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BREXIT - Is This Really Still Rumbling On? 😴

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  • rick_chaseyrick_chasey Posts: 61,445 Lives Here
    edited 16 May
    pblakeney said:

    pblakeney said:

    pblakeney said:



    pblakeney said:

    pblakeney said:

    Even the Telegraph dares to mention Brexit as a factor in the UK's woes:

    “The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”

    A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.

    The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.

    Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.

    The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.



    https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
    Wasn't higher wages one of the things some people voted for?
    Yes, without considering the bigger picture.
    Being other people's wages?
    Bigger picture being inflation.
    Higher wages => higher costs => higher prices.
    Not necessarily
    You've not ran a business have you?
    Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.

    Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
    There are other ways but companies are forced to increase prices in line with costs.
    Wages are simply one of those costs. It cannot be ignored as a consequence.

    That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.

    I dare say that there are companies with wide margins but the majority are not.
    I'd hazard a guess that the majority of SME's are barely getting by.
    The joys of no productivity growth over a decade eh?

    I think the "companies accepting narrower margins" argument is a little overlooked generally - often firms will do that as wage rises are much stickier than prices or margins, so it is often the last thing they will do.

    (an argument for bonuses, by the way)
  • surrey_commutersurrey_commuter Posts: 16,043

    pblakeney said:

    pblakeney said:



    pblakeney said:

    pblakeney said:

    Even the Telegraph dares to mention Brexit as a factor in the UK's woes:

    “The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”

    A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.

    The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.

    Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.

    The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.



    https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
    Wasn't higher wages one of the things some people voted for?
    Yes, without considering the bigger picture.
    Being other people's wages?
    Bigger picture being inflation.
    Higher wages => higher costs => higher prices.
    Not necessarily
    You've not ran a business have you?
    Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.

    Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
    There are other ways but companies are forced to increase prices in line with costs.
    Wages are simply one of those costs. It cannot be ignored as a consequence.

    That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.

    The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.

    So in that instance there is plenty of room for wage growth before you get into wage-led inflation
    Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.
  • TheBigBeanTheBigBean Posts: 16,450

    pblakeney said:

    pblakeney said:



    pblakeney said:

    pblakeney said:

    Even the Telegraph dares to mention Brexit as a factor in the UK's woes:

    “The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”

    A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.

    The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.

    Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.

    The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.



    https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
    Wasn't higher wages one of the things some people voted for?
    Yes, without considering the bigger picture.
    Being other people's wages?
    Bigger picture being inflation.
    Higher wages => higher costs => higher prices.
    Not necessarily
    You've not ran a business have you?
    Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.

    Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
    There are other ways but companies are forced to increase prices in line with costs.
    Wages are simply one of those costs. It cannot be ignored as a consequence.

    That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.

    The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.

    So in that instance there is plenty of room for wage growth before you get into wage-led inflation
    Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.
    Companies choose to lower their profits? Supply and demand etc.
  • ddraverddraver Posts: 24,257
    I like Big Margins, and I cannot lie...
    We're in danger of confusing passion with incompetence
    - @ddraver
  • surrey_commutersurrey_commuter Posts: 16,043

    pblakeney said:

    pblakeney said:



    pblakeney said:

    pblakeney said:

    Even the Telegraph dares to mention Brexit as a factor in the UK's woes:

    “The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”

    A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.

    The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.

    Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.

    The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.



    https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
    Wasn't higher wages one of the things some people voted for?
    Yes, without considering the bigger picture.
    Being other people's wages?
    Bigger picture being inflation.
    Higher wages => higher costs => higher prices.
    Not necessarily
    You've not ran a business have you?
    Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.

    Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
    There are other ways but companies are forced to increase prices in line with costs.
    Wages are simply one of those costs. It cannot be ignored as a consequence.

    That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.

    The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.

    So in that instance there is plenty of room for wage growth before you get into wage-led inflation
    Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.
    Companies choose to lower their profits? Supply and demand etc.
    might be chasing market share
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here

    pblakeney said:

    pblakeney said:



    pblakeney said:

    pblakeney said:

    Even the Telegraph dares to mention Brexit as a factor in the UK's woes:

    “The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”

    A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.

    The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.

    Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.

    The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.



    https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
    Wasn't higher wages one of the things some people voted for?
    Yes, without considering the bigger picture.
    Being other people's wages?
    Bigger picture being inflation.
    Higher wages => higher costs => higher prices.
    Not necessarily
    You've not ran a business have you?
    Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.

    Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
    There are other ways but companies are forced to increase prices in line with costs.
    Wages are simply one of those costs. It cannot be ignored as a consequence.

    That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.

    The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.

    So in that instance there is plenty of room for wage growth before you get into wage-led inflation
    Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.
    Prices rise and fall - it's very hard to reduce people's wages once you've lifted them.
  • kingstongrahamkingstongraham Posts: 20,347
    I don't think negative inflation is a prospect worth worrying about any time soon.
  • surrey_commutersurrey_commuter Posts: 16,043
    From an economics viewpoint Brexit really is a fascinating experiment.

    We now have record low recorded numbers of unemployed and they are outnumbered by the number of vacancies.

    On the other hand the number of people in employment has not recovered to pre-pandemic levels.
  • Dorset_BoyDorset_Boy Posts: 5,103
    Lowest unemployment level since 1974 I think they said on the radio.
    You would think wages have to rise as vacancies exceed the number unemployed or those vacancies will remain vacant.
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here

    Lowest unemployment level since 1974 I think they said on the radio.
    You would think wages have to rise as vacancies exceed the number unemployed or those vacancies will remain vacant.

    Just posted this on the other thread - it's mad, the labour market is as tight as it's ever been yet real wages are still falling substantially. It's crazy.
  • Dorset_BoyDorset_Boy Posts: 5,103
    Wages will have to rise to fill the vacancies.
    That doesn't mean wages will rise at the same rate as inflation currently is running at.
    And the general expectation is the current very high (by the standards of the last 25 years) inflation is transitory.
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here
    edited 17 May
    Not necessarily for all of that.

    Firms can only afford what they can afford and if the shortage is inflexible (Brexit doesn't help this) those vacancies can just be left unfilled as that may be more optimal than paying more than firms can afford.


    If say, the global competitive market determines the market price,, and the firm's other costs are fixed there is a ceiling for for a firm can pay for a role to make sense.

    If the shortage means that the labour market price is above that ceiling, why bother making the hire?

    I think the high level of vacancies and the lack of real wage rises are partly a function of a skills missmatch which is partly a Brexit transition problem. To take a trivial example, if there are 80 dentists but the economy demands 100 dentists, there will always be 20 vancancies in the short term, regardless of the price, until more dentists are trained.

    This is what people mean when they say leaving the EU single market makes the whole economy less efficient.
  • TheBigBeanTheBigBean Posts: 16,450
    ONS. Real wages are rising.

    Growth in average total pay (including bonuses) was 7.0%, and growth in regular pay (excluding bonuses) was 4.2% among employees in January to March 2022.

    Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.

    In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%.
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here
    edited 17 May
    Yeah so when we say real wages - that is regular pay, right? That is why all the headlines say "real wages fall 1.2%"

    If you break it down further you can see the growth in total pay comes mainly from bonuses which are massively supercharged by financial services which is experiencing a boom not seen since pre-crash days (which is not sustainable...!)
  • TheBigBeanTheBigBean Posts: 16,450
    A quick graph shows real wages have largely been increasing since March 2014. Bonuses or not it is all pay.
  • TheBigBeanTheBigBean Posts: 16,450
    Wage graph.

    image
  • TheBigBeanTheBigBean Posts: 16,450
    I do love ONS.
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here
    Lol that’s what, 2% over 14 years?
  • kingstongrahamkingstongraham Posts: 20,347

    A quick graph shows real wages have largely been increasing since March 2014. Bonuses or not it is all pay.

    Mean or median?

  • kingstongrahamkingstongraham Posts: 20,347
    edited 17 May
    For public sector employees, the wage growth of 1.6% is bad news.
  • TheBigBeanTheBigBean Posts: 16,450
    edited 17 May
    10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here

    10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.

    So look, I spend most of my time parroting economists who do this for a living.

    It is general practice to refer to the previous high when talking about growth, right?

    So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.

    By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
  • rjsterryrjsterry Posts: 22,575

    Lol that’s what, 2% over 14 years?

    If you run a professional services SME, you'd count being able to give above inflation pay rises while still turning a profit as something of a success.
    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
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    Liberal metropolitan, remoaner, traitor, "sympathiser", etc.
  • TheBigBeanTheBigBean Posts: 16,450

    10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.

    So look, I spend most of my time parroting economists who do this for a living.

    It is general practice to refer to the previous high when talking about growth, right?

    So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.

    By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
    Why make reference to a peak that wasn't sustainable? So much so that it causes a massive recession.

    There has been 8 years of real wage growth. It is nonsense to claim otherwise.
  • rick_chaseyrick_chasey Posts: 61,445 Lives Here

    10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.

    So look, I spend most of my time parroting economists who do this for a living.

    It is general practice to refer to the previous high when talking about growth, right?

    So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.

    By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
    Why make reference to a peak that wasn't sustainable? So much so that it causes a massive recession.

    There has been 8 years of real wage growth. It is nonsense to claim otherwise.
    No economist refers to post-crash recovery as growth. For very obvious reasons.
  • TheBigBeanTheBigBean Posts: 16,450

    A quick graph shows real wages have largely been increasing since March 2014. Bonuses or not it is all pay.

    Mean or median?

    Mean, I believe. See the comparison chart which shows it doesn't make much difference on a relative basis.

    https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/methodologies/comparisonoflabourmarketdatasources
  • ProssPross Posts: 32,001

    ONS. Real wages are rising.

    Growth in average total pay (including bonuses) was 7.0%, and growth in regular pay (excluding bonuses) was 4.2% among employees in January to March 2022.

    Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.

    In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%.
    As I said in the other thread, I'd love to know who is getting 8.2% rises. My thinking is it is only being done by people moving companies. I could get around 15-20% more if I made a move to similar roles I've seen advertised but I've gone beyond the mving for extra salary stage, any future move I make will be for the type of work and the work / life balance and will possibly require a reduction in salary.
  • TheBigBeanTheBigBean Posts: 16,450
    Pross said:

    ONS. Real wages are rising.

    Growth in average total pay (including bonuses) was 7.0%, and growth in regular pay (excluding bonuses) was 4.2% among employees in January to March 2022.

    Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.

    In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%.
    As I said in the other thread, I'd love to know who is getting 8.2% rises. My thinking is it is only being done by people moving companies. I could get around 15-20% more if I made a move to similar roles I've seen advertised but I've gone beyond the mving for extra salary stage, any future move I make will be for the type of work and the work / life balance and will possibly require a reduction in salary.
    Your current employers may become worried if people leave and therefore bump your salary.
  • ProssPross Posts: 32,001

    10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.

    So look, I spend most of my time parroting economists who do this for a living.

    It is general practice to refer to the previous high when talking about growth, right?

    So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.

    By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
    Why make reference to a peak that wasn't sustainable? So much so that it causes a massive recession.

    There has been 8 years of real wage growth. It is nonsense to claim otherwise.
    No economist refers to post-crash recovery as growth. For very obvious reasons.
    By that rationale should they not refer to a crash either as it only reverse years of strong growth?
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