Neighbours First, Voters Second

There are those ‘opportunists’ who are seeking to exploit the divisions that the referendum revealed to pursue long cherished ambitions or old hurts. They see the Brexit result as a sign of great division in the UK and national weakness. Elements of the Spanish government are now calling for immediate joint sovereignty over Gibraltar. Sinn Fein want a vote in Ulster for a united Ireland and the SNP have started campaigning for a second referendum. There’s a petition seeking to exploit the 100,000 rule and MP sentiment to force a re-run of the referundum and a ground swell in London that wants London to break away from the rest of the UK. We also have the run on the pound and the crash in the UK share prices. Black Friday,  as it is being referred too.

Brexit is a constitutional change for Scotland, Ulster and Gibraltar which they should have a further say in.  To deny otherwise would be hypocritical of those who have sought a vote on the EU membership for many years. These member states of the UK should be presented with a new Act of Union once the full details of the UK divorce settlement from the EU is finalized.

Gibraltar and Ulster are special cases given that Madrid and Dublin are stakeholders in these areas. Their referendums should allow for two other choices. A vote in favour of dissolving Northern Ireland and joining the Irish Republic, or another option to form an Anglo-Irish Commonwealth of joint sovereignty with Dublin.  Likewise with Gibraltar and Spain.

These issues of Ulster and Gibraltar are historical and , from some perspectives, long-running grievances. It is time overdue to ditch the baggage of history and forge a modern relationship with these constituencies.. A modern relationship that is based ,first and foremost, of the United Nations resolution 1514 on self-determination. Accusations of imperialism are null and void once the ballot box speaks regardless of whether Dublin, Madrid, Belfast or London ‘like’ the answer they get.  Let the people decide once they have all the facts of the divorce settlement from the EU in front of them.Any attempt to force the issue in Scotland, Ulster or Gibraltar before the details of the UK settlement with EU are known should be ‘robustly’ rejected by the Prime minster of the day and his/her successors.

I have no regard for the arrogance of Greater London who believe they should be exempt from the democratic will of the rest of the England. They are not. Plain and simple. The City of London, on the other hand, representing the financial services sector, should be part of the negotiation team sent to the EU.

The turmoil of the markets with respect to the pound and UK share prices was inevitable in the event of a win for Brexit. This is partly because the market priced the other way about a week before the vote. The key market movers shorted the UK stock and Forex holdings once the actual result came in. That creates a domino affect amongst the minnow traders. One of the cardinal rules of playing the financial market is never to go against market sentiment. If the big players start selling off UK shares and currency,  then the rest of players will follow suit. The financial markets have always had a healthy population of Lemmings. There will come a point when the market will accept that the floor hasn’t dropped out of the UK economy, the world did not, in fact, come to an end and that it is, in truth, business as usual.

There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold.” ..Mark Carney, Governor of the Bank of England, 24/06/2016

That simple truth, eloquently expressed by the Governor,  has yet to be priced in by the currency markets.

Clearly there will have to be a risk assessment that consider possible outcomes of  the UK divorce negotiations with respect to trade tariffs.The only UK companies, in my opinion, that you may need to take a cautious view on are those that are heavily reliant on sales to EU countries or for whom the import of goods/services maybe a key component of their costs .The necessity for that caution maybe short-lived.  There is a myth that our economy is dependent on EU exports. Most companies do not export at all. Our economy is dependent on the disposal income of domestic consumers.

Nigel Farage is right to say that UK exporters will welcome a weaker pound but omitted to acknowledge short-term hurt for households.

There is , an minor upside risk to Inflation and therefore interest rates but that should not be overstated. The cost of white goods and AV equipment may increase as these are largely imported goods. Likewise, walk around money for holiday makers going abroad this summer. If you haven’t got your Euro’s for your trip abroad this Summer then it is probably already too late to get a good deal. There will be pressure on food prices, given our level of food imports, but this will be counter balanced by the fact that most of the big supermarkets have forward contracts for their supplies, and currency hedge funds. They  are also operating in an intensely competitive environment on the UK High Street. I would be surprised, therefore if any of those upward pressures actually found its way to the supermarket shelves. Ultimately though, all of those upward pressures on inflation will unwind as Sterling stabilises and slowly or sharply recovers lost ground.

One of the arts to playing the financial markets is knowing when the price of an asset , be it a currency  or a share, has reach its low point. That would be the  time to buy.  I am not gifted with such art. There may be a further retreat of share prices and Sterling or those prices may snap back once professional international traders calm down and realise that many of the UK assets are now under-priced.  Equally, there maybe no more sharp movements and prices may recover cautiously until the final details of the divorce settlement from the EU is known.

What we can see are UK shares trading 3.5% below normal price and a Bank of England standing behind the markets with £250 Billion of support if required. Strikes me that there are some bargain buys on the Footsie right now provide if you are prepared to go long.

Some experts are pointing to potential investment buying opportunities, while others say investors should sit tight and wait for markets to calm down. But today is definitely not a good time to sell out of investments that you’ve carefully built up over the years.” 

24/06/2016 – MoneyWise.co.uk – (FCA regulated).

Many of the papers, people and other commentators are wondering what happens next. I have a opinion on that.

I respect David Cameroons decision to stand down in October but the country cannot be put on hold whilst the ruling party descend into internal navel gazing for the next three months to sort out its leadership and hence the resident at No 10. Likewise for the Labour party. For both main political parties to descend into leadership contests will re-inforce the view at home and abroad that the UK has no plan and no leadership. That will not help Sterling or the Financial markets.

Both David Cameron and Jeremy Corbyn need to appear on the same podium as soon as possible to announce the establishment of a cross-party delegation to begin exit talks with the EU.

This is not a matter for the ruling Conservative party alone. It should be above party politics and their internal turmoil’s. There has to be show of strength and common cause from both mainstream political parties to steady the ship.

Aside from that, I think the road-map from here-on in is fairly straight forward. The key to the UK future is the trade agreements we now seek with the EU and rest of the world.

Trade delegations should be sent to Washington, Beijing and Buenos Ares.  We need to begin discussions on Free trade agreements with USA, China and Brazil immediately. Those negotiations will take time and be independent of any discussions with the EU. The UK should also call an extra-ordinary meeting of the Commonwealth heads of state and table the notion of forming a Commonwealth Free Trade Area.  Other people have suggested that and been ridiculed for it. That’s daft. Brexit represents new opportunities. It would be entirely foolish to overlook the business opportunities that the Commonwealth club  represents given that it includes three out of seven of the G7 countries and India. A Commonwealth Free Trade Area would have a consumer market three times larger than that of  the EU and there is already a great deal of goodwill between the member states. There have been long tanding calls from many African commonwealth countries for free trade agreements between its members.

I believe that there should be a two pronged approach to the EU. On the one hand the Foreign office needs to be dispatching envoys to each of the EU capitals to begin fostering goodwill to the UK divorce negotiations. There is clearly a disconnect between the attitudes of the EU mandarins who will look to ‘punish’ the UK as an example to other member states flirting with cessation votes and the ruling political parties of the member states who do not wish to harm their UK export markets. Comments from Merkel and Juncker following the vote serve to illustrate. One of the first thing that needs to be agreed on is radio silence. Neither side should be attempting to negotiate via the media. That will get ugly.

The referendum has been acrimonious and full of false claims by both camps. It appears some have yet to stand down from that belligerence.

I gather a lot of young people were being told that they will loose their opportunities to be part of Europe if the Brexit succeeds. There’s no reason for that to be case.The divorce settlement will need to make reciprocal arrangements on work permits. Ok. there maybe a few more hurdles to jump through if you want to go and work in say, Germany or Spain for a while but the notion that this will no longer be possible as a result of Brexit is nonsense.Likewise with the access to European Universities. It should also be pointed out that Brits were going to make a life in Europe long before the EU came into being and,  will carry on doing so long after the divorce.  This side of the negotiations have not yet taken place and it therefore entirely premature to say that young people will have lost out by Brexit.

There are some who are claiming that the result is invalid due to ‘low’ turnout or narrow margin of victory.

A handful of metropolitan areas in the big cities with large remain votes should not be allowed to dictate the course to the rest of England and Wales. The ‘margin of victory’ is skewed by some of densely populated inner cities areas.

59.5% of Lancashire voted to leave the EU according to the figures published by the Lancashire Evening Post. A pattern that I suspect is largely repeated across the rest of so called ‘provinces’ in England and Wales. That is  hardly a narrow margin of victory on a turnout that exceeded that of the most recent General Elections.

There are some in Parliament  who have suggested that the vote is not legally binding and should be ignored.

It is very important that leaders from all political parties distant themselves from such talk. Such malcontents are spouting that Parliament has the final say in a parliamentary democracy. They do not. They were put into parliament by a plebiscite of the electorate and they can be removed by the same. We’ve had people in the past suggesting that they have some kind of divine right to rule this country regardless of the will of the people. Perhaps it’s time to re-sharpen the axe.

To try and re-run this referendum  on any of the above grounds or ignore the outcome because the minority did not like the result would be the greatest affront to the democracy in this country since Charles Ist.

There are those in the remain camp who implied that those who opted to vote leave are dim-witted, racist, or xenophobic. The exit camp, for their part have smeared their opponents as the unpatriotic rich elitists. Both caricatures of supporters were not true and were deliberately intended by both camps to offend. I gather some feel they may have lost friends as a result of this referendum. That shouldn’t have happened. True friends can surely  agree to disagree.

We are all islanders, whether that be Irish, Scots, English, or Welsh. Young, old or gloriously in-between.  A geographic truth regardless of politics, age  or national flag. We are not little Englanders nor a nation of shopkeepers  and second largest economy in Europe is hardly a minor trading post.

The sharks of one kind or another are circling now. They sniff weakness and division in these Islands. It would not be the first time we have stood apart from the rest of Europe. Those were always testing times and this time will be no different. History shows that these Islands have come through such times before and we can come through it again.

Provided you remember that you are neighbours first and voters second.

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