Isn't a lower British Pound value better for people buying exports?

"nermal" (nermal) 06/24/2016 at 08:11 • Filed to: Pound it out, Economics

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So, Mini Coopers and Land Rovers and Jaaaaaaaaags are now cheaper for people from other countries that want to buy them. Thus, demand for them and other exports goes up, and investment from international companies goes up as well.

Then, after a few years of investment, the increased demand for British products causes the currency to go back up, thus making everybody filthy rich.

* Just ignore the fact that Mini Coopers, Land Rovers, and Jaaaaaaaaaags are build in India

** Also ignore that all imports to Britain are now more expensive

fourvalleys > nermal 06/24/2016 at 08:16

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I’m keeping a very close eye on the exchange rate, as I’ve got a sizable parts order to put in from GB. It’s been fairly friendly lately (I just put in a large order a few weeks ago), but it sure would be nice to knock a few bucks off.

TheTurbochargedSquirrel > nermal 06/24/2016 at 08:22

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Actually Minis are owned by the Germans and produced in BMWs British plant.

facw > nermal 06/24/2016 at 08:25

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Yes, a weak pound is good for people buying British goods, and for British exporters. And yes, over time people buying more British stuff would help the currency back up. And yes, a weak pound makes it more expensive to import supplies to build British stuff.

If the UK leaves the common market, there is another problem, which is that it would be more expensive to trade with continental Europe in general due to tariffs, etc. That means UK-built vehicles would be less competitive in Europe regardless of the exchange rate. And cars built on the continent would face the same issue selling to the UK.

Nibby > nermal 06/24/2016 at 08:28

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CHEAPER JAGUARS, RANGE ROVERS, AND ASTON MARTINS <3

fintail > nermal 06/24/2016 at 08:33

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The Limeybuck is only down like 6% or something, right? The average shopper won’t notice. And with restrictive US private import rules, it won’t impact those much either.

marimvibe, new packaging, same great taste > nermal 06/24/2016 at 08:34

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I mean, so long as the coming recession doesn’t result in you taking a pay cut or losing your job, yes.

As someone who will soon be in the market for a new house, I welcome the pending financial crisis that's about to hit us.

qbeezy > marimvibe, new packaging, same great taste 06/24/2016 at 08:43

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Interest rates will still be rock bottom. I might refi, and food luck in your house hunt !

Aaron M - MasoFiST > nermal 06/24/2016 at 08:45

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The problem is that Britain is a net importer, so the pound falling means their economy is going to get thrashed. When you consider that everything is going to be 6% more expensive in relative terms (food, steel, a good chunk of their electricity thanks to trans-Atlantic wires), the actual price impacts on finished goods, even ones made in Britain, could be significant. It’ll probably make the small number of goods we buy from Britain cheaper, but everyone over there is going to suffer...even more so once you consider that tariffs from the other EU countries are now going to increase.

TheBloody, Oppositelock lives on in our shitposts. > nermal 06/24/2016 at 08:45

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Land Rovers are still built in Solihull so there is money to be made on exports.

Ash78, voting early and often > nermal 06/24/2016 at 08:50

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In theory, the Euro going from $1.60 to $1.10 in just the past few years should have made all European imports about 30% cheaper for us, but in almost every case, pricing remains “whatever the market will bear.” In other words, middlemen saw their margins get compressed, now they’ll see them widen, but the consumer probably won’t see any difference. However, I might actually go to Everbank and open a GBP-denominated account at some point. Actually holding your own GBP allows you to take the money there (or do business with the UK) without having to convert, so that would be “cheaper” for us to buy things that way. (I’m not endorsing Everbank, but they are the most reputable national/online bank with foreign accounts for the average joe)

marimvibe, new packaging, same great taste > Aaron M - MasoFiST 06/24/2016 at 08:58

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And then their inability to buy stuff from Europe will cause a loss in exports there, which will mean Europeans can't buy as much British and American and Chinese stuff, and...

Aaron M - MasoFiST > marimvibe, new packaging, same great taste 06/24/2016 at 09:01

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Bingo. The only country that may have a chance to shrug this off is the US, as the US actually produces at least some of all the raw materials they consume and the shift in the financial industry from London to NY may create more of a positive than the negative of the import situation.

415s30 W123TSXWaggoIIIIIIo ( •_•))°) > nermal 06/24/2016 at 10:22

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Was it wrong this was my first thought? Will people be able to import British classics cheaper?

BigBlock440 > nermal 06/24/2016 at 10:47

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That’s essentially been Japan’s economic policy for the past few years.