27 June 2016

Brexit is an opportunity, as long as Graham Brady gets a move on


Goodness. Like most people in the UK, I spent the weekend glancing at social media or the TV, talking to friends and relatives, and one thing was clear: the entire country was in a total post-referendum stew. I live in Wandsworth in London which voted 70% Remain and there was a sort of inquisition as hysterical people marched up to you and demanded: “Did you Vote Leave? Have you seen the pound, it has fallen to a 30-year low. We won’t be able to go on holiday and my children have been in tears.”

This negativity has been reflected in markets this morning. The pound has dropped 2% to $1.36 against the dollar and certain shares, notably banks, have fallen dramatically (although the FTSE 100 as a whole is only off about 1%).

Being of a naturally contrarian mindset, I am afraid I disagree with the hysteria. Things should work out, with a settlement which is close to being in the EU. It simply is not in everybody’s interests to have a prolonged crisis.

As far as markets are concerned, this may be a buying opportunity. I am sticking my neck out, but now is probably the time to buy shares in Lloyds Bank, move house, or invest in the UK. Kipling was right. If you can keep your heads when all about are losing theirs and blaming it on you, you will be a man my son.

That doesn’t mean we should be complacent. In particular, a heavy responsibility rests upon the shoulders of the leading politicians. We should take comfort from the fact that George Osborne gave a responsible and calming statement from the Treasury, indicating it is well prepared. Boris Johnson also gave a well-judged victory speech on Friday.

Three crazy things need to be killed off immediately.

The first is to be found in various petitions demanding that the referendum should somehow be overturned either in Parliament or via a second ballot. That would be profoundly undemocratic.

Second, is the hope that the Tories can indulge in a long leadership election. The person with responsibility for the process is Graham Brady MP, the chairman of the 1922 Committee. A theory was going round at the weekend that this could take five months: a leisurely Parliamentary sifting of the candidates down to the top two, followed by a hustings at the Conservative conference in October and then a postal vote of party members with a winner declared in November. That is far too long. The process must be complete by the end of July.

Mr Brady needs to publish the timetable as soon as possible. And those no-hopers planning on positioning themselves by entering the race should withdraw. Only two names count: Theresa May and Boris Johnson. George Freeman, the life science minister, has already pulled out, good for him.

Third, Michael Gove and Theresa May have a duty to kiss and make up. A pathetic feud erupted between his office and hers two years ago which resulted in him being moved out of education and one of her special advisers being fired. Both of them need to be big-hearted, to think of others and put that behind them. I hope they can.

Following the precedent of Gordon Brown, who engineered entering No10 mid-term but bottled having an election, a general election is now likely. That will cause more political risk, so we need to get on with it as soon as possible after the new Prime Minister is in power. She may also decide that she wants to go to the country quickly before Labour re-organises itself and replaces the hapless Jeremy Corbyn with the photogenic widower and ex-Paratrooper Dan Jarvis.

A general election in October or November would be the best outcome. Who would win it? One thing we have learnt in the last few days is that psephology is as much use as charming snakes. My guess is what the country most wants now is a safe pair of hands, but what do I know?

George Trefgarne is founder of Boscobel & Partners, a communications firm.