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HighPressure

UK & EU Economies post Brexit

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A lot of recriminations going on in the Referendum thread, so I am hoping that this one will be used slightly differently.

The markets are currently in turmoil around the world on uncertainty about the future, of UK and Euro zone economies. G7 say the UK is well placed to cope with the consequences of Brexit.

I have been watching quite a bit of CNBC to get away from the rather emotional debate here, and its been quite interesting to hear views from the US Markets. Believe it not there is quite a bit of exposure to the UK from US companies, and there are concerns on the strength of the dollar vs the pound and Euro.

We are in never before seen territory of a large country breaking away from a union, its effects around the world are simply not known. Analyzers stress we are not seeing a financial crisis but a political one which is quite different from what has been seen before.

The views are not all negative from the other side of the pond for the UK, and its going to be a very interesting time to see how all this plays out over the coming months maybe even years.

I note that Boeing are making their European headquarters in the UK irrespective of the Brexit vote. It would appear that some form of trade deals are already in the making.

As I said I have not made this thread to discuss the wrongs and rights, but purely to follow the moves, so please don't bring the argument from the referendum thread over.

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Hello Clive,

I will add my "tuppence worth" if I may.

Having voted Remain I and no doubt the majority of us will have to get on with life as best we can. Most will find little difference in the short term, apart from the volatility in the money markets and stock exchange.which may impinge on their pensions if maintained in the longer term, although it should even out of such investments  in the fullness of time.

What needs to happen next is to fill the political vacuum that is currently being experienced with an outgoing PM and possibly the Leader of HM Opposition also going to fall on his sword. Certainly unprecedented times. Once the politics in this country have been sorted, and only then,do I believe that any meaningful progress be made.

Trade deals will eventually materialise, but whether they will be as beneficial as currently enjoyed only time will tell.

As far as the level of immigration is concerned there will be no impact initially but towards the end of the invoking of  "Article 50" could well lead to a last minute stampede if it becomes obvious that those residing in the UK at the time may remain and others may wish to join them before it is too late to do so. Equally the exact opposite might be the situation at that time. If things do go badly with the economy and a recession results then there could equally be a mass exodus of European migrants back to their homelands.

Kind Regards

Mystic Dave

 

Edited by claret047

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Markets are now open in Asia and GBP is likely to dip lower today. Christine Largarde head of the IMF says uncertainty driving the markets in the short term. Next step crucial for UK and EU, not help by power vacuum.

The markets view UK as in political chaos following BREXIT, its important for short term stability that Cameron and Osbourne make strong statements today, and that negotiations start as soon as possible. The UK and EU have no choice but to work together in the best interests of both.

  

 

    

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ftse100 seems to be soaring.. I guess people only post that if it is doing badly 

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59 minutes ago, lfcdude said:

ftse100 seems to be soaring.. I guess people only post that if it is doing badly 

It's worth remembering that in December 1999 the footsie was just a few points shy of 7000 that being the highest it reached in what is now nearly 17 years.

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2 hours ago, lfcdude said:

ftse100 seems to be soaring.. I guess people only post that if it is doing badly 

FTSE 100 is primarily global and heavily exposed to commodities which appear to be lifting from their bottom. 

Generally though, people put far too much emphasis on short term movements in stock and currency markets. Evaluation quarter by quarter is much better to draw conclusions. 

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57 minutes ago, mike Meehan said:

It's worth remembering that in December 1999 the footsie was just a few points shy of 7000 that being the highest it reached in what is now nearly 17 years.

Pretty sure we passed that in 2014, perhaps only in intra-day trading though. 

At any rate, the market is relatively fairly priced right now. In 1999 it had the biggest multiple since the great depression. 

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Nearly everything will get blamed on brexit now that's how the media works all doom and gloom it was on the radio today,but the ecomony was in dire straits before with 1.5trillion in debt.

On a more lighter note.

SPECULATION is mounting there is a secret society within the EU after senior figures were snapped making the same masonic-style hand signal.

Nothing to see here move along.

http://www.express.co.uk/news/weird/692031/Does-hand-sign-made-by-Merkel-May-and-now-Juncker-prove-there-is-a-secret-EU-illuminati

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This post is off topic, and I don't apologise.

There are certain members out there who choose to bully persons whom they perceive as vulnerable and therefore are targeted for the following reasons.

I am  female- don't have a strong scientific background - have fairly liberal views on politics.- and  have challenged posts which I deem to have had no basis in fact.

Moderators take note.

 

 

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5 hours ago, mike Meehan said:

It's worth remembering that in December 1999 the footsie was just a few points shy of 7000 that being the highest it reached in what is now nearly 17 years.

Firstly I am glad the EU referendum thread has finally passed it sell by date, and I hope that people join this thread in a conciliatory nature to see how things unfold.

Mike you are absolutely about highs in stock markets, they are not necessarily confirmation that everything in the garden is rosy. BREXIT itself is not a huge player in the global playground, although it has provided a side show. The big issue in the market place is global growth (its too slow), which mean interest rates remain globally low and that means money looks for safe havens. A lot of money has been going into blue chip companies, utilities and gold. The Yen and Dollar are both far too strong which will cause problems with their exports. With the UK and EU investors are simply holding on to their money while they see how things pan out not just with the UK and BREXIT but also with the wider EU and its problems with low growth, Turkey and problems in Italy.

The US appears to be fairing better in the 2nd half of the year with, good job data, consumer spending up, but the FED is unlikely to raise interest rates there this year because it will simply push the dollar up further.

Meanwhile UK growth projection for 2017 was initially cut from 1.9% to 0.9% has now been adjusted to 1.3% so it is pretty inevitable that there will be a slow down in the UK economy, the question is how much, how deep and for how long???          

    

   

 

Edited by HighPressure

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‘Flash’ survey points to post-Brexit recession

Quote

The British economy has suffered a “dramatic deterioration” in activity after the vote to leave the European Union, dropping to a level not seen since the financial crisis, according to a closely watched survey.

Economists were warning that the data was consistent with an “imminent recession” after a flash reading of activity in the manufacturing and services sectors showed a decline in output and new orders, while business expectations recorded their sharpest fall ever.

The pound slid sharply after the purchasing managers index, which traditionally is considered one of the best indicators of the health of the economy, showed a fall to 47.7 in July, the lowest level since April 2009. Any reading below 50 represents a contraction.

http://www.thetimes.co.uk/edition/business/survey-points-to-imminent-recession-following-brexit-vote-xpjq9xdc9

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 http://www.bbc.co.uk/news/business-36864273

 

Philip Hammond, urged caution

"Let's be clear, the PMI data is a measure of sentiment, it's not a measure of any hard activity in the economy.

"What it tells us is businesses confidence has been dented, they're not sure, they're in a period of uncertainty now."

 

and as the £ fell in response to the data - it became a self-fulfilling prophecy

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1 hour ago, interested & confused said:

As a nation our profitability relies on confidence - if we don't have confidence in ourselves then how can we expect others to have confidence in  us? 

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s

11 hours ago, HighPressure said:

Firstly I am glad the EU referendum thread has finally passed it sell by date, and I hope that people join this thread in a conciliatory nature to see how things unfold.

Mike you are absolutely about highs in stock markets, they are not necessarily confirmation that everything in the garden is rosy. BREXIT itself is not a huge player in the global playground, although it has provided a side show. The big issue in the market place is global growth (its too slow), which mean interest rates remain globally low and that means money looks for safe havens. A lot of money has been going into blue chip companies, utilities and gold. The Yen and Dollar are both far too strong which will cause problems with their exports. With the UK and EU investors are simply holding on to their money while they see how things pan out not just with the UK and BREXIT but also with the wider EU and its problems with low growth, Turkey and problems in Italy.

The US appears to be fairing better in the 2nd half of the year with, good job data, consumer spending up, but the FED is unlikely to raise interest rates there this year because it will simply push the dollar up further.

Meanwhile UK growth projection for 2017 was initially cut from 1.9% to 0.9% has now been adjusted to 1.3% so it is pretty inevitable that there will be a slow down in the UK economy, the question is how much, how deep and for how long???          

    

   

 

HP ..

I agree that the FTSE stocks and shares indices are not representative of the current state of the UK economy.

I prefer for that to look at Gilts...

These represent an assessment of whether or not money is moving in or out of the UK.

Here it is all positive. The yield (inverse of the actual values) is at its lowest level for the whole of its life. (Over 300 years). It indicates that money is pouring into the UK. It is important because it dictates the bank rate (remained constant) and that in turn affects the mortgage rate,  (these are now falling naturally and reflect the situation of 2011- 2013) and will mean that people will have more money in their pockets for the years ahead. Good news indeed!.

The FTSE indices are  reflecting the situation in the coming 1 - 2 years. They are not necessarily looking at the current period.

The 100 has being rising strongly (up over 15% since just after the ref). It is based upon a partial world wide recovery in the mining stocks. BUT within that the '100'  is a lot of interest and variation....

Banking stocks have fallen substantially  Lloyds TSB and RBS (around 25%). As have companies like M&S  (I cannot help but think that this is a warning for companies not to get involved in politics!) and even TESCO has fallen. Despite of this the 100 index has now added nearly 250 billion pounds. This is a strong indicator that worldwide companies do not see the UK economy as a 'dead horse'.

Where has the money gone? Well it is the mining stocks, and also many British companies such as GSK, Diageo, BATS and even utiliites such as Shell and BP, all of whom see a partial devaluation of sterling as positive news. This also applies to Unilever, but what I find more difficult to quantify is why National Grid and Severn Trent have risen rapidly.

This money is looking at the next year and a half ahead. It does not spell recession next year (or ever)  to me.

Looking at the FTSE 250.

It is now at a higher level than it was pre ref. (and that was thought to be very high!).

In detail, the smaller banks like Virgin and  Metro plus others have again been hit hard. As have the builders and construction companies, They were at an unsustainable level, mainly based upon the London housing and construction boom. The ref simply triggered what would have happened soon anyway. The other major impacts were in the Travel  related companies such as the agents and airlines, where again I think that Ryanair has reaped their own rewards for political meddling.....

Against all this doom and despondency, the 250 has still gained(albeit slightly)!  Many companies who trade within the UK (including holiday companies and hotels), are not affected by the Brexit vote.They are now expected to thrive, as they have more than made up for a huge outflow in funds above.

In general terms in the 250, the business services, property, financail services,  telecoms  and retailer companies have recovered, although  to still be just below mid-range, chemicals, engineering leisure and industrials  are towards their upper ranges. 

Everyday we hear from worldwide companies who are staying or increasing their presence  in the UK. Some are now increasing their investment here, such as Boeing and  it was one of the large American banks who now intend to set up head offices in London. This contrasts with no companies I have seen who have stated that they will leave the UK.  Many have stated they might - but all seem to want to wait to see what happens.

So the above is my summary of economics at the end of the first month of Brexit. It is to say the least not what was expected by many in official circles and can only be considered a bonus.

MIA 

Edited by Midlands Ice Age

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This is not good news for post Brexit negotiations for our Financial Services sector upon which our economy is so heavily reliant.

Many are sceptical of the appointment of a notorious opponent of the City to represent Brussels in the talks.Michel Barnier , the former French government minister and European commissioner, has previously clashed with the UK over rules on bankers' bonuses and attempts to relocate City activities. The Telegraph described him in 2010 as the most dangerous man in Europe.

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Hello Kar999 and other fellow posters,

I saw that on television yesterday. It will be interesting to see how it all pans out. The commentator was saying that he ruffled a lot of feathers in the City of London, when EU banking rules were being formulated. The commentator also said that the member states through the EU Parliament would be agreeing the main policies with the Commission whom he represents tasked with the details.

Over the past few days whilst this thread has been closed we have witnessed a great deal of conflicting evidence on how UK plc is currently "doing".

On the one hand we have the FTSE 100 and the FTSE 250 above what they were pre 23 June and output for the past 3 months up until the 30 June showing a 1.6% increase. An important caveat to the output figure is that it only includes one week following from the Brexit vote, and although the numbers reported for April and May were very robust the June figures were somewhat less so as uncertainty and ultimately realization set in fueling further uncertainty.

Further positive news has come to light in that several large companies have now pledged major long term investment here, such as Boeing and GKN.

On the minus side the pound is well down on the pre Brexit exchange rate, with its pluses and minuses which have previously been well documented and so I will not repeat them here.

A further area of concern appears to be poor retail figures coming from the High Street and very low demand for investment by purchasing officers in various sectors of the economy.

They are certainly very interesting times ahead which over the coming months will inform us whether we are heading for golden times (albeit after possible short term pain), or long term stagnation with a dwindling market within which to sell our goods and services.

Kind Regards

Dave

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Hi Dave. Plenty of good news about but I don't thing the golden times will be after short term pain. The pain will IMO be medium to long term. Inflation can only be around the corner with many importers suffering 14% price rises due to the $. As a net importer that will affect us all.

Any new agreed trade deals are years away.

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We'd have a better shot at a bright future if our own media didn't try to self-sabotage at every opportunity

 

 

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1 hour ago, Snowy L said:

We'd have a better shot at a bright future if our own media didn't try to self-sabotage at every opportunity

 

 

Snowy L...

I must agree with your comments here...

This has been a classic day to show the qualities of the BBC!

In general,at 08:00 this morning this news was being presented  as job losses caused as a direct consequence of Brexit. (BBC Radio)

The BBC were the arch believers of this. The 07:30 news bulletin presented it only as being  required by the slowdown caused by the Brexit. It had a 10 minute discussion before someone pointed out that it was a little too early to be making any policy decisions based upon BRexit.. 

By the news at 13:00, the BBC  had mellowed to have been caused by the low interest rates over the past 5 - 6  years, and the continuing low rates now expected to be caused by BRexit!  (Inspite of the fact it had been full of how interest rates would have to rise prior to the ref).

By the 18:00 BBC news it had changed around to have been an effect of the last few years, and with a possibility of an uncertain future caused by Brexit.

As Danial Hannan has now reported it was a re-announcement which was made before the referendum was taken.

It does appear to me that many people are keen to talk the economy down. I do not see why.

Surely the better things are for the UK economy in the run up to the discussions the better it will be for the ultimate future of the UK? 

MIA

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Blimey, MIA: for once I agree with you! As if Lloyds weren't planning all this before-hand!

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36 minutes ago, Snowyowl9 said:

I know this is the express not many people`s favourite paper on here,but this must be true.

CATALONIA has approved a bid to break away from Spain and could see independence by the end of next year, according to politicians.

http://www.express.co.uk/news/world/694172/Catalan-Parliament-vote-independence-Spain

Pro-independence politicians defended the vote, saying Catalan citizens will get a say on independence in a referendum.

A poll last week showed that public support for splitting from Spain was on the rise - with 48 per cent of the Catalan population currently supporting independence compared with 43 per cent against it.

...

It's not quite the done deal that the media paints it to be.

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10 hours ago, summer blizzard said:

Pro-independence politicians defended the vote, saying Catalan citizens will get a say on independence in a referendum.

A poll last week showed that public support for splitting from Spain was on the rise - with 48 per cent of the Catalan population currently supporting independence compared with 43 per cent against it.

...

It's not quite the done deal that the media paints it to be.

Ah right well yes a lot can happen by the end of next year.

I did see something about this a few months ago,must of been on RT.

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With Q2 data now in it looks like US GDP growth over the past 4 quarters has fallen to ~1.4% vs ~2.2% for the UK.

First time since 2008 that i think Eurozone growth (1.6%) is faster than the US. 

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