Hi Mike
Yes. The US has/is booming. I have one (not very big!) pension in the UK with a mixture of UK and US investments. I think the UK funds are pretty conservative (property etc) and they’ve been completely outstripped by the more adventurous US funds over the last 10 years.
I see that the motor vehicle manufacturing industry “group” has reported that investment for the last 6 months is under £100m. The annual investment just a few years ago was £2.3b. Crazy!
The fall in the pound is a disaster for the vast majority of UK citizens, significant amounts of food and other goods are imported so will become more expensive. Manufacturing needs raw materials, components etc that are normally imported so their costs rise to a degree and so reduce the benefits of a weak pound. The only people who benefit are the more wealthy people who have overseas investments or share in companies that make most of the earnings outside the UK. Oh and Buffoon Johnson, he benefits because he is ecstatic because of being the PM and doesn’t care that he is shafting the country.
Careful guys! This thread is beginning to turn away from the OP’s original question and risks awakening Mr Dane’s irritated attention!
Best
David
I presume, as part of the drive for Brexit and the internal planning undertaken in the last 3 years, the UK can operate in a self-sufficient mode for all power, food, consumables, vehicles, plant machinery and components used in manufacture, and therefore not rely on imports from EU or be able to pay the higher prices for them given that there will be tariffs on the importation and the destabilization of the UK economy and value of the GBP.
Plus the Financial industry is ready for the loss of all European passporting on transactions conducted outside of the UK borders (btw it is about 50% of all transactions conducted within the City of London, and therefore a major component of revenue generated).
Remember 50%+ of the population voted for this.
I presume that was said with tongue firmly in cheek, as the UK is nowhere near self -sufficient for food - and if it were to move to more intensive agriculture and become self-sufficient and not import anything, choice would be very much more restricted than the current generation has been used to.
I am less clear on all the other commodities, but suspect they are a long way from the UK being self-sufficient.
You forgot to insert the “smiley” emoji…
Discussing B directly is against the moratorium - so best not pursue discussion of the possible cause of a need to be self sufficient, but only whether not UK is - however it might be getting off-topic.
No didn’t forget one - so the UK population voted for and the UK Government is implementing a strategy where imports from EU are required to feed the population and maintain the economy, but still planning on leaving that single market economy on which it fundamentally depends on and knows it will have to pay more for these items after leaving.
Remember 50% + of the population voted for this!
Guys,
please keep this about the effects of a fall in Sterling…
And if I’m understating correctly, the current drop is a sign that the market thinks there are portents of bad times are ahead and if it stays low it will begin to impact on inflation, never a good thing.
However there will be a short term gain in export advantage which might then be outweighed by higher cost imports of raw materials.
So average Joe, more expensive holiday abroad, (some) more expensive food and a lot of more expensive “luxury goods”.
So it would seem a small fall is possibly useful for an open economy but a larger sustained fall will cause issues?
.sjb
If it does play out as the market is expecting the “average” UK person COULD be better off as they have debt, interest rates will fall to stimulate the economy so they will have smaller interest bills each month (Unless BoE only uses QE to stimulate). House values will fall but that is not realised unless the person moves, and has been stated food prices will probably go up a bit. The world and their dog is short cable so I really don’t see that going to parity - I think that side of things is limited, but I could be wrong.
Fuel cost increase impacts everything because it affects all haulage, as well as personal travel, etc. My wife and I reckon the cost of food has gone up an average of 20 to 30% over the past 3 years.
Other things, too, but non-absolute essentials may indeed be luxury items.
Interest rates on mortgages are extremely low and going back to their lowest doesnt make a huge difference. Other personal loan repayments are unlikely to drop just because base rate is lowered. The stimulation of lower interest rates is more to encourage business borrowing, where lowered interest rates can be significant. But that is my personal view based on experence: I am not an economist.
It is forecast that welsh lamb will attract a 40% levy when imported into the EU, so there will be a surplus of Welsh lamb in the UK market as the EU will not buy lamb with a 40% price uplift.
Other UK sourced products that will be priced out the EU market will become more available in the UK.
It is probably pretty good news for the value of your pension (if in UK) however.
You’ll have to explain that one. Value of Sterling internationally goes down, costs of import go up. We import a lot of our food and consumer goods.
Surely this means your pension buys you less?
From Feb 2015 to Jan 2016 Sterling was around £1:€1.35-€1.40.
From Jan 2016 to October 2016 Sterling fell to around £1:€1.15 and since then it’s mostly bumped around €1.10-€1.15
I’m not aware of any significant positive economic impact of this, but it could be that I’ve missed something. I don’t think our exports have done especially well.
I do think we’ve seen the cost of imports, especially food, go up though.
I agree - it is particularly bad for pensioners, as they generally have fairly tight resources.
Maybe Jamiewednesday meant for the value of your pension pot if not yet retired or near to it - yes, if you are lucky enough that yours is a personal pension and based on non/U.K. investments: but not if you have a workplace pension as the value of the investment may make no difference, while the buying power when you retire will be less.
Ah, maybe I should have been clearer, the value of your pension fund.
Not necessarily true, unless a Government scheme, a workplace pension will still be asset backed, either directly if in DC environment or directly and indirectly if DB scheme, with investment managers of the latter trying desperately hard to give the very high returns demanded at the low risks also demanded. Not easy!
And they will be mightily relieved for some added growth to provide the near miracle returns expected by trustees of these schemes.
Though, as pointed out earlier, this may prove temporary, whether a few days or for a few years. Sterling is expected to operate within a range, let’s say between 1 and 2 dollars(…), so is likely to change and move the other way in due course, however there exists the opportunity to make hay while it lasts. In contrast, by and large, the price of global assets as an average will continue to grow over time, albeit with ups and downs along the way of course.
Maybe I should have thought a little about what you meant!