Brexit

[radamfi]

So did I. Still utterly shocked by the result though, even though it gave me almost 4% increase in value of investments, which should make me cheerful. Really uneasy about what we've done here, though. Doesn't mean it was the wrong decision, but I'm far from sure it was the right one.

What about our freedom to live where we want in Europe? Did you ever consider that?

[IlliniDave]

So there's a lot of opinions out there in the financial press (showing up here in the states) that Britian has screwed itself economically with this. What do folks here think? Is it the same direction the US would go under Trump. There were lots of parallels drawn earlier in the week between Trump and the Exiters, both politically (anti-immigration) and economically (a bit more isolationist).

[radamfi]

So there's a lot of opinions out there in the financial press (showing up here in the states) that Britian has screwed itself economically with this. What do folks here think? Is it the same direction the US would go under Trump. There were lots of parallels drawn earlier in the week between Trump and the Exiters, both politically (anti-immigration) and economically (a bit more isolationist).

The primarily old and uneducated people who voted for Brexit were mostly bothered about immigrants from central/eastern Europe. They are prepared to sacrifice the economy in order to block these people from living and working in the UK.

[Tyler9000]

So there's a lot of opinions out there in the financial press (showing up here in the states) that Britian has screwed itself economically with this. What do folks here think?

I honestly don't know the extent of the financial impact, but I intuitively suspect that the most doomsday predictions are overblown. The absolute last thing that the EU supporters want to believe is that Britain might be just fine or (gasp!) better off without them. I predict it will be volatile while everything gets sorted out, but ultimately the world will keep spinning just like it did before the EU was a thing.

[jacob]

@IlliniDave - Well, it has certainly screwed itself financially for the time being. Much of the UK's GDP is in international banking and [English-speaking] services in particular serving as the gateway for trade between the EU's 500 million consumers and the rest of the world (Americas and Asia). This gateway will now be less attractive/more expensive. Financial companies (world wide) are the most damaged sector today. Note how the GBP is considered about 10% desirable in terms of doing international transactions. It's not as useful as it was. (It's still important to keep in mind that most stock market moves today are actually international currency moves.)

On the flip side the drop in the pound should make tourism more attractive. Trump made some happy sounds from his newly opened golf course in Scotland. Speaking of Scotland, this result might force another independence vote since Scotland actually benefits more from being in the EU than from being in the UK.

Economically speaking, one of the immediate problems is that some or rather a lot of immigrants are actually skilled labour from other EU countries. The UK will have to figure something out ... some kind of permanent residence deal or automatic visas. Otherwise that's a large loss of human resources. One company I looked at had 25% of its management structure being foreigners. That's a lot of people to lose. It's hard for me to imagine these guys getting rounded up and kicked out. The economic consequences would be immense and negative. Same reason that the US isn't solving its illegal immigrant problem. As it is, new hires would now require visas and not all companies, especially small ones, are willing to deal with that hassle, but again, something will probably be worked out. I could easily imagine the UK standing to lose some entrepreneurs ... people who previously moved to the UK to found a company ...

In terms of the politics, the refugee situation should become easier to deal with. The UK can now make its own laws. The should decrease the blowback cost of an aggressive foreign policy as it would fall on the rest of the EU until they figure out how to fix the consequences of their ME adventures. Preventing entry from foreign EU workers will also benefit anyone with a UK passport who didn't get hired because EU labour was either cheaper or more talented. Of course, this price will be paid by UK businesses (another reason why the stock market is falling).

Overall, the consequences of protectionism (building walls, erecting fences, reneging on trade agreements, hindering the flow of people, money, or goods) tend to hurt the average overall but also serve to benefit certain sectors in the economy. That is, the country will be poorer than it otherwise would be, but some people inside the country will get richer than they otherwise would be.

The UK is lucky that it stayed out of the EMU ... if that had been part of the Brexit as well ... I can't even imagine. Also why Grexit was likely a bigger deal.

@Tyler9000 - One of the main reasons for the creation of the coal and steel community which later evolved into the EU was to prevent another major European/world war; so far so good.

[Bankai]

I didn't manage to trade any stocks from 8 am to 8.35 when I finally gave up - my broker's website was timing out / crashing all the time, and the few trades I got a quote for just didn't go through. Overall, after today' bloodbath, my portfolio is 11% down, mainly thanks to housebuilders. Good to know I can handle this kind of dive without panicking, albeit this at least partially might be caused by my portfolio being quite small in absolute terms.

On the flip side, I have most of my money in cash, ready to deploy at the right time (the difficult part is of course to figure out when that is). Also, if house prices and interest rates indeed will go down, there is a chance I might make it back few times over if I buy a house.

Additionally, I might need to get british passport after all, which means additional costs.

Regardless of massive hit I've taken today in terms of NW, I can't stop feeling excited. Short-medium term is definitely going to be a turbulent time, however looking forward several years, chances are UK will be better off.

[saving-10-years]

@radamfi

The primarily old and uneducated people who voted for Brexit were mostly bothered about immigrants from central/eastern Europe. They are prepared to sacrifice the economy in order to block these people from living and working in the UK.

Well I don't know you and you don't know me so don't see how you can know WHY I voted. I will state that immigration was not the big factor in why I voted leave, I found some of those arguments personally very distasteful (and sometimes disgraceful). I'd be interested in your arguments for why remaining would be less of a sacrifice for the economy (let's talk long term rather than knee jerk timescale). I didn't see the EU as particularly healthy going forward (with or without the UK in it). My vote was for a combination of reasons, partly a disgust of politicians and a (perhaps) naive belief that they should be forced to stand up and be accountable and have power to make change (not just hide behind Europe as an excuse). I think that this vote will change the UK. Not talking about regional divides but what we do now to survive.

Thanks for ruining my life.

Surely its far too early to see what the impact on the UK or you personally might be. Not sure when your FIRE date is but perhaps you need to have some flexibility in your plans? There has been a trend in healthcare for UK residents in EU (not retired and not working) and UK-citizens returning to the UK after absence which you may not have factored into your plans? See http://www.nhs.uk/NHSEngland/Healthcare ... ction.aspx I sincerely hope that your life is successful and you have a great retirement when this happens.

@Egg, thanks for speaking up.

Doesn't mean it was the wrong decision, but I'm far from sure it was the right one.

I was not sure what was the 'right' decision but this one felt braver and better to me despite most of my friends and former colleagues being heavily into 'remain'. Leaving feels to me like its a stop-turn-and-head-in-right-direction thing. But I am disturbed by some of the people in the 'leave' camp and hope that they don't get control of what we do next.

@Bankai, best of luck and sorry to hear that its been a really rocky day for you. No investments other than RE here. In fact we are (unintentionally) cash rich at the moment so perhaps this is our opportunity to be brave and invest in the UK. It _is_exciting. Maybe its the standard British response to adversity?

[Isabel]

Overall, the consequences of protectionism (building walls, erecting fences, reneging on trade agreements, hindering the flow of people, money, or goods) tend to hurt the average overall but also serve to benefit certain sectors in the economy. That is, the country will be poorer than it otherwise would be, but some people inside the country will get richer than they otherwise would be.

Well not necessarily, Great Britain, Germany, South Korea and USA became industrial powerhouses after introducing high tariffs on industrial goods in 18th and 19th centuries (Korea in 20th century). The "infant industry" theory by A. Hamilton and F. List.

[jennypenny]

Isn't part of the appeal the fact that Brits toward the lower end of the income scale will probably benefit while the Financial Services industry simultaneously takes a big hit?

I didn't understand the remain side's appeals to the public that a brexit would hurt banking. Part of the reason people are so disgruntled is because governments have been too focused on the condition of the banking industry and not focused enough on the condition of regular folks.

They still don't get the angst behind the populist message, in the UK or US. The accusations that 'leave' folks are all just bigots or clueless remind me of the same assumptions about Trump supporters. Those accusations aren't just false but more fuel for the bonfire.

[radamfi]

Well I don't know you and you don't know me so don't see how you can know WHY I voted. I will state that immigration was not the big factor in why I voted leave, I found some of those arguments personally very distasteful (and sometimes disgraceful). I'd be interested in your arguments for why remaining would be less of a sacrifice for the economy (let's talk long term rather than knee jerk timescale). I didn't see the EU as particularly healthy going forward (with or without the UK in it). My vote was for a combination of reasons, partly a disgust of politicians and a (perhaps) naive belief that they should be forced to stand up and be accountable and have power to make change (not just hide behind Europe as an excuse). I think that this vote will change the UK. Not talking about regional divides but what we do now to survive.

I wasn't talking about how you personally voted. I was talking generally. It was the old and uneducated who voted for Leave in the largest amounts. Graduates and the under 30s were particularly inclined to Remain.

I would say that economically the UK would do OK either in or out of the EU. That wasn't the main issue for me. For me it was mostly about freedom of movement, both for people coming into the UK and for us to go elsewhere. This affects the young people the most. The old people voting for Leave have enjoyed freedom of movement for decades but now they want to block the young from the same privilege.

Surely its far too early to see what the impact on the UK or you personally might be. Not sure when your FIRE date is but perhaps you need to have some flexibility in your plans? There has been a trend in healthcare for UK residents in EU (not retired and not working) and UK-citizens returning to the UK after absence which you may not have factored into your plans? See http://www.nhs.uk/NHSEngland/Healthcare ... ction.aspx I sincerely hope that your life is successful and you have a great retirement when this happens.

Technically I'm already past FIRE date but I've got personal reasons why I can't leave the UK at the moment.

Maybe Freedom of Movement will be negotiated as part of the exit procedure so we are like Norway or Iceland. I can live with that. But the Leavers seem particularly vexed by immigration, so I'm not optimistic about that.

[saving-10-years]

@Jacob

Economically speaking, one of the immediate problems is that some or rather a lot of immigrants are actually skilled labour from other EU countries. The UK will have to figure something out ... some kind of permanent residence deal or automatic visas. Otherwise that's a large loss of human resources. One company I looked at had 25% of its management structure being foreigners. That's a lot of people to lose. It's hard for me to imagine these guys getting rounded up and kicked out. The economic consequences would be immense and negative. Same reason that the US isn't solving its illegal immigrant problem. As it is, new hires would now require visas and not all companies, especially small ones, are willing to deal with that hassle, but again, something will probably be worked out. I could easily imagine the UK standing to lose some entrepreneurs ... people who previously moved to the UK to found a company ...

The discussion has been about a points-based system for new immigrants. I presume that there will be some sort of deal for those already here and in jobs (particularly skilled ones). There has been a lot of emphasis on the role of small businesses in the UK and to some extent the remain campaign has been linked to big business and the leave campaign to the small entrepreneur stifled by EU red tape. Of course in the public imagination in the UK the 'little guy' is always the good guy. I can see he/she is also often the cowboy with poor business practices.

@jennypenny

Isn't part of the appeal the fact that Brits toward the lower end of the income scale will probably benefit while the Financial Services industry simultaneously takes a big hit?

Didn't think that far ahead myself, but had someone suggested to many of my remain-voting friends that the Financial Services Sector in London would have been the worst hit by a leave win they may have at least considered switching sides. This antipathy is not just from people coming at the lower end of the income scale. A neighbour was forced to sell her business at a loss because of the tricky behaviour of her bank during the last crisis, she almost lost all her investments at this time and certainly blames the big banks (still).

[saving-10-years]

@radamfi

I wasn't talking about how you personally voted. I was talking generally. It was the old and uneducated who voted for Leave in the largest amounts. Graduates and the under 30s were particularly inclined to Remain.

Thanks for clarifying. For those who voted us in in the first place (aka older generation) the leave opportunity vote has meant a lot. A common refrain amongst those old enough to vote in the first EU (then it was EEC) referendum was that they did not vote for what the EU bureaucracy has become and would not have voted for it. Well of course it changed (Duh!) but the older generation feel somehow responsible. Its not a bad thing (misguided maybe). They also recall (perhaps too fondly) life before the EU while my DS voted remain as this is all he has known.

This was my first ever vote and I voted IN. Very happy then and now to be part of Europe, geographically and in other ways. I hope that the Europeans on this board don't think the leave vote is anything personal. Its the regulations and rules of this particular club that rankle - not the other members. Its more an argument with the style of management (if that makes sense?) What was very clear is that we (UK) had no influence to change the rules, so we are leaving the club. Hoping to stay friends with the people in it.

[CelticTiger]

My reaction is maximise income, minimise expenses and keep investing, developing skills and hobbies that could become side gigs. (Exactly what I was doing anyway - just more urgency).

I'm currently down less than 1% net worth but I await my broker to update fund prices, my company pension is slow so i wont know where I am personally to next week. (I'm UK based).

Can anyone see any new opportunities to arise from the crisis that we can take advantage of? I've got most of my pension savings in "Boglehead" inspired trackers. I have my cash in current accounts paying 4-5% and in P2P lending at 3%.

The only debt i have is "good debt" mortgage and student loan and i'm paying those down.

I have options on my mortgage rate soon as my equity has increased substantially (it's on a fixed rate but the charges to switch are reasonable). If The Bank of England reduce base rate I can get an even better deal.

I couldn't care less about the rest of the country just my immediate family. In the community, i'm an active member of two charitable organisations locally who do a lot of work with the poor and disadvantaged. But i'm feeling confused with the Brexit vote, if we have voted for a recession i'm going to stop at nothing to ERE. I can forgive myself for wasting my money but for the "brexiters" to arbitrarily tax me of a few months salary and permanently lower potential growth of my wealth, well, it makes me go cold and calculating. I think i'm going full ERE, I'm going full potato and you should never go full potato!!!

What are we to do?

[Bankai]

Barring irrational motivation to 'punish' UK for leaving, EU has very good economic reasons not to put barriers and negotiate access to common market for UK:

- In Q1 2016 alone UK had £24b trade deficit with EU, hence any tariffs would hurt EU exporters more
- Germany exported €89b worth of goods to the UK in 2015 while importing only €39b. That a €50b a year surplus makes it quite hard for Merkel to tell big businesses there'll be tariffs to the UK. And it's mainly her who runs the show.
- UK tourists spend way more in Europe (especially Spain) that the other way around

Re Scottish referendum, would people really be interested in voting in yet another referendum? This article suggest no:
http://www.heraldscotland.com/politics/ ... their_vote_/

[radamfi]

This was my first ever vote and I voted IN. Very happy then and now to be part of Europe, geographically and in other ways. I hope that the Europeans on this board don't think the leave vote is anything personal. Its the regulations and rules of this particular club that rankle - not the other members. Its more an argument with the style of management (if that makes sense?) What was very clear is that we (UK) had no influence to change the rules, so we are leaving the club. Hoping to stay friends with the people in it.

But what about our rights to live and work anywhere in the EU/EEA? It is all very well to criticise the bureaucracy of the EU etc., but you keep failing the mention the absolutely precious Freedom of Movement. That affects your fellow UK citizens, not just those in the rest of Europe.

[jacob]

@iDave ... As it pertains to Trump and the expected vows to move to Canada that would follow his election as POTUS, something very similar to the lament below would likely show up in the US. Plus ca change ...

http://www.ft.com/cms/s/0/f4dcdf62-399d ... a8ee7.html (in case that link doesn't work)

“A quick note on the first three tragedies. Firstly, it was the working classes who voted for us to leave because they were economically disregarded, and it is they who will suffer the most in the short term. They have merely swapped one distant and unreachable elite for another. Secondly, the younger generation has lost the right to live and work in 27 other countries. We will never know the full extent of the lost opportunities, friendships, marriages and experiences we will be denied. Freedom of movement was taken away by our parents, uncles, and grandparents in a parting blow to a generation that was already drowning in the debts of our predecessors. Thirdly and perhaps most significantly, we now live in a post-factual democracy. When the facts met the myths they were as useless as bullets bouncing off the bodies of aliens in a HG Wells novel. When Michael Gove said, ‘The British people are sick of experts,’ he was right. But can anybody tell me the last time a prevailing culture of anti-intellectualism has led to anything other than bigotry?” — Nicholas (This comment has gone viral on Twitter.)

[stayhigh]

The UK will have to figure something out ... some kind of permanent residence deal or automatic visas. Otherwise that's a large loss of human resources. One company I looked at had 25% of its management structure being foreigners. That's a lot of people to lose. It's hard for me to imagine these guys getting rounded up and kicked out.

If you are from EU/EEA and working in UK for 5 years or more, you have permanent residence by default and you can apply for citizenship. And IIRC, if you are not from EU/EEA, you need to earn 35k+ a year to stay. So it's not a big deal.

[jacob]

@stayhigh - From an ERE perspective the earnings-requirement actually would be. I know someone (UK citizen) who recently moved back to the UK with his Canadian wife. They've been living on less for years but he had to go back to work and get a job to boost his income enough to meet the rule.

Similarly, I would no longer be able to relocate to the UK w/o finding some way to put in 5 years of work at substantially above median salary (27600 GBP) levels even if I don't need the money.

All things being equal, the reduction in location optionality for everybody makes ERE harder.

[stayhigh]

On the other hand, if you already found the way to stay there for good, british capital gain tax rules are superb for ERE compared to major European countries.

Hopefully, they will adopt similar rules as Switzerland, Norway or Iceland for free movement of people.

[radamfi]

I don't see why honest British people should be punished for the actions of the Leavers. Why should I be denied Freedom of Movement when other Europeans get it? I wish I was never born in England. It is not my fault I was born here.