So 2021 is a New Year but which year? Are we on the precipice of a new dawn of enlightenment, a golden age of discovery, free trade and glories on the high seas? Well, one Tory MP and former Conservative leader, Iain Duncan Smith, has virtually suggested a return to piracy and world domination!
“I just wish I was 21 again, frankly, because my goodness what prospects lie ahead of us for young people now. To be out there buccaneering, trading, dominating the world again…” – IDS
Meanwhile in America, 2021 begins with a stuck record as Donald Trump is still tweeting out MAGA like he’s original and not on the way out.
That makes Donald Trump the great pretender and lifting slogans out of 1950s and 1970s Britain. Fortunately, it’s only 18 days till America gets to play a new record.
Sadly, the UK is also changing its tune and has just fulfilled the 1975 EEC and 2016 EU membership referenda by Leaving the EU.
Back in 1975, 2/3 voted Remain – 90% of Tory MPs, the Liberals and most of the N Ireland parties. The SNP, Plaid Cymru, Communists, DUP, SF and NF voted Leave – it’s worrying how many National Front policies are close to those at the heart of this government again. The Labour Party was split with its left-wing and a majority of unions backing Leave, as did 2/3 of its membership at conference, whilst the MPs were 50/50 and a majority of the then shadow cabinet and leadership were in favour of Remain.
It’s fascinating how things change or revert, or don’t change at all. My biggest fear is that 2021 will be an age of continued polarised conflict, a nation and self-first attitude that imposed constraints on immigration and refugees, that attempts to go it alone rather than work it out together. Covid has exacerbated this for many nations too, and yet what we forget is that, along with climate change, it also reminds us that we are all in this together, I guess that’s up to us, as much individually, as nationally, certainly I now spend more time in the borderless land of Zoom now than worrying about sovereignty, control or borders.
The war of words, or even war of the worldviews, continues apace over Britain’s relationship with Europe. The Battle of Brexit has already seen Dunkirkesque fishing fleets with Bob Geldof and Nigel Farage traversing the Thames and shouting at each other! Rather than resigning ourselves to the inevitable the Blitz spirit of Remainers has been to stubbornly resist Brexit whilst a small number of Leavers have threatened Guy Fawkesesque revolution if it doesn’t proceed as planned. ‘Planned’ is probably too strong a word for the most disorderly unplanned unmitigated disaster of an attempt to pull out of the EU that might see rebuilding UK supply and trade options more like a Scrapheap Challenge looking for parts here and there rather than being content in the existing roadworthy vehicle.
Tory MP and former International Development Secretary, Priti Patel, has actually suggested using possible Irish food shortages post-Brexit as a threat to get a better deal. She’s clearly not read, “How to win friends and influence people”.
Additionally, the Government is preparing for mass immigration following a No Deal scenario. Yes, immigration! As the free movement of ex-pats, mostly of retirement age, seek to return to the UK if reciprocal EU residence rights are not agreed. Over a million people could return putting pressure on the NHS, taking our jobs, applying for benefits – oh wait wasn’t that the Leave argument? But these ‘foreigners’ all speak English and we can’t tell them to “Go Home” as the UK is their ‘home’ (as it is for all those who have settled here).
The false stereotypes of Britishness and ‘foreignness’ are aptly illustrated in the recent revelation by star spinner – not political but cricket, Moeen Ali that he had a white British grandmother called Betty Cox. Birmingham-born Ali could not be more British in terms of cricket, but the chess-playing all-rounder also acknowledges his Pakistani heritage – something that down-under he was taunted about when called ‘Osama’ by Australian sledgers.
As part of her charm offensive (either an oxymoron or a transposition of ‘offensive charm’) D-Day Theresa has dispatched 30 Tory MPs around the country to persuade people to adopt her T-for-Terrible Brexit Deal rather than N-for-Nobody wants it No Deal. The deal is heading for defeat and two words that should not be attached to Tory door-knocking, “charm offensive”, are only going to piss off the public – who can’t even vote on the Parliamentary debate.
Better a Dunkirk spirit of knowing when to retreat from a bad situation. May is too stubborn and fighting for her own survival which she sees as contingent upon showing strength and resolve, whereas true leadership also knows how to lead a hasty retreat from a mistake unlike the Charge of the Light Brigade disaster ahead of us.
“I knew Winston Churchill, I worked with him, I stayed with him at his home at Chartwell and I have read his speeches many times. I can assure you that Winston Churchill was no Euro-sceptic.” – Former Prime Minister, Edward Heath, 1996
Whilst we tread choppy waters on our quitting of the EU or even quitting the process of leaving so we remain, keeping up? UKIP are quitting their party – founded to quit the EU – in droves. The latest UKwitters include David Coburn and Paul Nuttall who join Nigel Farage, Suzanne Evans and others in quitting UKIP.
UKIP membership of around 23,000 is now half its 46,000 peak just prior to the EU Referendum. That such a small party – and an increasingly right-wing one at that, has influenced a generational change in our relationship with Europe is a testament to the ongoing divide between Eurosceptics and Europhile “citizens of Europe”.
It’s ironic that UKIP is collapsing after bringing about the Brexit vote by striking fear into the hearts of Tories and David Cameron that their voter base was quitting to join UKIP. For its members to be now calling it too extremist with Tommy Robinson, riddled with Islamophobia and thuggery, makes one wonder why the Tories were so afraid of an extremist minority. Had David Cameron just waited it would have imploded anyway like the BNP or EDL and Brexit needn’t have happened.
Indeed, a UKIP tweet now has 39,000 votes in their own echo-chamber (but being tweeted widely now) showing 32% support for No Deal Brexit but 66% support for No Brexit!
If the British People were forced to vote on Leaving the EU again how would you vote? Retweet for a good sample size please.
Current polling “suggests that people continue to prefer remaining in the EU to the deal (Remain 46%(+3), Leave with the deal 37%(+3)) and that in a choice between the deal or leaving without one, they’d go for no deal (No deal 41%(+7), deal 35%(+3)). This leaves us in a bit of a quandary. People narrowly approve of the deal and think MPs should approve it… but they also prefer both of the two obvious alternatives to the deal. For the record, the poll also finds people in favour of a new referendum on the deal by 48% to 34%.”
“This week it is Parliament that will take back control. We have mixed oil and water by imposing on our Parliamentary system a referendum result. And, of course, Parliament must respect that. It is now for the House of Commons to decide how to proceed in the light of all that has happened…” – Andrew Mitchell MP
Even Brexiteers believe in the sovereignty of Parliament, or should do at least, it is democratically elected and sovereign, more so than the Queen or EU. So, what Parliament does next is critical. It is clear, though, that Parliament is overwhelmingly against a bad Deal that they cannot sell to their constituencies.
Tuesday’s “meaningful vote” is Parliamentary Democracy over Plebiscite Referendum – which was something of a meaningless vote, given the lies and gross simplicity without understanding context or consequences, and only offered for political expediency by Cameron to stave off votes leaching to UKIP who are now falling apart anyway.
Six years to the day after the 1500 v 200 EDL counter demo and the fine welcoming city of Norwich has another small demo, Norwich Against Fascists! Counter demonstration! “There are many many more of us than you” was being chanted by 750 anti-racists and Remainers (mostly) and 50Unity UK pro-Leave Brexiteers shouting back the same and “More of us voted Leave than you” and “you lost”!
The atmosphere was mostly good-natured, carnival-like with drums, whistles, chanting, occasional discussion and the odd rant. One masked protester was led away, possibly anarchist/anti-Fa, certainly a scarf covering their face but there was no violence.
The police, some 30-40 or so, created a thin blue, well hi-vis yellow line, to keep the sides apart, sadly also blocking the dialogue, the lack of which has left us in Brexit impasse land. Initially, kept to opposing pavements, and allowing the traffic to pass, the police eventually surrendered to the sheer size of the counter-protest and even re-drew the line in the centre of St Peter’s Street.
After an hour, they also mostly gave-in to allowing people to cross the street and engage with each other. At times, it was clear some of the police were struggling to keep their serious and professional faces on given the number of humorous moments.
Even the police giggled when Lab Cllr Jess Barnard started playing Benny Hill over the megaphone! Rather ironically, similar chants were echoed on each side of the street:
“Whose streets, our streets”, “No to racism, No to Nazis, no to fascism” “You’re the racists”, “No, you’re the racists!”
Towards the end, it was almost comical as the Remainers remained and the Leavers left, leaving perhaps a dozen Brexiteers facing still hundreds of anti-racists. The larger crowd refusing to depart until their counter-demo had fully seen off the other side. Police remained on site waiting for one side to completely depart but were frustrated when the larger crowd decided to cross the street and swamp the “drain the swamp” protesters. A few of the latter repaid the gesture and also switched sides leading to hilarity and confusion.
At the close, some 2-3 hours later, several protesters shook hands after dialogue, others persisted in their polarised positions.
The Unity UK Leave contingent tried to convince me that their side of the street was more diverse than the Remainers/anti-racists, but that was hard to accept seeing as how they were 99.9% white, and 75% older people, some dressed in 1950s fashion, a time they perhaps wanted to send Britain back to.
I had conversations with perhaps half-a-dozen of the pro-Brexiteers including a passionate but polite chap called Joe, an older woman whom we both agreed were opposed to Theresa May, and several others willing to dialogue. Nothing will change without conversation, communication and, probably, compromise about our beliefs.
* Alleged roots in Ancient Sparta, Plato, and Rome
* Totalitarian belief in the State, order and its Ruler
* Ultranationalism, monolithic unity, racial purity (esp. anti-Semitism, anti-immigration) and ableist idealism
* Ironically, Italian and German fascism both grew out of national socialism but opposed international socialism and communism yet share common antipathy towards liberalism, capitalism, and the individual instead favouring the Party and the State
* Militant strength, masculinity, patriotic rebirth and revolution
* Authoritarian pseudo-democracy, cultic hero worship, national power (Maurice Barrès)
Both sides were a bit confused by the use of the word fascist, both calling each other it. The word really defines those who are totalitarian, anti-democratic and ultranationalist. Along with Nazis – despite the odd mocking salute, it’s a word that didn’t really describe anyone there. One of the Leavers complained about being called a “Nazi” saying “I have an Indian wife”.
Poignant, as it was, across from the city’s War Memorial, the day before armistice day, when we remember standing up to aggression, conquest, fascism, hate, imperialistic ultranationalism, and ultimately, cultural xenophobia in two world wars.
We need to stop fighting and start uniting, build better and common futures, that was why the EU was born, for peace and prosperity, and to end wars.
A week really is a long time in politics, as Labour surge and Tories entrench to fight onto their minority Government. The latest post-election polling has Labour on 45% (+5) and the Conservative Party on 39% (-3) that means in another election Labour would win, but in all likelihood still fall short of a majority – making a progressive rather than DUP regressive coalition the best way forward. All this is another reason the Tories are shoring up deals with the devil to stay in power. The poll was in the Mail on Sunday and from Survation who had the Tories on 41 and Labour on 40 on 7 June predicting a hung parliament, and hence the most accurate poll.
Theresa May’s Leadership
Whilst “strong and stable” is clearly parked like the hastily hidden away EdStone in 2015, Theresa May still feels like she can hang on whilst the Tory Titanic sinks.
Just 38% now think Theresa May should stay on as Prime Minister, 49% think she should resign.
Whilst the Tories stubbornly call for ever harder Brexit, the DUP and Scottish Conservatives want a softer one. If this was an election called to confirm a strong majority for Brexit negotiations, then May has lost her mandate for it.
Ruth Davidson, leader of the Scottish Tories, may be tempted to break away from the English and Welsh Tories in order to fight for a very soft Brexit and to campaign against the DUP amidst their anti-LGBT and women views.
“The pattern of seat results suggests that seats in Remain areas saw significant defections away from the Conservatives.” – Electoral Calculus
Tactical voting clearly played its part with people moving from minority parties to the main two in order to vote “anything but Tory” or for BluKIP, i.e., UKIP voters hoping to shore up the Tories. Seemingly, many UKIP voters also returned to Labour.
Goats for Votes?
Goats have often been used to persuade people to register to vote for the first time. My old university, UCL, did this year, and local to me, UEA, has done in the past.
Today, old goats were in the news, not because climate sceptic Michael Gove was made Environment Secretary – right up Donald Trump and DUP‘s street, but because the Queen’s Speech may be delayed. It turns out that the speech is written on goatskin (well heavy parchment now) and it takes 7 days to dry the ink and so the whole political process has ground to a halt. And so, #goatgate is born!
Back to the Future?
Whilst the Tories criticised Labour for appearing to go back to the 1970s, their own manifesto programme of a return to the 1950s – fox hunting and pre-EU, has now been torn up. It was clear that young people voted for a Jeremy Corbyn future in droves.
Theresa May has today apologised to the Tory 1922 Committee (who feel that 2017 is way too modern) saying,
“I got us into this mess and I’ll get us out of it”. – Theresa May
More Laurel and Hardy than Strong and Stable!
Perhaps, foxhunting, OAP hounding, goatskin, will mean the swansong of the pigheaded Tories and Theresa “Kitten Heels”. (Any more animal allusions I could get in there?)
On the eve of BBC Question Time in Norwich, not just one political demo but two protests against the Government took place. One was anti-austerity/Tory and gathered outside The Open where filming was taking place.
The other was anti-Brexit whose centrepiece was a German carnival float with the sensitivity of a French Charlie Hebdo cover in the spirit of Spitting Image satire – how about that for European unity!
French artist but UK resident for 30 years, Laure Olivier Minns, drew attention to the sad state of the satirical statue, in an interview with the Norwich Evening News:
“Look at the state of her head already, it’s a sign that she isn’t strong and stable.” – Laure Ollivier Minns,EDP
The humour was not to everyone’s taste, and as someone who has experienced suicide attempts, I found the subject matter challenging. The image of Theresa May shooting herself in the mouth was meant to be about Britain committing political suicide by Brexit. Instead, the image was profoundly personal evoking strong reactions.
Perhaps, it should have been Britain shooting itself in the foot, rather than the mouth, it may even be seen as an own-goal. Some erstwhile Remainers refused to attend the rally as a result, others like myself had mixed feelings.
During the evening I had several conversations with passers-by about suicide but few about Brexit. One car driver stopped and said he agreed with what we were doing and supported Remain but having lost a family member to suicide found the imagery distasteful.
Another person found that it conjured up allusions of male-on-female violence. I critiqued that view and pointed out that male suicide by gun is a much higher figure than female suicide fatalities. Well, it created a debate, but perhaps not the one intended. Much as Antony Gormley’s recent rooftop-edge human sculptures up at UEA.
Laure defended the choice to bring the float to Norwich and use it as one expression among many of people’s feelings about Brexit. She said:
“The message is clear: BREXIT IS TOXIC. And that I guess is at least something we all agree on. So this May’s float might not be everyone’s cup of tea in terms of ‘bad taste’ for some, however, I truly believe that it is so important for FREEDOM OF SPEECH to be respected and protected.
Visuals such as the float or other creative means like some ingenious cartoons show humour through carrying angry voices and it is a way to soften anger too strong for words and at the same time be totally spot on in delivering a strong message. Humour is so important to cherish and use through tragedies and political dilemmas to also lighten up the atmosphere. Likewise many creative placards that are conveying strong messages through cartoons of sorts, make an important impact in seconds and make people smile relating to that message or/and provoke a reaction. So what? I think it should. It is a way to be heard.
We can’t expect everyone to agree on each of those creative means to carry our voice forward and it does not mean that the placard of Billy-next-door is a reflection on what we all stand for. We all have our own individual way of expression, shared by other groups or not, and we should remind ourselves that we are marching for the same goal: Pro-EU / stop Brexit > which are both about MAKING OUR VOICE HEARD whatever slogan one chose or art form used.”
Nonetheless, the satire also made the point that most provocative art and humour do, that life is sometimes messy and uncomfortable, opinions differ and divide; it was certainly a talking point – whether it was Remainers shooting themselves in the foot with a tactless float, or Brexiters committing political suicide, we’ll have to wait and see…
The float is currently on a British tour and arrived in Norwich on the same day as the BBC’s Question Time took place at The Open.
Satire or Serious Message?
Düsseldorf’s Karneval regularly features political satire but this year with Donald Trump, Netherlands’ Wilders, France’s Le Pen, Turkey’s Erdogan, along with Britain’s Brexit, there was plenty of material.
The stodgy stereotypical image of German humour is clearly way off the mark as these floats were right up Charlie Hebdo‘s street and could have walked off the Spitting Image TV set. Humour, like art, both protests and provokes. I hope the conversation shifts away from the rather visible satirical attack on Theresa May and instead remains about the political and personal damage that Brexit may do to European relations and EU nationals living here, as well as threats to Britain’s prosperity and cultural tapestry.
Norwich Anti-Austerity Protest
The serious message about austerity and cuts and their impact on the disabled, the poor, and the most vulnerable was also protested outside the BBC filming by Vince Laws, Jan McLachlan, Tim Hughes and many others.
“If the system cripples you, you must cripple the system” – Oscar Wilde
OK, so Vince made that one up, but the #fakenews quote got you thinking and googling its source! What Oscar Wilde did say was – “Quotation is a serviceable substitute for wit”.
I voted Remain and I still feel more European than British, a global citizen, part of the forward thinking age of inclusion, diversity, and multiculturalism. I try to take the best human parts of globalisation from its worst capitalist components. BBC Look East interviewed me today about Brexit to go out on the evening news tonight, unlike the poor BBC coverage of the 100,000 march in London last week, at least local news are covering people’s views about Article 50 and concerns for their fellow Europeans living locally who feeling like political pawns, now entering 2 years of uncertainty for their families and jobs.
A new politics
As Britain triggers Article 50, Leave & Remain are the new dividing lines tearing up the old political party Left & Right rule book. Nationalism (good and bad), and broader consensus politics that is pro-internationalism, pro-migrants, more concerned about others than self, believing in the need for a rainbow coalition rather than party first electioneering. Being pro-EU has become a new political movement, just as UKIP was anti-EU. When Tory old guarders like Michael Heseltine are on the same side as Labour and LibDem remainers, you know something has shifted.
Article 50 “the biggest sacrifice of British sovereignty and self-interest that I can remember…losing control over the conditions in which British companies trade and operate in our biggest market…all the stuff about gaining sovereignty, putting ourselves in charge, will be exposed for the hypocrisy that it was…” – Michael Heseltine
Norwich, which voted 56% Remain and feels like more because of its welcoming attitude to foreign nationals who quickly feel at home here, is also home to Archant newspapers and their New European newspaper launch. A paper for the 48%, for those anti-Brexit, anti-Trump, anti-Le Pen and the direction some politics are going.
The resistance to change, not only from Remainers not wanting to seemingly go backwards, is evident in the unexpected 52% who voted Leave, who had many reasons for their decision. Among them, legal sovereignty, immigration, and yes some xenophobic racism, but perhaps for many a preference for traditional Britain, without too much further integration of diverse peoples, cultures, languages and the changing landscape that comes with it. The Remain campaign emphasised economics in their failed “Project Fear” advertising and yet just 2% of Leavers cited economics as the reason for their vote. Vote Leave had its own issues around false advertising – we’re still waiting for that mythical £350m a week for the soon to be lacking EU workers NHS. Both Leave and Remain campaigns were riddled with lies, damned lies, and statistics that led to project fear of immigrants v project fear of economic loss.
“We’re going to build a stronger, fairer Britain” – Theresa May
Fairer to whom, Britain first? Stronger for whom, against those who are already weak?
I remain worried about the narrative of “Britain First, make Britain Great again” which echoes Trumpism, and its anti-migrant, xenophobic language, building walls not bridges, pulling up the drawbridge and retreating to an island mentality, pre-WWII, pre-globalisation’s understanding of this internet and fast travel age.
I remain concerned about the new dividing lines, of Leave and Remain, instead of a unity that was continentally broader than our small sceptred isle. We are now fighting among ourselves to keep the Kingdom United. Scotland has every right to leave, as we have voted to leave the EU. I’d rather Scotland stayed, I’d rather the UK stayed within the EU, but I’ll support Scotland’s right to leave, does that make me a hypocrite, perhaps, it certainly makes Theresa May one for pushing through Brexit but blocking and delaying #IndyRef2.
“We are one great union of peoples and nations” – Theresa May
At a recent ComRes polls Brexit Britain data event it was revealed that of those that thought the following were negative factors for ill in society, the majority were Leave voters:
When 70-80% of the people who essentially oppose diversity and equality, and the modern global movement and communication age, are Leave voters, you can see why age, education and tradition factors were so prominent in voting intention.
Once in a lifetime decision
Age, education and rural versus urban dwellers, were the demographics most prominent in those that voted Leave. Take the vote again in even 5-10 years and the majority would probably vote Remain. Sadly, Article 50 is a once in a generation vote, although nothing is stopping us from applying to rejoin in the future, it would never be the great economic deal we once had.
As much as World War One and Two, were drawn up along divided national lines, the European Union provided the opposite. A unity of nations bringing prosperity and preserving peace from once warring nations. Indeed, Winston Churchill had called for a “United States of Europe” although did not see Britain as a part of it. The Council of Europe (1949) in turn led to the European Coal and Steel Community (1952) and to the Treaty of Rome forming the European Economic Community (1957).
I’m pragmatic about the future and still believe that at an individual, local, and national level we can speak positively to the benefits of European and international freedom of movement, exchange of ideas, culture, education and the arts.
Business will always find a way to make the best of it, we’re a nation of entrepreneurs and shopkeepers (as Napoleon or Adam Smith once said), my concern is for the people, the students, partners, migrants, artists, and the leavers – ironically, many of whom may be the worse off for Brexit.
Osborne & Carney try to stabilise markets … and fail, at first
As George Osborne, David Cameron, Boris Johnson, and the Bank of England’s Mark Carney rush to reassure the financial markets – the Pound, the FTSE, and the UK’s sovereign credit rating all dive. Sterling has been battered and remains at a 31-year low, the FTSE 250 has witnessed in as many days two of its top-five one-day losses, and S&P have trashed our credit outlook by two-notches, increasing borrowing for the Government and businesses. A second BoE reassurance on Tuesday 5 July caused the FTSE 250 and Pound to dive further.
Former Governor of the Bank of England, Mervyn King essentially said “Keep Calm, Don’t Panic”:
“Markets move up, markets move down. We don’t yet know where they will find their level…What we need is a bit of calm now, there’s no reason for any of us to panic.”
Was this just a two-day shock? We haven’t seen all out financial Armageddon, but just what are we getting, and for how long?
As of Tuesday 28 June morning, adventurous investors were buying into the flatlined market and the FTSE 100 was up 2% and FTSE 250 up 3.3%, although within the hour the gains had fallen back to 2.6-2.8% – still 11% down since the Referendum. At the close it was 3.5% up, restoring a quarter of its Brexit losses. To quote the Financial Times, Markets Live blog:
“It’s still a bloody mess, even if markets have steadied.” FT, 11am Tuesday 28 June
In the first hour of Tuesday’s trading the Pound was up just 1%, barely 1.5c higher after its 18c fall, but by 10.30am had lost half that gain already, only to regain it after lunch and lost most of it by 5pm. There has been no recovery against the € Euro.
By Wednesday 29 June midday, the FTSE 100 had recovered all of its losses, whilst the FTSE 250 remained 10% down.
It could be, too, that the market is recovering on the news that nothing will happen in the short term, that Brexit reality is delayed, and won’t kick-in properly till after Article 50 is actioned and up to 2 years later Exit terms agreed and then years worth, but some counts 5-10 years, of negotiating new trading terms with the EU and some 50 agreements with the rest of the world that were based on our membership of and access to the European Single Market.
Thursday 30 June saw previous day gains restore the FTSE 100 to parity and by the close it was 2% above 23 June’s high. Whilst the more British based companies index, the FTSE 250, remains 7% down despite two more days of gains. It has gained 8.5% or 1300pts up on 14,967 since its low point on Monday. The Pound:Dollar exchange rate added 2%, lost 1% overnight, then made it back by lunch but after Mark Carney said financial easing might be required and Boris Johnson ruled himself out of the Conservative leadership, the Pound lost all the week’s gains, falling another 1.5% and remains 12% down.
In a Radio 4 interview early this week, George Osborne repeated his claim that Brexit “would make Britain poorer” and lead to “an economic downturn”.
Mark Carney had been accused of breaching the Bank of England‘s (BoE) independence by commenting quite forcefully pre-Referendum that Brexit might trigger recession. So, for him to say we are “resilient” now, is a little “flip-flop” but he did say that in the long term growth would be slower and the Bank could only “mitigate” against negative effects rather than resolve them. Mitigation includes the possible injection of £250bn.
The £ Pound on Monday did not rally against the $ Dollar, instead, it continued its slide to around $1.31, nearly 13% off its 2016 peak to which it had risen on the short term belief that the UK would Remain. Instead, it has settled at its lowest level for 31 years, despite a 1% recovery on Tuesday morning. A week later, and by Wed 6 July Sterling dropped as low as $1.28 and is now hovering at $1.29, a 15% devaluation.
Sterling is predicted to fall further to around $1.15-$1.25, a 20-25% devaluation. This could add 15-20p to a gallon/3-5p a litre to the price of petrol within the month, as oil is priced in Dollars. There could be an 8% rise in food and drink prices imported from Europe since at €1.17 the Pound is 23% off its Euro peak and nearly 9% down since Thursday.
Global Stocks and UK Shares
Some $2.5 trillion was wiped off global markets in hours after the Referendum result – between 100-400 years worth of the nobody-can-agree-on-the-actual-figure of UK contributions to the European Union. Seeing £100bn wiped off leading FTSE companies in 2 days is way more than the £350m a week (less than £10bn/year after rebates) supposed EU savings, i.e., equivalent to more than a decade’s worth of EU contributions. So no new money for the NHS then!
Stock markets in the poor-performing economies of Europe, e.g., Greece, Italy and Spain, tumbled 12-15% on Friday, other world markets fell 3-8%.
Italy announced a €40bn rescue of its banks after they lost a third of their value post-Brexit vote, despite a 5% bounceback they remain over 25% down since Thursday, June 23.
FTSE 250 as UK Financial Indicator
A far better indicator than the FTSE 100, which has ‘only’ seen 2-3% daily falls since Brexit and a 2% recovery on Tuesday, is the FTSE 250. It is made up of more mid-size predominantly British companies with 50-70% UK-based trade – the powerhouse of employment in the UK. Some 75% of Small and Medium Enterprises (SMEs) voted Remain.
The FTSE 250 has lost over 14% since Thursday’s vote, reaching 7% late-afternoon, continuing its near-8% slide last Friday when, at its worst, it dropped 14% in hours – its “worst drop ever”. It’s nearly 20% off its peak due to Brexit uncertainty over the last few months, its worst crash since 1987. During the 2008 crash, over a number of months, it lost nearly half its value leading to lay-offs. recession and austerity.
As to the financial market reaction not being as bad as 2008, that is not yet evident. The FTSE 100 is insulated by its international makeup but the FTSE 250 is more British. Back in October 2008’s crash it suffered a one-day fall of around 6.5% amounting to nearly 40% over 3-4 months. After the Referendum, it’s lost 8% and 7% across 2 days. It’s fourth and fifth biggest one-day falls ever from Sep/Oct 2008 have been eclipsed by Brexit day 1 and day 2, so far. This is the worst FTSE 250 crash since 1987, although Brexit days 3 and 4 are looking brighter, having recovered over a third of the losses, yet it remains 10% down, despite 1.9% gains Wednesday morning. A week later and by Wed 6 July, the FTSE 250 was down again drifting towards an 11% loss, eradicating any intervening recovery,
The FTSE 350 lost £140bn in a day, recovered, lost it all again by 4.30pm Monday but has now recovered 5% from its 7% loss.
Banks (domestic and foreign) in Britain have been told by EU members France and Netherlands that they will not be able to use the European financial ‘single passport’ access to unhindered trading resulting in additional banking costs and a reduced incentive for US and Asian banks to be based in the UK – Dublin, Frankfurt and Paris, are suddenly more attractive and expected to gain financial jobs from the City of London. Barclays and Royal Bank of Scotland (RBS) have lost 35% in value since Thursday and had their shares temporarily suspended on Monday. On Tuesday there was around a 5% recovery.
Whilst many 99%-ers on the Left might celebrate another banking collapse, those businesses that employ millions depend upon a stable lending banking system to finance their growth and pay wages.
The costs of imported raw materials, food, wine, petrol etc could rise 10% because of the Pound’s fall alone. If British businesses selling at home want to keep prices the same, they will have to cut back office costs and jobs instead. Yes, we will recover, but book a “one-way ticket”, to quote George Osborne, for more austerity, unemployment and inflation pain first.
House prices may fall in the short term according to Savills but so will affordability, mortgages, and lending criteria stress tests may rise. International buyers may take advantage of a cheaper Pound to buy here, whilst locals are priced out of the mid-market. House builders have seen significant share price falls and the FTSE triggered its ‘circuit-breaker’ to suspend trading in all house builders temporarily. For instance, Taylor Wimpey fell 16% (40% since Thursday), Persimmon 17.4% (38% in 2 days) and Barratt Developments fell almost 20.7% (38.4% in 2 days), Bovis Homes 33% in 2 day etc. In addition, with the credit rating trashing they will find it harder to fund new building developments, further intensifying our domestic housing crisis.
Radio 4’s You and Yours is reporting people seeing immediate 5% drops in house sale prices due to Brexit – ‘Brexundering’.
We could eventually see a quadruple-whammy of wage restraint, credit crunch, inflation and interest rate rises, affecting house buyers and stifling the pressured renting sector too.
It has been reported that particularly those living abroad may lose UK annual increases with inflation to their pensions, but also those at home might lose the “triple lock” guarantee. Pension funds held privately on the stock market will obviously go up and down with the fortunes of the FTSE, currently down. Of course, Leave leader, Boris Johnson said pensions would be unaffected, he also said the NHS would get £350m a week and that among many pseudo-promises has already been pulled.
Credit Rating and Economic Outlook
After the Brexit vote, Moody’s changed the UK credit outlook to “negative” from stable. Fitch see it likewise and downgraded it to AA negative. Today, Standard & Poor (S&P) have followed suit and downgraded our last remaining Triple-A national credit rating two-notches from AAA to AA:
“In the nationwide referendum on the U.K.’s membership of the European Union (EU), the majority of the electorate voted to leave the EU. In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K. … The vote for “remain” in Scotland and Northern Ireland also creates wider constitutional issues for the country as a whole. Consequently, we are lowering our long-term sovereign credit ratings on the U.K. by two notches to ‘AA’ from ‘AAA’.” – S&P
“Fitch has revised down its forecast for real GDP growth to 1.6% in 2016 (from 1.9%), 0.9% in 2017 and 0.9% in 2018 (both from 2.0% respectively), leaving the level of real GDP a cumulative 2.3% lower in 2018 than in its prior ‘Remain’ base case.” – Fitch
“S&P maintained its negative outlook on the UK, which means there is a one-in-three chance of another downgrade in the next two years. The UK is now deemed less credit worthy than the US and EU by S&P, and the decsion marks its exit from an elite club of countries such as Switzerland and Australia that stil have a AAA rating.” – Daily Telegraph
A survey of 1,000 directors at the weekend reveals that roughly 20% are expecting to issue redundancies, over 20% are freezing recruitment, and 20% considering moving some operations to Europe.
Worst Economic Crisis since WWII
A former Organisation for Economic Cooperation and Development (OECD) economist has warned that the UK faces its worst economic crisis since the Second World War. It is certainly on track to challenge 2008’s banking crisis and 1987’s Black Monday crashes which saw £63bn wiped out. Other crises include the 1974 General Election which saw one-day losses of 7.1%. Back in 1929 the Dow Jones witnessed a 22.5% drop in a single day.
Always Look on the Bright Side …
Yes, we will weather it, and in the long term it may make little difference, but the short-medium term is going to be harder. We still have to pay into the EU budget, but will begin to be shut out of meetings and decisions, we will still have freedom of movement and migration for EU citizens for at least 2 years, if not beyond if we follow the likely Norway or Swiss models. It is highly unlikely the EU will allow us the Canadian model, indeed Angela Merkel said today that the UK would have to accept freedom of movement. The EU do not want to encourage other exits. Many are trying to find legal ways to vote out of the Referendum result.