Investment Note June 2016



Blue on blue, red on red and the man on the Clapham omnibus


“Brexit camp in turmoil as leading Tory defects” – Front page headline, The Times, first edition, 20th June 2016.

“Brexit camp divided as senior Tory walks out” – Front page headline, The Times, second edition, same day.

It seems there might have been a little confusion over at The Times at the weekend following their headline announcement of Baroness Warsi’s defection from the Leave to Remain campaign.  Some prominent members of Leave said they were unaware that she was a Brexit supporter in the first place although George Osborne seems to think she was.  It wouldn’t be surprising if he was having as much trouble as the rest of us working out who’s on which side since one of the curiosities of the EU debate is the role reversal of some of the main protagonists themselves.

Indeed, prior to kick off, Prime Minister David Cameron was always considered more Eurosceptic than a great many of his colleagues and his unlikely ally in the Remain campaign, Labour leader Jeremy Corbyn, has a long history of voting against European integration. Conversely, ex-London Mayor, Boris Johnson surprised many by emerging as a leading figure for pro-Brexit despite a Europhile history and allegedly having assured none other than Cameron himself of his support for Remain.

There are few more determined supporters of the Leave campaign than Nigel Farage and Michael Gove but between whom a wedge has been driven due to what Nigel Farage calls his “unfortunate timing” of an anti-immigration poster following the murder of MP, Jo Cox.

But even before this tragic development, which has added a new emotional dimension to the debate, the Prime Minister had lost half of his back benchers to the Leave campaign and suffered a split in his own cabinet.  Whichever way the finely balanced referendum goes, questions will be asked about the wisdom of having called a referendum and, in the process, formed a circular firing squad inside his own Conservative party which will be hard to put back together. On the other hand, he hardly had a choice since the promise to hold a referendum was written into the manifesto of an election which he himself almost certainly did not expect to win.

Politically, the debate, with all its associated unlikely alliances and defections, is all hugely interesting but what is the ordinary voter, the quintessential man on the Clapham omnibus, making of it all? In January, when Cameron surely believed a landslide was inevitable, the bookies were laying odds of 9 to 1 against Brexit. A week ago, those odds had fallen to just above evens at 5 to 4.  An awful lot happened over the weekend and there has been a large swing back to where they were on 9th June, around 3 to 1. 

But beyond the result the various political parties haven’t done themselves any favours in the view of the ordinary voter who probably sees neither a functional government nor opposition.  In the aftermath, whichever way it goes, there will be changes.

Perhaps it will all fall into place for David Cameron.  He’ll win the referendum for Remain, turn on the right of the party and govern for a generation from the relative comfort of the middle ground.  That sounds like a plan but it isn’t working elsewhere in Europe where ordinary voters have grown tired and angry at the perceived weakness of middle ground politics occupied by the existing monolithic parties. 

The peripheral parties in this increasingly polarised political landscape from Italy’s Five-Star movement, Spain’s United Left, Syriza in Greece and Austria’s Eurosceptic Freedom Party have all shown they can garner enough support to win elections.  Like UKIP, they are no longer a bucket for voters to spit in when they’re fed up with either of the mainstream parties or just politics in general.

The polls were wrong about the Scottish referendum in 2014 and last year’s general election and there’s no reason to expect that a failure to understand what drives the voting public will make the current polls any more accurate. If we really want to know what the man on the Clapham omnibus is thinking, we may do well to turn our heads away from the political infighting, the markets and, instead, check out what odds the bookies are offering in Clapham High Street.



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