BREXIT ONE MONTH ON
As Othello, Un Capitano Moro, said some time ago, chaos is come again. If he had been talking about Europe in the last few weeks then he may have had to find some stronger words. But the cavernous mouths, shredding their vocal chords with predictions of doom and gloom have already started to assuage. Panic has been replaced by quiet reflection and reality. The sky has not fallen in. Even the most pessimistic have not failed to realise that despair was the solace of fools.
Before the Brexit referendum the IMF said there could be a recession in the UK, the fifth strongest economy in the world. Now they say there won't be and that the UK will grow faster than France, Italy and Spain. Political stability has returned and the Bank of England has also said it will support the economy.
The FTSE 250 is back up near where it was before the referendum, having lost just 2%, and the FTSE 100 index is about 5% up since the vote. The pound initially took a battering but it has since stabilised at about 9% below its level before the referendum vote. The UK may have lost its AAA status with all the credit rating agencies but the markets couldn't care less.
After the event there were widespread forecasts of mayhem in the financial markets but alarmist views have proved unjustified. Although the fall of sterling will cause problems and losses to some people, including holiday-makers booking trips, it will be of net benefit to the UK economy overall. For all the pessimism, there has been no descent into a death spiral; we have seen resilience and bounce instead. We must not therefore talk ourselves into a self-fulfilling downturn.
As is the wont of all whirlwinds, they appear from nowhere and rise up unannounced. Just as the dust was beginning to settle at one end of the continent, so new troubles erupted at the other: a coup d'état attempt in Turkey which came out of the blue.
Turkey, a member of the NATO military alliance and an EU candidate, saw its army rise up against its own democratically elected head of state during a brief orgy of brutality that almost succeeded. This, it must be remembered, is in the same continent transforming itself into an EU super-state, no longer based just on trade but with ambitions of complete political and even military union.
In Britain a few days earlier, the people had rejected their prime minister's position at the ballot box. David Cameron resigned and the new prime minister, Theresa May, sacked ministers and replaced them. The army did not rise up; there were no arrests; no blood was shed. The outgoing prime minister departed to a standing ovation in the House of Commons, echoing from both sides of the Chamber and from the Speaker himself.
But in Turkey 9,000 soldiers were arrested along with 2,745 judges. The Turkish Higher Education Council (YÖK) ordered more than 1,500 university deans to resign; warrants for arrest were issued against 42 journalists. The prime minister remained and received a standing ovation from those who were not already in jail.
These events of the past few weeks surely indicate that it is the EU and its institutions that face the real challenge going forward: how to deliver stability and ever-closer union in a continent where fundamental stability is the norm in one part, contrasted by fundamental instability in the other.
So we move on. What now? Britain has a newlycreated ministry, headed by a new Minister for International Investment. Contrary to President Obama's warning that “the UK would go to the back of the queue”, it seems the US is now embracing the prospect of a trade deal with the UK. Dialogue is also already underway with 12 fresh global partners.
Leaving the EU is not the same as leaving Europe and the UK will negotiate access to the Single Market. Being outside the Single Market does not mean being unable to trade with it, but the reality is that the global growth zones, the places to invest and to trade, are now beyond the European continent and the Single Market lags far behind them. Canada, Australasia, Asia, China - all offer markets far larger than the existing 400 million EU block. Each is now moving strategically to ensure that once the restrictions on negotiating unilateral arrangements with the United Kingdom are lifted, they will be front of the queue.
Australia's Prime Minister, Malcolm Turnbull, told Theresa May by telephone last week that his country wants to strike a deal “as soon as possible”.
UK Ministers are now aiming to secure groundbreaking free trade deals with zones ten times the size of the EU before Britain leaves in 2019.
So this is also a good time to start talking to the UK about how its relationship with the Caribbean can be maintained and developed. Bilateral agreements and decisions are there to be had between regional governments and the UK directly. Some of these have not been possible until now and are opportunities that can be exploited.
Liam Fox MP, the UK's new Secretary of State for Investment, last week announced that a number of countries had already been in contact about striking free trade deals. Mr Fox said: “We've already had a number of countries saying we'd love to do a trade deal with the world's fifth-biggest economy without having to deal with the other 27 members of the EU.”
Boris Johnson MP, the new Foreign Secretary added, “I can tell you that in Whitehall and around the world we have the staff who are only too eager to get on with it and help build a new role for this country: a global Britain.”
We might do well to recall the advice of King Philip, in 350BC, to his own son - later King Alexander-the-Great: “My son, ask for thyself another Kingdom, for that which I leave is too small for thee.”
So what can all this mean for regions such as the Caribbean, those who depend significantly on the strength and performance of the British economy? Will we see tourist numbers decline against a weaker pound? How will those living in the OECS who depend on their UK pensions be affected?
These are legitimate concerns and the value of the pound is the elephant in the room, but the reality is that most tourist traffic coming into the region is from travellers with higher disposable incomes, those less affected by fluctuations in currency value. The key determining factor is UK economic performance. Where economic performance remains stable or grows, people spend. Even the pensioners will take consolation from the fact that units of their pension fund investments will be in dollar denominated stocks, returning more pounds against the same dollar returns and, since the Brexit vote, most of the world's major stock markets are up.
Business in the Caribbean can rise to the challenge, business always does. It knows how to offer a competitive advantage and, locally, provide what is unique to Saint Lucia and promote it to the markets we serve and to new ones. Government has its role in ensuring market stability but it is the providers of the tourism product that can help ensure that Saint Lucia remains competitive in this time of change, while government explores the new opportunities that have now arisen with Saint Lucia's oldest trade partner, the United Kingdom. John Kennedy is President of the British Caribbean Chamber of Commerce, Saint Lucia, and Chairman and CEO of Boka Group, a major investor on the Island. The above is his personal view.
Prime Minister Theresa May is now at the helm in Britain as it prepares for Brexit. Non-EU countries are lining up for trade deals; what about the Caribbean?