One of the leading money managers in the City of London has said the fallout from Britain’s vote to leave the EU will be “horrible” and the Square Mile is still “slightly stunned” by the result.
Richard Buxton, the chief executive and head of UK equities at Old Mutual Global Investors (OMGI), which manages £26bn of funds on behalf of individual investors and institutions, said warnings from the pro-EU campaign about the impact of Brexit before the referendum were well placed.
“I don’t think there was doom-mongering, because it is absolutely going to be horrible,” he said. “Mark Carney’s speech [in which he warned of dangers of Brexit] was absolutely spot on. This is just really bad news.
“You can criticise the Brexit team for a) an utterly mendacious campaign and b) not expecting that they would really win, so never having a plan. I mean the whole thing is literally unbelievable. It is extraordinary how we have ended up where we are.”
Buxton has worked in investments for 31 years and is regarded as the City’s leading stock picker, alongside his rival Neil Woodford. Funds worth more than £1bn left Schroders and went into Old Mutual when Buxton moved between the two companies in 2013.
Brexit is not as immediately dangerous as the financial crisis in 2008, when, Buxton claimed, cashpoints were 30 minutes away from running out of money. However, he remains concerned.
“Unlike an election result, where ‘OK, it’s not great, but in five years time it can be reversed’, this is stupendously final,” he said. “I don’t always agree with Martin Wolf [the Financial Times columnist], but when he wrote the day after that this is probably the single worst event in British postwar history, yeah, I don’t disagree.
“In terms of the markets, you have seen this massive polarisation, literally 60%-70% share price differential within days, between British American Tobacco [that went up due to the weakness of sterling against the dollar] and a housebuilder [that went down]. That is without precedent.”
With Theresa May in place as prime minister and Philip Hammond as chancellor, the City is focusing on what policies the new government might pursue. Hammond, Buxton said, has “walked into one of the most unusual economic environments I have known in my 30-year investment career”.
“I am pretty sure that the government will, in the autumn statement, do some fiscal weakening, such as reducing stamp duty on housing transactions, cutting petrol taxes to offset the increase that will come from the weaker currency,” Buxton said. “The bigger question is: are they bolder? Do they go ‘right, well we are in a different world, if we can borrow at a ludicrously low rates through extensive debt issuance, then let’s do so, specifically to invest either directly or alongside private investors in infrastructure projects’.
“We could resurface [the] M1 [motorway], we have a clear need for more gas-fired electricity generational plants. The private sector is not stepping up and doing any of this, unsurprisingly, so lets do some funding, some guarantees, make things attractive.
“It will be interesting whether they do that. But clearly even just the former measures, let alone the latter, mean the budget deficit is going to be swinging out again. Now, that, to my way of thinking, is why sterling is weak and could weaken further, to be honest. Already it [the deficit] wasn’t coming in quick enough, but it is going to start expanding.”
As for the response of his company, Buxton said OMGI would open a new office in Dublin if it needed to, but predicted that there is unlikely to be any “clarity” for two years as the UK negotiates to leave the EU.
“For now, the UK is still a member of Europe [the EU] and we can still do everything that we were doing,” he said.
Nicola Sturgeon has said she would consider a second referendum on Scottish independence in the first half of next year if necessary.
The first minister told the BBC that could happen if the UK government started the formal process of leaving the EU without Scotland's position being safeguarded.
The leader of Ireland’s main opposition party said he hopes Brexit will move Ireland closer to reunification.
Micheál Martin said a reunification referendum should be called if it becomes clear a majority want to see an end to Irish partition over the UK decision to leave the EU.
The Fianna Fáil leader added that Northern Ireland’s 56% majority vote to remain within the bloc could be a defining moment for the region. He made his remarks delivering the annual John Hume lecture at the MacGill Summer School in Glenties, Co Donegal.
“It may very well be that the decision of Northern Ireland to oppose the English-driven anti-EU UK majority is a defining moment in Northern politics,” he said.
“The remain vote may show people the need to rethink current arrangements. I hope it moves us towards majority support for unification, and if it does we should trigger a reunification referendum.
“However, at this moment the only evidence we have is that the majority of people in Northern Ireland want to maintain open borders and a single market with this jurisdiction, and beyond that with the rest of Europe.”
The 310-mile border that separates the island of Ireland is the only land border between the UK and the rest of the EU. Although heavily militarised with checkpoints and road closures during the Troubles, the peace process has opened up a seamless crossing between both jurisdictions.
Tens of thousands of people pass over the border every day on their way to work, for shopping or on day trips. Concerns about its status after the Brexit result – and whether free movement of people, goods and services will be affected – have dominated political debate since the poll.
During the referendum campaign, Theresa May indicated some form of border control would be required in Ireland if the UK voted to leave the EU. But just last week, Northern Ireland’s new secretary of state James Brokenshire insisted he does not want to see a hardening of the border.
Martin, a former foreign affairs minister whose party is leading opinion polls and whose backing is needed by the minority Fine Gael government, said any “new barriers between both parts of this island would potentially set us back decades”.
All just more Project Fearmongering though I'm sure.http://www.bbc.co.uk/news/uk-scotland-s ... s-36819182https://www.theguardian.com/uk-news/201 ... referendum