The other craziest thing is that the Bank of England isn't just saying "We'll have a recession" but they're specifically selling it as the longest recession ever.
If you ever want to have the longest recession ever a great first step is for your central bank to say "Hey - this one is going to be a lot worse than most of them". One of the responsibilities of central banks (which the Fed has taken quite seriously) is to carefully control messaging - if you're overly optimistic when things are clearly bad you'll cause a loss of faith and it'll make things worse... but there's also never a reason to go above and beyond expectations in how bad you think things will be because that causes people to batten down even more hatches and prolong the recession.
Markets are weird and they're essentially gigantic tabloids - the image of what's going on counts much more than tangible things like a shortage of widgets.
The US is still entirely driven by its own consumers and the way its behavior reflects off the international economy, driving all that voodoo noise, but the UK?
I think they should kill zombie businesses quicker (yay, interest rates!) and try to pick up as many international worker positions from companies least likely to be zombies. Their downward slope locally is pretty inevitable but puts them in a good position like a weak currency for exports.
Giving up on a shoot the moon strategy that has gone this far usually means shooting yourself.
> One of the responsibilities of central banks is to carefully control messaging
That might be exactly what they're doing. The article says that their forward guidance for interest rate hikes is substantially below market expectations. Maybe they are hoping that a bit of gloomy talking will do some the work of slowing down price dynamics, reducing the need for them to take more drastic measures.
And since recessions are partly a product of mass psychology, announcing that this will be the worstest recession ever makes it more likely to be the worstest recession ever. Even now they can't stop punching themselves in the face.
"While it will not be the UK's deepest downturn, it will be the longest since records began in the 1920s, the Bank said."
They didn't say it would be the worst, just the longest.
They've also indicated that they aren't going to just keep madly raising interest rates, but expect to top out by next autumn:
"The Bank has done something it doesn't normally do in the published minutes of its decisions - it has given guidance that seems to suggest a peak in interest rates of about 4.5% next autumn.".
So it's far from scare mongering (on the bank's part, can't control how the media portray it), and more "this is not going to be a quick fix, we have some idea of how bad it'll get, and it's not as bad as the 80s. Please don't panic".
Quite a measured response in reaction to some bad news IMO.
I fail to see any upside from the bank forecasting a long recession. It's hard to believe it's a high accuracy forecast; the central tenant of economies is that they usually do what you don't expect.
Agreed with everything else you said. "This is not going to be a quick fix, we have some idea of how bad it'll get, and it's not as bad as the 80s. Please don't panic" is perfect phrasing. But saying it will be the longest recorded absolutely is fear mongering, and partly self-fulfilling.
Did they punch themselves in the face or was it Cambridge Analytica type meddling from groups with a vested interest in Brexit happening stomping them in the face with a boot?
From my brief reading about the matter it seems that the same villains showed up over there for that manipulation campaign.
There's also a big chunk of column C: the leading opposition party did a terrible job of opposing it. There was a chunk of the Labour party, including its leader, who also favor Brexit, albeit a very different kind of Brexit from the Tories. For them, it's more about anti-globalism and anti-corporate-control.
That leader eventually resigned, but by that point the damage was done.
I can't predict what would have happened if the Labour party had chosen to unify on a pro-Europe platform, but they were soundly defeated. The Tory party won resoundingly, and they had run on a pro-Brexit platform.
There is always skullduggery, but it's really just something the UK did to itself.
This is not true. There were a small number Labour MPs who wanted to leave, including Gisela Stuart, Kate Hoey, and Graham Stringer, but by the time of the referendum, Jeremy Corbyn had long changed his mind, accepted we should remain in the EU, and campaigned for that: https://www.theguardian.com/politics/2016/jun/22/corbyn-fina...
The actual referendum was very close, and there was a lot of room for Labour to argue that it wasn't intended to be binding, or at least a Brexit In Name Only. The result was that Labour was creamed and the Tories got a real majority, whereas previously they'd been saddled with UKIP.
Corbyn also failed at the referendum, arriving at a belated and wishy-washy stance, and without compelling Labour to follow it. Had he resigned then, things might have been very different. Instead, he continued to lead Labour in a way that left people confused about where they stood on Brexit when put in the form of a Parliamentary election. Nobody could read the results as anything but "The nation voted strongly for Brexit."
I don't believe that really reflects what voters wanted, but elections are poor tools for sending messages. What they do is put people in office, and the people in office were people strongly for Brexit.
Labour offered another referendum on membership, which none of other parties offered or were in a position to deliver, so the decision to leave could have been overturned if enough people wanted it to. A Labour victory would have given them the chance, regardless of Corbyn's stance.
The Liberal Democrats took an even stronger position, basically ignoring the referendum. But the LibDems are still out in the wilderness, and got very few votes. All they did was to highlight that Labour was not the anti-Brexit party.
The impression I get was that by 2019, Remainers were tired of fighting about it, weren't enamored of Corbyn's version of Labour (Brexit was only part of it), and weren't going to rush over the LibDems.
And that overall, Brexiteers were enthused. Probably for very bad reasons, but they genuinely believed them. As for the original question, they might have been nudged along by some foreign propaganda and targeting, but it wasn't anything that their own leadership wasn't encouraging them to believe.
Biggest ever investigation by the Information Commission. No CA were not involved.
If you understood the political situation at the time, then it was all but obvious there would be a massive anti-establishment vote, facebook ads or not.
No one who does a days work in Britain thinks any of this is a good thing. It's largely generated by a far right party through a voting system that allows pensioners (a minority) to control who gets into power.
Not sure that is completely true. People working in construction or hospitality are probably happy for now that there are fewer people competing with them for jobs.
Even if that were true - and it isn't - countless export-oriented businesses have been shutting down because it is now insanely bureaucratic and uneconomically expensive to trade with a bloc that is just over 20 miles away.
The lies told to get Brexit over the line normalised a period of exceptionalist reality-denying insanity which has spilled over into Covid policy, economic policy, climate policy, health policy, energy policy, immigration policy [1], transport and logistics, media credibility, and political stability.
It is - without any exaggeration at all - an absolute shit show.
No one earning less than a few million a year has benefited in any lasting or significant way. Certainly not big-picture economically.
[1] Pandemic aside, Brexit has had no impact on immigration numbers.
There has been a labour shortage for years now in these sectors. It hasn’t helped their situation and both pubs and shops keep closing. These people have few reasons to be happy.
With the mess of England's prime minster, a number of Brexit videos showed up in my feed on Youtube... some of the ones that I've watched that are interesting.
A German documentary (it has English subtitles for the German narration)): British Fishermen and Brexit | ARTE.tv Documentary https://youtu.be/gUKywFazdDo
A financial times article on Brexit - The Brexit effect: how leaving the EU hit the UK | FT Film https://youtu.be/wO2lWmgEK1Y
A TLDR from earlier this week: No-one Likes Brexit Anymore: What Happens Next? https://youtu.be/kLZOlHhumq8 (the main part on this relevant is the polling and the corresponding events)
---
There's a fair bit of Brexit-regret going on now and some people apparently still think its a good idea. At the time of the referendum, it appears that quite a few people who did a day's work in Britain thought that it was a good idea, but have since come to realize that it wasn't.
(As an aside, our national newspapers, mostly right-wing and Conservative-supporting, have poisoned political discourse for decades in the UK. The FT is the only national newspaper with a higher standard of journalism than the others.)
That was a nice short clip, and looking into it, the voice of Anna Ford was initially lost on me (not being British).
I found the German one to be the interesting too in that it was more "regular person" interview content (which was all in English) and the thoughts that they had about the Brexit, the promises that they were given and what they're seeing now. The FT video had a much more business orientation, which while informative on the, well, financial side of it didn't capture the common person's experience as much.
Wouldn't inflation (and thus tax cuts) hit pensioners the hardest? Presumably inflation hits pensioners harder than those who are still working? I'm not sure how the UK pension system works, but I wouldn't want to sell off my retirement investments at low prices for currency with sharply reduced buying power. Is the idea that they voted in this government which then betrayed them (either through incompetence or malfeasance)?
I think it's not even an act of betrayal - they did exactly what they said they were going to do. It also wasn't like there was nobody saying how bad of an idea it was - basically anyone who had any kind of knowledge of economics was screaming that it was a horrible idea and people still voted for it because they saw it as a rejection of the outgroup social exercise which is, unfortunately, one of the most egregious bugs in the human firmware.
In principle, unless the Government reverses it (which they are semi-consistently somewhat threatening to do), UK pensions are supposed to be protected by a "Triple lock". They increase each year by whatever is the highest out of inflation, average wage, or 2.5%. So if the country tanks and inflation skyrockets, they are supposed to get an increase to match it.
The triple lock only applies to the state pension, which is not generous - it's basically about the bare minimum to live on I think. That's part of the reason why the government is willing to increase it so aggressively.
That's true, the state pension is tiny. So small it has to be topped up with other benefits if it's all you have, especially if you're renting as the state pension usually isn't enough to cover rent. Some people don't even qualify for the full state pension.
But a large number of pensioners have a ridiculously tiny private pension (or none), so the state pension is a large and essential fraction of their income and the triple lock remains relevant to pension-age voters.
Many pensioners have a spre property by one means or another (often inherited - "accidental landlords"), which they rent out to supplement their pension. As rents have tended to go up with or even faster than general inflation until recently, this buffers the effect of inflation on those pensioners too.
Right is relative. The Tories are currently way to the right of where they have been, historically speaking. This came from the absorption/takeover when all the "Britain First" <redacted>'s joined up.
Golding didn't join the Tories. He tried to join and was rejected. The Tories have not been taken over or absorbed by Britain First.To say so is an absurd lie. Any fool with £20 can join a political party but that doesn't mean they determine policy or have any control. Do you really think Rishi Sunak or Suella Braverman take their orders from Britain First nutcases?
England has been captured by far-right think-tanks, dressed up in nice suits and dresses. There are pockets of resistence within the ruling party, but that doesn't change the last 10 years of madness.
If you are unaware of this, your personal Overton window is all over the place. I'd get that checked out at the local mechanics.
The Brexit isolationism thing? The immigration policy and the way they deal with refugees crossing the Channel? The Rwanda thing? I mean, it’s really not that difficult.
The only reason that seems far right to you is that the Overton window has radically shifted. Not being beholden to the EU and controlling your borders was perfectly normal 30 years ago.
Hell, the whole “not letting anyone in just because they claim to be a refugee” aspect was normal in Europe…10 years ago?
> The only reason that seems far right to you is that the Overton window has radically shifted.
You mean rightwards, right? Otherwise we don’t live in the same reality. Even Labour is tame compared to what it was 30 years ago.
> Not being beholden to the EU and controlling your borders was perfectly normal 30 years ago.
The problem with Brexit is not the control of the borders, it’s the whole nationalist bullshit that goes with it (and the fact that it’s completely unrealistic). 40 years ago Thatcher was commuting the country to thriving in the single market. And she was as right wing as it comes, and the political mainstream of the day. 30 years ago it was Major.
> Hell, the whole “not letting anyone in just because they claim to be a refugee” aspect was normal in Europe…10 years ago?
No, not really. If you are British, your perspective might be a bit skewed, but there were discussions about refugees waves regularly after the Viêt Nam war or the Armenian genocide, for example, certainly no consensus to deport them to a third world country. The only example of fortified borders in Europe from that era was the iron curtain.
New Labour was in 1997. 30 years ago was 5 years before that. And yes, that time saw the Labour Party shift towards European-style centre-left policies.
Yes, I think my personal Overton window is around 3 years behind. It hasn't caught up with what we're now happy to call 'Far right'.
As far as I can tell, anything remotely right wing is now 'Far right' amongst a growing band of idiotic and insufferable liberal moralisers, so the moniker has effectively lost all meaning.
It's a lost cause us discussing this. I think if you describe how the UK has been governed in the last 10 years as 'far right', you're an idealogue and completely irrational. You're convinced I'm blissfully ignorant with an unintentionally warped political compass, or I'm a crypto right-winger. Oh well.
I agree, discussing this is pointless as we've demonstrated.
Ascribing defintions to yourself that you think I have, or might, call you, in anticipation, is where we're at.
As someone else said. Our current ruling party (or a section of it, considering the internal war going on) are pushing polices that were not out of place (and actually, in terms of the Rwanda nonsense) beyond where the BNP and National Front were 40 years ago, which I think we can agree were 'the far right'.
Again, if you're unwilling to acknowledge this, you've jumped off the logical and historical diving board into a sea of nonsense.
The main self-inflicted cause here is the energy crisis, which is by and large a result of bad policy recently and over the past decades. The second self-inflicted cause is public spending during Covid, bearing in mind that the UK has always been more exposed because it is not 'shielded' behind the euro.
If you are thinking of Brexit, I don't think it is a major cause although it obviously does not help.
Indeed - it was set up long before Ukraine or Liz Truss. But aside from bad long term energy policy, the incompetence of Andrew Bailey can't be ignored in my view.
In July 2021, Andrew Bailey said "Our forecast at the moment is that we do expect inflation to pick up in the next month or so really ... At the moment we don’t see that evidence [of long term inflation] but we will watch it, of course we must do, very carefully."
So he took no action.
By October 2021 his colleague Hugh Pill said "The magnitude and duration of the UK's inflation spike is proving greater than expected …"
And yet they continued to do nothing. They continued to claim inflation would rise to a few percent and then drop back.
It may be reasonable to say that they couldn't foresee Ukraine, but the inflationary pressure was already there, as you say partly because of Covid bailout money printing, but also from the supply side because of China's zero Covid policy, which was already recognised by many, but not by the Bank of England apparently, as being a fairly major contributor of inflationary pressure [1].
Yes, it’s self inflicted, but not due to recent events any more than a recession is the fault of whoever the sitting president is. There are deep, long-standing structural reasons for the stuff we find ourselves in, and the cycle is as old as civilization, because it’s just human nature. The politicians who advocate for austerity and fiscal discipline don’t tend to do as well as those who let the credit run like water.
Add to that that it feels like some people want this to happen. It's a cycle. Media wants more clicks, they cover and exaggerate every small layoff, even though in other times no one would have said anything, people panic, managers and CEOs panic, more layoffs, snowball effect.
the ironic thing is that the US did tons of direct check-type helicopter money and yet our growth is healthier and more robust than anyone else in the world (and the dollar has also outperformed).
given other countries did not undergo similar fiscal programs and have faced similar levels of inflation, i would argue that the larger component of inflation was the sudden global start-stop supply-chain shock from the pandemic rather than purely excess demand from the too-large fiscal programs. and i do not consider that shock to be self-inflicted (tho the excessive fiscal spending certainly was).
Not just self-inflicted, self-inflicted by the BoE, in the process of fighting the inflation the BoE itself created by printing money irresponsibly, in response to moronic lockdown policies.
You described the process as something that was quite polite. It was more like they screamed, yelled at, smeared and insulted everyone who warned them. And when people informed them that the warnings started visibly coming true, they doubled down and declared everyone as an enemy.
Brexit process and its aftermath was a crazy, crazy case study, once in a lifetime observation opportunity for social sciences.
not sure that there was 700 billion spend during covid.
but there's nothing wrong with pumping money into an economy that you have forcibly restricted (or that is in a recession for that matter)
the issue is that you need to be in control of where it ends up. UK has an extremely financialised economy where nearly everything anyone uses or does flows up to the top. Therefore taxes needed to be increased and targeted on where the money flowed to to avoid even further accumulation of assets by a small pct of the population.
The UK is in a very, very bad situation. Just look at the crisis management being done at the Bank of England compared to the ECB. Inflation affects the whole of Europe, yes, but other countries do not have anything like the cost of living crisis in the UK. And the recession is also much worse in the UK in general (some specific EU countries fare better or worse on some specific aspects, of course). None of these countries are talking about austerity right now.
I hope so, and I don’t wish any harm to my British friends (well, I hope everyone will be ok, I certainly don’t wish any harm to my fellow Europeans on the continent either).
But there are many reasons why the EU could fare better over the long term. More people (and a bigger unified internal market), more land (and natural resources), more industry, for a start. The thing with the UK is that a lot of that is self inflicted and mind bogglingly stupid. Why are the conservatives still in power? The whole political system is holding the country back.
Sshhh, you're not supposed to point out that inflation and recession are happening in many countries. The unwritten rule here is that if anything bad happens anywhere in the UK, it's always because of leaving the EU.
Also we're not allowed to remember that just a year ago the UK was crushing Europe in vaccine access so badly the EU was openly talking about seizing British assets to try and catch up; the unique performance of the UK in this area was due to it ignoring the EU joint acquisition programme. That's all been memory holed a long time ago, of course. The EU is best at everything.
Eh, you're overthinking the vaccine story. It's unsurprising that the UK had better access to vaccines: the UK is one of the world's biggest medical industry centers.
The point about inflation and recession is not that it isn't happening elsewhere: it's just that it's worse in the UK. It's also kind of obvious that putting a tariff on all your exports (leaving the common market) is bad for the economy.
I suspect brexit is more a symptom than a cause. The UK has had horrible economic growth for over a decade now, largely driven by a political system that concentrates power in the hands of not particularly competent people.
I've seen some wild claims circulating that, for example, 80% of the UK's inflation is caused by Brexit but those don't seem at all plausible. No EU member has inflation that low, France's is about the lowest at 6.2% and that's with some fairly substantial and expensive energy price subsidies keeping it down. In fact I don't think there's any country in the developed world with inflation as low as that would imply the UK's should be if not for Brexit.
It's a bit of a misleading stat - the EU's avg. inflation is brought up by the poorer countries. If you compare the UK to France, Germany, Italy (the normal points of comparison, in other words), it's obviously doing fairly badly[0].
It's also not the only stat that looks bad. Foreign direct investment, for instance, fell off a cliff. Exports have basically plateaued, probably because it's actually really difficult to get things in and out of the EU now.
On a more fundamental level, leaving the single market is essentially declaring a trade war on your own economy. It's never going to be a good economic proposition, and the hard brexit we've ended up makes it pretty onerous to do anything over EU/UK borders.
No, it really is only France and a couple of smaller countries which have that comparatively low inflation - Germany was 10.9%, Italy 9.4%. That headline average inflation figure is pretty representative. (Also, it looks like one of the countries bringing up the average was the Netherlands which is definitely not considered one of the poorer countries.)
What people do often point to is the interest rates Germany's government pays to borrow money, which are rather lower than the UK (and lower than the rest of the Eurozone). Basically, the only comparisons that get made are the ones that make the UK look worse.
Inflation is only part of the problem. The economy is not in a great shape overall. And the forecasts are terrible. If you read a bit more on what the BoE says, you’ll see there is more to it than the sound bites you get from politicians. Also, Labour is lucky not to be in power right now, but they will still have to do the thankless, dirty work when they get their majority. Expect some vocal disappointment in the near future.
For context, whilst the BoE forecasts the longest recession ever in the UK, the ECB adjusted its forecasts for 2022 to 4% and 2023 to 2.7%. The British economy really is not behaving like the EU’s.
Of course the forecasts are terrible, they're terrible everywhere. The attempts to fight COVID and especially lockdowns were a disaster. Things were pretty normal up until they started. This has nothing to do with Brexit.
Brexit happened in January 2020. As the first lockdown started, the news were that trade was falling from a cliff, which was part of the impetus to deny anything bad was happening, to avoid shutting down the country at an already difficult time.
Things had started to change beforehand as various actors tried to adapt before the shit hit the fan, but yeah, the effects were not being felt that much, on account of the thing not having actually started yet.
"It's unsurprising that the UK had better access to vaccines:"
Other countries in Europe have pharma industries, most obviously France. And the mRNA vaccines were partly developed by a German company (BioNTech) so, this doesn't work. It was a surprise and the reason the UK got better access much faster because the EU insisted on doing everything as a single bloc, in a heavily centralized way, and the EU institutions are slow.
"The point about inflation and recession is not that it isn't happening elsewhere: it's just that it's worse in the UK."
As pointed out by makomk, this isn't true.
"The UK has had horrible economic growth for over a decade now, largely driven by a political system that concentrates power in the hands of not particularly competent people"
This talking point is also made up. UK growth has been similar to the EU for the last decade - sometimes a bit higher, sometimes a bit lower. See for yourself:
If the UK has had "horrible" growth due to "incompetent people" then the same is true of the European Union as a whole.
There's a real problem with pro-EU misinformation here. Both your talking points about economics are completely false. It's not even like Europe is the only place with inflation, the whole world has it right now thanks to the massive money printing that went into lockdowns and other attempts to mitigate COVID. I thought everyone knew that.
Are we looking at the same graph? Aside from 2012-14, it consistently shows the UK trailing the pack in terms of growth, often by multiple percentage points. Bear in mind, even a single percentage point is quite a big deal: the chinese economy was 'roaring' at an average of 4% growth per year.
I loaded up the csv in visidata, and the graph you sent me shows the UK trails the EU growth average by half a percentage point since 2008. Against a relatively well-performing economy like germany, it trails by 0.94% over the same period.
I do take your general point that the stats do not make such a dramatic picture as one would expect given the recent coverage. The general picture, though, is of a country generally underperforming, even when compared against an underperforming region. This is, in my eyes, totally in keeping with what you would expect from the haphazard policy-flailing that has characterized the UK government in recent years.
We can certainly agree that the UK has underperformed relative to, say, America. I don't think Chinese GDP stats have ever been accurate and developing countries often have high growth anyway, so am not so interested in comparisons to that. But certainly it can be compared to the US and there we see poor relative performance, and indeed the same is true of Europe in general.
Comparing UK growth to the EU average isn't so useful because the EU contains a lot of countries still catching up from decades of Soviet rule. Poland posts 6% GDP growth but that doesn't mean it's a richer country than the USA, obviously. That sort of thing skews the average upwards. That's why I plotted the EU line but also more comparable non-ex-Soviet countries. German GDP was historically boosted by their fixation with subsidizing the rest of the EU with cheap exports, leading to their massive Target2 imbalances. That is nearly a sort of broken windows fallacy style of growth so those figures also have to be taken in context.
But these things aren't anything to do with Brexit, and the UK isn't really so different to comparable western European countries. Their growth is all within narrow bands on that graph, especially from 2017. Indeed the poor growth rates inside the EU were one of the arguments made for why leaving is a good idea! EU policy leads to poor growth, so went the argument and therefore by leaving, the UK can change policies to go faster and catch up with the USA. Of course the mere act of leaving doesn't make that automatic - it's necessary but not sufficient, and it's unclear if the other conditions will ever be satisfied (primarily social attitudes towards capitalism are the problem, imo). Brexit actually taking effect happened simultaneous with the appearance of COVID and then the government was dominated by that, so very little of what's theoretically possible has been done, and now of course the economy is trashed due to lockdowns so who knows when or if the a more US style approach can ever be implemented. But it is at least now theoretically possible.
I have the opposite opinion. I think the UK has been historically hamstrung by its desire to ape the US. The US is a continent-spanning superpower, the dollar is the world's reserve currency, and the US economy is the largest in the world. That means that a lot of the things the US can do, vis-a-vis policy, the UK cannot. Copying a nation that is on basically in a class of its own in every particular is a quixotic project that will never work.
With the EU, the UK had at least one US-level advantage: the unfettered access to a gigantic market. Now, there's regulatory doubling, at the very least, if you want to sell or buy things in that market. I think you'd need some spectacular advantages to outbalance that, going forward - and I have no idea where they are supposed to be coming from. From a business perspective, the most perfect regulatory framework is inferior to a bad regulatory framework that allows you access to a much bigger market.
Access to the EU market was never really a big advantage for the UK because the EU's internal market never did much beyond physical goods, but the UK was/is strongest in services. Unifying trade in services never became a priority for the French/German controlled EU institutions, and was sometimes outright opposed by them, meaning the UK benefited far less than is commonly argued it was more like other countries having great access to the UK market but not vice-versa.
Moreover the EU had and still has a completely imperial attitude towards the UK, as they perceived leaving as impossible so figured they could do whatever they wanted to Britain. See how they were constantly attempting to screw with or outright steal the City financial industry, like by trying to forcibly relocate it to other areas of Europe. That sort of thing was also happening before the referendum even got started. Most people in the UK don't have a good view towards the EU for this sort of reason. Remain had to rely heavily on fear-based arguments in order to shore up the 'natural' level of positive EU support which would otherwise have been far too low (~a third, iirc).
"From a business perspective, the most perfect regulatory framework is inferior to a bad regulatory framework that allows you access to a much bigger market"
Yeah? Tell that to all the people and companies fleeing China after years of arguing that there were no limits to what made sense to do, to get access to the world's largest single market.
I don't think it's very hard for the UK to follow in America's footsteps. Most of the big economic differences are a combination of legal and cultural, not anything fundamental. US culture is to some extent a derivative of British culture after all!
If you can't see fundamental economic differences between the UK and US, I would caution you that, while it may not be visible from your vantage point in Andromeda, Jupiter is indeed larger than a duck, even if they seem more or less much-of-a-muchness when one has proper perspective.
When roughly 50% of the imports and exports of such a piddling island, services included, are directed towards the EU - obviously, from a very great distance, it makes no difference at all if those goods are subject to tariffs, and if the industries producing them get no input into the regulations they will have to adhere to.
If you were observing, say, from Pluto, you would probably note that the little smudge of the EU is a mite bigger than the little smudge of the UK, and 50% of the UK's import/export economy, while no big deal on the cosmic scale, probably matters a bit to the people who live there.
> Also we're not allowed to remember that just a year ago the UK was crushing Europe in vaccine access so badly the EU was openly talking about seizing British assets to try and catch up
Actually, the issue was that AstraZeneca had simultaneously signed a contract with the UK with a clause that it would give them priority access to vaccines, and with the EU with a clause that it doesn't have any other contract that would prevent it from fulfilling its requirements.
>Also we're not allowed to remember that just a year ago the UK was crushing Europe in vaccine access so badly the EU was openly talking about seizing British assets to try and catch up; the unique performance of the UK in this area was due to it ignoring the EU joint acquisition programme.
It's only you guys that made this a competition in the first place. If anything it's good for you this whole episode has been memory holed since it made the UK look like a bunch of selfish pricks. Meanwhile the UK had the highest number of total COVID deaths per capita in Western Europe.
It's weird to see this stuff posted so much without anyone bothering to make a case for how Brexit caused this. Somebody just posts a "told you not to do brexit," which begins a thread of mutual congratulations and praise.
How did Brexit affect the US economy so badly at the same time?
Numerous economists spent years informing everyone the downsides of the UK leaving the EU. And pointing out that there was no way the the EU would allow the UK to keep the benefits of open trade with the bloc while not having to accept the "downsides" the UK was seeking to avoid.
So when Brexit happened, and all those predictions happened, the only thing really to say is, "we told you so."
The British economy has been hurting so much worse than the rest of the world. The British pound has fallen 14% against the dollar compared to the Euro, which only fell by 10%.
They are completely unable to sell bonds now. At this point, they are being forced to buy their bonds in order to keep the market for their bonds from total collapse. This is only going ot further erode the value of the pound and continue to make inflation in England the worst in the developed world.
The UK is going through everything the EU is, plus a bunch of self-imposed issues. They are in a leadership crisis and an economic crisis, and their near-to-mid term economic prospects are bleak.
Brexit was an idiotic idea, but the criminal part was the Tory government deciding to listen to the far-right Brexit version of "fuck off Europe, we'll leave and won't even try to negotiate some kind of trade agreement."
Remember when they were considering a Norway-like agreement? Or perhaps like Switzerland?
There were many ways of adapting to this new life outside the EU, and they've decided to go for the hardest, stupidest imaginable version, just to appease an extreme fringe of ultra nationalist pillocks that took over the entire Conservative party.
And to appear a reasonable alternative to these imbeciles, Labour is adopting the same party line, because anything apart from the hardest Brexit imaginable is politically toxic.
No one even dares to build a pragmatic platform trying to make the best out of a terrible situation. 48% voted to Leave and only a smaller subset of that wanted to completely burn all bridges. If you wanted to stay or wanted a softer Brexit, good luck, no big party is representing you right now.
"Remember when they were considering a Norway-like agreement? Or perhaps like Switzerland?
"
The self-interested groups who were trying to deny that the vote had happened were some of the loudest voices against any sort of soft Brexit. therefore all but guaranteeing chaotic Brexit.
Look at the indicative votes in early 2019 at a time when the government was paralysed and desperate to get any way out. Those voting against single market / customs union were nationalists, green, change uk and right wing labour MPs.
> So when Brexit happened, and all those predictions happened
None of them happened. There weren't rampant food, fuel, and medicine shortages and mass deportations, and Britain didn't become a Mad Max wasteland.
The pound lost a few cents, and then a couple of years later, when everything was dropping against the dollar (because of US interest rate decisions) and all of Europe is having fuel problems for obvious reasons, these things also happened to Britain. What part of not doing Brexit would have prevented this, and how did Brexit also cause these problems in the EU?
This doesn't make all of the Tory/UKIP lies about the benefits of Brexit more truthful, but time shows Remoaner statements about the consequences of Brexit were at least wild exaggerations, if not outright lies themselves.
I would say that Corbyn's 70/30 Remain/Brexit evaluation turned out to be the most realistic assessment, but he was hated and destroyed for it by both the Remoaners and Brexiteers.
Some of the bad stuff predicted for Brexit happened - lower economic growth, businesses exporting to Europe having problems, queues down the M20, extra paperwork, difficulty getting fruit and veg picked for example. On the other hand some didn't like a house price crash (yet).
An odd side effect I didn't expect is that we got a worse class of politicians as the smart honest ones who were prepared to admit it was a mess didn't get in power and instead we got Boris and Liz who were quite prepared to say any old nonsense to get the job.
"They are completely unable to sell bonds now. At this point, they are being forced to buy their bonds in order to keep the market for their bonds from total collapse."
yes there was a period of buying guilts, but Bank of England has reversed this now and is going through policy (incorrect in my opinion) of quantitive tightening and selling what it 'bought' during QE https://www.ft.com/content/64e5dcdd-42a8-4013-a3bd-75a62cf8e...
Ahem. It's "gilt" auctions, not "guilt" auctions. Guilt auctions would be selling indulgences, or poor people bidding to serve jail sentences for money, or something.
In face of what's going on, repeatedly calling people "remoaners" to this day just proves there can be had no intelligent discussion with you.
But sure, keep insulting people and crying "no one listens to our reasons." Because all we can hear now is the Brexit voting areas collectively feeling duped. Not by the Remoaners, but by those that promised to take back your bloody borders they so much cared about and now are poorer than they were before.
At least now you get to keep your pints, pounds and bendy bananas, I guess. Worth it mate.
(Nevermind, looks like you live in Illinois, US. Looking forward to hear your informed opinion on British politics and how post Brexit life actually is.)
The younger ones are not the one that need an explanation, as the distribution of votes in favour of Brexit was strongly correlated with older age.
Brexit reinforces my very controversial belief that pensioners should not be able to vote. The future is not theirs. Elderly wisdom is a terrible cultural meme. People grow wiser as they age, but are not wiser in the absolute. Also, a young mind ingests many orders of magnitude more information about the world than a person with declining mental faculties and ossified beliefs.
He presumably remembers how to drive a car. Private pilots don't have to resit their flying tests annually beyond a certain age, but they do have to prove they're medically fit to fly. If you're allowed to fly a light aircraft after passing a regular medical examination which checks things like eyesight, chronic illnesses which would affect their ability to drive, and reaction times, a similar arrangement should be adequate for driving a car.
The oldies go slowly and tend to end up with some low speed impacts giving dented cars rather than injury. Maybe if you get 2 or 3 of those in a year it's time to stop.
On average, young people see the world, see that it does not work, and want to change it. Hence, they chant: "Change things!"
On average, old people see the world, they already settled on a routine that mostly works for them ( genuine survivor bias ) and do not want to change one thing for fear of losing what little they have. Hence, they chant: "Stop changing things!"
It is a question of balance. I always said that the biggest problem with democracy is its weakest link as it depends on a well informed voter. Fear is not a great advisor, but it is a great motivator.
The other huge problem of democracy is that it doesn't account for human biases, such as the Donning-Kruger effect: people with high expertise tend to see flaws in one party or the other and will tend to not vote for anybody, while people with low expertise and knowledge buy any politician's lies wholesale and thus can be easily swayed by the best liar. So on average more liars get to govern us than good politicians.
Additionally, the other issue is that the best people with the expertise to solve a country's issues are exactly those that couldn't be bothered to get into politics. Likewise, career politicians tends to be absolutely inept and unqualified to run a country.
Democracy is the least worse form of government, but it still is very very bad.
Yeah, that about sums it up. I ended up holding a bunch of GBP, in an company in admistration (bankruptcy.) I'm getting a haircut on my haircut. If you made an inverse ETF taking the opposite side of my lifetime investment decisions, the performance would be stellar.
People often blame England, but it was the whole of the UK, there were enclaves of opposition in all of the home nations.
Also, there were plenty of opposing voices in the UK (I realise we're party of the World, still!). Financial experts unanimously agreed it would damage our financial system; they only differed in whether it was worth it. Those for Brexit agreed that there would be up to a decade of economic damage.
> Those for Brexit agreed that there would be up to a decade of economic damage.
Those for Brexit never argued such a thing before it was obvious things were going to be bad. The day before the referendum you had Farage on the radio saying that leaving the single market would be stupid and that the EU would just fold and let the UK in with its own rules. Remember the “pro cake and pro eating it”?
Which is the kind of stuff that makes me think there should have been or maybe be a second vote now people know what the actual deal is. Still I went on the 2nd vote marches but the MPs weren't having it. Dunno where it goes now.
You weren't downvoted for saying that money printing -> inflation[1], everyone with a basic grasp of arithmetic can understand this.
You were probably downvoted for thinking that letting the economy completely implode was preferable to inflation. Or, alternatively, that piling a few million bodies onto the altar of economic growth[2] in a pre-vaccine world was a good idea.
[1] Also, there's a difference between Wall St. inflation and Main St. inflation, and the latter is as much caused by the war and supply chain disruptions as it is by the printing press.
[2] Growth which wouldn't have even materialized, because everyone with an ounce of self-preservation dramatically changed their spending and travel habits.
No, I am not presenting the full arguments here so don't go after what I just put here. Similar comments were upvoted later this year.
Reminds me of the pandemic 180 degree turns we made with respect to origins. At first, it was unacceptable to discuss lab leak theory. After Lancet post, it was then suddently acceptable. But, now it is uncool again.
The mob is absolutely ruthless and disgraceful. We need a north star to follow that's based on reason and logic, not what others are thinking.
I've followed HN through the pandemic and I found it pretty balanced on the lab leak theory. I've personally always been open to the idea and I've not noticed a huge wave of "mob" behaviour either way.
That’s unfortunately not true (it would be nice if it was, because that would imply that fixing it would be easier than it actually is). The idiotic decisions of the government did play a minor role, but the UK economy was already on the road to ruin before that happened.
> that would imply that fixing it would be easier than it actually is
I assume the self-inflicted part is leaving the common market / customs union... and rejoining this is not easy at all. I think it might be politically impossible for at least 10 years.
I'd agree after watching this YT video by the Financial Times.
Suddenly having to pay import taxes led many companies to move operations to mainland Europe.
I wonder if EU would let UK join without adopting the Euro. The UK seems to have lost a lot of its negotiating power that let them keep the GBP the first time.
> I wonder if EU would let UK join without adopting the Euro. The UK seems to have lost a lot of its negotiating power that let them keep the GBP the first time.
If the UK rejoined (assuming it was welcome after the last few years) I find myself wondering if forcing us (I'm British) to go all the way - into the Euro and onwards to full participation in everything - might actually be a good idea.
There are some aspects which taken in isolation may not be that great an idea (eg a Euro which includes such a variety of economies), but contrast that with the last approx half century where we've been the wall-fly. The one who goes to the dance, but hangs around the edges and never really joins in.
Half-hearted commitment can often be worse than none at all, and being forced to commit fully in order to be able to rejoin may well be the making of a better UK that takes it seriously and helps drive things forward.
What the UK had before was pretty much "EU membership the good parts" - and (a slim majority of) the public rejected that. Is full membership really possible?
That was a slim majority of who voted at the time. Leave voters heavily skewed older. Even just taking out the people who have died since the vote would result in a remain vote. 15 years worth of younger voters would overwhelmingly vote for remain.
Half the countries in the EU don't use the Euro. Many economists recommend against a currency union without possibility of fiscal transfers to deal with asymmetric shocks, predicting what happened in the years after 2008.
I think OP means all of the idiotic decisions, from Brexit to all of the delusional politics that have achieved no actual economical advantages to the UK ever since.
Yes, I think those have contributed, but I think they play a minor role compared with some fundamental problems with both the global economy (Ukraine, most obviously) and the UK economy (low productivity).
The whole world is going through a down turn, however, the UK will likely impacted harder and longer. We gave up a trade deal with a very large trading block, the EU, and haven't been able to make up for this by having trade deals with the USA, China or India so far. The few wins, trade deals with New Zealand and Australia, are mostly symbolic as the impact on the GDP is expected to be small.
A trade deal with China looks unlikely given the current political climate. Trade deals with both the USA and India are fraught with political risk. The USA wants to be able to export GM food to the UK, out pricing UK farmers that were reliant on EU subsidies until recently. India is after a deal on immigration and this is even more contentious.
Trade deals will eventually be signed, however, almost certainly won't help to shorten or lessen the impact of the current recession.
(Not directing this at you, as I have no knowledge of what you consider low productivity to mean.)
What is often missed in the talk of low productivity is that the general assumption on hearing the phrase is that the problem is a lazy and unproductive workforce, which leads to the workers being an obvious target of blame.
In economics terms MFP is the more important view of productivity, and it's the amount of output that can be generated for a given set of inputs including not just labour but also capital/investment. And in general terms the largest issue here is not lazy workers but extractive management and asset-owners who take out the profits (as dividends, salaries, share buy-backs, etc) rather than reinvest them in the companies and the infrastructure. Without that investment the organisation remains below par for productivity as the inputs remain stagnant.
And that understanding shifts both the blame (and the required direction of travel to tackle the issue) to where it should be focused. Not pay, workers rights, etc, but addressing the inequality that allows that extraction which is the real cause of the productivity gap.
Apparently the evangelical jehadis and MAGAts are likely gonna succeed towards a similar outcome here in the US. These people forget how much better western economies were before BREXIT and MAGA nuisance took over.
The way I look at it, there are many issues facing many economies at the moment. What Brexit did was remove any contingency that might have been available to ride out the storm.
I am suddenly seeing articles about multiple US tech companies doing layoffs / pausing hiring on HN as well, not sure why and how all this relates....Has global recession started???
The global economic situation is certainly complicated, but at least in the US growth seems healthy at the moment. My take is that most companies are taking advantage of the impression that we're in hard economic times to perform layoffs that they wanted to do anyway. There are certainly cases where companies were too optimistic (expecting a bigger post-pandemic "bounce") and over hired.
As far as the UK goes though, this is just result of multiple terrible decisions and incompetence on the part of the government (Brexit, Truss's proposed tax cuts for the rich, etc). It is almost entirely self-inflicted, and the incredibly predictable outcome of the government's actions.
> My take is that most companies are taking advantage of the impression that we're in hard economic times to perform layoffs that they wanted to do anyway.
And convince people to take a wage cut or outsource/"insource" labor.
The lay offs are driven directly by the cost of borrowing that has gone up this year. We had a decade where money was pretty much free. Now money is no longer free, companies are looking at cutting costs.
No it's not. I know this is the narrative being pushed, but this is not a real problem. Remember, the US government pumped out $3T that's still circulating, and there was record borrowing at ZIRP for bonds with 30 year duration. The Fed's hikes are an attempt to slow that down, but money is still on average cheap.
All respect, but regarding the UK economic situation I think you meant (Freedom and national autonomy, and Truss's job builders empowerment). Yes, self inflicted but also incredibly awesome -- just depends on your view.
Most countries in the Euro zone aren't on their third government since the summer, and didn't have one of those governments collapse in the fallout of introducing a tax cut for the rich, funded entirely through borrowing, which made their bond yields shoot through the roof.
Most countries in the world didn't stick up a middle finger to their largest trading partner, and then failed to replace it, in a timely fashion, with alternative trade deals.
Most countries in Europe aren't also selling gas's to other countries, knowing full well they will have to buy it back at a higher price in the winter. The UK has very little gas storage compared to other EU countries.
Political turnover doesn’t really substantiate the idea that Britain is entering a recession because of bad economic choices. Again, the rest of the eurozone is in the same boat. To me, it only substantiates political discontent and a system of government where that kind of turnover is possible. I see little evidence that Britain’s current state of affairs is because of Brexit.
UK seems to be in a different boat due to Brexit. While definitely suffering from the same issues as the EU, they're not in a place to bounce back. Even before the current crisis, it was looking increasingly gloom.
The government was planning to do tax cuts (further increasing demand during a period of already-high inflation) when the central bank was trying to get inflation under control. The market saw the writing on the wall and people began selling off UK currency, causing the value of the pound to plummet. The central bank had to reverse course and decrease rates to prop up the pound in the short term to stabilize the economy. Ultimately the PM fired her economic minister and then she was ultimately forced to resign herself. This situation was unprecedented anywhere globally as far as I'm aware.
EU has its economical problems, but nothing like Britain.
AFAIR the United Kingdom is the only country whose economy still has to reach pre-pandemic levels. Our political system has been fighting over that thorny issue for 6 bloody years, and everything else has been put on hold.
The UK isn't part of the Euro Zone anymore. That's the simplest reason. The fallout from that decision will continue to drag the UK down as they continue the process of not being a Euro Zone economy. At some point things will steady, but they're not there yet.
While I won't object to the notion that a global recession may be on the way, the UK's particular situation is greatly exacerbated by Brexit and so might not be universal.
It's elections season and there is about to be a shift in power. Those currently in power have been resisting labeling the current environment a recession. Expect this to change in Q1 2023 as they gaslight you into believing we're in a recession because of the new team in charge.
The recession is driven both by an economic slowdown in China and the war in the Ukraine.
The economic slowdown in China is caused by the endless Covid lockdowns.
The war in the Ukraine is resulting in a shortage of natural gas in Europe, sharply driving up energy prices resulting in double digits inflation and people naturally tightening their spending.
The USA has mostly been protected as they have their own gas and oil supplies, however, they are not immune to what happens in the world.
Suddenly? I've been noticing the layoff announcements for more than a month. I work for a Fortune 100 company that has frozen hiring. That has only happened when layoffs are imminent.
Small cap tech stocks were literally worth 10-20x their present values. They hired like crazy (chasing more of that funny-money growth). Now they'll need to cut back some since the funny-money valuations are gone.
I wouldn't try to connect the dots and come to the conclusion that doom & gloom lies ahead.
The definition of a recession is negative GDP; so who is it? You will notice those who are in recession are of a certain economic bloc, depending where you are in the world you will see them axis vs allies. Sure we should go further and look at real gdp but the point stands.
who could have guessed that governments forcing economies to shut down for months would have long term ramifications? It's not like tons of people warned about the cure potentially being worse than the disease when you factored in the long term economic damage of lockdowns
Does anybody else think that the media has been wrong so many times about growth and recessions that everything is always overblown.
2000 - technology forever
2001 - it's over, go home.
2006 - everything will go up forever!
2008 - RIP good times
2010 - we're going to be ok
2018 - boy were we wrong about 2008 - nothing can go wrong
2020 - oh crap, it's over
2021 - nope, we're fine, go all the things!
2022 - worst recession ever!
I even feel like I'm missing some things in there.
I'm not saying there isn't a downturn, there obviously is, but that's a downturn from the peak, and everyone being scared.
As Buffett says, be greedy when others are fearful, and I'd say everyone is more fearful now than they've ever been.
Looking at stock markets, the 2008 recession, S&P 500 showed the biggest drop from May 2008 - Jan 2009, with recovery from then.
2000 saw a slower descent from July 2000 to Sept 2002, but also slower growth on the back.
This time we've seen a a sharp decline, and I think there is a bit more of a decline, but how much of the decline is already priced in?
From 2000 to 2007 we really lost faith in growth and technology. Did much happen in the technology sector from 2000 to 2006? The iPod, media was going digital, but at the time that was mostly a loss of revenue to labels, not a lot of growth. Social was being figured out, etc etc.
Then came iPhone, mobile, social, SaaS (AWS began in 2006). These things converged for huge growth and really brought the internet and technology to the promise it initially aimed for.
This time, we're at the early stages of AI, clean-tech, bio & neurotech (my field).
My current belief is that yes, we've hit a wall, what do you do when you hit a wall? You don't stop. You go and beat the hell out of that wall. It will come down.
I have a theory here. In times of growth the large companies will hire like crazy so that people don't work or create competing products. When times are tough they fire people who in turn will work on creating competing or revolutionary products. This is why you see revolutionary products during recession.
The Tories had better hand over government to Starmer quickly, because there's no possible way they can blame Labour for this one. Blaming Brown and Blair for everything has already gotten extremely long in the tooth; in a few years, there will be voters that will have never lived under a Labour government.
The banishing of the Bounty is one of the few purely good pieces of news we've had! I mean I'll cave a few days after Christmas and eat them but I'm not happy about it.
The world economy died in 2008, it's just been on QE life support ever since.
This life support has spawned zombie companies everywhere that produce nothing that anyone really wants or needs and amount to nothing more than adult day care centres.
I bought into that for a while (having followed that variety of economic opinion). The idea was that the whole system was hanging by a thread. A moderate shock would make it all fall over. Well, we got a hell of a shock in 2020, and we're doing economically kinda bad, as one would expect regardless after such a shock, but not catastrophically. I don't know what the right model is, but I no longer think that this is the one.
I perhaps could have specified that part of the prediction was that if QE was used substantially more to deal with said shock, it would lead to hyperinflation. What we have now looks (to me) like bad inflation but not hyperinflation.
It's a crisis of productivity that Brexit has made worse.
Question for software engineers in the UK: how good are companies these days at training up junior engineers? One of the starkest differences I saw on leaving London for Silicon Valley was how much better SV is at training up young engineers. But I left a decade ago (in what was, in retrospect, a high watermark for the UK); perhaps matters have improved?
Recession and growth are most directly affected by central bank interest rates. When they say they "predict" such things, they mean they will make it so.
The illusion of a soft-landing by the Fed, and the Bank of Canada, has never been archived. All central banks are pushing their respective economies into recession.
The UK is essentially three entities: the city of London (a wormhole to a giant offshore tax exile trusts network) and a quasi sovereign state, the Crown corporation and the actual sovereign state.
The money being siphoned off by the first two entities are largely immune to the oncoming UK nation state recession and are heavily invested in increased stateless globalization.
If you have the time this is 120 minute documentary THE SPIDER'S WEB reveals how Britain transformed from a colonial power into a global financial power
At the demise of empire, City of London financial interests created a web of offshore secrecy jurisdictions that captured wealth from across the globe and hid it behind obscure financial structures in a web of offshore islands. Today, up to half of global offshore wealth may be hidden in British offshore jurisdictions and Britain and its offshore jurisdictions are the largest global players in the world of international finance. How did this come about, and what impact does it have on the world today?
The UK is essentially three entities: the city of London (a wormhole to a giant offshore tax exile trusts network) and a quasi sovereign state, the Crown corporation and the actual sovereign state.
The money being siphoned off by the first two entities are largely immune to the oncoming UK nation state recession and are heavily invested in increased stateless globalization.
I mean... it can be tho? The case can be made that Capitalism creates horrible problems which cannot be solved by capitalism. The statement that Capitalism has created some of the most prosperous nations in the history of the world is also a true statement?
Developing markets (starved for dollars to pay back loans) and and Europe (starved for energy) will suffer the most imo. The US will be infuriatingly fine (given the warmongering they are doing). It is most likely the FED will be able to pull of the soft landing (even if there is a small recession it will probably not be too deep and long)
But hey, THEY GOT BREXIT DONE! Poor dumb mfs... But to keep things in perspective, they fear 6,4% unemployment by 2025. Spain is currently at around 13%.
To be fair, the 'done' part was the actual leaving- notwithstanding the issues that continue like the NI border.
I voted to remain and would vote to rejoin. But I think in fairness the getting it "done" part was to leave the EU. NI border is pretty much unsolvable outside a common market anyway.
Spain has little real unemployment, those numbers are the people working without paying taxes or collecting unemployment. Look up employment rate instead, it’s on par with other OECD nations, I.e. Belgium, Italy, some US states, etc
