October 2016 – Open Season

The political and regulatory agenda shows no signs of slowing down.  With Theresa May now setting out her vision for her new government, the core promise was that a new United Kingdom with renewed sovereign powers would have a government prepared to intervene more in markets where it sees reasonable justification to resolve issues.  The dilution of the gap between the poorest and richest in society appears to be at the heart of change and for business it needs to demonstrate more care for their employees and customers.  The savaging of the former boss of BHS and the attack on those who do not pay their fair share of taxes will be a core part of the new agenda.

Another central plank which will impact us is the continued commitment to the housing market.  It is clear that the new team still has housing at the heart of its initiatives.  However this may not be supported by cheap money in the same way as the previous incarnation.  However an independent Financial Policy Committee, Monetary Policy Committee and Bank of England may frustrate the political objections to long-term low interest rates.  The Autumn Statement on 23 November now looks even more important in signalling how the government intends to manage the economy as it commences the tortuous negotiations on Brexit.  If anyone is in any doubt about how complex this will be – consider this list

  • Agreement on Irish Border controls
  • Agreement on residence for UK nationals currently living in Europe and vice versa
  • Payment for UK expats health care in the EU
  • Location of border controls for the Channel Tunnel
  • Keeping Scotland in

All of the above needs resolving before we get to trade agreements, how the City of London is protected and how financial services continues to cross borders without limitations.  If free movement of labour is off the agenda, then getting consensus from the remaining 27 member states, sometimes unanimously, looks a very tall order.  And if free labour movement is off the agenda we will still have an international responsibility on refugees that needs to be hammered out.  That is a lot of skilled negotiators.

This will bring turmoil over the next 2 years.  Any objective of not negotiating in public is unlikely to be shared by our European partners.  They are bound to leak at every opportunity.  This will create a climate of uncertainty and political back-biting and in-fighting like we have never seen before.  The great British public will need to demonstrate a degree of maturity to rise above this if the economy is not to suffer from a distinct lack of confidence.  However the latest pronouncements saw some good news.  Whilst there was a further down-grade from the IMF on UK growth, it has to be noted that the UK is still projected to grow more in 2017 than any other G7 country.

So as we now are writing business that may not complete until 2017, the need for a great pipeline had never been so important.  We are still going to have a lot to do as this government pushes ahead on new-build.  But ensuring that we are looking after those who already have mortgages is just as important.  Lenders are looking at more and more ways to keep their borrowers at the end of the introductory rate.  We must be even smarter at ensuring they talk to their broker before they complete a simple product transfer.

Robert Sinclair
Chief Executive, AMI
October 2016