645: Brexit update
Labour Try To Seize Power: The longer Brexit goes on the more it has become clear that all Labour are interested in achieving from the ongoing political crisis is power they want Corbyn in No10 to start their left wing policies and distribute the wealth to the masses through higher taxes, attacking businesses and the middle classes. The flip flop on Brexit has been quite extraordinary and its likely the general UK population has picked up on this, along with their anti-sematic rhetoric and not vote them in in a General Election. The Liberal Democrats at least can gloat they have consistently wanted to stay in the EU and will campaign for that. 70% of Tory voters voted to Leave the EU so Teresa May and now Boris Johnson are desperately trying to get a deal done that is not voted down by Labour and the Liberal Democrats. The number of Tory MPs simply has not been enough to get any deal over the line they have failed on three occasions. Labour have flip flopping around and have not admitted they actually - most of the senior left wing leadership at least - want out.
Good Start for PM: Boris Johnson has done a pretty good job so far of upping the anti and making it clear he will go out on 31 October without a deal if necessary. Both Merkel and Marcon seem to have taken notice and Barnier is now saying he is willing to listen to the UK proposals. However, its just a start and there are many hurdles to overcome before the UK achieves a Brexit. Johnson suspending parliament end August was a bold move to try and assure Brexit deal or no deal. But its certainly angered many people including some in his own party that are conspiring and plotting against him now since they see this as undemocratic. However, the counter argument is that there was a Referendum many years ago democratically held and the politicians have voted against all Brexit deals three times against the will of the people which is hardly very democratic either. Johnson claims he has some bold new initiative in the Queens Speech that are pressing business and its difficult to argue against that since these politicians have only been talking Brexit for the last few years it seems. Its time to move on.
Key Period in UK Politics: For the next 9 weeks before 31 October, Boris Johnson faces three key challenges one is a vote of no confidence in him as Prime Minister. If he continues to make progress on the Irish backstop and makes positive indications he is closing in on a deal, then our view is it would be unlikely a no confidence vote would be successful. However, Philip Hammond and Dominic Grieve are working insidiously in the background to try and undermine Boris Johnson. The Tory party becomes more divided by the day.
Remainer Try To Stop: Labour and the Liberal Democrats will also try working with Remain Tories to bring in legislation to prevent a non deal Brexit in September but time is running out for them. There are likely to be a series of votes critical to trying to stop a hard Brexit. No-one knows the outcome.
The Speaker: Meanwhile a third threat (or opportunity as once sees it) is Bercow the Speaker of the Houses of Parliament hes got such a huge ego we believe hell want to go down in history as the person who scuppered Brexit before he stands down from his role.
Divisive Politicians: The bottom line is this bunch of politicians drive by egos and power and driving the country into multiple crises Johnson is trying the be decisive though in doing is its even more divisive an his gamble could spectacularly back-fire and see Corbyn with as little as 23% of the popular vote get into Downing Street a frightening prospective if ever there was one.
Deal or No Deal: It seems highly likely that Boris Johnson wants to get a deal done just before the 31 October deadline, then immediately go to the polls after a Brexit to try and crush Labour, the Liberal Democrats and the Brexit party. He will make the point that he has delivered Brexit and we can move forward once more with confidence as a country to unite and get on with business and public spending. Its a very risking strategy but its certainly possible he could succeed. He has certainly started well and his popularity also with some Leave Labour voters has improved. He is definitely an optimist and a motivator something the country needs at this time. We saw this when he was Major of London and hes a breath of fresh air when compared to the miserable soundings of Jeremy Corbyn blaming all on business and anyone trying to get ahead in life.
Labour Threat: For property investors is obviously a critical time, because if Jeremy Corbyn got into power we would see:
· Huge increases in capital gains tax also on single (only) family homes
· Increases in income tax
· Increases in inefficient public sector jobs creation including more regulations
· Rent controls
· Seizure of empty property by the public sector for their use
· Increase in general inflation
· Decrease in the value of Sterling
· Decrease in house prices a potential house price collapse specially in London
· Increase in unemployment in the private sector as businesses collapse from high costs and taxes
· Richer people and international wealthy people leaving the country to avoid the draconian taxes
Ultra-Left Wing Arm: Frankly a Labour government run by a Marxist would be a complete disaster and someone everyone should be worried about. If he was to get into power through the back down some form of socialist hung parliament it would be at least 4 years of economic mayhem. When Sterling drops, its probably less to do with Brexit and more to do with the threat of a Labour government are have a known track record of overspending and running huge deficits even in the good times and with a centre left government. Wind forward ten years and economic times are far more challenging as the UKs manufacturing base has weakened and Brexit turmoil has spilled over in to business confidence, plus Labour is far more left wing that during the Blair-Brown era of course. So Labour economic policies would be a complete disaster.
Stop Investment For Now: Our steer for property investors is dont invest at this time in the UK. Its simply to risky with the threat of Labour getting into power. There is something like an 80% chance of another General Election before the end of 2019, the most likely date being 1 Nov 2019. And if Labour form the next government it will be disaster for property investors its simple. Anyone owning a home or wanting to buy a home will be clobbered from all directions. Its too late to sell as well. One has to just keep ones fingers crosses all very distressing.
Rapid Exit Best: Business hates uncertainty. The best outcome for property investors is a swift Brexit either Hard or with a deal by 31 October, an Election 1 November then Boris Johnson winning a big majority. Then there would likely be a big increase in house prices starting November 2019 onwards particularly in London and particularly if a deal was struck.
Delay Prolongs the Pain: But equally likely is another delay and it could be a big delay more uncertainty or Labour getting into power. If there is another delay then the chances of Labour getting in to power rise sharply because if there was a general election, the Brexit Party would take so many Tory votes and the population will be so upset they might want to vote for a second referendum something Labour have promised it seems after they switched tact a few weeks ago. Of course if Boris Johnson achieves a Brexit by 31 October, he could get a lot of northern Labour Brexit voters voting for him as they side against Corbyn who deserted their cause. Its even possible the Brexit party could disband or Farage gives Johnson has nod particularly if there was a Hard Brexit.
Johnson-Tory Strategy: Its likely that Johnson thinks the chance of achieving a deal is quite low, though he may genuinely want a deal, but he wants to play the game through to mid Sept then dash to the finishing line with a Hard Brexit and then a General Election which is the Tory parties best chance of securing a big majority around 1 November. He certainly seems capable of making good motivating speeches that one could imagine would win votes also across party lines if they trust he will bring better economic days in years to come and help make the Brits proud again (rather than insecure navel gazing negative souls). Lets hope he charms his way around Europe and gets a deal done quickly to put everyone out of their misery. The theory around a 31 Oct Brexit with no deal or deal then 1 Nov election would be Johnson could claim he has delivered Brexit, we can move on positively and he would grab most of the 13% Brexit votes. Since Labour are currently on 23%, Lib-Dems 21% and Tories 32% - he could achieve a significant majority if this gamble worked. Of course Labour can see this and Remainers can see this so their only was of stopping this success strategy is to put the skids under a Brexit whatever legal, political or other was possible. Its a dash to the finishing line for Johnson but hes got many hurdles to get over in the next 9 weeks.
Well update again shortly as the next few weeks are likely to shape both politics, UK business and investment for many years as the politicians plot against each other to get there ways with scant regard for the general population voters. Theyve had 3 years to make progress on Brexit and every deal has been voted down by the Labour party, whilst the population worries about their futures. Jobs and the business environment.
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