How Much Will Brexit Add to the Cost of Trident and Hinkley Point? 45

The spectacular and continuing fall in the value of the pound will add over £50 billion to the cost of Trident. Yes, bits of steel are being welded together in the UK, but the steel is imported and so is the missile technology.

Similarly, Hinkley Point will be in trouble. The Chinese and French are to build it against guarantees of income from future energy prices fixed at double the cost of current wholesale electricity. But the hard currency value of that income has now been slashed. I do not know the precise details of the contracts, but the French and Chinese not being stupid, my guess is that their income from it is set in a proper stable currency not in sterling. Which means that electricity prices to the British consumer will have to not just double as planned, but go up 50% again, to cover the diminished value of sterling.

Of course, it would be wonderful if all this led to both Trident and Hinkley Point being cancelled, but sadly politicians are wed to nuclear projects, both civil and military, as both symbol and source of vast central power for them and their paymasters. But the implications of paying for them with Mickey Mouse currency are going to bite the Tory loons hard in coming months.

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45 thoughts on “How Much Will Brexit Add to the Cost of Trident and Hinkley Point?

  • gyges01

    You blame Brexit but isn’t the fall in sterling due to the unraveling of the Quantitative Easing policy?

    • craig Post author

      No. It hasn’t caused massive depreciation in other countries using it. The size is not so vast compared to the total amount of sterling in circulation as to cause depreciation on this scale. The evil of QE is in its negative distributional effects – it pumps more money into the wealthy – rather than in depreciating the currency, though some small effect would be expected.

      • Loony

        Hosw do you possibly know that. All currencies are floating currencies with no fixed peg. Maybe all currencies are being devalued. The only possible comparator is gold. That is up massively since 2000 when measured in any currency. The price of gold is also rigged to keep it lower than it otherwise would be.

        You are living in an era of currency wars where everyone is desperately seeking comparative advantage through depreciation – Carney has used Brexit as an opportunity to relaunch QE and to ramp up his Open Mouth Operations to drive sterling lower.

        • glenn

          If all currencies were being devalued, why would you notice a relative drop of the pound, FFS? Come on!

          Gold has been up and down a lot, because it’s driven by speculation.

          Loony, in two paragraphs you’ve shown that your knowledge of economics is badly lacking. Have you read any books on the subject? I’d suggest doing so, before slating someone else for their supposed ignorance.

          • Habbabkuk

            Good reply, Glenn (all three elements).

            For the record, it should be noted that the pound sterling has been here before. Since the creation of the Euro, the value of the pound sterling has been between (roughly) 1,10 and 1,50 Euros.

      • Paul

        Besides, usually the depreciation of a currency is supposed to boost exports, and since the devaluation I have not seen a single bettering of our exports… THIS IS A BAD OMEN!!!

        • Resident Dissident

          The J curve is a pretty well known phenomenon with devaluations – things get worse before they get better as the price effects come before the volume effects.

          BTW the devaluation after Brexit has been nothing like the level suggested by Craig when he talks about a 50% rise in UK prices.

      • Geoffrey

        Yes. Sterling has fallen primarily because an idiot called Carney halved interest rates and said he was going to print masses of pounds,added to the fact that Sterling was previously overpriced anyway.

    • Shatnersrug

      You are kidding yourself if you don’t think the pound collapse is a result of Brexit – we were warned that the markets would punish us and so they did, you can see how much it ditched again after Amber Rudds ridiculous xenophobic speech.

      Traders were watching to see if the Tories would throw them a bone and work towards the single market option, however Rudd proved that the U.K. Is now no place to be if you aren’t British by birth. Funnily enough that didn’t go down to well with the couple of million non Brits working in the financial centre.

      As for blaming quantitive easing, well thats just pure economic illiteracy.

      It’s not whether it’s right that the markets punish us, in fact it’s completely vindictive – however that’s how it works and that’s what was explained to us, and in response Gove said “the British people have had enough of experts” i.e. We don’t want to hear the truth now you’re seeing the truth and there’s a LAME attempt to blame it on quantitive easing.

      • Loony

        Speaking of economic illiteracy how do you explain the total and catastrophic collapse of the Zim$. Some people may think it was a result of central bank money printing. I suppose another explanation could be that that money is prejudiced against black people.

        • Shatnersrug

          Loonie it’s pointless arguing with you.

          “To argue with a person who has renounced the use of reason is like administering medicine to the dead”

          You are in a state of delusion and will continue to throw up these silly comparisons, but for other more reasonable readers I’ll say again,

          Traders threatened us with bad consequences should we vote for Brexit, we voted for Brexit. We now face bad consequences. It’s quite deliberate. It’s was never a prediction it was always a threat and one that is being carried out.

          • Loony

            Have you ever heard of the term “transference” ? If not look it up, as you appear to be suffering from it.

            Read people like Jim Rickards (a 35 year Wall St. veteran and former General Counsel for LTCM). He wrote a book called Currency Wars in 2011 in which he set out the case for endless rounds of competitive currency devaluations. Read the formal statements of the Bank of England and read the speeches of Bank of England officials. Currency depreciation is official policy – and that policy is being implemented.

            It is true that the current action is being undertaken under the cover of the Brexit vote, but then it would be wouldn’t it, as the policy to devalue a floating currency can never be undertaken overtly.

            Why do you think Greece is allowed/forced to hang around the Euro? It is because Greece enables Germany to have a cheaper currency than it otherwise would have. Greece is simply the German method of devaluing its currency. Once again it is not overt because it cannot be overt.

            Look at the US Fed and how it talks (as it must of a strong $ policy) and then never actually raises interest rates.

            Look at respected investment professionals – people like Neil Woodford for example who concluded that a vote for Brexit would have no discernible effect on the UK economy, or people like Terry Smith (the manager of one of the worlds best performing investment vehicles) and who has £10’s of his own money invested and who actively campaigned for a Brexit vote. Or people like Peter Hargreaves the single largest private investor in the UK stock market who also campaigned for a Brexit vote.

            But still your spraying around ad hominem invective and reporting on unspecified threats made by unspecified people is obviously far more persuasive than actually taking the time to look at evidence.

          • Geoffrey

            if you increase the supply of capital and reduce the return on it (Half the rate of interest) the price will go down. I think I learnt that in the first lesson of “O” Level economics.

  • RobG

    The markets won’t touch nuclear power (ie, it’s not profitable; it’s a total white elephant), so it has to be massively subsidised by governments, who also take on the insurance costs and clean-up costs, which last indefinitely.

    The only reason that some governments waste huge amounts of tax payer’s money in this manner is because they need fuel for their nuclear weapons.

    It’s as simple as that.

    • Loony

      Not really. Take Finland, they currently host the Okiluoto nuclear facility, which happens to be the most expensive structure in Europe – easily outstripping the cost of the Large Hadron Collider.

      Unlike the Okiluoto plant the Large Hadron Collider actually works.

      The Finns don’t have a nuclear weapons program. Maybe they just like the kudos of having the worlds largest white elephant.

      • RobG

        Nuclear waste is palmed out all across the world (mostly Africa, where no one cares how many people die). The nuclear site you refer to in Finland is just PR spin for the Onkalo spent nuclear fuel repository…

        … which is already falling to bits and leaking.

        God help the Finns and everyone else in Scandanavia.

        And the fact that cancer rates have been going through the roof over the last 50 years has nothing to do with any of this.



        • glenn

          RobG: Do you have any particular evidence that cancer at any given age is “going through the roof”?

          We’re obviously all going to die of something, and the older we get the more likely we are to be smitten with cancer. Are you sure you’re not conflating a general longevity with an actual risk of increased cancer?

          (I was amused by a fellow who insisted that passive smoking must be a load of nonsense. Why, the proof was that his dogs had never died of cancer! Just in case the point is missed, passive smoking generally takes longer than the lifetime of a dog to promote likelihood of cancer.)

          • KingOfWelshNoir

            Yes, in humans but dog years are equivalent to seven of ours so an 8 year old dog is well into middle age, by which time the symptoms of cancer should have appeared. The dog argument seems a good refutation of the passive smoking thesis to me 🙂

        • Shatnersrug

          I’m afraid to say that the Fins have a very high chance of cancer due to their small population – breast cancer in particular – my friend who is half Finnish is already on a watch list at 32 – all the women in her family were dead of breast cancer before 50, it would be extremely difficult to prove it had anything to do with radiation sadly it’s a genetic propensity.

    • michael norton

      Rob it is also the ultimate means of controlling the masses.
      For example if Syria had been getting the bulk of its electricity from its own Nuclear Power stations, do you think the Syrian war would have happened.
      Answer it would not have happened.

      • michael norton

        five or ten years down the road, when Russia has complete hegemony over Syria,
        the best long term means of Russia maintaining that control, will be smothering Syria
        with Russian built/owned/run Nuclear Power stations.

  • glenn

    Hollande make a denouncement of the UK, saying how it should be punished, and was rewarded by a sudden drop in the value of the pound.

    Surely this is the perfect excuse to say, thanks to your intervention, we are no longer going to go ahead with the EDF deal?

  • Loony

    Sometimes I despair. Many people active on alternative media frequently complain as to the bias and obfuscation of the MSM and the duplicity and un-trustworthiness of politicians. Even when these people report the truth people seem to have difficulty grasping it.

    The official policy is to increase inflation. The evidence for this is everywhere. It is widely stated and widely reported. So far policy makers have largely failed in their stated objectives. Again the evidence for this is everywhere and is widely stated and widely reported.

    QE and ZIRP/NIRP are the tools used to force currency depreciation and hopefully generate inflation. They are not working too well as the only inflation generated is in asset prices. Hinckley Point and Trident are both projects of sufficient size that they afford the UK an opportunity to import measurable inflation. Hinckley Point is especially useful since electricity is priced on a marginal basis and hence all power costs will rise to the marginal price set by Hinckley Point. They are part of the the over arching policy of generating inflation and therefore they will not be abandoned. The more the cost of these projects increase the happier the policy makers will be.

    If this sounds mad it is because it is mad. It is however official policy and official policy is being pursued and is being pursued more or less openly.

  • LordSnooty

    You may argue about the reasons for Sterling’s recent weakness until you are blue in the face. For myself, I think we are the harbingers of future currency wars. The Pound’s floating exchange rate will perform its historic role over time, but how many of you think that the Euro will retain its strength in the face of the winds of change now blowing across Europe, or for that matter the US Dollar as the default global reserve currency, in the face of the tectonic shifts in geopolitics now taking place?

  • Dave

    I hope Trident and Hinkley Point are cancelled but to win its necessary to sink the political argument that sustains both despite the cost by debunking the climate change hoax that provides the cover story that facilitates both.

    JC is opposed to Trident and his brother has debunked climate change. Put the two together for an effective message about value for money public spending and economic policy (reopen the mines) and opposition to nuclear proliferation.

    There are a range of interests that promote the hoax but for different reasons and these include EU/Globalists, new age marxists, the taxman and the nuclear lobby.

    For example, nuclear power is far more expensive than fossil fuel so its proponents say “its worth the price to save the Planet”!

    But whereas you can have nuclear power without nuclear bombs, you cant have nuclear bombs without nuclear power and the UK Government has announced plans to renew Trident!

    But Trident isn’t independent, its an American weapon with a union jack on top for show, which means the UK Government has in fact announced plans to renew US nuclear bombs!

    But no new nuclear power stations have been built in US since 3 Mile Island accident over 35 years ago due to safety fears and cost, so where will they get the nuclear material needed to build their nuclear bombs? Well the UK has announced plans to build new nuclear power stations!

    Hence a UK decision to renew Trident and build nuclear power stations is in fact a decision to provide the nuclear material needed to renew US nuclear bombs!

    So providing nuclear power to combat climate change becomes the cover storey for nuclear proliferation and thus the real choice is between promoting the climate hoax or opposing nuclear proliferation.

    If “greens” promote the climate hoax they are de facto supporting nuclear power because everyone knows renewables are no alternative to fossil fuel.

    In short opposing the climate hoax and nuclear power by supporting fossil fuel is the effective way to oppose nuclear proliferation – which is a very real man-made threat to humanity!

    • Kempe

      It’s not the nuclear weapons that are being replaced but the submarines that carry them. The US and the UK currently have stockpiles of surplus plutonium (140 tons in the UK) so no new nuclear power stations will be needed to make more should we need it, in fact the reactor planned for Hinckley Point will burn up some of this surplus.

  • Dave Lawton

    Hinkley Point is a white elephant and will never be completed.
    Lenr or Cold fusion is now accepted as a reality.Is lw cost and will send a shock wave through
    the energy industry.
    US Defense Threat Reduction Agency Releases LENR Report — “Investigation of Nano-Nuclear Reactions in Condensed Matter”
    The report can be accessed at the LENR-CANR site here:,

  • Sharp Ears

    Why did the silly old duffer who was at the BoE and who was present during the crash (didn’t that work out well for all of us, except the bankers?) appear on the box to say everything was A OK with the fall in the value of the £?

    Pound sterling collapse a ‘welcome change’, says former Bank of England governor Mervyn King
    Reactions have been ‘over the top’; Brexit has delivered what central bankers have failed to for years – lower exchange rates, lower house prices, higher interest rates, King said.
    Ben Chapman
    11 October 2016

    Then we had that nice Canadian gentleman ex Goldman Sachs, reassuring us in the same way.

    This morning 7.55

    ‘Pound eases back against dollar

    Pound v dollar

    The pound is trading a little lower this morning against the dollar. A short while ago the pound was a third of a cent lower at $1.221.

    The chart above shows the pound’s slide this month, from around $1.30. The fall was sparked by the Prime Minister’s speech on 2 October when she said that the formal beginning of the Brexit process would start no later than March of next year.

    That gave traders a bit of shock and the pound has been volatile since then.’

  • nevermind

    good logical thinking Craig, Hinkley and Sizewell are now in doubt, imho, as most consumers of electricity now have alternative supplies and the alternative energy sector is growing, despite the cut in solar subsidies.

    Britain is being submitted to the usual,, a Brexit rip off, business and industry adding sums on to their products due to the falling pound and inaction of this Government.
    Paul has it about right, this time the festive period will not pull the economy out of a hole, the domestic market will be careful to spend their money and foreign suppliers of goods such as toys might import their goods here cheaper than what we have on the shelf’s.
    Mrs May is weak and in a position were she has to watch her back, look out for flashing blades, best example is the shiner she pulled over Bojo’s insistence that the military option in Syria is on the table. She denied it was yesterday, but today BoJo’s insistence was amplified by the public mouthpiece.
    Either she is lying, or she has an understanding that she says NO, meaning that we will prepare for it, as it was planned since 2006.
    The Conservatives are inwardly split to the bone and their belligerence and inaction is clearly visible on the smiling face of D. Davies.
    They are reaping what they sowed and when one hears Tim Farron, in the comfortable office of Archant Norwich, is bleating to the converted, making out that the referendum had nowt to do with them, they could not have possibly bust open the coalition for such a paltry reason, then my heart sinks, the whole political class is rowing backwards, unable to deal with the pile of s..t they themselves delivered to their doorstep.

  • Derek Harper

    Yes, it would be prudent to cancel both Hinckley and Trident,,OK, there will be penalties but surely it would be worth it in the long run

  • Dave

    Kempe’s comment that US/UK have a massive stockpile of Plutonium prompted me to seek out other links between nuclear power/Hinkley Point and Trident and after a lengthy period of looking found a very interesting “Ecologist – Trident nuclear submarines and the UK’s nuclear power imperative”.

  • Geoffrey

    The silver lining of a falling pound would be the cancellation of Trident,Hinkley point C and HS2.
    The silver lining of a silver lining might be a rise in interest rates leading to falling house prices and making housing affordable again.

    • Kempe

      The problem might be cancelling contracts that have already been signed. The Tories wanted to cancel the two aircraft carriers but found that the contract agreed by New Labour would’ve required them to pay compensation that was greater than the cost of the ships.

      • michael norton

        I am very against Hinkley Point C,
        always have been.
        Islamaphobic Theresa wants to big up the Economy of the United Kingdom.
        Big projects, four or five of them at once, will cause a big leap forward.
        Crossrail, Heathrow runway 3, HS2, Hinkley Point C, renewal of the Trident system

        These projects alone are bigger than most countries economies.

        • Kempe

          Crossrail is 75% complete, it would be self defeating to scrap it now but a more far sighted government could’ve had it in the 1940s for a fraction of the cost.

          • michael norton

            Crossrail now to be known as The Elizabeth line, will transform travel across the city, boosting the economy by billions of pounds and supporting thousands of new jobs and homes. The line, currently being constructed by Crossrail, will be named after the UK’s longest serving monarch when it becomes operational through central London in 2018.
            Crossrail 2 (Chelsea–Hackney)
            Crossrail 2 is a proposed rail route in South East England, running from nine stations in Surrey to three in Hertfordshire providing a new rail link across London on the Crossrail network. It would connect the South Western Main Line to the West Anglia Main Line, via Victoria and Kings Cross St. Pancras, intended to alleviate severe overcrowding that would otherwise occur on commuter rail routes into Central London by the 2030s.
            Two full sized aircraft carriers, new fighter boat based aircraft, new tanks,
            new trident nuclear missile, submarines.
            New runway at London Heathrow
            New runway at Gatwick
            New fleet of monster French nuclear power stations
            new fleet of Grammar schools

            But yes, does a collapsing pound to the Euro

            mean a collapse of the Hinkley Point C project.
            Because if it was barely sustainable at 1.5 Euro to the Pound
            will the FRENCH take 1.0 Euro to the Pound?

            £18,000,000,000 x E1.5 = E27,000,000,000
            £18,000,000,000 x E 1.0 = E18,000,000,000

            So he Frogs would be out of pocket by E9,000,000,000 on the Hinkley Point C deal.

  • Jemand

    Complete bullshit.

    The pound floats like so many other currencies, so BFD! That it was probably overvalued prior to Brexit doesn’t rate a mention by Craig nor the fact that it could just as easily rise again, perhaps so high that Trident could be £50B cheaper. Would that be a positive thing, Craig?

    But this is ignoring the glaring fact that Trident is only one of thousands of items in the UK economy that bobbles with a floating pound. Does it escape Craig’s attention that many export industries will enjoy greater sales, thereby offsetting that £50B? Not to mention a likely revival in UK manufacturing that will bring better employment prospects to Britons as well as this blog’s beloved illegal migrant demographic.

    But penny-pinching aside, Trident, or a more agreeable locally manufactured nuclear deterrent, is vital to maintain UK power & prestige in the world. Yes, yes, I know those two P-words make the resident communists here choke on their own vomit. But without that power & prestige, the UK becomes a pathetic old-world power in precipitous decline and nobody will bother to listen to it – especially if led by a dishevelled hobo Labor PM. Not in the EU, not in the UN Security Council or elsewhere. Indeed, the UK will probably need to surrender it’s seat on the UNSC. And with that will go the last vestige of political influence in a world on course for a global civil war.

    • michael norton

      I can not see how it is complete bullshit.
      #The United Kingdom and France use different currencies.
      The U,K, uses the pound while the frogs use the Euro ( for the time being)
      Either there was a fixed price based on an actual date or there is a floating price.
      We have not actually been told if the deal is floating.
      For several years we have been told it is an £18,000,000,000 project.

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