Brexit Thread VIII: Taking a penalty kick-ing

[Kouvb593kdnuewnd]

2,5 huh? That would be what... a 60% taxation rate? That would put the US well ahead of any of the Scandis then. (US at 24+% taxation rate, Denmark tops the list at 45%.)

ca 20% * 2.5 = 45%, atleast that was what I ment. With 24% it is around 55%. Anyway the better US become, the more likely other countries are to try to do the same or even outdo US, atleast it seems like that based on history. So if US set a 6 hour workday, 4 days a week and 6 week paid holiday, likely other countries will start to do the same.

 

[AmazonQueen]

2,5 huh? That would be what... a 60% taxation rate? That would put the US well ahead of any of the Scandis then. (US at 24+% taxation rate, Denmark tops the list at 45%.)

A 45% tax that targets a larger group will net the government as much as a 60% tax that targets a smaller group. The level at which people start paying higher rates is important too.

 

[Hrothbern]

Yes, the GINI is important
The GINI before tax (the market incl effects of trade unions) and the GINI after tax and benefits.

Here trhe OECD comparison with as first column the mentioned tax to GDP ratio and then split up into income tax, social securities and taxes on properties.
The UK and US having less collective social insurances for social securities. Denmark having that wrapped up in income tax.
Capital gains tax not shown separately and the pensions not transparant (some countries having most pension money visible, some countries having more a hybrid with private, some only private with a base level as social benefit for the poor)
I guess the missing % of tax is VAT (sales tax), customs income, etc.
Benching is still small print, but anyway... here the OECD:

 

[Kouvb593kdnuewnd]

US and Sweden had roughly the same tax to GDP ratio up to mid 50s with Swedens peak reached around mid 80s, so US could probably achieve the same tax rate in 2 decades. Taxation - Our World in Data

Wages in Sweden Average monthly salary, 1973–2019 (scb.se), inflation adjuster Prisomräknaren (scb.se)

1973 values in 1995 vs 2019 for total 1973 adjusted (actual for 1995) vs 1973 adjusted (actual for 2019)
Full-time non-manuel workers in mining, quarring and manufacturing
19 840,80 (20 695) vs 26 028,07 (47 100), stagnation between 1973 to 1995, big growth between 1995 to 2019.

Central government sector
17 723,51 (17 530) vs 23 250,50 (38 900) small decline between 1973 to 1995 but big increase to 2019.

Muncipal sector (1) From 1994 the figures for the municipal sector and the county council sector include both full- and part-time employees. That is why the salary in 1994 is lower compared to 1993 for "Total".) So 1993 value used instead of 1995

14 753,41 (14 812) vs 20 280,23 (31 400), keep in mind (1), stagnation vs big increase.

County council sector again 1993 values due to (1)
13 486,90 (16 057) vs 18 539,27 (38 300), small increase vs big increase.

Supposedly wages in US, UK have stagnated since 1970s for the majority, but how true that actually is given while there seems to be a stagnation in swedish wages, it "only" lasted to mid 90s before wage growth started to outpace inflation. Price level in Sweden 1830–2020 (scb.se) seems to show a clear slowdown in price increase during the 90s and beyond. Like this show basically no wage growth for US since 1979 Employed full time: Median usual weekly real. earnings: Wage and salary workers: 16 years and over (LES1252881600Q) | FRED | St. Louis Fed

 

[Hrothbern]

US and Sweden had roughly the same tax to GDP ratio up to mid 50s with Swedens peak reached around mid 80s, so US could probably achieve the same tax rate in 2 decades. Taxation - Our World in Data
View attachment 592614

Good graph
Would be nice to have the GINI (on disposable income) parallel to it

 

[Kouvb593kdnuewnd]

For sweden gini coefficient since 1975 Gini coefficient 1975–2019 (scb.se) Seems to increase around 90s, wages stagnated between 70s and 90s may be important here, once wages grew so did gini coefficient. Tax ratio to gdp between the period is basically always higher than 40%, peek of about 50% is year 1990 from what I can tell. Some would maybe say the bottom is made up of immigrants, here is the immigration/emmigration rate since 1970 Immigration and emigration by sex and country of birth 1970–2019 and projection 2020–2070 (scb.se). The immigration peeks and gini coefficient peeks seems to correlate a bit, immigration decline seems to be tied to decline of gini coefficient.

Income and tax statistics (scb.se) -> disponibel income per decile. With capital gain income of the bottom 10% have increase by 27.6% and top 10% by 128%, average is 74.6%. Seems strange that even the bottom 10% of swedish population could have seen potentially better growth than average americans during the same period, this is also considered that taxes to gdp ratio was higher in early 1990s than 2019. Neither lower taxes nor immigration stopped the bottom from improving its conditions even if relative the top have fallen behind. Each group above have increase their incomes more than the groups under it which may be a concern, but since all groups have increase their incomes and wages have grown, it do look quite good overall even if improvements can be made, thus must take account for the situations and explain why each group have a different income growth and how it can be equalized.

Also there is this that look at many factors on how well households was doing in 6 developed countries between 1993 to 2014 and it do not look good if true MGI-Poorer-than-their-parents-Flat-or-falling-incomes-in-advanced-economies-Executive-summary.pdf (mckinsey.com)

Even in terms of billionaries per capita List of countries by number of billionaires - Wikipedia 3 nordic countries (Sweden, Norway and Iceland seems to have more than US and Denmark and Finland are also high up). Not sure that is meaningful, but it is quite interesting how socities that is considered some of the most equal is also some of the most capable at producing billionaries, also it mean high taxes to gdp ratio have not stopped the existance of billionaries.

Labour cost per hour in 2019 EU/Europe from what I can find • Chart: Where An Hour Of Work Costs The Most In The EU | Statista, UK is far behind from the looks of it, don't know if exchange ratio have an impact. US labor cost for private industry averaged $36.23 per hour (€31.8 average 2020 exchange rate), placing it above Irland and Below Finland assuming no major changes between 2019 and 2020 values. Compensation costs in private industry averaged $36.23 per hour worked in December 2020 : The Economics Daily: U.S. Bureau of Labor Statistics (bls.gov)

 

[Arakhor]

We seem to have got sidetracked here. How does this relate to Brexit?

 

[Takhisis]

Taxation. The EU was taxing the UK, which is bad™.

 

[Hrothbern]

We seem to have got sidetracked here. How does this relate to Brexit?

We got a bit into the details to avoid shallow conclusions.

What for Brexit remains for me is in how far this Tory coupe is going to increase GINI to keep the rich free from the economical Brexit impact.
Here the tax to GDP plays a role as well with Sunak in my impression already preparing for real austerity like actions, also to government free money for a Tory transition of the economy.

Janet Yellen, the US Fed calls for a minimum global corporate tax rate, aiming at support for the intended US increase from 21% to 28%. All in the OECD bargaining pool.
If the US is going to add the stick that, when a US company can touch lower tax in another country, the US will just add the difference to 28% as US tax, the simple implemented incentive for US companies for low tax countries will be gone.
If Biden gets the OECD together, it will at least close the door for the UK to go low on corporate tax.
https://www.reuters.com/article/us-usa-treasury-yellen-tax-idUSKBN2BS1DE

 

[EnglishEdward]

' it will at least close the door for the UK to go low on corporate tax.
https://www.reuters.com/article/us-usa-treasury-yellen-tax-idUSKBN2BS1DE

UK corporation tax is already too low, going lower was never a useful option.

And our Chancellor, Rishi Sunak, announced that corporation tax would increase at his last budget.

 

[Hrothbern]

UK corporation tax is already too low, going lower was never a useful option.

And our Chancellor, Rishi Sunak, announced that corporation tax would increase at his last budget.

Sunak did mention that with some caution
But the Britannia Unchained gang is with all authors in the BoJo cabinet. That is a genius out of the bottle for both BoJo as Sunak.

Here an article with some nice quotes in that spiritual fashion, incl a Javid (the predecessor of Sunak) who aimed at decreasing Corporate tax from 19% to 12.5%.
https://www.newstatesman.com/politi...rket-book-defines-boris-johnson-s-new-cabinet

Better have that door tighter closed with a US and hopefully a OECD decision, than the whim of the moment of BoJo with still that Unchained or is that unhinged ? bunch as cabinet members.

 

[Mega Tsunami]

This is the Torygraph’s take on the current state of the British economy and it does not make very good reading for Remainers at all.
If they can bring themselves to read it of course.

Britain’s economic resurgence has caught the whole world by surprise
The numbers all point to blistering growth as the hit from Brexit continues to diminish each month

Two cheers for the British Wirtschaftswunder. It may not be an economic miracle, but the accelerating recovery now under way is a breathtaking turn of fortunes for the much denigrated Brexit economy.

The UK will probably regain pre-Covid levels of output before the eurozone, perhaps by Christmas. By the end of next year it may even have recouped the entire cross-Channel gap in growth since the referendum.

The rest here:

Spoiler :

Philip Shaw from Investec has pencilled in blistering growth of 7.3pc this year, but says it could be over 8pc. “We’re trying not to sound outrageous but that is what the numbers are telling us,” he said. The firm has the eurozone pegged at 4.4pc.

Upgrades are pouring in. The Swiss bank UBS has raised its UK forecast from 3.8pc to 5.5pc. Bank of America and Barclays have both raised theirs to 5.9pc.

A “very optimistic” Goldman Sachs is eyeing 7.1pc, thanks to both early and rapid vaccination. The US bank says press alarmism about a 1.3 million exodus of EU nationals fleeing London is nonsense. “The true net outflow of migrants is closer to the 200,000 mark,” it said. It predicts that many will return soon because jobs are scarce at home. Migrants from Hong Kong will do the rest.
“Everybody has been too bearish on the UK,” said David Owen from Jefferies. “It is going to be a ‘coiled spring’ recovery and we even think the UK will outperform the US in 2022 with 7.6pc growth.”

Mr Owen says a powerful inventory cycle is about to kick in as firms restock. This will be turbocharged by £100bn of excess savings built up by companies over the pandemic.
It will be further juiced by investment tax incentives that reduce the effective marginal rate on plant machinery to zero for the next two years. Early evidence from the torrid pace of new business formation suggests that the UK is a step ahead of Europe in exploiting smart data technology, and will be a leader of post-Covid innovation.

Europe will rebound too, eventually. There is €500bn (£434bn) in pent-up household savings waiting to be spent. But vaccination paralysis in December and January is inflicting its long-tail damage today. April has turned into a lockdown wipe-out. Virologists in Germany, Italy, and France say politicians are fooling themselves in thinking they can reopen fully in May.
The erratic on-again, off-again treatment of the AstraZeneca jab probably delays final reopening by yet another month due to the slower rollout and damage to vaccine confidence. The EU is now trapped by its zero-tolerance policy on rare blood clots, as if it had the luxury of treating vaccines like a routine drug when 3,000 Europeans a day are dying from Covid, many from blood clots caused by the disease itself.

It has poisoned the well for Johnson and Johnson’s viral vector jab as well. Capital Economics says the 55m doses of J&J scheduled for the second quarter amount to 25pc of the EU capacity to immunise (given the one shot effect).

The promise of 50pc adult herd immunity by July is slipping away, and so is the second summer season for Club Med, with all that this means for pent-up insolvencies and sovereign debt ratios already stretched to the limit.
France has nudged down its growth forecast for this year from 6pc to 5pc. It is still too high. Spain has signalled a coming downgrade as well. The sorpasso moment when eurozone output surpasses pre-Covid levels has probably been pushed into mid-2022.

What we confirmed from UK data this week is that the headline collapse in trade with the EU seen in January was meaningless. The February figures are unrecognisable. They do not yet offer a “steady state” picture of post-Brexit trade as teething problems fade, but they do refute catastrophist claims.

Exports worldwide were down just 2.2pc from a year earlier. If that trend were to continue it would imply an annual trade loss of £7bn or around 0.07pc of GDP. It is macroeconomic noise.

Details are revealing. Exports to the EU were down 12pc (y-on-y) but over two-thirds of this was offset by a rise in exports to the rest of the world. There was a 20pc fall in exports to France but a 38pc rise in shipments to Belgium, some shipped from the Humber to Antwerp rather than clogging up the M25 en route to Dover.

It is evidence of trade diversion away from French ports that can no longer be entirely trusted, the cost of Emmanuel Macron’s anglophobe antics. It implies a revenue loss for Calais.

On the import side, the UK is buying less from the EU and relatively more from elsewhere. China’s shipments jumped 71pc (partly due to PPE). Imports fell 27pc from France, 18pc from Holland, 14pc from Germany, and 13pc from Italy. A pattern is emerging: the EU has chosen to make goods trade with the UK needlessly complicated and is now losing market share to global competitors.
There are signs that UK exporters are adapting to Brexit red tape – because they have to – while EU exporters are more dispersed and less focused. This will get worse when the UK waives the current exemptions on customs controls and reciprocates EU curbs. Europe is likely to see a galloping loss of its once captive UK market. Korea, Japan, China, America, and Mexico will snatch it away

It is true that the UK’s fishing industry has suffered a body blow, but this is a political and community issue. The commercial sums are tiny. Live shellfish exports are worth just £15m a year. Furthermore, the press narrative has degenerated into caricature. “I don’t think there ever really were piles of rotting seafood in the ports,” said Barrie Deas, head of the National Federation of Fishermen’s Organisations.

Mr Deas says there are eager buyers of British fish in the vast Asian market, once the logistics are right. “Before Covid, the market for frozen crab was expanding dramatically in China,” he said.

Nor is it beyond the wit of man to put more of Britain’s catch on British tables. “We’re being inundated with emails from people asking where they can buy fresh fish but the big supermarkets don’t give it prominence the way they do in Spain and France. We’re missing a trick,” he said.

It will take a generation to reach a useful economic verdict on Brexit. What is clear already is that the incessant high-decibel negativism of the London opinion machine has been exposed as ill-informed and hysterical. The British economy is doing just fine. Time to change the stuck record, my friends.

https://www.telegraph.co.uk/busines...c-resurgence-has-caught-whole-world-surprise/

 

[Samson]

So the tldr version is bankers say they think it will get better, but will not show their working? What rate of real terms growth would you be willing to bet we will beat? I would put an ether on it being under 7% if you want to take that.

 

[Gorbles]

Seems like a very typical Torygraph piece. For all the condemnations of "Remainers" and their "catastrophic" predictions, this is nothing more than that the opposite way.

I'd feel more assured if at any point pro-Brexit / pro-Conserative newspieces admitted the costs so far, but it seems they're intent on minimising them (see: the fishing industry). I'm sure that's a great comfort to the workers in that industry

 

[Snowygerry]

(...)
There was a 20pc fall in exports to France but a 38pc rise in shipments to Belgium, some shipped from the Humber to Antwerp rather than clogging up the M25 en route to Dover.

https://www.telegraph.co.uk/busines...c-resurgence-has-caught-whole-world-surprise/

That was more or less expected in case of a so called "soft Brexit"....

This is from 2019 or so :

"Brexit creates not only challenges but also opportunities for trade between the UK and Ireland on the one hand and the European continent on the other. Having more shortsea solutions in the logistics chain will not only mean greater reliability, it will also diminish our dependence on trucks for 'last mile' transport, as well as reducing costs and CO2 emissions,"

Port of Antwerp anticipates that accompanied trucks will increasingly be replaced by shortsea container transport, which by definition refers to unaccompanied goods loaded on board by crane for non-oceanic crossings.

https://newsroom.portofantwerp.com/...ies-for-trade-between-uk-and-port-of-antwerp#

Lugging goods in trucks with East European drivers all the way around Calais was never the most efficient method, it was the cheapest method

 

[FriendlyFire]

Philip Shaw from Investec has pencilled in blistering growth of 7.3pc this year, but says it could be over 8pc

You have lucked out with the roll out of Vaccines (which looks like mostly luck)
The EU is expected to have a similar "growth" for the same reasons once they get the vaccines rollout done

The UK will probably regain pre-COVID levels of output before the eurozone, perhaps by Christmas
Europe will rebound too, eventually. There is €500 billion ($771 billion) in pent-up household savings waiting to be spent. But vaccination paralysis in December and January is inflicting its long-tail damage today

 

[Samson]

This is the Torygraph’s take on the current state of the British economy and it does not make very good reading for Remainers at all.
If they can bring themselves to read it of course.

Britain’s economic resurgence has caught the whole world by surprise
The numbers all point to blistering growth as the hit from Brexit continues to diminish each month

Two cheers for the British Wirtschaftswunder. It may not be an economic miracle, but the accelerating recovery now under way is a breathtaking turn of fortunes for the much denigrated Brexit economy.

The UK will probably regain pre-Covid levels of output before the eurozone, perhaps by Christmas. By the end of next year it may even have recouped the entire cross-Channel gap in growth since the referendum.

The rest here:

Spoiler :

Philip Shaw from Investec has pencilled in blistering growth of 7.3pc this year, but says it could be over 8pc. “We’re trying not to sound outrageous but that is what the numbers are telling us,” he said. The firm has the eurozone pegged at 4.4pc.

Upgrades are pouring in. The Swiss bank UBS has raised its UK forecast from 3.8pc to 5.5pc. Bank of America and Barclays have both raised theirs to 5.9pc.

A “very optimistic” Goldman Sachs is eyeing 7.1pc, thanks to both early and rapid vaccination. The US bank says press alarmism about a 1.3 million exodus of EU nationals fleeing London is nonsense. “The true net outflow of migrants is closer to the 200,000 mark,” it said. It predicts that many will return soon because jobs are scarce at home. Migrants from Hong Kong will do the rest.
“Everybody has been too bearish on the UK,” said David Owen from Jefferies. “It is going to be a ‘coiled spring’ recovery and we even think the UK will outperform the US in 2022 with 7.6pc growth.”

Mr Owen says a powerful inventory cycle is about to kick in as firms restock. This will be turbocharged by £100bn of excess savings built up by companies over the pandemic.
It will be further juiced by investment tax incentives that reduce the effective marginal rate on plant machinery to zero for the next two years. Early evidence from the torrid pace of new business formation suggests that the UK is a step ahead of Europe in exploiting smart data technology, and will be a leader of post-Covid innovation.

Europe will rebound too, eventually. There is €500bn (£434bn) in pent-up household savings waiting to be spent. But vaccination paralysis in December and January is inflicting its long-tail damage today. April has turned into a lockdown wipe-out. Virologists in Germany, Italy, and France say politicians are fooling themselves in thinking they can reopen fully in May.
The erratic on-again, off-again treatment of the AstraZeneca jab probably delays final reopening by yet another month due to the slower rollout and damage to vaccine confidence. The EU is now trapped by its zero-tolerance policy on rare blood clots, as if it had the luxury of treating vaccines like a routine drug when 3,000 Europeans a day are dying from Covid, many from blood clots caused by the disease itself.

It has poisoned the well for Johnson and Johnson’s viral vector jab as well. Capital Economics says the 55m doses of J&J scheduled for the second quarter amount to 25pc of the EU capacity to immunise (given the one shot effect).

The promise of 50pc adult herd immunity by July is slipping away, and so is the second summer season for Club Med, with all that this means for pent-up insolvencies and sovereign debt ratios already stretched to the limit.
France has nudged down its growth forecast for this year from 6pc to 5pc. It is still too high. Spain has signalled a coming downgrade as well. The sorpasso moment when eurozone output surpasses pre-Covid levels has probably been pushed into mid-2022.

What we confirmed from UK data this week is that the headline collapse in trade with the EU seen in January was meaningless. The February figures are unrecognisable. They do not yet offer a “steady state” picture of post-Brexit trade as teething problems fade, but they do refute catastrophist claims.

Exports worldwide were down just 2.2pc from a year earlier. If that trend were to continue it would imply an annual trade loss of £7bn or around 0.07pc of GDP. It is macroeconomic noise.

Details are revealing. Exports to the EU were down 12pc (y-on-y) but over two-thirds of this was offset by a rise in exports to the rest of the world. There was a 20pc fall in exports to France but a 38pc rise in shipments to Belgium, some shipped from the Humber to Antwerp rather than clogging up the M25 en route to Dover.

It is evidence of trade diversion away from French ports that can no longer be entirely trusted, the cost of Emmanuel Macron’s anglophobe antics. It implies a revenue loss for Calais.

On the import side, the UK is buying less from the EU and relatively more from elsewhere. China’s shipments jumped 71pc (partly due to PPE). Imports fell 27pc from France, 18pc from Holland, 14pc from Germany, and 13pc from Italy. A pattern is emerging: the EU has chosen to make goods trade with the UK needlessly complicated and is now losing market share to global competitors.
There are signs that UK exporters are adapting to Brexit red tape – because they have to – while EU exporters are more dispersed and less focused. This will get worse when the UK waives the current exemptions on customs controls and reciprocates EU curbs. Europe is likely to see a galloping loss of its once captive UK market. Korea, Japan, China, America, and Mexico will snatch it away

It is true that the UK’s fishing industry has suffered a body blow, but this is a political and community issue. The commercial sums are tiny. Live shellfish exports are worth just £15m a year. Furthermore, the press narrative has degenerated into caricature. “I don’t think there ever really were piles of rotting seafood in the ports,” said Barrie Deas, head of the National Federation of Fishermen’s Organisations.

Mr Deas says there are eager buyers of British fish in the vast Asian market, once the logistics are right. “Before Covid, the market for frozen crab was expanding dramatically in China,” he said.

Nor is it beyond the wit of man to put more of Britain’s catch on British tables. “We’re being inundated with emails from people asking where they can buy fresh fish but the big supermarkets don’t give it prominence the way they do in Spain and France. We’re missing a trick,” he said.

It will take a generation to reach a useful economic verdict on Brexit. What is clear already is that the incessant high-decibel negativism of the London opinion machine has been exposed as ill-informed and hysterical. The British economy is doing just fine. Time to change the stuck record, my friends.

https://www.telegraph.co.uk/busines...c-resurgence-has-caught-whole-world-surprise/

Over 440 finance firms move jobs out of UK and 10% of bank assets flee

Think tank New Financial said in a study published on Friday that it had identified over 440 companies that "have moved or are moving part of their business, staff, assets or legal entities from the UK to the EU." The think tank said its report was the most comprehensive measure of the impact of Brexit on the City of London so far.
New Financial estimated that around 7,400 staff have been shifted out of London since the 2016 Brexit vote. That is in-line with EY's Brexit tracker, which last month estimated that 7.600 roles had been moved.
New Financial estimated that £900bn ($1.2bn) in bank assets — roughly 10% of the UK banking system — has either been shifted to the EU or been earmarked to move.

Dublin has been the biggest winner when it comes to job re-locations, followed by Paris. Luxembourg, Frankfurt, and Amsterdam have also been popular re-location destinations. New Financial said this scattering of jobs across the EU had "wound the clock back by about 20 years."
"While this is higher than previous estimates, it underestimates the real picture – and the potential longer-term impact," the report's authors warned.
"The bigger issue is not jobs leaving the UK but new jobs in the EU being created in future that might otherwise have been created in the UK."

New Financial said it expected move jobs and assets to shift to the continent as part of a "drip-feed of business and activity from the UK to the EU."
"As the EU takes a tougher line on the location of activity and individuals we expect these headline numbers to increase in future," the report said.
Earlier this month the chief executive of JPMorgan (JPM) said he may be forced to move all EU-facing jobs out of London as a result of "uncertainties" around regulation.​

 

[Snowygerry]

As usual when it comes to Brexit it's mostly Brits arguing against other Brits, pro and contra...

It just goes on and on.

It never really had anything to do with us, did it

 

[Arakhor]

Of course not, but it's in the interests of the metropolitan elite (you know, the Westministerites actually making the decisions) to make everyone think so.

 

[Snowygerry]

Of course not, but it's in the interests of the metropolitan elite (you know, the Westministerites actually making the decisions) to make everyone think so.

That is what makes it confusing for outsiders, before Brexit it was said it was the "metropolitan elite" that suckered the "the people" into EU membership.

But it is the same "Elite" in Westminster now, it is even the same party ? What changed exactly ?

Seems to me you're having a national identity crisis