Current Affairs EU In or Out

[peteblue]

Perhaps food for thought, courtesy of Tim Harford's latest column in the FT.

"So what happens now? As the aftershocks of the Brexit vote rumble on, people keep asking me to predict the future. I am not sure that is a useful exercise. But there’s a lot to be learnt from examining the recent past. The unexpected result has important lessons for anyone who wishes to see what might be ahead.

The first is that wishful thinking is surprisingly powerful. A few years ago, the economist Guy Mayraz conducted a simple experiment at Oxford university’s Centre for Experimental Social Science. Mayraz ran sessions in which the participants were shown 90 days of “wheat prices” (actually based on historical price data) and asked to predict the price of wheat on the 100th day. In addition to being paid for accurate forecasts, half the experimental subjects were told they were “bakers”, who would profit if the price of wheat fell, and half were “farmers”, who would make money if the price of wheat rose.

Logically, a farmer should make the same forecast as a baker, since the forecast does not change the outcome, and both of them are paid for accuracy. If people want to hedge even these small bets, farmers ought to forecast a lower price so that if the unwelcome outcome happens, at least they’re rewarded for their forecasting.

But that’s not what Mayraz found. Instead, nearly two-thirds of farmers predicted higher-than-average prices, and nearly two-thirds of bakers predicted lower-than-average prices. People tended to predict that their dreams would come true.

The same seems to have happened to Remain supporters — a group that included most of the British and international political and business establishment. Months before the vote, betting markets suggested that the chance of a Leave vote was about one-third. Given the likely consequences of such a vote — including the collapse of the pound, the resignation of the prime minister and a prolonged period of rudderless uncertainty — a one-third chance was worth taking seriously. Yet most of the elite seemed unwilling to countenance it. That is wishful thinking at its finest.

The betting markets, influenced as always by the weight of money, may have been displaying some wishful thinking of their own. Even during a mid-June run where nine out of 10 polls showed the Leave side ahead, the markets never gave Leave much more than a 40 per cent chance. With hindsight that seems odd.

The second lesson is that confirmation bias is everywhere: we are quite capable of clinging on to our beliefs by picking whatever facts support them. Remain voters now see the catastrophe they expected; Leave voters see a gratifying shake-up that will turn out fine in the end. Contrary evidence is easily dismissed. Eurosceptics claim that a drop in high-street footfall, a drying-up of job adverts and the emergency lockdown of property funds are not because real economic damage is in prospect, but because of gloomy Europhiles talking Britain down. The convenient thing about this argument is that it can never be falsified: recessions can always be blamed on the lack of faith of unbelievers.

I’m as guilty as anyone of confirmation bias. Like most economists, I expected that the consequences of a Leave vote would be ugly. The immediate collapse of the pound and the FTSE 100 made me feel I was right, although really they demonstrated nothing more than the fact that traders shared my view. Yet when the FTSE 100 recovered, that did not reassure me at all. I recalled that the index contains largely global companies and says little about the UK’s economic prospects. I accepted bad news when it chimed with my beliefs, and dismissed good news when it did not.

Perhaps the most important lesson is that we spend too much energy trying to foretell the future, and too little trying to be resilient whatever happens. The referendum result was unpredictable but the likely short-term consequences of a Leave vote were perfectly clear. Former deputy prime minister Nick Clegg, aka “Mystic Clegg”, outlined them in an article on the eve of the referendum that now seems clairvoyant. But most of what Clegg wrote could have been foretold by any well-informed observer who bothered to think through the consequences.

…

Perhaps Clegg learnt the trick of thinking things through from Vince Cable, his former colleague. Cable and I briefly worked together in the scenario planning department at Shell, a fascinating place to think about the future. Rather than making forecasts, good scenario planners sketch out different possibilities and bring together people with different perspectives to work through the details. The end result will be several plausible, internally consistent and emotionally compelling stories about the future. The scenarios will highlight hidden connections and make distant consequences seem real. But, importantly, the scenarios will also contradict each other.

It’s time for more serious scenario thinking about the UK’s future in Europe. Because scenarios are persuasive stories, they can help us face up to uncomfortable prospects and think clearly about possibilities we would rather ignore. And because scenarios contradict each other, they force us to acknowledge that, in the end, we cannot actually see into the future. As a result, we move from a sterile question to a fertile one — from “What will happen?” to “What will we do if it does?”"

He could have got the same results reading through this thread......but of course that was your point....

 

[roydo]

I work as a sales manager for a company, the largest in the world in it's product category. Been on a conference call this morning where we were told there would be a blanket 10% price increase as of September to retailers, due to Brexit. The last time something like this happened in the industry was 2008. Other large players in the industry are doing the same.

This will massively impact consumers in the fourth quarter of this year, at a time when money is already traditionally tight for people.

It will all be fine though. Boris said so.

Why?

 

[Brennan]

Why?

Currency fluctuations, basically. European manufactured products being sold in this country are hit by the exchange rate.

 

[Bruce Wayne]

He could have got the same results reading through this thread......but of course that was your point....

This or any other political thread really.

 

[Joey66]

I work as a sales manager for a company, the largest in the world in it's product category. Been on a conference call this morning where we were told there would be a blanket 10% price increase as of September to retailers, due to Brexit. The last time something like this happened in the industry was 2008. Other large players in the industry are doing the same.

This will massively impact consumers in the fourth quarter of this year, at a time when money is already traditionally tight for people.

It will all be fine though. Boris said so.

Don't go near any high rise Windows will you, it will be a stuttering Brexit leave, but with the WTO already cueing up as the EU has blocked them trading with us it will be the best thing to happen 5 years down the line it will be EU thank god we left!

 

[roydo]

Currency fluctuations, basically. European manufactured products being sold in this country are hit by the exchange rate.

I realise that the currency has been bumped by the vote, but it isnt like the only time it has moved unfavourably for your company.

Calling profiteering or excuse making.

 

[bring the ghost on]

I work in M&A, private equity, etc. I've already seen a number of deals where the plug has been pulled post-Brexit. In large part, this is due to the uncertainty, which is understandable and expected (but still worrying). However, it's more concerning that British businesses are now seen as lacking easy access to the EEA and investors are feeling their money could be spent better elsewhere in Europe.

It is going to be an uphill struggle to strike a compromise which will ensure the economy doesn't suffer, but also give the voters what they think they voted for (no more free movement of people).

 

[peteblue]

I realise that the currency has been bumped by the vote, but it isnt like the only time it has moved unfavourably for your company.

Calling profiteering or excuse making.

Exactly. Both the £ and the Euro have suffered against the dollar by similar percentages. It reminds me of when we introduced decimalisation and amazingly, just by how we counted money, immediately put all the prices up......rip off...

 

[peteblue]

I work in M&A, private equity, etc. I've already seen a number of deals where the plug has been pulled post-Brexit. In large part, this is due to the uncertainty, which is understandable and expected (but still worrying). However, it's more concerning that British businesses are now seen as lacking easy access to the EEA and investors are feeling their money could be spent better elsewhere in Europe.

It is going to be an uphill struggle to strike a compromise which will ensure the economy doesn't suffer, but also give the voters what they think they voted for (no more free movement of people).

John Kerry....

“As Britain and the EU begin negotiating the new terms of their partnership, America is rooting for and will do all we can to try to encourage and assist in the development of the smoothest possible transition and a highly integrated and collaborative EU/UK relationship.”

 

[bring the ghost on]

John Kerry....

“As Britain and the EU begin negotiating the new terms of their partnership, America is rooting for and will do all we can to try to encourage and assist in the development of the smoothest possible transition and a highly integrated and collaborative EU/UK relationship.”

That's fine Pete, I'm not denying we have a good negotiating position and support. I'm just curious where the compromise is. I think access to the EEA is a must, but we won't get that without free movement of people, and that will be a huge slap in the face of the voters.

 

[peteblue]

That's fine Pete, I'm not denying we have a good negotiating position and support. I'm just curious where the compromise is. I think access to the EEA is a must, but we won't get that without free movement of people, and that will be a huge slap in the face of the voters.

It is becoming more apparent by the day that the IMF, the USA etc all want the EU and the UK to do a deal because otherwise everybody suffers. A deal will be done and the bureaucrats within the Eu will have to get with the programme...it is in no ones interests for a good deal not to be done.......And we will not have this free movement of people........

 

[bring the ghost on]

It is becoming more apparent by the day that the IMF, the USA etc all want the EU and the UK to do a deal because otherwise everybody suffers. A deal will be done and the bureaucrats within the Eu will have to get with the programme...it is in no ones interests for a good deal not to be done.......

Do you think the EU will let us off with free movement of people then?

If so, do you think that has the potential to bring down the undermine the whole EU project?

 

[peteblue]

Do you think the EU will let us off with free movement of people then?

If so, do you think that has the potential to bring down the undermine the whole EU project?

Sorry, I added a bit while you were typing.....

The EU can carry on just as before, except we won't be in it.....the EU can bully and demand all sorts of things with countries with small economies, but as we have been saying all along the Uk is a big player and will be treated as such....

 

[bring the ghost on]

Sorry, I added a bit while you were typing.....

The EU can carry on just as before, except we won't be in it.....the EU can bully and demand all sorts of things with countries with small economies, but as we have been saying all along the Uk is a big player and will be treated as such....

I would think if the UK had full access to the EEA without free movement of people, that would cause serious outcries in other countries (France, for example) of "well why do we have to have free movement of people?"

That's the reason I don't think the EU will allow the UK to have such a privileged position - it will be too damaging to their whole project.

 

[peteblue]

I would think if the UK had full access to the EEA without free movement of people, that would cause serious outcries in other countries (France, for example) of "well why do we have to have free movement of people?"

That's the reason I don't think the EU will allow the UK to have such a privileged position - it will be too damaging to their whole project.

Not really. France and co signed up for Schengen, they like the idea, we didn't because we don't. We brought people in because, frankly, we wanted them, but that may not be the case over the coming years. It will be used no doubt as a negotiating issue and the quietly dropped if we allow them access to our fishing grounds or we promise to use our military with France as a nuclear deterrent......they would not demand free movement from Canada, USA, China, India etc etc, and we will fall into that category.......