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The Financial Ironmonger Blog No 29/2019

The Financial Ironmonger Blog No 29/2019

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.

–THE FINANCIAL IRONMONGER BLOG NO 29/2019–

At 11.00, next Tuesday morning, the Conservative party will announce who their members have chosen to be the next Prime Minister of the United Kingdom, having ditched the present one, widely thought to have been one of the most useless in a generation. The choice is between Boris Johnson and Jeremy Hunt, the former a loose cannon, and the later probably a competent administrator.

Mr. Hunt would make a good peacetime job of it, but that is not really where we are, and the members would appear to have decided that Boris would be good front of house, backed by a coherent and cohesive team. It is likely that many of the team he built around him whilst Mayor of London will step up, once again.

The danger is that this could remove him from direct contact with his own MPs, just as May sealed herself off, before calling an unnecessary election, and loosing the party’s majority, which is when the rot set in. There are already signs that many, in his own party, will not support any plan to leave Europe without a deal, which undermines a vital part of his negotiation strategy.

Whether they would support a vote of confidence against him, thus felling the government, and causing a general election, is a different matter, but it is clear that he is treading a very fine line, difficult for someone far more used to a bombastic style.

He is fortunate that the opposition are in a total shambles at a time when they should be winning by a mile. The members are in favour of staying in the EU, whilst the voters, certainly in the north of England, want out. It is as irreconcilable as the Brexit question itself, but given the highly volatile nature of the electorate, no one is going to risk finding out, voluntarily.

Nevertheless, the Remain side have ramped up their warnings about the danger to the economy of leaving, with the Chancellor reckoning that it could cost £90bn, although it is not clear what he bases this on. Given that he is going to be out of a job next Tuesday morning, he probably does not care.

However, if we are short of that sort of sum, the obvious thing to do is cancel HS2, the hugely expensive project to build a rail line between London, and the Midlands. This is now thought to be costing more than £400 million per mile, which no report, independent or otherwise, attempts to justify.

There would, inevitably, be a cost to leaving the close relationship we presently have with Europe, but the major planks of the economy such as banking are well prepared, and pragmatism goes a long way, certainly compared to the cost of uncertainty.

Even the Irish Taoiseach has said that Ireland are “prepared to compromise”, now that the full cost of his intransigence becomes more obvious, although this would put him apart from most voters. Whether next Tuesday’s result will bring a new approach to this thorny problem will become evident quite quickly, but here is a good chance that a way can be found to lead us out of this impasse.

–MORE ABOUT OUR GUEST BLOGGER, DAVID OAKES–

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.