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.

We need Opposition!

There has never been more need of a strong opposition than today – and that’s true for many countries and regions in the world, all at once. As I see the change, driven by political movements across the world, sweeping the status-quo altogether, I am horrified at the prospect that there is so little in the way of political opposition.

Brexit is a prime example of this. The UK needs a stronger than ever opposition from the Labour party but they seems to be in tatters and are not able to provide the strong front that is needed to keep some of the government activities in check. They have failed to deliver completely and despite me being a conservative supporter, I am not liking the prospect of giving a free rein to the government on matters of such significance such as our relations with Europe and the shape of our country going forward.

The US is another example where the Democrats are scrambling to put together a front which allows them to face off to the newly elected president. They are rudderless, leaderless and that is not a good outcome – particularly at this crucial juncture of the American history.

In the middle-east, we are seeing opposition either being crushed or not allowed to originate by the autocratic ‘rulers’ of some of these countries. The impact is in front of everyone – chaos, crime, loss of humanity and loss of world order.

In countries like India, the ruling party is solidifying its position – not all of which is a bad thing. What is troubling, however, is that there is just no opposition. No matter how strong or sensible a government is – they will inevitably make mistakes or introduce policies which relate to their ideologies and beliefs, not all of which will be sensible. There is just no opposition at the moment who can challenge the government and provide a sounding board for policies.

Its surprising, perhaps not, that all of this change is coming all at once – in every part of the world. May be we overlooked the need for change, may be people are frustrated at how things are working out (or not) for them, may be there is a lot of discontent (clearly). But do we all know which direction are we walking? Do we know what the other side of the tunnel looks like and if that is going to be the answer to all our anxieties and frustrations?

It has taken decades for us to get to this position where change has arrived. I don’t know how long it will be before we see a reversal of trend. One thing I do know is that it takes time to embed change which means the society will have to be ready for bumps along the way.

Momentary celebration of victory is all good, but we better have a plan for future. So far I’m not convinced that those who promised the moon have a scooby-doo (i.e. any idea!) of how to fulfil those grand promises.

10 more sleeps

I’ve been thinking of a way to start my post in a positive way but words (and thoughts) aren’t helping me, even amidst the festive cheer. To some, this countdown may seem double what they would’ve expected but this clearly isn’t towards Christmas. Rather, this is an eagerly awaited departure for 2016 – most likely a historic year and not for all the good reasons.

Looking back at it, I just cannot believe what the world has gone through this year and the tumultuous reign this year has had over all good fortunes which were wished when we embarked upon this year. Right from geopolitical crises to ‘populist’ movements to politics being turned on its head to Europe facing acute challenges (security, economic and political), 2016 has had it all. And we have probably witnessed a stream of activity we all wished we hadn’t.

What wish can we make for 2017? Well, for starters, anything could be better than 2016. But is that really true? I don’t know if we’ve either seen the worst or have become immune to the multitude of awful things which we’ve encountered. Whatever it may be, my hope for 2017 is that humanity prevails and world order is restored. The deaths, killings and sufferings need to stop. The uncertainties of the world today are not helping anything – trade, politics, economics, happiness. Happiness, because the sense of insecurity that exists in societies today isn’t a breeding ground for healthy living.

Even if it was a year for some to rejoice given how politics is being reshaped in the West, the consequences of this movement are still to be witnessed. So here’s my second wish, which is that I hope that all the rhetoric of this new political class is just that, rhetoric, and that it doesn’t become reality. Prosperity was never achieved by being exclusive. Nationalism and protectionism isn’t the way forward in a truly global world and now, more than ever, the world needs to come together to heal. There are more pressing problems than us rejecting people and globalisation.

I dream of a 2017 which gives us cause for joy and happiness. It is only after 2016 do I know how much even smaller things in life could give you inner peace. There are so many more things I want to write and so many more wants and wishes and hopes, but I think if 2017 can make the world a better place than it is right now, I will be happy.

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

 

A final responsibility to continue on the path to Greatness

After an overwhelming majority of Scots delivered an incredible verdict on the hard fought and well argued Scottish referendum, its now the turn of the Great British public to continue the momentum to greatness. Elections 2015 are one of the most critical elections in recent history, one that would decide the track our country follows in the years to come.

There has been a lot of hard work that’s gone in over the last parliament to get the country back on its feet and make it the fastest growing economies amongst the advanced economies of the world. This was not an easy feat to achieve in midst of record deficit, world-wide recession and a hard pressed, cash strapped, highly indebted population up and down the country. Yet – the Conservatives delivered a performance that has been matched by no other country. The government held to its policies and decisions even as the IMF and other respected think tanks criticised its fiscal and monetary policies and scrutinised the economic impacts they had. Plan A worked well indeed!

This is all in contrast to what Labour has done in the past and what it stands for – a deficit ballooning party that still believes in buying its way out of tough times. Looking at the achievements of the current Conservative (in a coalition arrangement with the Lib Dems) government, its clear to me that the way forward is to carry on the momentum we have got and not to stray away from the already successful policies in place.

We are an aspirational society that has historically been successful of the back of the creativity, ingenuity and hard work of the many communities across the country. Over the last 2-3 years, we have re-established that strength. UK is now the entrepreneurial powerhouse of Europe, we have booming industries, we have a strengthening financial industry – all of which is creating more jobs and allowing people to be aspirational once again.

Going back to Labour will mean going back to the old days of borrowing more to spend – only for the future generation to again suffer due to the mistakes of current generation, something that we have all witnessed very recently.

We have a final responsibility of voting  sensibly – voting for a government that has a stable set of policies, that has a proven track record and that is committed to bring back the Greatness to Great Britain. Let’s make it happen!

#Conservativesfor2015 #Elections2015 #DavidCameron

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.