When Philip Hammond made his first few budget speeches as chancellor, he promised that in stark contrast to his showy predecessor, George Osborne he would return to having one big budget speech a year in autumn, with the spring edition reverting to being little more than a quick progress report.
He stuck to the script this week, although I have a sneaking suspicion that this was more by necessity than by choice. Hammond was speaking the day after Prime Minister Theresa May's Brexit withdrawal agreement had been rejected yet again by the House of Commons. What with all eyes focused on Brexit, the chancellor was reduced to dangling a carrot in front of various government departments. They can look forward to more cash in the near future but only so long as the politicians get their act together and agree on a deal with the European Union (EU).
Technically, May's latest rejection means we're still on course to leave the EU outright on 29 March. Yet so far, markets appear to be shrugging it all off. Even the pound the most sensitive asset to Brexit talk has been fairly sanguine this week. At first that might seem surprising, particularly given the somewhat hysterical "lettuce shortage" headlines that the prospect of a "cliff-edge/clean" (delete according to your voting preferences) Brexit has inspired. It's easy to forget in these politics-obsessed times that markets often quite enjoy political gridlock when politicians are tied up squabbling over other things, there is less time for them to do anything that might mean major disruption for businesses.
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
And in the UK, we are most likely nearing the point where it's all about the admin. By the time you read this, there will have been approximately another half a dozen (I may be exaggerating I hope) votes on Brexit and amendments on Brexit and amendments to the amendments on Brexit. But unless something very surprising indeed happens, it's all pointing to a massive fudge of exactly the sort that always envelopes any negotiation that involves the EU.
I suspect the next step will involve delaying the date of Brexit probably until just before the European elections, which will be presented as the "final" final deadline. And if May's deal can't scrape over the line by then, there will be another extension, and so on, until the Commons agrees on Brexit or there's a fresh general election.
Investors shouldn't get too comfy. Gridlock will end, and when it does, it's clear that our politicians are gunning for companies on several fronts: share buybacks are a hot topic in the US, while the tech giants aren't getting any more popular (in his spring statement, Hammond said he will ask for a competition review of the digital-advertising market). But if you focus on assets that are cheap; domestic rather than global in focus; and you avoid the most politically exposed sectors (housebuilders, say), then, as Christopher Wood of CLSA nods to, the main risk for UK assets might not be that they have a lot further to fall but that they recover faster than you expect.
The Sceptical Investor, John's book on contrarian investing, is out now MoneyWeek readers can get 25% off here.
-
Millions of pension savers could get targeted support under new proposalsThe proposals are part of the FCA’s attempt to tackle the advice gap, after 75% of savers admitted they don’t have a clear plan for their pension
-
RICS: Housing market continues to strengthen but 2025 could be challengingThe latest survey by the Royal Institution of Chartered Surveyors reports a resilient UK housing market, but warns of headwinds next year
-
Beat the cost of living crisis – go on holidayEditor'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 governanceEditor'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 forecastingEditor'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 doorEditor'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 worksEditor'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 economyEditor'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 governmentEditor'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.
