« Generational vs class divides | Main | May's challenge to Marxism »

October 04, 2016


Patrick Kirk

People have to say something in order to get web traffic and and the old "its cold in London and the FTSE is up so the cold is causing the FTSE to rise" narrative pattern of reporting is being used.

Brad Fisher

For what it is worth here is my prediction. Britain will opt for "hard" Brexit with complete control of immigration. Parliament will pass a law establishing an "Australian/Canadian" style quota system for immigrants. The government will then declare "job done" on Brexit. Then it will turn to the EU and say "I tell you what I can do for you". They will then - in exchange for free trade access to the EU - offer to set the quota on EU citizens so high as to make no difference. Somebody at the EU will complain about the cost of health care for all those pensioners in Spain. Money will exchange hands.

And Bob's your uncle, Britain will have left the EU - but will still be in the EU.

There will of course be a lot of nashing of teeth and rending of clothes along the way.


Donald A. Coffin

Nick Rowe at Worthwhile Canadian Initiative also comments on something similar:


Any fool can drop the exchange rate - but what do you do with the temporary advantage it buys you? Do you encourage a return to an England of Miss Marple, warm beer and cricket with hovels and poverty hidden from view. Or do you use the advantage? to re-industrialise, educate more effectively and accept the necessary concrete and tarmac.

Neither way represents a free lunch - but lunches in parliament are heavily subsidised. So I think the Tories will go for the Miss Marple route as long as they can.

Dave Hansell

Listening to the baying mob in Birmingham being fed red meat from a rabid rostrum and a cheerleading media which has morphed from a fourth estate to a fifth column against democracy its obvious to a blind man on a galloping horse that we have gone way past Miss Marple and are heading full tilt past Uriah Heep land towards Edward I.

A party and a group of people who pontificate about red tape and bureaucracy are being cheered to the rafters by a brain dead section of the populace over forcing companies to register foreign workers whilst at the same time seeking to reintroduce cadet forces into schools and restricting the rights of what are clearly regarded as feudal British (read English) subjects from working and studying abroad. They'll be introducing restrictive quotas on who and how many can leave the UK the rate they are going.

We are certainly inhabiting the process explained by the late Milton Meyer in 'They Thought They Were Free.'


gastro george

"Any fool can drop the exchange rate - but what do you do with the temporary advantage it buys you? Do you encourage a return to an England of Miss Marple, warm beer and cricket ..."

Apparently, yes. The government has already said that we should be exporting more jam and marmalade to France.

Dave Timoney

Interesting that the commentary on the fall in sterling / FTSE gain has largely addressed the impact on the balance of payments in terms of the potential for trade. We may be missing the bigger picture.

The worsening of the current account since 2011 has primarily been driven by declining foreign investment income. A fall in sterling should improve this in the short-term - i.e. dollar and EU receipts will be worth more in pounds - and this may extend into the medium-term if sterling stays low vs the dollar and euro.

The steady decline in transfers (i.e. investment receipts leaving the country) is likely to get worse if a hard Brexit curtails FDI, but this paradoxically means the BoP may improve, essentially because the UK economy contracts and we become more dependent on foreign receipts.

"Success", in Tory terms, may mean the country becoming even more of a rentier economy.


There is a huge difference from forecasting the overall trend of the FTSE (220 day moving average) and its day to day fluctuations. The £ has been devaluing against the $US since long before June23. After June 23 it has plummeted and is drifting further down. Bank rates going down and £65B of quantitative easing plus the fact that bond yields are so low tends to make the stock exchange the only game in town. The books also won't be balanced by 2020 which further weakens sterling.

Most in the market who understand business better and realise that devaluation will make our balance of trade worse as we no longer have the basic mass industries that would benefit from devaluation. We will still import German cars, say, even if they are 10% more expensive because we do not make similar cars with the necessary car snob appeal. The effects are current masked as firms are currency hedged 6 months ahead and have stocks at the old prices. Customers are still in a full employment stage and still spending on credit.

It is not worth saying what the true early effects of even the vote are until early 2016 and what the effect of investment halts and actually leaving won't be revealed for several years.

The comments to this entry are closed.

blogs I like

Blog powered by Typepad