As someone who spent most of my childhood in rural areas, visits to London in the seventies were memorable for the bright lights of the West End, trips to the theatre, and a strange figure who tramped up and down Oxford Street carrying sandwich boards declaring “THE END OF THE WORLD IS NIGH”. Eventually we ceased to see him, though there have been plenty of doom-mongers since his time forecasting the end for humanity: such as former broadcaster, David Icke and more recently, David Cameron.
Whatever one’s viewpoint on the viability of our membership of the EU, most reasonable people would concede that the Prime Minister employed some pretty graphic predictions to try and persuade the public to stick with the project. In the end none of the dire warnings – nor the appalling warning on state pensions, uttered in the final days of campaigning as Project Fear morphed into Project Threat- were enough for the Establishment elite to divert the Eurosceptic majority. Indeed as I watched the PM’s wretched resignation speech in the immediate aftermath, I wondered just how large the majority would have been had he not mobilised the supposedly independent Whitehall machine to back Remain: 60-40, 70-30? For most of the people I know who backed the supposed status quo, did so despite deep misgivings over the EU’s trajectory of travel; opting instead to avoid any financial uncertainty.
So what did that financial shock actually look like? On the Friday morning, once the count became clear, shares in FTSE 100 and FTSE 250 companies plunged by as much as 40 per cent – before bouncing back strongly in the afternoon.
The UK’s housebuilders were amongst the hardest hit, but I am pleased to report that I stuck to my strategy stated in an MMC Magazine editorial, to hold my stocks throughout the Referendum campaign; and added to them substantially as the drama on the City’s trading floors unfolded.
I was in good company, however, as Berkeley Homes’ boss Tony Pidgley added approaching a million pounds to his personal stake in the regeneration specialist; and even Dame Kate Barker – a non-executive director of Taylor Wimpey – invested thousands in the hugely discounted stock.
You may recall it was Ms Barker who put her name to a report on housing supply in 2004, when Gordon Brown was still Chancellor, revealing how far short we were of the necessary number of new homes required. The Cowdenbeath Clunker famously went on to announce he was going to oversee the number of completions rise to 250,000 a year, just before the Credit Crunch and output fell to under 100,000. In case anyone is concerned about lack of demand in the foreseeable future, we have never got anywhere near the quarter of a million figure in the years since; while population rise has put further pressure on housing, schools, hospitals and other facilities.
Sterling or Gold?
Gold is always viewed by investors as a safe haven during turbulent times, while the Pound suffered a downward adjustment roughly half of what many economists had predicted was due for some years. And as I write, the lunchtime news is reporting a renewed drop in Sterling due to City jitters over commercial property sales, but this is also expected to prompt a further cut in the base rate to 0.25 per cent: which will bolster the attraction of house purchases if it is passed on to mortgage borrowers. Meanwhile confidence seems high in major manufacturers such as Rolls Royce, for whom wider markets look more accessible post-Brexit.
I am though sympathetic to businesses such as a wood machining company located near me, which reports it cannot pass on the currency connected price rises for its timber supplies from Europe, to customers here. In every scenario there are winners and losers.
Not only have the CBI back-tracked on its forecast of financial Armageddon should we vote Leave, but I have been encouraged by much of the widespread reaction to the Referendum result.
The building services research body, BSRIA, for instance declared it was ‘business as usual’ for its members and that the construction industry should remain confident and optimistic about the opportunities out there for existing and new industry projects. Indeed BSRIA is committed to offering ‘extra service to members during these uncertain times.
Julia Evans, Chief Executive, BSRIA, said: “Now that the dust has settled a week on from the Brexit decision – for BSRIA it is definitely business as usual – we are where we are. There are opportunities out there for our members to garner new work and deals – we all just need to find them.
“Against a backdrop of political and ‘economic spaghetti, BSRIA can lead and support its members into a bright new future. It is a brave new world. We appreciate there is certainly political turmoil, noise and volatility in Westminster – but BSRIA needs to join in this debate.
“As an industry – we must now start to shape future policy. Indeed it is a chance to revise industry regulations and to renegotiate the framework for the future and find new trade rules.
“We need to protect what has already been invested in and make the most of our assets – especially – investments and buildings. And ensure that investors have confidence in our industry. I was especially encouraged to learn that government ministers have begun efforts to reassure industry leaders that housing and infrastructure spending will not drop and in fact both will become ‘more important, not less’ after Brexit.”
Another positive perspective came from The Vinden Partnership, talking to UK Construction Online. MD Peter Vinden stated: “The effects of the result of the EU referendum are still being felt, with some of the initial reaction bordering on hysteria. The country now needs strong leadership to steady the ship and put Britain back on course.
“Instability surrounding the pound and the markets were inevitable once it became clear Britain had voted to leave the European Union. As the posturing stops and serious negotiations begin, it will become clear that Britain will not turn its back on trading with Europe. Likewise Europe, despite some of the more unhelpful comments being made from certain quarters, will realise it needs to maintain a favourable trading relationship with Britain.
“We have seen EDF confirm that the Hinkley Point power station project will remain unaffected by the vote. Likewise, Huawei will be pressing ahead with its billion pound investment programme.
“Britain will also be able to pursue advantageous trading relationships with other parts of the world. Already we are seeing trade talks begin with the likes of Australia, Canada, India and South Korea. The Brexit decision should be viewed as a great opportunity and we need to reinforce the message that Britain is open for business.”
Another point worth making is regarding the post-Referendum status of European nationals already here – including the many thousands working in construction. As I wrote in MMC – does anyone imagine that the day after a vote to Leave that Nigel Farage was going to insist on deporting his German born wife?
In fact the phalanxes of foreign staff – mostly salaried by the NHS – posting pictures of themselves on line (during work time?) with placards parading their nationality, are indulging in their own brand of scaremongering. How is their future status any different to that of an American, Australian, Indian or Nigerian living and working in this country?
In fact one of the few things our politicians seem able to agree on is that there will be no removal of EU citizens already resident in the United Kingdom; while most Brexiteers favour a points based system which will continue to admit people of any nationality whose skills are needed.
In time, with a fairer, more tightly controlled immigration system – rather than an open door to 500 million irrespective of their attributes or intentions – then we may just manage to balance our building and public services provision with demand. And then we will be in a far better position to offer sanctuary to genuine asylum seekers; for which this country has an admirable record going back centuries.
Remember when the monstrous Idi Amin launched his racist campaign against Ugandan Asians in the 1970s, we were able to accommodate some 30,000 people who arrived with virtually no possessions. But it was a far easier ask than trying to absorb 300,000 migrants, year after year.
Hopefully David Cameron and his taxpayer funded billboards will soon be just a bad memory, while I hope we can all find a way to work together and recall another government as well as a business backed campaign from the Seventies: “I’m backing Britain”.