Is Chaos the New Norm?

Posted by Paul Cherpeau

Chief Executive

Thu 03rd, Aug

The past fortnight has been an extraordinary period of time in the political and economic life of the country. The traditionally quiet end of term tranquillity of July/August in Westminster has borne witness to a remarkable demonstration of text book political squabbling, back-stabbing and general disquiet within the Conservative Government cabinet.

Such schisms are normal within Government, albeit usually kept more private than the very public spat dominating the media in the past week. However, these are deeply concerning times for business and the inability of the Cabinet (let alone Government or the opposition party) to agree and articulate a basic set of principles for Brexit is accentuating the uncertainties for business.

On Tuesday, it was reported that Treasury select committee chair Nicky Morgan had called on the Bank of England to provide details of how prepared banks and insurance firms are for Brexit.

Alex Brazier from the Bank of England addressed this very topic at Chamber of Commerce roundtable session last week. Alex confirmed that Brexit is one of four key concerns facing the UK economy and the Bank is undertaking stress testing for all eventualities, with particular focus upon the impact upon financial services in the wake of a ‘hard Brexit’.

Yet in all honesty, it appears nigh on impossible to adequately stress test circumstances that we cannot fully anticipate. One year on from the referendum, there is perhaps even less clarity now than there was then. “Brexit means Brexit” was the soundtrack of winter, yet even the commencement of negotiations between the UK and the European Union has done little to create clarity nor quell key business concerns around access to migrant workers, status of EU citizens living in the UK and favourable access to overseas markets.

Our latest quarterly economic survey results for Liverpool (pre-dating the general election) suggest that investment intentions for the next 12 months are substantially reduced. Resultant growth will be stagnant without the clarity of a way forward.

There is no doubt that businesses will adapt to whatever environment emerges; whether Brexit continues according to the original schedule (or – whisper it – even happens at all), or takes a different form to a hard/soft/slightly spongey texture. Fundamentally, it will be the list of casualties that emerge from the journey that determines how ready businesses are for whatever is coming.

A splintered Cabinet, a fractured political environment, a population that remains largely split over the Brexit process and an economy that remains largely dependent upon the continuation of consumer spending and debt amid a threat of increasing inflation. These are not the traditional factors one associates with periods of economic stability and growth.

Yet in a world where the White House Communications Director can be fired before he has officially begun, perhaps chaos is a perpetual state to which we should become accustomed.

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