back to article Osborne on Leave limbo: Travel and trade stay unchanged

Keep calm and carry on is the Chancellor’s message to UK firms trading with Europe working with EU staff following last week’s shock victory for Vote Leave. George Osborne made a statement Monday morning designed to calm the markets and business jitters since the referendum result to leave the EU. Osborn stated the fact that …

Anonymous Coward

Even here at the bottom end it's a mess

We do forklifts; selling, hiring and maintaining. All very unglamorous and dealing almost entirely with the manufacturing industry.

Our main supplier of parts is in Belgium, our (separate) main supplier of new machines is also in Belgium, our biggest single customer is German and some huge proportion of our business trickles down from [unnamed motor manufacturer].

So, our major suppliers due to exchange rates became 6% more expensive overnight, our single biggest customer's future in the UK is uncertain, and heaven only knows what the carmaker will do now. Oh, and if (as anyone remotely sensible wants) the UK is to retain access to the common market we'll still be required to adhere to all the EU regulations, but without having a vote in them.

Yay independence?

42
2
Silver badge

Re: Even here at the bottom end it's a mess

our biggest single customer is German and some huge proportion of our business trickles down from [unnamed motor manufacturer

our major suppliers due to exchange rates became 6% more expensive

So, your exports just got 6% cheaper as well, or to put it another way every EU sale now gets you 6% more income. Swings & roundabouts.

I've never seen such a bunch of glass-half-empty pessimsists :)

12
38
Anonymous Coward

Re: Even here at the bottom end it's a mess

Everything we do is priced in £, so no dice.

Also we've now got the fun situation of having to fix a £/€ exchange rate, to be able to quote people in £ for new machines to be ordered in a month or more, to be paid for in €. Margins are already rather thin. Fun times.

20
1
Silver badge

Re: Even here at the bottom end it's a mess

Also we've now got the fun situation of having to fix a £/€ exchange rate, to be able to quote people in £ for new machines to be ordered in a month or more, to be paid for in €.

So talk to your accountant about currency hedging, there's nothing new or Brexit-specific about that.

8
9
Len

Re: Even here at the bottom end it's a mess

@ Phil O'Sophical A devalued Pound is only beneficial if none of your purchases are in another currency. If you buy cherries from Italy to make "British' jams or buy German parts to produce your machines designed in Britain a company could easily be worse off.

18
1
Anonymous Coward

Re: Even here at the bottom end it's a mess

That's possible, but there's a cost involved in setting up such a facility and for using it, to hedge against the risk of an unfavourable exchange rate movement *IF* the order is actually placed. An unknown % of the quotes will ever come to fruition.

Plus I'd have to find a new accountant, I don't think they're particularly competent in that area. I doubt the merchant banks would be particularly interested in the vague possibility of dealing with me at this moment, I imagine they're rather busy.

7
0
Silver badge

Re: Even here at the bottom end it's a mess

@ Phil O'Sophical A devalued Pound is only beneficial if none of your purchases are in another currency.

Indeed so, but as the original poster clearly said, his company buys parts from Belgium, and sells finished goods to Germany. He wil lose one one, but gain on the other. The sky is not falling.

4
16
Anonymous Coward

Re: Even here at the bottom end it's a mess

OP here.

We buy parts and machines in €, so those purchases are say 10% more expensive.

The German company operates in the UK and we sell services to them priced in £.

We lose on the import, and gain nothing on the export. We also import a far greater value overall than we export.

21
0

Re: Even here at the bottom end it's a mess

So you run a business that trades extensively in other currencies but you don't hedge? Jesus...

7
7
Anonymous Coward

Re: Even here at the bottom end it's a mess

"I've never seen such a bunch of glass-half-empty pessimsists :"

Clearly you are the expert here (not that we need any), and those right in the middle of it know nothing.

A shrinking economy to the tune of 2 trillion USD in a couple of days is not a problem?

15
2

Re: Even here at the bottom end it's a mess

As other posters pointed out.

Your £GBP parts went up 6%, but your £GBP income went up 6% too.

Depending on how much stuff you make for the UK market (and fixed contracts) then your company should have became more profitable overnight!..

Think more of it this way, Their €EU numbers stayed the same, but when they convert it back to £GBP then there's more "numbers" there. So the staff, pension, gov all take home less and the employer takes home more.

If they can keep this up for a few more months we can rename ourselves to little China ;P.

2
6
Anonymous Coward

Re: Even here at the bottom end it's a mess

@ MR J

Please, for the love of God tell me how my £ income has gone up by 6%, considering that if last week a particular machine was hired out for £x/week it is still £x/week this week. The contracts are in Pounds!

10
0
Silver badge

Re: Even here at the bottom end it's a mess

A shrinking economy to the tune of 2 trillion USD in a couple of days is not a problem?

Two days isn't long enough to decide if the economy is shrinking at all, and a twitchy stock market doesn't define a 'shrinking economy" anyway, so no, I don't think there's a problem yet. The markets are still in passably healthy shape over the year so far. We see the same twitchiness after general elections, give it a few months and then review the situation when heads have cooled.

1
3
Anonymous Coward

Re: Even here at the bottom end it's a mess

The contracts are in Pounds!

Currency exchange rates are always volatile, look at past experiences with the ERM, Lehman Bros, Nick Leeming, etc. You signed contracts in GBP when you have costs in EUR and didn't hedge, which was unwise. 20/20 hindsight is easy, of course, but if I were you I'd get some serious financial advice before the US presential election comes along in November.

2
1

Re: Even here at the bottom end it's a mess

Since I'm from a country that regularly suffers this type of fall in currency (ISK), what you claim is not correct. This fall in the pound is going to increase cost of living, increase inflation, increase interest rates and the list goes on and on when it comes to this.

In short, this is no good and is going to cost the pubic in the UK billions and that is just in the short term.

8
3

Re: Even here at the bottom end it's a mess

Currency hedging is mainly for corporate clients in UK banks. We have been talking to our bank previously (before this debacle started) because we often buy in USD and some 75% of sales is in the eurozone. We now offer the best prices in USD but also in EUR for convenience but at prices with a decent, inbuilt currency margin. GBP pricing is only for the UK. Nobody outside the UK has ever wanted to pay in Sterling.

1
0

Re: Even here at the bottom end it's a mess

This fall in the pound is going to increase cost of living, increase inflation, increase interest rates and the list goes on and on when it comes to this.

Hasn't the Bank of England been actively trying to increase inflation since the financial crisis? Now something has happened which may actually succeed.

Compare Japan. (which may also prove that deflation is not always as fearsome as half-digested history of the 1930s would suggest).

1
0

Re: Even here at the bottom end it's a mess

If you buy cherries from Italy to make "British' jams or buy German parts to produce your machines designed in Britain a company could easily be worse off.

Only to the extent that the customers can choose not to buy your product when you are forced to raise your prices. For example, if one of your competitors is making similar machines out of parts manufactured in the UK, or if they switch to blackberry and apple jam made using British fruit, and you don't change your output. If there is no alternative to using German parts you'll just be forced to raise your prices, and your competitors likewise.

0
0

Re: Even here at the bottom end it's a mess

Plus I'd have to find a new accountant

Why do you need an accountant to hedge? It's not hard and online brokers happily handle mere three-digit trades in major currencies. You take an order for x dollars which you you can expect to be paid in two months' time and on that basis have to buy materials costing y pounds now. You can sell some dollars equalling y pounds two months forward at a rate known today. You can also look up the relevant forward rate for the issuing of quotations. All you need is a forex broker. Two months hence your dollars arrive, a demand for those dollars by your broker becomes due, and the pounds at the agreed rate become available.

My holiday funds were hedged a few weeks ago. I rather expected this!

0
0
Silver badge
Flame

There is no fucking way everyone's going to wait

Things cannot go on as normal while there's three months of House of Cards for the two main political parties and then afterwards work out whether or not there really will be an exit or there'll be new elections or a second referendum or however they want to backtrack.

They are going to find out they're not as important as they think they are.

They either come up with a credible routemap now or any argument about the UK pulling out because it pays x million a day to the EU will become academic anyway.

31
1

Re: There is no fucking way everyone's going to wait

It already has become academic. One way and another, the leave vote has already cost the UK far more than the UK's entire historical contributions to the EU.

29
6
Silver badge
Stop

Re: There is no fucking way everyone's going to wait

"It already has become academic." Yes, but the only way back now is for the Commons to vote it down, since 37% of the registered electorate is not a mandate. Tell your MP to vote Brexit down.

3
2

Re: There is no fucking way everyone's going to wait

There is also the little issue of stripping the people of an entire nation of a citizenship without a valid reason (which according to international treaties etc is usually fraud, crime etc). I believe that the Vienna convention and the European Convention on Nationality (which the UK has opted out of) may put some blockers in about what the government can do.

2
0
Silver badge

Project FUD is alive and well

more than one-third would continue to hire at the same pace.

a quarter planned to freeze recruitment, with five per cent expecting to fire staff.

One in five are considering moving some of their operations outside of the UK

one per cent will bring operations back.

So what are the figures for any other July? is this any different from "business as usual?

4
17
Silver badge

Re: Project FUD is alive and well

"So what are the figures for any other July? is this any different from "business as usual?"

Not got the figures to hand, but I suspect 20% of businesses planning to offshore a big chunk of their workforce and another 25% engaging in a hiring freeze isn't a typical July.

16
2
Anonymous Coward

Re: Project FUD is alive and well

..and I think the FUD group were the ones saying "ooh, be afraid, there are lots of people with dark skin coming to take your jobs".

7
2
Silver badge

Re: Project FUD is alive and well

Interesting. I've got 7 downvotes already just for asking a question, and the only attempt at an answer starts "Not got the figures to hand, but I suspect..."

Anyone who has the figures to hand want to take a stab at an answer?

2
5
Silver badge
Mushroom

Re: Project FUD is alive and well

I'm all for fact-based thinking, but the fact is that the markets are doing exactly what the Remain side predicted and exactly the opposite of what the Leave liers predicted. There was, and is, no uncertainty and doubt; fear was, and is, fully justified.

As I keep saying, for heaven's sake email your MP to vote to bring us back from the brink.

6
2

Re: Project FUD is alive and well

I took part in the IoD poll. We started contingency planning just after the general election last year when they promised the referendum. As the eurozone is by far our biggest market, we eventually decided to open two offices in the eurozone as well as moving the holding company there. All our hiring has been there, not in the UK. The UK company will be relegated to only serve UK customers.

5
0
Silver badge

Re: Project FUD is alive and well

"..and I think the FUD group were the ones saying "ooh, be afraid, there are lots of people with dark skin coming to take your jobs". "

I thought it was that Polish/Romanians who would be taking all the jobs. Once the UK is outside the EU, then it'll be migrants from the sub-continent who'll be taking the jobs.

So I'm pretty sure a Leave vote was anti-EU migrant and pro brown skinned or commonwealth migrant.

Or the UK could magically solve the labor issues by enforced training and job placement. Since this has yet to be shown to ever work (it's about the worst form of communism), once this has been solved then the UK can lead us all to the new utopia. Oh, and it would require not only controlling where people lived, but also not letting them leave the country ever.

2
0
Anonymous Coward

Re: Project FUD is alive and well

Some of the Brexiters interviewed on TV probably couldn't get a job if the UK was relocated to the moon. No immigration stoppage would ever help them.

2
0
Anonymous Coward

Re: Project FUD is alive and well

'the fact is that the markets are doing exactly what the Remain side predicted and exactly the opposite of what the Leave liers predicted.

The markets are doing exactly what anyone with any common sense would have expected, their usual chicken little impression because of uncertainty. It's unfortunate that people panic in the face of uncertainty but that's human nature for you. The markets will recover, it would be foolish to react too quickly (well, except to buy sterling, as I did this morning :) )

As I keep saying, for heaven's sake email your MP to vote to bring us back from the brink.

Any such vote would be a catastrophic push over the brink. It would leave the UK labelled as Europe's doormat, full of bluster but unable to stay any course. It would be the end of every concession, opt-out and rebate, since the EU could simply majority-vote us out of everything and they know we'd cave in. We'd be in Schengen and the Euro before you know what hit you, and the financial markets would be shipped off to Frankfurt. What a field day Farrago and UKIP would make of that.

When did we become a nation of cowardly French poodles?

1
0
Silver badge

Re: Project FUD is alive and well

"The markets are doing exactly what anyone with any common sense would have expected, their usual chicken little impression because of uncertainty. It's unfortunate that people panic in the face of uncertainty but that's human nature for you. The markets will recover"

The markets are correcting for future expectations. What make you think the correction will be un-corrected? There is no guarantee of that. Things could just as well keep sliding down another 5-10% and stay there for 5-10 years.

"Any such vote would be a catastrophic push over the brink. It would leave the UK labelled as Europe's doormat, full of bluster but unable to stay any course. It would be the end of every concession, opt-out and rebate"

This is not unlikely. Still a lot better than not being in the EU.

0
2
Silver badge

Re: Project FUD is alive and well

@ Yes Me

"I'm all for fact-based thinking, but the fact is that the markets are doing exactly what the Remain side predicted and exactly the opposite of what the Leave liers predicted. There was, and is, no uncertainty and doubt; fear was, and is, fully justified."

Actually it seems to be what both predicted. And both predicted it would be a good thing for the UK in the short-mid term and the different opinions were for many years down the line depending on what actions an elected free gov does. The idea that we are all doomed as soon as the vote is over was far more recent FUD.

I am amused that the leave are accused as liers when we are yet to start WW3. At what time is that again?

1
1
Bronze badge

Re: Project FUD is alive and well

>So I'm pretty sure a Leave vote was anti-EU migrant and pro brown skinned or commonwealth migrant.

Since the heaviest Leave vote came in communities that saw relatively little migration (and the heaviest Remain vote came in communities with the highest migration), there was little logic to their xenophobia.

They were 'damned immigrants' - allowing xenophobes to imagine whatever hate figure they chose.

1
1

Re: Project FUD is alive and well

Two and a half days is only long enough to observe a knee-jerk reaction (which is actually reversing to some degree over the last couple of hours). In a year or two we'll know to what extent project fear was accurate.

Too late to put the toothpaste back in the tube, anyway. You can blame the EU commission as much as the Cameron government. The fundamental problem is that neither the UK government nor the EU commission has been listening to its citizens for the last two decades.

If the EU commission wants to fix this problem they'll (finally!) listen and propose treaty changes to (a) allow states to limit freedom of movement within sane limits (roll back to before Maastrict treaty?), and (b) permanently and irrevocably roll back EU law out of all "home" matters which do not directly concern dealings between EU states and (c) address the EU's democratic deficit to reconnect it with its peoples. Then we could hold another referendum on the new and improved settlement, and get the result that UK.gov and EU.gov both wanted.

Listening to the noises emanating from the palaces in Brussels so far, they still don't recognise this problem. They want the UK out asap. It won't be good for the UK in the next few years, but it will end far worse for the EU and worst for the commissioners in power when TS finally hits TF. The guillotine awaits them, and I'm not at all certain that's a metaphor.

1
0
Silver badge

Re: Project FUD is alive and well

@ Nigel 11

"Listening to the noises emanating from the palaces in Brussels so far, they still don't recognise this problem."

I think you will be amused by this- http://www.forbes.com/sites/timworstall/2016/06/28/brexit-isnt-about-leaving-todays-european-union-its-about-not-joining-tomorrows/#7de99a05b4b0

0
0

Re: Project FUD is alive and well

@codejunky

Many thanks. He's a better writer than I am!

1
0
Silver badge

Growing Sense of bereavement..

Just like a death, the Brexit result has resulted in an irreversible change. You can't ask a dead granny those questions you always wanted. Now you can't plan a future as an EU citizen because that's gone.

I'm not accusing, as some have done,. the Leave camp of a being a bunch of ill-educated xenophopic seniors, with some rosy tinted memory of a Darling Buds of May England. But I do think that some of them were duped possibly even conned by the Leave campaign with promises that are patently impossible even after several years of nogotiations; and they are precisley the people who are likely to be hit hardest by the growing consequences.

Sad Days

35
3
Silver badge

Re: Growing Sense of bereavement..

I do think that some of them were duped possibly even conned by the Leave campaign with promises that are patently impossible even after several years of nogotiations;

You could say exactly the same about the Remain campaign, where promises about more control and more independence were just so much hot air.

The vote was Leave, now we have to make it work. Regretting it, or hoping it was just a bad dream, won't change anything, and trying to make leaving more difficult will only make things worse for everyone.

We have a once in a generation opportunity that we didn't have a week ago. Sad days perhaps, for those who want an easy life. Happy days for those willing to take that opportunity.

8
29
Silver badge

Re: Growing Sense of bereavement..

If you're rich, white, from a privileged background and preferably male like most of those leading the leave campaign then yes, you've got lots of opportunities to take advantage of. Everyone else however is in a leaky boat with no paddle. As for just accepting it, if a narrow loss was good enough for Farage to demand another swing at it, I don't see why remain should be any different.

http://www.bbc.co.uk/news/uk-politics-eu-referendum-36306681

13
6

Re: Growing Sense of bereavement..

"The vote was Leave, now we have to make it work."

No. You have to make it happen. Until then leavers are 'having their cake and eating it', you wanted to leave, start pressing the clowns in westminster to make it happen NOW.

The leave voters I talked to after the result voted to leave, not to get a better deal. The leave campaign targeted them, time to grow some balls and accept the consequences.

17
0
Silver badge

Re: Growing Sense of bereavement..

"You could say exactly the same about the Remain campaign, where promises about more control and more independence were just so much hot air."

I don't recall the Remain camp making many promises of what would happen if we stayed in, tbh. I do remember them promising that if they lost, the pound would fall, unemployment would go up, there'd be a recession, we wouldn't be able to get access to the common market without following all the rules anyway, hell, even that the price of holidays would go up. Y'know, all the stuff that's actually happened over the last few days.

Just about the only thing that hasn't happened is Osborne's Brexit Budget (A.K.A the second-longest electorial suicide note in history), and that's only because he honestly still believes he has a chance at No. 10.

21
2
Silver badge

Re: Growing Sense of bereavement..

I think the budget was delayed so that brexiters would have to be the ones to announce and implement it. Why bother getting your hands doing something you don't want to do and warned everyone about and get the blame for it when you can wait a few months, then point at laugh safe on your big pile of money.

8
0
Anonymous Coward

Re: Growing Sense of bereavement..

If you're rich, white, from a privileged background and preferably male

More excuses.

Everyone else however is in a leaky boat with no paddle

So get off your arse and start plugging leaks, FFS. Don't just sit there hoping a luxury cruise liner will pass by.

if a narrow loss was good enough for Farage to demand another swing at it, I don't see why remain should be any different.

By that reckoning the French acceptance of Maastrcht to create the EU (51%) was also invalid.

You don't seem to realise that one of the very strong driving forces behind the Leave campaign was to get rid of the arrogant EU elite who are so convinced of their own infallibility that anyone who disagrees with them must be wrong, and will be told to vote again, and again, until they "get it right". By taking that same attitude to this vote you define yourself as part of the problem.

3
17
Silver badge

Re: Growing Sense of bereavement..

"So get off your arse and start plugging leak"

Remainers have to do nothing. YOU fix it!

17
2
Silver badge

Re: Growing Sense of bereavement..

the pound would fall, unemployment would go up, there'd be a recession, we wouldn't be able to get access to the common market without following all the rules anyway, hell, even that the price of holidays would go up. Y'know, all the stuff that's actually happened over the last few days.

No, almost none of it has happened.

The pound has dropped. A little. Three months ago it was $1.43, now it's $1.37. Not surprising with all the uncertainty, it's only been two working days since the result. It's way too soon to speak of unemployment (which was the lowest in Europe anyway) or a recession, or holidays, or access to the common market.

Just about the only thing that hasn't happened is Osborne's Brexit Budget

That was just Remainer FUD.

2
7
Silver badge

Re: Growing Sense of bereavement..

Remainers have to do nothing. YOU fix it!

Fine, if the remainers will agree not to keep kicking more holes while saying "we're sinking, told you so"

3
11
Silver badge

Re: Growing Sense of bereavement..

"Fine, if the remainers will agree not to keep kicking more holes while saying "we're sinking, told you so""

Huh? Who's kicking holes?

6
2
Silver badge

Re: Growing Sense of bereavement..

"Just about the only thing that hasn't happened is Osborne's Brexit Budget

That was just Remainer FUD."

We haven't left yet. A new budget will be needed as soon as we leave, if ever.

I can't see how we can not have a completely new budget if we leave...

Obviously Osborne won't want to stoke the flames under the boiling financial market at this exact moment in time.

4
0

Page:

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Forums

Biting the hand that feeds IT © 1998–2017