Brexit plunges economy into recession - but it's .. Germany?

[Costa Fierro]

Last I checked the German economy is still feeling the effects of dieselgate on a massive scale, and chances are it will only get worse as VW's fines come into full effect. This is added to the trade issues Germany faces with the US... I wouldn't be surprised if so since the US market is pretty big for the German automakers.

Volkswagen saw significant declines in sales across Europe and did take significant losses immediately after the scandal. However, globally they've posted another record year and actually improved their sales performance in the United States. BMW also saw good sales growth in the US too, although I suspect this may impact German manufacturing a bit less, as a significant proportion of models sold in the US are made outside of Germany.

However it's been a pretty terrible year across the board for most European manufacturers. Ford has been sales declines in virtually every European market, but I suspect that's less due to Brexit and more to do with middle-range brands being squeezed by luxury and budget models (the same thing is happening to Vauxhall/Opel, which were sold to PSA).

As for brexit... Still waiting to see what will happen there, but all the major automakers are planning for the worst, which doesn't bode well. Nissan was talking about reducing investment in the UK, and I imagine Land Rover/Jaguar will take a pretty big hit as well. Others are sitting quietly, but it seems everyone is preparing for a worst case senario.

Jaguar-Land Rover will have a significant impact on their performance as Europe represents their second largest market (after China), and Nissan could already look at having their models made in Renault's plants in mainland Europe, or perhaps shift production of global cars to it's Sunderland plant to offset the potential losses from a bad Brexit deal.

[Thermodolia]

Brexit is not good for UK or the world. Brexit will isolate UK from the world. It must be prevented.

Because who cares what the people vote for?

In a non-binding referendum that wasn’t marketed as such?

[Trumptonium1]

Last I checked the German economy is still feeling the effects of dieselgate on a massive scale, and chances are it will only get worse as VW's fines come into full effect. This is added to the trade issues Germany faces with the US... I wouldn't be surprised if so since the US market is pretty big for the German automakers.

Volkswagen saw significant declines in sales across Europe and did take significant losses immediately after the scandal. However, globally they've posted another record year and actually improved their sales performance in the United States. BMW also saw good sales growth in the US too, although I suspect this may impact German manufacturing a bit less, as a significant proportion of models sold in the US are made outside of Germany.

However it's been a pretty terrible year across the board for most European manufacturers. Ford has been sales declines in virtually every European market, but I suspect that's less due to Brexit and more to do with middle-range brands being squeezed by luxury and budget models (the same thing is happening to Vauxhall/Opel, which were sold to PSA).

I'd hedge a guess it has more to do with excessive credit for vehicles in northwest Europe, which far exceeds 2008 levels. The new car market is still growing in Iberia and Central/Eastern Europe with the exception of Germany and Switzerland, so it can't be down to consumer's distrust over diesels.

As for brexit... Still waiting to see what will happen there, but all the major automakers are planning for the worst, which doesn't bode well. Nissan was talking about reducing investment in the UK, and I imagine Land Rover/Jaguar will take a pretty big hit as well. Others are sitting quietly, but it seems everyone is preparing for a worst case senario.

Jaguar-Land Rover will have a significant impact on their performance as Europe represents their second largest market (after China), and Nissan could already look at having their models made in Renault's plants in mainland Europe, or perhaps shift production of global cars to it's Sunderland plant to offset the potential losses from a bad Brexit deal.

Nissan is very well known in the UK for threats, having made threats to quit in 2002 when the UK didn't join the Euro and earlier in the 90s if it didn't join ERM. It also makes several non-Europe related threats all the time, like in 2009 over the economy and in 2011 over corporate tax.

Personally I stopped caring.
https://www.theguardian.com/business/20 ... ng.theeuro
https://www.telegraph.co.uk/finance/283 ... -euro.html

As of now the Sunderland Nissan plant is the most profitable and efficient car manufacturing facility in Europe, even low-cost Hungary and Romania taken into account, so I see no logical reason to worry. Plus they send out mixed signals -- they give out all these threats and even sent a letter to all their employees urging them to vote Remain, but a year after the vote they announced they're investing an extra 4 billion to increase the capacity by one fifth. So most likely flinging horseshit again.

Jaguar-Land Rover has a plant in Slovakia which makes up the bulk of its sales (F-Pace and XF)

Best case scenario anyway is that we simply tariff SUVs at a high rate, say 30%, since Nissan is the only SUV manufacturer in Britain. If they leave then any savings they make will be offset by freefall of demand from UK market. Big leverage right there.

[Alvecia]

Why would we care if its not good for the 'world'?

Terminal British-ness: Not considering yourself part of this world.

*Rule Space-tannia intensifies*

[British Tackeettlaus]

So is this another screed about how dare people suggest Brexit will end badly?

I don't know, you tell me.

I'm just waiting for all the bad effects of Brexit. I've been promised meteorite armageddon and I'm getting a two-person queue at a McDonalds order station. It's very disappointing.

Do you realise Brexit hasn't happened yet? Maybe we will have to see what happens after march 29th. Impact will depend on what kind of deal (if any) is settled upon. Market volatility is part of this pre Brexit phase, as no one knows what is going to happen.

[Vassenor]

I don't know, you tell me.

I'm just waiting for all the bad effects of Brexit. I've been promised meteorite armageddon and I'm getting a two-person queue at a McDonalds order station. It's very disappointing.

Do you realise Brexit hasn't happened yet? Maybe we will have to see what happens after march 29th. Impact will depend on what kind of deal (if any) is settled upon. Market volatility is part of this pre Brexit phase, as no one knows what is going to happen.

But because the economy didn't 100% implode the second the vote was called there will never be any negative consequences.

[Hrythingland]

Terminal British-ness: Not considering yourself part of this world.

*Rule Space-tannia intensifies*

Not much worth colonising in space though

[Alvecia]

*Rule Space-tannia intensifies*

Not much worth colonising in space though

Not with that attitude

[Hrythingland]

Not much worth colonising in space though

Not with that attitude

It’s just some rocks and balls heat more gaseous than a post lunch kraut.

[Alvecia]

Not with that attitude

It’s just some rocks and balls heat more gaseous than a post lunch kraut.

Well we certainly wont be bringing debbie downers like yourself to create our new Great British Space Empire.

[Hrythingland]

It’s just some rocks and balls heat more gaseous than a post lunch kraut.

Well we certainly wont be bringing debbie downers like yourself to create our new Great British Space Empire.

It’s not England if it’s not a green and pleasant land.

[Trollzyn the Infinite]

Brexit will not lead Britain to ruin. To suggest otherwise is fearmongering nonsense likely brought on by Pro-EU bias.

[Alvecia]

Well we certainly wont be bringing debbie downers like yourself to create our new Great British Space Empire.

It’s not England if it’s not a green and pleasant land.

Then we’ll make our own green and pleasant land, with blackjack and hookers

[Vassenor]

Brexit will not lead Britain to ruin. To suggest otherwise is fearmongering nonsense likely brought on by Pro-EU bias.

Prove it.

[The Xenopolis Confederation]

Brexit is not good for UK or the world. Brexit will isolate UK from the world. It must be prevented.

How will it be any more isolated from the world than your average nation that's not part of the EU?

[The Xenopolis Confederation]

Brexit will not lead Britain to ruin. To suggest otherwise is fearmongering nonsense likely brought on by Pro-EU bias.

Prove it.

The burden of proof falls on the positive statment.

[United States of Natan]

Ahh Brexit, the gift that keeps on giving.

Brexit has been been a big question on virtually every piece of economic news in the last two and a half years, and from the viewpoint of a Remainer each piece of bad news was because of Brexit and each piece of good news was despite it. We have so far been convinced that Brexit will plunge the UK into a recession from a variety of formerly-credible sources like IMF, the World Bank, the UK's own central bank warning a recession worse than 2008 and of course the famous research paper circulated by the former finance minister George Osborne on behalf of the UK Treasury which opined that the mere election result to leave would result in a recession and the unemployment of half a million people over a financial year period. Although this has now been archived in the ash heap of history and remainers do their best to pretend it didn't happen.

So with so many credible sources saying Brexit will cause a recession, surely it must happen.

And so it did.

Except it wasn't in Britain - it's in Germany. And it's just starting.

According to statistics released today afternoon, German industrial production is down 1.9% in November versus October. On the year, it's down by 4.7%. Car exports fell over 10% in 2018, to 2009 levels. Car exports to Britain have fallen the most. This is really bad news for a country that is the most reliant developed state on exports in the world - almost half of its economy (47%) is dependent on exports, of which 13% or $154 billion are assembled motor vehicles.

In direct contrast to what is happening in Britain, where economic predictions by experts of slowdowns and recessions in particular and the overall market continue to be outright flipped as growth turns out 'unexpectedly' positive, in Germany constant predictions of an upswing and positive growth are nowhere to be found as Germany continues to 'unexpectedly' underperform and have negative growth. We have heard much about London apparently predicted to lose thousands of employees, assets, wealth and companies to Frankfurt ... but in reality, the Frankfurt office market is completely dead. Office take-up in Frankfurt has grown by just 0.6% in the previous two years, while prime rents have grown by 2.5% since 2014. In hilarious irony, office take-up in London and prime rent growth has been exactly double of Frankfurt's performance -- and it's even over a much shorter time period from the second half of 2016.

Line up Europe's major economies in order of likelihood of having a recession soonest according to the experts and you'd probably have the UK with Brexit, then France with mass protests followed by the 'powerhouse' that is Germany. In a funny turn of events, France also released GDP growth figures today which put them at 1.4% yearly growth .. to the UK's 1.5%, which means currently the UK is the fastest growing major economy in Europe. But surely the experts cannot be so disastrously wrong in their craft, right?

Keen observers will have noted that Germany's economy already contracted in the third quarter of 2017. In just over a month we'll find out whether Germany has contracted in the last quarter of 2017 too, which with these car production numbers and such terrible producers PMI is a near certainty. In which case we are almost certain that Germany will enter a recession in 2017.

German Q3 GDP Contraction Confirmed
The German economy shrank a seasonally-adjusted 0.2 percent on quarter in the three months to September of 2018, unrevised from the preliminary estimate and after a 0.5 percent growth in the previous period. This was the first quarterly contraction since the first quarter of 2015 due to declines in both exports and household consumption.

The largest negative contributions to the GDP growth came from foreign trade (-1 percentage points) and household consumption (-0.1 percentage points). Meanwhile, government spending was neutral while gross fixed capital formation added 0.2 percentage points to the GDP and changes in inventories contributed 0.7 percentage points.

Exports of goods and services declined by 0.9 percent in the third quarter, compared to a 0.8 percent growth in the second quarter. At the same time, imports grew 1.3 percent, following a 1.5 percent rise in the previous period.

Household consumption dropped 0.3 percent (vs 0.3 percent in Q2) amid reluctance to buy new cars while government spending rose 0.2 percent (vs 0.8 percent in Q2). Meanwhile, fixed investment expanded at a faster pace (0.8 percent vs 0.5 percent in Q2), driven by investment in machinery and equipment (0.8 percent vs 0.1 percent), construction (0.9 percent, the same as in Q2) and other fixed assets (0.2 percent vs 0.3 percent).

Year-on-year, the economy expanded a calendar-adjusted 1.1 percent in the third quarter, following a 2 percent growth in the previous three-month period. On an unadjusted basis, the GDP grew by 1.1 percent, much weaker than a 2.3 percent advance in the June quarter.

In recent months, signs of a slowdown in Europe and China have weighed on global markets, despite continued strength in Trump's economy. The disconnect presents the Federal Reserve with a tricky choice: focus more on the domestic economy and keep nudging interest rates higher to combat inflationary concerns, or pay greater attention to stresses abroad and in markets, and hold rates steady? Trump has been campaigning against the Federal Reserve -- and a recession in Germany might give him just what he wants.

Some important quotes:

The ECB has long argued that its four-year program of bond purchases, known as quantitative easing, was the primary driver of the eurozone’s economic recovery. Having ended those purchases in December, that boast may return to haunt policy makers.

“The impact of QE is something we all underestimate,” said David Folkerts-Landau, chief economist at Deutsche Bank. “My instinct is to say we are in a much more precarious position in Europe than we thought.”

Production in Germany’s key industrial sector, adjusted for inflation and seasonal swings, fell 1.9% in November from the previous month, the country’s statistics agency said Tuesday. Economists polled by The Wall Street Journal had expected a 0.3% gain.

And its not just the car industry - Germany's largest company, the chemicals giant BASF, has issued a profit warning that plunged shares to their lowest levels since 2016 after experiencing a dramatic slowdown in demand from China and Britain.

So that's it folks. Brexit has claimed its first recession victim - Germany. Italy has also had a negative quarter of growth in Q3 2017, and is likely to fall into recession along with Germany when statistics are released next month. Protests have shat on France's prospects, and that leaves Britain as the country with the highest growth in 2018. This damn Brexit thing just can't touch the UK.

And the bigger question - when will Germany leave her recession? Is it a blip? Or is it just the start of something much worse?

None of this suggests Germany's economic troubles are due to Brexit, however. And don't forget, the UK still hasn't actually left yet. When it leaves, then you can expect the situation to worsen.

[Vassenor]

Prove it.

The burden of proof falls on the positive statment.

So when they're saying "this won't happen" it should just be taken as read and they shouldn't have to prove it won't happen?

[The Xenopolis Confederation]

The burden of proof falls on the positive statment.

So when they're saying "this won't happen" it should just be taken as read and they shouldn't have to prove it won't happen?

Good point.

[Equalsun Empire]

I don't see what this has to do with... Well, anything, really. There's no significant causation here that I can see- the Bloomberg opinion piece earlier in the thread explains it very well. In addition, Britain is still technically in the EU, and will continue to be until March. Once they officially leave is when the economic downturn will begin, especially if the no-deal scenario happens with both sides unwilling to negotiate. At the moment they're in their last few months of little to no effect. All in all, I find this thread title and topic misleading, or even outright wrong.

[Hrythingland]

It’s not England if it’s not a green and pleasant land.

Then we’ll make our own green and pleasant land, with blackjack and hookers

How frightfully unwholesome.

[-Ocelot-]

I don't see what this has to do with... Well, anything, really. There's no significant causation here that I can see- the Bloomberg opinion piece earlier in the thread explains it very well. In addition, Britain is still technically in the EU, and will continue to be until March. Once they officially leave is when the economic downturn will begin, especially if the no-deal scenario happens with both sides unwilling to negotiate. At the moment they're in their last few months of little to no effect. All in all, I find this thread title and topic misleading, or even outright wrong.

Some people are actively looking for reasons to portray the EU as an evil, bad, or collapsing entity, even when there is nothing indicating so to begin with. Almost as if such opinions aren't genuine but part of a larger effort to demoralize European citizens.

Not that such people exist in NS, of course. We are all honest free thinkers here.

[The Technocrates]

If people what their own sovereignty over their nation, then they have to take complete responsibility over any and all economic and social repercussions that occurs when they isolate themselves from the world. Brexit, and other anti-globalization ideals, is a terrible idea because it downgrades their economy by removing the main aspect that makes modern and developed nation have such a strong and prosperous economy in the first place. Trade. Citizens from first world nations are more educated and have a greater capacity to design goods and services that take advantage of human capital. A German car company designs their cars and makes plans for them in their home areas; however, the parts to make the literal car were made in China, assembled in Mexico, and sold in the across the world. This process is benefits everybody immensely, products become cheaper, more people become educated and prosperous, and poorer nations start the process of industrialization and westernization raising their standards of living.

[Hrythingland]

If people what their own sovereignty over their nation, then they have to take complete responsibility over any and all economic and social repercussions that occurs when they isolate themselves from the world. Brexit, and other anti-globalization ideals, is a terrible idea because it downgrades their economy by removing the main aspect that makes modern and developed nation have such a strong and prosperous economy in the first place. Trade. Citizens from first world nations are more educated and have a greater capacity to design goods and services that take advantage of human capital. A German car company designs their cars and makes plans for them in their home areas; however, the parts to make the literal car were made in China, assembled in Mexico, and sold in the across the world. This process is benefits everybody immensely, products become cheaper, more people become educated and prosperous, and poorer nations start the process of industrialization and westernization raising their standards of living.

But most people at the end of the day come down on the side of identity than money. People like, nay, love money but actually community is still important to many of them. There is no point in being a prosperous nation if there is no ‘nation. High minded economists must realise that people do not care for their predictions and calculations partly because they’ve got it wrong so often and partly because economists frequently fail to address social and constitutional issues.

[The Xenopolis Confederation]

If people what their own sovereignty over their nation, then they have to take complete responsibility over any and all economic and social repercussions that occurs when they isolate themselves from the world. Brexit, and other anti-globalization ideals, is a terrible idea because it downgrades their economy by removing the main aspect that makes modern and developed nation have such a strong and prosperous economy in the first place. Trade. Citizens from first world nations are more educated and have a greater capacity to design goods and services that take advantage of human capital. A German car company designs their cars and makes plans for them in their home areas; however, the parts to make the literal car were made in China, assembled in Mexico, and sold in the across the world. This process is benefits everybody immensely, products become cheaper, more people become educated and prosperous, and poorer nations start the process of industrialization and westernization raising their standards of living.

You make it sound as if Britan wants to ban all imports and exports, shut off inbound and putbound communication and Barricade the entire isles with titanium domes.