So much has happened in the last 2 weeks since I issued my previous News and Views that I’d also almost forgotten that during that period, we have also had Christmas and the New Year celebrations!
So let’s try to make sense of the three big headlines of the Brexit trade agreement, the Covid-19 and new lockdown in the UK and the US Presidential Election.
Whilst the Brexit negotiations have dominated the news in the UK for 4½ years, the actual achievement of a trade agreement at the eleventh hour pales into insignificance when compared to the other two topics, but nonetheless, it’s an important one just to digest a little!
It’s fair to say the majority of the agreement was about trade and travel rather than looking at services, and when you consider that the UK is probably 80% services when it comes to export, it seems remarkable that such a big proportion has kind of been left out from the negotiations.
That having been said, there are on-going negotiations, which are working towards a Memorandum of Understanding, which should be issued sometime in March, which deals with the Financial Services sector. Sadly, this means that we are still left with some uncertainty with regard to our European based clients, but as they will know, I’ve been communicating with them regularly on a separate basis to keep them appraised of progress.
As you know, I try not to be political in my views, but I would say that despite the fearmongering that went on prior to the Brexit agreement about difficulties for freight at the border and in particular Dover, which as you probably appreciate is in the County of Kent where we live, very few problems have actually materialised. There had been a small number of trucks that have been turned away from the border due to inappropriate paperwork, but these resulted in small fines and were quickly resolved. Certainly nothing like the issues that were predicted or indeed, the pictures that we saw of the huge number of lorries being held up due to the border being closed by the French just before Christmas.
In my last Newsletter, I suggested that the border closure might have been a bit of smoke screening to hide a concession on fishing rights from the French to enable agreement to be reached. We’ll never know whether there was any truth in that in reality, but nonetheless, there was compromise on both sides and that did facilitate the agreement.
By the time the travel restrictions are lifted, such that we can venture onto the continent of Europe once again, I’m sure people will be so pleased to be able to travel, that they will take in their stride any new restrictions or additional paperwork that is required in the post Brexit environment. We just need to learn a few new disciplines.
Turning now to the Covid situation, the complete lockdown in the UK really should not come as a surprise to anybody as the number of cases were accelerating and particularly with the new strain of the virus, pressure on the Health Service was bound to result and we are now seeing that in the daily numbers that are being released by the Press. Sadly, we’ve not quite reached that peak as yet, so I think it is a situation that will get worse before it gets better, but nonetheless, the roll out of the vaccines, both in the UK and further afield, has to be good news and as the most vulnerable people in society are vaccinated first, I would hope that this will be reflected in the statistics before too long. There will of course, be a lag effect, because it takes 2 – 3 weeks for immunity to be achieved, and it can take around the same period for somebody who is infected to show symptoms and to become ill. It may well be therefore, that we don’t see any significant movement downwards with numbers until the beginning of February, but hopefully, we will start to see them taper off before then – fingers crossed.
Hopefully, this combined with the lockdown and people responding positively to the social distancing, staying at home and other restrictions, will help to defeat the virus once and for all. Only time will tell.
Turning now to the US, I had some mild interest in the ceremony of counting of the Electoral College seats in Washington DC yesterday, which should have been manly symbolic and the result being to endorse Joe Biden’s Presidency.
Although we knew there were going to be some objections to the results, it was widely accepted that this would just be a bit of sabre rattling, which would soon be dismissed and that the traditions would be observed.
I did express earlier in the day, a concern that I was feeling about the continuing inflammatory statements coming from President Trump and that this could have led to some disturbance, but never in a million years, did I believe that we would see the shambolic scenes in the Capitol Building that were being shown on the TV yesterday evening!
Commentators were saying that if this sort of activity went on in a third world country, then it would be seen as an attempted coup d’état and thankfully even though sadly 4 people lost their lives, there was not further death and destruction. In fact, when you review some of the video coverage of the actual storming of the Capitol Building, it seemed that once they got inside, the protestors were at a loss as to what they should do once they were there. Maybe they were just surprised that they’d managed to gain entry that far, but for those involved on the receiving end, it must have been a very frightening experience indeed.
Historically, the last time the US State Capitol Building was breached was in 814, when it was burned down by an invading army – you guessed it – it was the British! Not guilty this time!
At least we can breathe a small sigh of relief today as it has been announced that President Trump has now conceded, but there is some speculation as to ‘did he fall or was he pushed?’
Over the next few days, I think we should get more clarity, but it’s interesting to note that Donald Trump’s Twitter account was closed down and that the video that he had released has also been taken down by a number of the social media sources. There was comment from some political corners yesterday that the 25th Amendment of the United States Constitution could be invoked, which is where a President is removed from office if they become unable to do their job. Under these circumstances, the Vice President becomes the President. I just wonder whether that actually happened yesterday or not? Whilst I don’t want to appear to be turning into a conspiracy theorist, it is interesting that when the Electoral College count recommenced, that the Vice President, Mike Pence, recused himself from his role in the proceedings and it would also seem that it was him that instructed the National Guard to be deployed. In theory, I believe it is only the President that can give that order, so who knows?
All of this should now settle down fairly quickly in terms of the US Inauguration of President Biden on 20th January and hopefully, we will see some stability return thereafter. Clearly, with the two seats in the Senate that were won by the Democrats, this now gives them a much stronger position politically, but what happens with Trump and his supporters now, is anybody’s guess.
As for the markets, as you know, they don’t like uncertainty and despite the Covid lockdown and the US shenanigans, markets are looking quite positive and the UK has had the strongest start to a New Year for some considerable time. You might think this strange, when we’ve just gone into lockdown, but actually, markets look ahead and will be seeing beyond lockdown and anticipating the positive effects of the roll out of the vaccinations and hopefully, we will see that growth trend continue from here.
Although it now seems a little tame to say it, after all of the above, may I just close by saying I hope you had an enjoyable Christmas break and to pass on our best wishes for 2021.
As always, best wishes. Richard, Chris and Lesley