Crazy month. Sane result. That seems the simplest way to sum up UK politics since the EU referendum. It's looked like chaos. But within a few weeks we have moved from a shock vote for Brexit to a leadership campaign via a period in which person after person, as the wonderful Ruth Davidson put it, was "resigning, getting knifed, bottling it, withdrawing, failing, declaring, or falling on their sword" and on to the coronation of a new prime minister and a perfectly good one at that.
This is the kind of thing that should make our political system the envy of the world because it works. It means, as analyst Russell Napier says, that the UK is capable of "flexing not breaking". The politicians who stretched a million truths in the run-up to the referendum are gone. The overvalued pound that produced our horrible current-account deficit is gone. The cost of our borrowing has fallen with gilt rates, such that we can now dump austerity. Our constitution, exchange rate and political system are all flexing. So far so good.
What next? Theresa May promises to follow through with Brexit. That's good. However, it'll take a while our guess is that while an awful lot will be blamed on Brexit over the next five years (some with validity, most without), by the time it is all sorted out, most people will have forgotten that trade terms with the EU were ever a problem.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
We also suspect that the corporate world in the UK will have long switched from whining about Brexit to worrying about bonuses. Why? Because while we don't know much about May's policy plans we do know that she has had it with big company boards. She reckons they aren't working as they should. So she wants to find a way to block takeovers that come with little point beyond making CEOs rich. She wants to make shareholder votes on remuneration binding (rather than advisory). And she wants consumers and employees to sit in on board meetings.
Not many boards will like this. Nor will many fund managers (if their votes on behalf of shareholders are fully binding, they will have to use them properly). But it shouldn't come as too much of a surprise. Corporates have been ignoring their stakeholders (ie, everyone but their short-term shareholders) for decades the evidence is all around us. Think ludicrously high executive pay, low dividend cover, low average wages, low productivity and low capital investment all things that are bad for both long-term shareholders and the economy.
I haven't been the only commentator telling boards and fund managers for years now that if they didn't reform themselves sharpish they would end up being reformed by someone else. If that now happens, they have only themselves to blame. The rest of us should be cheering May on. If life after Brexit is to be better, the corporate sector needs to flex with the rest of the UK's institutions whether it wants to or not.
-
Bitcoin hits new heights - is now a good time to invest?The value of Bitcoin has surged to a 20-month high. Why is Bitcoin rising and is now a good time to invest?
-
Gold hits record high - could it soar higher next year?
The yellow metal has hit a new all-time high. We look at market expectations for 2024, whether investors should sell and take profits, and how to invest in gold.
-
Beat the cost of living crisis – go on holiday
Editor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How capitalism has been undermined by poor governance
Editor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecasting
Editor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”
Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s door
Editor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation works
Editor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
Car hire and the strangeness of the post-pandemic economy
Editor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
-
Why we need to get a grip on our government
Editor's letter Our government is trying to do too much, enacting policies that are destructive to the private sector. It needs to drop the the feel-good nonsense and create policies that lead to long-term wealth, says Merryn Somerset Webb.
