Interim Brexit Scorecard

I have been threatening this article for a while now so lets do the Brexit Scorecard.

Brexit snorecard more like!

Not helping…

OK. But how are you going to do this? We still don’t know what Brexit even is or when it is going to happen.

Fair point. We do know that some of the less damaging options are off the table but there is not much else decided beyond some stuff about the “divorce bill”, which is more of a distraction that anything else. This is just an interim score. I’m just going to reprint the table of predictions from March 2016 and score them on where we are now.

I know how much you enjoy playing around with HTML tables in WordPress.

Not helping…

Right. Lets do this. I’m comparing to my “sensible” prediction column only. I’m taking May 27th as the comparison point as that is just before all the graphs go haywire.

Metric My “Sensible” Prediction (March 2016)
Interim result December 2017
Pound vs Euro 5-15% fall.
Both the Pound and the Euro take a kicking but the pound gets the worst of it. Imported goods will be more expensive.
27 May 2016: €1.3155
29 Dec 2017: €1.1276
14.3% fall.
Rating: Nailed it!This was probably the easiest to predict and it went as expected. People are talking about it going lower still.
Pound vs US Dollar 15-25% fall.
The pound not be seen as the major world currency it was before. Energy will be more expensive.
27 May 2016: $1.4622
29 Dec 2017: $1.3518
8% fall.
Rating: Poor.I failed to predict Trump winning so I grossly overvalued the Dollar. Still, an 8% fall against the currency of a country run by a raving lunatic… And I was right about energy prices too.
UK Stockmarket 20-40% fall with a moderate recovery to follow. ISAs and pension funds will be hit. FTSE 100: Up 22%
FTSE 250: Up 20%
Rating: Dreadful!
The weak pound and global stockmarket rises can only partially account for this. This looks completely insane. I predict big falls to come when rational valuations reassert themselves.
UK Inflation 2-4%. The increased cost of foreign goods and energy partially offset by economic slowdown deducing demand. Latest RPI figure: 3.9%

Rating: Nailed it!

UK Interest Rates 2-3%. To try to stabilise the pound interest rates to rise slightly. Latest rate 0.5%

Rating: Dreadful!

Nobody seems to care about the pound or inflation. Cheap money in the UK is all that matters now. I think that interest rates will have to rise more though and that the prediction will be borne out.

Housing The arse falls out of buy-to-let but the rest of the market falls more moderately. Rents fall. Over-leveraged buy-to-let landlords lose their shirts. Market is stagnant. Prices are falling slowly. This is a lot slower than I predicted but I still think it will happen. People are getting out of buy-to-let but few are losing their shirts. This will get worse though.

Rating: Fair.

Employment Some major companies leave and no new ones replace them. Unemployment 10%, partially offset by skilled workers leaving. Wages fall. No significant rise in unemployment.

Rating: Poor.

Wage cuts and people moving into insecure casual/gig work seem to be keeping traditional unemployment at bay. Will it last? Probably not.

The UK Scottish independence and swift admission to the EU and the Euro. Picks up major international companies leaving the UK. Well, that just didn’t happen. The EU were very much against it because of Catalonia.

Rating: Dreadful!

The UK and Europe Allowed access to the single market at high cost. Too early to say but it is not looking good. Almost all the good options have already been rejected as “Not proper Brexit”.
The UK and Justice Euroseptics disappointed to discover that the European Court of Human Rights still applies to the UK. This was one I was very frightened about but the worst outcome has been avoided. Instead the battleground is the ECJ, which is important but not to the same extent.

Rating: Nailed it!

Migration Refugees still want to come to the UK but it no longer attracts skilled migrant workers. Too early to say for sure but I think this is happening. Of course, the Brexiteers think this is great because they hate all foreigners, even the ones we need.
The UK and the World Well, we will still be in NATO. That’s still relevant. Right? Trump seems to be shattering the unity of the western world so much it is hard to tell if Brexit is also having an effect.
The UK and EU membership UK rejoins the EU after 10-20 years on reduced terms. No longer equal to France and Germany. Too early to say but I still expect this to happen.

So that was a mixed bag at best. What else did I not predict?

  • That crazy UK election.
  • That hilarious UK election result.
  • That tragic US election result.
  • That the Brexiteers really didn’t have any plan at all. Not even a stupid one.
  • That negotiations would proceed so slowly and that the UK would try to obstruct and confuse the process every step of the way. (I mean, we are the ones who need a deal!)
  • Russia becoming a bigger concern for the EU than Brexit.
  • Catalonia becoming a bigger concern for the EU than Brexit.

That all said, the one I really can’t explain is the stockmarket. Why is the stockmarket going “to teh m00n”? On the back of Trump’s basic economic illiteracy (and maybe literal illiteracy if you read some of his tweets)? On the back of no actual good economic news? What is driving this? Is this much less insane than the Bitcoin fiasco?

It seems that I am not the only person thinking this:

That was from October but it has resurfaced on the BBC News front page now.

I think we have to face some economic facts:

  • Efficient markets are dead. Markets can be, and normally are, made by idiots. Idiots make the market because idiots trade a lot more frequently than sensible people. Bitcoin is the extreme example (a 100% idiot market!) but it covers everything. Nobody knows anything and most people don’t even know that that they don’t know everything.
  • Just as Japan will never succeed while its economic approach is to keep doing the same thing it has since 1985 even though it never works, the USA will not get far with Trump’s idiotic idea to cut taxes for the rich and bung the whole cost on the national debt. That is another idea from the 1980s that didn’t work then and won’t work now. It isn’t money that trickles down…
  • Interest rates can’t stay low forever if inflation continues to rise.
  • When the reckoning comes, the nations with real economies will fare a lot better than us folk on the B Ark getting ready to crash into Planet Brexit.

I must admit that I am just sitting on my hands in the face of the inexplicable. I can’t find a good home for my money apart from Premium Bonds at the moment. How long can we wait for the other boot to drop?

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December 29, 2017. #Brexit, Money, Politics, Sensible.

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