Spoiler alert, this is not going to be a bright and breezy post for your Tuesday morning read!
The national mood could not be lower than it is right now
Well, last night I think I watched perhaps the worst game of football I have ever wasted my time on. England were beaten 2-1 by Iceland, who, lets be honest, deserved to beat us. We looked completely and utterly clueless. No passion. No ideas. No energy. No direction. Every single overpaid player let us, themselves and their country down.
Now usually, I wouldn’t be starting a post with a report about a football match. But England’s worst ever defeat in a football match rounded off a Monday which oversaw yet more chaos both on a political front and a business front, and of course the two are very much interlinked.
With pretty much all of mainstream politics determined to tear itself apart, someone needs to do something, anything, to stem the creeping uncertainty and panic.
It’s all about uncertainty
What has caused the currency and markets around the world to drop steeply in value is down to the uncertainty ahead, not the actual act of the UK leaving the EU. The uncertainty has been caused quite simply because no country has left the EU before. This is a first and no one really knows what Brexit looks like.
The worst thing in the world for stock markets and business is uncertainty. If they don’t know what is going to happen, traders are going to vacate risk assets and plough their money into safe havens like gold and miners. This drains all major stock markets and the Sterling in our case, of value. The knock-on effect of this if this becomes prolonged are pensions will be hit as many pension funds are held in high value stocks on the FTSE. Ripples from this will then start to filter into public and consumer confidence – not something the window and door industry wants.
What has infuriated me over the past 24 hours is the lack of any direction from any side of the political spectrum. It would be easy to blame the Leave campaign, but they’re not the ones in charge. It is Number 10 and the cabinet that is in charge of running the country, and no matter what the final outcome of the vote was, be it to stay in or two leave, there should have been a plan to deal with the aftermath.
As we are now seeing, David Cameron did not have a plan. Instead, he chose to step down, creating a power vacuum behind him that the rest of Government was ill prepared for. This spectacular lack of planning and contingency is what has led us to this point.
Swift leadership required, nothing forthcoming
What we are now left with is a Conservative Party that looks like it is going down the route of a leadership contest which could take 9 weeks to wrap up, and a Labour Party which seems unable to stop their imminent decimation due to a leader who refuses to resign and a shadow cabinet in continuous walk out.
In my opinion, a leadership contest within the Tory Party right now is the worst thing to do right now. By choosing to run this contest it means we won’t know who the next leader is. This also means that when it comes to Brexit, we won’t be able to take any concrete action as David Cameron has put the onus of triggering Article 50 onto the new leader. 9 more weeks of uncertainty is going to damage markets all around the world, especially here and in Europe.
Perhaps some stability could have been restored if the opposition could have resisted tearing itself apart. However, Labour has turned on itself and it’s leader Jeremy Corbyn. His lackluster campaigning and apparent disconnect with Labour heartlands have led much of his shadow cabinet to resign. Yet, he refuses to go. His support from grassroots members and unions means he believes he has the confidence to stick it out. On Tuesday Labour MPs will table a motion of no confidence in him. It is expected that this motion will pass. It is also expected that he will continue to resist calls to resign. He has also said that if there is another leadership contest, he will run again. With strong grassroots support and the backing of all the major unions who perversely hold the majority of votes in a leadership contest continuing to back Corbyn, Labour look stuck with a leader that might well destroy the party for decades.
The Tories need to install a leader, rather than waste time electing one. These are unprecedented times and they call for unprecedented measures. We all know in a likelihood that it’s going to be Boris Johnson. He campaigned for Brexit and it wouldn’t make much sense putting a Remain campaigner like Theresa May in charge of a party that is mostly euro-sceptic.
On Tuesday David Cameron goes to Brussels to discuss the start of Brexit with other EU leaders. However, Merkel, Renzi and Hollande have already said that until Article 50 is triggered there will be no talks, formal, informal or of any other kind. So what DC expects to gain from this meeting is beyond me.
In my eyes, what needs to happen now is a triggering of Article 50 to start the process of Brexit as quickly as possible. This would end some of the uncertainty as markets would then know a timetable and at this point some semi-concrete information is better than nothing at all. If some calm can be returned to markets then any impacts economically on the UK and Europe could be limited.
If however those who did not like the outcome of the vote continue to push either for renegotiation (which the EU have already quashed) or further referendums until they get the result they’re happy with, this will only serve to create even more uncertainty which could harm us even more.
In the end, we’re steadily descending into a right old mess down to a lack of contingency planning and absolutely zero leadership from the whole of the political class. There is no one running the country at present and until something definitive is put in place, the volatility and uncertainty we’re seeing will become the new, economically painful norm.
Sorry to end on such a bum note. I’ll try and make the next post a bit cheerier!
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I think that DC’s resignation absolutely had to happen but I believe he did it immediately in order to buy us some time to work out a plan of attack. If he was still acting PM, the EU presidents would be pushing very hard for him to enact Article 50 at today’s summit, however we’re clearly not ready for this right now. The fact that the government is in limbo gives DC the opportunity to shrug his shoulders and say “it’s not within my remit to push the big red button”. This borrowed time is crucial as there has got… Read more »
A well written piece Jason- I pretty much agree with all you wrote. George Osborne is trying to stabilise things along with Matk Carney at Bank of England- it will take a few days/weeks to get things on an even keel but I think they will do it.
PS Dont get me started on the footy
Mark, I’ve learned not to get my hopes up when it comes to the national football team! On the business front, I have been keeping an eye on what has been going on in Brussels today. Whilst our main parties squabble and flounder to pick new leaders, the EU has made it very clear that Article 50 has to be triggered, they won’t suffer months of uncertainty as we try and attempt back door negotiations to secure some sort of deal. That’s against EU rules and they will not have it. We should have had the backbone to trigger it… Read more »