jonathan punter

Ultimately, it won’t happen immediately

Henry Kissinger knows a thing or two about the art of negotiation.

And there are a number of quotes which allude to his accumulated wisdom around the negotiation table but one stands out.

“Whatever must happen ultimately should happen immediately.”

This makes eminent sense. Raise, discuss and agree the central issues clear to all concerned as quickly as possible.

Call me presumptuous but even he might be scratching his head as to how this maxim applies to the talks to define and decide how Brexit should proceed.

That’s because no-one really knows what will ultimately take place, so it can scarcely be immediate.

Indeed, Alex Barker’s piece in the FT on four potential scenarios set me thinking.

Timing is on the mind of former British diplomat, Sir Christopher Meyer, who was quoted thus: “This is a case where we hang loose, we trust in God and we keep our powder dry and we don’t take the decision until very near the moment when we take the decision”.

He was outlining the possibility that while Article 50 – the official trigger to leave – had been invoked, much could happen which may see Britain remain in the EU.

I believe this is credible. The next General election is due in December 2020. Theresa May cannot go into an election without having a plan for Brexit. It will be impossible to persuade the 28 member states of the EU to sign up to a deal to approach anything like that timescale.

Allowing for the length of a general election campaign, we need to have left the EU by the end of December 2019. This means the latest date by which we would have to give formal notice is December 2017.

That may sound like plenty of time in the real world but in the parallel universe of international trade negotiations; it is but the blink of an eye.

They are measured in years, even decades. I cannot see a formalised trade deal being achieved in that time.

With nothing concrete signed, any gathering momentum towards Brexit will mean a hard landing. The government will be trying desperately to bolster confidence with outline deals – more like a Memorandum of Understanding –  with non-EU partners and an emerging framework for a deal with the EU, which will take years to ratify formally.

In the meantime, these may be some possible consequences.

• Existing EU residents outside their country of origin will be able to remain. For example, London’s large French community, Spain’s British expats.
• Some form of potential restriction framed for new immigrants for both the UK and EU but not necessarily immediately enacted.
• We will sit outside the single market and potentially the customs union but, initially, tariffs will not be applied either way.
• Loss of “passport rights” for financial services companies, making it harder for them to carry out business within that market.
Investment managers and banks will set up subsidiaries in Dublin and elsewhere in the EU to trade more freely. Switzerland will also benefit from specialist companies migrating from London.

The Singapore option of less regulation and a competitive tax base for financial services is a possibility.  Professional services firms will be affected by regulations restricting their ability to recruit from across the EU – a HR director’s living nightmare.

When we leave –although it’s not certain – there will be winners and losers. Some regions and industries will lose out more than others. Cornwall and Wales voted out but rely on generous EU funding. Universities and researchers will be denied grants and large-scale farming enterprises may well count the cost, although this fear appears to have been addressed with government promises.

There will be a mild slowdown for our economy. While not, technically, a recession, it will feel like it for most.

The UK’s deficit will increase. Not catastrophically, but it will require real interest rates to stay negative for longer and, depending on where inflation goes (up, temporarily, but will fall back as growth slows) is likely to mean near zero base rates. Those same low rates will continue to have an impact on Britain’s defined benefit pension scheme deficit.

These rates will further weaken sterling but, in my view, not as much as predicted by some. Other currencies will strengthen; the Swiss franc will do well.

This is by no means a comprehensive view but an unfolding series of impressions as we process the likely next steps in the wake of the referendum vote. The scale of the possible implications is daunting.

Not only does Theresa May have to tackle and oversee these issues but, while doing so, meet the aims of her first speech as prime minister: to improve the lives of those who have felt forgotten or left out.

Tackling just one subject here is challenge enough. To tick off everything is, by any analysis, a tall order. Not least, placating Scotland, given new momentum for its own, repeat referendum.
I’m reminded of another quote of the size of the task ahead.

“…in the hands of politicians, grand designs achieve nothing but new forms of the old misery…”
― John le Carré, Tinker, Tailor, Soldier, Spy

brexit european flag

Quarterly investment update, July 2016

In the initial paragraph of our Q1 16 market commentary, we started by saying the key themes over the first quarter were uncertainty and volatility caused by the EU referendum, terrorist attacks, the EU migrant crisis, Japan and negative interest rates and concerns about Chinese growth. Three months later and not a lot has changed – other than the fact we actually voted to leave the EU! Click here for the full update.

Why wellness matters in the workplace – video

In association with Employee Benefits,  Beate O’Neil, head of wellness consulting at Punter Southall Health and Protection, takes us through the main points of wellness in the workplace, here, including:
1.Why are we suddenly seeing such an increase in workplace wellness programmes and why is it important employers consider their own?
2.How does an organisation develop a wellness strategy?
3.How can employers optimise benefits to support their wellbeing programme?
4.What are the most popular services to include in a wellbeing programme?
5.What changes are we likely to see in future?
6.What will wellness in the workplace look like for the HR managers of tomorrow?