BREXIT ONE MONTH ON

The Star (St. Lucia) - - LOCAL - By

John Kennedy

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?

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