Au revoir and Vaarvel

Let’s give David Davis the credit he deserves. I mean he really is outstanding. So good he performs so well out of his depth. In fairness, I think anyone is out of the depth when agreeing to hold the reigns of the worst known set of political and economic negotiations since the 1939-45 war….without your top man. Even Sir Ivan knew as early as January that this was a sinking ship and grabbed one of them strong and stable lifeboats. But what do experts and professionals know? Good riddance, we don’t need you. You lost. Move on. Brexit means Brexit. Remoaner! 

On the other hand Jacob Reese-Mogg knows better. Apparently the Gravity Model of Trade is “comprehensively wrong” however he didn’t really come up with any alternative except good ol’ wishful thinking. No sorry, he did come up with something, “classical economic thinking”….BOOM! At least wishful thinking and classical economics are not mutually exclusive unlike the Irish Border conundrum.

One musn’t digress though, the focus is on Davis. Mogg, you’ll have your day!

As silly as it sounded at the time, we were assured by Davis back in April this year that the two EU agencies located in Canary Wharf would not leave London. Nevertheless, all we hear is that “the UK is leaving the European Union” and “when we leave the European Union”. Even ‘Remainers’ shout it from the rooftops above as if they have bought into the silliness of it all. So, I ask the same question then as I do now, how can the UK hold onto EU agencies if “we are leaving the European Union”?

Well, it was all theory back then I guess, wasn’t it? But Davis had the audacity to suppress it as scaremongering thus stating that it fell within the realms of the Brexit negotiating table. Fast forward just 7 months and the practice has been firmly put into place. It appears that the EU can pull out agencies whenever it wants from whoever it wants. Yes, the agencies have gone! From tonight! To Paris and Amsterdam. Au revior & vaarwel.

Interestingly, the European Banking Authority only hires 150 staff but lets read in between the lines. London is the financial heart of, er, Europe. I really thought Frankfurt would be candidate as an emerging location to be a new financial hub for the EU but Paris has triomphed and one can see a lot of positives in the EU making that move, one notably being that it’s only two hours train ride away from London. This will also benefit London whilst it takes on the world, new opportunities, new tech, brexit means brexit, get over it……oops, we did that bit, didn’t we? No seriously, I see the transition being very smooth indeed for the short term, quite possibly in the long term too but jobs will be lost.  No, jobs have been lost…FACT! Read the above article in the previous paragraph. Brexit, on the other hand, does indeed provide a unknown opportunity but it’s more disruptive as staying in because there’s no real certainty. Ah, driverless cars. No, we’ll have driverless cars! At least spreadsheet Phil has a solution.

I’m thinking aloud here now, completely cynical. So cynical I now class myself in the same ‘silly’ bracket as David Davis. I do pay close attention to Sunday politics, daily politics, watch news, read news, chat to economists, etc. I attended a Dr. Angus Robertson seminar last week as he delivered the topic of new macroeconomics. While everybody else complains about hangovers and nurses them by zombie-walking to the nearest Wetherspoon for a cheap Brexit-supporting breakfast, I’m in position to consider the level of silliness that people like David Davis are capable of delivering. That’s my Sunday breakfast. Chewing the fat of lies, deceit and madness. Other reasonable, God fearing folk just generally have loads of stuff to do and rely on politicians to act in our best interests. Please note: they don’t! But why believe me. Listen to people like David Davis get things horribly wrong by ruling out economic and political theory altogether from people that do know. So let’s give Davis the credit he’s due.

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Mood!

UK interest rates rise for first time in 10 years

True it is but let’s put that into perspective shall we and finish off with a dram.

The first rate rise in 10 years would not have occurred had it not been for 52% of voters at last year’s EU referendum. The drop from 0.5% to 0.25% last year came at a time where there was a clear and present danger to certainty around the UK economy. Some argue this was a shock. It was. The pound literally plummeted. I saw it before my eyes that night after Sunderland came through. Perhaps less said about the football team the better but in terms of delivering, the city in the North East certainly grabbed the headlines early on that night.

The news headlines this week have been all about mood in that a rise was expected because growth in the economy was expected to surpass expectations (yeah…at 0.4%). We were being prepped and mood is the only tool left for the Bank of England. Keynes referred to it as animal spirits but don’t go off roaring yet.

Today is not an indication the economy is performing well just that inflation, as a direct consequence of the falling pound, inflicted by the 52% I hasten to add, is still rising. And now at 3%. The last 12 months have demonstrated an increase of 2.1 p.c. points from 0.9%. In July 2016 it was 0.6%.  Since 1997, the Bank of England has possessed few tools to shape the UK economy’s future which was during a period of visible stability, meanwhile post-crisis it had no option but to use the full force of its main tool (QE being a new concept). This tool is interest rates and to lower the rates to it’s lowest level ever, that record having been broken just last year as explained above.

The Bank of England has been left with little option. No response this time round would see continued inflation whereas an increase in interest rates, albeit by the smallest of margins, would have a negative effect on the economy. We will expect mortgage repayments to increase as an example which in turn impacts on disposable income for lattes and purchases on the discount shelf in TK Maxx. Wages are already decreasing massively in comparison to other EU countries and the UK is now falling further behind in terms of growth as it now sees itself last position of advanced economies.

It was in pole position just 3 years ago.

The economy is undoubtedly still recovering post 2008. The last thing it needed was another storm on top of a category 5 shit storm, serving only to chop the waters more aggressively with no real clear sky in sight. Uncertainty still surrounds the outcome of Brexit where falling back on WTO rules will grind the country to a halt and expand the state – a Tory ‘s worst nightmare. In addition, it should be alarming to us that David Davis is implementing contingency plans for a worst case scenario. It’s not looking promising, is it?

Brexit truly is a case of shooting yourself in the foot in the hope of leaving the trench but rather than expect 52% of your fellow countrymen to save you, while the other 48% are wondering what the hell you’re playing at, you’re actually hoping for the enemy to come across no-mans land to your aid and save you from your own trench that protects you.

Ain’t. Going. To. Happen.

What we should be asking ourselves and UK politicians is, what is the best case scenario irrespective of the will of the people? Undemocratic? Whatever. If so, lets see a bigger number agree leaving the EU is advantageous for everyone. Remember, it’s the economy stupid. As a student in business and management I have become accustomed to the use of frameworks and matrices to gauge an understanding of complex issues. The current position of remaining in the EU should not be ignored.

So, the Bank of England projections are based on a best case scenario and at present the outlook even on that is not good. Be prepared for the worst folks…all 100% of you. At least that’s my mood but I’m in not a part of the 52%. If they are so enthused by Brexit then they need non-Brexiteers like me to get me on board…get me in a happy mood please and I’m with you (subject to scrutiny on whatever is presented and attempting to sway my mood).

Are sprinkler retrofits really necessary? Why can’t we rely on just an effective and robust fire risk assessment?

I found this article quite interesting from BAFSA in that they sponsored a retrofit in Sheffield back in 2012 to underpin the benefits of active fire protection systems in residential tower blocks. In the wake of the Glenfell incident Sheffield council now appears to be leading the way on residential sprinkler retrofits having experienced the benefits of this pilot first hand, but have also added, primarily to assure residents, that their sustainable energy-saving and aesthetically pleasing cladding is also fire resistant.

I don’t believe a retrofit is required if there is substantial fire stopping material used in the compartmentalisation within residential tower blocks, nevertheless destruction caused by a fire which, despite its effective containment, can still obviously cause significant damage and bring not just inconvenience towards the resident but to his/her neighbours in terms of smoke damage, fear and trust. If sprinklers are installed however damage to an affected flat could be further minimalised but it is worth considering that the fire in the Glenfell tower was actually contained, but startling to us all, with thankfully no real blame attached, firefighters didn’t know that the cladding outside the building had caught light. In my opinion, sprinklers should be considered during a phase of refurbishment which will ultimately ensure minimal disruption to residents and reduced cost to the landlord.

This small blog piece has not dived into the political realm and will keep steer of the fallout from this tragedy. In short, there were recommendations by the Rt. Hon. Sir Eric Pickles via the coroner’s report in wake of the Lakanal Fire that appear to have been largely ignored. So, whatever body is latterly deemed responsible, it will no doubt benefit from the wrath behind the deregulated legislation which is that of the Regulatory Reform (Fire Safety) Order. Is reliance on the fire safety order enough however? If so, heads will have to roll to justify the effects of deregulation. If not, legislation is very much required in the interests of all our health and safety.

Artwork credit: David McConochie as featured in the FT weekend, Saturday 25 June 2017 (www.davidmcconochie.co.uk)

The Northern Lights are out in Old Aberdeen

Fascinating stuff in Aberdeen today. No I’m not talking about the Dons 2-1 victory but rather on those Labour Councillors in their preparation to collude with Tories. 

In addition, although there is precedent at being unable to trust a Lib Dem, or their party as a whole, it remains frightening to see one of its councillors resign to go independent just in order to get into bed to make a threesome…just two weeks after running on a party ticket. Aberdeen now emerges as the battle ground where political parties argue the case for Union in so far as they will put realpolitik to one side. This demonstrates yet again how politically remote Scotland is from rUK (not inc. NI) which sees the emergent SNP (albeit powerful now for more than a decade) essentially create havoc amongst Scottish mainstream parties. You won’t get this in England nor Wales (the appetite for independence not being strong in these countries for obvious reasons) therefore those parties are not really tested south of the border. UKIP didn’t really test matters enough because it appealled to such a small audience in constituencies, however, nationally 4m votes from the 2015 general election is something that had garnered interest throughout the whole of the UK. Had UKIP lost the #EUref in June 2016 would we have seen an increase in support in this party as was witnessed in Scotland post #indyref? One thing is clear nevertheless, both SNP and UKIP are polar opposites, so does that mean Scotland and the rUK are too?

The mainstream parties in Scotland are continuing to fight a battle with fear, as well as obsessing about the rise of nationalism. It would seem the only way for politics to correct itself is to see the country go independent thus rendering their adversary ineffective. Until such times it would seem it very much is independence v’s union regardless what kind of election is in the offering to the voter. Instead of a Royal Rumble in the realms of Realpolitik what we have instead is more a case of SNP v’s the mainstream parties (Lab-LibDem-Con). 

What do you think?

(Photo credit: Me, outside Aberdeen City Council, April, 2017)

Uncertainty

“The culprit was caned and lessons carried on as usual”.

“Generation snowflake”.

I can’t even imagine the “sheet of flame” scenario ridiculous as it sounds. Just what kind of fire is that and how was it suppressed?

Before going any further, you might be best to refer to this interesting article and readers comments at the end.

I think I can see the correlation in this reader’s comments between a complete disregard for people’s health & safety and that of the now fashionable post-Brexit, criticize-if-you-dare,”back in the day”, inward-facing mentality. Health and safety of today is built on the basis of lessons learned and on risk assessment thank goodness, however in terms risk management it is obvious that risks change over time, all thanks to shifts in technological and social trends which is a result of our appetite to improve our lives and well-being in every way possible.

Thankfully, the school had an automatic fire suppression system installed which not only acted in the interests everyone’s safety, in particular the pupils, but it also ensured the continuity of business. I don’t mean business in the sense of the perverse anti-capitalist mindset but rather that of uninterrupted provision of education . Although a day had been lost the students had returned to class the following morning as opposed to a maximum loss scenario (i.e.. complete destruction, as seen in those schools in Essex and Sussex last summer) which would have ultimately guaranteed uncertainty as to when the school would reopen again.

Thanks to effective risk management, and in insurance terms, a probable maximum loss scenario is what occurred here, nevertheless what is startling to see in the news article is that the sprinklers appear to have contributed to the inconvenience and because of this the decision was taken to close the school. Yes, in this real-life event water has created a flood which is the inevitable result when extinguishing a fire but what is remarkably downplayed is the efficiency in the way the automatic fire protection system operated. Even the head teacher has gone as far as comment that “the smoke and water caused by a small fire” was the main reason instead of pointing out that the proximate cause, the fire, if uncontrolled can actually destroy schools completely. The reason why the fire was so small was thanks to the sprinkler activation – this is what it does, it keeps small fires small and extinguishes them using water. Had firefighters been on the scene a minute from the fire inception and sprayed water all over the place would the head teacher have mentioned the problem of water damage? Most probably not, and quite the opposite perhaps, given firemen do brave things all the time when called into action and are warmly congratulated, medals, photo opportunities etc. etc. I am being cynical of course but is still fact. In contrast, we have sprinkler engineers who install and maintain systems and just get on with the job of ensuring and continuing the trend of zero lives lost in a sprinkler protected building.

Once again sprinkler systems are downplayed and this doesn’t help to raise society’s awareness of their importance. It could be argued that this article builds on the fallacy that all sprinklers are activated since it seems we have a case of a school being flooded with smoke damage. Yes, OK a slight exaggeration, however I have had a discussion before with asset managers where the understanding was that in the event of a “small fire”, say, in the corner of a open-plan office floor, that all sprinklers heads across the floor would activate.

We have seen it right before our very eyes with the Government’s approach to curtail the requirement for new schools to invest in this highly beneficial protector of lives and buildings. My recommendation, in this cold bitter austere economic climate, is to simply calculate the payback period on investment because there will be savings on the insurance premium in the mid to long run. Surely this would be a sustainable approach whilst providing a robust defence in every sense of the word. Failure to do so only creates more risk in an already uncertain environment whilst 2016 has already proven alone that uncertainty in Political, Economic, Social and Environmental terms is just around the corner…in fact, right….this…..moment…now!

So, what’s wrong with a little inflation?

Although inflation has recently increased to 1.6%, understandably through the devaluation of the pound sterling since the result of the EU referendum (more than 11% on the Euro, more than 16% against the Dollar) and the rising price of oil, it is still an increase which falls within the Bank of England’s 2% target, a target I might add which aims to achieve price stability and is set by Government. So, what’s wrong with a little inflation?

Although this should not be alarming to the consumer, it most probably should be. It was not long ago the now ex-Chancellor of the Exchequer, George Osborne, indicated that 0% inflation in 2015 was a ‘saving to consumers’, contrary to the inflation figure set for the Bank of England to achieve (and to report on if not reached). Now, although to an extent this is true, a continued fall can also curb consumer spending as one may hold out for a better price hence the need to keep inflation up year on year to limit this uncertainty. The mood would be terribly important too, so if the population is generally happy then consumer spending will continue without further ado and might even see an increase in purchasing

Apart from a period in 2009 during the Great Recession, the RPI (Retail Price Index) is almost always higher for those that have mortgage repayments, therefore homeowners could feel an added pinch in the propensity to spend. Importantly to note, as of November 2016, personal credit is at an all-time high and thanks to the positive mood spun by the press just a couple of years ago when CPI was at all-time low we could see spending now being curbed on the back of rising everyday costs combined with increasing and potentially unmanageable credit debt. For some it could be untenable to control given unemployment is expected to rise throughout 2017 which in turn will affect the the UK economic outlook leading to a a negative downward spiral effect.

So, I ask again, what’s wrong with a little inflation? Well, if the starting point for consumer saving and spending was at 0% then surely anything above and beyond is going to negatively affect spending, especially for so-called JAM’s, the Government’s branding of those that are ‘just about managing’. On the flip side, however, had Mr. Osborne indicated that inflation at 0% was negative for consumers then the spiral of deflation could well have continued as mood, or “animal spirits”, again, has played an umeasurable role, professed of course by an economist not widely supported by neo-liberals, John Maynard Keynes.

The above is not exhaustive, nevertheless it’s important to be critical about what happens next as all facets of the economy need to know the extent of the deepest reaches of a Europhile’s thinking as well as taking on board the ultra-positive outlook from hard Brexiteers. Hard is now clean, soft is now dirty but still the UK Government has a hard task ahead of satisfying 48.1% of the UK population who up until last June probably ‘never had it so good’…where matters are more certain remaining ‘in’ as opposed to being ‘out’.

Fire at Marks & Spencer, West Quay Shopping Centre, Southampton

The news report on the day doesn’t really describe the impact sprinklers had in controlling the fire prior to the firefighters arriving and Hampshire Fire & Rescue’s comments seem to construe that` sprinklers worked alongside the fire crew as opposed to the alternative. Only the one head was activated but could the fire have been doused before the fire crew’s arrival?

BAFSA bring a bit of balance to the media coverage by highlighting the importance of sprinklers with their report which provides some tangible consequences were it not for the activation of the automatic fire suppression system.

Media reports, hollywood movies, even the fire brigade (on the back of their PR) seem to really underplay the sprinkler’s importance in my opinion. It certainly begs the question, how does the public perceive the importance of sprinklers in buildings?

What is your perception?