Guest editorial

Turbulent times ahead

Conal Gregory

The UK is in the midst of a troubled, even disorderly time in its economic and political history. Uncertainty is the name of the game as the deadline for Brexit approaches. Whilst the guillotine for the UK’s exit from the EU goes down on March 29 2019, few believe that a competent deal will be struck by then.

Investors and electors alike should be concerned. There are several players in this field following Cameron’s insistence on a referendum and the less than helpful approach from the European Commission.

Theresa May was wrongly advised to call a general election and proved inadequate to a presidential style of campaigning. Few cabinets have been formed of such a lacklustre group of MPs, several of whom apparently see no reason for acting like Henry VIII in creating law without Parliamentary approval.

Labour is not covered in glory either; it pledged to accept the referendum result but contradicted itself by voting against the EU Withdrawal Bill.

Referenda results can be interpreted and acted upon in different ways. A higher percentage of the electorate voted for Scottish independence in 2004 than for Brexit two years later. However, Scotland remains very much an integral part of the UK and yet the UK is set to leave the EU. Just as in a card game, players on one side are not showing their cards to their opponents but few on this side of the Channel believe realistic business assessments have been made of the consequences of withdrawal. This is economic self-harm spearheaded by a dogmatic clique who have jumped on the tiny recorded majority.

Currency fluctuations and disinvestment in the UK will follow the official termination of EU membership. Our current trading partners are unlikely to view Great Britain as a bright new lion whose doors are now open to win global trade. The proponents speak eloquently of a fog lifting and our kingdom becoming glorious again. The truth is that this island nation will look closer to an amateur production of a Gilbert and Sullivan opera. Even close allies like the US will see that London has lost its diplomatic clout in Europe and Washington and seek alternative routes for influence.

An historical analogy is apposite. In the early 1950s when Europe was coming out of its war-torn past, the UK was the economic powerhouse of the continent. That position has been reversed. Today France and Germany show that leadership and further afield, the US is still dominant in key sectors but under President Trump has entered a period of introspection.

No fewer than 66 countries have negotiated trade agreements with the EU. There is no mechanism for just switching these across to the UK upon departure from continental Europe. It will require fresh talks with each such state with no promise that trade will continue on the same favourable terms.

This island nation will look closer to an amateur production of a Gilbert and Sullivan opera

To date, the Cabinet minister responsible has seen just three of these countries, which suggests either little energy is being expended or that our trading partners regard the UK as a low priority. For those who favour a Canada-style free trade agreement, they need to remember just how long such a pact with the EU took to negotiate: seven years.

Ulster and the Irish Republic are particularly difficult to reconcile, despite the years of progress in fields like tourism. The border between the two is impossible to make secure and both sides depend upon each other and do not wish to return to the dark days of conflict. Ireland’s commerce is intrinsically linked with the UK and Dublin does not want this disrupted but Brexit is likely to again bring turbulence.

For the thousands of UK firms whose trade is solely with the EU, burning the European regulations will bring a massive headache not least because each will need to become Customs-compliant. One wonders just how far the Government department negotiating departure has really analysed the options of remaining part of the Customs union, reverting to World Trade Organisation rules or striking a free-trade pact.

The globe’s trading giants are China and India. The former’s confidence under President Xi Jinping is in keeping with his country’s success, notably in technology. Companies like Alibaba, Baidu and Tencent would grace any country’s economy even if its growth statistics are sometimes questionable.

Many wish to use post-Brexit as an opportunity to increase the Commonwealth into a far stronger trading network. India, the world’s largest democracy, could be the key. One million young people – more highly educated than in any generation before - join India’s labour force each month. This largely agrarian country is clearly moving into manufacturing and Narendra Modi may be open to more British overtures.

For a demoralised Conservative party, it may be time to seek a leader who has shown their mettle, is not afraid to debate, is clear and convincing and has already won a respected seat. Step forward, Ruth Davidson. Although young at 39, this ex-journalist who has served in the TA, has shown true leadership of the Scottish Conservatives. She would be more than a match for the neo-Maoist duo of Corbyn and McDonnell and could restore confidence again in our nation.

Conal Gregory is a financial journalist and former Conservative MP for York. In his two terms (1983-1992), he secured more Bills onto the statute book than any other MP including the Cheques Act 1992. He has been Personal Finance Editor of the Yorkshire Post for 11 years and has been awarded Regional Journalist of the Year by the Association of Investment Companies, Bradford & Bingley, British Insurance Brokers’ Association and Headline Money. Conal is a Master of Wine and was Chairman of The International Wine & Spirit Competition and Panel Chair of the International Wine Challenge.

Conal recently compered the JM Finn investment conference held at Rudding Park, near Harrogate.

Illustration by Elliot Elam

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