Reply to post: Re: About Time

British Prime Minister Boris Johnson moves to shut Parliament

Justthefacts

Re: About Time

So, your argument is:

1) We import lots of stuff from the EU. They might threaten not to sell us stuff. Therefore, they have us over a barrel.

2) We export lots of stuff to the EU. They might threaten not to buy stuff from us. Therefore, they have us over a barrel.

Can you see the flaw in your reasoning? If not, let me clarify. Every trade is done at a price where the price reflects how much the goods being bought are worth to the buyer. Often there is a power imbalance, but *this is reflected in the price*. If “the EU” have a monosoponistic claim on our export lamb, they would already be paying us sweet FA for it.

In fact, “the EU” doesn’t buy lamb, individual supermarkets do. And they are competing against each other. It wouldn’t make any sense for Carrefour to buy US or NZ lamb rather than UK just to poke us in the eye, when those countries aren’t in the EU either. The willingness of Carrefour to pay won’t change, so if the EU imposes 10% tariff, our price in euro would have to decrease by 10% to compensate. Except, the exchange rate already dropped by 15%, so actually we are ahead on that deal and currently our exports are booming.

You seem to think it’s bad news when effective exchange rate drops, and also when it goes up. You want to “not have your cake and also not eat it”

The reality is, it’s mostly swings and roundabouts.

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

SUBSCRIBE TO OUR WEEKLY TECH NEWSLETTER

Biting the hand that feeds IT © 1998–2019