Strolling round the south coast on a half-term excursion, head of fixed income Bryn Jones’ kids stumble on a bit of advice for politicians wrangling over Brexit.
By Bryn Jones
One minute they are playing together in the sunshine, all enjoying the fun of the pier. The next, they are howling at each other. One is sat on the ground refusing to budge and the other is tugging on my arm, trying to run to the distant horizon. Could be just another day at Westminster, could be a day out with my kids during half-term.
With just more than a month to Brexit, the country's politics are in a shambles. Prime Minister Theresa May has said she is “saddened” by the departure of three of her MPs, as they decide instead to make their beds with eight members of the opposition. And let them lie; the last thing the country needs now is yet another political party. So, whatever will happen next in this never-ending un-fairytale?
Unless European Commission President Jean-Claude Juncker and Mrs May can fiddle a plaster very soon, we are going to see something a lot deeper than a shaving cut. So much so that Fitch has warned of a cut to the UK’s AA credit rating. The ratings agency said its review was due to “heightened uncertainty over the outcome of the Brexit process”, concluding that “a recession on the scale of that seen in the UK in the early 1990s (when GDP declined by 2% over six quarters) would be a reasonable comparison for gauging the potential macroeconomic stress” of a no-deal Brexit. So, here we go ... the beginning of the end?
As I have said before, Europe needs us as much as we need them – even more so right now as its growth starts to fade. European banks haven’t sorted themselves out quickly enough, with lots of bad debt still stinking up their balance sheet. The European Central Bank is talking about doing more long-term refinancing options (essentially subsidising lenders), but did that work before? Doing the same thing over and over again and expecting a different outcome is what Einstein called "insanity". Now he knew his stuff and was also on the spectrum, so gets insanity.
So with questionable decision-making on both sides of the Channel, I reckon politicians from both the UK and Europe could benefit from some sage advice. They should all meet up in Brighton and consult the Zoltar Speaks mechanical fortune-telling booth my son discovered down there. The advice it gave him was definitely meant for them, not him: “You are headed for a period of introspection and reflection.”