Increased tax, higher unemployment & economic difficulties

[dealtn]

New presidents usually sweep house, especially at the FED.

Not even close to being true with respect to Chair of the Federal Reserve.

Obama didn't,
Bush didn't,
Clinton didn't,
Bush didn't,
Reagan didn't...

[SalvorHardin]

And the yields on the debt suggest that holders of US treasuries currently desired almost 4x as much risk compensation (i.e. the yield) than they do of UK debt. Which suggests that they are less certain of getting their money back if they hold the US debt!

Leaving asides the different expectations of future interest rates and inflation in the UK compared to the US, there's one factor peculiar to America which will give concern to many holders of US Treasury bonds.

The possibility of large scale civil unrest after the election.

I used to think that this was a fringe view, the sort of thing mostly discussed by doomsday preppers, communist hippy types and science-fiction fans. Nowadays I'm not so sure. Investors don't like civil unrest, it makes them jittery and if nothing else leads to them demanding higher returns on public debt to compensate for the increased risk.

The Democrats have spent the last four years refusing to accept the result of the last 2016 Presidential election and have vowed to contest the 2020 election result, refusing to accept it if Trump wins. There are ongoing investigations of Obama-era officials breaking the law by trying to bring down the Trump presidency which, if true, makes Watergate seem like a minor event. The Republicans are already claiming that the Democrats are engaging in voting fraud on an industrial scale; vowing to contest or ignore close votes.

It looks increasingly likely that the Presidential election result will end up being contested in numerous state supreme courts and the federal supreme court. We could end up with both sides claiming victory and trying to install their candidate as President in January.

In the last six months we've seen riots in many major cities, the burning down of entire neighbourhoods being cheered on by Democrat mayors and congressmen, with law and order breaking down in some city centres (notably Minneapolis and Portland). Meanwhile an increasingly large number of Republicans seem to believe that a Biden administration will strike down the constitution and swiftly impose communism.

Russ Robert, host of the economics podcast EconTalk, raised this possibility of post-election unrest leading to civil war in last week's discussion with journalist Anne Appebaum about her latest book and the state of American democracy today. For this to be seriously discussed on EconTalk was quite an eye opener for me (link below, the civil war is mentioned shortly after 32:40).

https://www.econtalk.org/anne-applebaum-on-the-twilight-of-democracy/

[odysseus2000]

New presidents usually sweep house, especially at the FED.

Not even close to being true with respect to Chair of the Federal Reserve.

Obama didn't,
Bush didn't,
Clinton didn't,
Bush didn't,
Reagan didn't...

https://en.wikipedia.org/wiki/Chair_of_ ... al_Reserve

Trump sacked Yellen and appointed Powell

Obama appointed Yellen after Bernanke left

Bush appointed Bernanke after Greenspan retired

Regan appointed Greenspan after Volker left.

Carter appointed William Miller, then Volker

Nixon appointed Burns

Truman appointed McCabe then then Martin

There is a regular series of changes at the Fed, although Greenspan was there a long time.

Each of the appointments is political in that the President appoints whom ever he/she (maybe one day) feels is appropriate and although a Fed chair may not get tossed in January with the inauguration there is often a conflict between the President and the Fed and given an opportunity that is forced or unlikely to spook the markets, a President will put their own personal choice into the Fed chairs job often during the course of his presidency, although recent data is skewed by Greenspan’s long term.

Regards,

[odysseus2000]

And the yields on the debt suggest that holders of US treasuries currently desired almost 4x as much risk compensation (i.e. the yield) than they do of UK debt. Which suggests that they are less certain of getting their money back if they hold the US debt!

Leaving asides the different expectations of future interest rates and inflation in the UK compared to the US, there's one factor peculiar to America which will give concern to many holders of US Treasury bonds.

The possibility of large scale civil unrest after the election.

I used to think that this was a fringe view, the sort of thing mostly discussed by doomsday preppers, communist hippy types and science-fiction fans. Nowadays I'm not so sure. Investors don't like civil unrest, it makes them jittery and if nothing else leads to them demanding higher returns on public debt to compensate for the increased risk.

The Democrats have spent the last four years refusing to accept the result of the last 2016 Presidential election and have vowed to contest the 2020 election result, refusing to accept it if Trump wins. There are ongoing investigations of Obama-era officials breaking the law by trying to bring down the Trump presidency which, if true, makes Watergate seem like a minor event. The Republicans are already claiming that the Democrats are engaging in voting fraud on an industrial scale; vowing to contest or ignore close votes.

It looks increasingly likely that the Presidential election result will end up being contested in numerous state supreme courts and the federal supreme court. We could end up with both sides claiming victory and trying to install their candidate as President in January.

In the last six months we've seen riots in many major cities, the burning down of entire neighbourhoods being cheered on by Democrat mayors and congressmen, with law and order breaking down in some city centres (notably Minneapolis and Portland). Meanwhile an increasingly large number of Republicans seem to believe that a Biden administration will strike down the constitution and swiftly impose communism.

Russ Robert, host of the economics podcast EconTalk, raised this possibility of post-election unrest leading to civil war in last week's discussion with journalist Anne Appebaum about her latest book and the state of American democracy today. For this to be seriously discussed on EconTalk was quite an eye opener for me (link below, the civil war is mentioned shortly after 32:40).

https://www.econtalk.org/anne-applebaum-on-the-twilight-of-democracy/

Sure it could happen, but having lived in the US the one factor that one finds is how small c conservative the Americans are.

The politicians get a lot of air time but most people loathe them and so long as things get along in ways that are not too different, most Americans don't care about the politics although they would like things better.

One criticism of Trump is that he has not done enough to drain the swamp as is the oft used expression for their political system.

Whether Trump is loathed more than the establishment Biden we will soon find out. That was the case with Hilliary Clinton.

Regards,

[dealtn]

New presidents usually sweep house, especially at the FED.

Not even close to being true with respect to Chair of the Federal Reserve.

Obama didn't,
Bush didn't,
Clinton didn't,
Bush didn't,
Reagan didn't...

https://en.wikipedia.org/wiki/Chair_of_ ... al_Reserve

Trump sacked Yellen and appointed Powell

Obama appointed Yellen after Bernanke left

Bush appointed Bernanke after Greenspan retired

Regan appointed Greenspan after Volker left.

Carter appointed William Miller, then Volker

Nixon appointed Burns

Truman appointed McCabe then then Martin

There is a regular series of changes at the Fed, although Greenspan was there a long time.

Each of the appointments is political in that the President appoints whom ever he/she (maybe one day) feels is appropriate and although a Fed chair may not get tossed in January with the inauguration there is often a conflict between the President and the Fed and given an opportunity that is forced or unlikely to spook the markets, a President will put their own personal choice into the Fed chairs job often during the course of his presidency, although recent data is skewed by Greenspan’s long term.

Regards,

Maybe "sweep house" means something else to you!

Obama appointed Yellen. This was 5 years after he was first elected. In fact Obama nominated Bernanke for re-election at the end of his term, and he served a second term.

Bush appointed Bernanke, and again this was 5 years after he was elected, so keen was he to replace Greenspan, with his "broom". Bush was more than happy to have Greenspan nominated to an unprecedented 5th term on his watch.

Clinton was perfectly happy with Greenspan, saw no cause to "sweep" him aside and reappointed him.

Bush senior had no reason or desire to replace Greenspan, and reappointed him.

Reagan appointed Greenspan as a replacement for Volker over 6 years after he was first elected President.

The only "sweeping" thing about this claim appears to be your statement.

[odysseus2000]

dealtn
Maybe "sweep house" means something else to you!

Obama appointed Yellen. This was 5 years after he was first elected. In fact Obama nominated Bernanke for re-election at the end of his term, and he served a second term.

Bush appointed Bernanke, and again this was 5 years after he was elected, so keen was he to replace Greenspan, with his "broom". Bush was more than happy to have Greenspan nominated to an unprecedented 5th term on his watch.

Clinton was perfectly happy with Greenspan, saw no cause to "sweep" him aside and reappointed him.

Bush senior had no reason or desire to replace Greenspan, and reappointed him.

Reagan appointed Greenspan as a replacement for Volker over 6 years after he was first elected President.

The only "sweeping" thing about this claim appears to be your statement.

Greenspan's long term is distorting matters.

When a new President comes in he wants to get things happening and not disturb the financial markets.

This was particularly true for Clinton who was initially seen as a communist and he left the Fed alone as his signal to the markets that all would be well.

Bush wanted to blow up Iraq and needed the markets as calm as possible so he too did not want to mess with the markets.

Trump wanted to "drain the swamp" and set about this by showing he was not going to have a Fed run by an Obama appointee. Trump's behaviour in this was much more like the traditional behaviour of the President, going back to when the Fed was created.

As things now are Biden loathes everything about Trump and that increases the odds on him wanting a new Fed chairman.

Meanwhile Trump has been very upset with Powell and has threatened before to remove him. If he gets another term he might act.

I have zero idea on what will happen with the Fed, but I don't think we are in a Greenspan like era where people are re-appointed a lot.

Others may disagree, such is how folk have different views.

Regards,

[dealtn]

dealtn
Maybe "sweep house" means something else to you!

Obama appointed Yellen. This was 5 years after he was first elected. In fact Obama nominated Bernanke for re-election at the end of his term, and he served a second term.

Bush appointed Bernanke, and again this was 5 years after he was elected, so keen was he to replace Greenspan, with his "broom". Bush was more than happy to have Greenspan nominated to an unprecedented 5th term on his watch.

Clinton was perfectly happy with Greenspan, saw no cause to "sweep" him aside and reappointed him.

Bush senior had no reason or desire to replace Greenspan, and reappointed him.

Reagan appointed Greenspan as a replacement for Volker over 6 years after he was first elected President.

The only "sweeping" thing about this claim appears to be your statement.

When a new President comes in he wants to get things happening and not disturb the financial markets.

Do you ever admit that sometimes the "odd" things you say initially aren't actually true, rather than ramble on, changing the subject, bringing in new things etc.?

[TheMotorcycleBoy]

And the yields on the debt suggest that holders of US treasuries currently desired almost 4x as much risk compensation (i.e. the yield) than they do of UK debt. Which suggests that they are less certain of getting their money back if they hold the US debt!

Leaving asides the different expectations of future interest rates and inflation in the UK compared to the US, there's one factor peculiar to America which will give concern to many holders of US Treasury bonds.

The possibility of large scale civil unrest after the election.

I used to think that this was a fringe view, the sort of thing mostly discussed by doomsday preppers, communist hippy types and science-fiction fans...

The SciFi bit is pretty cool coming from one of the "greatest mayors ever to rule Terminus."

Nowadays I'm not so sure. Investors don't like civil unrest, it makes them jittery and if nothing else leads to them demanding higher returns on public debt to compensate for the increased risk.

Definitely. I've watched much footage online across several States, OR, MI, NY, MN, WI, etc. of clear battle lines starting to emerge, and display of raw anarchy. Had such footage been aired a decade or so ago, without sound or indication of location, one would honestly believe that the events were going on in a third world country or a pariah State. Part of me believes that the despite the "most powerful nation in the planet" reference, were it not for America holding the global reserve currency, having been the only country to have ever deployed nukes, plus their holding (probably) the Worlds biggest [expletive deleted] of such weapons, it really would be a failed state.

Russ Robert, host of the economics podcast EconTalk, raised this possibility of post-election unrest leading to civil war in last week's discussion with journalist Anne Appebaum about her latest book and the state of American democracy today. For this to be seriously discussed on EconTalk was quite an eye opener for me (link below, the civil war is mentioned shortly after 32:40).

https://www.econtalk.org/anne-applebaum-on-the-twilight-of-democracy/

Many thanks for sharing this Salvor. I read AA's book "Gulag" once-upon-a-time. So this latest of her's is now on the list. The civil war reference is at 34:00, and whilst I'm aware of there being many armed militia in the US, and many Yanks (even teenagers!!) seem to be armed to the teeth, I imagine that civil war is actually *unlikely* based on the presence of a strong army which would probably stay loyal to the Constitution, presumably at least that spoke by the SCOTUS. If things do break down, my money would actually be on a military coup, the Generals certainly hate Trump.

(On a slightly different note if you are interest in Trump. his administration and how it's viewed from within, I can recommend Bolton's book which I enjoyed reading since JB sits on a totally different side of the fence to me, but he comes across in the book as being a very clever, rational and patient participant and narrator.)

Matt

PS Thanks for opening my eyes to "econtalk"

[SalvorHardin]

PS Thanks for opening my eyes to "econtalk"

Glad to help. The best economics podcast out there by a mile (and I've listened to quite a bit of the competition), except for listeners who are statists that think that the government should micromanage most aspects of life. I generally listen to them when I'm out for a walk (high capacity MP3 players are a godsend for this).

People say that reading Warren Buffett's letters to shareholders is a better education than an MBA. I'd like to add that EconTalk is similarly better than a Masters in Economics.

IMHO the top interviewees are the economists Mike Munger and Tyler Cowen, and of course Nassim Taleb who wrote "The Black Swan" and "Skin in the Game"

https://www.econlib.org/econtalk-by-featured-guest-and-letter/?selected_letter=M#MichaelMunger

https://www.econlib.org/econtalk-by-featured-guest-and-letter/?selected_letter=T#NassimNicholasTaleb

https://www.econlib.org/econtalk-by-featured-guest-and-letter/?selected_letter=C#TylerCowen

[odysseus2000]

Biden apparently wants to dump Powell and appoint Yellen:

https://www.businessinsider.in/politics ... 378968.cms

Regards,

[PeterGray]

No, he's going to dump Mnuchin and replace him with Yelland, as Treasury Sec.

[AsleepInYorkshire]

Analogously I have suggested to myself that we are currently fighting World War III. But this time our enemy isn't another country. In context it has so far killed more in the UK than the blitz of WW II. I can't generalise about those who have passed as being old and frail. Each life cut short is nothing less than tragic.

Yesterday Rishi Sunak delivered a spending plan for the next 12 months. Scattered throughout that delivery were references to

1. Increased taxes
2. Higher unemployment
3. Economic difficulties

I will never be persuaded that we can step over this economic downturn by increasing government debt and kicking the can down the road to future generations by not looking to reduce that debt. But there's some strong arguments to suggest we cannot repay the amount we have borrowed over a short term. A government debt is effectively an uncollected tax in my opinion. I wonder if the current government is trying to repeat history and reduce the debt by increasing our GDP. Roads, hospitals, affordable housing and the military have all been identified to receive immediate increases in budget.

AiY

[odysseus2000]

Analogously I have suggested to myself that we are currently fighting World War III. But this time our enemy isn't another country. In context it has so far killed more in the UK than the blitz of WW II. I can't generalise about those who have passed as being old and frail. Each life cut short is nothing less than tragic.

Yesterday Rishi Sunak delivered a spending plan for the next 12 months. Scattered throughout that delivery were references to

1. Increased taxes
2. Higher unemployment
3. Economic difficulties

I will never be persuaded that we can step over this economic downturn by increasing government debt and kicking the can down the road to future generations by not looking to reduce that debt. But there's some strong arguments to suggest we cannot repay the amount we have borrowed over a short term. A government debt is effectively an uncollected tax in my opinion. I wonder if the current government is trying to repeat history and reduce the debt by increasing our GDP. Roads, hospitals, affordable housing and the military have all been identified to receive immediate increases in budget.

AiY

There are two standard political remedies for difficult times:

1) Austerity, as in the 1930's, Cameron's administration and many others

2) Keyes, spending as in Roosevelt new deal and this is the route, as far as I can tell, that the PM is taking.

Regards,

[ursaminortaur]

Analogously I have suggested to myself that we are currently fighting World War III. But this time our enemy isn't another country. In context it has so far killed more in the UK than the blitz of WW II. I can't generalise about those who have passed as being old and frail. Each life cut short is nothing less than tragic.

Yesterday Rishi Sunak delivered a spending plan for the next 12 months. Scattered throughout that delivery were references to

1. Increased taxes
2. Higher unemployment
3. Economic difficulties

I will never be persuaded that we can step over this economic downturn by increasing government debt and kicking the can down the road to future generations by not looking to reduce that debt. But there's some strong arguments to suggest we cannot repay the amount we have borrowed over a short term. A government debt is effectively an uncollected tax in my opinion. I wonder if the current government is trying to repeat history and reduce the debt by increasing our GDP. Roads, hospitals, affordable housing and the military have all been identified to receive immediate increases in budget.

AiY

Increasing GDP so as to reduce the debt/GDP ratio would be a lot easier if we weren't about to sabotage our economic prospects for a prolonged period (if not permanently) through this hard brexit.

[AsleepInYorkshire]

Analogously I have suggested to myself that we are currently fighting World War III. But this time our enemy isn't another country. In context it has so far killed more in the UK than the blitz of WW II. I can't generalise about those who have passed as being old and frail. Each life cut short is nothing less than tragic.

Yesterday Rishi Sunak delivered a spending plan for the next 12 months. Scattered throughout that delivery were references to

1. Increased taxes
2. Higher unemployment
3. Economic difficulties

I will never be persuaded that we can step over this economic downturn by increasing government debt and kicking the can down the road to future generations by not looking to reduce that debt. But there's some strong arguments to suggest we cannot repay the amount we have borrowed over a short term. A government debt is effectively an uncollected tax in my opinion. I wonder if the current government is trying to repeat history and reduce the debt by increasing our GDP. Roads, hospitals, affordable housing and the military have all been identified to receive immediate increases in budget.

AiY

Increasing GDP so as to reduce the debt/GDP ratio would be a lot easier if we weren't about to sabotage our economic prospects for a prolonged period (if not permanently) through this hard brexit.

I could be naïve but I don't see Brexit as an issue. The EU will want to continue to trade with the UK and there will be an 11th hour deal achieved based more semantics and euphemisms but ultimately allowing us to fish our own waters and trade with them successfully. There will, as ever there is, be more forms to fill in.

We've become more reliant upon our service industries and Covid is hitting parts of them hard. It's clear this government wants to build it's way out of this problem. I think it's the only option on the table regardless of who's in power. But I can say without any doubt that we don't have the skills in the industry that we once had. That could trigger wage inflation?

AiY

[AsleepInYorkshire]

Analogously I have suggested to myself that we are currently fighting World War III. But this time our enemy isn't another country. In context it has so far killed more in the UK than the blitz of WW II. I can't generalise about those who have passed as being old and frail. Each life cut short is nothing less than tragic.

Yesterday Rishi Sunak delivered a spending plan for the next 12 months. Scattered throughout that delivery were references to

1. Increased taxes
2. Higher unemployment
3. Economic difficulties

I will never be persuaded that we can step over this economic downturn by increasing government debt and kicking the can down the road to future generations by not looking to reduce that debt. But there's some strong arguments to suggest we cannot repay the amount we have borrowed over a short term. A government debt is effectively an uncollected tax in my opinion. I wonder if the current government is trying to repeat history and reduce the debt by increasing our GDP. Roads, hospitals, affordable housing and the military have all been identified to receive immediate increases in budget.

AiY

There are two standard political remedies for difficult times:

1) Austerity, as in the 1930's, Cameron's administration and many others

2) Keyes, spending as in Roosevelt new deal and this is the route, as far as I can tell, that the PM is taking.

Regards,

Completely agree yes. But if I recall correctly debate continues to this day about the overall success of that program. I suspect WW II played a strong part in the US recovery as they became the worlds banker and supplier overnight until they joined in 1941. I can't imagine there's any perfect way to overcome the trials of economic malfunctions. But, and as a generalisation the options are usually limited and various governments tinker and apply as they really have no other option. The leading world economies are racked with debt on a scale that many of us will not live to see diminish to levels that ease pressure on there economies.

AiY

[ursaminortaur]

Analogously I have suggested to myself that we are currently fighting World War III. But this time our enemy isn't another country. In context it has so far killed more in the UK than the blitz of WW II. I can't generalise about those who have passed as being old and frail. Each life cut short is nothing less than tragic.

Yesterday Rishi Sunak delivered a spending plan for the next 12 months. Scattered throughout that delivery were references to

1. Increased taxes
2. Higher unemployment
3. Economic difficulties

I will never be persuaded that we can step over this economic downturn by increasing government debt and kicking the can down the road to future generations by not looking to reduce that debt. But there's some strong arguments to suggest we cannot repay the amount we have borrowed over a short term. A government debt is effectively an uncollected tax in my opinion. I wonder if the current government is trying to repeat history and reduce the debt by increasing our GDP. Roads, hospitals, affordable housing and the military have all been identified to receive immediate increases in budget.

AiY

Increasing GDP so as to reduce the debt/GDP ratio would be a lot easier if we weren't about to sabotage our economic prospects for a prolonged period (if not permanently) through this hard brexit.

I could be naïve but I don't see Brexit as an issue. The EU will want to continue to trade with the UK and there will be an 11th hour deal achieved based more semantics and euphemisms but ultimately allowing us to fish our own waters and trade with them successfully. There will, as ever there is, be more forms to fill in.

We've become more reliant upon our service industries and Covid is hitting parts of them hard. It's clear this government wants to build it's way out of this problem. I think it's the only option on the table regardless of who's in power. But I can say without any doubt that we don't have the skills in the industry that we once had. That could trigger wage inflation?

AiY

Any deal achieved will be a bare bones deal which although slightly better than no deal won't be that much better. The hit on GDP of no-deal is expected to be pretty bad.

https://www.theguardian.com/politics/2020/sep/23/no-deal-brexit-will-cost-uk-more-than-covid-report

“Our modelling with LSE of the impact of a no-deal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid-19,” says the report.

LSE modelling puts the long-term economic hit from a no-deal Brexit at 8% of GDP, similar to that of the government’s own forecast in 2018 of 7.6%, which amounts to £160bn in today’s money, or £2,400 per person.

This compares with the Bank of England’s latest forecast of the impact of Covid which shows a reduction of 1.7% of GDP to the economy up to 2022.

[odysseus2000]

ursaminortaur Any deal achieved will be a bare bones deal which although slightly better than no deal won't be that much better. The hit on GDP of no-deal is expected to be pretty bad.

https://www.theguardian.com/politics/20 ... vid-report

“Our modelling with LSE of the impact of a no-deal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid-19,” says the report.

LSE modelling puts the long-term economic hit from a no-deal Brexit at 8% of GDP, similar to that of the government’s own forecast in 2018 of 7.6%, which amounts to £160bn in today’s money, or £2,400 per person.

This compares with the Bank of England’s latest forecast of the impact of Covid which shows a reduction of 1.7% of GDP to the economy up to 2022.

Economic forecasts are educated guesses, often with a heavy layer of political bias.

Everything depends upon how the UK performs after Brexit (assuming it happens at the end of this year).

Whether we get a "great deal" or a "no deal" it still depends on how the economy performs and making predictions about that are impossible as its uncharted waters for everyone. Sure the EU can make things difficult, but to do so is to spite German auto in the face and various other European business too.

If Europe does this and the UK still manages to prosper it makes a Italxit much more likely. Better for the EU to be more helpful and to note that the UK only did well thanks to the EU etc, rather than have the UK re-connect with the commonwealth and leave UK politicians with bitter memories of the bad things the EU did.

My guess is that the UK will prosper after Brexit if the politicians want it to happen and will struggle if the politicians want us to. However, the danger for the politicians is that if they come over has being wreckers of the opportunity there is the Reform party in the wings and a general loathing of how the present government is handling the pandemic.

There are a lot of high stake political games being played and it is imho the height of folly to believe any economic forecasts.

History has shown time and again that the UK prospers no matter what. All the analysis at the start of the second war was that the UK would surrender. We did not. After the war the UK was bankrupt and ruined, but within 15 years we had the swinging sixties and in the meantime we fed a lot of Europe when the war ended.

Regards,

[ursaminortaur]

ursaminortaur Any deal achieved will be a bare bones deal which although slightly better than no deal won't be that much better. The hit on GDP of no-deal is expected to be pretty bad.

https://www.theguardian.com/politics/20 ... vid-report

“Our modelling with LSE of the impact of a no-deal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid-19,” says the report.

LSE modelling puts the long-term economic hit from a no-deal Brexit at 8% of GDP, similar to that of the government’s own forecast in 2018 of 7.6%, which amounts to £160bn in today’s money, or £2,400 per person.

This compares with the Bank of England’s latest forecast of the impact of Covid which shows a reduction of 1.7% of GDP to the economy up to 2022.

Economic forecasts are educated guesses, often with a heavy layer of political bias.

Everything depends upon how the UK performs after Brexit (assuming it happens at the end of this year).

Whether we get a "great deal" or a "no deal" it still depends on how the economy performs and making predictions about that are impossible as its uncharted waters for everyone. Sure the EU can make things difficult, but to do so is to spite German auto in the face and various other European business too.

If Europe does this and the UK still manages to prosper it makes a Italxit much more likely. Better for the EU to be more helpful and to note that the UK only did well thanks to the EU etc, rather than have the UK re-connect with the commonwealth and leave UK politicians with bitter memories of the bad things the EU did.

My guess is that the UK will prosper after Brexit if the politicians want it to happen and will struggle if the politicians want us to. However, the danger for the politicians is that if they come over has being wreckers of the opportunity there is the Reform party in the wings and a general loathing of how the present government is handling the pandemic.

There are a lot of high stake political games being played and it is imho the height of folly to believe any economic forecasts.

History has shown time and again that the UK prospers no matter what. All the analysis at the start of the second war was that the UK would surrender. We did not. After the war the UK was bankrupt and ruined, but within 15 years we had the swinging sixties and in the meantime we fed a lot of Europe when the war ended.

Regards,

If you put up barriers to trade then trade will suffer.

[NeilW]

If you put up barriers to trade then trade will suffer.

That's an EU concern, not ours. Given the floating rate it will reflect onto their exporters to us - due to opening up to full global competition. Those areas imposing the barriers pay the cost of them overall.

The correct approach here is to drop as many import restrictions as possible to encourage supply from across the world. Then let the market sort it out.

The whole push behind WTO was one set of rules that applied everywhere. The UK used to be at the vanguard of that approach.