[EU] Brexit negotiations at a standstill

[Pann]

I think there's little doubt that a US-UK FTA won't replace the one we had with the EU by being in the EU, but that should be obvious given the relative market shares of the EU & USA when it comes to the UK's trading partners.

One of the touted benefits of Brexit was that it is a big wide world out there and by leaving the EU we would no longer be held back and would able to exploit the opportunities on offer.

Now it turns out that a trade deal with our largest trading partner (in terms of exports) is not all it's cracked up to be and that economically we'd probably be better off if everyone looked down the back of their sofa and spent the change they found.

It absolutely is a nonsense figure, given the way it is calculated. For example, the UK imports more than it exports. Want a quick & easy way to bump up the GDP figures? Erect massive tariffs on all imports - or even ban them altogether. Because of the way GDP is calculated, that will increase GDP (C+I+G+X-M vs C+I+G+X-0, basically). The government could double, if not triple, GDP tomorrow by borrowing £2tn from the Bank of England and then giving every family in the UK a share, or by spending it on whatever it wants.

On the other hand, what isn't calculated? Taxes & servicing debt both take money out of the economy, but they are left out - funny, that.

Then there are all the adjustments and such made over time. The USA was in recession in 2001 according to reporting at the time... until the BEA finished adjusting the figures and made the recession disappear. So... was it in recession? Who knows, because the metric we use - GDP - is a retarded one.

https://www.wsj.com/articles/SB100678701961876400

vs

https://www.multpl.com/us-real-gdp-g...ble/by-quarter

GDP like all figures is only useful as a tool if it is used properly. The comparison, in this case, as to how certain outcomes will influence UK GDP is perfectly valid - hence our own, pro-Brexit, government using them.

Other factors will influence GDP and it is possible that even with a fall in GDP the average UK citizen will not notice any difference to their lives - it may even be the case that despite a contraction in GDP tariff reductions or other stimulus means that the average person is slightly better off - but figures cannot be dismissed because on their own they do not tell the whole story or because they do not give the desired result.

Sure, but I'm attacking (a) the routine where people say what "could" happen etc, and (b) the numbers, which are nonsense.

But ultimately this line of argument is no more sophisticated than economic predictions are complicated therefore just ignore them.

[Forogil]

The point I was making, my property I choose who lives in it. For whatever reason I think, but perhaps am not able to say thanks to stupid EU rules. Whether that's potential tenants with a bad haircut, tattoos, white socks, or a big nose. I believe nightclubs etc quite openly place the very same thing on all their flyers inviting entry to their property.

R.O.A.R.

No one accuses them of racism, they just perhaps don't want Esmerelda at the party.

Of course night-clubs are accused for racism, just bing it:

https://www.theguardian.com/world/20...le-environment
https://www.bbc.com/news/newsbeat-44440799

I don't know why it just "randomly" picked news-stories from London.

And it was more a matter of exposing your ridiculous claim that it wasn't racism - just allergy to garlic, cheese (still unclear why you have to eat people's food), and big-noses.

[Teleros]

One of the touted benefits of Brexit was that it is a big wide world out there and by leaving the EU we would no longer be held back and would able to exploit the opportunities on offer.

Right, but remember this is only the USA. Granted, it might not be fair to say "only" the USA, but there's the whole Commonwealth and more for us to do deals with too.

GDP like all figures is only useful as a tool if it is used properly. The comparison, in this case, as to how certain outcomes will influence UK GDP is perfectly valid - hence our own, pro-Brexit, government using them.

Oh, well sure if you just want to play with numbers, yeah there's nothing wrong with GDP. As a measure of the actual economy though, it sucks hard.

But ultimately this line of argument is no more sophisticated than economic predictions are complicated therefore just ignore them.

Nah, it's more that I'd like to see more useful numbers. For example, real wages, expected tax revenues, (un)employment, expected FDI... I'll grant you that condensing it all into one number (GDP) is simpler and makes for nicer headlines, but the examples I just gave will provide much better information as to the strength of the real economy than GDP.

[Demolitia]

Right, but remember this is only the USA. Granted, it might not be fair to say "only" the USA, but there's the whole Commonwealth and more for us to do deals with too.

Have you even looked at the types of imports and exports you have to and from the EU?
https://researchbriefings.parliament...mmary/CBP-7851
Click on the full pdf report. It's cars, medicines and machinery both ways. Services get more interesting even.
Are you seriously planning to compensate financial services and tourism with the US or the commonwealth? Or buy tata cars?

[Pann]

Right, but remember this is only the USA. Granted, it might not be fair to say "only" the USA, but there's the whole Commonwealth and more for us to do deals with too.

Only the USA? The US is largest economy on the planet and biggest single destination for our exports and the result of a trade deal with this powerhouse is... well... it's a rounding error.

To say that I am not optimistic that trade deals with Commonwealth nations will yield better results would be an understatement.

Oh, well sure if you just want to play with numbers, yeah there's nothing wrong with GDP. As a measure of the actual economy though, it sucks hard.

In terms of comparing the outcomes of potential trading relationships GDP is a valid metric.

Nah, it's more that I'd like to see more useful numbers. For example, real wages, expected tax revenues, (un)employment, expected FDI... I'll grant you that condensing it all into one number (GDP) is simpler and makes for nicer headlines, but the examples I just gave will provide much better information as to the strength of the real economy than GDP.

All of those figures are much, much harder to predict than GDP - which in itself is difficult to predict. The point of the government figures is not to give an absolute answer but to highlight the different outcomes of different trade relationships.

[Teleros]

Click on the full pdf report. It's cars, medicines and machinery both ways. Services get more interesting even.
Are you seriously planning to compensate financial services and tourism with the US or the commonwealth? Or buy tata cars?

Are you seriously suggesting there won't be UK-EU trade post Brexit, even in the event of a complete failure to reach any kind of deal?

To say that I am not optimistic that trade deals with Commonwealth nations will yield better results would be an understatement.

Mhmm, my point is just that it's not fair to model a situation where you focus only on one country.

In terms of comparing the outcomes of potential trading relationships GDP is a valid metric.

Going to disagree here.

All of those figures are much, much harder to predict than GDP - which in itself is difficult to predict. The point of the government figures is not to give an absolute answer but to highlight the different outcomes of different trade relationships.

To my mind, the GDP stuff is a case of "garbage in, garbage out". It's much easier to work with the figures I gave, because frankly a lot of it is much easier to get a hold of if you're the government. Through the income tax system you can get a very good picture of family incomes etc over the years, productivity numbers by industry aren't too hard to get a hold of either - and there you go, that's the core of what you'll want if you want to compare, say, UK car manufacturing wages before & after a UK-USA FTA.

[Pann]

Mhmm, my point is just that it's not fair to model a situation where you focus only on one country.

Why? The potential US FTA is the only one on the table until the proposed terms of other FTA agreements are known it is simply impossible to model their outcome.

Going to disagree here.

You have to ask why the government - who obviously want to show their potential trade deal in a good light - would use these figures if they were, as you say, a bad metric.

To my mind, the GDP stuff is a case of "garbage in, garbage out". It's much easier to work with the figures I gave, because frankly a lot of it is much easier to get a hold of if you're the government. Through the income tax system you can get a very good picture of family incomes etc over the years, productivity numbers by industry aren't too hard to get a hold of either - and there you go, that's the core of what you'll want if you want to compare, say, UK car manufacturing wages before & after a UK-USA FTA.

I'm afraid that is complete nonsense. It is in no way easier to work with the figures you've given and it would appear that you're trying to obfuscate to situation.

The point of using GDP - in this case - is to model from the same starting point with all things being equal the effects of different trading scenarios on the UK economy.

I seriously have a hard time believing that the UK/US FTA will drive up wages when the overall impact on the UK economy is - for want of a better word - negligible.

[dribbles]

All this talk of GDP I wonder if the predictions account for this?

EU panic: German companies ‘poised to relocate to UK’

"Imagine you are a German car manufacturer and you have already seen a 5 to a 7 percent decline in the European car market. "But in a few years time, you realise that if you relocate your factory to Sunderland, you will be able to sell your Audis, Mercedes tariff free to the US."

https://www.express.co.uk/news/uk/12...s-carswell-spt

More benefits of brexit to the UK revealed...BMW renamed to British Motor Work? You heard it here first folks!

[Pann]

All this talk of GDP I wonder if the predictions account for this?

EU panic: German companies ‘poised to relocate to UK’

"Imagine you are a German car manufacturer and you have already seen a 5 to a 7 percent decline in the European car market. "But in a few years time, you realise that if you relocate your factory to Sunderland, you will be able to sell your Audis, Mercedes tariff free to the US."

https://www.express.co.uk/news/uk/12...s-carswell-spt

More benefits of brexit to the UK revealed...BMW renamed to British Motor Work? You heard it here first folks!

I admire your optimism but wouldn't it just be easier for them to produce cars in their US factories?

[dribbles]

I admire your optimism but wouldn't it just be easier for them to produce cars in their US factories?

Factory in the US.

Factories in the UK.

[Pann]

Factory in the US.

Factories in the UK.

VAG, BMW and Mercedes each have a factory in the USA hence factories - plural.

VAG have one factory in Crewe that produces Bentleys I can't see them wanting to swap the Continental for a Polo.

Mercedes abandoned their plan to produce cars in Sunderland.

BMW have two car plants one in Swindon and one in Oxford as well as an engine plant that produces their small capacity engines.

Don't get me wrong there could be potential for expansion of the UK car market (for example there is talk that Nissan will close European plant(s) to focus on Sunderland - https://www.bloomberg.com/news/artic...pean-plants-ft) but the big German manufacturers relocating to the UK is not something I think will happen.

I'd love to be wrong but I'm just not seeing it.

[Teleros]

Why? The potential US FTA is the only one on the table until the proposed terms of other FTA agreements are known it is simply impossible to model their outcome.

27 countries vs 1, when the former comprise what, 45-50% of our trade? Seems a bit unfair, that's all.

You have to ask why the government - who obviously want to show their potential trade deal in a good light - would use these figures if they were, as you say, a bad metric.

Because it suits their purposes. Like I said, it avoids inconvenient things like taxation and debt, which suits plenty in government all too well.

The point of using GDP - in this case - is to model from the same starting point with all things being equal the effects of different trading scenarios on the UK economy.

Right, but if the measure you're using is junk, you're not really learning much or doing much in the way of useful work beyond generating hot air from all the CPU cycles used to work out these numbers.

I seriously have a hard time believing that the UK/US FTA will drive up wages when the overall impact on the UK economy is - for want of a better word - negligible.

Agreed - I'd agree even if it had a bigger impact. For wages to rise in the UK I think it'd be better to not have a free trade agreement. Restrict the supply of labour instead of opening UK workers to US competition and you'd see a better result in that regard.

I admire your optimism but wouldn't it just be easier for them to produce cars in their US factories?

Possibly, but there may be other considerations in their supply chain, business etc that makes it better for them to site them in the UK. Maybe they can expand things more easily here, or build cars here for both the US & EU markets... just speculating mind you, but I imagine there's a reasonably sensible explanation.

[Pann]

27 countries vs 1, when the former comprise what, 45-50% of our trade? Seems a bit unfair, that's all.

I don't think anyone is directly comparing the US FTA with EU membership - I know I'm not - but it cannot be denied that the predicted result of the US FTA is underwhelming.

I think most people accepted that leaving the EU would result in a reduction of growth and that the potential trade deals we would be able to strike would not completely offset this but if the trade deal with the US resulting in such small gain is anything to go by (I think it is reasonable to expect that other trade deals will yield similar, if not worse, gains) then we are a long way short from offsetting the reduced growth from leaving the EU.

Because it suits their purposes. Like I said, it avoids inconvenient things like taxation and debt, which suits plenty in government all too well.

Yes, it does in so much as it allows different trading relationships to be compared. Tax and debt have nothing to do with what is being analysed.

Right, but if the measure you're using is junk, you're not really learning much or doing much in the way of useful work beyond generating hot air from all the CPU cycles used to work out these numbers.

You're going to have to come up with a more compelling argument than the numbers are junk because I say so.

Agreed - I'd agree even if it had a bigger impact. For wages to rise in the UK I think it'd be better to not have a free trade agreement. Restrict the supply of labour instead of opening UK workers to US competition and you'd see a better result in that regard.

What? The point of a FTA is to open up foreign markets and in order to enable our businesses to sell more to our trading partners. I simply cannot make the link between reducing or limiting trade and an increase in wages - perhaps you could explain your thinking?

Possibly, but there may be other considerations in their supply chain, business etc that makes it better for them to site them in the UK. Maybe they can expand things more easily here, or build cars here for both the US & EU markets... just speculating mind you, but I imagine there's a reasonably sensible explanation.

Unless the supply chains are in the UK the cars produced will fall foul of rules of origin and would not be be subject to reduced tariffs enjoyed by imports from the UK.

[Slant]

VAG, BMW and Mercedes each have a factory in the USA hence factories - plural.

VAG have one factory in Crewe that produces Bentleys I can't see them wanting to swap the Continental for a Polo.

Mercedes abandoned their plan to produce cars in Sunderland.

BMW have two car plants one in Swindon and one in Oxford as well as an engine plant that produces their small capacity engines.

Don't get me wrong there could be potential for expansion of the UK car market (for example there is talk that Nissan will close European plant(s) to focus on Sunderland - https://www.bloomberg.com/news/artic...pean-plants-ft) but the big German manufacturers relocating to the UK is not something I think will happen.

I'd love to be wrong but I'm just not seeing it.

It isn't happening. Anyone still believing that should probably stop taking drugs.

[Teleros]

I don't think anyone is directly comparing the US FTA with EU membership - I know I'm not - but it cannot be denied that the predicted result of the US FTA is underwhelming.

I think most people accepted that leaving the EU would result in a reduction of growth and that the potential trade deals we would be able to strike would not completely offset this but if the trade deal with the US resulting in such small gain is anything to go by (I think it is reasonable to expect that other trade deals will yield similar, if not worse, gains) then we are a long way short from offsetting the reduced growth from leaving the EU.

Yeah, fair enough.

Yes, it does in so much as it allows different trading relationships to be compared. Tax and debt have nothing to do with what is being analysed.

Well, that trade should be expected to impact taxes and all that, no?

You're going to have to come up with a more compelling argument than the numbers are junk because I say so.

I went over them before, but you weren't convinced, so w/e.

What? The point of a FTA is to open up foreign markets and in order to enable our businesses to sell more to our trading partners. I simply cannot make the link between reducing or limiting trade and an increase in wages - perhaps you could explain your thinking?

Think of an FTA as an increase in the supply of labour in whatever industries have the tariffs knocked down on. Bump up the supply of labour (ie by permitting equal competition with foreign workers), and the price will necessarily go down. Well... I suppose the US labour market could be so much more expensive that it doesn't really affect us, but I rather doubt that's the case.

[Pann]

Well, that trade should be expected to impact taxes and all that, no?

Seriously? Tax and debt have nothing to do with the comparison being made. It is a simple case of saying if we start a defined date and NOTHING else changes the predicted result of trading relationship A will be X% growth, B will be Y% and so on and so on.

I went over them before, but you weren't convinced, so w/e.

Nothing you've mentioned is applicable to the comparison of trading relationships. Surely it must occur to you that there has to be a reason why the government's own experts have decided to use GDP as a metric and not the figures you claim are better?

Think of an FTA as an increase in the supply of labour in whatever industries have the tariffs knocked down on. Bump up the supply of labour (ie by permitting equal competition with foreign workers), and the price will necessarily go down. Well... I suppose the US labour market could be so much more expensive that it doesn't really affect us, but I rather doubt that's the case.

I can't make head nor tail out of you're talking about there. In ideal circumstances a FTA opens up foreign markets whilst protecting domestic ones - I honestly don't know why you're mentioning an increase in the supply of labour.

[Demolitia]

All this talk of GDP I wonder if the predictions account for this?

EU panic: German companies ‘poised to relocate to UK’

"Imagine you are a German car manufacturer and you have already seen a 5 to a 7 percent decline in the European car market. "But in a few years time, you realise that if you relocate your factory to Sunderland, you will be able to sell your Audis, Mercedes tariff free to the US."

https://www.express.co.uk/news/uk/12...s-carswell-spt

More benefits of brexit to the UK revealed...BMW renamed to British Motor Work? You heard it here first folks!

China and the US are already german cars main export markets. I don't think audi and mercedes buyers are too picky about prices over there.

- - - Updated - - -

Are you seriously suggesting there won't be UK-EU trade post Brexit, even in the event of a complete failure to reach any kind of deal?

I was under the impression that you believe whatever trade loss will happen as a result of brexit could be compensated by trade relationships with the us and the commonwealth. I am not saying trade will stop, but I don't really see what it is the UK could sell or buy more favourably to make up for it.

[LeGin Tufnel]

/snip

Reading your posts is almost, almost enough to make me go full Long-Bailey.

You're the bastard love child of IDS and Katie Hopkins.

[Teleros]

Seriously? Tax and debt have nothing to do with the comparison being made. It is a simple case of saying if we start a defined date and NOTHING else changes the predicted result of trading relationship A will be X% growth, B will be Y% and so on and so on.

The FTA in question is supposed to improve our GDP by whatever tiny percentage it was over... I want to say 15 years or something. So yes, taxes absolutely do matter in this regard, because they're going to impact things like government expenditure... which is a part of GDP. If your model isn't including feedback loops like this then it's extra useless.

Nothing you've mentioned is applicable to the comparison of trading relationships. Surely it must occur to you that there has to be a reason why the government's own experts have decided to use GDP as a metric and not the figures you claim are better?

Beyond their preference for hiding things as I mentioned, inertia springs to mind. "We've always done it this way, so we always will."

I can't make head nor tail out of you're talking about there. In ideal circumstances a FTA opens up foreign markets whilst protecting domestic ones - I honestly don't know why you're mentioning an increase in the supply of labour.

You can't have free trade in (say) cars if I can erect tariffs to your cars but you can't erect tariffs to mine. If we have free trade in cars, then neither of us can have tariffs on cars in place. Therefore, whereas before our domestic manufacturers were protected from foreign competition, they no longer are. This is equivalent to a very large increase in the market, including the market for all the things that go into making those cars.

Now on the one hand, maybe we can get cheaper US aluminium or w/e, which would reduce the cost of building cars over here (of course, this might hurt our own aluminium industry, whatever it's like). On the other hand, if US car factory labour costs are lower than ours, that's not going to work in favour of our workers.

= = =

I was under the impression that you believe whatever trade loss will happen as a result of brexit could be compensated by trade relationships with the us and the commonwealth. I am not saying trade will stop, but I don't really see what it is the UK could sell or buy more favourably to make up for it.

Only partially compensated. I've always been one of those "sovereignty uber alles" Brexiteer types, and expected some economic pain from the get go.

= = =

Reading your posts is almost, almost enough to make me go full Long-Bailey.

You're the bastard love child of IDS and Katie Hopkins.

Oh please, that pair of wets?

[Pann]

The FTA in question is supposed to improve our GDP by whatever tiny percentage it was over... I want to say 15 years or something. So yes, taxes absolutely do matter in this regard, because they're going to impact things like government expenditure... which is a part of GDP. If your model isn't including feedback loops like this then it's extra useless.

Seriously what are you going on about? The linked figures predicted GDP based on certain trading scenarios - in order for it be a useful comparison it is assumed that there will be no difference in tax regimes, etc between each scenario.

Honestly it seems that you are attempting to muddy the waters... badly.

Beyond their preference for hiding things as I mentioned, inertia springs to mind. "We've always done it this way, so we always will."

So your fall back is some sort of conspiracy theory?!? Given the government's actions and their proposals I don't think they have much intention to do things the way they've always been done.

You can't have free trade in (say) cars if I can erect tariffs to your cars but you can't erect tariffs to mine. If we have free trade in cars, then neither of us can have tariffs on cars in place. Therefore, whereas before our domestic manufacturers were protected from foreign competition, they no longer are. This is equivalent to a very large increase in the market, including the market for all the things that go into making those cars.

Now on the one hand, maybe we can get cheaper US aluminium or w/e, which would reduce the cost of building cars over here (of course, this might hurt our own aluminium industry, whatever it's like). On the other hand, if US car factory labour costs are lower than ours, that's not going to work in favour of our workers.

That really makes no sense. How does increasing the potential market in which you can sell cars increase the supply of labour (which was your initial point)?


Look, I acknowledge that GDP is not a good measure as to how well the person on the street is doing and Brexit might well bring benefits to the average person despite GDP growth not being as strong as if we'd remained in the EU - I even said as much several posts ago - but using GDP to compare different trading scenarios is perfectly valid and to be honest your insistence that is not is really quite bizarre.