The retreat of globalisation

Not long before the Brexit vote last year, I wrote here that one of the best ways to save the union would be to vote Brexit. At the time the SNP-led Scottish government was threatening to demand the right to hold another referendum if the UK voted out. I don’t suppose they really want to, I said – “the SNP does good threats” – but their members may end up forcing them into it, at which point they would likely lose (again) and the rest of us would (finally) have to hear no more about it.

Things seem to be panning out pretty much as I thought. The fall in the oil price has exposed an already very ropey economic case for going it alone. There is still no consensus on what Scotland would do for a currency. Whenever the referendum happens (if it happens) the UK would be out of the EU before Scotland was out of the UK, which would surely leave Scotland in no unions at all (possibly briefly, possibly not).

That might seem fine (after all, it is odd to want to leave a mostly successful union such as the UK, for a so-far-not-very-successful one such as the EU). But it hasn’t in the past seemed to be quite what the nationalists are after. It is early days to worry about the specifics (the market has bigger things on its mind). But it is still worth seeing the Scottish government’s renewed call for separation as part of a wider global trend: when historians try to analyse the first decades of the 2000s, they will, I think, see it as one of borders voluntarily reborn. Think 1989 in reverse.

What advice can I give you on this? Worry about how the retreat of globalisation might hit the profits of the international blue chips you have been relying on for growth and income for the last ten years (in a recent survey, more than 35% of US hedge-fund managers said they reckoned that protectionism would be the thing that would finally do in the long US bull market). Get ready for more enduring inflation than most expect (US hedge funds have doubled their holdings of gold since December). Diversify (see Sarah Moore’s thoughts in our cover story on commercial property).

More practically, if you tend to gravitate to property for your security, buy a pretty house on the Northumberland side of the Scottish border. You can rent it out to panicky Edinburgh financiers who succeed in selling their own houses while we wait to see what happens (several big Edinburgh town houses are coming on the market already); you can then sell it to one of the same at a satisfying premium if the Scots turn out to favour emotion over economics; and finally, if the Scots instead turn out to be rationalists and to take 300 years of reasonably successful joint history over nationalism, you can let it out as a holiday home (the yields on holiday homes in Northumberland are excellent).