Bank Of England Brexit FUD

[jackg]

It annoys me that the Bank of England post random FUD because they want to stay in the EU (even though they are run by a Canadian guy and Canada are an independent country, if the brexit scenario has taught us anything, it's that the uk is anything but independent).

I just found this article: https://www.bbc.co.uk/news/business-46377309
Didn't read it very much because it's just bank of england fud and I can't really be bothered reading it, but anyone who looks just at the headline and article will probably be convinced we should remain with a deal with the EU...

Actually taking a look at it, it doesn't seem all that bad:

Unemployment would rise to 7.5%

7.5%? So that's still not a huge amount?

house prices fall by 30% and commercial property prices collapse by 48%.

That's good considering they seem to be in a bubble phase anyway.

Interest rates would reach 4%.

So my bank will no longer take the money I invest in it for granted and will have to offer me more interest? Wait a second, what's wrong with that .


People with mortgages should have been tested up to at least a 4% level due to the new found "strength of the banks", if they haven't that's the banks fault for not allowing people enought contingency for a budget...

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[cellard]

It depends on who you ask they will tell you a different outcome. If they are pro-EU then you will hear FUD, and independents will tell you leaving EU will be the second coming of Jesus Christ with bitcoins for everyone.

Anyway, as always there is common ground, pros and cons. I believe short term UK will suffer after leaving EU, but long term, if the forecasts of some analysts become true, EU will go into a deep recession and UK may be able to dodge that bullet.

The worst part for me would be lose the easiness of movement across EU as an UK citizen because sorting visas is a pain in the ass, the good part would be to avoid EU conglomerate clusterfucks that can always happen and escalate into the rest of the nations. Italy is still saying that they don't care about the central bank requirements and they are doing their own thing. Salvini may push Italy into a bridge like what happened with Grece, but Italy is not Greece, it could be a big mess.

[NeuroticFish]

I think that the British got fooled into this by some of their politicians fueled by Russian money.

I don't know why people still believe what politicians say (even those pretending to be bankers), while we all know that what they say is what they have to say based on their interest or employer' interest and not really what they believe. So the article worth reading, but not necessarily believed.

I think that's silly that we have so many countries on a such a small area like Europe, but others' interest and our over sized ego keep us (all of us) divided.
So yeah, I believe that Britain may be doing it wrong.

[davis196]

The future growth of the UK GDP will decrease with around 4%,because of Brexit.That's not a big number,but I can't figure out any significant  pros of Brexit.No country can be fully independent in nowadays global world.
Recent polls say that 51% of the britains don't want Brexit,because they realise the real cost of the UK being outside the EU.

[Kemarit]

I think its all f**k-up. I even read that 5,000 jobs could be lost in the City of London alone. Tariffs will be reimposed if I'm not mistaken, so that would increase prices of imports into the U.K. So higher imports rate will also has a domino effect in food sector and different areas as well. So its really hard to see England leaving without any consequences or implications that will slow down their economy in the next 3-5 years.

[chairmanMao]

This is good news. It is a good idea for the UK to leave the EU. This may be a booster for the cryptocurrency to take off. The European Union may be disintegrated in the future. The world-class financial crisis is moving towards human civilization.

[o_e_l_e_o]

Unemployment would rise to 7.5%

7.5%? So that's still not a huge amount?

Any rise in unemployment is bad. Currently 20% of the UK live in poverty and 1 in 200 people are homeless. Those are not statistics we want to rise.

house prices fall by 30% and commercial property prices collapse by 48%.

That's good considering they seem to be in a bubble phase anyway.

That's terrible. If my house price falls by 30%, then my LTV also falls massively when my fixed term mortgage is up in 2/3/5 years and I have to remortgage. I will get a much worse deal, and my monthly payments will go up significantly (even more so if the interest rates rise). Suddenly the entire country has much less disposable income, and spending decreases to account for this. The economy tanks.

Interest rates would reach 4%.

So my bank will no longer take the money I invest in it for granted and will have to offer me more interest? Wait a second, what's wrong with that .

Except that's not how the banks work, because they are greedy self-serving assholes. Look at the last interest rate rise or the one before that. Banks increased the costs of their variable mortgages literally the same day, but we are now months down the line and most savings accounts remain unchanged. They pass on the costs but absorb the profit. The same thing would happen with further rises - mortgages and loan repayments would go up, interest on your savings would stay unchanged.

[aoluain]

Even though we dont like banks around here what the bank of England
are spreading is real concern. BREXIT is a disaster, it was voted for by
peoole who were misled and a big point was immegration. The BREXIT
vote coincided with terrorist attacks in France for example in the name
of ISIS. There was big fear in the UK.

As has been posted i cannot think of anything positive about the consequences
of that leave vote.

[BitHodler]

Italy is still saying that they don't care about the central bank requirements and they are doing their own thing. Salvini may push Italy into a bridge like what happened with Grece, but Italy is not Greece, it could be a big mess.

Italy is a ticking time bomb most people don't seem to pay attention to. I am legit worried about what would happen if Italy triggers Deutsche Bank to fall with it because of their exposure.

Deutsche Bank is one push away from imploding, and if you read today's news about how Deutsche Bank's offices got raided, things aren't looking good at all. It's either Italy triggering Deutsche Bank or vice versa.

I'm thankful for the recent Bitcoin price correction so I can get rid of my devalued Euros and buy an asset that will allow me to hedge the aforementioned risks. The lower the price the better for me.

[STT]

Brexit hasnt happened yet, only alot of talk.    People never get this or forget it at least but politics doesnt determine the world and they are only representatives of trade or whatever agreement takes place.    EU is a big deal but ultimately member countries, companies and employees of those companies want to buy and sell with UK

How they manage to mess up that basic requirement I dont know.   All I can think is the EU requires UK leaving to appear bad at the time to discourage others from also leaving, such as Greece most obviously I'm thinking of since they are bound to debt for decades instead of being to function as a normal economy and just default on the bad debt.
Later I imagine trade normalises between UK and EU just because that is the most profitable route to take.

The only big snagging point I got was the soft border in Ireland.   That can probably be solved with tracking devices for goods crossing I guess, that'll take time.   The BOE forecast was for a no deal exit, of course they presume the worst and that appears biased instead of realistic but its not impossible I guess

[jackg]

Later I imagine trade normalises between UK and EU just because that is the most profitable route to take.

These are my eact thoughts. But some of that article makes it look like it's not actually that bad if we come out without a deal.
Of course we want to have trading relations with each other and the world, its a mutual thing too. We want to trade with the EU to both export and import goods. They might make it look bad at first but they know they can't ultimately damage the UK too badly.

1. Any rise in unemployment is bad. Currently 20% of the UK live in poverty and 1 in 200 people are homeless. Those are not statistics we want to rise.

2. That's terrible. If my house price falls by 30%, then my LTV also falls massively when my fixed term mortgage is up in 2/3/5 years and I have to remortgage. I will get a much worse deal, and my monthly payments will go up significantly (even more so if the interest rates rise). Suddenly the entire country has much less disposable income, and spending decreases to account for this. The economy tanks.

3. Except that's not how the banks work, because they are greedy self-serving assholes. Look at the last interest rate rise or the one before that. Banks increased the costs of their variable mortgages literally the same day, but we are now months down the line and most savings accounts remain unchanged. They pass on the costs but absorb the profit. The same thing would happen with further rises - mortgages and loan repayments would go up, interest on your savings would stay unchanged.

1. I think the current unemployment rate is 4%, a rise to 7.5% is quite dramatic, but the BOE suggest it will go back down. People depressed from living on benefits are people who have been on benefits for a really long time and can't get out of the rut, I know of people who are really ahppy for being on benefits and think they've outsmarted the tax man by getting the free money they would instead have bene paid by their job...

2. House prices are in a bubble and it's quite dramatic with a lot of real estate. I really wanted to do some investments but I can't do it in such a market with that dramatic of an uptrend.

3. That's true, there's always a long delay, and somehow what is 4% interest to the banks on a mortgage is earnt from the 0.5% interest they have to pay from the Bank Of England. I'd say that 2% for the mortgage to charge would be much fairer...

[mu_enrico]

It's not clear yet whether the UK will end up with soft Brexit, hard Brexit, or no deal Brexit. There are many aspects to be negotiated, and I think the no-deal Brexit is the worst one (based on many sources of course). A recession is common by the way and the no-deal Brexit is very reasonable to trigger it. It's nothing to be fear of since a country as big as the UK would certainly recover from recession (unlikely to go to the depression).

[jackg]

It's not clear yet whether the UK will end up with soft Brexit, hard Brexit, or no deal Brexit. There are many aspects to be negotiated, and I think the no-deal Brexit is the worst one (based on many sources of course). A recession is common by the way and the no-deal Brexit is very reasonable to trigger it. It's nothing to be fear of since a country as big as the UK would certainly recover from recession (unlikely to go to the depression).

The world economy are actually technically due a recession as far as I can tell (based on usa recessions history from wikipedia - there tends to be one every 10 years).

A banking crisis may yet again clash with the next recession (that's possibly also due soon). It'll affect quite a ot of the poorest people in the counrty but hopefully there will be a bounceback and since the country are going to have a much greater surpless of money, they're going to have to put it somewhere (and I do hope it's not the politicians' back pockets)...

[LeGaulois]

They did also say that the GBP will lose 25%. Brexit will have huge costs, but the citizens will pay. Add to this the house prices falling by 30%. It's going to be a pain for people during the next 10 years. And since the UK isn't only England country what about i.e. a farmer who won't be able to export anymore knowing 80% of his production is going to England.
Hope for you guys it won't be adopted at the Parliament or whatever it is named.

[jackg]

They did also say that the GBP will lose 25%. Brexit will have huge costs, but the citizens will pay. Add to this the house prices falling by 30%. It's going to be a pain for people during the next 10 years. And since the UK isn't only England country what about i.e. a farmer who won't be able to export anymore knowing 80% of his production is going to England.
Hope for you guys it won't be adopted at the Parliament or whatever it is named.

Farmers selling only to British consumers seems a good thing to me. Most people only buy British meat i the uk now anyway so a premium is probably added.

The link says the worst case scenario sees an 8% drop from gdp. I think the last prediction was from the Bank of England so it’s getting more optimistic.

[wuvdoll]

First of all UK is a first world country and 7.5% is a bit high considering these kinds of stuff doesn't just go down out of nowhere.
Governments needs to do something that would make a lot more jobs opened up for the country, hence 7.5% means "more like 10%+ if we do nothing about it". That's not a rocket science, if governments do not intervene with unemployment, there will be consequences. Hence it requires socialistic moves that would make it go lower instead and "banks" don't like that.

House prices going down is actually really good wherever you are unless you are not a landlord or builder and what not, any regular person who just wants to have a home is welcoming that message. Interest rates that is given to you has two problems. If they go up it would mean the interest rates of loans you take will go up as well, remember those people who wanted to buy a house because the market crashed ?

Well, they will have to pay more for mortgage since the interest rates went up, the only interest rate that goes up is not the one bank gives you, it is also what you give to the bank. Also another problem is, if banks do not get enough profits in return, there is a big chance of american style bail out from government, which is a risk UK can't take during brexit deals, would create a huge step back.

[tmfp]

The OP is a shining example of the shallow thinking going on in the UK right now, especially amongst the xenophobes and neocons circling the soon to be post Brexit UK carcass, all trying to work out how they can grub some personal advantage out of it.

It annoys me that the Bank of England post random FUD because they want to stay in the EU

This is a good example of the level at which the bar is being set here.
Anything you don't agree with (even though you haven't read it), is FUD. What is "random" about it, surely it's a carefully crafted part of the Conspiracy to Enslave Britain?
We're talking Trump Tactics here: if you don't like it, just yell "Fake News!"

even though they are run by a Canadian guy and Canada are an independent country

I mean, c'mon, speak English.
You're saying that because the Governor of the BofE was born in a certain country, therefore economic modelling done by the Bank should...what?  

if the brexit scenario has taught us anything

The "brexit scenario", what is the "brexit scenario"? How has the "brexit scenario" taught anyone anything in itself?
If that means you have been inspired to cherry pick some factoids to support your personal prejudices, then all you have been taught is not to be so ignorant in the first place.

the uk is anything but independent  

Once again, empty rhetoric.
"Anything but"? That means "not at all".
If you make any deal, it's two way. If you're part of an organization of any sort, it's two way. Having an obligation to deliver your side is not loss of independence, it's rational self interest. Or are you talking about bent bananas and Daily Mail euromyths?

I just found this article...Didn't read it very much....I can't really be bothered reading it

That's always a great basis on which to dismiss something. About on the level of my six year old who won't eat potatoes because they "look funny".

but anyone who looks just at the headline and article will probably be convinced we should remain with a deal with the EU...

Ignoring the perils of just looking at headlines, why would it do that? There's always a bit of pain mixed in with gain, and if the UK is going to enter its second Golden Age when freed of the federalist EU blahblah shackles, then it will be a good test of that British Bulldog spirit which Made Us Great.

Actually taking a look at it, it doesn't seem all that bad:

So it's not random FUD after all?

Unemployment would rise to 7.5%

7.5%? So that's still not a huge amount?

That's over a million more people out of jobs.
A million poorer customers for local shops and businesses.
A million more Universal Credit claims.

house prices fall by 30% and commercial property prices collapse by 48%.

That's good considering they seem to be in a bubble phase anyway.

When their asset values collapse, borrowers default. When property prices fall, construction stops. There are 3 million jobs in the UK construction industry.

Interest rates would reach 4%.

So my bank will no longer take the money I invest in it for granted and will have to offer me more interest? Wait a second, what's wrong with that .

You "invest" money in a bank??
Interest rate rises are a bit further reaching in effect than just on your current account. Think deflation of the economy,

People with mortgages should have been tested up to at least a 4% level due to the new found "strength of the banks", if they haven't that's the banks fault for not allowing people enough contingency for a budget...

"strength of the banks"? Isn't that just more Bank of England random propaganda?
Systemic collapses are nonlinear. The reassurance that the banking industry has absorbed sufficient free QE "money" to survive certain modelling is meaningless in terms of the potentially huge societal impact of Brexit and related isolationist policies.
No-one "knows" what will happen post Brexit, no-one knows what sort of Brexit there will be: shouting fud and sticking your fingers in your ears is the best you can you?

[mu_enrico]

The world economy are actually technically due a recession as far as I can tell (based on usa recessions history from wikipedia - there tends to be one every 10 years).

A banking crisis may yet again clash with the next recession (that's possibly also due soon).

I think we are not in the recession yet, but yeah, it's subjective. Usually, a recession is triggered by a stock market crash, a 16%-20% correction (depend on which source you want to use). Let's say FTSE100 recent high was 7878. The support level would be 6302-6617, then after FTSE100 crashes to this support, there is a strong probability that it will lead to a recession (not always, just an indicator).

I agree that the market cycle would demand a recession very soon, it's not something to be feared. It's just a normal cycle after a series of a bull market or a good economy.

[o_e_l_e_o]

People with mortgages should have been tested up to at least a 4% level due to the new found "strength of the banks", if they haven't that's the banks fault for not allowing people enough contingency for a budget...

"strength of the banks"? Isn't that just more Bank of England random propaganda?
Systemic collapses are nonlinear. The reassurance that the banking industry has absorbed sufficient free QE "money" to survive certain modelling is meaningless in terms of the potentially huge societal impact of Brexit and related isolationist policies.

An increase in the base rate to 4% could be catastrophic, especially since it will be going along with higher unemployment, rampant inflation, lower wages and a house price crash.

A rise from the current 0.75% to 4% will add somewhere between £100 - £400+ pounds per month to mortgage repayments. depending on your outstanding balance and remaining term. A house price crash of 30% could add a similar amount on to your monthly repayments thanks to a lower LTV ratio. Predicted inflation of 6.5% and a drop of 25% in the value of the pound will compound this.

Landlords will pass this on to their tenants immediately, so everyone in the country will be paying this. We are talking anywhere between £300 to £1000 extra per household per month. Wage growth has been stagnant for years, and real term wages will fall even further after Brexit given the huge predicted inflation. We will also have another million people in unemployment and many many more on zero hour contracts. Many will be unable to afford these higher payments. Poverty will rise. Food bank usage will rise. Homelessness will rise. Deaths will happen. Everyone in the country except the millionaires that bankrolled this nonsense will have significantly less disposable income. The economy will tank.

This isn't random FUD, and if you are quite willing to turn a blind eye to children dying from starvation and homelessness because "we need to take back our sovereignty", then I'm not sure there's much else to be said. I mean, even her own party are resigning over the complete mess May has made of this.