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Weekend reading: Still dithering our way to Brexit

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Before the link list, a Brexit update. If you don’t like the odd bit of politics here please do skip down to the articles – there’s plenty else to read this week!

Time heals most wounds – including the self-inflicted – but 15 months on from that vote, we’re still motoring ahead with our great populist mistake.

As Winston Churchill noted in The Grand Alliance Vol. 3:

Governments and peoples do not always take rational decisions. Sometimes they take mad decisions, or one set of people get control who compel all others to obey and aid them in folly.

For those who’ve not been keeping up, a quick recap:

  • Yes, we are going to pay a multi-billion bill before leaving the EU
  • No, there is no extra money for the NHS
  • Yes, subsequent post-vote reporting has confirmed that Brexit is a logistical nightmare, from Ireland to atoms
  • No, Frankfurt isn’t too terrible to play home to American bankers
  • Yes, the EU is united in dealing with our pathetic tantrum mighty negotiators
  • No, the Eurozone hasn’t collapsed. Rather, the economic cycle has continued to turn. (The EU is now growing faster than the UK.)
  • Yes, the EU has signed trade deals with Canada and Japan since the Referendum
  • No, the UK won’t get a better deal by being a smaller country with less bargaining power
  • Yes, clever EU citizens are already being tempted to leave the UK
  • No, the French didn’t vote in the fascists. (Our own rash decision – and the other one over the pond – probably gave them pause).
  • Yes, we are probably going to keep obeying EU regulations, including via the European Court of Justice, post-Brexit
  • No, scaring away skilled EU citizens hasn’t cut net immigration to the ‘tens of thousands’ yet (and Brexit won’t either, because much of net migration is from the non-EU and we never did anything about them before the vote)
  • Yes, it’s true our economy didn’t slump in the wake of the Referendum result. (I was wrong footed there, but my bigger fear is for the long-term hit anyway)
  • No, there has been no great export boom due to the cheap pound
  • Yes, future generations of UK citizens will be unable to live and work anywhere in Europe like their parents and grandparents could by right
  • No, there’s no evidence this curtailment will do anything for the disaffected and angry people in slow-growth provincial towns, except reduce the tax receipts that pay for aid and benefits

I could go on, but it’s too depressing. How often do rational people – as opposed to mobs on the streets – get together to decide to do something against their own interests? To negotiate a worse economic outcome? To cede power?

Perhaps in suicidal religious cults. Not much else springs to mind.

About the only good – if unsurprising – development is that things are going slowly. As Tim Hartford puts it in this week’s FT [Search result]:

The British people have dealt the British establishment an unplayable hand: a parliament strung out between several lunatic fringes, and a referendum result that is hard to interpret and even harder to deliver.

With the prime minister powerless, her ministers are showing signs of quiet realism.

Yes, the country is chugging towards a train-crash Brexit, but at least our politicians are tying fewer hostages to the tracks.

To return to the Churchill quote above, what rational people would conclude at this point is that we should get off the tracks.

But at the moment, the democratic symbolism foolishly placed in the Referendum – even by many Leavers – means the best version of getting off the tracks from here is probably some sort of fudge that looks like a Brexit, but that doesn’t walk or talk like one. A fake Brexit.

But who knows? Perhaps if we do drag it out for long enough it might never happen. Better than any alternative, as far as I’m concerned.

Matthew Parris for one says Brexit is dying:

“Brexit is in terrible trouble – and with every month that passes, the difficulties become clearer, and the Remain side of the argument becomes stronger.”

Fingers crossed.

Still crazy after all this year

Of course the fallout from not-Brexiting would now be terrible, too, especially if it was called off any time soon.

That’s because because enough angry people came to believe Brexit would solve problems that are in reality probably close to intractable.

I’ve come to understand over the past 12 months how the Brexit vote reflected genuine anger and disquiet among a chunk of the population who feel that the world isn’t going their way. (Almost inexplicably, in the case of the comfortably off Barry Blimps, unless you go down the identity politics rabbit hole).

But I’ve seen little to show it has much to do with the EU.

What I think took the vote from a minority of committed Eurosceptics to a winning majority were wider forces like globalization, technology, income inequality, urbanization, and fundamental terrorism.

And then was the misinformation campaign that’s been much debated in the subsequent year.

Happily, researchers have found that as we learn to cope better with social networks and their ability to distort reality (and as those networks get better at policing themselves) we might see fewer crazy years like 2016.

As Bloomberg reported concerning one academic deep dive:

The study does offer one positive conclusion: Broad awareness of fake news should tend to work against its success. Campaigns were much less successful when individuals in the model learned strategies to recognize falsehoods while being fully aware that purveyors were active.

This suggests that public information campaigns can work, as Facebook’s seemed to do ahead of the French election in May.

In other words, fake news is like a weaponized infectious agent. Immunization through education can help, but it might not be a comprehensive defense.

Either way, it’s too late for Britain, which could be sliding towards a situation where even the food chain is disrupted.

That’s not me being a doomster – it’s the supermarkets:

Failure to find an agreement on free trade within Europe before Brexit day is likely to result in gaps on UK supermarket shelves, increased waste and higher prices, retailers have warned.

More than three-quarters of food imported by the UK comes from the European Union, but if the UK does not agree on a transitional period or a deal when it leaves the bloc in March 2019, World Trade Organisation rules will apply.

This means that goods coming from the EU will be subject to the same custom checks, tariffs and regulations currently in place with the US, with some 180,000 extra firms drawn into customs declarations for the first time.

Let’s hope that a shortage of Werther’s Originals leaves a sour taste in the mouths of the legions of Brexit-voting pensioners – hundreds of thousands of whom have already left this Earth and their mess for us to clean up.

Harsh? Perhaps, but as Ian McEwan said when he seconded my own observation that the Leave vote was probably literally dying:

“Truly, Brexit has stirred something not heroic or celebratory or generous in the nation, but instead has coaxed into the light from some dark, damp places the lowest human impulses, from the small-minded to the mean-spirited to the murderous.”

Yet on we dawdle, into the pointless maw.

Note: As usual I’ll be deleting anything I arbitrarily and personally happen to think is overly nasty, racist, or intolerant (on both sides) so please watch your words if you’d like to comment. And if you don’t like the sound of that, no worries, there are other places to chat on the Internet. This is a benign dictatorship, not a democracy. 🙂

From Monevator

Using the Rule of 300 to estimate your retirement pot needs – Monevator

From the archive-ator: Don’t forget your financial freedom goals – Monevator


Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1

Non-doms pay an average £105,000 in tax; £9 billion a year in total [Search result]FT

Does a £7,600 a year service charge for a 3-bed above a shop seem fair to you? – Guardian

First signs of rising rents as buy-to-let investors pass on higher tax [Dubious!] Telegraph

Gun-shy private equity firms are sitting on nearly $1 trillion in cash – Bloomberg

Products and services

An Islamic bank is offering the highest return on cash, at 1.7% – Telegraph

Tax rule changes and low rates prompt collapse in cash ISA totals – Guardian

Pensioners hit as annuity rates drop by 10% in two years [Search result]FT

The new PPI deadline advert staring Arnie is pretty compelling – FCA via Twitter

British banks had to contribute £30m towards that PPI advert – Telegraph

The ‘secret trick’ that enables you to transfer part of your pension – Telegraph

Why people are waiting longer to upgrade their smartphones – Guardian

We don’t cover it much, but the cryptocurrency space looks bubbly – Techcrunch

Creating a set of cryptocurrency benchmark indices – Bletchley Indexes

Comment and opinion

The dumbest call of the era – The Reformed Broker

What do the best investors do that the rest don’t? – Behavioral Investing

Want a house price crash? Be careful what you wish for – Guardian

Have equity income funds had their day? [Search result]FT

The worst case scenario for passive investing: Part 1 [Debate!]Bloomberg

The Analyst on Monevator’s 1-page investing philosophy – Todd Wenning via Twitter

Tobacco stocks could be damaging to your wealth – The Value Perspective

The market is high. Beware of portfolio drift – New York Times

Decisions, decisions – A Wealth of Common Sense

Time to buy gold? – The Irrelevant Investor

How time perspective influences portfolio decisions – Portfolio Charts

Jason Calcanis on how to invest in technology start-ups [Podcast]Meb Faber

Forecasting: How to map the future [Video]BBC

Do Spanish pensioners have it much better than Polish workers? – SexHealthMoneyDeath

There is always some clown with a bigger boat – The Escape Artist

Just buy the cheapest stocks [Research, wonky]Alpha Architect

Off our beat

Overcoming your demons [Recommended]Morgan Housel

Why we should stop trying to contact aliens – Big Think

How to save money on gardening: An A-Z – Backyard Boss

How milk became the go-to beverage of the alt-right – The Conversation

What working from home does to your brain, apparently – Mel

And finally…

“Try to imagine the calamity of that: Zack, age twenty-eight, with no management experience, gets training from Dave, a weekend rock guitarist, on how to apply a set of fundamentally unsound psychological principles as a way to manipulate the people who report to him.”
– Daniel Lyons, Disrupted: My Misadventure in the Start-Up Bubble

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []
{ 69 comments… add one }
  • 1 Matt September 2, 2017, 1:28 pm

    Well, I’m still doing well out of Brexit. But then I do work for a big exporter! 🙂

  • 2 TT September 2, 2017, 1:51 pm

    Before naysayers jump in- I am happy to see another brexit post. The campfire of debate is healthy, the worst thing that could happen is total disinterest by the populous of what is actually agreed, or to be agreed, and we end up with something very bad.

  • 3 TT September 2, 2017, 1:57 pm

    Nice to see the Telegraph cover Al Rayan’s saving rates. I’ve used them since they were IBB and they’ve never missed their ‘expected profit rate’ in my experience. They tend to get let off many a ‘Best Buy’ list, and the ‘catch’ is often over emphasised. Maybe they even offer a level of diversification should the west be hit by some banking calamity. So good on them.

  • 4 Gregory September 2, 2017, 2:28 pm

    The worst case scenario for passive investing: Part 1 Maybe. Who knows? We have approximately 200 years of knowledge about stock markets. This knowledge can be very misleading because it misses the (increasing) affect of passive investing. Next 200 years will be different. Maybe. Who knows?

  • 5 Steve September 2, 2017, 2:35 pm

    “Free trade” we hear such a lot about it and how it would be dreadful if we lost this golden EU egg.
    But when has something you pay for ever been free,it’s misleading to say the least.
    As far as I’m aware we exported £240 billion to the EU in 2016,we paid £8.6 billion in membership fees (net), that’s 3.58%.
    But we imported £310 billion and got nothing for that.
    So if we use a 3% trade tariff both ways we get £7.2 billion ( 3% of 240 billion) and £9.3 billion (3% of £310 billion) so we would gain £2.1 billion plus the membership fee is an annual gain of £10.7 billion.
    The made up exit fee has no law rules to back it up,they just need that amount to carry on the extravagant spending that’s all.

  • 6 Retirement Investing Today September 2, 2017, 3:06 pm

    Nice Brexit summary (rant…) TI although as a fellow remainer who was hoping to be one of those “…future generations of UK citizens…” living and working “…anywhere in Europe like their parents and grandparents could by right” I would say that wouldn’t I.

    Rather than adding to the rant which probably won’t be helpful and will just get me worked up I’ll instead offer this link https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/641334/2017-08-30_-_EU_UK_Comparison_Table_CR_AUGUST_day_2_FINAL_AGREED_VERSION_AGREED_with_Cion_V2.2.pdf which might be useful for readers. It shows a concise summary of where we are from an agreement/disagreement perspective in the negotiations to date.

  • 7 cttw September 2, 2017, 4:30 pm

    I voted remain and for the economy of the country in aggregate I think it’s dumb. But from an investment perspective it has been excellent so far. I have an internationally diversified equity portfolio and anything that kills £ is good news. The more shambolic the whole Brexit process becomes the better as far as I am concerned. In fact I would love a train crash Brexit the more catastrophic the better – I think this would be a once in a generation opportunity to to pick up UK assets at bargain prices.

  • 8 PC September 2, 2017, 5:33 pm

    I don’t know what I’d do without your Brexit rants and the http://www.remainiacs.com/ podcast . I’m only getting more angry. The only bright spot is that my SIPP has done very well out of Brexit because of the exchange rate drop, but only measured in pounds.

  • 9 The Investor September 2, 2017, 5:45 pm

    @cttw @matt — Yes, it’s been brilliant for me on a personal level, too. And I expect that to continue (not counting the handing away of my rights to live in Europe, which I would have taken up at some point) unless I mess something up. I should do very well in the sort of low-tax deregulated economy the Leavers might have to go for if we really come off the rails after a hard Brexit (with a bit of luck they’d even scrap CGT!) But like you I wasn’t voting for my interests. 🙁

    In terms of the once in a lifetime opportunity aspect, I think it’s very difficult to wait for a one-off moment like that, given it might not come. When I wrote my currency hedging article back in January it was because with the £ so smashed I was already trying to edge back into £ exposure. I’d agree there will be more twists and turns along the way, but my investing style is to try to aim for a middle ground where possible for as many years as possible, rather than risking missing out entirely / getting killed. 🙂

    @Gregory — That article was pretty full-on, wasn’t it?

    @Steve — Of course there’s a cost and a benefit to membership, which we’ll both have seen pulled apart either way elsewhere, but I’d add to that I think basing sums on the status quo of being in Europe when you’re making the case for leaving (which I see pro-Leavers do quite a bit about the British economy) is also misleading.

    In the worst possible exit (which I think we’ll probably avoid, because the Leave hand is so weakened) supply chains will get totally borked IMHO, and hence trade with the EU would be hit. So those numbers will be moot.

    Similarly, I see Leavers saying “London is the tech capital for tech startups, we don’t need to be in Europe”. Well as an investor in some of them — including unlisted start-ups — I personally have seen that a bit chunk of the founders and their employees are from the EU. Some sort of Visa system might help with the employee part, assuming they still wanted to come here, but an end to free movement would probably choke off the supply of bright EU founders coming to seek their fortune here, if without a job lined up they didn’t get in.

    Similarly, cutting off all that immigration, whatever the pros and cons from a society level, is going to depress GDP — especially if it turned to net migration of skilled and hardworking EU workers going back home.

    In other words, there will be cons and some pros (though I honestly think minimal pros) to life outside the EU that make the membership fee just a small part of the mathematics, in my view.

  • 10 Gadgetmind September 2, 2017, 6:05 pm

    My investments have also done well from the collapse of sterling as long as I look at their value in sterling. Their buying power hasn’t increase yet I’ll probably get taxed for exceeding the LTA as this isn’t yet index linked. Oh, and many my skilled staff are leaving to return to the EU where they are welcomed and paid in a currency that hasn’t been trashed.

  • 11 Retirement Investing Today September 2, 2017, 6:35 pm

    If I continue to get the returns that I’ve averaged since I started on my investing journey in 2007 like @Gadgetmind I’m also now looking like bumping up against the LTA by private pension access age.

    Measured in £’s my total portfolio (pension + non-pension) is up 35% since the Brexit vote. Measured in the currency that matters for my FIRE, EUR’s, I’m up only 16%.

  • 12 Gregory September 2, 2017, 6:37 pm

    @The Investor — That article was pretty full-on, wasn’t it? Data mining is tricky https://thefelderreport.com/2017/08/17/the-great-passive-investing-bait-and-switch/

  • 13 The Investor September 2, 2017, 6:47 pm

    @RIT — It’s fascinating to me that you’ve continued on with your plan to move to Europe with only minimal disruption from Brexit. (A slight pause in your timeline as best I can tell). I’m not saying you’re wrong to — probably I’d be too easily swayed — but for me it’s such a potentially big change to rights that I’d have agonized over it after the vote. But perhaps you have, off-site, I suppose? 🙂

    For various reasons I had “move to somewhere in Europe” floating around as a potential on my to do list for a few years. With my financial situation now I’d be seriously considering it, were it not for Brexit.

    But maybe I’m too timid. As people have reminded me, Brits buy homes in the States without the right to live/work there, and they were living in Europe before we joined the EU.

    I suppose I see a big difference between having the legal right, versus being somewhere as at best a welcome guest in a politically uncertain world. But maybe if things did get nasty to the extent that, say, the Spanish were ejecting the millions of Brits and Germans living there, the legalities would be moot anyway?

    (I’m not expecting them to get like that — I expect Europe to keep integrating. I am just speculating on scenarios where I might have need of the rights we’re giving up.)

  • 14 FI Warrior September 2, 2017, 6:51 pm

    I know someone who’s selling their home now while house prices are still flatlining to lock in the gain before the wave of departing Europeans panic sell, then is easing off to Malta once the new Irish passport arrives. He’s offered to send me delicacies in the future to break the tedium of spam and British sprouts that the shops will be full of; old nostalgic favourites of the impoverished past should make a serious comeback too, like tripe.

    He’s made FI early due to the bounce from equities and shorting the £ hard straight after the vote. I reckon given the ruling elite’s ideology, that the UK will end up a sweatshop moored off Europe making plastic tat even cheaper as it wont have to be shipped from China any more. It’ll be interesting to see if the zero-hour contract army can afford that by then though. Dual passport (1 of which EU) holders currently resident in the UK are going to be sitting pretty and the Irish could do a roaring trade in documentation if they play this right. (Apparently one in 10 Brits could qualify one on criteria or other)

  • 15 Retirement Investing Today September 2, 2017, 7:24 pm

    @TI – You’re right that we have taken a small pause in our timeline while we watch how Brexit develops a little more. I officially called it One More Year (which whether I like it or not it is) and took plenty of flack for it.

    We plan to become resident in the EU27 before 29 March 2019 (official Brexit day if played by the book) meaning we’ll likely emigrate to an EU27 country in the summer of 2018 to allow us time to get ourselves officially registered and become residents. My understanding is international law should then prevent us from losing those rights as long as we stay residents.

    As for other Rights required for a family of independent means and not dependent on benefits of any kind (my models don’t even assume a State Pension) the only other real problem I can see is healthcare. Short term that’s not a problem while we’re young. We’ll just take private healthcare which having received real quotes following underwriting is very affordable for us. The problem as I see it is then when we get into our dotage and private cover becomes unaffordable or worse private cover is refused. Already I can see a few things playing out:
    1. the link I provided in comment 6 is suggesting that the S1 system (or an equivalent) might just survive Brexit provided we have emigrated before Brexit.
    2. if it didn’t Cyprus would potentially be problematic although that looks to be changing as well. They have just started the process of building a ‘Cyprus NHS’ which would mean provided we had our Permanent Residence (available after 5 years of residency) we could participate indefinitely for hundred’s of EUR’s per year.
    3. if 1 or 2 don’t play out I think we’ll likely go for Spain. There we can pay into the State System, the convenio especiale, after 1 year which increases in price to EUR157 per month per person after 65 but still works for us. So we could use private until it became unaffordable or was retracted and then move to the State System.

    So right now it’s looking like we’ll go for Cyprus but we want to watch a bit more of the shenanigans as we might get one go at this if the drawbridge is pulled up post Brexit.

    You had a move to Europe on your to do list. What’s stopping you having a go as well? I don’t think there’s anything else I’ve missed. Brits were moving to Spain and Cyprus before freedom of movement existed. Just get residency before Brexit. If it doesn’t work out you can always come back to Old Blighty armed with a few stories to tell. I’d also be happy to buy you a beer after all you’ve taught me over the years. I know a wonderful bar in Cyprus that’s right on the Med, with views to die for, away from the tourists, full of locals and importantly no stress in sight.

    All that said I might have missed an important detail. My extensive research suggests I haven’t but I guess you just don’t know until you try and work your way all the way through the bureaucratic nightmare that I can see it becoming.

  • 16 AncientI September 2, 2017, 10:33 pm

    New here, I voted leave simply because im fed up with immigration. Theres far too many people in the UK and thats why public services are crippled and housing costs so much.

    If Brexit is going badly it is because we dont have anyone with a BACKBONE in politics or the negotiations. T.May has no spine. I guarantee if someone like Mogg became pm the pound would instantly increase in value. Just like dollar did with trump, because investors recognize the leader has a bloody pair of balls. Carney himself is out to sabotage brexit and the £ by trying to paint the grimmest picture possible.

    As an aside , I wanted to ask people in this community how would they invest 100k if they had that right now? Im just looking from opinions. Ive read a good chunk of this blog and it seems everyone is swearing by index trackers.

  • 17 Richard September 2, 2017, 11:38 pm

    I have only seen positives out of Brexit so far (stock market gains and softening of the housing market). Lots of noise around the negotiations, but inflation is only up a bit (nowhere near where I thought it would go) and while wages are still going nowhere that has been true for far longer than the vote. Even GDP is still increasing (I know, it may have increased a lot more without Brexit but that is hard to prove). Right now it feels like a storm in a teacup, but of course the deal is still a ways off and everything could change quite quickly.

  • 18 cat793 September 3, 2017, 3:12 am

    @ The Investor. I would say you are correct to be wary of the risks of moving abroad. Think of all the UK pensioners who moved to Thailand late 90s/early 2000s. They qualify for a retirement visa based on monthly income (calculated in Baht) or a lump sum held in a Thai bank account. When they retired in Thailand the exchange rate was 80 Baht or so to the Pound (now 40) and the cost of living was a lot lower, probably half as much. A monthly income of a thousand Pounds would have been very comfortable. Many of these people are now in serious financial trouble and at risk in theory of being ejected from Thailand to an uncertain future.

    I suppose the benefit of the weak Pound for those thinking about moving abroad is that it probably cannot get much worse and the only way is up.

  • 19 Retirement Investing Today September 3, 2017, 8:30 am

    @cat793 – The important question is are all those UK pensioners worse off financially for the Thailand experience? They’ll certainly be carrying plenty of stories to remember and tell family/friends so they’ll be rich in life experiences.

    I also don’t quite understand what you mean by uncertain future. If they are ejected from Thailand then they just come back to the UK. A place they would have been anyway had they not headed to Thailand in the first place. Now if they sold up their UK home and spent the proceeds as but one example I can see your point but that’s not prudent, bordering on plain silly, IMHO.

    Providing people are prudent when the emigrate I can’t just see why they can’t come back if they decide it’s not for them. It’s no different to people emigrating for work.

  • 20 expatter September 3, 2017, 8:45 am

    @cat793. Sounds like poor planning to me. A potential move to SEAsia is on the cards for me. I’m factoring in a significant decrease (75%) in pound buying power over the years.

  • 21 Lord September 3, 2017, 9:01 am

    Brexit has been been good for my GBP denominated portfolio but as I’m unlikely to ever want to return to the U.K. now to live – having most dividends coming in in pounds is not so nice. My JPY salary is going into anything that doesn’t pay out in GBP now. You live and learn….

    Won’t it be possible for RIT to get a new nationality after x many years in whatever country he ultimately resides in? Many old U.K. colleagues and friends are now moving out to DE / FR etc with such an objective. Is it dependent on paying tax?

  • 22 Matt September 3, 2017, 10:24 am

    Obviously like everyone here, I’ve done very well from the stock markets since the Brexit vote. But I thought it worth pointing out the view from manufacturing, as I get the impression most people here are from London and/or the service sector, particularly finance. (For the avoidance of doubt, I voted remain, but without any enthusiasm). Put simply, the fall in the value of the pound had been a massive boon for us. Our factory is part of a large international company, and it’s clear that we are now much, much more competitive now. The spreadsheets that management use to direct work around are now changing their outputs. Where they used to give answers like ‘Singapore’, or ‘Israel’ or ‘Indiana’ or ‘Germany’, they now increasingly give ‘UK’ as the answer. Due to this, work is being shifted into our factory – we’re in the process of doubling production. Now, you could argue that if Sterling were to go back up any time soon, that work would go straight back overseas. But I don’t think anyone really expects that to happen. Which is why we’re taking on extra staff and spending millions on new equipment to increase capacity, which is a sign of security of our jobs for the future. In the mean time, to keep up with demand, the engineers in the factory office have been offered shift allowance to help cover things (which has never happened before) and overtime to cover weekends and bank holidays (which hasn’t happened in 15 years), which has certainty helped to increase our take home pay! So for us, it’s been great – and not just from the point of view of stock market increases. And I’m hearing similar stories from other manufacturing firms. Anyway, I accept a lot of people have serious concerns over Brexit, but I thought it was worth presenting an alternative view.

    (A couple of asides: I know people will point out the risk of tariffs, but for most UK manufacturers, the fall in Sterling outweighs the potential tariffs allowed under WTO rules. In our sector, we’re fortunate that the maximum tariff allowed is 0%. I accept that some more complicated supply chains would be hit harder, but these are being simplified as I write. The second point people will raise is cost of living /inflation. We’re fortunate to be unionised, and most other big manufacturers are too (although less so for smaller ones), meaning we’re able to demand, (and get!) a share of those increased profits from the company, who can certainly afford it now profits are up. Finally, yes this is all good for me, but everyone here gets to benefit too, as I’m fairly sure you all own shares in this company through your index trackers – and the share price is up quite nicely lately! 🙂 )

  • 23 PC September 3, 2017, 11:27 am

    Good to hear manufacturing is doing well but it’s only 10% of the economy – wikipedia 2016 https://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

  • 24 Matt September 3, 2017, 12:12 pm

    Yeah, I appreciate that. But after years of being run down and the everyone’s focus being on promoting the financial sectors, it’s nice to have the shoe on the other foot! 🙂

  • 25 Matthew September 3, 2017, 1:28 pm

    What does brexit mean? I wish our pm could sum it up for us…

  • 26 Tim O'Neill September 3, 2017, 1:36 pm

    The big mistake the Brexiters are making is in their belief that the UK has been held back these last 40 or so years by EU membership, and that once free of the “shackles” of Brussels, the country can return to being “great” again, whatever that means.

    The reality is that the UK suffers from multiple, serious defects in its economy, government and society which EU membership has actually done a lot to compensate for. I would include in the list of defects a weak education system, a lack of skills especially in STEM areas, an adversarial ping-pong style of government that prevents long-term planning and sharp social divisions caused by inequality.

    I expect that once the UK leaves the European Union, these defects will come to the fore, and the country will go into a steep and rapid decline.

  • 27 William III September 3, 2017, 1:47 pm

    So we moved to the Netherlands in May.

    What we miss about London: the diversity, intellect, commitment to real impact, of colleagues/friends/neighbours/guy in the pub; and the professional opportunities. (The professional opps point is more theory than practice though as we’ve both made a significant leap in our careers since moving here, the economy is doing rather well. And on the friends side: we had loads of EU friends in London who’ve also moved back to their home countries anyway.)

    What we get back: living in a 141m2 house on a quiet street right in the centre of the most expensive city in NL after Amsterdam (a 25min train ride Amsterdam and airport), for which we were able to put down 50%, now netting less than a grand in mortgage cost (interest + amortisation as we’re on a 1.7%, 10yr fix). We’ve pulled FI forward to 40yrs (we’re both 30 now) – despite having both gone down to 4d work per week to spend time with our baby. We’re able to do all travel in town by bike, and can cycle into rural expanses in under 10mins.

    It is way too early to tell whether this has genuinely been a good move, but so far so good.

  • 28 greenasgrass September 3, 2017, 1:57 pm

    Quote The Investor:
    “not counting the handing away of my rights to live in Europe, which I would have taken up at some point”

    Aah. I see. This would explain the intensity of your anger about Brexit. It’s just my observation but it seems to me that people’s with especially strong feelings about Brexit, from both sides, are usually those who feel the outcome they don’t want will directly negatively impact their own lives and plans. Of course, in marshalling their arguments, those with especially strong feelings concentrate on making the case that it will ultimately be equally harmful to everyone else and that this is why they are so justifiably outraged. But it never quite rings true, because actually, if you don’t see a major impact on your own life, or only a minor one, then the whole issue becomes less important, whichever way you voted. That’s not to say you don’t have an opinion on the matter, and one you are happy to debate, but you are less likely to write long blog posts about it.

    Quote The investor:
    “But like you I wasn’t voting for my interests. ”

    I suspect this is not entirely true. But don’t worry, I understand. And I’m still a fan.

  • 29 William III September 3, 2017, 2:16 pm

    @greenasgrass: not only does a remarkable share of remainers have hidden agendas, such as wanting to retain an option to move to a warmer place in a couple of decades. Of late, the treachery cowards refuse to join their competent leadership in calling the EU negotiation tactics for what it is: blackmailing. Hideous.

  • 30 david m September 3, 2017, 2:28 pm

    Not everyone reading this or commenting here is so keen on trackers. I prefer managed funds (investment trusts) that invest in the equity income or small company sectors in the UK, global and Asia Pacific regions. If I had it I would put an extra £100,000 in those areas. I believe that trackers will cap any upside as well as capping any downside, although this may be a minority view here.

  • 31 Sara September 3, 2017, 2:34 pm

    Re – the Ian McEwan comment. The BBC did a news report on recruiting GPs from abroad
    I mistakenly made the mistake of reading some of the comments and it made me ashamed to be British .
    “-the lowest human impulses – yes
    from the small-minded – yes
    to the mean-spirited – yes
    to the murderous – probably”

    It really does make you despair of the seeming wall to wall ignorance and wonder if you can find a news site of happy stories.

  • 32 Factor September 3, 2017, 2:49 pm

    I was not a Leave voter but if Brexit brings rigours that reduce or even reverse our population growth and its consequences, mean fewer state-funded obese or otherwise unhealthy people, and leave us in my opinion “leaner” and better as a nation, then hallelujah!

    For those who plan to move abroad, I genuinely wish you well but I shall not miss you.

  • 33 The Borderer September 3, 2017, 4:31 pm

    I very much doubt that Brexit will reduce our population growth due to a reduction in immigation from the EU, but may due to the fall in our living standards that will be the inevitable result IMHO.
    Have a look at https://fullfact.org/immigration/immigration-and-jobs-labour-market-effects-immigration/.
    And for those on this site who are planning to leave the country (including myself), many have been planning to do so long before the referendum.
    I’m sorry you will not miss us, but I’ll try to live with it.

  • 34 Conor September 3, 2017, 4:58 pm

    Supermarket shelves will be empty?

    Here’s a video about international road transport in 1969 when it took pretty much exactly the same time to deliver a load from the UK to destinations all over the continent and vice versa as it does today.


  • 35 Jdr September 3, 2017, 5:02 pm

    @William III

    “We’ve pulled FI forward to 40yrs”

    I fully understand moving back to NL, nevertheless that particular country has its own set of problems : FI may just be possible, ER definitly is not: on top of the wealth tax ( between 1.2% / 1.5%), you will have to pay into social security when not working. The amounts involved are also dependent on your wealth and are staggering. And you will have to pay those until you reach AOW age ( 68, 69 yrs?) I did the calcuations and I cannot afford to move back to NL for my ER, i will have to stay in CH as that is actually cheaper !
    Pre-Brexit I contemplated a move to the UK…..

  • 36 Uncertain September 3, 2017, 5:22 pm

    Congratulations to all those who have done financially well over Brexit, whereas my portfolio is internationally diversified and has done fine, my main resource is my human capital and Income through work , in buying terms this has fallen through a decision whose idiocy is I believe yet to be fully realised.

  • 37 Richard September 3, 2017, 5:52 pm

    @Uncertain – is your loss of human capital something you are predicting (and therefore by no means certain) or something you are experiencing? Are you seeing your skills no longer in demand due to the prospect of Brexit (perhaps seeing overseas skills being used instead)?

    It is possible that some human capital may be worth more after Brexit (good time to be a lawyer I would predict)

  • 38 Steve September 3, 2017, 6:08 pm

    Well outside of the London bubble we are very optimistic about Brexit,yes there is a lot of noise in the press at the moment and the EU seems to be very negative on Brexit but we have to remember that Germany is having an election shortly and we could find afterwards the talks suddenly speed up.
    “In the worst possible exit (which I think we’ll probably avoid, because the Leave hand is so weakened) supply chains will get totally borked IMHO, and hence trade with the EU would be hit. So those numbers will be moot.”
    I think dismissing the £10.7 billion calculation because they are based on 2016 trade and not future out of the EU trade is a bit weak,I really don’t think supply chains will be Borked at all,why would the EU want the UK who have £310 billion worth of imports from the EU to be borked.
    Why not? Because that’s the last thing the Germans want or need,it doesn’t make sense it can’t happen that’s why it won’t,the EU is bricking it that we will go elsewhere for our £310 billion imports.
    They know full well we will quickly trade with Canada and Japan that’s why they quickly did a deal.
    Most of the export figures are up,foreign investment is doing well,people are earning loads of overtime etc yet the negativity is still here with the Londoners.
    Everywhere else is booming and everyone is happy.
    What people fail to realise is the manual working folk know that whatever London earns doesn’t make any odds to them,if London earned £200 billion a day it wouldn’t be given to the m/workers of this country.
    The only thing that helps them is more work/overtime and that’s what they are getting,so maybe they were right all along,chop a little off London and the rest of the UK is doing great.
    But by the looks of the articles bellow London is doing just fine and so is the rest of the UK.
    It’s all noise,a few ex EU meps worried about the big pension pot,that’s why Blair is over there,how can we stop the conservatives from putting Neil kinnocks pension pot at risk.




  • 39 mark dunn September 3, 2017, 10:53 pm

    Nobody knows what will happen in the future or how it will be affected by brexit. Brexit might be good or bad for the economy. They are some people who are convinced they can see into the future with their predictions of castrophies for the UK economy but they do not have a clue. Change always brings opportunities for some and problems for others. Look out for the opportunities and you might surprise yourself.

  • 40 J September 4, 2017, 8:14 am

    My Leave-voting father (an angry old man if there ever was one) has one response to any criticism of Brexit: “I believe in the British workers. They’re at their best when their backs are against the wall.” I think he’s referring to the 1950s when he was a young man, but can’t get any more explanation of why he’d want to land his grandchildren in the economic soup. I do hope the generation those grandchildren represent will soon take their future into their own hands rather than allow this process to go forward.

  • 41 booklady September 4, 2017, 9:10 am

    How I wept after the referendum…living in France for the last 15 years and feeling as though I’m on a raft waiting to be rescued from Brexit… Still can’t believe the stupidity of it all. However! All is not lost: my UK SIPP is doing very nicely indeed thank you, so only just over three years before retirement here. And, if I keep an eye on the French income tax threshold, I won’t pay any tax in my host country, nor any UK income tax. Of course, my SIPP depends on a certain large pension provider not losing their passport for financial arrangements for ex-pats anytime soon. Still, let’s not worry about that, and open up another bottle of vin rouge while sitting in my garden in the sun!

  • 42 Steve September 4, 2017, 11:58 am

    It seems im not the only one who thinks the trade figures suggest am increase in UK trade and income if WTO rules are applied.


  • 43 Barry Maud September 4, 2017, 12:15 pm

    Well at, almost, 74 I suppose I am an old man but not angry. I can’t believe my luck at having been born during the last war in Britain. The golden ticket. I saw enough of real austerity to appreciate the level of luxury we all now take for granted. But I too joined the chorus of doubters before the 2012 Olympics only to be astounded by the brilliance of the event and wonder at the number of organisations that had come together to showcase our fantastic heritage.

    You young ‘uns do not appreciate the latent potential of your fellow citizens and yes, your politicians, to achieve the right outcome. The negotiations with our friends and neighbours in Europe, (where my son and his family live), will have an outcome where both parties achieve a satisfactory outcome because we will continue to depend on each other for our future prosperity. As the deadline approaches pressures will build from the ‘stakeholders’ of both camps to ensure the negotiators do the right thing so that this ‘golden age’ can continue.

  • 44 The Investor September 4, 2017, 12:41 pm

    Thanks for the thoughts all, only felt the need to delete a couple of comments this time around so maybe we’re all getting better at discussing this stuff. 🙂

    It’s a busy Monday and obviously I can’t reply to everything, so just a few quick thoughts / follow-ups.

    Firstly, if someone is thinking about moving to Europe and is wavering because of Brexit, I’d follow @RIT’s lead over mine. I have definitely been wrong-footed by what I saw as the frightening anti-progress direction of the EU Referendum vote (its motivations as much as the outcome) and it’s almost certainly biasing my thinking. He’s done a lot of cold hard research.

    In terms of the challenge of why I don’t move (and whether I’m actually being secretly selfish in being pro-Remain on the grounds of fancying living in Europe some time) @RIT’s comments have made me think a bit.

    It was never a firm plan, more a potential, but my reticence to even consider moving right now is as I say definitely partly down to the Brexit vote. I prefer rights to reciprocal agreements or worse.

    The sheer uncertainty is enough to give me pause. (In a crazy extreme example what if the UK re-introduced currency controls, if things went truly off the rails? Very unlikely but the far end of what could be in play). I don’t embrace risk/change in my personal life at the best of times (unlike in my portfolio! 😉 ) so this is a big factor.

    There’s also a personal situation beyond the scope of this blog that has changed. Finally there’s our weak currency. I am a value investor at heart.

    I mostly think about moving to Europe when the pound is buying a lot of Euros (pre-crisis, and pre-Brexit campaign and vote) and hence a fancy villa or whatnot. Today it buys tiddly-squat euros, which (a) tells you want the markets think about Brexit and (b) doesn’t fit my value investing mean-reversion mindset.

    Did I vote Remain because I wanted to be able to move abroad with full rights? Of course it was in the mix — I think those rights are/were hugely valuable — but I don’t think it was the prime motivation.

    Firstly, I have a mildly interesting family tree that means if I jump through some hoops I can live in Europe under different right regimes anyway. Secondly, frankly, unlike the Leave voters who statistics show clearly (note for the slow: not exclusively) skewed poorer and less well-educated, I’m already pretty wealthy and Brexit has only made me more so. So worse comes to worse, I can just throw some money at the problem by “investing” in some idyllic Southern European country (i.e. buying a house there) where there’s schemes to attract inward investment.

    E.g. Lisbon for the past few years, which is one of the greatest and most underrated minor cities in the world in my view.

    Given that Brexit has made me richer without permanently impinging all my options (albeit greatly increasing the hassle and likely reducing the flexibility/freedom) I could simply laugh at (especially) left-leaning working class Leave voters in the provinces and chortle “I’m all right Jack”. I don’t, because I think they’ve made a big mistake and I’d rather better for them. But if people choose to think that’s purely selfish that’s fair enough, and I’m certainly only human.

    Anyway we shall see how the angry and generally less fortunate Brexit voters feel in a few years time.

    In terms of the export boom due to Brexit and the low £, obviously it’s been good for some individual companies and if you own/work at one then I’m pleased for you. But a weak currency is not a great bedrock to build a strong and enduring manufacturing/export sector. Most of the countries the Brexiteers look enviously towards like Germany and Japan have dealt for decades with a strong currency. Weak currencies can encourage cheap manufacturing and lower investment in productivity and whatnot, and often such countries occupy lower rungs on the value chain, with less skilled workers etc.

    In addition, you have to remember why the £ is weak. It’s because the market knows how reliant the UK is on overseas flows. Gambling with those very flows by renegotiating our terms of trade with the world is not the way I would have encouraged stronger exports.

    If the sole objective had been a weaker pound we could have voted in Corbyn and had him run amok with the national balance sheet, or cut Bank Rate to negative. (Not saying we should have done either, but IF…) We didn’t have to risk Brexit.

    Also on exports, I would note there’s not really any sign of a great export renaissance due to the post-Brexit pound going on anyway. As I linked to above, the Eurozone is also seeing an export boom. Global trade has been picking up since early 2016. UK GDP is only really slowing down because the weak pound has crimped consumer spending power, and we’re mostly a consumer economy. We should be growing even more strongly now, and interest rates would have been a tad higher, too. The pound would have been in good nick. Oh well.

    Incidentally, I have received 3-4 emails from Leavers saying something along the lines of “Brexit will be glorious, if you lot stop moaning and stand behind Britain.” (I wish I was misquoting).

    I don’t know whether to life or cry at this. Again, Remain voters skew higher on wealth and education; I think it’s fair to say then we have been more than pulling our weight when it comes to UK GDP and doing our bit for Blighty PLC.

    (Of course that might be part of the complaint from some Leavers — that they feel left behind — but I say again I don’t think being in the Eurozone is responsible for that at all. No evidence whatsoever).

    Anyway, let’s be clear. Leave voters made this problem. If it goes badly, they own it.

    I’ll reiterate too that I DO NOT expect some massive collapse in the UK economy. I expect our terms of trade to be slightly worse forever, because the whole reason countries around the world clamour to join trading blocs and to make arrangements is because they reduce costs and friction and boost trade. So we can’t win on that. (Sorry, but linking to Redwood articles from last October that were rightly lampooned at the time isn’t very convincing. And that post-vote optimism has sailed).

    In the long-term I am thinking (off top of head) say 10-25 basis points of economic hit, permanently. We know about compound interest on this site. The point is compounded over decades that will *probably* amount to tens of billions of pounds worth of a lower standard of living every year etc. But life will go on.

    And for what? What’s the big achievement?

    On that score I’m grateful to the Brexiteers who commented and summed up for us the real reasons why the majority of them voted that way. Unfortunately given they weren’t troubled by data before I doubt they will be now, but anyway still we see the same canards trotted out. Even by their own terms, Brexit is already flailing (no extra money for NHS, big exit bill, ongoing legal impact on UK, etc etc) and I think any victory in reducing EU migration will also at best be Pyrrhic.

    E.g. As this graph shows, EEA migrants were strong net *contributors* to UK GDP and drew *less* benefits than both natives and non-EEA migrants:


    So if the Brexit voters succeed in cutting European migration they will simply have made ongoing migration less profitable for the UK.

    Another good day at the voting both, eh? 🙁

  • 45 TonyS September 4, 2017, 1:45 pm

    I’ve long been a fan of Morgan Housel’s writing, he’s someone that I respect as an accomplished professional. To read about his private personal struggles to master a ‘hidden’ disability is both thought provoking and inspiring. In these days of online anger and leaping to judge others, it’s also useful to be reminded now and again that we could all seek to be a little kinder and a little more patient when dealing with others.

  • 46 Grislybear September 4, 2017, 7:58 pm

    Been on a holiday in northern France last week, stayed in a small guest house lots of other northern Europeans staying there. One night got into a discussion with some of the guests about Brexit. Most of them are relaxed about the UK leaving the EU the custom union and the single market but don’t really understand why. Regarding a trade deal with the UK after leaving they agree its a good idea however they found it very amusing when they discussed that all 27 countries would have to ratify it, 15 to 20 years was the consensus. I tried to answer most of their questions however when they asked me who was representing the 50 odd percent of the voters who voted remain i couldn’t answer.

  • 47 Sean September 4, 2017, 8:00 pm

    I work in manufacturing and it has been good for us and some of it is not in the data yet as we are still buying machinery to cope with demand. I think this will take another couple of years yet to filter through.

    Not sure if the pound is weak or was over valued before but I think every up and down will be blown out of proportion.

    Interesting for me some of my friends from the continent are upset about the pound as it does not go as far back home and are thinking about leaving for that reason.

    I like the different views on here it’s refreshing hearing different experiences from across the country and sectors that we work in.

    Top work!!

  • 48 The Investor September 4, 2017, 9:48 pm

    Nice column in the FT today that reflects my view in prettier language:

    The Eurosceptic error is to take much comfort from what has transpired [since the vote]. Britain is growing more slowly than the eurozone. In the Office for Budget Responsibility’s vision of life after exit — the most measured I know — the economy underperforms an imagined future under EU membership without tipping into a death dive. Relative rather than absolute decline.

    Imagine a Britain that misses out on tenths of a percentage point in economic growth, year after year. Businesses go uncreated. Investors commit their marginal pound elsewhere. Financial services are on-shored to the continent in small parcels. Just as slowly, old rigidities in the labour market and in industry that were banned under European law start to return. Wunderkind graduates from around the world consider Britain but make their careers on the continent, North America and Asia instead. At no point will any of this feel like a crisis but, over a generation, the build-up of little failures amounts to the same thing: a diminished country, perhaps with a single concentrated reckoning at the end.

    If this reads like speculative dystopia, remember that Britain is already steeped in imperceptible decline. In the three decades after 1945, the UK was not a disaster zone. It just consistently underperformed most of western Europe. Its growth was a bit lower, its policies a bit worse. At no point did this deterioration manifest in an emergency (the 1967 fall in the pound aside) but it ended with the world’s first industrial power asking the International Monetary Fund for help and its own electorate to decide whether politicians or trade unions held the right to govern.


  • 49 Learner September 5, 2017, 2:09 am

    On the flip side, anyone currently overseas planning a move (back) to the UK? What data or events are you waiting for?

  • 50 Financial Samurai September 5, 2017, 5:54 am

    Hmmm, sounds like you are anti Brexit! 🙂

    It is interesting how the EU has turned and it’s back to bull markets again.

    The US markets are one-way bullish. Frightening so! I’m taking some money off the table from the stock market and diversifying it into cheaper property markets around the country.


  • 51 The Borderer September 5, 2017, 8:03 am

    Regarding your post regarding the FT article.
    Have a look at Sir Nicholas Henderson’s valedictory despatch written on his retirement as ambassador to Bonn and Paris. As you will know such despatches were traditionally written without ‘fear or favour’ as being his true opinion.

  • 52 PC September 5, 2017, 12:33 pm

    @TheBorderer thanks for the link. This is how I remember the UK in the 70s – until we joined the EU ..

  • 53 Pete September 5, 2017, 1:51 pm

    I think you are over-estimating the impact of Brexit. Businesses want to trade and they will find a way to do it. There is absolutely no way there will be any impact to the food supply chain.

  • 54 HK Expat September 5, 2017, 2:06 pm

    The Borderer
    Interesting that on the future section, and back in 1979, his comment was:
    “There is certainly an acute problem ahead over our net budgetary contribution to the community. We have been hardly done by here. We are not going to find an easy solution whatever we do. So far as money is concerned the community is imbued with a spirit of grasp and take.”
    How little things change!

  • 55 ermine September 5, 2017, 3:34 pm

    @ The Borderer a fascinating glimpse – nearly all the problems from 1979 seem to still exist now in Britain’s troubled relationship with the EU. preserved in aspic across nearly forty years. Perhaps the Brexit vote is an expression of the national character rather than a convulsion of sticking it to the elites. Verhofstedt was right in saying that it was never a passionate love affair, and de Gaulle has been proved right when he observed in 1963 that England

    “has, in all her doings, very marked and very original habits and traditions. In short, England’s nature, England’s structure, England’s very situation differs profoundly from those of the Continentals.”

    I recall my German grandmother coming to pre-EU London in the late 1960s and early 1970s and wondering why the place was so run down and so many old bangers still on the roads. Twenty years later I went to Germany in the early 1990s and wondered why the place looked so run down as they absorbed the DDR.

    I suspect in the years to come people from Germany will have the same feeling about Britain as my late grandmother.

  • 56 The Investor September 5, 2017, 4:17 pm

    @Pete — Well, it’s not me over-estimating it really, it’s the supermarkets raising the potential impact. I am merely citing their warnings, and I believe they are well-placed to know about the food supply chain. I agree with you businesses want to trade. Unfortunately Brexit has disrupted our relationship with our key trading partner. In the worst case it will introduce genuine and permanent obstacles and costs to that trade. In the best case, it will be slightly worse (because there is no way it will be as good as the deal we have now — it’s not about “punishing” us, it’s because that’s the reason people join free trade communities). We may in 10-20 years have some ex-EU deals that somehow make up for this permanent diminishment. I wouldn’t hold your breathe. But as I keep saying, it won’t be collapse, just likely a general worse-off situation in perpetuity. For hardcore constitutional Leavers that may be a price worth paying, and fair enough. I suspect for most people, including most Leave voters, it wouldn’t be.

    @The Borderer @ermine — Excellent read! I have been reading up a lot on revolutions and similar recently (historical) and it’s made me re-appreciate that a huge chunk of Brexit-voting is probably people wanting a myth of an alternative Britain to believe in, and hang the practical consequences. And I suppose some Remainers like me believe in a similar mission of progress and international cooperation that they would call a myth. (Well, and we also believe in the fact that we’ve done much better for being in the Eurozone than when we were out of it. But you know, facts…)

  • 57 hosimpson September 5, 2017, 4:51 pm

    I think Stephen Hawking also has said we should stop broadcasting our location to the Universe. I’ve put the Three-Body Problem series on my reading list. Thanks for the link 🙂

  • 58 Gadgetmind September 5, 2017, 5:05 pm

    The Three Body Problem is worth sticking with. Some of the writing (by the translator?) annoyed me, and some parts are a little slow, but it really works as a trilogy.

  • 59 e17jack September 6, 2017, 9:21 am

    The Economist link makes for sobering reading and outlines a depressing litany of missed opportunities.

    This from the conclusion (the community being Europe):

    “There is also a task of explaining the community to the British public rather than making it the scapegoat for our ills.”

    How prescient, and what a terrible shame that nobody has risen to that task in the last 38 years (my lifetime!)

  • 60 The Rhino September 6, 2017, 10:17 am

    This link leading on from your reformed broker link is worth a look:



  • 61 Gizzard September 6, 2017, 11:59 am

    “Let’s hope that a shortage of Werther’s Originals leaves a sour taste in the mouths of the legions of Brexit-voting pensioners – hundreds of thousands of whom have already left this Earth and their mess for us to clean up.”
    Since an increasing number of these silly old codgers are no longer around, it could be argued that their reasons for voting the way they did was for reasons other than for their own benefit. As these same doddery old/dead folk were eligible to vote in the 1975 referendum (which resulted in a 2:1 majority in favour of remaining a member) something must have transpired in the intervening 40+ years to change their opinion.

  • 62 windinthefens September 6, 2017, 9:44 pm

    As a long term lurker here, and unashamed remainer, I’d be interested to know whether anyone else has taken similar action to me. I had all my low-risk element of my passive portfolio in UK gilts. I’ve now moved nearly half to a Global Government bond ETF (AA-AAA rated) which is hedged back to Sterling. I never really imagined the UK Government could default in the pre-Brexit era, and I still think it unlikely, but less unlikely now.
    Thanks TI for the best financial site out there, and for expressing my exact feelings a lot more succinctly than I ever could!

  • 63 FI Warrior September 7, 2017, 1:09 pm

    There is no shortage of tax havens in the world today, more commonly known in the jargon as ‘business-friendly markets/countries’, but investors only have money because they are smart in the first place. As such they will notice that the establishment here is overtly hostile to foreigners; (first they came for the Poles) the fig-leaf of scapegoating only Europeans wont fool capitalists who’ll simply hunt for the highest yield elsewhere.

    In the free-market competition that is our interconnected planet, countries are constantly optimising their incentives to inward investment, so if there is a burst of xenophobia in one domain, foreign investors will simply avoid it. Witness the premium that has to then be offered by the likes of Russia to external investors to have any effect, since it was shunned when worries about the general rule of law applying surfaced.

    Similarly, if bigotry in the UK is seen as rising, easily assumed from the efforts of the media on a daily basis, investors will inevitably see this as an increased risk. (the more extreme the perception of the country the more the assumed risk, who invests in Zimbabwe today despite its potential?) So given the ever increasing dependence of the UK on the generosity of foreign investment to balance its books, what with the annual deficit as it can’t earn its lifestyle today, this antipathy towards said foreigners is a gamble.

  • 64 The Investor September 7, 2017, 1:33 pm

    @windinthefens — Thanks for the kind words, glad you enjoy the site. My portfolio/strategy will not at all be reflective of most readers’ (or perhaps even of what it should be!) due to my active foibles, but with that said I for one have been making greater use of currency-hedged ETFs in both equities and fixed income since the start of the year. That isn’t because of a perceived credit risk of UK gilts for me though; rather I thought the pound had already been pretty heavily pummeled and wanted to take some of that off the table.

    See this article (and yes, I should have written part two by now!): http://monevator.com/currency-hedged-etfs/

    Personally I think the chances of the UK State technically defaulting are extremely low, given our ability to print our own money. What would probably happen instead if things got so extreme would be deliberate and excessive inflation, and further devaluation of the pound. In that case currency-hedging back to a depreciating sterling might backfire.

    My feeling is one should avoid all-this-or-that bets at this time, and rather spread risk around (as indeed you’ve been doing with a c.50% allocation) given the very wide range of outcomes we conceivably now face as a result of this ill-advised Brexit.

    Time will tell.

    (Obviously this is not personal advice, as I’m not qualified to give it and don’t know your circumstances etc anyway. Just food for thought. 🙂 )

  • 65 Matthew September 7, 2017, 1:35 pm

    @ FI warrior – why would xenophobia (almost put xeroxphobia!) put investors off when sin stock doesn’t? There’s a danger in overreading into this, at the end of the day there is still the UK consumer to serve

  • 66 Gadgetmind September 7, 2017, 2:08 pm

    I’m over exposed to sterling currently as I’ve “life styled” my pension to about 40% bonds to avoid sequence of returns risk in early retirement. Oh, and our ISAs are also cash heavy as I’ve agreed to lend someone £400k for “a few months” as a house bridging loan. Boy, do I need that back by April 5th!

  • 67 Steve September 8, 2017, 8:50 pm

    The Brexit vote has really depressed me. Yes, I know Leave only “won” because they ran two campaigns with mutually incompatible promises (as has since been made very clear in the negotiations waffle). Yes, I know you cannot blame folk for thinking ill of the EU (and its far from perfect) when so many daily papers decided to boost their sales with outrageous statements about how evil Brussels. Still, a mature democracy should have seen through all that – and Britain failed to do so.

  • 68 The Rhino September 14, 2017, 7:03 pm

    What is this mature democracy you speak of? The country containing it has so far managed to elude me.

  • 69 Gadgetmind September 14, 2017, 7:13 pm

    He meant mature as in old rather than wise. You know, like the in laws.

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