Are we sleep walking into lunacy?

A newspaper article today was headlined, ‘MPs walk out of committee after gloomy Brexit forecasts’. I must admit, its not been easy reading newspapers and other media of late. It forms a depressing start (and end) to the day, particularly as I have been a fervent supporter of UK’s continued relationship with Europe. And given the uncertainties surrounding the future of our nation, none of the commentary is stable (no matter what side of the aisle you sit).

But I have also been a believer that one must read / listen to alternative views to get a more balanced view on things as there could be some merit in the opposition (which I completely agree with and my last blog was on the importance of a strong opposition). And reading alternative views in today’s world isn’t a hard task – the media has become more partisan than ever. Brexit debate certainly has divided us and our thoughts like never before.

As the Prime Minister triggers Article 50 today, the next couple of years will not be comfortable either. Perhaps more uncomfortable than the last few months, although I hope that’s not the case. Change is hard but change of such magnitude can be devastating too – there’s a very fine balance. It won’t be easy for the ministers to come up with plans which fulfil their promises during the Brexit debates. Now is the time to make true those fiscal, societal and regulatory statements which proved to be the steroids of the Exit campaign.

The Great Repeal Bill will bring into UK statute around 19,000 European laws. Some say only for the UK government to ease it for the UK businesses. What does that even mean? Firstly, how long would it take for us to get to a point where that is true and secondly, what happens to those businesses who are reliant on exports into the EU? For the industry I know of, there is talk of equivalence or passporting of EU regulations in order for the banks and other financial services participants to continue doing business in the EU markets. Not that I know much about farming, dairy and other such sectors, but would those businesses not need to comply with European laws, standards and regulations if they want to export goods into those markets?

Some estimates suggest that there are more than £100BN of costs to comply with EU laws on an annual basis, which might be true. But how much of it is really removable?

There are clearly lots of questions and I’m merely skirting on the surface with mine. In the next few years, we are going to have to redefine the business model of the UK. Globalisation is here to stay (despite the rise of populism) and any future shape of our economy must be ready to accept that as a fact. A standalone country with no trade barriers, reduced regulation and low taxation – a model which could work but what does that mean for immigration which has been at the heart of the Brexit debate? To what level can we only have skilled labour as part of our immigration policy? What would that do to the cost of living and the living standards across the country? Is that even a model which would pass international test? Would the nations be willing to give us a free trade pass and also accept our tough stance on immigration? May be, may be not. We don’t hold as much clout as the US in terms of economic power or the size of the consumer market.

We either will come out as smart negotiators or realise quickly that something’s got to give. Businesses don’t like uncertainty. People don’t like change. Demographics are hard to reverse. A smooth transition would mean overcoming all the barriers imaginable – and it would be very important for the economy to not have any bumps along the way.

A hard task indeed – but I hope not something that ends with a hard Brexit.

It’s time we gave this a serious thought

UntitledWith the impending EU referendum vote on June 23, the activity on both sides of the campaign is reaching fever pitch. I’m pro-EU and with all its flaws, its still a union which allows us to trade freely in the world’s largest trading blocs. And for the UK, this trading bloc is vital given the level of our exports into the EU (with about half of all UK exports going to the EU).

There have been many studies recently outlining why leaving the EU would be disastrous / catastrophic etc. etc., so I won’t go into all the metrics and people’s arguments that those studies are projections and we all know how projections can go wrong (no one projected the downturn of 2008!). But I would like to point out some highly likely outcomes in case we take the disastrous decision of leaving the EU. Some possible scenarios below:

  • Cost of living could go up as the sterling depriciates (based on recent market movements – so not projections)
    • Sterling has seen a huge amount of volatility in recent months, with recent reduction in value driven by market worries about UK leaving the EU
    • Insurance against moves in sterling against the dollar has reached the levels of 2009
    • The cost of your basket at the supermarkets could go up, holidays will become expensive
  • Tax receipts would be hit hard, investments into the UK could be reduced, consumer spending could take a hit – all this takes me me back to the not-so-good-memories of 2008
  • This will be a big shock to the economy when we are just getting out of the previous recession
    • Various estimates suggest that the UK economy, along with the EU economy, is expected to shrink for the next few years
    • It’s the uncertainty and negative sentiment that hits the markets more than the fundamentals; the market sentiment is against UK leaving the EU

Brexiteers call this fear tactics / scaremongering, but this is the reality we’ll have to live with folks. Consequences are not the most attractive, with potentially significant negative implications on the economy and even a question mark over the union of the United Kingdom (will the Scots rethink their decision of staying the UK if we were to leave the EU?).

As Great as Great Britain is, the world now doesn’t work on an isolated basis. We live in a connected global economy with a globally mobile population and shared economic fortunes (at least for the more developed economies with spill over effects of ill health of one felt on another ). We may be the world’s fifth biggest economy, but there’s a reason we occupy that position in the world and receive the investments we do – the UK plays a vital role in a connected world and is at the centre of activities of some of the most important sectors (e.g. finance, tech). We dare not move away from that advantageous position.

It’s time we think through this most important decision of our generation (or for many generations to come). This is a structural shift, not a short term decision while we assess its impact. This could change our world as we know it – working together to address the issues of today to build a strong future is far better than being observers from the outside as the world reshapes itself, without us.

 

 

Source: Photo courtesy StrongIn.co.uk

 

My various conundrums – and myths

As a number of management consultants may feel, I also think that I don’t have enough hours in the day to manage both my personal (and social) and work life. Work life balance, or work life quality as its increasingly referred to now, is hard to achieve but not impossible. My work place has started placing a strong emphasis on this measure of a consultant’s life – which has been gratefully welcomed.

However, I have grown up in an environment where I always found myself working extremely hard (sometimes more than 15 hours a day) and somehow this started to feel ‘normal’ to me. Thankfully, the various career progressions I’ve had over the last few years mean that I don’t have to put in as much time now, but I still find myself starting at 6am and not knowing what time I’ll actually finish.

As a result, I have found it hard to accomplish what I want to on a personal side. This mainly refers to keeping fit and healthy. My health has taken a serious beating over the last few years – I used to pride myself with not getting sick at all vs. catching cold or something else every now and then in my current shape. My body needs a bit of TLC but I struggle to find time for it (or try hard to make time).

I’ve been reading a number of interesting articles on time management and personal blogs of successful leaders and executives who make it a habit to look after themselves. Even in my office, I see a number of my colleagues running / cycling to work or taking the time in the afternoon to do so – which has given me some inspiration. Increasingly also there is a greater amount of quality content out there which talks about making the most of the short amount of time available to you to get yourself in shape and become active.

My conundrum still is making time for ‘myself’ and ensuring that I have a longer and healthier career. I think I have to cull the myth that the only way to be successful is working 15-16 hours a day – there are a number of successful people who manage time much more efficiently. I have to take some learnings. Management consultants also need to consult themselves on sustainability and growth – of their own lives.

Ensuring a sustained, well balanced economic recovery

There’s one big outstanding question in my mind re the sustainability of the UK economic recovery. Agree that the economy is doing much better than it has done over the last few years, agree that the confidence has increased (both business and consumer) and agree that we are seeing a record amount of entrepreneurial activity in the economy (read start ups). But how sustainable is this growth given what I believe could hamper the consumer spending power over the coming months and years?

There are some key economic, policy and geopolitical changes that will hit the families’ real income. Interest rate rise is going to add to the monthly mortgage and other credit bills. The ongoing price wars by the supermarkets is unsustainable. The conflict in the middle east is, at some point, going to hit the oil production and supply.

All of the above and more (read recent price hikes in rail fares for 2015 and other inflation linked annual price rises) will have a significant impact on the disposable income of most families. Even more challenging would be the timing of of some / all of the above (potentially in quick succession of one another). Families will have to adjust and adapt their monthly spend in order to accommodate these which will in turn impact their ability to sustain the level of consumer spending we have seen since last couple of years.

The saving grace would be an increase in real wages – something that the working population has not seen for many years now. UK has become a hot spot for start ups in Europe and there has been a steep rise in the number of entrepreneurs over the last 2-3 years, a trend that I believe has been a result of the below inflation (or even stagnant) salary / wage rises.

Government, policy makers and businesses alike must ensure that the economy is well positioned to sustain these monetary shocks, specially given the probability of all of these happening in close proximity with each other.