Mother Jones
Tyler Cowen points to the following tidbit in the Financial Times:
The plummeting pound is threatening UK households’ supplies of Ben & Jerry’s ice cream and Marmite spread, as Tesco, the country’s biggest supermarket, pulled dozens of products from sale online in a row over who should bear the cost of the weakening currency.
Unilever has demanded steep price increases to offset the higher cost of imported commodities, which are priced in euros and dollars, according to executives at multiple supermarket groups. But Tesco signalled it would fight the rises, removing Unilever products from its website and warning that some of the items could disappear from shelves if the dispute dragged on.
Um, what? Tesco thinks that if the pound falls, prices on imported items shouldn’t change? How do they figure that? Then again, maybe it’s nothing:
An executive at another consumer goods manufacturer said Unilever would probably regard Tesco’s action as a negotiating tactic rather than a serious threat.
Roger that. But in the long run, there’s no getting around this. A weak currency means cheaper exports and more expensive imports. You can try to jam a finger in the dike for a little while, but eventually you have to give in.
I don’t know what the long-term impact of Brexit will be. I suspect it will be moderately negative on several levels, and in particular, will probably hurt the blue-collar workers who were suckered into voting for it. Rage-based voting rarely does anyone any good. In the short-term, however, the impact will be unambiguously bad. Prices of imports will go up before the benefits of rising exports work their way through the economy, and uncertainty over Britain’s final status will paralyze lots of decisions from foreign firms about whether they should continue to invest there. This will all shake out in the end, but there will be some pain in the meantime.
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