The Eye of the Storm – The Pilot Newsletter

Well, that was a month to remember. 

You may recall last month I highlighted the chaos that surrounded Liz Truss and her acolytes.  Then Kwasi was given his marching orders and finally a grown up entered the room in the form of Jeremy Hunt.  I don’t think I have ever seen such a collective sigh of relief. 

With Liz taken out at the knees and totally lacking in both credibility and charisma, people even considered bringing back Boris – who, like some Greek Titan (maybe Dolos?), flew in from the Caribbean to land at Heathrow as Rees-Mogg’s hero before having to do a volte face upon realising that six weeks is not long enough for the party to forget all his woes and rally around him.  So, Rishi it is, and I am sure we all very much hope he will have a calming hand on the tiller – we have stormy seas ahead of us.

Unseen, there was also a real power tussle between the Bank of England and the government.  The government, the pension funds and much of the press wanted the Old Lady of Threadneedle Street to keep buying bonds (an emergency lifeboat, given it was all going to hell in a handcart).  All was set for a face off, during which the Governor, Andrew Bailey, showed his mettle and stopped buying exactly when he said he would.  The sky did not fall on our heads and the BoE demonstrated to the world that it is truly independent.  This, in itself, will have brought down the bond yields.  So here we are at the beginning of November, feeling like it was all a bad dream.

Yesterday, we were drawn back to a rate rise not seen since 1989, when I was still a year from joining KPMG, so as a student, I can’t say it caused me much of an issue! A different story to when I had a mortgage on Black Wednesday 1992.  On top of this rise, the Bank is forecasting a two-year recession – not as deep as the 1920s, but certainly long. By the end of this, I guess we would have shrunk our economy to a size suitable for the inhabitants of this island of ours.  Best we keep those pesky skilled Europeans out of our workforce and God forbid that we want to sell them something. 

 Here is a not-so-funny anecdote: for one of the businesses we are selling, it is now easier for the CEO to fly out and hand deliver samples to a potential bidder in his hold luggage that to send them by freight.  Looks like “smuggling” is taking place both directions.  Just imagine what would happen if we had real free trade! 

 So, Jeremy – how about we realise that the Brexit in which some envisioned Blighty as thriving as a low-tax nirvana is in fact a mirage, and we once again allow for the free movement of people, goods and services between us and the EU, much like Norway and Switzerland do.  Then we can rejoin the rest of the grown-up world and leave this self-imposed playpen.

By Charles Whelan on 07/11/2022