Djpekingman wrote: Mitaman wrote: Djpekingman wrote:
Where the hell do you get cheap commodity prices and raw materials? Exactly how many raw materials does the UK produce? Everything it uses in what's left of its manufacturing is imported. That means with a weak pound you pay more for them. And food. And that compounds inflation. Which means higher wages. Which means higher prices at the factory gate. Come on get real.
I perhaps did not explain myself very well. UK does not produce, it imports. Manufacturing has benefited from this over the last 5 years as core prices have plumetted. Had commodity prices remained broadly the same as they were, UK manufacturing would now be getting mullered, as things stand, they should be able to cope with a falling Sterling (it will erode current margin, but not put them out of business). Take your pick of these price charts, this one is copper..
The low price of commodities is only a temporary blip while the chinese economy picks up again. As soon as it does and they start buying up everything in world again, UK manufacturing will be stuffed with a £ that is going to be around 30% less than is was two weeks ago....
Ordinarily I would agree with you, but we are by no means in ordinary markets, or anything close. Europe and Japan in a negative interest rate death spiral, global interest rates are pulling themselves down due to low growth. No inflation, I honestly cannot see where the growth is going to come from in these times. If no growth, commodity prices are not going to rapidly appreciate any time soon, although I do think they have been oversold at these prices, but not greatly.
Japan has been in the funk for nearly 30 years after their own asset bubble, I can easily see the same happening on a global basis, bear in mind we have been in this now for nearly 9 years (top of the market was Sept/Oct 2007). Easily, this could go on for another 10 years.
So my original point is essentially this, Europe’s companies need British buyers far more than we need them and so this notion of new trade agreements (following a Brexit) taking 10 years to formulate is highly unlikely. The UK goods deficit is over GBP10 billion with Europe (not to be confused with trade deficit).
Those Italian shoe companies, French wine producers and German car companies sure as shit won’t be waiting 10 years of stunted UK sales to get agrreements in place.
And IF Cameron is right, and these do take 10 years to sort out, then UK manufacturing will be given its biggest ever open goal, but that assumes Sterling is very weak (highly likely) and commodity prices remain low (the big unknown). These two things need to happen for this to be correct.
Only my opinion of course.
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