I confess, I was in shock on Friday morning. Now I can see clearly at least one consequence of Brexit which is unavoidable.
Inward investment into the UK will turn into employers migrating away from the UK to the EU. This will benefit Ireland and Spain I reckon. Unemployment is likely to rise. Tax revenue will fall and call for this money will increase. The only saving that can be made is to cut overseas aid but that will not solve the problem. The hole in our finances can be met in one way only. Income tax and VAT rates will have to go up. These are hard taxes to avoid. Maybe some high salary jobs will move away from the UK to avoid punitive income tax, as has happened in France. This will only exacerbate the problem. We have seen high taxes in the past. Remember that in Margaret Thatcher’s first government the top rate of income tax was 60% and under Harold Wilson in the 1960s was approaching 100%. However, now the workforce is more mobile and will not hang around to be fleeced.
This is profoundly depressing. There is a ray of sunshine for a retired person like me. It will become attractive to minimise income and spend capital, although I envisage that loophole being closed. I am more sanguine about the value of my savings. Rather surprisingly I only hold one stock that fell significantly on Friday: property developer, Urban & Civic (formerly Terrace Hill). I have held shares in this company since it started life as a Business Expansion Scheme letting residential property to students in Glasgow. It briefly entered the FTSE 250 before collapsing in 2008, since when it has been slowly recovering. Tim Wood of McInroy & Wood has written to his investors outlining his sensible view of the outlook for investors. You can read it HERE.
From time to time the UK economy is buffeted by unavoidable events. World Wars, the oil crisis in the 1970s, the dotcom bubble, the banking crisis have all hit us hard. What I find so annoying is that this time it is self-inflicted misery. The UK will go from being a poster boy for sound economic policy to being the sick man of Europe.
If you share my view and want to try for a second referendum, here is the link. We won’t succeed but it might make us feel a bit better.
https://petition.parliament.uk/petitions/131215
Those of you who voted to Leave may not agree with my pessimistic opinion and may think that the lyrics of this Johnny Nash number better reflect your view of our prospects.
William Butler Yeats (1865-1939)
THE SECOND COMING
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: a waste of desert sand;
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Wind shadows of the indignant desert birds.
The darkness drops again but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
You have done nothing to calm my anxiety about what lies ahead. Many employers and rich folk in the UK will recall another Yeats poem and say “I will arise and go now …”
A reader suggests this apposite quote
That England that was wont to conquer others
Hath made a shameful conquest of itself.
–Richard II
Several times in my life I have been forced to accept a democratic conclusion I didn’t vote or care for. My instinct is to accept that conclusion, to be positive about our future and to make whatever contribution I can for the better.
I am currently inclined to the idea of an all party coalition, so as to appoint those best qualified to lead the country towards a better quality of life.
That may be an ideal, but I think it’s worth aiming for. What else can we do?
The majority of democratically elected MPs want the UK to Remain in the EU. A democratic referendum has shown that the people of the UK want to Leave. This is a constitutional crisis. There is a disconnect between Parliament and the People. I will address this tomorrow morning.