I'm utterly fascinated by Brexit -- I'm here in Ireland and it's going to be part disaster part boom depending on how we handle it so it has very real consequences. I think the biggest damage will be that to young people in the UK who will likely be denied the ability to travel as freely to live and work across the EU and this sort of denial of opportunity won't manifest as obvious for many years.
We put up the price of our software in the UK once we heard the referendum result and May indicating hard Brexit. On both occasions Sterling dropped.
At the same time, the volatility of exchange rates are worrying businesses, but the absolute value is probably rather positive for the economy. People will buy more local and exports are cheaper. The economy seems to hold up well and will probably continue to do so until Brexit actually happens.
To be clear, I'm absolutely no fan of Brexit, but I don't think that it will have negative effects in the next 1-2 years. In the longer term this may look very different.
But I'm not so positive on the effects as you are. Britain's manufacturing output, the thing it's most likely able to export when it leaves the EU, has a large imported component in other materials, and the transaction costs there will be higher not just because of lower sterling.
Since Britain hasn't been able to compete effectively in manufacturing with Germany while in the EU, I find it hard to believe they'll be able to compete with China when they're out in the same seas. So I don't see a resurgence in manufacturing. Honestly, when you buy something, is British a sign of quality? For me, not in food, not in durable goods, not in almost anything.
And Britain's main export is services, which it doesn't have much in the way of trade agreements by default. So that gets screwed by Brexit too.
Personally, if Brexit goes through, I'll be leaving the country. I'm Irish living in London, and while I'll probably have working rights grandfathered in (the same way I can vote in national elections, from the history of our two countries), my 3 year plan is geared towards leaving. I'm still only 60% sure Brexit means Brexit, though.
I don't understand how they are calculating it to only be around 3%.
We are already noticing things to be running at around 10% in imports, and sometimes more across various things.
We import a lot in the UK; energy, food, goods.
I personally think it will be way above 3% possibly reaching double figures.
2007: Business needs to be protected from Pound fluctuation: we accepted the new norm that a $500 gadget cost £500
2016: Brexit hurt our company earnings : like I care, we are full stack OSS
We use full stack OSS too, not a penny spent on licences.
Have fun with your 22% M$.
Brexy-fans can say it's "fluctuating not tanking"; we still have to pay more for software (and less for hospital beds, staff, and so on. In big orgs these costs are gibberring).
(personally I'm betting on EUR-GBP parity by xmas, because my Cassandra gland is firing overtime)
http://www.independent.co.uk/news/uk/home-news/brexit-vote-l...
Can someone explain this part of Brexit. Nigel Farage resigns in July 2016 after he wins the vote. Why? Says he did "his job" and didn't want to be a career politician (according to Wiki)
Then earlier this month he stepped back in as party leader of UKIP after his replacement was forced(?) out/unable to garner support? Did he just get bored and want his job back? Seems like he has ample time to fly over to the States to pump up Trump.
What I'm trying to get at is this whole Brexit triggered a huge depression in the value of the Pound. Yet the Conservatives and UKIP are still in power? Or can no one do anything until the next general elections?
UKIP is a single-issue party. It rarely happens for single issue parties, but, well, they won - not "to within a reasonable approximation" or whatever copout one might come up with, they won flat out. The dog caught the tail. Nobody knows what's next; this part was never in the script. There's a chance UKIP will morph into conservatives-in-the-north (where, for context, the Conservative party hasn't really been competitive for a couple of decades mostly because of the Thatcher legacy, but UKIP actually is), but I honestly wouldn't bet on it. They're simply not wired for being a 'real' party.
In answer to your wider point, I think you're reducing the problem to the value of the pound when there are many more factors at play ('sovereignty', border controls, democracy etc). Plus, many people viewed sterling as overvalued so a fall might not be too bad a thing.
It might be that, in time, the negative economic consequences of Brexit affect the Conservatives in the polls but it's too early for that.
> Then earlier this month he stepped back in as party leader of UKIP after his replacement was forced(?) out/unable to garner support?
He didn't want to be the one holding the bag once brexit had passed, so he skipped town for a while, let others handle the early fallout then came back fresh as a rose with little to no blame.
The man's a shit-weasel.
As for Farage - I don't think anyone really understands his actions or motivations - I wouldn't put too much thought into it.
So while there will be some inflation (estimated at 3% at the moment), the economy profits from the exchange rate movements. The underlying problem is that the GBP lost value because of the uncertainty, and this uncertainty is not good for the economy. However, people voted for Brexit and a lot of them are happy with the result. So this uncertainty won't necessarily lead to less consumption. Current economic data looks better than what was anticipated before.
So as long as people are happy with the current situation and the outlook, the economy could actually profit from the vote in the short term. The longer term is of course very dependent on the deal that the UK will get.
Regarding your other points: A lot of promises were made in the campaign that are completely unrealistic (£200mln a week for the NHS). Not being part of the government makes it easier to ignore those promises. Boris is probably one of the only ones who could face questions at some point, in case the deal isn't as great as he believes.
As Conservatives are already in favour of a hard Brexit, it's hard for UKIP to get many voters in that space and to gain more seats in the next election. Farage saw the chance to sell the vote as his win (although he wasn't even part of the official campaign) without having to implement any of the consequences. The party is an absolute mess. They don't seem to have a lot of competent people, so Farage basically had to take over again. I don't think he planned that. Especially as they'll have to find a motto now. Their purpose was to get the UK out of the EU. With that done, the question is why people should vote for them.
We'll see over Christmas, as the Christmas shopping is now the first time that people will really feel the rising prices. Given that more Leave voters regret their vote than Remain voters already, it'll be interesting to see polls in Jan/Feb as well.
> (£200mln a week for the NHS). Not being part of the government makes it easier to ignore those promises.
They're now faced with a letter from 40 MPs asking them to either honour the 350m/week (not 200) or explain why several Tory cabinet members misled the public during the campaign. Of course they'll do neither but that isn't the purpose either - the purpose is press. But given that a number of Leave campaigners are part of the goverment you can expect the next two years to consist of a constant stream of attempts to embarrass them over those claims...
> As Conservatives are already in favour of a hard Brexit
Some are. At least on the surface. May has a small enough majority that it is very possible she'd face rebellion over that. But then again, May presided over the Home Office for 6 years and talked up being tough on immigration and achieved pretty much nothing - quite possibly on purpose - so I'm not so convinced that she actually wants hard Brexit, but is using the same tactics of talking up how hardline she'll be to the public and pursue a softer line. Of course the problem with that this time is that her counterparts in Europe are hearing all of this too.
This is true, however a problem is when you cannot substitute expensive imports with local products. Two obvious examples: Cars and computers.
Many computers are priced in USD, so after Brexit many IT departments found they could only buy 9 servers with a budget that was supposed to cover 10 (this happened to us).
> However, people voted for Brexit and a lot of them are happy with the result. So this uncertainty won't necessarily lead to less consumption.
A lot of them are also very unhappy, it being so close and all. Completely anecdotal, but out of an office of ~60, 2 senior and 2 junior programmers decided to leave the UK post-Brexit. I think brain-drain and it's effects is much harder to predict, but quite damaging in the long run.
Wasn't there some scandal around his replacement (rumours of a punch-up)? There's also the possibility that this was his plan all along.
> What I'm trying to get at is this whole Brexit triggered a huge depression in the value of the Pound. Yet the Conservatives and UKIP are still in power? Or can no one do anything until the next general elections?
Remember that the public voted for it in a referendum - the Conservative government was opposed, at least officially.
Fluctuations in the value of the pound don't normally bring down governments.
Also worth remembering that Britain is still de facto in the EU for a few more years.
http://www.telegraph.co.uk/business/2016/10/05/no-prime-mini...
Theresa May could have done all kinds of things to force favourable Brexit terms for the UK.
For example she could continuously lower corporate taxes for foreign investment for while not activating Article 50 and simply wait until it really hurts the EU. If the EU doesn't give in the UK continues to wait and makes a lot of money in the process, if it does then the UK also wins.
I suspect that the UK's prime minister actually wants to tank the economy to do another Brexit vote. (the EU loves this, just repeat until you get the desired result - that's one of the reasons why the EU will fail)
She really wants to join her friends at the Soviet High Command in Brussels again.
I'd argue Britain is de facto out of the EU already. Anybody planning for the future is operating under this assumption. A few concrete examples: Scientific collaborations, corporate growth plans, and policy-making has all been impacted AFAIK.
There are always two sides to a rising or falling currency. In the case of the weak Pound, it is good for exporting British companies and for tourism.
... If/when we get there, any bets Microsoft will not lower pricing?
