Investment Management

A Rethink and Perhaps a Redo…

A couple of years ago, our British cousins took on a populist vote and elected to remove Great Britain from the great “European Experiment”, the European Union. The English voter declared they were tired of intrusive European rules determined in Brussels, not in London. They (the Brexeteers) “wanted their cake and to eat it, too”. They wanted the best commercial deals to be had by being part of the “club” — but without the responsibilities of being a part of the “club”. That wish was always going to be denied by the rest of Europe. There is no “free lunch”. Approximately two years was the time the Brits had to negotiate their way out of Europe. It has not gone well.

Because of the seemingly lack of a united front, either in the Tory Party or the May government, or in Great Britain as a whole, the negotiations with Europe have utterly failed. Prime Minister May has been embarrassed in Parliament. Her government stays in power “by a thread”. Business in the country has ground nearly to a full stop. Investment decisions are not being made and companies are moving personnel out to other locales throughout Europe. We have thought for some time that a new referendum might be due to give the English people another “bite of the apple”. A lot of new information has been revealed since the last vote. Recently, the Labor Party has supported such a move. If given another shot, we think Brexit would be voted down and we believe British business would thrive.

The UK is not the only country today which is dealing with a bout of populism. In the name of “shaking things up”, populists have been empowered. Unhappily, the results so far have been more like the aftermath of a “bull in the china shop” than a flawless execution of a sharp change in direction. Those who vote for disruption too often forget the collateral damage on the economy. Economies and markets are complicated and delicate. Disrupt them and there will be consequences — as the Brits have discovered — as well as the Italians, the French, the Greeks, etc. Change, real change, lasting change only happens in small increments. People and investors need time to adjust to new circumstances. This is true in the United Kingdom, as it is in the United States.