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The Financial Ironmonger Blog No 19/2017

The Financial Ironmonger Blog No 19/2017

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.


I am sticking with my belief that politics will be at least as important as economics, in the short term, but the situation is getting harder to read by the day. The Cabinet has been locked in talks about what type of arrangements should be in place after the UK leaves the EU at the end of March next year, about which there would appear to be no agreement.

One side wants to maintain the existing position, albeit called something else, whilst the other wants the least interference possible. As such, for all the semantics, nothing has really changed since Article 50 was triggered, except that the PM threw away her majority in a needless election. The results of the local elections last week confirmed the message from the electorate.

70% of them want Brexit sorted, according to the polls, and marginally they would rather have Theresa May in charge  than Jeremy Corbyn, They want neither a hard deal, nor a soft one, just one that works. Next year will mark the 50th anniversary of the first landing on the moon, using technology that had been fifteen years in the development; it is incredible how basic the kit was.

It must, therefore, be possible to design a frictionless border system, without too much difficulty, but I guess that whilst everyone at NASA pulled together to make it happen, this deal features lots of conflicting interests tugging in opposing directions. The EU have made it perfectly clear that neither of the above options are acceptable to them, sticking to the line that you are either in or out.

Brinkmanship, with the clock ticking, but it would have been naive to expect otherwise. The problem is that the UK does not have a settled position on what it wants, apart from that it wants it settled, and as the clock ticks, the splits are beginning to show. The Foreign Secretary called the fudge option “crazy” in print on Tuesday, leaving no room to row back, and yet he remains in post, at the time of writing. The whole thing is coming to a head, and the consequences are totally unpredictable.

Meanwhile, the European Commission has been preparing for our departure by publishing the multi-annual financial framework which runs from 2021 to 2027, otherwise known as a budget, even if it sounds more like a soviet-era centralised plan. It is thought that the effect of the UK leaving is a 94bn euro hole on the income side, so you might expect a trimming of the sails, at the least.

Not so; the Commission wants a bigger budget for a smaller state, albeit it that it proposes a 5% cut in the Common Agricultural Policy, which still consumes 40% of all spending. The French are unlikely to be impressed. To raise some more money, known as new “Own Resources”, they will take an increased share of tariffs, and a 3% clip on the new Common Consolidated Corporate Tax Base to raise 22bn euros a year.

This refers to the unified rate of Corporation Tax that they want to introduce right across the EU, and has obviously not been spotted by the Irish, who have been too busy hiding behind nanny over the border negotiations. Oh, there is also a new idea of “conditionality” whereby those states that step out of line will have funding withdrawn, Hungary and Poland take note.

Given that all 27 states have to agree the proposals, somebody has a tough job on their hands.


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.