The art of muddling through

An election win for Theresa May will make muddling through Britain's negotiations with the European Union a whole lot easier, says Merryn Somerset Webb.

What makes a political group a populist party rather than just a party? There's been endless discussion about this, given that the recent rise of what looks like populism seems to come fromall ends of the political spectrum. But the simplest way to define what is and isn't populist is by the demands the party in question makes of the ruling elite.

Populist parties always put themselves in conflict with an elite and they always make extraordinary demands of that elite that they don't expect to be negotiated immediately or even delivered at all.

So, as John Judis puts it in his recent book The Populist Explosion, demanding an increase in the number of guards on the Mexico/US border is not populist. Demanding a new wall to run the entire way along it is. Asking to raise the minimum wage to £10 is not populist. Demanding a basic income for all is (see this week's double-page analysis). Wanting a full review of our relationship and the return of significant amounts of legal authority from the European Union to Westminster is not populist. Demanding the immediate and total cutting of every one of our ties to the EU is. You get the idea.

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The common factor of all populist parties is that their demands are impossible to meet inside a functioning democracy something populist leaders find out the second they win an election. Populists have historically played an essential role in moving the political debate in signalling "that the prevailing political ideology isn't working and needs repair".

However, they hardly ever get much of what they want. Instead, success means ending up with a shift or two of direction away from the status quo (Latin, as Ronald Reagan liked to point out, for "the mess we're in"). So there will be no wall (bits of one might appear). There will be no universal income (though other countries may adopt our insanely expensive tax credit system). And there will be no sudden clean break from the EU: the UK's relationship with it in five years will be different to today's, but not as different as either hysterical remainers fear or hardline leavers want. This brings us to Theresa May's decision to call a general election and why it's good news.

Brexit is going to be a negotiated muddle-through. She needs a clear mandate to get the angry factions on both sides off her back, so she can make sure muddling through isn't either horribly unpleasant or expensively destabilising. A successful result will give her both the reputation and the time to do so. That's a good thing. But for now, you'll be wanting to know how to invest while all this is going on. The answer is in much the same way as usual. Buy assets that offer some value (such as the UK see this week's cover story), but perhaps also with a nod to some of the markets in which no one is interested in the tiny twists of British politics.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.