Exports are up for the moment but when hedging runs out a weak pound will drive up the costs of imported materials and energy. We don't have vast natural resources to rely on to fuel that manufacturing boom. It might benefit exports over all but it won't be painless by any means.
Crumbs. Exceedingly good cakes, meat dressing price hike in wake of the Brexit
Life is about to get more expensive for anyone in Britain that favours a French Fancy, an Angel Slice or indeed any other “exceedingly good” cake from a certain baker. The sad (for some) news reaches El Reg that Premier Foods, the parent of Mr Kipling, is poised to hike prices to retailers. “The situation on pricing differs …
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Tuesday 10th January 2017 19:24 GMT Anonymous Coward
The biggest cost to most businesses is their employees, not the cost of raw materials. This is especially true of our service exports. What you'll find is that foreign owned firms in the UK need to increase their prices to maintain the same profits in foreign currency, this puts UK owned firms in a far more competitive position than foreign owned firms as they don't have to maintain the constant currency equivalent of profits. In no way does a 10% fall in sterling equate to a 10% rise in a UK manufactured finished product price increase, sheer profiteering using Brexit as an excuse. But hey that's business, isn't it great ?
Note Japanese company Nissin owns a 17% stake in Premier foods, who make Mr Kipling's cakes.
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Wednesday 11th January 2017 04:37 GMT streaky
Rates of inflation are a myth in the real world. Basket prices used to measure don't necessarily match the cost of things we're actually buying and have no relation to volumes people are buying at.
If the rate is 5% it doesn't automatically mean people are having to spend 5% more to get the same items - because there isn't much stopping people switching brands and yes that does drive the importers nuts; but it should. Not that there's a better way of measuring price increases at a macro level. Well we probably could with supermarket data but only supermarkets have that...
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Wednesday 11th January 2017 09:56 GMT tiggity
Indeed. +1ed
The inflation rates rarely seem to relate to increases in my usual shopping / services / utility / travel expenses.
Usually when inflation is quoted at X I find my outgoings have increased by Y (where Y > X)
Maybe I'm just totally atypical compared to the weighted basket of goods, maybe it's due to some of the many flaws in the methods used to calculate inflation (e.g. RPI all about cost change in weighted basket of goods, not about cost to maintain your standard of living - the "basket" is typically a poor estimate of an individuals unique cost of living). Classic example is rented accommodation with limited availability, people I know who rent have had (significantly) above inflation rent increases for years, and as rent is by far their main outgoing they experience a cost of living rise way higher than headline inflation
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Wednesday 11th January 2017 14:36 GMT Doctor Syntax
"The biggest cost to most businesses is their employees, not the cost of raw materials."
So either the employees absorb the effect of rising cost of imports on their purchases or they get paid more. Either that biggest cost increases or employees subsidise their employer. Never mind, they're getting back control.
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Wednesday 11th January 2017 09:05 GMT James 51
Re: My toothpaste
The UK has offically been metric since before I was born and the goverment has been pushing for it before we were members of the EEC. We really need to consign that completely illogical system to history. If we start exporting stuff we're going to need to use units of measurement everyone can understand. Not to mention they are a nightmare to teach to children.
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Wednesday 11th January 2017 14:43 GMT Doctor Syntax
Re: My toothpaste
"We really need to consign that completely illogical system to history."
Along with metric. Do things right. Binary would be a bit cumbersome but octal or hex would be fine. The evolutionary chance that gave us 5 digits on each hand is a pretty dumb basis for a numbering system.
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Tuesday 10th January 2017 17:08 GMT Tezfair
it's easy to resolve...
get out of EU asap
cut fuel duty as oil in any form is the root of just about everything in modern life
cut VAT back to 15 or 17.5%
it's the taxes that's killing us, cut that back encourages growth, thus manufacturing gets healthy. Gov wins, we win
It's only because the gov wants to clear it's debts that we are all suffering.
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Tuesday 10th January 2017 18:11 GMT Cynic_999
Re: it's easy to resolve...
"
So much less tax for like paying the NHS and pensions, etc?
"
Or we could keep those things the same and instead cut back on illegal wars, vanity projects such as millennium domes, excessive pay rises for civil servants and unnecessary HS railways. (Though a few inflated pensions of ex-government employees could be reduced a tad with no ill effect). Maybe we could even increase the price of food & booze for MPs to make it the same as the plebs have to pay. Given the readership, I'd better not suggest stopping the practice of spending £billions of our taxes on various computer projects than never had a hope of working.
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Tuesday 10th January 2017 18:54 GMT Fruit and Nutcase
Re: it's easy to resolve...
@Cynic_999
Given the readership, I'd better not suggest stopping the practice of spending £billions of our taxes on various computer projects than never had a hope of working
Somehow I think the readership do take issue with overspend and waste especially when it is our taxes. The money usually goes to line the pockets of the usual suspects and serial offenders and the government of the day never seems to learn. In fact, the larger the waste, the more likely you are to be given even more money to waste next time
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Tuesday 10th January 2017 19:11 GMT Paul Crawford
Re: @ Cynic_999
So here is your politician's choice when faced with a tax shortcoming:
1) "Or we could keep those things the same and instead cut back on illegal wars, vanity projects such as millennium domes, excessive pay rises for civil servants and unnecessary HS railways"
2) Cut back on NHS and public pensions?
What do you really expect them to do?
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Wednesday 11th January 2017 04:41 GMT streaky
Re: it's easy to resolve...
instead cut back on illegal wars
I get that people think this stuff is funny but our illegal wars are actually a large portion of UK GDP- both in terms of keeping people directly employed and being able to produce stuff that can be exported. World peace would cause world depression - and tech advancement would grind to a halt fwiw.
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Wednesday 11th January 2017 07:43 GMT Flocke Kroes
Re: it's easy to resolve...
"Being able to produce stuff that can be exported". So we are able to produce stuff, but don't, and it could be exported but we don't.
Imagine instead of buying bombs and bullets we buy are soldiers beer, and instead of fighting wars, our soldiers have parties. Still got manufacturing and employment for our GDP, but we make fewer enemies. I have confidence in our soldiers, but I am sure even they cannot drink our entire arms budget. Send the surplus beer to our enemies, and perhaps we will have more friends.
"tech advancement would grind to a halt". ROTFLAO.
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Tuesday 10th January 2017 20:06 GMT Anonymous Coward
Re: it's easy to resolve...
"So much less tax for like paying the NHS and pensions, etc?"
You pay something out of your wages called 'National Insurance' which are supposed to fund those...
...or not, if you happen to be one of that special breed of "IT Contractor" who think that National Insurance is for other people.
<nineties_flashback/>
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Tuesday 10th January 2017 20:45 GMT Paul Crawford
Re: @AC
For 2017 NI income is £127 billion (apparently http://www.ukpublicrevenue.co.uk/breakdown)
Expenditure is Public Pensions = £157 billion and National Health Care = £143 billion
So if you thought that NI alone covered it, and not a significant chunk of general taxation, you are in for a rude surprise.
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Friday 13th January 2017 13:04 GMT Anonymous Coward
Re: @AC
"So if you thought that NI alone covered it"
Oh come on,we all know that NIC hasn't been significantly increased in, well, forever - unlike the escalating cost of the NHS services and pensions which as you rightly point out now dwarfs NIC receipts.
The point remains that NIC comes from personal income taxation and is supposed to contribute to these public services - and in the '90s especially, large numbers of so-called contractors arranged their company finances so as to pay minimal PAYE and often no NIC at all.
I'm assuming the numerous downvoters were NIC-dodgers. Well thanks guys for IR35 which was the inevitable result of that behaviour. Well done.
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Wednesday 11th January 2017 15:03 GMT Doctor Syntax
Re: it's easy to resolve...
You pay something out of your wages called 'National Insurance' which are supposed to fund those...
"Supposed" is the operative word there. NI has been part of general taxation for many years.
The Treasury really, immensely, tremendously hates with a vengeance the very idea specific taxes going to specific expenditure as it wouldn't be able to get its claws on them. It invented an ugly word to describe them: "hypothecated". Would you want to pay something as nasty-sounding as a hypothecated tax? Of course if you knew that NI went to the NHS, pensions etc. or Vehicle Excise Duty under its old name of Road Fund was spent on roads you'd think it was a good idea.
Ideally NI would go direct to the relevant spending departments and VED would go direct to the DoT & Highways Agency and even a contribution to the NHS to cover the costs of treating RTA injuries. That would force governments to be a bit more upfront about general taxation levels.
And a final point about NI. I take it you pay NI as part of PAYE. Do you realise that you only pay employee's NI? Freelancers pay both employee's and employer's contributions. Maybe you didn't know that.
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Tuesday 10th January 2017 23:39 GMT TVU
Re: it's easy to resolve...
" it's easy to resolve...
get out of EU asap"
*sigh* When will this spate of Brexit hoodoo economics ever end? Economic isolation and separation from the single market area will result in service and manufacturing businesses relocating within the single market area, more unemployment and economic stagnation and recession.
Furthermore, there is this grand delusion that's exhibited by Brexit supporters that all foreign investors will opt for investing in a small market of 64 million people over investing in a much larger unified market of well over 400 million people. That is just not going to happen.
Yes, there will be beneficiaries from a hard Brexit but they will be Paris, Frankfurt and the Republic of Ireland and certainly not British workers.
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Thursday 12th January 2017 21:41 GMT Anonymous Coward
Re: it's easy to resolve...
Furthermore, there is this grand delusion that's exhibited by Brexit supporters that all foreign investors will opt for investing in a small market of 64 million people over investing in a much larger unified market of well over 400 million people. That is just not going to happen.
No, they'll continue to invest in the total market of 464million. Why would they do otherwise if they can make money with it?
Yes, there will be beneficiaries from a hard Brexit but they will be Paris, Frankfurt and the Republic of Ireland and certainly not British workers.
That's what the EU want to see, of course, to punish the UK for daring to leave their cosy little club, but it won't be like that (unless the remoaners continue to work against exit just for spite). There's too much money at stake, and too many people who aren't daft enough to pour good money after bad into failing eurozone regions like Paris.
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Wednesday 11th January 2017 02:08 GMT Schultz
"It's only because the gov wants to clear it's debts that we are all suffering."
I hate to break it to you, but those are really your debts, taken on by your government in your name. (I assume that you interact with said government by voting, paying taxes, receiving benefits, using public infrastructure, ...)
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Tuesday 10th January 2017 17:13 GMT Lars
Oh dear
Why this topic, when the Sterling goes down something else goes up, good for some and not good for others. I live in a country who got fed up with the ten-yearly devaluation and joined the Euro hoping for a less easy and more intelligent solution to dealing with the reality. Could it be, that after all, the UK has had to wake up to the reality of a country who, living in the past, and totally unaware of how fast the country has gone towards a "I wash your feet, and you cut my hair" economy. If so, welcome to the reality, dear Brits, the silver lining of Brexit perhaps.
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Tuesday 10th January 2017 19:34 GMT Anonymous Coward
Re: Oh dear, Lars
I live in a country who got fed up with the ten-yearly devaluation and joined the Euro hoping for a less easy and more intelligent solution to dealing with the reality.
Bwahahahahaa! Look how that's panned out - vast unemployment in southern Europe, an incipient Italian banking crisis, the issue of Greek (Spanish, Portugese, French) bad debt wholly unresolved, meanwhile Germany exports fancy cars at discounted intra-EU exchange rates.
The UK is a basket case economy, I'll give you that. But I rather be my own basket case, than wrapped up in the incestuous, bungled mess of the Euro. Within the Euro, there's only two options - repudiate certain high value billion-to-trillion value debts, or Germany pay them all off. Either is a bad outcome, but that's what Europe is stalling on. Good luck, because you're going to need it even more than our little island is.
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Tuesday 10th January 2017 20:10 GMT Brewster's Angle Grinder
Re: Oh dear, Lars
@Ledswinger Greece aside, I don't think either of your options need happen. If there are no massive external shocks or internal revolts, then internal devaluation will produce a continent where every country is as efficient as Germany, with a commensurate rise in the euro. For Germany, it would be a slow and painfree slide into mediocrity; I mean, imagine if the Italians could produce cars every bit as well engineered as German ones.
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Wednesday 11th January 2017 02:23 GMT Schultz
"internal devaluation will produce a continent where every country is as efficient as Germany"
Just like during the golden age before the EU integration? As I remember it, a lot of countries struggled to compete economically with Germany before the EU economic integration. Why should the future look very different?
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Tuesday 10th January 2017 19:48 GMT Brewster's Angle Grinder
Re: Oh dear
I'm a remainer. But the euro is a whole different kettle of piranha.
When your currency can't go down, wages end up cut to the bedrock, unemployment increases and companies (and individuals) incur massive debt (which probably end up bailed out by the government leading to cuts in public services). Such "internal devaluation" is far, far worse than the 5% inflation we might get.
With a name like Lars, you're probably from a country whose currency should have risen. So I'm sure its very nice for you; the UK would have been in the same position, if we'd joined. It's too soon to know whether joining would have been a stroke of Machiavellian genius or whether we've avoided an almighty day of reckoning. Given what the Greek's have accepted so far it may be joing would have been cost free. But part of the reason Brexit is happening is because people have blamed the EU for the crisis in the eurozone periphery.
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Wednesday 11th January 2017 15:13 GMT Doctor Syntax
Re: Oh dear
"I live in a country who got fed up with the ten-yearly devaluation and joined the Euro hoping for a less easy and more intelligent solution to dealing with the reality."
I suspect one reason we kept out of the Euro was the realisation that it seemed impossible to set an economic policy that worked out right for all parts of the UK let alone a whole continent.
Brown thought he had a winner to end boom and bust: set interest rates at a level depending on inflation excluding housing inflation and at a time when a lot of manufacturing was being outsourced to cheap labour countries. It was going really well until the consequent humongous credit boom collided with reality.
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Tuesday 10th January 2017 17:35 GMT Aristotles slow and dimwitted horse
I'm sure...
I'm sure that an extra 5p or so on top of my beloved 6 pack of Bakewell tarts isn't going to break the bank. Alternatively if I was really moved to do so I'd just reprioritise or do away with some of the other superflouous stuff so the impact of these cost rises are of minimal impact.
No fuss. No dramas.
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Tuesday 10th January 2017 17:45 GMT Warm Braw
Re: I'm sure...
The average family spends around £3000 per year on food. You may not really notice if that bill goes up by 5%, but the economy will notice the loss of all the £150s people like you would otherwise have spent on something else.
EDIT: Also, as a good proportion of food is zero-rated for VAT purposes, the diversion of more discretionary spending into food purchases also reduces tax revenues...
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Tuesday 10th January 2017 19:38 GMT Anonymous Coward
Re: I'm sure...
but the economy will notice the loss of all the £150s people like you would otherwise have spent on something else.
True, but the devaluation of Sterling is long overdue. The FX rate justified on membership of the EU was an unsupportable one, because the macro economics were quite clear. So blaming Brexit for an entirely justified and long overdue fall in our exchange rate is rather pointless. And the EU still have to come to terms with the flaws in their own collective economy.
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Tuesday 10th January 2017 18:00 GMT Cynic_999
Re: I'm sure...
Sure, anything taken in isolation is trivial. You give up an unnecessary luxury here, pay a bit extra there - no single item is worth shouting about. Then one day you wake up to the fact that you are paying a lot more for a crappier standard of living compared to this time 2 or 3 years ago.
Just like I'm sure it would be no problem for you to give a syringe of your blood to that nice nurse. It would be silly to make a fuss even if you don't think that taking the sample is going to do any good. But after 100 nurses have demanded the same before lunch, you might be feeling decidedly light-headed ...
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Tuesday 10th January 2017 19:57 GMT Anonymous Coward
Re: I'm sure...
> I'm sure that an extra 5p or so on top of my beloved 6 pack of Bakewell tarts isn't going to break the bank.
Or you could even buy *real* bakewall tarts from a local baker or farmer's market, rather than mass-produced pap where they shave off every fraction of a penny that they can.
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Tuesday 10th January 2017 20:13 GMT Dr Stephen Jones
Clickbait
So basically:
* IT wages will go up
* Manufacturing exports will increase
* We rebalance the economy away from The City - maybe
And yet all the author can do is whinge about the possibility that angel slices might get more expensive. Might being the operative word, as the competitive retail market has absorbed most of the wholesale price rises so far.
No tech angle here, just clickbait for Remoaners.
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Wednesday 11th January 2017 07:25 GMT Richard 12
Re: Clickbait
* Inflation is going up
* Well-paid jobs will be lost
* Underemployment will increase
* Companies will close (esp. importers)
* Cost of Government borrowing rises
* Tax revenue will fall.
Note the London is roughly 30% of all the UK tax revenue. Close down "The City" and total UK tax revenue falls by 10-20%.
You think "X" is underfunded now? Try cutting 10% of the budget.
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Wednesday 11th January 2017 10:25 GMT Anonymous Coward
Re: Clickbait
The chances that the UK Government will roll back 30 years worth of policies promoting London and the South East as the be all and end all of world are rather remote I feel.
The only thing that will fix this bloody country is a rapid expansion of housing and moving vast chunks of capital to the North, Wales and Cornwall to encourage business to go there.
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Wednesday 11th January 2017 15:25 GMT Doctor Syntax
Re: Clickbait
"The chances that the UK Government will roll back 30 years worth of policies promoting London and the South East as the be all and end all of world are rather remote I feel."
I think you're confusing two issues. Increasing concentration of employment in large cities is unsustainable - far too much time and energy is wasted on commuting ever-increasing distances.
On the other hand "the city", be it in one place or many, accounts for a large proportion of the national income and we'll be very much worse off without it. Especially if May wants to use some of that income as state aid to keep motor manufacturing from migrating to a bigger home market.
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Tuesday 10th January 2017 20:27 GMT Kyorin
If people actually thought they would be financially worse off, they may have voted differently, but it's done now, most people will very likely be worse off.
I think any deal the government manages to negotiate should be put to the public at the end of this two year period. If the deal is crap, then why continue down the path to ruin? Of course, there a chance we may get a good deal, but whichever way it goes, at the end of the two years of negotiating, the question should be put to the public again once the terms are known.
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Tuesday 10th January 2017 21:39 GMT Rich 11
I think you might be a little more optimistic than I am that such a vote wouldn't once more be awash in a flood of emotive argument and outright lies, rather than be one of considered discussion of the advantages and disadvantages of the single market, the customs union and the four freedoms.
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Wednesday 11th January 2017 03:24 GMT SeanC4S
Emotional blinding admixed with elements of callous disregard.
I think the situation in the English speaking countries is interesting. I wonder how it will turn out for them? Hopefully some form of self correction will occur and there won't be a geopolitical tsunami. Unfortunately I live on the coastline and would certainly end up swimming with the fishes.
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Thursday 12th January 2017 21:47 GMT Anonymous Coward
the advantages and disadvantages of the single market, the customs union and the four freedoms
It's too late to worry about them. They were all a key part of the largely successful common market.
The the politicians added political and financial union to the mix to create their european empire, and fucked the whole thing up.
If we could get back to just the single market & the customs union we'd all be better off but, since the egotistic bozos in Brussels won't admit they're wrong, it looks like the only option is to smash the whole thing, and build a new one that might get it right. Wasteful, but so are most things where politicians are involved.
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Wednesday 11th January 2017 03:06 GMT SeanC4S
The cakes don't cost anything to make. You are paying for executives and middle class managers to scratch each others backs. The international commodity price of these things is within a rounding error of zero. But that is how it is in a neoliberal /neoconservative society.
60% of the population have a better quality of life than a millionaire in the 1960's or 1970's would have had. The other 40% don't exist. They've been swept under the carpet, for none to see.
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Wednesday 11th January 2017 07:36 GMT Richard 12
Lots of people put those cakes on supermarket shelves.
Lots of people work in the warehousing and lorries that get the cakes from the factory to the supermarket.
Lots of people work in the factories making cakes.
Lots of people work in the factories making ingredients and packaging for those cakes.
Lots of people work in the farms, forests etc growing and harvesting the raw materials for those cakes.
Lots of people work in the ports loading and unloading the ships of materials for those cakes.
Lots of people work in the warehousing, ships and lorries storing and transporting the materials for those cakes.
Lots of other people do jobs that are necessary for those cakes to end up in my kitchen, yet I don't even realise those jobs exist.
Do you really think that none of those people are worthy of a decent wage?
Think very carefully before you answer.
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Wednesday 11th January 2017 15:33 GMT Doctor Syntax
"Same applies to Walkers Crisps. ... Surely they don't import spuds!"
No, but they and the farmers producing the spuds buy the energy to fertilise, harvest and transport the spuds, fry them, make the packaging and distribute them at dollar denominated prices. They're realistic costs although there might be an excuse to increase margins there, which will probably be taken up in the longer run with wage rises when the employees get hit with all the other price rises consequent on more expensive imports.
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Wednesday 11th January 2017 08:21 GMT Anonymous Coward
stir and stoke
This is a perfect story for both sides of the referendum to keep beating on about the same nonsense that led to their vote.
England may or may not do alright with or without europe but the EU is far from healthy and the number of trade deals going on outside of your quaint Euro-bubble is staggering.
I've watched years of austerity from the boom land of Asia and its pathetic how the infighting is distracting everyone from the fact, England and the EU are not the big desirable markets they were... sure they are worth chasing, but southern asia is mostly middle class now... replacing the people in Europe buying toasters from China.
Keep fighting and throwing around terms like "hard" and "soft" brexit, whatever you are doing, get on with it. No one else in the world is waiting for you.
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Wednesday 11th January 2017 10:33 GMT astrax
Re: stir and stoke
This is probably one of the most balanced perspectives I've seen regarding the referendum. A lot of people are basing their projections on the current state of the global economy; in reality, five years from now the new power-house economies will be the likes of Brazil and India. It is clear that we are leaving the EU, and like AC said previously, the UK should focus on getting the EU trading agreements completed as quickly as possible. When these global economic shifts occur, we want to be riding the crest of the wave, not drowning under it.
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Wednesday 11th January 2017 13:33 GMT John Brown (no body)
Re: stir and stoke
"England may or may not do alright with or without europe"
Are you presuming that the UK will fully break up or just one of the colonials who think the other countries of the UK are Scotlandshire, Irelandshire and whatever that other place with the sheep is called that Prince Charles rules.
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Wednesday 11th January 2017 09:59 GMT Fihart
Nothing to see (or eat) here...
A glance at a shot of Premier Foods' product line reassured me that any price increases would not affect me one jot. To take your example of Mr. Kipling -- he does make exceedingly over-sweet cakes.
I once read that many of the extra ingredients listed in factory-made cakes were there to prevent the mixture sticking to the machinery and the rest were there to prolong shelf-life.
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Wednesday 11th January 2017 12:43 GMT John Sturdy
Since their pay to stay, Premier Foods have been a company I'd be delighted to see go under, in the hope that whoever moves into their niche will be an improvement. I'm not going to notice their price hikes, because I've not bought from them since then.
Biting the hand that feeds IT
