The headline in The Times here last Monday was “Britain is no longer safe, Trump warns Americans.” We’ve been Trumped, again. Maybe the Tr-man meant another Br-word, Brussels.
The terrorist atrocities of March 22 in that city are an outrage, of course, and another unwelcome reminder of the fragility of the times. Let us hope that the Belgian authorities succeed quickly in apprehending the remaining survivors of the suicide bombing teams and anyone who helped them, actively or not. Certainly, the country and its security forces must now seek to regain the confidence of fellow European Union member states, and their populations, that they have the problems posed by their longstanding Walloon/Flemish cultural and linguistic antagonisms (with a name like mine, you can probably guess which side of that divide I’m on) and their imported and restless ethnic minority communities in hand.
But the Br-word on investors’ lips across the world is not Britain or Brussels but Brexit. The United Kingdom will be holding a referendum on E.U. membership on June 23, and the outcome is impossible to predict.
The question that U.K. voters will be asked to answer is: “Should the United Kingdom remain a member of the European Union or leave the European Union?” A Brexit poll tracker in The Financial Times shows an overall 45 percent in favor of staying in the E.U. and 42 percent in favor of leaving, leaving 13 percent undecided. Of 42 polls carried out so far this year, 24 found a majority for remaining and 14 for leaving. Four were tied. A simple majority on the day is all that is needed.
There are still almost 12 weeks of campaigning to go and much can happen. So far, neither side — the Brexiteers or the Remainers — has made a convincing case or produced decisive arguments. The numbers of voters who are undecided is significant. There are suggestions that Brexit supporters — generally older and more motivated, for they can remember how much better (ahem) things used to be — are more likely to vote. Ah, the apathy of youth. But it is today’s youth that will, above all, have to live with the consequences of the vote. Live long and prosper? Maybe.
Speaking to the 19th International Hotel Investment Forum in Berlin on March 8, Roger Bootle, chairman of Capital Economics, presented a global economic outlook and took delegates through the various political and economic flashpoints around the world.
Bootle talked about the China slowdown (“just a correction. The evidence is that the Chinese economy has stabilized and the markets have got themselves worked up unnecessarily”), the oil price (“down now but it will go up again. Lower oil prices are a good thing for the world economy”), the United States (“the U.S. market is very resilient”), the euro zone (“not a good outlook. Ireland is going to be OK; its economy is open to two strong economies, the United Kingdom and the United States. Italy, Portugal, Spain and Greece, though, have a pretty grim outlook”), the United Kingdom’s Brexit referendum (“could go either way but there is a serious, serious chance that we will leave”) and the future of the E.U. (“the single biggest uncertainty is what the consequences of Brexit would be for the European Union”).
Bootle ended by suggesting that, if Brexit did happen, it could lead to the break-up of the E.U. “I’m far too polite,” he added, “to say if that would be a good thing or a bad thing.”
As for Trump’s jibe that Britain is no longer safe for Americans, a writer to The Times’s letters page pointed out subsequently that gun murders per capita in the United States between 2012 and the start of this year were 2.9 per 100,000, compared with the United Kingdom’s 0.1 per 100,000, so almost 30 times higher. Trump that.
The United Kingdom will have its in/out vote in June and the United States will have its not-much-of-a-choice, you/certainly-not-you presidential vote in November. Whatever the outcomes, both are likely to prove significant for the future progress of the western world. Certainly, investment markets could be volatile either side of both the votes. For the brave, volatility equals opportunity.
In both cases, neutral observers are entitled to shake their heads and ask how the world got into this mess. Me, I’m saying nothing. Br-rr. Tr-rr.
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Richard Fleming is editor of Institutional Real Estate Europe.
