weeks
  • Under EU laws, the British people's rights would decrease

2. UK established workers’ rights long before EU

  • “Protection against sex, race and disability discrimination in the UK pre-dated EU law” (from TUC report)
  • Women’s rights: Equal Pay Act, Abortion Act and Divorce Reform Act were all passed before UK even joined EU
  • Sex Discrimination Act, Domestic Violence Act, Employment Protection Act – no EU involvement
  • EU’s Posted Workers Directive means EU workers can be employed in UK for fraction of the cost of UK workers

3. EU healthcare rights are way below UK standards

  • EU has no free healthcare requirement – most people pay for top-up private insurance
  • In France it costs over £25 just for 5 minutes with your GP, paid at the time
  • In many countries you pay, and get only partially reimbursed later
  • With the UK’s NHS, treatment is free at the point of delivery

4. Finally, workers’ rights are only relevant if you have work

  • In the Eurozone, austerity has taken the jobs of millions of workers
  • You’re nearly twice as likely to be out of work in the Eurozone
  • An entire young generation across southern Europe has been devastated by 30-50% unemployment for years

Relevance to Brexit

The EU is insisting on a "level playing field" as part of the ‘Future Partnership’. In other words it is trying to prevent the UK from operating as an independent country with its own taxation policies and other frameworks which would make the UK a more competitive country than those in the EU.

What could be a more obvious lack of a level playing field than that of UK businesses competing with businesses in the Single Market and Customs Union having a minimum wage 1/5th that of the UK? Or trying to compete with businesses which don’t face costs of higher holiday entitlements, or substantially longer maternity pay?

From:

https://facts4eu.org/news/2019_feb_workers_rights

 

 

 

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10 minutes ago, zugzwang said:

I know that and you know that, and every Tory MP secretly knows it too. But rather than admit the truth, which is that the national budget is nothing like a household budget and that public expenditure is never revenue constrained, Tory MPs at all times pretend the opposite and characterise Labour as improvident spendthrifts because of it.

MMT is bunkum because in a fiat currency system the potential extraction through seignorage does have a limit beyond which hyper inflation is likely to occur but MMT ignores this.

I agree that the characterisation of government spending as being akin to a household budget is also bunkum. The austerity introduced by Osborne had an immediate impact on GDP because monetary policy was at the ZLB and fiscal policy should step in. But of course Osborne and his ilk wanted to shrink the state, being of a neoliberal turn of mind.

Spending by Labour went up mainly during the financial crash to bail out bankers not because of "routine Lefty profligacy" as the Tories would say; its record prior to that was one of restraint but, as you say the Tories ignored this rather important point.  

Edited by crouch

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10 minutes ago, crouch said:

I have a localised tumour but "privatise the NHS?" - over my dead body! My care has been exemplary.

For all its faults my opinion is that the NHS ranks as one of the greatest achievements since the war. The thought of a US style health service absolutely horrifies me, not for me because I'm old, but for younger people.

Why do you write that a US style health service the only alternative? Plenty of other private/part private models out there, even those of the EU.

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1 minute ago, onlooker said:

Why do you write that a US style health service the only alternative? Plenty of other private/part private models out there, even those of the EU.

Did I say the the US style was the only alternative? It is an outlier that shows where privatisation can lead if you're not careful.

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  • The Prime Minister stated that there were three Brexit options available to the UK:   325 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


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