Skip to main content

Would we pay more for their stuff?

I'm confused. Brexiters argue the Germans, Italians and French will still want to sell us their cars, so continued free trade with the UK is in their best interests. But we'll have to negotiate this (with an EU unwilling to make leaving easy) by threatening to make their cars more expensive for British people to buy. We'll do this because WE need to make imports more expensive to try to restore our balance of payments. Are Brits prepared to pay more for their Audis, Fiats and Renaults in order to make British cars more appealing, or do Brexiters want to pay more in order to punish them for taxing our insurance and banking products? Either way, imports will cost more.

While in the EU, we buy their cars because we like the choice and don't want our own government to tax them. Indeed it would be better for British car manufacturing if we went back to the good old days of being encouraged to buy cheaper British cars (made by foreign owned factories). Is that what Brexiters want? To threaten to increase the price of the things we like to buy cheaply from them if they tax our stuff?

So why have tariffs? Whilst it's well publicised that 44% of our exports are to the EU and only 8% of theirs are to us, unfortunately the money flow is in the other direction as can be seen from the chart below. Note the UK has by far the worst balance of trade in the whole of the EU as a percentage of GDP!

Current account balances of the EU Member States as share of GDP (%) 2015 Q4





Tariffs are designed to reduce outflows by making imports more expensive. In other words our economy NEEDS tariffs with the EU to make their stuff more expensive in order to encourage we Brits to buy British instead of German and French etc.

So under a Brexit government in financial difficulty (as agreed by Brexiters and Remainers alike), wouldn't they be tempted to implement tariffs, not fight for them to be removed in order to improve our balance of trade?

If Brexiters knew their BMWs and Renaults would cost a lot more to encourage them to buy British, would they still vote to leave? I very much doubt it.

But if you're still unsure, why risk a more uncertain future than the one we've got?

I also like employing people who want to work as hard as possible for as much as possible, not as little as possible for as much as possible. Migrants are great for Britain. Love 'em!

Comments

Popular posts from this blog

Phillips screws - yes I'm angry about them too

Don't get me wrong. They're a brilliant invention to assist automation and prevent screwdrivers from slipping off screw heads - damaging furniture, paintwork and fingers in the process. Interestingly they weren't invented by Mr Phillips at all, but by a John P Thompson who sold Mr P the idea after failing to commercialise it. Mr P, on the otherhand, quickly succeeded where Mr T had failed. Incredible isn't it. You don't just need a good idea, you need a great salesman and, more importantly, perfect timing to make a success out of something new. Actually, it would seem, he did two clever things (apart from buying the rights). He gave the invention to GM to trial. No-brainer #1. After it was adopted by the great GM, instead of trying to become their sole supplier of Phillips screws, he sold licenses to every other screw manufacturer in the world. A little of a lot is worth a great deal more than a lot of a little + vulnerability (watch out Apple!). My gromble is abo

Prepare for Alien Contact

I've not gone barking mad or joined some weird religious cult (aren't they all?). But I do predict that we will make contact with intelligences from other planets soon. Here's my reasoning: There are approximately 100,000,000,000 stars in our galaxy (easy way to remember this order of magnitude is it's one hundred, thousand, million). Usefully there are also approximately the same number of galaxies in the universe. And assuming every star has about the same number of planets orbiting it as our Sun, and that the Milky Way is an average size of galaxy, that means there are around 100,000,000,000,000,000,000,000 planets in the universe. A lot. Scientists have long debated the probability of life, as we would recognise it - reproducing, eating, etc - existing outside Earth. Most agree mathematically that it's a certainty. What they did was take all the components they believed were required for life to have evolved on Earth and then extrapolate what they know about

Introducing Product Relationship Management - it's what customers want.

Most businesses these days have Customer Relationship Management (CRM) systems which store and process vasts amounts of information about us. They use this information to generate communications, amongst other things, which target us to buy their products and services. CRM is all about how a business relates to its customers: Past (keeping them loyal through aftersales and service), Present (helping them buy through bricks and clicks channels) and Future (prospecting). Most businesses will at some stage have declared themselves 'customer-centric'. They will probably have drawn diagrams on whiteboards that look something like these: But there's a problem with this whole approach of keeping the customer at the centre of your world and the focal point for everything you do. Is it what the customer wants ? Of course companies who ignore their customers eventually go out of business. And those who treat their customers well, tend to thrive. But is it really in the best inte