Buying a new Skoda and Brexit

2 hours ago, Scot5 said:

 

Well let me give some advice to the British Automative Industry, Fortune and others with tunnel vision...

I’m sure you know better than people in these roles. Is this a bit of the Gove rhetoric of “we’ve had enough of experts?”

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I bought my first house in 1987. A few years later I was fortunate I didn't loose it because with interest rates of 15%, most of my income was being spent on a mortgage. Many others were less fortunate and lost their homes. If you wanted to buy a car, you'd be looking to pay around 20% interest. As far as I can remember, we were not trading under WTO rules in the early 90's, we were part of the EU.

There was a recession at the start of the 90s and that impacts finances, inflation and interest rates. I'm not saying that has anything to do with the EU. It’s a bit like me saying I had a significantly lower income 10 years ago but now that it’s much higher it must be thanks to brexit... conveniently ignoring all the other factors that affect financial situations. 

Interest rates are are currently being kept somewhat artificially low to continue trying to stimulate growth in the economy. Low rates encourage borrowing and spending which is what an economy needs to grow.

You're trying to extrapolate your personal finances and experiences to those of a national economy, but the two aren’t the same thing and don’t work in the same way. 

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Interest rates are at a historic low right now, and it has nothing whatsoever to do with being part of the EU. Some folk cannot appreciate that. Are interest rates going to increase at some point? Well of course they are but it's got nothing to do with Brexit etc. As I keep saying, how does the rest of the world manage to get buy being outside the EU?

Its not that it’s impossible, it’s just we would have a lower buying power as a solitary nation so are unlikely to get deals as good. Same reasons the supermarkets caused so many independent local shops to close in the 90s, they were massive so had huge buying power and could use that to buy at lower costs than the independents could ever negotiate. 

The uk also currently has no trade deals and they need to be negotiated which is, unfortunately, a time consuming process, it doesn’t happen overnight and it can take years. In the meantime, you’re stuck in limbo. The rest of the world manages because they already have trade deals in place, but that doesn’t mean they are good. Goods aren’t equally cheap across the world, and the UK is relatively small in population terms so it’s fair to assume we would be unlikely to broker deals equally as favourable as current EU rates. 

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Please don't try to re-write history - the pound did not crash after the referendum. The pound increases / decrease for many reasons, all of which are out of our control. As for exchange rates - I first visited the USA in 1979. From memory the pound was worth just under $4.   The UK was part of the EU in 1979. 

On the 24th June the pound had its biggest day collapse in 30 years falling from $1.50 to $1.32 (12%) in 24 hours. In October 2016 it reached $1.18 (21% Drop on before referendum). In February this year it was up to $1.32, a rise which was fuelled by the delay  withdrawal. They are all facts, not history rewriting. The point is, markets don’t like uncertainty. Uncertainty creates risk, and risk is bad for trading - who wants to risk losing money? - and something like brexit, which is unprecedented, is a huge level of uncertainty, hence its bad for markets and the economy in general. It will almost certainly recover, eventually, in the long term. But we have no idea how long it may take and the real question is, why would we want to risk financial downturn, when there doesn’t seem to be any significant gain.

So you’re saying the pound was strong in 1979 and...what? I’m not sure what point you’re trying to make? It’s weaker now. I remember it being almost £2 to the dollar in January 2008 and now it’s less than that. This has been caused by various different things, not least the last recession, but as the above shows, the referendum caused the single biggest drop against the dollar in 30 years. Fact, whether you like it or not.

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What sickens me about the Brexit debate is that all sides are guilty of tunnel visioned short-term views, the financial sector being worst of all, and will blame Brexit for everything.

No, the problem is that both sides talk about things as certainties, when there are no certainties. And as already mentioned, the lack of certainty is what is bad for the markets and, as a consequence, the economy. Staying in the EU, things will remain broadly the same for the foreseeable future. The much bigger uncertainty is proceeding with brexit because, being unprecedented, we can have no solid understanding of what will definitely happen. It is, however, essentially inconceivable that at least in the short term (3 to 10 years) that the economy won’t suffer.