BAB In The New Year

A Message From Duncan Edwards, CEO


Welcome back, nothing’s changed!

If you were sensible and switched off from economic and political news coverage over the Holiday and spent time doing something more rewarding, don’t worry, you didn’t really miss anything. Here is where we are: politics in the UK and the USA continue to be polarized and positions are more entrenched than ever.

In the US, the government is still closed, the administration’s efforts to re-set trade terms will continue and a fired-up Democrat house probably means no progress will be made on the two big issues that business wants to see, a merit-based overhaul of immigration and a long-term plan for infrastructure investment. We are set for a period of legislative gridlock, which, perhaps counter-intuitively, is often good for business!

In the UK, the Brexit debate blocks out the sun and will continue to for the foreseeable future; meanwhile, businesses are getting on with their planning: a recent EY report estimates that the Financial Services sector has relocated £800bn of assets into the EU in preparation for March 29th. For people still hoping to close the stable door, I’m afraid some of the horses have already bolted. The debate will continue right up to the wire, but our guess is that the Withdrawal Agreement, or something very close to it, will get passed.

As a natural optimist, I am pretty phlegmatic about all of this; of course there are important issues being debated and some businesses are having to spend time on things that are not in the ordinary course of their activity, but when you really think about it, the biggest challenges for business are in technological and cultural change, macro-economic cycles and geo-political risk of a far greater order of magnitude than Brexit or the US Mexico border wall.

Incidentally, a Russian friend of mine once told me a story illustrating what it means to be an optimist in Moscow; during one crisis someone turns to her friend and says, ‘At least things can’t get any worse.’ Her friend replies, ‘Oh, I’m sure they can!’.

Well, we are not in Russia, and our optimism should be real and founded on the strength of the UK and US economies, the natural attractions of both markets and the energy and entrepreneurialism of the populations.

And as it is New Year, how about some predictions for 2019? Here are 8 which I will make… half of which I will be pleased if they turn out to be correct!

1)     The Brexit Withdrawal Agreement will be approved by the UK parliament after some quasi-legal changes to the permanence of the Irish backstop.

2)     There will be no 2nd referendum.

3)     UK markets and sterling will rise after 29th March.

4)     There will be no ‘massive’ trade deal between the US and UK as the UK’s hands will be tied but trade and investment between US and UK will continue to grow.

5)     Trade talks between the UK and EU on post-transition arrangements will make little or no progress.

6)     China will give more concessions on trade issues, lowering tariffs and liberalizing market access.

7)     The US and EU truce on trade will end as US patience runs out.

8)     Pochettino will not go to Utd.

Happy New Year to all our members!

– Duncan Edwards