No deal Brexit impact

[SteamyTea]

I am going to buy some bananas and live in a republic.

Oh hang on...

[Temp]

https://www.theguardian.com/commentisfree/2019/jan/09/brexit-utopia-receding-dream-food-shortage-fruit-veg-supplier

 

Quote

 

A “leave‑backing former cabinet minister” recently stated: “We won’t be able to get certain foods like bananas...
 

 

 

?

Edited August 28, 2019 by Temp

[Stones]

Can we please keep this topic confined to the impact of no deal on self building and renovating?

[ProDave]

Please keep the discussion on the topic of how Brexit might affect cost and availability of building materials. 

[Pocster]

It will be more expensive for imported materials from the EU

 

Sorry ; thought I’d say something sensible and likely ?

[Patrick]

And it will take longer to deliver  if item is not stock (e.g. Windows)?

[Pocster]

Just now, Patrick said:

And it will take longer to deliver  if item is not stock (e.g. Windows)?

True . Walk on glazing ( for example ) already available in the UK is a good bet .

[joth]

While the mean price and lead time is very likely to increase, even more certain is the variability in price and lead time. There could be bargains (if stock piling proved excessive) on some things, there could be many month delays and profiteering on others. 

In the immediate term it's Project management, already not the easiest thing, that will be hit hardest. Anyone on a very tight timeline and budget will be hit the worst with all the increased uncertainty and stress.

 

Edited August 28, 2019 by joth

[Pocster]

3 minutes ago, joth said:

While the mean price and lead time is very likely to increase, even more certain is the variability in price and lead time. There could be bargains (if stock piling proved excessive) on some things, there could be many month delays and profiteering on others. 

In the immediate term it's Project management, already not the easiest thing, that will be hit hardest. Anyone on a very tight timeline and budget will be hit the worst with all the increased uncertainty and stress.

 

I’m alright- 4 years in . If it takes another 4 years no sweat 

[Triassic]

On 10/12/2018 at 10:03, gc100 said:

Well a no deal brexit is most likely to kill my build project after already investing 25K it seems.

 

If a no deal is happening, what are peoples best guess on cost of building materials?

No doubt building materials imported will be more expensive. Labour will probably be more expensive as EU labour leaves or are rounded up by immigration swat teams. 

 

On the plus’ side you’ll be able to buy a lot of materials at liquidation auctions.

[scottishjohn]

well if we believe some of what we have been told -there is no import duty to be added to most things from eu --so only the exchange rate will alter pricing  and that will no doubt get better soon after things settle --

so not sure forward buying will work out any better--its a guessing game

[Patrick]

10 minutes ago, scottishjohn said:

so only the exchange rate will alter pricing  and that will no doubt get better soon after things settle --

 

Can I take your word for it. Would like to buy 15k worth of materials, but not sure wether to wait with exchanging as it might be getting even worse rate-wise. But I'm glad it "no doubt" will be going up after. Pm your details so you can lock this deal for me, please ?

[joth]

1 hour ago, scottishjohn said:

well if we believe some of what we have been told -there is no import duty to be added to most things from eu --so only the exchange rate will alter pricing  and that will no doubt get better soon after things settle --

so not sure forward buying will work out any better--its a guessing game

Aside from exchange rates, delays at ports and with logistics firms will impact supply. Lack of supply also impacts prices. (But conversely delays on exports could give a glut of other things hence stock clearance price reductions). 

Also, delays can result in indirect costs: e.g. for me, that means longer in rented accommodation, etc etc.

 

Tldr: the only reliable prediction is things will be hard to predict. 

 

[joth]

1 hour ago, pocster said:

I’m alright- 4 years in . If it takes another 4 years no sweat 

This is the attitude to have, and one I'm trying to bring myself to.

 

When we bought last year we thought we'd be half way renovated by now, in before Christmas! LOL.

We've not started anything yet, now starting to think about temporary remedial renovation work to get us through another winter before we pull it all down. 

[Temp]

If you place an order now from an EU vendor for delivery after Brexit I think it's vital to check that the terms and conditions will mean you won't pay two lots of VAT. 

Edited August 28, 2019 by Temp

[Ferdinand]

6 hours ago, joth said:

This is the attitude to have, and one I'm trying to bring myself to.

 

When we bought last year we thought we'd be half way renovated by now, in before Christmas! LOL.

We've not started anything yet, now starting to think about temporary remedial renovation work to get us through another winter before we pull it all down. 

 

Just think of all that extra time you are getting to enjoy our company.

 

Do you not feel ... er ... personally enriched?

 

As for the winter, my posts make excellent firelighters.

 

??? ?

Edited August 29, 2019 by Ferdinand

[Triassic]

Maybe as a result of the deal with Trump we’ll see more free movement of tradespeople from across the pond, 

[Ed Davies]

12 hours ago, scottishjohn said:

so only the exchange rate will alter pricing  and that will no doubt get better soon after things settle

 

You know something the markets don't, then? In the short term there can be overreaction, of course, but that gets fixed pretty quickly as future expected events are discounted; people bet on the assumption of future changes which pulls the current exchange rates into line with what people overall expect. Further exchange rate variation will be the result of unexpected events and internal variability within the market.

 

I think the drop in the pound from ~€1.30 in 2015 to ~€1.10 now sums the whole thing up quite nicely from the purely financial point of view.

[Patrick]

24 minutes ago, Ed Davies said:

 

 

I think the drop in the pound from ~€1.30 in 2015 to ~€1.10 now sums the whole thing up quite nicely from the purely financial point of view.

Agree, and what is there to say that the Pound won't go down to let s say 0.80€? I know the Pound historically was always strong, but who is to say if the exchange rate might not drop further? At least it would prop up exports.

But the weak Pound already is a problem for importing.

[Bitpipe]

1 hour ago, Patrick said:

Agree, and what is there to say that the Pound won't go down to let s say 0.80€? I know the Pound historically was always strong, but who is to say if the exchange rate might not drop further? At least it would prop up exports.

But the weak Pound already is a problem for importing.

 

The reporting I saw a few weeks ago did not see any substantial rise in exports with the post 2008 and 2016 drop in the pound. This was explained due to the need to import materials and elements of the finished product, therefore diminishing the ability to discount.

 

https://www.ft.com/content/0ee55f40-b2c9-11e9-8cb2-799a3a8cf37b

 

A lower pound increases inflation as prices of imported goods rise and UK runs a significant trade deficit - as interest rates are at a historic low to keep the economy from stalling, the BoE has little scope to boost them to reign it back in or to cut further if recession looms.

 

Also the relatively low UK productivity (essentially a lack of investment in skills and technology) is a factor. The current high employment rate (and the recent wage growth) is believed to be a reflection of this - easy to invest in low skilled additional workforce for the short term (boost wages to obtain/retain staff) and lay them off or cut wages when revenue falls, vs a longer term investment in skills and technology which needs to be paid for over many years, whether revenues keep up or not.

 

But heh, I 'm sure all of this can be resolved with a positive mindset and some cheery optimism!

 

[Jeremy Harris]

Do we know how much material imported into the UK from the EU goes into an average house?

 

My guess would be that most significant material might well be timber, as a great deal of the timber we use seems to come from Sweden.  I can't find a detailed breakdown, but it seems that we import around 2/3rds of the sawn constructional timber we use, and those imports have been increasing in recent years.  A fair bit of the processed timber we use seems to come from North America, though, so if it starts to cost more to import from the EU my guess is that imports from countries like Canada might start to look more attractive.

 

Blocks, brick, cement and sand/aggregate seem to be primarily produced within the UK (although some seems to come from the Far East, rather surprisingly), so probably wouldn't be a significant issue.  Roofing materials seem to come from all over, with imports from both within the EU and from the rest of the world.  Same goes for relatively high value stone and ceramics.

 

The majority of imported electrical and plumbing stuff seems to come from the Far East, so nothing much would change there.  There's also the strong possibility that other building materials from the Far East might end up replacing imports that currently come from within the EU; it's currently cost-effective to import cut stone from China, for example (notably the Scottish Parliament building and, more prosaically, the large expanse of granite paving on the market place/car park, in front of Salisbury Guildhall).

 

The impact on imported kitchen appliances might be interesting, as I'm not 100% convinced that many of the components that make up some of the well-known German brands actually come from Germany, I suspect that the German companies may well either import components from the Far East, or even outsource manufacture completely.

 

Looking around at general hardware, tools etc, then it seems that not much comes from either the UK or the EU, much of it seems to come from the Far East.

 

If I get a spare few hours I might try to dig around and see how much of a typical house, in terms of cost, is made up from materials imported from the EU.  If I had to guess, I'd say it might be around 10% to 20%.  Whether this has a big impact depends on whether material imported from the EU is essential for housebuilding or not.  Taking timber as an example, I'd guess that if Swedish timber becomes more expensive, then more Canadian timber might be imported instead.  Hard to predict what impact that might have in terms of build cost here, as my guess is that there would be some sort of competitive balancing process - Swedish supplies might try to reduce their prices in order to stay competitive, for example.

 

 

 

 

[Ferdinand]

49 minutes ago, Bitpipe said:

The reporting I saw a few weeks ago did not see any substantial rise in exports with the post 2008 and 2016 drop in the pound. This was explained due to the need to import materials and elements of the finished product, therefore diminishing the ability to discount.

 

https://www.ft.com/content/0ee55f40-b2c9-11e9-8cb2-799a3a8cf37b

 

A lower pound increases inflation as prices of imported goods rise and UK runs a significant trade deficit - as interest rates are at a historic low to keep the economy from stalling, the BoE has little scope to boost them to reign it back in or to cut further if recession looms.

 

I'm going respectfully to disagree with that, but there are all sorts of measurement effects and adjustments involved. 

 

Back in late 2015, bodies such as the IMF were arguing that the pound was 5-15 % overvalued. And by 5-20% in 2016. So I am not worrying about that as a generic effect. Such an adjustment leaves us not far off where we are now.

https://fullfact.org/economy/exchange-rates-and-imf/

 

FT 2014:

Quote

The International Monetary Fund warned on Monday that the pound was “overvalued” and preventing the rebalancing of the economy away from a reliance on spending and imports. In its annual assessment of the UK economy, the fund said sterling was between 5 and 10 per cent overvalued because of a “lack of competitiveness and limited export diversification”.

https://www.ft.com/content/ec6bef86-1653-11e4-8210-00144feabdc0

 

Telegraph, 26 Dec 2015:

Quote

 Earlier this year, the International Monetary Fund said the pound was between 5pc and 15pc overvalued.

https://www.telegraph.co.uk/finance/currency/12065157/Pound-is-most-overvalued-currency-in-the-world-analysts-claim.html

 

IMF, June 2016:

Quote

an estimated current account gap of -1.5 to -4.5 percent of GDP and REER overvaluation of 5–20 percent in 2015

 

Also, I question the idea that exports have not increased. From Trading Economics / ONS: Total exports measured in GBP by month. As said above, revisions and measurement effects abound, yet it a jump from the point of the vote.

As far as I can tell, adjustments by the ONS seem recently to be improvements.

 

F

 

Edited August 29, 2019 by Ferdinand

[Ferdinand]

14 minutes ago, JSHarris said:

If I get a spare few hours I might try to dig around and see how much of a typical house, in terms of cost, is made up from materials imported from the EU.

 

Slightly old from the Construction Products Association

https://www.constructionproducts.org.uk/media/264067/cpa-brexit-issues-for-construction-march-2017.pdf

 

But they should have more if you register free

https://www.constructionproducts.org.uk/

F

[Bitpipe]

1 hour ago, Ferdinand said:

 

I'm going respectfully to disagree with that, but there are all sorts of measurement effects and adjustments involved. 

 

Back in late 2015, bodies such as the IMF were arguing that the pound was 5-15 % overvalued. And by 5-20% in 2016. So I am not worrying about that as a generic effect. Such an adjustment leaves us not far off where we are now.

https://fullfact.org/economy/exchange-rates-and-imf/

 

FT 2014:

https://www.ft.com/content/ec6bef86-1653-11e4-8210-00144feabdc0

 

Telegraph, 26 Dec 2015:

https://www.telegraph.co.uk/finance/currency/12065157/Pound-is-most-overvalued-currency-in-the-world-analysts-claim.html

 

IMF, June 2016:

 

Also, I question the idea that exports have not increased. From Trading Economics / ONS: Total exports measured in GBP by month. As said above, revisions and measurement effects abound, yet it a jump from the point of the vote.

 

As far as I can tell, adjustments by the ONS seem recently to be improvements.

 

F

 

 

I don't disagree about overvaluation (and happy to be corrected on impact on exports) but I do think a sudden correction to the norm (with an inevitable undershoot) vs a gradual rebalancing is not good for the economy or individuals. 

 

 

[Bitpipe]

Our house had..

- Irish timber frame & insulation (+ Labour) no idea where their timber is sourced - Scandinavia or Canada?

- Austrian windows

- Spanish internal doors

- Canadian slate roof

- German kitchen and appliances

- German sanitary ware

- Dutch flooring (Sika) & Skia chemicals in the concrete basement - plus Parex external render (also a Sika company)

- German lightwells

- German front door

- Polish staircases

- Danish Rooflights (Velux)

- Finnish pendant lights

 

Guessing majority of first fix plumbing and electrics were UK, MK sockets used also.

Plasterboard, plaster, EPS and concrete all UK I'd guess.

Not sure on wood flooring & tiles.

 

All of these purchasing decisions were made on quality, style and price - most through UK suppliers and resellers but some items (frame, bathroom fittings, lightwells) direct from supplier and paid in Euros.

 

Ex rate was 1.4€/£ for most of the build (2015) so made sense.