The unremitting horror of brexit (Economics)

The UK's economic troubles didn't even politely wait until the results were in. The pound started to fall against the dollar (and euro) from the first big brexit win. But that was only the start of it.

Uncertainty is the new British norm.

In the days since the Brexit vote, stoke prices have been volatile, and the pound has been volatile at a new lower level. The pound has over the last few days, been as weak against the dollar as it has been in my lifetime.

It was helpfully pointed out to me on the night that this was just a temporary effect of uncertainty.

What the person who said this appears to have missed, is that the whole process of untangling the British economy from the EU economy is basically a Femtotech matter fabricator optimised for the production of uncertainty. That happens to be running at full capacity. Uncertainty is the only thing the UK economy can be confident of having for the next few years

Between the political fallout, the uncertainty faced by EU citizens in the UK and the UK citizens in the EU, the upcoming re-write of vast chunks of our corpus of law, and the fact we haven't gotten a clue what will be happening with trade; the future is looking pretty hard to reasonably predict.

High Demand

To say that "the UK is dependent on imports" is one of the greatest truism in global economics, it is up there with "China has a huge cheap labour market" and "american governmental subsidy of high technology industry through the space race and military spending built the modern world."

We import almost half our energy and 40% of our food (almost all of our ingredient variety and non-seasonal food is thanks to imports). Almost all raw materials used in British industry are imports. 

With the fall of in the pound against other currencies, we are starting to experience import inflation. 

This is already having an effect on the engineering industry, where firms such as specialising in high quality, CnC routing are Geometric Manufacturing Ltd are having their costs pushed up by increases in the cost of aluminium, which is traded globally using the dollar. Increased costs have an impact on the companies ability to compete against EU and Chinese competitors. 

The real kicker is going to be food, as it will affect cost of living significantly, driving inflation.

Nothing to trade 

The sad truth is, other than scientific research, media and very specialist engineering, the UK doesn't produce much. As a result other nations don't really have much reason to trade with the UK, as there isn't much for us to sell them. Sure we are a large consumer market, but we cannot afford not to trade with other nations just cause the deal isn't great.

But that is okay currently, because we have access to the single market(itself an awesome trade deal) and have a host of around 50 others, which we come out of pretty well, thank you very much. We have these deals because we marketed ourselves as the gateway to the single market . 

This would be great news for the UK, as it would mean we still had access to almost all the material, goods and luxuaries we are accustomed to, if it were not for one little detail.

Almost all of our trade deals would be left null and void with the signing of Article 50(you remember that thing that nobodies signing because they have no plan in place).

Trade deal are a real arse ache, they take years to hammer out and honestly at this point there is no certainty anyone would be willing to give the UK anything like as good terms in future as we have right now, but that is okay because out leaders live in....

Fantasy land!
"It's all just propaganda, everything fine."

Despite  the crash of the pound, despite multiple credit rating agencies having removed out AAA status, despite ongoing market instability, the message in the right wing press and from the leave campaigns leaders is that; reality is over rated, everything is  fine! Every. Thing. Is. Fine.

This is of course because markets are non-rational, and to a degree perception defines economic reality. Many leave voters are believing this message uncritically, and clinging to it with the desperation of angry drunks.

Where's my money, man? Give me my money!

Britains future looks to involve a fair amound of being beaten with baseball bats by loan sharks, as  Standard and Poor's, Fitch, and, Moody have all down graded the UK's credit rating, making it harder and more expensive for the nation to borrow.

£350 million as week?  

One of the big elements of the leave campaign was the above statement. Now the idea that we spend £350 million a week on the EU has been thoroughly debunked and the idea that we could have spent all of that money on the NHS (as opposed to the things we were getting funding from the EU for) was always some what ridiculous, however, the idea of spending significant sums on the NHS, is to the British populations roughly equivalent of promising "free gun and your sports team winning the next superbowl" to a subset of the American population. 

You'll note I hope, notice the absence of the words "we will fund...", and sure enough, not sooner had the dust begun to settle, than the leave campaign conveniently shuffled the statement of their website and briefing that it would almost certainly not be possible to spend the money on the NHS...

Which is a good thing too. Why? Well because we are very likely to have to continue to pay a significant portion of this for access to the single market, just like the non-EU Scandinavian countries do

There is also fairly little chance we will get migration controls, as most hyperthetical deals for single market membership will require free movement of labour...

Which is itself oddly one of the very few cases of good news in the last few weeks, given that immigration controls would likely damage our GDP.

It's all awful...

So, yeah, that is some of what is happening here in the UK. With concerns the UK/london property bubble is about to burst and more economic chaos on the way, let me leave you with a thought and one last bit of politics.So first, this is the kind of event that on occasions triggers global recessions.  

Second, do you remember Boris Johnson? The blonde cockwomble who jumped into the Brexit campaign, throwing his weird and inexplicable political charisma into the mix, offering a legitimizing boost to Leave? Well he came out of the vote presumptive leader of the conservative party, and our next priminister, and within the space of a few days pissed is all away. On thursday, last week, having just been stabbed in the back by his presumed deputy, Boris withdrew from the race, leaving the conservatives to choose from perhaps the only four people more utterly horrible than him, in the whole of British politics

Fuck you, Boris.

Anyway promise that i have it out of my system now; back to pure red markets goodness from now on ;)

Thursday, we learn about the horrors of puddles!