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The Financial Ironmonger Blog No 17/2017

The Financial Ironmonger Blog No 17/2017

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


Now that the General Election campaign has got going, the true state of the parties is starting to emerge. An Ipsos Mori survey found that 61% of voters think Mrs. May to be the most capable of the party leaders against 23% for Jeremy Corbyn. This is the strongest ranking ever recorded in some fifty years of posing the question, and easily surpasses the 48% achieved by Margaret Thatcher at the peak of her popularity.

Asked about voting intentions 49% replied Conservative, and 26% Labour. UKIP polled just 4%, and when you think that the margin for error is 3%, it shows how quickly support has fallen away. This is no surprise given the withdrawal of their charismatic leader, but with Brexit under way, it has ceased to have a purpose, much like a Christmas tree in the middle of summer.

Those voters are clearly returning to the Conservatives, but if you slice up the poll, it shows them ahead in every socio economic and age group, bar young women, who are probably not that inclined to vote anyway. Extraordinarily, they lead in the C2DE category by 43% to 26%, the traditional Labour heartland voter. This spells electoral disaster, with the betting markets predicting that 60% of all MPs will be Conservative, and just 24% Labour. It is quite possible that there will be not much of the party left outside London and Liverpool.

Official figures released this week show that 50.5% of British households take more out of the state in the form of benefits than they pay in by way of taxes, a legacy of the dependency engineered by Gordon Brown. By the time he left office, he got that number to peak out at 53.2%, so all the talk of austerity has been just that.

The conventional wisdom is that people dependant on the state tend to vote to the left of centre, and yet even these have deserted in droves. You cannot sail against a tide flowing so fast, and there will be many very capable Labour MPs who end up on the rocks. As Fraser Nelson of the Spectator put it, if this was a boxing match, the referee would have put a stop to it; there are six more weeks to grind through.

Margaret Thatcher sacked one of her ministers who expressed his view, publically, that too large a majority would lead to complacency, but what really did for them was winning the 1992 election. Imagine if Kinnock had won, and Labour in charge when we exited the ERM.

People rightly question the validity of the polls when they got Brexit and Trump wrong, albeit that both were tight races with a binary outcome. This is not the case now, so the question is what she is going to do with such a commanding majority. Presumably, an increase in their numbers will dilute the quality, and there is hardly an abundance of it already. On top of that, her style is hardly inclusive, so perhaps it is too much to hope that there might be an intelligent debate about the future of the NHS, or taking politics out of education, both much needed.

Perhaps her energies will be sapped by Brexit, not a surprising outcome. One of the reasons for holding the election was to strengthen her negotiating hand, she claimed, and whilst no one believes that here, the EU 27 have taken umbrage, and hardened their tone, in particular the Germans. Well, they have got elections coming up in September, and they can see that they are going to get stuffed with making up the shortfall in the budget, once we leave.

Political posturing or not, I hope that someone is drawing up a credible Plan B, one suggestion being unilateral free trade, with no tariffs or barriers of any sort, which should be our response if they cut up difficult. The Irish economy shows what can be achieved in a low tax environment, before they blew it on a housing bubble, but exactly the same approach has got them back on track again.

Dancing round the Maypole is the activity of choice in 2017, it seems.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.