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Britain has abandoned its claim to be the world's fifth largest economy

139 points by socalnate1 9y ago

aportnoy 9y ago
Had humans had 6 fingers on each hand, this news would not exist.
CptFribble 9y ago
Wait, you mean building bigger barriers to international trade can cause your economy to slow down? Who could have predicted this??
- orf 9y ago
  All those experts we've "had enough of"[1], of course. If you think we've got enough faded glory already wait until we set sail on a Brexit low tide and immediately sink. Rule Britannia! 1. https://www.youtube.com/watch?v=GGgiGtJk7MA https://www.youtube.com/watch?v=GGgiGtJk7MA
  - tomjen3 9y ago
    The people who voted for Brexit are not going to be hit so bad for this - they weren't the one whos economy was growing and with the workers from Eastern Europe not being allowed in, they will probably get a bit higher salary.
    - gpvos 9y ago
      Small businesses will be hit hard, though; e.g., farmers who won't be able to find enough workers to gather the produce off the land.
    - beaconstudios 9y ago
      that's a lot of assumptions about people who voted to leave. Not all (or even, I would wager, most) were anti-immigration working class voters. I voted leave, as well as at least 5 other people I know who are open enough about politics to admit it - and they're the minority of people right of Corbyn who are willing to admit it publicly.
      - comstock 9y ago
        I think surveys have shown the leave vote was mostly about immigration: http://www.independent.co.uk/news/uk/home-news/brexit-latest-news-leave-eu-immigration-main-reason-european-union-survey-a7811651.html http://www.independent.co.uk/news/uk/home-news/brexit-latest... But perhaps you have other data that supports your case?
        deleted 9y ago
        [deleted]
        beaconstudios 9y ago
        > Not all (or even, I would wager, most) were anti-immigration working class voters. If you re-read the above you'll see that I didn't claim to have data on the matter. I'm perfectly open to the idea that a large share of the leave vote is anti-immigration (although that sentiment itself has a broad range of meanings from intolerant to reasoned), but my point was to highlight the perception of leave voters as being generally xenophobic members of the working class as being inaccurate or at the very least, a broad stroke of the brush. Through discussing the vote with the other leavers I know, not once was immigration mentioned as a concern, and we all work in average-to-senior software roles, not Dave the van man who rants about Polish people coming for his job.
        comstock 9y ago
        Oh ok, so just anti-immigration? Not anti-immigration and working class? Your anecdotal evidence is not very useful in a reasonable discussion, and it might be more interesting to have a data based discussion (if you have some data).
        beaconstudios 9y ago
        You seem intent on painting a picture more than reading what I actually wrote: >Through discussing the vote with the other leavers I know, not once was immigration mentioned as a concern You seem to be a bit obsessed with backing everything with data. Do you want me to make a survey for the people I've spoken to? I'm not trying to say "immigration is not the issue and I have proof!", I'm saying that immigration isn't the issue for everyone, and that there are people in the main HN - reading demographic (and more than just me and the 5 I know, although I'm sure you're going to ask for a citation) that A. Don't match the image in your head and B. Didn't vote the way they did as some kind of attempt to lock out immigrants. Your suggestion that discussions can only be had by providing data is just not true. If I were trying to assert a claim large enough to need a sample size then sure, but I'm not.
    - peterclary 9y ago
      The numbers I saw, regarding how areas are best positioned to cope with impact of Brexit, suggested that Leave-voting areas would be impacted far worse than Remain-voting areas.
      - neilwilson 9y ago
        Then we just use the enhanced powers of the parliament to shuffle things around. That's sort of the point. The uk has rejected market distribution as a fair mechanism
        lhopki01 9y ago
        If the enhanced powers of parliament weren't used before to shuffle things around they won't be used after. There were no powers to shuffle things around that parliament didn't already have.
        neilwilson 9y ago
        After brexit parliamentary decisions are absolute. Before Brexit entities can use the courts and EU law to overturn acts of parliament. So as a simple matter of logic there are things you can do after Brexit you couldn't do before - because parliamentary supremacy has been restored.
        lhopki01 9y ago
        No that is a fundamental misunderstanding of British law and Parliamentary tradition. Entities could not use courts and EU law to overturn acts of parliaments. The most they could do is tell parliament that they are in breach of EU law and so must decide what to do but it is impossible for a court to overturn an act of parliament. The UK parliament is and always has been completely sovereign. Even UK courts can't overturn an act of parliament. The UK isn't like the US where we have a written constitution where all laws need to conform to it. The times that the EU could affect UK law was when parliament had specifically legislated for the EU to have those powers. Even in those cases though it was an act of parliament that gave those powers. The closest argument you could make is that if the UK still didn't want to follow EU law when it was in breach then it'd have to make a decision of paying fines (because it'd legislated to give the EU to right to fine it) or leave the EU.
  - crdoconnor 9y ago
    >All those experts we've "had enough of"[1], All those experts (~90%) predicted a sharp 20% increase in unemployment in the period between the vote and the finalized deal when surveyed by the bank of England just before the vote because of "uncertainty". Unemployment didn't spike a massive 20%. It went DOWN. I'm not even a leaver but seriously... fuck the economists. You're not a smart person if you trust them.
    - peterclary 9y ago
      Worth noting that you’re not counted as unemployed if you’re working as little as 1 hour a week, or if you’re on a government training scheme or on Workfare. Given that many people who work are in poverty it would be more meaningful to track the numbers in poverty.
      - crdoconnor 9y ago
        Officially the UK hit the lowest level of unemployment in like 25 years. That's bullshit of course. For the reasons you mentioned. Still didn't go up. Still went down.
      - tonyedgecombe 9y ago
        The figures for underemployment are down as well.
    - Izkata 9y ago
      > I'm not even a leaver but seriously... fuck the economists. You're not a smart person if you trust them. My favorite experience when it comes to economists was back in highschool (~15 years ago), when my teacher showed us a recording of two economists arguing with each other (on the news, I think). One was an expert in macroeconomics, the other in microeconomics. They were using the exact same evidence to argue opposite positions.
    - X86BSD 9y ago
      There is a reason the word con is in eCONomics.
- 88 9y ago
  Worth noting the EU doesn’t have free trade agreements with any of the three largest economies (US, China, Japan) and in theory, Britain would be free to enter into such agreements after leaving the EU.
  - celticninja 9y ago
    Negotiating a fair free trade deal is harder for a smaller market who every one knows are in need of a trade deal.
    - nanomoose 9y ago
      On the contrary, the opportunity to access the UK market has much enthusiasm.
      - EliRivers 9y ago
        It certainly does. A country reeling in economic shock, suddenly cut off from the free trade it enjoyed with 300 million other people? They will take trade deals that previously they wouldn't have given the time of day to.
        jamiegreen 9y ago
        Thats a bit hyperbolic. It's not like trade with the EU will suddenly stop. Worst case will be WTO tariffs , most of which will already be offset by the fall in the pound.
        heavenlyblue 9y ago
        Yeah, but definitely not if you're importing into UK.
      - celticninja 9y ago
        They(US, Japan, China) would like a deal with the UK because it would be easier for them to obtain more preferential terms than if they were negotiating with the EU. The EU is a much bigger market than the UK alone, Australia which made some noises about a free trade deal with the UK don't want to actually make a deal, or even discuss it, until they have their EU deal sewn up. The reality is we lost a lot of negotiating power through brexit and put ourselves in a position where we need trade deals and all our trading partners know that we need those deals. It's a poor position from which to negotiate.
- krona 9y ago
  It's about productivity, not trade (the GDP forcast is available to read, which obviously no news agency has bothered to do.) Last I checked the UK had a 6-7% GDP trade deficit. The UK needs another supply-side revolution, and not to turn it in to some beggar-thy-neighbour mercantile trading powerhouse. Brexit is small potatoes in the grand scheme of the real economy.
  - throwaway5752 9y ago
    Elaborate on what you mean by, "The UK needs another supply-side revolution, and not to turn it in to some beggar-thy-neighbour mercantile trading powerhouse. Brexit is small potatoes in the grand scheme of the real economy."
    - standupstandup 9y ago
      I think he means that there's a lot of debate when you peel back the covers on how much modern trade deals really impact economic growth. And quite a lot of evidence that they have surprisingly little impact. If you go read press releases made about trade deals they always have apparently huge numbers but spread over a very large number of years. Modulo what's said elsewhere about the uselessness of economic predictions, the predicted impact is usually very low. Probably because tariffs are already quite low and falling globally, most trade barriers are now regulatory in nature and those tend to be relatively unaffected by trade deals.
  - neilwilson 9y ago
    In the floating rate era there can be no imbalance. Everybody is getting what they want by definition. Savings are an export product.
- alexasmyths 9y ago
  "you mean building bigger barriers to international trade can cause your economy to slow down? Who could have predicted this??" The UK has never created barriers and does not want barriers. The EU is creating barriers to entry into it's economy for purposes of punishment (their words) - like the gym that makes you pay extra when you leave? The UK is now free to negotiate deals with any nation in the world - and not restricted to taking what the EU provides it - this is not restrictive. UK can now chose exactly whom it wants to migrate - this is not restrictive. If it were up to the UK, the EU nations would be considerably less economically restrictive than they are today. Finally - wages are up in the UK considerably, and property prices are down a little - which is exactly what we all want to hear when thinking about 'affordability'. 'Open trade' of real estate creates crazy bubbles and holds regular citizens under the tyranny of the massive cash-flows of foreigners who are able to hold their own citizens in indentured servitude. There are more empty flats in London than there are homeless people. And the weak pound + slow down in migration from the EU has caused wages to rise - which is awesome. Mass migration is 100% a downward driver on wages, only in very specific cases is it not - it's an issue some have a hard time grappling with. In the Alberta Oil Fields they want to increase migration for what they call 'labour input costs' - which is literally a different way of saying 'high wages'. In other words: 'wages are too high, we need more immigrants' - it's all rather obvious. There are issues that should have been addressed by the EU, but they won't - so we have full revolt. There's no reason for UKIP, True Finns, AFD, Sweden Democrats to exist - they exist because EU leadership won't listen to reason. In many ways America is the same - Trump is the ugly response to a system that wouldn't bend for some reasonable causes. Brexit was an ugly choice, hopefully a real wake up call for EU leaders, sadly, they seem to be doubling down and it won't end well.
  - IkmoIkmo 9y ago
    > The EU is creating barriers to entry into it's economy for purposes of punishment (their words) - like the gym that makes you pay extra when you leave? Of all countries on planet earth, it's frankly nothing less than comedy that we're seeing 'this eu realpolitik is unfair!' arguments from the UK. Anyway, no trade barriers, just one on real estate? Anyway, frankly the UK today enjoys approximately the same circumstances pre and post vote. It's way too early to look at current metrics and say 'look, nothing going on or even an improvement' when the brexit vote has occurred, but the actual brexit is years away. >And the weak pound + slow down in migration from the EU has caused wages to rise - which is awesome. Also, I'm lacking some crucial context. Sure, wages are up, have you looked at inflation? In globalisation a weakening pound creates jobs and makes goods more expensive, can't have your cake and eat it too. Real wages are actually down in the UK, surprise. > In the Alberta Oil Fields they want to increase migration for what they call 'labour input costs' - which is literally a different way of saying 'high wages'. In other words: 'wages are too high, we need more immigrants' - it's all rather obvious. I've never really fully followed the reasoning. Let's not let anyone into our countries because hey, we want to keep the high-paying jobs for ourselves. Oh damn, jobs are moving overseas cause it's cheaper or dropping our wages to stay competitive, well let's bring back protectionism. Oh wait no, we believe in free trade. Look I'm sympathetic to brexit voters, but I think one way or another, the west has to come to terms that the only way isn't up anymore, and that their relatively position of power will weaken no matter what policy path is taken. Whether you allow or disallow migrations, allow or disallow free trade, things have changed and they'll never be the same again. Literacy in India from British rule (1947) was 12%, now it's over 75%, and India is below the world average. That's close to a billion more literate competitive agents. No policy can simply isolate you from that. And that's just one metric from one country. The nationalist rhetoric isn't the solution, it's simple scapegoating.
- neilwilson 9y ago
  Not really. If you have fully engaged the people in your nation then the only losers are rich people asset shuffling. GDP is a global corporatists viewpoint. It ain't the viewpoint of the poor person struggling to get a small bedsit in a now overcrowded neighbourhood.
trynumber9 9y ago
What is going on with Europe's GDP in general? Comparing the IMF figures from 2008 to 2017 it seems France, Germany, and the United Kingdom have all had economic contraction while the U.S. grew 33%.
- xbzbanna 9y ago
  During the great recession, Europe decided to do austerity instead of Keynesian stimulus. Just like the textbooks say, this has led to weak growth and deflation.
  - monk_e_boy 9y ago
    Austerity in the UK is extreme and it doesn't seem to have helped much. It seems to be a convenient way for the Tories to auction off more of the public services because 'they are too expensive'...
    - hardlianotion 9y ago
      Auction off? I am unaware of this. Perhaps that is not what you meant. Can you clarify or show where this happened?
      - hansjorg 9y ago
        One example is the Royal Mail which was sold on the cheap a few years ago. It was purchased mostly by a group of secret investors which promptly turned around and made bank on the 1bn pound price difference.
      - netsharc 9y ago
        Somehow they privatize things saying the market can offer a better deal than a government funded institute, when this happens the government-employed people are fired and then only some of them get hired by the private company. Savings at a cost of worse service, because fuck the taxpayers. https://www.opendemocracy.net/shinealight/kiri-kankhwende/uk-outsourcing-alan-white-serco-G4S https://www.opendemocracy.net/shinealight/kiri-kankhwende/uk... https://www.theguardian.com/business/2013/jul/29/serco-biggest-company-never-heard-of https://www.theguardian.com/business/2013/jul/29/serco-bigge...
krona 9y ago
Since the IMF is measuring in Dollar terms, Britain became the 6th largest economy the day after Brexit, solely as a result of the devaluation of GBP. And apparently, this is news.
- hirsin 9y ago
  Does the currency they measure in impact anything? Every currency is correlated - they could measure in Swiss francs or yen and the result would still be the same I assume, otherwise there's arbitrage to be had.
  - hardlianotion 9y ago
    Yes. GBP underwent a slippage across the board immediately following the referendum and has not recovered since. Todays news likely to be more about the timing at which these official comparisons are made.
    - SamReidHughes 9y ago
      But we'd still get the same result if we measured in GBP. The ordering is a consequence of measuring with any currency, and choosing to measure GDP.
      - hardlianotion 9y ago
        Yes, I was being careless and only read the question I was interested in.
  - rz2k 9y ago
    Generally speaking the ranking between different countries is not affected by which currency is chosen. However, there are small differences and even arbitrage opportunities of going through multiple currencies rather than directly if you can avoid certain transaction costs. For example: usd/gbp * gbp/eur might not exactly equal usd/eur at a given time.
- rayiner 9y ago
gpvos 9y ago
"Crashes out of"? They went from 5th to 6th place. When seeing a phrase like that, I would've expected a sudden drop to at least the 10th place or so.
- sctb 9y ago
  Thanks, we've just updated the headline to the subtitle.
- extrememacaroni 9y ago
  It crashed with airbags on.
celticninja 9y ago
This was initially titled "Britain crashes out of the top 5 world economies" It made me think of the end of The Italian Job where the bus was hanging over a cliff edge. Seems like a fitting analogy.
deleted 9y ago
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blibble 9y ago
the UK and France swap positions at regular intervals, which the article even states: > This year will be the first time since 2013 that France has topped the U.K. in the ranking, according to the IMF.
- gerdesj 9y ago
  To be honest I thought the UK was still third in the EU economy top N (behind FR and DE). UKoGBnNI and FR have vied for the same position for quite a while now. Another interpretation is that we have equally successful economies based on one, rather archaic but generally agreed on, measure.
whack 9y ago
The real story is the one no one has been talking about. The US has been the world's largest economy for the past 100-150 years. In another ~10 years, that will no longer be the case. Every year that passes afterwards, the US is going to fall further and further behind China, until it eventually gets lapped some time in the mid-21st century. It's going to be "interesting" to see what happens then. http://fortune.com/2017/02/09/study-china-will-overtake-the-u-s-as-worlds-largest-economy-before-2030/ http://fortune.com/2017/02/09/study-china-will-overtake-the-... https://www.quora.com/Economic-History-At-what-point-did-the-US-become-the-biggest-economy-in-the-world https://www.quora.com/Economic-History-At-what-point-did-the...
- forapurpose 9y ago
  The other real story, though a few years old now, is the reduction of the individual European powers from world leaders to second-tier powers. The rise of China has made the first tier out of reach to countries with only 60-80 million people (such as the UK, France, and Germany). If the European powers combined - somehow, who knows how - then they would have the weight to be global powers and have more influence to move global affairs in directions the Europeans desire. With only 60 million people, the UK is destined to be a bit player. One wonders why a neighboring second tier Eurasian power would want to disrupt European integration and the resulting arrival of a superpower on their doorstep. Stand together, or hang separately.
  - tellarin 9y ago
    EU - UK vs. Russia Ukraine as the "trial" case?
    - Balero 9y ago
      Russia has a smaller economy than Italy. They have an disproportionally large military compared to their size, but this is running much closer to what they can sustain than European countries, which run a disproportionally small military.
      - 9y ago
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partycoder 9y ago
The UK was the first country to go through the Industrial revolution and for a while they had a huge advantage over other countries. But other countries eventually caught up to their industrialization. Eventually, the UK did no longer have an advantage in terms of productivity. So around WW2, Churchill transferred substantial knowledge to the US through the Tizard mission, so the US supplemented UK production. After that, came the Suez crisis, which is when the UK stopped being a superpower. The UK still has some of the best research universities in the world, but the role as London as trade hub is in decline. The UK might do well in the future, and will continue to be relevant, but the best days are gone.
- hardlianotion 9y ago
  London in decline as trade hb? Where is the evidence for that?

139 points by socalnate1 9y ago

Had humans had 6 fingers on each hand, this news would not exist.

Wait, you mean building bigger barriers to international trade can cause your economy to slow down? Who could have predicted this??

orf 9y ago
All those experts we've "had enough of"[1], of course. If you think we've got enough faded glory already wait until we set sail on a Brexit low tide and immediately sink. Rule Britannia! 1. https://www.youtube.com/watch?v=GGgiGtJk7MA https://www.youtube.com/watch?v=GGgiGtJk7MA
- tomjen3 9y ago
  The people who voted for Brexit are not going to be hit so bad for this - they weren't the one whos economy was growing and with the workers from Eastern Europe not being allowed in, they will probably get a bit higher salary.
  - gpvos 9y ago
    Small businesses will be hit hard, though; e.g., farmers who won't be able to find enough workers to gather the produce off the land.
  - beaconstudios 9y ago
    that's a lot of assumptions about people who voted to leave. Not all (or even, I would wager, most) were anti-immigration working class voters. I voted leave, as well as at least 5 other people I know who are open enough about politics to admit it - and they're the minority of people right of Corbyn who are willing to admit it publicly.
    - comstock 9y ago
      I think surveys have shown the leave vote was mostly about immigration: http://www.independent.co.uk/news/uk/home-news/brexit-latest-news-leave-eu-immigration-main-reason-european-union-survey-a7811651.html http://www.independent.co.uk/news/uk/home-news/brexit-latest... But perhaps you have other data that supports your case?
      - deleted 9y ago
        [deleted]
      - beaconstudios 9y ago
        > Not all (or even, I would wager, most) were anti-immigration working class voters. If you re-read the above you'll see that I didn't claim to have data on the matter. I'm perfectly open to the idea that a large share of the leave vote is anti-immigration (although that sentiment itself has a broad range of meanings from intolerant to reasoned), but my point was to highlight the perception of leave voters as being generally xenophobic members of the working class as being inaccurate or at the very least, a broad stroke of the brush. Through discussing the vote with the other leavers I know, not once was immigration mentioned as a concern, and we all work in average-to-senior software roles, not Dave the van man who rants about Polish people coming for his job.
        comstock 9y ago
        Oh ok, so just anti-immigration? Not anti-immigration and working class? Your anecdotal evidence is not very useful in a reasonable discussion, and it might be more interesting to have a data based discussion (if you have some data).
        beaconstudios 9y ago
        You seem intent on painting a picture more than reading what I actually wrote: >Through discussing the vote with the other leavers I know, not once was immigration mentioned as a concern You seem to be a bit obsessed with backing everything with data. Do you want me to make a survey for the people I've spoken to? I'm not trying to say "immigration is not the issue and I have proof!", I'm saying that immigration isn't the issue for everyone, and that there are people in the main HN - reading demographic (and more than just me and the 5 I know, although I'm sure you're going to ask for a citation) that A. Don't match the image in your head and B. Didn't vote the way they did as some kind of attempt to lock out immigrants. Your suggestion that discussions can only be had by providing data is just not true. If I were trying to assert a claim large enough to need a sample size then sure, but I'm not.
  - peterclary 9y ago
    The numbers I saw, regarding how areas are best positioned to cope with impact of Brexit, suggested that Leave-voting areas would be impacted far worse than Remain-voting areas.
    - neilwilson 9y ago
      Then we just use the enhanced powers of the parliament to shuffle things around. That's sort of the point. The uk has rejected market distribution as a fair mechanism
      - lhopki01 9y ago
        If the enhanced powers of parliament weren't used before to shuffle things around they won't be used after. There were no powers to shuffle things around that parliament didn't already have.
        neilwilson 9y ago
        After brexit parliamentary decisions are absolute. Before Brexit entities can use the courts and EU law to overturn acts of parliament. So as a simple matter of logic there are things you can do after Brexit you couldn't do before - because parliamentary supremacy has been restored.
        lhopki01 9y ago
        No that is a fundamental misunderstanding of British law and Parliamentary tradition. Entities could not use courts and EU law to overturn acts of parliaments. The most they could do is tell parliament that they are in breach of EU law and so must decide what to do but it is impossible for a court to overturn an act of parliament. The UK parliament is and always has been completely sovereign. Even UK courts can't overturn an act of parliament. The UK isn't like the US where we have a written constitution where all laws need to conform to it. The times that the EU could affect UK law was when parliament had specifically legislated for the EU to have those powers. Even in those cases though it was an act of parliament that gave those powers. The closest argument you could make is that if the UK still didn't want to follow EU law when it was in breach then it'd have to make a decision of paying fines (because it'd legislated to give the EU to right to fine it) or leave the EU.
- crdoconnor 9y ago
  >All those experts we've "had enough of"[1], All those experts (~90%) predicted a sharp 20% increase in unemployment in the period between the vote and the finalized deal when surveyed by the bank of England just before the vote because of "uncertainty". Unemployment didn't spike a massive 20%. It went DOWN. I'm not even a leaver but seriously... fuck the economists. You're not a smart person if you trust them.
  - peterclary 9y ago
    Worth noting that you’re not counted as unemployed if you’re working as little as 1 hour a week, or if you’re on a government training scheme or on Workfare. Given that many people who work are in poverty it would be more meaningful to track the numbers in poverty.
    - crdoconnor 9y ago
      Officially the UK hit the lowest level of unemployment in like 25 years. That's bullshit of course. For the reasons you mentioned. Still didn't go up. Still went down.
    - tonyedgecombe 9y ago
      The figures for underemployment are down as well.
  - Izkata 9y ago
    > I'm not even a leaver but seriously... fuck the economists. You're not a smart person if you trust them. My favorite experience when it comes to economists was back in highschool (~15 years ago), when my teacher showed us a recording of two economists arguing with each other (on the news, I think). One was an expert in macroeconomics, the other in microeconomics. They were using the exact same evidence to argue opposite positions.
  - X86BSD 9y ago
    There is a reason the word con is in eCONomics.
88 9y ago
Worth noting the EU doesn’t have free trade agreements with any of the three largest economies (US, China, Japan) and in theory, Britain would be free to enter into such agreements after leaving the EU.
- celticninja 9y ago
  Negotiating a fair free trade deal is harder for a smaller market who every one knows are in need of a trade deal.
  - nanomoose 9y ago
    On the contrary, the opportunity to access the UK market has much enthusiasm.
    - EliRivers 9y ago
      It certainly does. A country reeling in economic shock, suddenly cut off from the free trade it enjoyed with 300 million other people? They will take trade deals that previously they wouldn't have given the time of day to.
      - jamiegreen 9y ago
        Thats a bit hyperbolic. It's not like trade with the EU will suddenly stop. Worst case will be WTO tariffs , most of which will already be offset by the fall in the pound.
        heavenlyblue 9y ago
        Yeah, but definitely not if you're importing into UK.
    - celticninja 9y ago
      They(US, Japan, China) would like a deal with the UK because it would be easier for them to obtain more preferential terms than if they were negotiating with the EU. The EU is a much bigger market than the UK alone, Australia which made some noises about a free trade deal with the UK don't want to actually make a deal, or even discuss it, until they have their EU deal sewn up. The reality is we lost a lot of negotiating power through brexit and put ourselves in a position where we need trade deals and all our trading partners know that we need those deals. It's a poor position from which to negotiate.
krona 9y ago
It's about productivity, not trade (the GDP forcast is available to read, which obviously no news agency has bothered to do.) Last I checked the UK had a 6-7% GDP trade deficit. The UK needs another supply-side revolution, and not to turn it in to some beggar-thy-neighbour mercantile trading powerhouse. Brexit is small potatoes in the grand scheme of the real economy.
- throwaway5752 9y ago
  Elaborate on what you mean by, "The UK needs another supply-side revolution, and not to turn it in to some beggar-thy-neighbour mercantile trading powerhouse. Brexit is small potatoes in the grand scheme of the real economy."
  - standupstandup 9y ago
    I think he means that there's a lot of debate when you peel back the covers on how much modern trade deals really impact economic growth. And quite a lot of evidence that they have surprisingly little impact. If you go read press releases made about trade deals they always have apparently huge numbers but spread over a very large number of years. Modulo what's said elsewhere about the uselessness of economic predictions, the predicted impact is usually very low. Probably because tariffs are already quite low and falling globally, most trade barriers are now regulatory in nature and those tend to be relatively unaffected by trade deals.
- neilwilson 9y ago
  In the floating rate era there can be no imbalance. Everybody is getting what they want by definition. Savings are an export product.
alexasmyths 9y ago
"you mean building bigger barriers to international trade can cause your economy to slow down? Who could have predicted this??" The UK has never created barriers and does not want barriers. The EU is creating barriers to entry into it's economy for purposes of punishment (their words) - like the gym that makes you pay extra when you leave? The UK is now free to negotiate deals with any nation in the world - and not restricted to taking what the EU provides it - this is not restrictive. UK can now chose exactly whom it wants to migrate - this is not restrictive. If it were up to the UK, the EU nations would be considerably less economically restrictive than they are today. Finally - wages are up in the UK considerably, and property prices are down a little - which is exactly what we all want to hear when thinking about 'affordability'. 'Open trade' of real estate creates crazy bubbles and holds regular citizens under the tyranny of the massive cash-flows of foreigners who are able to hold their own citizens in indentured servitude. There are more empty flats in London than there are homeless people. And the weak pound + slow down in migration from the EU has caused wages to rise - which is awesome. Mass migration is 100% a downward driver on wages, only in very specific cases is it not - it's an issue some have a hard time grappling with. In the Alberta Oil Fields they want to increase migration for what they call 'labour input costs' - which is literally a different way of saying 'high wages'. In other words: 'wages are too high, we need more immigrants' - it's all rather obvious. There are issues that should have been addressed by the EU, but they won't - so we have full revolt. There's no reason for UKIP, True Finns, AFD, Sweden Democrats to exist - they exist because EU leadership won't listen to reason. In many ways America is the same - Trump is the ugly response to a system that wouldn't bend for some reasonable causes. Brexit was an ugly choice, hopefully a real wake up call for EU leaders, sadly, they seem to be doubling down and it won't end well.
- IkmoIkmo 9y ago
  > The EU is creating barriers to entry into it's economy for purposes of punishment (their words) - like the gym that makes you pay extra when you leave? Of all countries on planet earth, it's frankly nothing less than comedy that we're seeing 'this eu realpolitik is unfair!' arguments from the UK. Anyway, no trade barriers, just one on real estate? Anyway, frankly the UK today enjoys approximately the same circumstances pre and post vote. It's way too early to look at current metrics and say 'look, nothing going on or even an improvement' when the brexit vote has occurred, but the actual brexit is years away. >And the weak pound + slow down in migration from the EU has caused wages to rise - which is awesome. Also, I'm lacking some crucial context. Sure, wages are up, have you looked at inflation? In globalisation a weakening pound creates jobs and makes goods more expensive, can't have your cake and eat it too. Real wages are actually down in the UK, surprise. > In the Alberta Oil Fields they want to increase migration for what they call 'labour input costs' - which is literally a different way of saying 'high wages'. In other words: 'wages are too high, we need more immigrants' - it's all rather obvious. I've never really fully followed the reasoning. Let's not let anyone into our countries because hey, we want to keep the high-paying jobs for ourselves. Oh damn, jobs are moving overseas cause it's cheaper or dropping our wages to stay competitive, well let's bring back protectionism. Oh wait no, we believe in free trade. Look I'm sympathetic to brexit voters, but I think one way or another, the west has to come to terms that the only way isn't up anymore, and that their relatively position of power will weaken no matter what policy path is taken. Whether you allow or disallow migrations, allow or disallow free trade, things have changed and they'll never be the same again. Literacy in India from British rule (1947) was 12%, now it's over 75%, and India is below the world average. That's close to a billion more literate competitive agents. No policy can simply isolate you from that. And that's just one metric from one country. The nationalist rhetoric isn't the solution, it's simple scapegoating.
neilwilson 9y ago
Not really. If you have fully engaged the people in your nation then the only losers are rich people asset shuffling. GDP is a global corporatists viewpoint. It ain't the viewpoint of the poor person struggling to get a small bedsit in a now overcrowded neighbourhood.

trynumber9 9y ago

What is going on with Europe's GDP in general? Comparing the IMF figures from 2008 to 2017 it seems France, Germany, and the United Kingdom have all had economic contraction while the U.S. grew 33%.

xbzbanna 9y ago
During the great recession, Europe decided to do austerity instead of Keynesian stimulus. Just like the textbooks say, this has led to weak growth and deflation.
- monk_e_boy 9y ago
  Austerity in the UK is extreme and it doesn't seem to have helped much. It seems to be a convenient way for the Tories to auction off more of the public services because 'they are too expensive'...
  - hardlianotion 9y ago
    Auction off? I am unaware of this. Perhaps that is not what you meant. Can you clarify or show where this happened?
    - hansjorg 9y ago
      One example is the Royal Mail which was sold on the cheap a few years ago. It was purchased mostly by a group of secret investors which promptly turned around and made bank on the 1bn pound price difference.
    - netsharc 9y ago
      Somehow they privatize things saying the market can offer a better deal than a government funded institute, when this happens the government-employed people are fired and then only some of them get hired by the private company. Savings at a cost of worse service, because fuck the taxpayers. https://www.opendemocracy.net/shinealight/kiri-kankhwende/uk-outsourcing-alan-white-serco-G4S https://www.opendemocracy.net/shinealight/kiri-kankhwende/uk... https://www.theguardian.com/business/2013/jul/29/serco-biggest-company-never-heard-of https://www.theguardian.com/business/2013/jul/29/serco-bigge...

krona 9y ago

Since the IMF is measuring in Dollar terms, Britain became the 6th largest economy the day after Brexit, solely as a result of the devaluation of GBP. And apparently, this is news.

hirsin 9y ago
Does the currency they measure in impact anything? Every currency is correlated - they could measure in Swiss francs or yen and the result would still be the same I assume, otherwise there's arbitrage to be had.
- hardlianotion 9y ago
  Yes. GBP underwent a slippage across the board immediately following the referendum and has not recovered since. Todays news likely to be more about the timing at which these official comparisons are made.
  - SamReidHughes 9y ago
    But we'd still get the same result if we measured in GBP. The ordering is a consequence of measuring with any currency, and choosing to measure GDP.
    - hardlianotion 9y ago
      Yes, I was being careless and only read the question I was interested in.
- rz2k 9y ago
  Generally speaking the ranking between different countries is not affected by which currency is chosen. However, there are small differences and even arbitrage opportunities of going through multiple currencies rather than directly if you can avoid certain transaction costs. For example: usd/gbp * gbp/eur might not exactly equal usd/eur at a given time.
rayiner 9y ago

gpvos 9y ago

"Crashes out of"? They went from 5th to 6th place. When seeing a phrase like that, I would've expected a sudden drop to at least the 10th place or so.

sctb 9y ago
Thanks, we've just updated the headline to the subtitle.
extrememacaroni 9y ago
It crashed with airbags on.

celticninja 9y ago

This was initially titled "Britain crashes out of the top 5 world economies" It made me think of the end of The Italian Job where the bus was hanging over a cliff edge. Seems like a fitting analogy.

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blibble 9y ago

the UK and France swap positions at regular intervals, which the article even states: > This year will be the first time since 2013 that France has topped the U.K. in the ranking, according to the IMF.

gerdesj 9y ago
To be honest I thought the UK was still third in the EU economy top N (behind FR and DE). UKoGBnNI and FR have vied for the same position for quite a while now. Another interpretation is that we have equally successful economies based on one, rather archaic but generally agreed on, measure.

whack 9y ago

The real story is the one no one has been talking about. The US has been the world's largest economy for the past 100-150 years. In another ~10 years, that will no longer be the case. Every year that passes afterwards, the US is going to fall further and further behind China, until it eventually gets lapped some time in the mid-21st century. It's going to be "interesting" to see what happens then. http://fortune.com/2017/02/09/study-china-will-overtake-the-u-s-as-worlds-largest-economy-before-2030/ http://fortune.com/2017/02/09/study-china-will-overtake-the-... https://www.quora.com/Economic-History-At-what-point-did-the-US-become-the-biggest-economy-in-the-world https://www.quora.com/Economic-History-At-what-point-did-the...

forapurpose 9y ago
The other real story, though a few years old now, is the reduction of the individual European powers from world leaders to second-tier powers. The rise of China has made the first tier out of reach to countries with only 60-80 million people (such as the UK, France, and Germany). If the European powers combined - somehow, who knows how - then they would have the weight to be global powers and have more influence to move global affairs in directions the Europeans desire. With only 60 million people, the UK is destined to be a bit player. One wonders why a neighboring second tier Eurasian power would want to disrupt European integration and the resulting arrival of a superpower on their doorstep. Stand together, or hang separately.
- tellarin 9y ago
  EU - UK vs. Russia Ukraine as the "trial" case?
  - Balero 9y ago
    Russia has a smaller economy than Italy. They have an disproportionally large military compared to their size, but this is running much closer to what they can sustain than European countries, which run a disproportionally small military.
    - 9y ago

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partycoder 9y ago

The UK was the first country to go through the Industrial revolution and for a while they had a huge advantage over other countries. But other countries eventually caught up to their industrialization. Eventually, the UK did no longer have an advantage in terms of productivity. So around WW2, Churchill transferred substantial knowledge to the US through the Tizard mission, so the US supplemented UK production. After that, came the Suez crisis, which is when the UK stopped being a superpower. The UK still has some of the best research universities in the world, but the role as London as trade hub is in decline. The UK might do well in the future, and will continue to be relevant, but the best days are gone.

hardlianotion 9y ago
London in decline as trade hb? Where is the evidence for that?