Sunday, 17 September 2017

Hard Cheese

More from Project Fear here: now it's cheese that is threatened by Brexit.

...the British Retail Consortium ... has just issued a report warning that, whatever the settlement, food shortages should be expected, and prices will rise across the board. Little wonder: four fifths of food imported to UK shops comes from Europe. There's good reason to believe that cheese will be a chief casualty during Brexit

Well, it's over a year since the pound plummeted after the Brexit vote, so any cost increases due to that should already have happened. In any case, the weaker pound should help our exports, but no, there can be no advantages to Brexit, when you are part of Project Fear.

But if exports have seen short-term benefits owing to a weaker pound, says buyer Bronwen Percival, this won’t last.

In fact, the true culprit is not Brexit at all. As the strapline points out, "Amid ongoing uncertainty, London’s cheesemongers fear the worst", the problem lies in the increasingly botched implementation of it. However "incompetent politicians make life hard for small businesses" is hardly news, is it?


DCBain said...

What are they worrying about? "Blessed are the cheesemakers"

JuliaM said...

On the bright side, our 'obesity crisis' would be solved!

jack ketch said...

As anti-Brexϟhite as I am , the whole 'zombie apocalypse' approach of Project Fear is just cringe worthy and up there in the patent nonsense stakes with the more frothy mouthed brexϟhiteyness as 'regaining sovereignty ' or 'regaining control of our borders'. Food shortages? Oh give it a rest! And if the export of English 'cheese' should suffer then it will be solely due to fact that cheddar is chemically nearer to bath soap than Emmentaler and beyond use as a burger topping there is little call for the stuff in the EU.

Mark Wadsworth said...

Hee hee, imports of food will be "hit" as will be exports. It requires a certain amount of doublethink to believe both (and I believe neither).

Steven_L said...

Well I've just done my bit for brexit Britain today and and agreed to part ex my German made Ford Fiesta for a UK made Jaguar XE.

I only actually went for a test drive to kill an afternoon while her indoors dragged her mother around womens clothes store. After responding to one of their 'come test drive ...' texts they send because I downloaded a brochure 2 years ago I assumed they'd treat me like I had "mug" written on my forehead.

So when he came over with his quote offering me £8k off a brand new unregistered sexy as **** in stock motor and a part ex figure I'd struggle to get privately I just told myself I'm doing my bit for the brexit I voted for. Taking responsibility for my actions and all that. Made in the UK, commonwealth owned company etc.

You know, I think I'll only have UK cheese this Xmas too, and Aussie wine to wash it down with, and a nice dram of Scotlands finest to round the evening off.

paulc156 said...

Most of the benefit from the post Brexit fall in sterling hasn't been seen in increased export volumes so much as in increased profit margins according to the ONS. Clearly increased import costs have been passed on to consumers in some measure hence falling real wages. That could reverse in due course with increased interest rates supporting a somewhat higher sterling so it is a bit muddled. But we've seen our trade deficit widen in recent months due to an increased deficit with non EU states. The ones that are supposedly going to make trade with EU less important after Brexit. Wing and prayer springs to mind.g

Shiney said...


And those profits go where? Usually divided between workers in the form of increased wages, 'investment' (retained profits) and shareholder dividends. So some workers in export industries may have seen better bonuses... or not. And some workers in industries that import may have seen suppressed wages. I don't know, nor do you, and nor do the ONS, I'd wager.

In the end everything is micro, not macro, so we just can't tell.

"Clearly increased import costs have been passed on to consumers".... Do me a favour. I own a business that supplies UK retail, so I know a little (at the micro level) how this works.

Best let the free market get on with it, eh?

Shiney said...

Bayard - "incompetent politicians make life hard for small businesses"

Yeah, tell me about it. If the f***ers would only leave me alone.

Shiney said...

Oh...... and the imminent increase in employer workplace pension contributions from 1% to 2% 'might' have something to do with why wage growth is stagnant (I don't know if its included in the 'compnesation' numbers).

Plus employees are seeing their contribution rise to 3%.

So, you see paulc, it ain't THAT simple.

paulc156 said...

Shiney. Increases in prices and lagging wages is where we are post referendum whether you do macro or not. Ignoring aggregates in favour of anecdotes is hardly an
advance in understanding where the economy has headed. Businesses hoarding cash in lieu of investment is the result of increased uncertainty. As luck would have it world trade has picked up this year so the mildly negative performance of UK Ltd has been somewhat mitigated.

Shiney said...


I'm not talking about 'anecdotes' - I have real world experience at the sharp end of UK manufacturing.

#1 - 'despite Brexit' import price pressure is down - hooray on RMs boo-hiss on FG (competition)!
#2 - due to #1 factory gate prices in my sector are still going DOWN
#3 - there is new investment coming into my sector all the time (esp by our largest competitor a UK based US owned corp)
#4 - We just hired 4 people! a 15% increase in directs

Most manufacturers just 'get on with it' and deal with issues as they arise - as Mr vL of Akzo Nobel said on R4 this morning (kinda paraphrasing, but the sentiment was there).

Like @B says "In fact, the true culprit is not Brexit at all [....] the problem lies in the increasingly botched implementation of it."

Now, I have work to do....

paulc156 said...

Good for you Shiney. But like I said...anecdotes.

Mark Wadsworth said...

PC, the economy is the sum total of loads of 'anecdotes'. I deal with hundreds of small and medium sized businesses, and for them it is all business as normal.

paulc156 said...

MW. Your general impression of 00's of SME's/clients is comparable to the ONS specific and targeted collection of 27,000's of SME's and PLC's across the UK? Really? In any case, I'm not trying to overstate the effect of the referendum on the UK economy merely to point out that there's been no narrowing of the trade deficit due to sterling's depreciation and that should ring some alarm bells for those supposing the world is our lobster after brexit, and more of the increases in export volumes that we have seen since the vote have gone to that dying edifice that is the EU. Business investment has stagnated since the referendum whilst it was steadily increasing prior to it. Output per head increases this year barely above zero, but profits are up {see connection with sterling down]. Those profits are not apparently finding their way to wages or investment ... in the main. Global economy has gained pace though so maybe brexit worries are a bit more of an issue than you reckon.

Mark Wadsworth said...

PC, nobody on this blog ever said that a fall in GDP would reduce trade deficit much, or increase inflation much. Theory says it would, real life shows surprisingly little impact. The reason our economy is in the shit is home-owner-ism, not brexit.

jack ketch said...

The reason our economy is in the shit is home-owner-ism, not brexit.

YES!...and 'in work' benefits too!

As to how the economy will be post Brexϟϟhite (just so there's no mistaking my personal feelings on the subject), I was fortunately born with the gift of second sight so allow me to enlighten you all: After Brexϟϟhite some things will be more expensive, some will get a little cheaper. A few things may get really expensive TEMPORARILY, even become unavailable TEMPORARILY. The Rich will get richer, the Poor poorer, taxes will go up AS ALWAYS. When a politician says 'Good Morning' they will still have lied twice already. The sun will rise in the East and set in the West.

Instead of 'Project Fear' my fellow anti-Brexϟϟshiters would do well to put out posters proclaiming "Same Shit Different Day" or perhaps "Same Shit Dictator May?" because THAT is the real worry business should be having, the removal of all effective oversight of our elected Betters & Elders.

paulc156 said...

MW. I presume you meant to say 'a fall in sterling' rather than a fall in gdp ;)

Mark Wadsworth said...

I meant GBP.

Mark Wadsworth said...

@ SL, that's a middle manager car! Have you been promoted?

Lola said...

JK P156 et al.

Business investment. The biggest issues we have in making capital investments are tax, regulationism and rents. These have got sod all to do with Brexit.

Employment. I have jobs for two to three people now. In order to take them on I have to make some capital investment (see above) and then sustain a non-profit making period on their costs.

Brexit is about getting out from under a sclerotic big government self-serving bureaucratic corporatist illiberal junta sustained by unsound money and coercion. If, and it is a Big If, on taking ourselves out we do the opposite to that we will be absolutely fine. Of course that attacks all sorts of Shiboleths for example government spending boost the economy etc. etc.

Hard cheese. Entrepreneurs will continue to find and exploit opportunity. Part of their job is dealing with/getting round all the anti-trade constructs beloved of bureaucrats. So whatever we'll be fine. Some jobs will go. Others will be created. T'was always thus.